Q4 2023 Eli Lilly & Co Earnings Call

February 6, 2024

Operator: --[ Operator Instructions ] I would now like to turn the conference over to your host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead.

I would now like to turn the conference over to your host Joe Fletcher Senior Vice President of Investor Relations. Please go ahead.

Joe Fletcher: Good morning, and thank you Paul and thanks for joining us for Eli Lilly and Company's Q4 2023 Earnings and 2024 Guidance Call. I'm Joe Fletcher; Senior Vice President of Investor Relations. And joining me on today's call are Dave Ricks, Lilly's Chairman and CEO; Anat Ashkenazi, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology; Anne White, President of Lilly Neuroscience, Ilya Yuffa, President of Lilly International; Jake Van Naarden, President of Loxo at Lilly; and Patrik Jonsson, President of Lilly Diabetes and Obesity and Lilly U.S.A. We're also joined by Michaela Irons, Mike Springnether, and Lauren Zierki of the Investor Relations team.

<unk> hold the line and we'll be right back with you. [music]. With you. [music]. Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q4 2023 earnings call. At this time all participants are in a listen only mode. Later, we will be conducting a question and answer session and instructions will be given at that time. Should you request assistance during the call. Please press Star then zero and an operator will assist you offline. I would now like to turn the conference over to your host Joe Fletcher Senior Vice President of Investor Relations. Please go ahead.

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<unk> and white President of Lilly neuroscience.

President of <unk> International Jacob <unk> President of locks are at Lilly and Patrik Jonsson, President of Lilly diabetes, and obesity and liver USA. We're also joined by Mccabe of Iron <unk> Investor Relations team.

During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. 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's 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 David Alright.

With you. [music].

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Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q4 2023 earnings call.

Speaker Change: At this time all participants are in a listen only mode. Later, we will be conducting a question and answer session and instructions will be given at that time.

Emission the.

The information we provide about our products and pipeline is for the benefit of the investment community. It's 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.

The information, we provide about our products and pipeline is for the benefit of the investment community. It's 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 David Alright. Thanks, Joe 2023 was a year of advancement across our company. We grew our topline we progressed our pipeline advanced our external innovation agenda through partnerships and collaborations we continue.

Speaker Change: Should you request assistance during the call. Please press Star then zero and an operator will assist you offline.

Speaker Change: I would now like to turn the conference over to your host Joe Fletcher Senior Vice President of Investor Relations. Please go ahead.

Now I'll turn the call over to David Alright. Thanks, Joe 2023 was a year of advancement across our company. We grew our topline we progressed our pipeline advanced our external innovation agenda through partnerships and collaborations we continue.

Now I'll turn the call over to Dave.

Dave Ricks: All right. Thanks, Joe. 2023 was a year of advancement across our company. We grew our top line, we progressed our pipeline, advanced our external innovation agenda through partnerships and collaborations. We continued to invest in quality, the reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new life-saving and life-changing medicines to more patients.

Joe Fletcher: Good morning, and thank you Paul and thanks for joining US for example, the <unk> Company's Q4 2020 earnings in 2024 guidance call and Joe <unk> Senior Vice President of Investor Relations and joining me on today's call are Dave Ricks, Lilly's, Chairman and CEO and not Ashkenazi Chief Financial Officer, Dr. Dan <unk>, Chief Scientific officer, and President of lithium. LNG and white President of Lilly neuroscience. President of <unk> International Jacob <unk>, President of blocks of what Lilly and Patrik Jonsson, President of Lilly diabetes, and obesity and liver USA. We're also joined by Magee of IR insight string of them are in Turkey of the Investor Relations team. During this conference call, we anticipate making projections and forward looking statements based on our current expectations 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 can. Emission the. The information, we provide about our products and pipeline is for the benefit of the investment community. It's 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.

To invest in quality.

The reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new lifesaving and life changing medicines to more patients.

Speaker Change: LNG and white President of Lilly neuroscience.

In 2023, revenue grew 20% for the full year, and 28% for the most recent quarter, as our newly launched portfolio continued to gain momentum. This past year, we announced positive Phase III for DONANEMAB, TIRZEPATIDE, MIRIKIZUMAB and PIRTOBRUTINIB. We also announced a positive Phase II results for ORFORGLIPRON as well as RETATRUTIDE and move these 2 important molecules into Phase III.

Speaker Change: President of <unk> International Jacob <unk>, President of blocks of what Lilly and Patrik Jonsson, President of Lilly diabetes, and obesity and liver USA. We're also joined by Magee of IR insight string of them are in Turkey of the Investor Relations team.

Our newly launched portfolio continued to gain momentum.

This past year, we announced positive phase III for Danone, <unk> mirror, Kitimat and <unk> nib.

Speaker Change: During this conference call, we anticipate making projections and forward looking statements based on our current expectations 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 can.

Also announced positive phase II results for <unk> as well as retractor, Todd and move these two important molecules into phase III.

In terms of external innovation in 2023, we continue to complement our pipeline through acquisitions and collaborations. These transactions included the acquisition of DICE Therapeutics, POINT Biopharma, Versanis Bio, Emergence Therapeutics, Mablink Bioscience, Immunitrack as well as Sigilon Therapeutics. We announced several significant investment and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

These transactions included the acquisition of Dice Therapeutics point Biopharma for Santos bio emergence therapeutics Madelene biosciences.

Speaker Change: Emission the. The information, we provide about our products and pipeline is for the benefit of the investment community. It's 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.

Speaker Change: The information, we provide about our products and pipeline is for the benefit of the investment community. It's 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.

No track as well as signal on therapeutics.

We announced several significant investments in manufacturing, including plans to expand capacity at the company's research Triangle Park facility and the 2 manufacturing sites within the LEAP Innovation Park in Boone County, Indiana. Most recently, we announced plans to construct a new high-tech manufacturing site in Germany. This facility will further expand the company's global injectable product and device manufacturing network, including for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk>. <unk> in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>. This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

We announced several significant investment and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

Speaker Change: Now I'll turn the call over to Dave Alright. Thanks, Joe 2023 was a year of advancement across our company. We grew our topline we progressed our pipeline advanced our external innovation agenda through partnerships and collaborations we continued.

Most recently, we announced plans to construct a new high Tech manufacturing site in Germany. This facility will further expand the company's global injectable product and device manufacturing network. <unk> for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk>. <unk> in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>. This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

David A. Ricks: To invest in quality. The reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new lifesaving and life changing medicines to more patients. In 2023 revenue grew 20% for the full year and 28% for the most recent quarter. As our newly launched portfolio continued to gain momentum. This past year, we announced positive phase III. Donut, a map tours appetite mirror kitimat and perfect Bird nib. So announced positive phase II results for. <unk> as well as retractor, Todd and move these two important molecules into phase III.

David A. Ricks: The reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new lifesaving and life changing medicines to more patients.

This facility will further expand the company's global injectable product and device manufacturing network.

<unk> for our diabetes and obesity portfolio.

David A. Ricks: In 2023 revenue grew 20% for the full year and 28% for the most recent quarter.

Most importantly, this past year, we brought innovative new medicines to patients. In 2023, we received regulatory approvals for ZEPBOUND, JAYPIRCA, OMVOH, EBGLYSS in the U.S.--in the EU rather and an expanded label for VERZENIO and 2 new indications for JARDIANCE. This progress will serve as a foundation to drive top-tier revenue growth and margin expansion over time.

Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk>.

Speaker Change: As our newly launched portfolio continued to gain momentum.

Speaker Change: This past year, we announced positive phase III.

<unk> in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>.

Speaker Change: Donut, a map tours appetite mirror kitimat and perfect Bird nib.

Speaker Change: So announced positive phase II results for.

Speaker Change: <unk> as well as retractor, Todd and move these two important molecules into phase III.

This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

Speaker Change: In terms of external innovation in 2023, we continue to complement our pipeline through acquisitions and collaborations. These transactions included the acquisition of dice therapeutics points, Biopharma <unk> bio emergence therapeutics, Madeline Biosciences, immuno track as well as signal on therapeutics. We announced several significant investments and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

As you can see on slide 4, we continued to make progress against our strategic deliverables in Q4. Revenue grew 28% with our new products growing by over $2 billion. Since our last earnings call, we achieved several key pipeline milestones. In addition to the ZEPBOUND and JAYPIRCA CLL approvals, today, we announced topline results for the TIRZEPATIDE Phase II SYNERGY-NASH trial as well as the VERZENIO Phase III CYCLONE-2 trial. Dan will talk more about this update-- in his update.

Speaker Change: These transactions included the acquisition of dice therapeutics points, Biopharma <unk> bio emergence therapeutics, Madeline Biosciences, immuno track as well as signal on therapeutics.

Revenue grew 28% with our new products growing by over $2 billion.

Since our last earnings call, we achieved several key pipeline milestones. In addition to the <unk> bound and <unk> approvals today, we announced topline results for the tourists appetite phase two synergy Nash trial as.

Speaker Change: We announced several significant investments and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

As well as the Virginia Phase III cyclone two trial.

Dan will talk more about these update in his update. In terms of business development in Q4, we completed the acquisition of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio ligand therapies. Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

Dan will talk more about these update in his update.

In terms of business development, in Q4, we completed the acquisition of Mablink Bioscience and POINT Biopharma, the latter of which expands our capacity and capability into radioligand therapies. Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the Fourth Quarter.

In terms of business development in Q4, we completed the acquisition of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio ligand therapies.

Speaker Change: Most recently, we announced plans to construct a new high Tech manufacturing site in Germany. This facility will further expand the company's global injectable product and device manufacturing network. <unk> for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk> combo. <unk> in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>. This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

Speaker Change: This facility will further expand the company's global injectable product and device manufacturing network. <unk> for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk> combo.

Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

Speaker Change: <unk> for our diabetes and obesity portfolio.

Speaker Change: Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk> combo.

On slide 5, you'll see a list of key events since our Q3 earnings call, including several important regulatory clinical and other updates. Now I will turn the call over to Anat to review our Q4 results. Thanks, Dave.

Speaker Change: <unk> in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>.

Now I will turn the call over to or not to review our Q4 results.

Thanks, Dave.

Thanks, Dave. Slide 6 summarizes financial performance in the Fourth Quarter of 2023. And I'll focus my comments on non-GAAP performance. We are pleased with the strong financial performance in the Fourth Quarter and for the full year. Our performance was highlighted by continued acceleration of revenue growth, driven by our new products and growth products. Q4 revenue increased 28% compared to Q4 2022. Certain divestiture this represents a quarter over quarter acceleration in revenue growth driven by Mcdonald Brasilia charity events and the recent launch of <unk>. For the full year revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82, 3%.

Anat Ashkenazi: Thanks, Dave. Slide 6 summarizes financial performance in the Fourth Quarter of 2023. And I'll focus my comments on non-GAAP performance. We are pleased with the strong financial performance in the Fourth Quarter and for the full year. Our performance was highlighted by continued acceleration of revenue growth, driven by our new products and growth products.

<unk> six summarizes <unk> financial performance in the fourth quarter of 2023. Lucas My comments on non-GAAP performance. We are pleased with the strong financial performance in the fourth quarter and for the full year. Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products. Q4 revenue increased 28% compared to Q4 2022. Certain divestiture this represents a quarter over quarter acceleration in revenue growth driven by Mcdonald Brasilia charity events and the recent launch of <unk>. For the full year revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82, 3%.

Speaker Change: This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

Lucas My comments on non-GAAP performance.

We are pleased with the strong financial performance in the fourth quarter and for the full year.

Speaker Change: As you can see on slide four we continued to make progress against our strategic deliverables in Q4. Revenue grew 28% with our new products growing by over $2 billion. Since our last earnings call, we achieved several key pipeline milestones. In addition to the <unk> bound at JP <unk> approvals today, we announced topline results for the tourist appetite phase two synergy Nash trial as. As well as the Virginia Phase III cyclone two trial. Dan will talk more about these update in his update. In terms of business development in Q4, we completed the acquisitions of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio of ICANN therapies.

Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products.

Speaker Change: Revenue grew 28% with our new products growing by over $2 billion.

Q4 revenue increased 28% compared to Q4 2022.

Speaker Change: Since our last earnings call, we achieved several key pipeline milestones. In addition to the <unk> bound at JP <unk> approvals today, we announced topline results for the tourist appetite phase two synergy Nash trial as.

Q4 revenue increased 28% compared to Q4 2022. Excluding divestiture, this represents a quarter-over-quarter acceleration in revenue growth driven by MOUNJARO, VERZENIO, JARDIANCE and the recent launch of ZEPBOUND. For the full year revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82.3%. Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses. Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses. Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses associated with launches of new products, and additional indications as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research as well as higher incentive compensation costs.

Certain divestiture this represents a quarter over quarter acceleration in revenue growth driven by Mcdonald Brasilia charity events and the recent launch of <unk>. For the full year revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82, 3%.

Speaker Change: As well as the Virginia Phase III cyclone two trial.

For the full year revenue increased 20% driven by robust volume growth of 16%.

Speaker Change: Dan will talk more about these update in his update.

Speaker Change: In terms of business development in Q4, we completed the acquisitions of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio of ICANN therapies.

Gross margin as a percent of revenue increased to 82, 3%.

Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses. Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses. Associated with launches of new products, and additional indications as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late for late stage assets and Additionally, let's say early stage research as well as higher incentive compensation costs.

Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses.

Speaker Change: Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter. On slide five Youll see a list of key events since our Q3 earnings call, including several important regulatory clinical and other updates. Now I'll turn the call over to it not to review our Q4 results.

Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses associated with launches of new products, and additional indications as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research as well as higher incentive compensation costs.

Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses.

Speaker Change: On slide five Youll see a list of key events since our Q3 earnings call, including several important regulatory clinical and other updates.

Associated with launches of new products, and additional indications as well as higher incentive compensation costs.

R&D expenses increased 28%, primarily driven by higher development expenses for late for late stage assets and Additionally, let's say early stage research as well as higher incentive compensation costs.

Speaker Change: Now I'll turn the call over to it not to review our Q4 results.

David A. Ricks: Thanks, Dave. <unk> six summarizes <unk> financial performance in the fourth quarter of 2023. <unk> six summarizes <unk> financial performance in the fourth quarter of 2023. Lucas My comment on non-GAAP performance. We are pleased with the strong financial performance in the fourth quarter and for the full year. Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products.

<unk> six summarizes <unk> financial performance in the fourth quarter of 2023.

David A. Ricks: Lucas My comment on non-GAAP performance.

In Q4, we recognized the acquired IPR&D charges of $623 million, which negatively impacted EPS by $0.62. In Q4 2022, acquired IPR&D charges totaled $240 million or $0.23 negative impact to EPS. Operating income increased 29% in Q4, driven by higher revenue from new launches, partially offset by operating expense growth. Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately seven percentage points attributable to the acquired IP R&D charges.

In Q4, we recognized the acquired IPR&D charges of $623 million, which negatively impacted EPS by $0.62. In Q4 2022, acquired IPR&D charges totaled $240 million or $0.23 negative impact to EPS.

Speaker Change: We are pleased with the strong financial performance in the fourth quarter and for the full year.

Lucas: Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products.

In Q4, 2022 acquired IP R&D charges totaled $240 million or 23 two.

Lucas: Q4 revenue increased 28% compared to Q4 2022. Susan divestiture this represents a quarter over quarter acceleration in revenue growth driven by Mcdonald Brasilia charity events and the recent launch of set out. For the full year revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82, 3%.

Operating income increased 29% in Q4, driven by higher revenue from new launches, partially offset by operating expense growth. Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately 7 percentage points attributable to acquired IPR&D charges.

Lucas: Susan divestiture this represents a quarter over quarter acceleration in revenue growth driven by Mcdonald Brasilia charity events and the recent launch of set out.

<unk> <unk> negative impact to EPS.

Operating income increased 29% in Q4, driven by higher revenue from new launches, partially offset by operating expense growth.

Lucas: For the full year revenue increased 20% driven by robust volume growth of 16%.

Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately seven percentage points attributable to the acquired IP R&D charges.

Lucas: Gross margin as a percent of revenue increased to 82, 3%.

Lucas: Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses. Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses. Associated with launches of new products, and additional indications as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late for late stage assets and Additionally, that's let's say early stage research as well as higher incentive compensation costs.

Our Q4 effective tax rate was 13.1% compared to 7.3% in Q4 2022. The higher effective tax rate for Q4 2023 was primarily driven by a lower net discrete tax benefit compared to the same period in 2022, and the new Puerto Rico tax regime. At the bottom line, we delivered earnings per share of $2.49 in Q4, and 19% increase compared to Q4 2022, inclusive of the negative impact of $0.62 from acquired IPR&D charges compared to $0.23 in Q4 2022.

Lucas: Marketing selling and administrative expenses increased 17%, primarily driven by higher expenses.

The higher effective tax rate for Q4, 2023 was primarily driven by a lower net discrete tax benefit compared to the same period in 2022, and the new Puerto Rico tax regime.

Lucas: Associated with launches of new products, and additional indications as well as higher incentive compensation costs.

Lucas: R&D expenses increased 28%, primarily driven by higher development expenses for late for late stage assets and Additionally, that's let's say early stage research as well as higher incentive compensation costs.

At the bottom line, we delivered earnings per share of $2 49 in Q4, and 19% increase compared to Q4 2022 inclusive of the negative impact of 62 cents from acquired IP R&D charges compared to <unk> 23 in Q4 2022.

Lucas: In Q4, we recognized the acquired IP R&D charges of $623 million, which negatively impacted EPS by <unk> 62. In Q4, 2022 acquired IP R&D charges totaled $240 million or 23 two. <unk> <unk> negative impact to EPS. Operating income increased 29% in Q4, driven by higher revenue from new launches. We offset by operating expense growth. Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately seven percentage points attributable to the acquired IP R&D charges.

On slide 8, we quantify the effect of price rate and volume and revenue growth. U.S. revenue increased 39% in Q4, driven by robust growth of MOUNJARO, VERZENIO and ZEPBOUND. Net price in the U.S. increased 27% for the quarter driven by MOUNJARO access savings cards dynamic as well as a one-time favorable change in estimates for rebates and discounts. Excluding MOUNJARO, net price in the U.S. decreased by high single digits. Europe continued its trend of strong continued its trend of strong growth in Q4, excluding $65 million in revenue associated with milestones received for the EU approval and launch of Atlas. <unk> was up 11% in constant currency, driven primarily by volume growth of <unk> <unk> and <unk>. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of <unk> and mantra.

Lucas: In Q4, 2022 acquired IP R&D charges totaled $240 million or 23 two.

U S revenue increased 39% in Q4, driven by robust growth of Monteiro <unk> Zip out.

Lucas: <unk> <unk> negative impact to EPS.

Lucas: Operating income increased 29% in Q4, driven by higher revenue from new launches.

Net price in the U S increased 27% for the quarter driven by Monteiro accessing savings parts dynamic as well as a one time favorable change in estimates for rebates and discounts.

Lucas: We offset by operating expense growth.

Lucas: Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately seven percentage points attributable to the acquired IP R&D charges.

Excluding most of our net price in the U S decreased by high single digits.

Europe continued its trend of strong growth in Q4, excluding $65 million in revenue associated with milestones received for the EU approval and launch of EBGLYSS, revenue was up 11% in constant currency, driven primarily by volume growth of VERZENIO, JARDIANCE and TALTZ. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of VERZENIO and MOUNJARO.

Europe continued its trend of strong continued its trend of strong growth in Q4, excluding $65 million in revenue associated with milestones received for the EU approval and launch of Atlas.

Lucas: Our Q4 effective tax rate was 13, 1% compared to seven 3% in Q4 2022. The higher effective tax rate for Q4, 2023 was primarily driven by lower net discrete tax benefit compared to the same period in 2022, and then you Puerto Rico tax regime. At the bottom line, we delivered earnings per share of $2.49 in Q4, and 19% increase compared to Q4 2022 inclusive of the negative impact of 62 cents from acquired IP R&D charges. <unk> 23 in Q4 2022.

Lucas: The higher effective tax rate for Q4, 2023 was primarily driven by lower net discrete tax benefit compared to the same period in 2022, and then you Puerto Rico tax regime. At the bottom line, we delivered earnings per share of $2.49 in Q4, and 19% increase compared to Q4 2022 inclusive of the negative impact of 62 cents from acquired IP R&D charges.

<unk> was up 11% in constant currency, driven primarily by volume growth of <unk> <unk> and <unk>. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of <unk> and mantra.

For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of <unk> and mantra.

Lucas: At the bottom line, we delivered earnings per share of $2.49 in Q4, and 19% increase compared to Q4 2022 inclusive of the negative impact of 62 cents from acquired IP R&D charges.

Moving to China, Q4 revenue increased 7% in constant currency with volume growth of 10%, partially offset by price declines. Volume growth in Q4 was primarily driven by TYVYT. We are pleased to see China return to growth in 2023. Revenue in the rest of the world decreased 10% in constant currency. However, when you exclude the impact of the Q4 2022 sales of rights for ALIMTA in Korea, and Taiwan, sales grew 9% in constant currency, driven primarily by volume growth of MOUNJARO and VERZENIO.

Client growth in Q4 was primarily driven by private we were pleased to see China return to growth in 2023.

Lucas: <unk> 23 in Q4 2022.

Lucas: On slide eight we quantify the effect of price rate and volume and revenue growth. U S revenue increased 39% in Q4, driven by robust growth of Monteiro <unk> Zip out. Net price in the U S increased 27% for the quarter, driven by Monteiro exits and savings parts dynamic as well as a one time favorable change in estimates for rebates and discounts. Excluding most of our net price in the U S decreased by high single digit. Europe continued its trend to continue. <unk> continued its trend of strong growth in Q4. 65 million in revenue associated with milestones received for the EU approval and launch of Atlas revenue was up 11% in constant currency driven primarily by volume growth the <unk> Jordan.

Revenue in the rest of the world decreased 10% in constant currency. However, when you exclude the impact of the Q4 2022 sales of rights for Alimta in Korea, and Taiwan sales grew 9% in constant currency, driven primarily by volume growth of more than <unk> <unk>.

Lucas: U S revenue increased 39% in Q4, driven by robust growth of Monteiro <unk> Zip out.

Lucas: Net price in the U S increased 27% for the quarter, driven by Monteiro exits and savings parts dynamic as well as a one time favorable change in estimates for rebates and discounts.

Slide 9 shows the contribution to worldwide volume growth by product category. As you can see the new product and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter.

Lucas: Excluding most of our net price in the U S decreased by high single digit.

As you can see the new product and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter.

Lucas: Europe continued its trend to continue. <unk> continued its trend of strong growth in Q4. 65 million in revenue associated with milestones received for the EU approval and launch of Atlas revenue was up 11% in constant currency driven primarily by volume growth the <unk> Jordan.

Lucas: <unk> continued its trend of strong growth in Q4.

Slide 10 provides additional perspective across our product categories. First I would like to highlight VERZENIO, which saw worldwide sales growth of 42% in Q4, driven by robust demand growth and to a lesser extent, higher realized prices. The continued positive momentum is driven by the early breast cancer indication with steady performance in the metastatic indication. JARDIANCE continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter. In the U.S. JARDIANCE revenue increased 29% driven by increased demand. In Q4 worldwide to let's see revenue declined 14% U S revenue decreased 18% driven by lower volume and lower realized prices.

Lucas: 65 million in revenue associated with milestones received for the EU approval and launch of Atlas revenue was up 11% in constant currency driven primarily by volume growth the <unk> Jordan.

First I would like to highlight <unk>, which sell worldwide sales growth of 42% in Q4, driven by robust demand growth and to a lesser extent higher realized prices.

Lucas: And Tal. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth upper Sony and sharp. Moving to China, Q4 revenue increased 7% ex currency with volume growth of 10%, partially offset by price declines. Volume growth in Q4 was primarily driven by private. We're pleased to see China return to growth in 2023.

Lucas: For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth upper Sony and sharp.

The continued positive momentum is driven by the early breast cancer indication with steady performance in the metastatic indication.

<unk> continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter. In the U S. Starting revenue increased 29% driven by increased demand. In Q4 worldwide to let's see revenue declined 14% U S revenue decreased 18% driven by lower volume and lower realized prices.

Moving to China, Q4 revenue increased 7% ex currency with volume growth of 10%, partially offset by price declines.

In the U S. Starting revenue increased 29% driven by increased demand.

Lucas: Volume growth in Q4 was primarily driven by private.

In Q4, worldwide TRULICITY revenue declined 14%. U.S. revenue decreased 18% driven by lower volume and lower realized prices. We experienced incremental delays fulfilling orders of TRULICITY. Starting in early December and go through January, all dose strengths of TRULICITY were indicated as having limited availability on the FDA drug shortages site. We expect to experience intermittent delays for fulfilling orders of certain doses in the coming months. In international market, TRULICITY volume continued to be affected by measures we have taken to minimize potential disruption to existing patients, including communications to health care professionals not to start new patients on TRULICITY.

Lucas: We're pleased to see China return to growth in 2023.

In Q4 worldwide to let's see revenue declined 14% U S revenue decreased 18% driven by lower volume and lower realized prices.

Lucas: Revenue in the rest of the world decreased 10% in constant currency. However, when you exclude the impact of the Q4 2022 sales of rights for Alimta in Korea and Taiwan. Sales grew 9% in constant currency, driven primarily by volume growth of more than <unk> <unk>. Slide nine shows the contribution to worldwide volume growth by product category.

Revenue in the rest of the world decreased 10% in constant currency. However, when you exclude the impact of the Q4 2022 sales of rights for Alimta in Korea and Taiwan. Sales grew 9% in constant currency, driven primarily by volume growth of more than <unk> <unk>.

Lucas: However, when you exclude the impact of the Q4 2022 sales of rights for Alimta in Korea and Taiwan.

We experienced incremental delays fulfilling orders of <unk>. Starting in early December and go through January all dose strengths of <unk> City, where indicated is having limited availability on the FDA drug shortage site. We expect to experience intermittent delays for <unk> or there's a certain doses in the coming months. In the international market solicited volume continued to be affected by measures, we have taken to minimize potential disruption to existing patients, including communications to health care professionals now to start new patients on <unk>.

Starting in early December and go through January all dose strengths of <unk> City, where indicated is having limited availability on the FDA drug shortage site.

Lucas: Sales grew 9% in constant currency, driven primarily by volume growth of more than <unk> <unk>.

Lucas: Slide nine shows the contribution to worldwide volume growth by product category.

Slide nine shows the contribution to worldwide volume growth by product category. You can see the new product and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter. Slide 10 provides additional perspective across our product categories. First I would like to highlight <unk>, which sell worldwide sales growth of 42% in Q4, driven by robust demand growth and to a lesser extent higher realized prices.

We expect to experience intermittent delays for <unk> or there's a certain doses in the coming months.

Lucas: You can see the new product and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter.

In the international market solicited volume continued to be affected by measures, we have taken to minimize potential disruption to existing patients, including communications to health care professionals now to start new patients on <unk>.

Lucas: Slide 10 provides additional perspective across our product categories.

Lucas: First I would like to highlight <unk>, which sell worldwide sales growth of 42% in Q4, driven by robust demand growth and to a lesser extent higher realized prices.

Moving to slide 11. MOUNJARO continued its robust growth as more type 2 diabetes patients benefited from the medicine. Q4 revenue grew to over $2.2 billion globally up from $1.4 billion in Q3 2023. In the U.S. MOUNJARO revenue of $2.1 billion in Q4 up from $1.3 billion in Q3 2023, benefited from a one-time change in estimates for rebates and discounts. Adjusted for this one-time change, sequential net sales in the U.S. would have grown approximately 30% in Q4. Since our last call. We further expanded patient access to Monteiro as of February one access for patients with type two diabetes in the U S was 90% in aggregate across commercial and part D, including 92% axis for commercial patient.

Q4 revenue grew to over $2 $2 billion globally up from $1 4 billion in Q3 2023.

Lucas: The continued positive momentum is driven by the early breast cancer indication with steady performance in the metastatic indication. <unk> continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter in. In the U S. Starting revenue increased 29% driven by increased demand. In Q4 worldwide to let's see revenue declined 14% U S revenue decreased 18% driven by lower volume and lower realized prices.

In the U S. Much of our revenue of $2 1 billion in Q4 up from $1 3 billion in Q3 2023 benefited from a onetime change in estimates for rebates and discounts.

Lucas: <unk> continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter in.

Lucas: In the U S. Starting revenue increased 29% driven by increased demand.

Adjusted for this one time change sequential net sales in the U S would have grown approximately 330% in Q4. Since our last call. We further expanded patient access to Monteiro as of February one access for patients with type two diabetes in the U S was 90% in aggregate across commercial and part D, including 92% axis for commercial patient.

Lucas: In Q4 worldwide to let's see revenue declined 14% U S revenue decreased 18% driven by lower volume and lower realized prices.

Since our last call, we further expanded patient access to MOUNJARO as of February 1st, access for patients with type 2 diabetes in the U.S. was 90% in aggregate across commercial and part D, including 92% access for commercial patients. This expanded access puts MOUNJARO near parity with the established injectable incretins and gives more patients the opportunity to start therapy on MOUNJARO for type 2 diabetes. Since the $25 in non covered co pay card program expired on June 30, we now consider all prescriptions paid. Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S. Recall that after a change to the non covered co pay program in late 2022. Patients already started on the 25 dollar copay card could remain in the program until June 30.

Since our last call. We further expanded patient access to Monteiro as of February one access for patients with type two diabetes in the U S was 90% in aggregate across commercial and part D, including 92% axis for commercial patient.

Lucas: We experienced incremental delays fulfilling orders of <unk>. Starting in early December and go through January <unk>. Strange Scepter listen he works then you were indicating is having limited availability on the FDA drug shortage site. We expect to experience intermittent delays for <unk> or there's a certain doses in the coming months.

Lucas: Starting in early December and go through January <unk>.

Lucas: Strange Scepter listen he works then you were indicating is having limited availability on the FDA drug shortage site.

This expanded access <unk> mantra near parity with the established injectable Incretin and gets more patients the opportunity to start therapy and Jarrod for type two diabetes. Since the $25 in non covered co pay card program expired on June 30, we now consider all prescriptions paid. Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S. Recall that after a change to the non covered co pay program in late 2022. Patients already started on the 25 dollar copay card could remain in the program until June 30.

Lucas: We expect to experience intermittent delays for <unk> or there's a certain doses in the coming months.

Lucas: In the international market solicit volume continued to be affected by the measures we have taken to minimize potential disruption to existing patients, including communications to health care professionals now to start new patients on <unk>. Moving to slide I'm on chart continued its robust growth and some more type two diabetes patients benefited from the medicine. Q4 revenue grew to over $2 2 billion globally up from $1 4 billion in Q3 2023.

Since the $25 non-covered co-pay card program expired on June 30th, we now consider all prescriptions paid. Compared to Q4 2022, MOUNJARO net price in Q4 2023 benefited from the change to the co-pay card program in the U.S. Recall that after a change to the non-covered co-pay program in late 2022, patients already started on the $25 dollar co-pay card could remain in the program until June 30th. Today, commercially insured patients without coverage utilize the current non-covered co-pay program and paid roughly half the list price for MOUNJARO prescription.

Since the $25 in non covered co pay card program expired on June 30, we now consider all prescriptions paid.

Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S.

Lucas: Moving to slide I'm on chart continued its robust growth and some more type two diabetes patients benefited from the medicine.

Lucas: Q4 revenue grew to over $2 2 billion globally up from $1 4 billion in Q3 2023.

Recall that after a change to the non covered co pay program in late 2022.

Patients already started on the 25 dollar copay card could remain in the program until June 30.

Lucas: In the U S. Much of our revenue of $2 1 billion in Q4 up from $1 3 billion in Q3 2023 benefited from a onetime change in estimates for rebates and discounts. Adjusted for this one time change sequential net sales in the U S would have grown approximately three 3% in Q4. Since our last call. We further expanded patient access to <unk> as of February one access for patients with type two diabetes in the U S was 90% in aggregate across commercial and part D, including 92% axis for commercial patient.

Today commercially insured patients without coverage utilize the current non covered non covered co pay program and paid roughly half the list price from much of our prescription. Turning to slide 12 in November we received FDA approval for <unk> for adults with obesity or those who are overweight and have weight related Comorbidities. We then announced on December 5th the depth and was available U S pharmacy, and we started building commercial formulary access before the end of the year.

Today commercially insured patients without coverage utilize the current non covered non covered co pay program and paid roughly half the list price from much of our prescription.

Lucas: Adjusted for this one time change sequential net sales in the U S would have grown approximately three 3% in Q4.

Turning to slide 12. In November, we received FDA approval for ZEPBOUND for adults with obesity or those who are overweight and have weight-related comorbidities. We then announced on December 5th that ZEPBOUND was available at U.S. pharmacy, and we started building commercial formulary access before the end of the year. We are pleased with the early access to approximately 1/3 of commercial lives covered as of February 1st.

Turning to slide 12 in November we received FDA approval for <unk> for adults with obesity or those who are overweight and have weight related Comorbidities. We then announced on December 5th the depth and was available U S pharmacy, and we started building commercial formulary access before the end of the year.

Lucas: Since our last call. We further expanded patient access to <unk> as of February one access for patients with type two diabetes in the U S was 90% in aggregate across commercial and part D, including 92% axis for commercial patient.

We are pleased with the early access to approximately one third of commercial lives covered as of February one. Accessing this market will be more gradual as individual employers need to opt in to coverage. After the typical formulary contracting takes place. We are focused on building formulary access and employer opt ins, but we expect that it will take some time before we reach broad open exits in this market. Meanwhile, our commercial savings for our program is available U S pharmacies for those who do not yet have coverage.

We are pleased with the early access to approximately one third of commercial lives covered as of February one.

Lucas: This expanded access plus mantra near parity with the established injectable incretin and gets more patients the opportunity to start therapy and tariff with type two diabetes. Since the $25 in non covered co pay card program expired on June 30th. Now consider all prescriptions paid. Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S. Recall that after a change to the non covered copay program in late 2022. Patients already started on the 25 dollar copay card could remain in the program until June 30. Today commercially insured patients without coverage utilize the current non cohort non covered co pay program and paid roughly half the list price for much of our prescription.

Access in this market will be more gradual as individual employers need to opt in to coverage after the typical formulary contracting takes place. We are focused on building formulary access and employer opt-ins, but we expect that it will take some time before we reach broad open access in this market. Meanwhile, our commercial savings for our program is available U.S. pharmacies for those who do not yet have coverage.

Accessing this market will be more gradual as individual employers need to opt in to coverage. After the typical formulary contracting takes place.

Lucas: Since the $25 in non covered co pay card program expired on June 30th. Now consider all prescriptions paid. Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S.

We are focused on building formulary access and employer opt ins, but we expect that it will take some time before we reach broad open exits in this market.

Lucas: Now consider all prescriptions paid.

Lucas: Compared to Q4 2022, Mongolian net price in Q4 2023 benefited from the change to the co pay card program in the U S.

Meanwhile, our commercial savings for our program is available U S pharmacies for those who do not yet have coverage.

In Medicare part D, weight loss drugs are still prohibited from reimbursement. In Q4, we recognized $176 million in sales for ZEPBOUND with approximately 3/4 of that coming from initial channel stocking. The initial prescription trends, we have seen are encouraging.

Lucas: Recall that after a change to the non covered copay program in late 2022.

In Q4, we recognized $176 million in sales for is that down what approximately three fourth of that coming from initial channel stocking.

Lucas: Patients already started on the 25 dollar copay card could remain in the program until June 30. Today commercially insured patients without coverage utilize the current non cohort non covered co pay program and paid roughly half the list price for much of our prescription.

Lucas: Today commercially insured patients without coverage utilize the current non cohort non covered co pay program and paid roughly half the list price for much of our prescription.

The initial prescription trends, we have seen are encouraging.

On slide 13, we provide an update on capital allocation. Looking forward to 2024 and beyond we have confidence in our existing commercial portfolio bolstered by the recent launches of MOUNJARO, JAYPIRCA, OMVOH and ZEPBOUND and the potential launches of the DONANEMAB and LEBRIKIZUMAB, all of which we expect to serve as drivers for continued growth through the balance of the decade.

Looking forward to 2024 and beyond we have confidence in our existing commercial portfolio bolstered by the recent launches of month's journal Jake per call, although as that balance and the potential launches of the non event and lubricant demand all of which we expect to serve as drivers for continued growth through the balance of the decade.

Lucas: Turning to slide 12 in November we received FDA approval for <unk> for adults with obesity or those who are overweight and have weight related comorbidities. We then announced on December 5th the setback was available U S pharmacy, and we started building commercial formulary access before the end of the year.

Lucas: We then announced on December 5th the setback was available U S pharmacy, and we started building commercial formulary access before the end of the year.

Lucas: We are pleased with the early access to approximately one third of commercial lives covered as of February one. Accessing this market will be more gradual as individual employers need to opt in to coverage. After the typical formulary contracting takes place. We are focused on building formulary access and employer opt in so we expect that it will take some time before we reach broad open exits in this market. Meanwhile, our commercial savings card program is available U S pharmacies for those who do not yet have coverage.

On Slide 14, you will see a summary of our outlook that outline our capital deployment decisions in relations to achievement of our strategic deliverables. We will invest in our current portfolio and in the future innovation through R&D, business development and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life-changing medicines to patients. We will continue to return capital to our shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital.

Lucas: Accessing this market will be more gradual as individual employers need to opt in to coverage. After the typical formulary contracting takes place.

We will invest in our current portfolio and in the future innovation through R&D business development and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life changing medicines to patients.

Lucas: We are focused on building formulary access and employer opt in so we expect that it will take some time before we reach broad open exits in this market.

We will continue to return capital.

Capital to our shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital.

Lucas: Meanwhile, our commercial savings card program is available U S pharmacies for those who do not yet have coverage.

Lucas: In Medicare part D weight loss drugs are still prohibited from reimbursement. In Q4, we recognized $176 million of sales for step down would approximately three fourth of that coming from initial channel stocking. The initial prescription trends, we have seen are encouraging.

Moving to slide 15, we highlight some of the dynamics that may impact our 2024 financial results. We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture, growing nearly 30% at the mid-point of our guidance range driven by positive momentum from recently launched products. And <unk> expense dissipate growth will be led by Montero ends up out.

Lucas: In Q4, we recognized $176 million of sales for step down would approximately three fourth of that coming from initial channel stocking.

We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture.

Lucas: The initial prescription trends, we have seen are encouraging.

Growing nearly 30% at the midpoint of our guidance range driven by positive momentum recently launched products.

On slide 13, we provide an update on capital allocation. Looking forward to 2024 and beyond we have confidence in our existing commercial portfolio bolstered by the recent launches of Mangano Jake per call, although as that balance and the potential launches of day, none of that and lebrecht kids in that. All of which we expect to serve as drivers for continued growth through the balance of the decade.

In incretins, anticipated growth will be led by MOUNJARO and ZEPBOUND. In 2023, we made tremendous strides in expanding access for MOUNJARO. And we enter 2024 with 90% of commercial and part D lives covered. ZEPBOUND coverage is off to a good start and its early December launched and we expect both TIRZEPATIDE brands to contribute substantially to Lilly's revenue growth in 2024. While we expect demand MOUNJARO and ZEPBOUND to be drivers of revenue growth, this will be partially offset by an expected continuation of the softer TRULICITY sales trends that we saw in the second half of 2023. Recent revenue declines for TRULICITY in the U.S. has been driven by supply tightness.

And <unk> expense dissipate growth will be led by Montero ends up out.

Lucas: Looking forward to 2024 and beyond we have confidence in our existing commercial portfolio bolstered by the recent launches of Mangano Jake per call, although as that balance and the potential launches of day, none of that and lebrecht kids in that.

In 2023, we made tremendous strides in expanding access from one job and we enter 2024 with 90% of commercial and part D lives covered. I found coverage is off to a good starts and its early December launched and we expect both to satisfy break to contribute substantially to <unk> revenue growth in 2024. While we expect demand cherilyn set bound to be drivers of revenue growth. This will be partially offset by an expected continuation of the softer <unk> sales trends that we saw in the second half of 2023. Recent revenue declines for truly sit in the U S has been driven by supply tightness.

I found coverage is off to a good starts and its early December launched and we expect both to satisfy break to contribute substantially to <unk> revenue growth in 2024.

Lucas: All of which we expect to serve as drivers for continued growth through the balance of the decade.

Lucas: On slide 14, you'll see a summary of our outlook outlined our capital deployment decisions in relations to achievement of our strategic deliverables. We will invest in our current portfolio and future innovation through R&D business development and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life changing medicines to patients. We will continue to return capital. Little Terra shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital.

While we expect demand MOUNJARO and ZEPBOUND to be drivers of revenue growth, this will be partially offset by an expected continuation of the softer TRULICITY sales trends that we saw in the second half of 2023. Recent revenue declines for TRULICITY in the U.S. has been driven by supply tightness. Volume has also been impacted by our actions outside the U.S.

While we expect demand cherilyn set bound to be drivers of revenue growth. This will be partially offset by an expected continuation of the softer <unk> sales trends that we saw in the second half of 2023.

Lucas: We will invest in our current portfolio and future innovation through R&D business development and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life changing medicines to patients.

Recent revenue declines for truly sit in the U S has been driven by supply tightness.

Lucas: We will continue to return capital. Little Terra shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital.

<unk> has also been impacted by our actions outside the U S. As for supply outlook for anchor tenants or manufacturer organization continues to execute well on the most ambitious expansion agenda in our company's long history. Given strong demand and time required to bring capacity fully aligned with.

<unk> has also been impacted by our actions outside the U S.

Lucas: Little Terra shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital.

As for supply outlook for anchor tenants or manufacturer organization continues to execute well on the most ambitious expansion agenda in our company's long history.

As for supply outlook for incretin, our manufacturer organization continues to execute well on the most ambitious expansion agenda in our company's long history. Given strong demand and time required to bring capacity fully aligned, we continue to expect demand to outpace supply in 2024. In late 2022, we shared our expectation that by year end 2023, our capacity for including auto-injector pens would double. This goal was achieved through significant efforts from our manufacturing colleagues and partners around the globe.

Lucas: Moving to slide 15, we highlight some of the dynamics that may impact our 2024 financial results. We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture. Growing nearly 30% at the midpoint of our guidance range driven by positive momentum recently launched products. <unk> expense dissipate growth will be led by Montero ends up out.

Given strong demand and time required to bring capacity fully aligned with.

Lucas: We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture.

We continue to expect demand to outpace supply in 2024. In late 2022, we shared our expectation that by year end 2023, our capacity for including auto injector pen would double. This goal was achieved through significant efforts from our manufacturing colleagues and partners around the globe. In 2020 for our capacity expansion efforts will continue with equal urgency. Will be accomplished not just through increased an injector capacity, but also through alternative presentation like her multi use quick then which received regulatory approval in the U K in late January.

Lucas: Growing nearly 30% at the midpoint of our guidance range driven by positive momentum recently launched products.

In late 2022, we shared our expectation that by year end 2023, our capacity for including auto injector pen would double.

<unk> expense dissipate growth will be led by Montero ends up out.

This goal was achieved through significant efforts from our manufacturing colleagues and partners around the globe.

Lucas: In 2023, we made tremendous strides in expanding access from withdrawals and we enter 2024 with 90% of commercial and part D lives covered. I found coverage is off to good starts and its early December launched and we expect both truths appetite break to contribute substantially to <unk> revenue growth in 2024. While we expect demand cherilyn set bound to be drivers of revenue growth. This will be partially offset by an expected continuation of the softer <unk> sales trends that we saw in the second half of 2023.

In 2024, our capacity expansion efforts will continue with equal urgency and will be accomplished not just through increased auto-injector capacity, but also through alternative presentation like our multi-use KWIKPEN, which received regulatory approval in the U.K. in late January. We expect our perennial manufacturing site in Concord, North Carolina, we will initiate production as early as the end of 2024 with product available to ship in 2025. And we are pursuing a host of other projects, internal and external, large and small, to further expand capacity.

In 2020 for our capacity expansion efforts will continue with equal urgency.

Will be accomplished not just through increased an injector capacity, but also through alternative presentation like her multi use quick then which received regulatory approval in the U K in late January.

Lucas: I found coverage is off to good starts and its early December launched and we expect both truths appetite break to contribute substantially to <unk> revenue growth in 2024.

We expect our parental manufacturing site in Concord, North Carolina, we will initiate production as early as the end of 2024 with product available to ship in 2025. New York pursuing a host of other projects internal and external largest small to further expand capacity. Now I'll provide a bit more context on the timing and pace of our increase in supply plans in 2024.

Lucas: While we expect demand cherilyn set bound to be drivers of revenue growth. This will be partially offset by an expected continuation of the softer <unk> sales trends that we saw in the second half of 2023.

New York pursuing a host of other projects internal and external largest small to further expand capacity.

Lucas: Recent revenue declines for choice sitting in the U S has been driven by supply tightness. <unk> has also been impacted by our actions outside the U S. As for supply outlook for acreage in our manufacturing organization continues to execute well on the most ambitious expansion agenda in our company's long history. Given strong demand and time required to bring capacity fully aligned. We continue to expect demand to outpace supply in 2024.

Now I'll provide a bit more context on the timing and pace of our increase in supply plans in 2024. While we're continuing to extend supply every quarter, we expect the most significant production increases to come into the second half of the year. We expect our production of sellable doses in the second half of 2024 will be at least 1.5x the production in the second half of 2023. Note that while last year, our commentary focused on capacity of auto-injectors devices compared to 2022, we're now referring sellable doses produced, which is more relevant to patients and investors.

Lucas: <unk> has also been impacted by our actions outside the U S.

Now I'll provide a bit more context on the timing and pace of our increase in supply plans in 2024.

Lucas: As for supply outlook for acreage in our manufacturing organization continues to execute well on the most ambitious expansion agenda in our company's long history.

Well, we're continuing to extend supply every quarter, we expect the most significant production increases to come into the second half of the year. We expect our production of Sellable doses in the second half of 2024 will be at least one and a half time that production in the second half of 2023. Note that while last year, our commentary focused on capacity of auto injectors devices kept for the 2022, we're now referenced sell though doses produced which is more relevant to patients and investors.

Given strong demand and time required to bring capacity fully aligned.

We expect our production of Sellable doses in the second half of 2024 will be at least one and a half time that production in the second half of 2023.

Lucas: We continue to expect demand to outpace supply in 2024.

Lucas: In late 2022, we shared our expectation that by year end 2023, our capacity for including auto injector pen would double. This goal was achieved through significant efforts for manufacturing colleagues and partners around the globe. In 2020 for our capacity expansion efforts will continue with equal urgency. Will be accomplished not just through increased an injector capacity, but also through alternative presentation like her multi use quick then which received regulatory approval in the U K in late January.

Note that while last year, our commentary focused on capacity of auto injectors devices kept for the 2022, we're now referenced sell though doses produced which is more relevant to patients and investors.

Note that while last year, our commentary focused on capacity of auto-injectors devices compared to 2022, we're now referring sellable doses produced, which is more relevant to patients and investors. Beyond incretin, we look forward to progressing our launch trajectory for 2 other leading medicine approved and launch in 2023, JAYPIRCA and OMVOH. <unk> was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program. <unk> the FDA approval also under the accelerated approval program in December 2023 for adult patients with <unk> or <unk> that have received at least two prior lines of therapy.

Lucas: This goal was achieved through significant efforts for manufacturing colleagues and partners around the globe.

Beyond <unk>, we look forward to progressing our launch trajectory for two other leading medicine approved and launch in 2023 <unk> per cab and envelope. <unk> was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program. <unk> the FDA approval also under the accelerated approval program in December 2023 for adult patients with <unk> or <unk> that have received at least two prior lines of therapy.

Lucas: In 2020 for our capacity expansion efforts will continue with equal urgency.

Lucas: Will be accomplished not just through increased an injector capacity, but also through alternative presentation like her multi use quick then which received regulatory approval in the U K in late January.

JAYPIRCA was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the Accelerated Approval program received the FDA approval also under the Accelerated Approval program in December 2023 for adult patients with CLL or SLL that have received at least 2 prior lines of therapy. We look forward to the ongoing opportunity to help patients with this medicine as our best Phase III program continues.

<unk> was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program.

Lucas: We expect our parental manufacturing site in Concord, North Carolina, we will initiate production as early as the end of 2024 with product available to ship in 2025. New York pursuing a host of other projects internal and external largest small to further expand capacity. Now I'll provide a bit more context on the timing and pace of our increase in supply plans in 2024. Well, we're continuing to extend supply every quarter, we expect the most significant production increases to come into the second half of the year.

<unk> the FDA approval also under the accelerated approval program in December 2023 for adult patients with <unk> or <unk> that have received at least two prior lines of therapy.

Lucas: New York pursuing a host of other projects internal and external largest small to further expand capacity.

We look forward to the ongoing opportunity to help patients with this medicine as are our best Phase III program continues. Although it was approved in October 2023 in the U S and earlier that here in Japan, Europe and other markets. And represents a compelling new options for patients struggling with moderate to severe ulcerative colitis.

We look forward to the ongoing opportunity to help patients with this medicine as are our best Phase III program continues.

Lucas: Now I'll provide a bit more context on the timing and pace of our increase in supply plans in 2024.

Although it was approved in October 2023 in the U S and earlier that here in Japan, Europe and other markets.

OMVOH was approved in October 2023 in the U.S. and earlier that year in Japan, Europe and other markets, and represents a compelling new options for patients struggling with moderate to severe ulcerative colitis. And in 2024, and we look forward to potential U.S. launches of 2 more medicines DONANEMAB and LEBRIKIZUMAB.

Lucas: Well, we're continuing to extend supply every quarter, we expect the most significant production increases to come into the second half of the year.

And represents a compelling new options for patients struggling with moderate to severe ulcerative colitis.

Lucas: We expect our production of Sellable doses in the second half of 2024 will be at least one and a half time that production in the second half of 2023. Note that while last year, our commentary focused on capacity of auto injectors devices kept for the 2022, we're now referenced sell both doses produced which is more relevant to patients and investors. Beyond <unk>, we look forward to progressing our launch trajectory for <unk>.

And in 2024, and we look forward to potential U S launches of two more medicines <unk> and <unk>. We continue to expect FDA regulatory actions under none of that in Q4 2024 and remain confident. In the substantial potential friction for danone that to benefit patients with Alzheimer's disease. Is the current state of diagnostic and treatment readiness initial uptake will be somewhat limited and we expect anonymous to contribute only modestly to growth in 2024.

And in 2024, and we look forward to potential U S launches of two more medicines <unk> and <unk>.

We continue to expect FDA regulatory actions under none of that in Q4 2024 and remain confident.

We continue to expect FDA regulatory actions on DONANEMAB in Q4 2024 and remain confident in the substantial potential friction for DONANEMAB to benefit patients with Alzheimer's disease. With the current state of diagnostic and treatment readiness, initial uptake will be somewhat limited and we expect DONANEMAB to contribute only modestly to growth in 2024 once approved.

Lucas: Note that while last year, our commentary focused on capacity of auto injectors devices kept for the 2022, we're now referenced sell both doses produced which is more relevant to patients and investors.

In the substantial potential friction for danone that to benefit patients with Alzheimer's disease.

Is the current state of diagnostic and treatment readiness initial uptake will be somewhat limited and we expect anonymous to contribute only modestly to growth in 2024.

Lucas: Beyond <unk>, we look forward to progressing our launch trajectory for <unk>.

Lucas: Two other leading medicine approved and launch in 2023 cheaper and Umbro. <unk> was initially approved by the FDA generate 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program. <unk> the FDA approval also under the accelerated approval program in December 2023 for adult patients with <unk> or <unk>. At least two prior lines of therapy.

LEBRIKIZUMAB, which last year was approved and launched in Europe under the brand name EBGLYSS by our partner Almirall, received regulatory approval in Japan in January. As for the U.S. we look forward to the potential approval of LEBRIKIZUMAB by the end of the year.

Lucas: <unk> was initially approved by the FDA generate 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program.

Remember kids in that which last year was approved and launched in Europe under.

Under the brand name <unk> by our partner Albemarle where C.

<unk> regulatory approval in Japan in January.

Lucas: <unk> the FDA approval also under the accelerated approval program in December 2023 for adult patients with <unk> or <unk>.

For the U S. We look forward to the potential approval of <unk> by the end of the year. We believe the efficacy safety and dosing of <unk> men can make it a compelling options for patients and prescribers. Large and growing market for the treatment of moderate to severe atopic dermatitis. Given the expected timing of FDA regulatory action, we expect <unk> to contribute only modestly to revenue growth in 2024.

For the U S. We look forward to the potential approval of <unk> by the end of the year.

We believe the efficacy safety and dosing of <unk> men can make it a compelling options for patients and prescribers.

We believe the efficacy, safety and dosing of LEBRIKIZUMAB can make it a compelling option for patients and prescribers in a large and growing market for the treatment of moderate to severe atopic dermatitis. Given the expected timing of FDA regulatory action, we expect LEBRIKIZUMAB to contribute only modestly to revenue growth in 2024.

Lucas: At least two prior lines of therapy.

Lucas: We look forward to the ongoing opportunity to help patients with this medicine as are our best Phase III program continues. Although it was approved in October 2023 in the U S and earlier that here in Japan, Europe, and other markets and represents a compelling new options for patients struggling with moderate to severe ulcerative colitis. And in 2024, and we look forward to potential U S launches of two more medicines to non event and lever kismet.

Large and growing market for the treatment of moderate to severe atopic dermatitis.

Given the expected timing of FDA regulatory action, we expect <unk> to contribute only modestly to revenue growth in 2024.

Lucas: Although it was approved in October 2023 in the U S and earlier that here in Japan, Europe, and other markets and represents a compelling new options for patients struggling with moderate to severe ulcerative colitis.

Beyond our recently launched portfolio of medicine, we expect continued growth from VERZENIO driven by the early breast cancer indication, where the magnitude and maturity of our clinical data reinforces it as a standard of care treatment in node-positive high risk early breast cancer. JARDIANCE has been another outstanding contributed to growth and we expect revenue growth to continue in 2024, though at a slower pace is strong script growth may be dampened by pricing dynamics in the U.S.

Lucas: And in 2024, and we look forward to potential U S launches of two more medicines to non event and lever kismet.

Lucas: We continue to expect FDA regulatory actions under none of that in Q4 2024 and remain confident. In the substantial potential friction for danone that to benefit patients with Alzheimer's disease. Is the current state of diagnostic and treatment readiness initial uptake will be somewhat limited and we expect anonymous to contribute only modestly to growth in 2024 was approved. Remember kids in that which last year was approved and launched in Europe under. Under the brand name <unk> by our partner Albemarle where C. <unk> regulatory approval in Japan in January. For the U S. We look forward to the potential approval of <unk> by the end of the year.

<unk> has been another outstanding contributed to growth and we expect revenue growth to continue in 2024, though at a slower pace is strong script growth may be dampened by pricing dynamics in the U S.

Lucas: In the substantial potential friction for danone that to benefit patients with Alzheimer's disease.

Lucas: Is the current state of diagnostic and treatment readiness initial uptake will be somewhat limited and we expect anonymous to contribute only modestly to growth in 2024 was approved.

Outside the U.S., we expect an acceleration of growth in every major geography led not only by the anticipated launches of TIRZEPATIDE, but also continued strong growth of VERZENIO, JARDIANCE and TALTZ. Lastly, we seek to create long-term value beyond this decade, we will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint.

Lucas: Remember kids in that which last year was approved and launched in Europe under. Under the brand name <unk> by our partner Albemarle where C. <unk> regulatory approval in Japan in January. For the U S. We look forward to the potential approval of <unk> by the end of the year.

Lucas: Under the brand name <unk> by our partner Albemarle where C.

Lastly, we seek to create long term value beyond this decade, we will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint.

Lucas: <unk> regulatory approval in Japan in January.

Lucas: For the U S. We look forward to the potential approval of <unk> by the end of the year.

Lucas: We believe the efficacy safety and dosing of <unk> men can make it a compelling options for patients and prescribers. Large and growing market for the treatment of moderate to severe atopic dermatitis. Given the expected timing of FDA regulatory action, we expect that to contribute only modestly to revenue growth in 2024. Beyond our recently launched portfolio of Medicine, we expect continued growth from <unk> driven by the early breast cancer indication, whereas the magnitude and maturity of our clinical data reinforces that as a standard of care treatment in node positive high risk early breast cancer. <unk> has been another outstanding contributed to growth and we expect revenue growth to continue in 2024, though at a slower pace is strong script growth, maybe dampened by pricing dynamics in the U S.

Slide 16 summarizes our initial 2024 financial guidance. Starting at the top-line revenue is expected to be between $40.4 billion and $41.6 billion. Using the midpoint of the 2024 range. This represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023. In terms of phasing of our revenue growth throughout 2024, while we don't provide quarterly guidance, we expect revenue growth to accelerate in the second half of the year consistent with the increased availability of anchor 10 doses. In terms of pricing for our core business, which excludes the divestitures, we expect a high single digit percent price decline in 2024. The lingering base period impact of them on to our non covered copay card dynamics will dampen these price declines in the first half of 2024 with more significant price declines expected in the second half of the year.

Lucas: Large and growing market for the treatment of moderate to severe atopic dermatitis.

Starting at the top line revenue is expected to be between $44 billion and $41 6 billion.

Lucas: Given the expected timing of FDA regulatory action, we expect that to contribute only modestly to revenue growth in 2024.

Using the midpoint of the 2024 range. This represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023.

Lucas: Beyond our recently launched portfolio of Medicine, we expect continued growth from <unk> driven by the early breast cancer indication, whereas the magnitude and maturity of our clinical data reinforces that as a standard of care treatment in node positive high risk early breast cancer.

In terms of phasing of our revenue growth throughout 2024, while we don't provide quarterly guidance, we expect revenue growth to accelerate in the second half of the year consistent with the increased availability of incretin doses. In terms of pricing for our core business, which excludes the divestitures, we expect a high single-digit percent price decline in 2024. The lingering base period impact of the MOUNJARO non-covered co-pay card dynamics will dampen these price declines in the first half of 2024 with more significant price declines expected in the second half of the year.

Lucas: <unk> has been another outstanding contributed to growth and we expect revenue growth to continue in 2024, though at a slower pace is strong script growth, maybe dampened by pricing dynamics in the U S.

In terms of pricing for our core business, which excludes the divestitures, we expect a high single digit percent price decline in 2024.

Lucas: Outside the U S. We expect an acceleration of growth in every major geography led not only by the anticipated launches of <unk> appetite, but also continued strong growth of Fresenius joint incidental. Lastly, we seek to create long term value beyond this decade, we will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint.

The lingering base period impact of them on to our non covered copay card dynamics will dampen these price declines in the first half of 2024 with more significant price declines expected in the second half of the year.

Lucas: Lastly, we seek to create long term value beyond this decade, we will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint.

During this year, we're taking a streamline approach to our guidance line items relating to expenses. Rather than providing 3 separate guidance line items for gross margin, research and development cost and marketing and selling and administrative costs, we are presenting a single new ratio representing our margin after planned costs calculated by subtracting R&D costs and marketing selling and administrative costs from gross margin and dividing that figure by revenue. We expressed this ratio as a percentage. And for 2024, we expect it to be in the range of 31% to 33% on a non-GAAP basis.

Rather than providing three separate guidance line items for gross margin research and development cost and marketing and selling and administrative costs. We are presenting a single new ratio representing our margin. After planned carve calculated by subtracting R&D costs and marketing selling and administrative cost from gross.

Lucas: Slide 16 summarizes our initial 2024 financial guidance. Starting at the top line revenue is expected to be between $44 billion and $41 6 billion. Using the midpoint of the 2024 range. This represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023.

Lucas: Starting at the top line revenue is expected to be between $44 billion and $41 6 billion.

Lucas: Using the midpoint of the 2024 range. This represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023.

Jim.

Dividing that figure by revenue.

We expressed this ratio as a percentage and for 2024, we expect it to be in the range of 31% to 33% on a non-GAAP basis. While we are not providing a specific guidance number for gross margin as a percent of sales are expected our expectations remain consistent but. We will maintain gross margin of approximately 80% on a non-GAAP basis. This is prices productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

We expressed this ratio as a percentage and for 2024, we expect it to be in the range of 31% to 33% on a non-GAAP basis.

Lucas: In terms of phasing of our revenue growth throughout 2024, well, we don't provide quarterly guidance, we expect revenue growth to accelerate in the second half of the year consistent with the increased availability of Pinkerton doses. In terms of pricing for our core business, which excludes the divestitures, we expect a high single digit percent price decline in 2020 for.

While we are not providing a specific guidance number for gross margin as a percent of sales, our expectations remain consistent but we will maintain gross margin of approximately 80% on a non-GAAP basis as productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

While we are not providing a specific guidance number for gross margin as a percent of sales are expected our expectations remain consistent but.

We will maintain gross margin of approximately 80% on a non-GAAP basis. This is prices productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

Lucas: In terms of pricing for our core business, which excludes the divestitures, we expect a high single digit percent price decline in 2020 for.

Lucas: The lingering base period impact of them on to our non covered copay card dynamics will dampen these price declines in the first half of 2024 with more significant price declines expected in the second half of the year. Starting this year, we're taking a streamline approach to our guidance line items relating to expenses. Rather than providing three separate guidance line items for gross margin research and development costs, and marketing and selling and administrative cost. We are presenting a single new ratio representing our margin after plant costs calculated by subtracting R&D costs and marketing selling and administrative cost from gross. Jim.

As for expense growth across key categories, we expect marketing selling and administrative expenses to again grow in 2024, though at a slower pace than revenue with growth driven by marketing investments in our recently launched and upcoming launch products.

Lucas: Starting this year, we're taking a streamline approach to our guidance line items relating to expenses.

We also expect R&D expenses in 2024 to increase, driven by growing investments across all phases of our pipeline as we invest for the future with the majority of dollar growth driven by ongoing and new late phase opportunities. We expect R&D expense to increase at a higher rate than marketing selling and administrative expenses. Other income and expense is expected to be between $400 million and $500 million of expense, primarily driven by higher interest expense.

Lucas: Rather than providing three separate guidance line items for gross margin research and development costs, and marketing and selling and administrative cost. We are presenting a single new ratio representing our margin after plant costs calculated by subtracting R&D costs and marketing selling and administrative cost from gross.

We expect R&D expense to increase at a higher rate than marketing selling and administrative expenses.

Lucas: Jim.

Other income and expense is expected to be between $400 million and $500 million of expense.

Lucas: Dividing that figure by revenue. We expressed this ratio as a percentage and for 2024, we expected to be in the range of 31% to 33% on a non-GAAP basis. While we are not providing a specific guidance number for gross margin as a percent of sales are expected expectations remains consistent.

Lucas: We expressed this ratio as a percentage and for 2024, we expected to be in the range of 31% to 33% on a non-GAAP basis.

Merely driven by higher interest expense.

Turning to taxes, we expect our 2024 non-GAAP effective tax rate to be approximately 14%. Note that this rate does not assume the deferral or repeal of the provision in the 2017 tax at requiring capitalization and amortization of research and development expenses for tax purposes. Should such a change take effect, our effective tax rate for 2024 would be moderately higher. Earnings per share is expected to be in the range of $12 26.

Lucas: While we are not providing a specific guidance number for gross margin as a percent of sales are expected expectations remains consistent.

Note that this rate does not assume that Earl repeal of the provision in the 2017 tax at requiring capitalization and amortization of research and development expenses for tax purposes.

Lucas: We'll maintain gross margin of approximately 80% on a non-GAAP basis. As prices productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities. Yes. As for expense growth across key categories, we expect marketing selling and administrative expenses to again grow in 2020, essentially four though at a slower pace than revenue with growth driven by marketing investments and our recently launched and upcoming launch products.

As prices productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

Should such a change take effect, our effective tax rate for 2020 core would be moderately higher.

Earnings per share is expected to be in the range of $12.20 to $12.70 on a non-GAAP basis. Consistent with our prior practice, we're not including any potential or pending acquired IPR&D and development milestone charges in our 2024 guidance. And we will provide updates each quarter on the impact of IPR&D on earnings per share as acquired IPR&D and development milestone charges are incurred. For guidance modeling purposes, we're currently estimating diluted weighted average share outstanding for 2024 to be approximately 903 million.

Lucas: Yes.

Lucas: As for expense growth across key categories, we expect marketing selling and administrative expenses to again grow in 2020, essentially four though at a slower pace than revenue with growth driven by marketing investments and our recently launched and upcoming launch products.

Earnings per share is expected to be in the range of $12 26.

The $12 70 on a non-GAAP basis. Consistent with our prior practice, we're not including any potential or pending the acquired IP R&D and development milestone charges in our 2020 for guidance and we will provide updates each quarter on the impact of IP R&D on earnings per share that's acquired IP R&D and development milestone charges are incurred.

Consistent with our prior practice, we're not including any potential or pending the acquired IP R&D and development milestone charges in our 2020 for guidance and we will provide updates each quarter on the impact of IP R&D on earnings per share that's acquired IP R&D and development milestone charges are incurred.

Lucas: We also expect R&D expenses in 2000, 2004 to increase driven by growing investments across all phases of our pipeline as we invest for the future with the majority of dollar growth driven by ongoing and new late phase opportunities. We expect R&D expense to increase at a higher rate than marketing selling and administrative expenses. Other income and expense is expected to be between $400 million and $500 million of expenses.

For guidance modeling purposes. We're currently estimating diluted weighted average shares outstanding for 2024 to be approximately. <unk> $903 million. We enter 2024 with strong momentum and a remarkable about opportunity to help millions more patients with our medicines Brian. For our Investor 2024 should be another exciting year, driven by expected revenue growth in our core business year and approaching. 30% and continued investment to drive future growth. Our outlook for top tier revenue growth and operating margin expansion remains on track now I'll turn the call over to Dan to highlight our continued progress in R&D.

For guidance modeling purposes. We're currently estimating diluted weighted average shares outstanding for 2024 to be approximately. <unk> $903 million.

Lucas: We expect R&D expense to increase at a higher rate than marketing selling and administrative expenses. Other income and expense is expected to be between $400 million and $500 million of expenses.

<unk> $903 million.

We enter 2024 with strong momentum and a remarkable opportunity to help millions more patients with our medicines. For our investors, 2024 should be another exciting year, driven by expected revenue growth in our core business near and approaching 30% and continued investment to drive future growth. Our outlook for top-tier revenue growth and operating margin expansion remains on track. Now I'll turn the call over to Dan to highlight our continued progress in R&D.

Lucas: Other income and expense is expected to be between $400 million and $500 million of expenses.

We enter 2024 with strong momentum and a remarkable about opportunity to help millions more patients with our medicines Brian.

Lucas: Primarily driven by higher interest expense. Turning to taxes, we expect our 2024 non-GAAP effective tax rate to be approximately 14%. Note that this rate does not assume that Earl repeal of the provision in the 2017 tax at requiring capitalization and amortization of research and development expenses for tax purposes. Should such a change to expect our effective tax rate for 2020 core will be moderately higher.

For our Investor 2024 should be another exciting year, driven by expected revenue growth in our core business year and approaching.

Lucas: Turning to taxes, we expect our 2024 non-GAAP effective tax rate to be approximately 14%.

30% and continued investment to drive future growth.

Lucas: Note that this rate does not assume that Earl repeal of the provision in the 2017 tax at requiring capitalization and amortization of research and development expenses for tax purposes.

Our outlook for top tier revenue growth and operating margin expansion remains on track now I'll turn the call over to Dan to highlight our continued progress in R&D.

Lucas: Should such a change to expect our effective tax rate for 2020 core will be moderately higher.

Thanks, Anat. I'll start with our progress against diabetes, obesity and complications thereof. Today, we announced positive results from SYNERGY-NASH, the Phase II study of TIRZEPATIDE adults with biopsy-proven metabolic dysfunction-associated steatohepatitis, also known as MASH. As shown on slide 17, the study met its primary endpoint with up to 74% of participants achieving an absence of mash with no worsening of fibrosis at 52 weeks. Compared to less than 13%.

Dan Skovronsky : Thanks, Anat. I'll start with our progress against diabetes, obesity and complications thereof. Today, we announced positive results from SYNERGY-NASH, the Phase II study of TIRZEPATIDE adults with biopsy-proven metabolic dysfunction-associated steatohepatitis, also known as MASH.

Lucas: Earnings per share is expected to be in the range of $12 26. The $12 70 on a non-GAAP basis. Consistent with our prior practice, we're not including any potential or pending acquired IP R&D and development milestone charges in our 2020 for guidance and we will provide updates each quarter on the impact of IP R&D on earnings per share, it's acquired IP R&D and development milestone charges are incurred. For guidance modeling purposes. We're currently estimating diluted weighted average share outstanding for 2024 to be approximately $903 million.

We announced positive results from synergy Nash phase II study of tours appetite adults with biopsy proven metabolic dysfunction associated Scioto hepatitis also known as mash.

Lucas: The $12 70 on a non-GAAP basis.

Lucas: Consistent with our prior practice, we're not including any potential or pending acquired IP R&D and development milestone charges in our 2020 for guidance and we will provide updates each quarter on the impact of IP R&D on earnings per share, it's acquired IP R&D and development milestone charges are incurred.

As shown on slide 17, the study met its primary endpoint with up to 74% of participants achieving an absence of MASH with no worsening of fibrosis at 52 weeks compared to less than 13% of participants reaching this endpoint on placebo. We are equally encouraged by results seen either secondary endpoint, evaluating improvement in fibrosis.

As shown on slide 17, the study met its primary endpoint with up to 74% of participants achieving an absence of mash with no worsening of fibrosis at 52 weeks.

Compared to less than 13%.

Lucas: For guidance modeling purposes. We're currently estimating diluted weighted average share outstanding for 2024 to be approximately $903 million.

Disciplined screeching this endpoint on placebo. We are equally encouraged by results either secondary endpoints evaluating improvement in fibrosis. While the study was not designed to be statistically powered to evaluate improvements in fibrosis. The study results showed a clinically meaningful treatment effect across all doses. On the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of Nash to placebo.

Disciplined screeching this endpoint on placebo. We are equally encouraged by results either secondary endpoints evaluating improvement in fibrosis.

We are equally encouraged by results either secondary endpoints evaluating improvement in fibrosis.

While the study was not designed to be statistically powered to evaluate improvements in fibrosis. The study results showed a clinically meaningful treatment effect across all doses on the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of MASH to placebo. The adverse events were consistent with those observed in other clinical trials studying TIRZEPATIDE in people living with obesity or type 2 diabetes. The full SYNERGY-NASH results will be presented at a medical congress later this year.

While the study was not designed to be statistically powered to evaluate improvements in fibrosis. The study results showed a clinically meaningful treatment effect across all doses.

Lucas: We enter 2024 with strong momentum and a remarkable opportunity to help millions more patients with our medicines for investor 2024 should be another exciting year driven by expected revenue growth in our core business nearing approaching. 3% and continued investment to drive future growth. Our outlook for top tier revenue growth and operating margin expansion remains on track now I'll turn the call over to Dan to highlight our continued progress in R&D. I'll start with our progress against the diabetes obesity and complications thereof.

On the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of Nash to placebo.

Lucas: 3% and continued investment to drive future growth.

The adverse events were consistent with those observed in other clinical trials studying <unk> appetite in people living with obesity or type two diabetes. The full synergy Nash results will be presented at a medical Congress later this year. As you know late last year, we received FDA approval is that bound. Which marks <unk> first approved treatment for obesity there's. This is a landmark occasion for patients and for the field.

Lucas: Our outlook for top tier revenue growth and operating margin expansion remains on track now I'll turn the call over to Dan to highlight our continued progress in R&D. I'll start with our progress against the diabetes obesity and complications thereof.

The full synergy Nash results will be presented at a medical Congress later this year.

As you know late last year, we received FDA approval is that bound.

As you know late last year, we received FDA approval on ZEPBOUND, which marks Lilly's first approved treatment for obesity. This is a landmark occasion for patients and for the field as ZEPBOUND is the first and only approved treatment activating 2 incretin hormone receptors, GIP and GLP-1, to tackle an underlying cause of excess weight. Yeah. Also in early stage development, we have now advanced our glucose sensing insulin receptor agonist for the treatment of diabetes into phase one. And our long acting atrial natriuretic peptide for treatment of heart failure into phase one.

Dan: I'll start with our progress against the diabetes obesity and complications thereof.

Which marks <unk> first approved treatment for obesity there's.

This is a landmark occasion for patients and for the field.

Dan: Today, we announced positive results from synergy Nash phase II study of tours appetite adults with biopsy proven metabolic dysfunction associated CIO hepatitis also known as mash. As shown on slide 17, the study met its primary endpoint with up to 74% of participants achieving an absence of mash with no worsening of fibrosis at 52 weeks. Compared to less than 13%. Disciplined screeching this endpoint on placebo.

I found is the first and only approved treatment activating to acreage in hormone receptors <unk> and <unk> one to tack on the underlying cause of excess weight. Yeah. Also in early stage development, we have now advanced our glucose sensing insulin receptor agonist for the treatment of diabetes into phase one. And our long acting atrial natriuretic peptide for treatment of heart failure into phase one.

Also, in early stage development, we have now advanced our glucose-sensing insulin receptor agonist for the treatment of diabetes into Phase I. And our long acting atrial natriuretic peptide for treatment of heart failure into phase one.

Also, in early stage development, we have now advanced our glucose-sensing insulin receptor agonist for the treatment of diabetes into Phase I and our long-acting atrial natriuretic peptide for treatment of heart failure into Phase I.

Yeah.

As shown on slide 17, the study met its primary endpoint with up to 74% of participants achieving an absence of mash with no worsening of fibrosis at 52 weeks.

Also in early stage development, we have now advanced our glucose sensing insulin receptor agonist for the treatment of diabetes into phase one.

and our long-acting atrial natriuretic peptide for treatment of heart failure into Phase I. We've advanced Matthew tied into phase III for obesity, as we began to dose patients in that study. We are pleased that early this year our partner event reported positive results from the phase III <unk> study from Astatide in Chinese adults with obesity. Innovate hope for development and commercialization rights for <unk> in China, and Lilly retains the rights for the rest of the world.

and our long-acting atrial natriuretic peptide for treatment of heart failure into Phase I.

And our long acting atrial natriuretic peptide for treatment of heart failure into phase one.

Dan: Compared to less than 13%.

We've advanced MAZDUTIDE into Phase II for obesity, as we began to dose patients in that study. We are pleased that early this year our partner, Innovent, reported positive results from the Phase III GLORY-1 study from MAZDUTIDE in Chinese adults with obesity. Innovent holds the development and commercialization rights for MAZDUTIDE in China, and Lilly retains the rights for the rest of the world.

We've advanced Matthew tied into phase III for obesity, as we began to dose patients in that study. We are pleased that early this year our partner event reported positive results from the phase III <unk> study from Astatide in Chinese adults with obesity. Innovate hope for development and commercialization rights for <unk> in China, and Lilly retains the rights for the rest of the world.

Dan: Disciplined screeching this endpoint on placebo.

Dan: We are equally encouraged by results seem to the secondary endpoints evaluating improvement in fibrosis. While the study was not designed to be statistically powered to evaluate improvements in fibrosis study results showed a clinically meaningful treatment effect across all doses. On the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of Nash to placebo.

We are pleased that early this year our partner event reported positive results from the phase III <unk> study from Astatide in Chinese adults with obesity.

Dan: While the study was not designed to be statistically powered to evaluate improvements in fibrosis study results showed a clinically meaningful treatment effect across all doses.

Innovate hope for development and commercialization rights for <unk> in China, and Lilly retains the rights for the rest of the world.

Dan: On the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of Nash to placebo.

Moving to oncology. Today, we shared that in the Phase II CYCLONE 2 trial, VERZENIO added to abiraterone did not meet the primary endpoint of improved radiographic progression free survival in men with metastatic castration resistant prostate cancer. For this study we employed an adaptive Phase II/II design. and while the phase two stage met the pre specified threshold for the independent data monitoring committee to recommend initiation of phase III. The signal was not confirmed in the phase III portion and a larger sample size.

<unk> added to abiraterone did not meet the primary endpoint of improved radiographic progression free survival in men with metastatic castration resistant prostate cancer.

Dan: The adverse events were consistent with those observed in other clinical trials studying <unk> appetite in people living with obesity or type two diabetes. The full synergy Nash results will be presented at a medical Congress later this year. As you know late last year, we received FDA approval is that bound. Which marks <unk> first approved treatment for obesity. Mark occasion for patients and for the field of <unk>. Found is the first and only approved treatment activating to acreage in hormone receptors, <unk> and <unk> one to tackle the underlying cause of excess weight.

For this study we employed an adaptive phase three design and while the phase two stage met the pre specified threshold for the independent data monitoring committee to recommend initiation of phase III. The signal was not confirmed in the phase III portion and a larger sample size.

Dan: The full synergy Nash results will be presented at a medical Congress later this year.

And while the Phase II stage met the prespecified threshold for the independent data monitoring committee to recommend initiation of Phase III. The signal was not confirmed in the Phase III portion in a larger sample size. The overall safety and tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the CYCLONE 2 study at a future medical meeting.

Dan: As you know late last year, we received FDA approval is that bound.

Dan: Which marks <unk> first approved treatment for obesity.

Dan: Mark occasion for patients and for the field of <unk>.

The overall safety and Tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the second to study at a future medical meeting. Since our last earnings call two perko received approval under the Fda's accelerated approval program for the treatment of adult patients with <unk>, who have received at least two prior lines of therapy, including a PTK inhibitor and a bcl two inhibitor.

The overall safety and Tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the second to study at a future medical meeting.

Dan: Found is the first and only approved treatment activating to acreage in hormone receptors, <unk> and <unk> one to tackle the underlying cause of excess weight.

We anticipate sharing full results from the second to study at a future medical meeting.

Since our last earnings call, JAYPIRCA received approval under the FDA's Accelerated Approval program for the treatment of adult patients with CLL or SLL, who have received at least 2 prior lines of therapy, including a BTK inhibitor and a BCL-2 inhibitor. We also reported that the Phase III confirmatory trial intended to convert this approval to traditional approval, known as BRUIN CLL-321, met its primary endpoint. And we plan to present these data at an upcoming medical meeting.

Since our last earnings call two perko received approval under the Fda's accelerated approval program for the treatment of adult patients with <unk>, who have received at least two prior lines of therapy, including a PTK inhibitor and a bcl two inhibitor.

Yeah. So in early stage development, we have now advanced our glucose sensing insulin receptor agonist for the treatment of diabetes into phase one. And our long acting atrial natriuretic peptide for treatment of heart failure into phase one. We've advanced Matthew tied into phase III for obesity, as we began to dose patients in that study.

Dan: So in early stage development, we have now advanced our glucose sensing insulin receptor agonist for the treatment of diabetes into phase one.

Dan: And our long acting atrial natriuretic peptide for treatment of heart failure into phase one.

We also reported that the phase III confirmatory trial intended to convert this approval the traditional approval known as Bruin's CLO 321. Met its primary endpoint and we plan to present these data at an upcoming medical meeting. With the CLO and <unk> approvals <unk> is now the first and only FDA approved non covalent <unk> inhibitor that can extend the benefit of targeting the <unk> pathway. Though an SLR patients previously treated with a covalent <unk> inhibitor in a bcl two inhibitor.

Dan: We've advanced Matthew tied into phase III for obesity, as we began to dose patients in that study.

Dan: We are pleased that early this year our partner event reported positive results from the phase III <unk> study from Astatide in Chinese adults with obesity. Innovate hopes the development and commercialization rights for <unk> in China. <unk> retains the rights for the rest of the world.

Met its primary endpoint and we plan to present these data at an upcoming medical meeting.

With the CLO and <unk> approvals <unk> is now the first and only FDA approved non covalent <unk> inhibitor that can extend the benefit of targeting the <unk> pathway.

With the CLL and SLL approvals, JAYPIRCA is now the first and only FDA-approved non-covalent BTK inhibitor that can extend the benefit of targeting the BTK pathway in CLL and SLL patients previously treated with a covalent BTK inhibitor and a BCL-2 inhibitor. This was the second approval for JAYPIRCA in 2023 with the first in patients with MCL. We believe these 2 indications only represent the beginning of the eventual impact JAYPIRCA can have for patients. And we look forward to seeing the data for the rest of the Phase III program across CLL, SLL and MCL.

Dan: Innovate hopes the development and commercialization rights for <unk> in China.

Dan: <unk> retains the rights for the rest of the world.

Dan: Moving to oncology today, we shared that in the phase III cycling two trial presenting or added to abiraterone did not meet the primary endpoint of improved radiographic progression free survival in men with metastatic castration resistant prostate cancer. For the study we employed an adaptive phase three design and while the phase two stage met the pre specified threshold for the independent data monitoring committee to recommend initiation of phase III the <unk>. Signal was not confirmed in the phase III portion and a larger sample size.

Though an SLR patients previously treated with a covalent <unk> inhibitor in a bcl two inhibitor.

This was the second approval for <unk> in 2023 with the first in patients with Mcl one. We believe these two indications represent. It represents the beginning of the eventual impact your broker can have for patients and we look forward to seeing the data for the rest of the phase III program, the cross CLO <unk> and Mcl. In Q4, we completed the acquisition of points Biopharma, which begins Louise entry into radio ligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers.

We believe these two indications represent.

Dan: For the study we employed an adaptive phase three design and while the phase two stage met the pre specified threshold for the independent data monitoring committee to recommend initiation of phase III the <unk>.

It represents the beginning of the eventual impact your broker can have for patients and we look forward to seeing the data for the rest of the phase III program, the cross CLO <unk> and Mcl.

Dan: Signal was not confirmed in the phase III portion and a larger sample size.

In Q4, we completed the acquisition of points Biopharma, which begins Louise entry into radio ligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers.

In Q4, we completed the acquisition of POINT Biopharma, which begins Lilly's entry into radioligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers. We welcome our new POINT colleagues to Lilly. And we look forward to building on their work to grow this capability at Lilly.

Dan: The overall safety and Tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the second to study at a future medical meeting. Since our last earnings call to Perko received approval under the Fda's accelerated approval program for the treatment of adult patients with cielo or SLO, who have received at least two prior lines of therapy, including a PTK inhibitor and a bcl two inhibitor.

Dan: We anticipate sharing full results from the second to study at a future medical meeting.

We welcome our new colleagues to Lilly and we look forward to building on their work to grow this capability at Lilly. 2020 core is also poised to be particularly productive year for new clinical starts in oncology as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago. After the loss of acquisition. Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year. A wild type of selective <unk> inhibitor <unk> inhibitor, a pan K Ras inhibitor, two antibody drug conjugates with tovar summaries payroll.

We welcome our new colleagues to Lilly and we look forward to building on their work to grow this capability at Lilly.

Dan: Since our last earnings call to Perko received approval under the Fda's accelerated approval program for the treatment of adult patients with cielo or SLO, who have received at least two prior lines of therapy, including a PTK inhibitor and a bcl two inhibitor.

2020 core is also poised to be particularly productive year for new clinical starts in oncology as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago. After the loss of acquisition.

2024 is also poised to be particularly productive year for new clinical starts in oncology, as we begin to see the results of the new oncology R&D strategy that we implemented about 4 years ago after the Loxo acquisition. Through a combination of internal discovery efforts and business development, we expect to put at least 5 new molecules into the clinic this year: a wild-type selective KRAS G12D inhibitor, a pan-KRAS inhibitor, 2 antibody-drug conjugates with topoisomerase payloads: one against ACTN4 and one against folate receptor alpha; and an actinium PSMA radioligand therapy.

Dan: We also reported that the phase III confirmatory trial intended to convert this approval the traditional approval known as proven CLO 321. <unk> met its primary endpoint and we plan to present these data I don't know upcoming medical meetings. With the CLO and <unk> approvals <unk> is now the first and only FDA approved non covalent <unk> inhibitor that can extend the benefit of targeting the <unk> pathway. All <unk> patients previously treated with a covalent <unk> inhibitor in a bcl two inhibitor.

Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year.

Dan: <unk> met its primary endpoint and we plan to present these data I don't know upcoming medical meetings.

A wild type of selective <unk> inhibitor <unk> inhibitor, a pan K Ras inhibitor, two antibody drug conjugates with tovar summaries payroll.

Dan: With the CLO and <unk> approvals <unk> is now the first and only FDA approved non covalent <unk> inhibitor that can extend the benefit of targeting the <unk> pathway.

One it gets back to four and one against folate receptor Alpha and Actinium CSMA radio ligand therapy. I'll speak in a moment about our clinical <unk> C program, but you could see that we're putting a real effort into developing a suite of rest directed therapeutics and we're excited to see those discovery efforts resulted three potential medicines so far. Of course, we'll have to see which of these deliver on our targeted clinical profiles, but we're optimistic about this early phase portfolio and we've certainly diversified the modalities in our pipeline.

One it gets back to four and one against folate receptor Alpha and Actinium CSMA radio ligand

Dan: All <unk> patients previously treated with a covalent <unk> inhibitor in a bcl two inhibitor.

I'll speak in a moment about our clinical KRAS G12C program. But you could see that we're putting a real effort into developing a suite of RAS-directed therapeutics. And we're excited to see those discovery efforts resulted 3 potential medicines so far. Of course, we'll have to see which of these deliver on our targeted clinical profiles, but we're optimistic about this early phase portfolio, and we've certainly diversified the modalities in our pipeline.

I'll speak in a moment about our clinical <unk> C program, but you could see that we're putting a real effort into developing a suite of rest directed therapeutics and we're excited to see those discovery efforts resulted three potential medicines so far.

Dan: This was the second approval for <unk> in 2023 with the first in patients with Mcl we. We believe these two indications only represent.

Dan: We believe these two indications only represent.

Dan: It represents the beginning of the eventual impact to perfect can have for patients and we look forward to seeing the data from the rest of the phase III program, the cross CLO <unk> and Mcl. In Q4, we completed the acquisition of <unk>, Biopharma, which begins Luis entry into radio ligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers.

Of course, we'll have to see which of these deliver on our targeted clinical profiles, but we're optimistic about this early phase portfolio and we've certainly diversified the modalities in our pipeline.

Dan: In Q4, we completed the acquisition of <unk>, Biopharma, which begins Luis entry into radio ligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers.

In addition, we're excited that our OLOMORASIB, our KRAS G12C inhibitor, has progressed into Phase II as we're finalizing dose selection under Project Optimus for the Phase III program, which we plan to start later this year. You can now see the full design of that study on clinicaltrials.gov. By way of reminder, we started this program used behind our competitors and through focused effort behind what looks like a great molecule to us we've made up the vast majority of that time.

Dan: We welcome our new colleagues to Lilly and we look forward to building on their work to grow this capability at Lilly. 2020 core is also poised to be particularly productive year for new clinical starts in oncology as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago after lots of acquisition. Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year.

You can now see the full design of that study on clinical trials Dot Gov.

Dan: 2020 core is also poised to be particularly productive year for new clinical starts in oncology as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago after lots of acquisition.

By way of reminder, we started this program years huge behind our competitors. And through focused effort behind what looks like a great molecule to us, we've made up the vast majority of that time. We believe we are now neck-and-neck with our closest competitors with a medicine that we hope to show combines better with PD-1. Lastly, in oncology, we terminated development of our RET inhibitor 2 as it did not meet our threshold to move forward with internal development. In immunology, we moved 2 new assets into Phase I and we advanced our Kv1.3 antagonist for psoriasis into Phase II. LEBRIKIZUMAB was approved in the EU for atopic dermatitis under the brand name EBGLYSS, which is marketed by our partner Almirall, there.

By way of reminder, we started this program used behind our competitors and through focused effort behind what looks like a great molecule to us we've made up the vast majority of that time.

We believe we are now neck and neck with our closest competitors for the medicine that we hope to show combines better with PD one. Lastly in oncology, we terminated development of our Ret inhibitor two as it did not meet our threshold to move forward with internal development. In immunology, we moved to new assets into phase one and. And we advanced our keeping one three antagonist for psoriasis into phase III. <unk> was approved in the EU for atopic dermatitis under the brand name <unk>, which is marketed by our partner Amaral there.

Dan: Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year.

Lastly in oncology, we terminated development of our Ret inhibitor two as it did not meet our threshold to move forward with internal development.

Dan: A wild type a selective <unk> inhibitor <unk> inhibitor, a pan <unk> inhibitor to antibody drug conjugates with tovar summaries payload. One it gets back to four and one against folate receptor Alpha and Actinium PSM eight radio ligand therapy. I'll speak in a moment about our clinical <unk> program, but you could see that we're putting a real effort to developing a suite of restricted therapeutics and we're excited to see those discovery efforts resulted three potential medicines so far.

In immunology, we moved to new assets into phase one and.

In immunology, we moved 2 new assets into Phase I and we advanced our Kv1.3 antagonist for psoriasis into Phase II. LEBRIKIZUMAB was approved in the EU for atopic dermatitis under the brand name EBGLYSS, which is marketed by our partner Almirall, there. In January this year, we were pleased to have EBGLYSS approved in Japan. In neuroscience, in January, our wholly owned subsidiary Akouos, announced positive clinical results for the Phase I/II AK-OTOF-101 study, which demonstrated hearing restoration within 30 days of a single administration in the first participant, an individual with more than a decade of profound hearing loss.

Dan: One it gets back to four and one against folate receptor Alpha and Actinium PSM eight radio ligand therapy.

And we advanced our keeping one three antagonist for psoriasis into phase III.

<unk> was approved in the EU for atopic dermatitis under the brand name <unk>, which is marketed by our partner Amaral there.

Dan: I'll speak in a moment about our clinical <unk> program, but you could see that we're putting a real effort to developing a suite of restricted therapeutics and we're excited to see those discovery efforts resulted three potential medicines so far.

In January of this year, we were pleased to have <unk> approved in Japan. The neuroscience in January our wholly owned subsidiary of Coors announced positive clinical results for the phase <unk> AK <unk> 101 study. Which demonstrated hearing restoration within 30 days of a single administration and the first participant in individuals with more than a decade of profound hearing loss.

The neuroscience in January our wholly owned subsidiary of Coors announced positive clinical results for the phase <unk> AK <unk> 101 study.

In neuroscience, in January, our wholly owned subsidiary Akouos, announced positive clinical results for the Phase I/II AK-OTOF-101 study, which demonstrated hearing restoration within 30 days of a single administration in the first participant, an individual with more than a decade of profound hearing loss. The surgical administration and the investigational therapy were well tolerated and no serious adverse events were reported.

Dan: Of course, we'll have to see which of these deliver on our targeted clinical profiles, but we're optimistic about the certainly faced portfolio and we've certainly.

Which demonstrated hearing restoration within 30 days of a single administration and the first participant in individuals with more than a decade of profound hearing loss.

The surgical administration and the investigational therapy were well tolerated and no serious adverse events were reported. These results highlight our commitment to help solve some of humanity's most challenging health care problems and make life better for individual patients. We now show top gene therapy in phase two on our pipeline chart as we've begun enrolling younger patients in the phase II portion of the study.

The surgical administration and the investigational therapy were well tolerated and no serious adverse events were reported.

These results highlight our commitment to help solve some of humanity's most challenging health care problems, and make life better for individual patients. We now show OTOF gene therapy in Phase II on our pipeline chart as we've begun enrolling younger patients in the Phase II portion of the study.

These results highlight our commitment to help solve some of humanity's most challenging health care problems and make life better for individual patients.

We now show top gene therapy in phase two on our pipeline chart as we've begun enrolling younger patients in the phase II portion of the study.

On slide 18, we highlight our select pipeline assets with updates since the last earnings call. And slide 19 summarizes our key events for 2023. I note the key updates on each of these slides in my therapeutic area of comments.

The key updates on each of these slides in my therapeutic area comments.

Turning to slide 20. We'd like to highlight potential key events for 2024. As you can see this year will be another important year as we look to progress our late-stage pipeline. In 2023, we initiated Phase III development programs for our next generation of incretins, which are oral agents, OFORGLIPRON, and our novel weekly injectable triagonist, RETATRUTIDE. These programs are progressing and enrolling well. We look forward to seeing the first set of Phase III results on OFORGLIPRON next year.

As you can see this year will be another important year as we look to progress our late stage pipeline.

In 2023, we initiated phase III development programs for our next generation of anchor tenants, which are oral agents <unk> and our novel weekly injectable Tri agonist read a true time.

These programs are progressing and enrolling well.

We look forward to seeing the first set of phase III results on or for <unk> next year.

This year, we're planning to initiate a Phase III program in type 2 diabetes for RETATRUTIDE, complementing the ongoing trials in obesity and related complications. Also this year, we are planning to initiate a Phase III program for LEPODISIRAN, our LPA- lowering siRNA therapy and cardiovascular disease. Hunters appetite, we're looking forward to a number of additional key data readouts this year. Beyond synergy Nash, we expect to see results from the phase III obstructive sleep apnea and phase III heart failure studies this year.

This year we are planning to initiate a Phase III program in type 2 diabetes for RETATRUTIDE, complementing the ongoing trials in obesity and related complications. Also this year, we are planning to initiate a Phase III program for LEPODISIRAN, our LPA- lowering siRNA therapy and cardiovascular disease.

Also this year, we are planning to initiate a phase III program for <unk> L.

L P a lowering <unk> RNA therapy and cardiovascular disease.

On TIRZEPATIDE, we're looking forward to a number of additional key data readouts this year. Beyond SYNERGY-NASH, we expect to see results from the Phase III obstructive sleep apnea and Phase III heart failure studies this year. We note increased investor interest in the timing of SURPASS-CVOT. And we can reiterate that we expect the data in 2025, notwithstanding the clinicaltrials.gov listing, which will be updated soon to reflect our current assumptions based on event rate.

Hunters appetite, we're looking forward to a number of additional key data readouts this year.

Beyond synergy Nash, we expect to see results from the phase III obstructive sleep apnea and phase III heart failure studies this year.

We know increased investor interest in the timing of surpassed cbot and we can reiterate that we expect the data in 2025, notwithstanding the clinical trials dot Gov listing, which will be updated soon to reflect our current assumptions based on our factory. By the end of 2024, we expect to have results of surmount, five which is our head to head study of tours appetite compared to high dose <unk> tied in participants with obesity.

By the end of 2024, we expect to have results of SURMOUNT-5, which is our head-to-head study of TIRZEPATIDE compared to high dose SEMAGLUTIDE in participants with obesity. We also expect the full Phase III program readout on a weekly basal insulin, insulin efsitora alfa, later this year.

By the end of 2024, we expect to have results of surmount, five which is our head to head study of tours appetite compared to high dose <unk> tied in participants with obesity.

Okay.

In 2023, we initiated phase III development programs for our next generation of anchor tenants, which are oral agents <unk> and our novel weekly injectable Tri agonist read a true tightened.

We also expect the full phase III program readout on a weekly basal insulin insulin half Cetura Alpha later this year. Moving to neuroscience, we're looking forward to FDA action and the potential launch at <unk> in Q1 of this year and we are progressing with regulatory reviews around the world. We've now launched a pizza at $2 seven blood. Blood based diagnostic test and we will continue to scale. This throughout 2024.

We also expect the full phase III program readout on a weekly basal insulin insulin half Cetura Alpha later this year.

Moving to neuroscience, we're looking forward to FDA action and the potential launch at DONANEMAB in Q1 of this year. And we are progressing with regulatory reviews around the world. We've now launched a P-tau217 blood based diagnostic test. And we will continue to scale this throughout 2024. We will also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease.

Moving to neuroscience, we're looking forward to FDA action and the potential launch at <unk> in Q1 of this year and we are progressing with regulatory reviews around the world.

These programs are progressing and enrolling well.

We look forward to seeing the first set of phase III results on order for <unk> next year.

We've now launched a pizza at $2 seven blood.

This year, we're planning to initiate a phase III program in type two diabetes for Red tide complementing the ongoing trials in obesity and related complications.

Blood based diagnostic test and we will continue to scale. This throughout 2024.

We will also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease. In immunology following the mere kismet positive phase III data Crohn's disease, we plan to submit to the FDA for this indication this year. Additionally, following the U S. FDA complete response letter on <unk>, we expect regulatory action by the end of the year in the U S.

We will also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease.

Also this year, we are planning to initiate a phase three program for <unk>.

In immunology following the mere kismet positive phase III data Crohn's disease, we plan to submit to the FDA for this indication this year.

In immunology, following the MIRIKIZUMAB positive Phase III data in Crohn's disease, we plan to submit to the FDA for this indication this year. Additionally, following the U.S. FDA complete response letter on LEBRIKIZUMAB, we expect regulatory action by the end of the year in the U.S.

L P a lowering <unk> RNA therapy and cardiovascular disease.

<unk> appetite, we're looking forward to a number of additional key data readouts this year.

Additionally, following the U S. FDA complete response letter on <unk>, we expect regulatory action by the end of the year in the U S.

Beyond synergy Nash, we expect to see results from the phase III obstructive sleep apnea and phase III heart failure studies this year.

Finally in oncology, as I mentioned before, we look forward to moving our KRAS G12C inhibitor olomorasib, into Phase III later this year following Phase II dose selection. Lastly, we are looking forward to seeing the results of our Imlunestrant Phase III study, EMBER-3 in participants with metastatic breast cancer in both monotherapy and in combination with VERZENIO. This past year was busy and productive and we would expect more of the same in 2024, as we make meaningful progress advancing our pipeline for the benefit of patients. I'll now turn the call back to Dave for closing remarks.

Lastly, we are looking forward to seeing the results of our inland <unk> phase III study <unk> III invitations to participants with metastatic breast cancer in both monotherapy and in combination with <unk>.

This past year was busy and productive and we would expect more of the same in 2024, as we make meaningful progress advancing our pipeline for the benefit of patients. I'll now turn the call back to Dave for closing remarks.

By the end of 2024, we expect to have results of surmount, five which is our head to head study of <unk> appetite compared to high dose <unk> tied in participants with obesity.

This past year was busy and productive and we would expect more of the same in 2024, as we make meaningful progress advancing our pipeline for the benefit of patients.

We also expect the full phase III program readout on our weekly basal insulin insulin <unk> Alpha later this year.

I'll now turn the call back to closing remarks.

Thanks, Dan and congrats to you and the LRL team for a big year. Before we go to Q&A, let me briefly sum up our progress in the Fourth Quarter. Q4 revenue growth accelerated. As our recently launched product portfolio continued to gain momentum. We achieved meaningful advances in our late stage pipeline with the FDA approvals of ZIP bound and Jay Perk up. We continue to invest in recent and upcoming launches late stage medicines early phase capabilities and in business development. Of which will serve as a foundation for future growth. In Q4, we completed the acquisition of point, Biopharma and announced plans to build a new manufacturing site in Germany.

Dave Ricks: Thanks, Dan and congrats to you and the LRL team for a big year. Before we go to Q&A, let me briefly sum up our progress in the Fourth Quarter.

Moving to neuroscience, we're looking forward to FDA action and the potential launch at <unk> in Q1 of this year and we are progressing with regulatory reviews around the world.

Q4 revenue growth accelerated.

As our recently launched product portfolio continued to gain momentum.

Q4 revenue growth accelerated as our recently launched product portfolio continued to gain momentum. We achieved meaningful advances in our late-stage pipeline with the FDA approvals of ZEPBOUND and JAYPIRCA. We continue to invest in recent and upcoming launches, late-stage medicines early phase capabilities and in business development, all of which will serve as a foundation for future growth. In Q4, we completed the acquisition of POINT Biopharma and announced plans to build a new manufacturing site in Germany. We returned over $1 billion to shareholders via the dividend.

We've now launched our pizza at $2 seven blood.

We achieved meaningful advances in our late stage pipeline with the FDA approvals of ZIP bound and Jay Perk up.

Blood based diagnostic test and we will continue to scale this throughout 'twenty going forward.

We continue to invest in recent and upcoming launches late stage medicines early phase capabilities and in business development.

We will also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease.

Of which will serve as a foundation for future growth.

In immunology following the mere kismet positive phase III data in Crohn's disease, we plan to submit to the FDA for this indication this year.

In Q4, we completed the acquisition of point, Biopharma and announced plans to build a new manufacturing site in Germany.

Additionally, following the U S. FDA complete response letter on <unk>, we expect regulatory action by the end of the year in the U S.

We returned over $1 billion to shareholders via the dividend. Lastly in January we announced that John and Norton, Our executive Vice President of global quality will be retiring at the end of July after 34 years of service. During her tenure genre has overseen significant expansion modernization and improvements in our quality and manufacturing processes. Like to thank her for her many years of outstanding service to Louie. Now I'll turn the call over to Joe to moderate our Q&A session.

We returned over $1 billion to shareholders via the dividend.

Lastly, in January, we announced that Johna Norton, our Executive Vice President of Global Quality will be retiring at the end of July after 34 years of service. During her tenure, Johna has overseen significant expansion, modernization and improvements in our quality and manufacturing processes. I'd like to thank her for her many years of outstanding service to Lilly. Now I'll turn the call over to Joe to moderate our Q&A session.

Lastly in January we announced that John and Norton, Our executive Vice President of global quality will be retiring at the end of July after 34 years of service.

Finally in oncology as I mentioned before we lower we look forward to moving our <unk> inhibitor <unk> into phase III later this year following phase II dose selection.

During her tenure genre has overseen significant expansion modernization and improvements in our quality and manufacturing processes.

Lastly, we are looking forward to seeing the results of our inland <unk> phase III study <unk> III invitations participants with metastatic breast cancer in both monotherapy and in combination with <unk>.

Like to thank her for her many years of outstanding service to Louie.

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

This past year was busy and productive and we would expect more of the same in 2024 as we make meaningful progress advancing our pipeline for the benefit of patients and I will turn the call back to closing remarks.

Joe Fletcher: Thanks, Dave before diving into the Q&A, I wanted to clarify one point. We may have had some muffled sound during announced prepared remarks regarding the timing of regulatory action on DONANEMAB. And as Dan mentioned the timing is expect it to be Q1 of 2024 this year, received some notes that there was some muffled sound. So just wanted to clarify from that important point. Now for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner. So consistent with prior quarters, we will respond to one question per caller, so ask you limit to one question per caller.

Regarding the timing of regulatory action on <unk> and as Dan mentioned that timing you would expect it to be Q1 of 2020 for this year.

Thanks, Dan and congrats to you and the <unk> team for a good year before we go to Q&A, Let me briefly sum up our progress in the fourth quarter Q4 revenue growth accelerated.

<unk> seen some notes that there was some muffled sound. So just wanted to clarify from that important point now for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner. So consistent with prior quarters, we will respond to one question per caller. So ask you limit to one question per caller.

Now for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner. So consistent with prior quarters, we will respond to one question per caller, so ask you limit to one question per caller as we'll end the call at 11:15 AM. If you have more than one question you can reenter the queue, and we'll get to your question if time allows it. Paul please provide instructions for the Q&A, and we are ready for the first caller.

As our recently launched product portfolio continued to gain momentum.

We achieved meaningful advances in our late stage pipeline with the FDA approvals of <unk> and Jay Perk up.

On the call at 11 15 a M. If you have more than one question you can reenter the queue and we'll get to your question. If time allows Paul please provide instructions for the Q&A and we are ready for the first caller. Thank you at this time, we will be conducting a question and answer session. If you have any questions. Please press star one on your phone at this time. We ask that participants limit themselves to one question on today's call. If you do have a follow up question. Please rejoin the queue by pressing star one at any time. We also asked our posing your question. Please pick up your handset of listening on speaker phone to provide optimum sound quality.

We continue to invest in recent and upcoming launches late stage medicines early phase capabilities and in business development, all of which will serve as a foundation for future growth.

If you have more than one question you can reenter the queue and we'll get to your question. If time allows Paul please provide instructions for the Q&A and we are ready for the first caller.

Thank you at this time, we will be conducting a question and answer session. If you have any questions. Please press star one on your phone at this time.

In Q4, we completed the acquisition of point, Biopharma and announced plans to build a new manufacturing site in Germany.

Operator: Thank you. [Operator Instructions] The first question today is coming from Terence Flynn from Morgan Stanley.

We returned over $1 billion to shareholders via the dividend.

We ask that participants limit themselves to one question on today's call. If you do have a follow up question. Please rejoin the queue by pressing star one at any time.

Lastly in January we announced that John and Norton, Our executive Vice President of global quality will be retiring at the end of July after 34 years of service during.

We also asked our posing your question. Please pick up your handset of listening on speaker phone to provide optimum sound quality.

During her tenure genre has overseen significant expansion modernization and improvements in our quality and manufacturing processes.

The first question today is coming from Terence Flynn from Morgan Stanley. Your line is live.

Your line is live.

To thank her for her many years of outstanding service to Lilly.

Terence Flynn: Great. Thanks, so much for taking the question, congrats on the progress. Just wondering for your GLP franchise ex U.S. you under-indexed versus your key competitor. Just wondering what are some of the hurdles to closing that gap as we think about the ramp in '24 but also into 2025? Thank you.

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

Joe: Thanks, Dave before I move into the Q&A I wanted to clarify one point, we may have had some muffled sound during announced prepared remarks.

Joe: Regarding the timing of regulatory action on <unk> and as Dan mentioned that timing is expected to be Q1 of 2020 for this year.

Yeah.

Thanks, Terence for the question. I'll hand over to Iluya Yuffa, President of Lilly International, for that question. great. Thanks Terence. As we think about <unk> launches outside of the U S. We have already launched in a number of select markets we have. A foundation to be competitive and many of our markets and we anticipate continued launches we. Just launched in file format. Select markets outside of the U S, mainly in Australia, Canada, Germany and Poland. And we just received an approval in the U K and so we are anticipating launch there as we get additional regulatory approvals for a multi use quick pen and remark.

Joe Fletcher: Thanks, Terence for the question. I'll hand over to Iluya Yuffa, President of Lilly International, for that question.

Joe: Seeing some notes that there was some muffled sound. So just wanted to clarify from that important point now for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner. So consistent with prior quarters. We will respond to one question per caller. So ask you limit to one question per caller that we'll end the call at 11 15 a M.

As we think about <unk> launches outside of the U S. We have already launched in a number of select markets we have.

Thanks, Terence. As we think about MOUNJARO launches outside of the U.S., we have already launched in a number of select markets. We have a foundation to be competitive in many of our markets. And we anticipate continued launches. We just launched in vial format in select markets outside of the U.S., mainly in Australia, Canada, Germany and Poland. And we just received KWIKPEN approval in the U.K. and so we are anticipating launch there as we get additional regulatory approvals for a multi-use KWIKPEN and remark.

Iluya Yuffa: Thanks, Terence. As we think about MOUNJARO launches outside of the U.S., we have already launched in a number of select markets. We have a foundation to be competitive in many of our markets. And we anticipate continued launches. We just launched in vial format in select markets outside of the U.S., mainly in Australia, Canada, Germany and Poland.

A foundation to be competitive and many of our markets and we anticipate continued launches we.

Speaker Change: If you have more than one question you can reenter the queue and we'll get to your question. If time allows Paul please provide instructions for the Q&A and we are ready for the first caller.

Just launched in file format.

Select markets outside of the U S, mainly in Australia, Canada, Germany and Poland.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you have any questions. Please press star one on your phone at this time, we ask that participants limit themselves to one question on today's call. If you do have a follow up question. Please rejoin the queue by pressing star one at any time.

And we just received an approval in the U K and so we are anticipating launch there as we get additional regulatory approvals for a multi use quick pen and remark.

And we just received KWIKPEN approval in the U.K. and so we are anticipating launch there as we get additional regulatory approvals for a multi-use KWIKPEN and we monitor our ramp-up in capacity for supply will continue to launch in other markets throughout the year. And so we anticipate further growth, anticipated for launches of MOUNJARO outside of the U.S. and continue with that throughout the year as well as into 2025.

We monitor our ramp up in capacity for supply will continue to launch in other markets throughout the year and so we anticipate further growth. Anticipated four launches of <unk> outside of the U S and continue with that throughout the year as well as into 2020. Thanks, Julia Paul next question.

Joe Fletcher: We also asked our posing your question you. Please pick up your handset of listening on speaker phone to provide optimum sound quality.

Anticipated four launches of <unk> outside of the U S and continue with that throughout the year as well as into 2020.

Joe Fletcher: The first question today is coming from Terence Flynn from Morgan Stanley.

Terence Flynn: Your line is live.

Thanks, Julia Paul next question.

Terence Flynn: Thanks, so much for taking the question congrats on all the progress just wondering for your <unk> franchise ex U S. You under index versus your key competitor just wondering what are some of the hurdles to closing that gap as we think about the ramp in 'twenty four but also into 2025. Thank you.

Joe Fletcher: Thanks, Iluya. Paul, next question.

Operator: The next question is coming from Chris Schott from J.P. Morgan.

Chris Schott: Great. Thanks, so much. On ZEPBOUND, it seems like you are making strong progress on coverage, but just interested in expectations for the remainder of this year, as we think about just where coverage to go and just how to think about ASP. I guess the core question is, is it reasonable to think that most payers who cover Wegovy will add ZEPBOUND this year? Thank you.

ZIP bound it seems like you are making strong progress on coverage, but just interested in expectations for the remainder of this year as we think about just where coverage to go and just how to think about asps.

Speaker Change: Yeah.

Jacob: Thanks, Terence for the question I'll hand over to <unk> President of <unk> International for that question great. Thanks Darren.

I guess the question is it reasonable to think that most payers who cover will Gobi will add this year. Thank you.

Speaker Change: As we think about my gyro launches outside of the U S. We have already launched in a number of select markets we have.

Thanks, Chris I'll hand over to Patrick to comment on that question about the bound coverage. Yeah. Thank you very much Chris as I stated, we are pleased with where we also early in launch we have been 35% commercial access having contract with ESI and seeing now add our assets moving forward will really be to continue to expand payer access but not only.

Joe Fletcher: Thanks, Chris. I'll hand over to Patrick to comment on that question about ZEPBOUND coverage.

Patrik Jonsson: Yes. Thank you very much Chris. As stated, we are pleased we are so early in launch with 35% commercial access having contract this, I'm seeing now-- Our efforts moving forward will really be to continue to expand payer access but not only we'll do that with a very disciplined approach as we did with MOUNJARO, but also to make sure that we get to employer opt-in. And as Anat alluded to in her prepared remarks, that's going to take some time. But we are assuming that with the current access we have that our access will be along the lines of what the competition has referred to, around 50%.

Speaker Change: A foundation to be competitive in many of our markets and we anticipate continued launches we.

Yeah. Thank you very much Chris as I stated, we are pleased with where we also early in launch we have been 35% commercial access having contract with ESI and seeing now add our assets moving forward will really be to continue to expand payer access but not only.

Speaker Change: Just launched in file format.

Speaker Change: Select markets outside of the U S, mainly in Australia, Canada, Germany and Poland.

Speaker Change: And we just received approval in the U K and so we are anticipating launch there as we get additional regulatory approvals for a multi use quick pen and we monitor on a ramp up in capacity for supply will continue to launch in other markets throughout the year and so we.

We'll do that with a very disciplined approach as we did with <unk>, but also to make sure that we get to employer opt in and as I alluded to in her prepared remarks, that's going to take some time, but we are assuming that way the counting the access we have without access will be along the lines of what the competition has great too. Around 50% let. Let me just emphasize that when it comes to employer opt in and that is not one reliable source for employer opt in so I think that's something that we need to continue to monitor and we'll come back with. More data during the coming earnings calls so. So overall. Good thoughts and we will continue our efforts to increase payer access I think we're quite encouraged with what we have from the marketplace. So for employer offering will take longer but we believe that we're well positioned in that regards as well. Thanks, Patrick next question Paul.

David A. Ricks: Dissipate further growth.

David A. Ricks: Anticipated four launches of <unk> outside of the U S and continue with that throughout the year as well as into 2020.

Around 50% let.

Let me just emphasize that when it comes to employer opt in and that is not one reliable source for employer opt in so I think that's something that we need to continue to monitor and we'll come back with.

Let me just emphasize that when it comes to employer opt-in, there is not one reliable source for employer opt-in. So I think that's something that we need to continue to monitor and we'll come back with more data during the coming earnings calls. So overall, a good start and we will continue our efforts to increase payer access. I think we're quite encouraged with what we have heard from the marketplace. So employer opt-in will take longer, but we believe that we're well positioned in that regards as well. Thanks, Patrick next question Paul.

Speaker Change: Thanks, Julia Paul next question.

Speaker Change: Yeah.

Speaker Change: The next question is coming from Chris Schott from Jpmorgan, Chris Your line of life.

More data during the coming earnings calls so.

Chris Schott: Great. Thanks, so much on Sept bound it seems like you are making strong progress on coverage, but just interested in expectations for the remainder of this year as we think about just where coverage to go and just how to think about asps.

So overall.

Good thoughts and we will continue our efforts to increase payer access I think we're quite encouraged with what we have from the marketplace. So for employer offering will take longer but we believe that we're well positioned in that regards as well.

Speaker Change: I guess the question is is it reasonable to think that most payers who cover will Gobi will add this year. Thank you.

Thanks, Patrick next question Paul.

Joe Fletcher: Thanks, Patrick. Next question, Paul.

Operator: The next question is coming from Seamus Fernandez from Guggenheim.

Speaker Change: Thanks, Chris I'll hand over to Patrick.

Patrick: Comment on that question about the bound coverage.

Seamus Fernandez: Thanks, very much and congrats on all the progress and the success here. But I just wanted to have a quick sense from Dan. Dan do you see a prospect from SYNERGY-NASH for accelerated approval? And can you confirm that while clinically significant, the secondary endpoint of fibrosis stage improvement was not statistically significant? Thanks.

Patrick: Yeah. Thank you very much Chris.

Patrick: As I stated we are pleased with where we also early in launch we have been 35% commercial access having contract with ESI and seeing.

Dan do you see a prospect.

From synergy Nash.

Speaker Change: I would answer it is moving forward, we would really be to continue to expand payer access, but not only we will do that with a very disciplined approach as we did with <unk>, but also to make sure that we get to employer opt in and I.

For accelerated approval and can you confirm that while clinically significant the secondary endpoint of fibrosis.

Stage improvement was not statistically significant.

Speaker Change: I alluded to in her prepared remarks, that's going to take some time, but we are assuming that way the counting the access we have without access will be along the lines of what the competition has picked up to around 50%.

Thanks, Seamus for the question Dan Yes. Thanks, Seamus this stage really quite new to us, but we're really excited about it.

Joe Fletcher: Thanks, Seamus, for the question. Dan?

Yes. Thanks, Seamus. This is really quite new to us, but we're really excited about it. We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity. Of course, this was a small trial of about 190 participants, but it did use on liver biopsies, of course, assess the endpoints here. with respect to the improvement in fibrosis, I think I, probably previously stated it was unsure of whether it would be possible for <unk> based therapies to reverse fibrosis and patients. Based on competitor Readouts in the field. Really excited to see this data with clinically meaningful improvement in fibrosis.

Dan Skovronsky : Yes. Thanks, Seamus. This is really quite new to us, but we're really excited about it. We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity. Of course, this was a small trial of about 190 participants, but it did use on liver biopsies, of course, assess the endpoints here.

We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity of course. This was a small trial of about 190 participants.

Speaker Change: Let me just emphasize that when it comes to employ at opt in and that is not one reliable source for employer opt in so I think that's something that we need to continue to monitor and we'll come back with.

But it did use on liver biopsies of course assess the.

Speaker Change: More data during coming on earnings calls so.

The endpoints here with respect to the improvement in fibrosis, I think I, probably previously stated it was unsure of whether it would be possible for <unk> based therapies to reverse fibrosis and patients.

Speaker Change: So overall.

Speaker Change: Good thoughts and we will continue our efforts to increase payer access I think we're quite encouraged with what we have from the marketplace for employer opening will take longer but we believe that we're well positioned in the back with us as well.

With respect to the improvement in fibrosis, I think I probably previously stated that I was unsure of whether it would be possible for incretin- based therapies to reverse fibrosis and patients, based on competitor readouts in the field. But really excited to see this data with clinically meaningful improvement in fibrosis.

Speaker Change: Thanks, Patrick next question Paul.

Based on competitor Readouts in the field.

Speaker Change: The next question is coming from Seamus Fernandez from Guggenheim Seamus Your line is live.

Really excited to see this data with clinically meaningful improvement in fibrosis.

Seamus Fernandez: Thanks, very much and congrats on all the progress.

There's different doses. There's different statistical methods that can be applied here accounting for dropouts, particularly in the placebo group. So we'll have to wait for the scientific presentation to see all the p-values there. But we're pretty, pretty positive on this data package as a whole. And what this could mean for patients both in terms of stopping progression of MASH and reversing fibrosis.

Seamus Fernandez: Our success here, but just wanted to add a quick sense.

Speaker Change: Dan do you see a prospect.

Speaker Change: From synergy Nash.

But.

Speaker Change: For accelerated approval and can you confirm that while clinically significant the secondary endpoint of fibrosis.

We're pretty pretty positive on this data package as a whole.

And what this.

This could mean for patients both in terms of stopping progression of Nash and reversing fibrosis.

Speaker Change: <unk>.

Speaker Change: Stage improvement was not statistically significant.

Joe Fletcher: Thanks, Dan. Paul, next question next.

Operator: The next question is coming from Umer Raffat from Evercore.

Speaker Change: Thanks, Seamus for the question Dan Yes, Thanks Seamus.

Hi, guys. Thanks for taking my question Dave. Dave as you think about manufacturing build out in various sites, which is obviously very important for all of the existing growth demand I'm curious how are you balancing that. Investment with your probabilities on orphan <unk> clinical and commercial, especially with all the blinded data that's coming in. Thanks, Dave Yes, happy to answer that of course as we. Enter this phase of really strong growth in the anchor turns were very focused on allocating capital, but our top priority is creating new capacities. Gating factors are not really financial for US right. Now so you can expect us to be investing fully.

Umer Raffat: Hi, guys. Thanks for taking my question. Dave, as you think about manufacturing build out in various sites, which is obviously very important for all of the existing GLP demand, I'm curious, how are you balancing that dollar investment with your probabilities on ORFORGLIPRON's clinical and commercial, especially with all the blinded data that's coming in?

Speaker Change: Really quite new to us, but we're really excited about it.

Dave as you think about manufacturing build out in various sites, which is obviously very important for all of the existing growth demand I'm curious how are you balancing that.

Speaker Change: We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity of course. This was a small trial of about 190 participants.

Investment with your probabilities on orphan <unk> clinical and commercial, especially with all the blinded data that's coming in.

Speaker Change: But it did use on liver biopsies of course assess the.

Thanks, Dave Yes, happy to answer that of course as we.

Thanks, Dave Yes, happy to answer that of course as we. Enter this phase of really strong growth in the anchor turns were very focused on allocating capital, but our top priority is creating new capacities. Gating factors are not really financial for US right. Now so you can expect us to be investing fully. We're not. Slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online that's particularly true in the parental side now you're referencing or formula Pran here, we do plan to build ahead of phase III at risk.

Joe Fletcher: Thanks, Umer. Dave?

Yes, happy to answer that. Of course as we enter this phase of really strong growth in the incretins, we're very focused on allocating capital, but our top priority is creating new capacities. The gating factors are not really financial for us right now, so you can expect us to be investing fully. We're not slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online. That's particularly true in the parenteral side. Now you're referencing ORFORGLIPRON. Here, we do plan to build ahead of phase III at risk.

Dan Skovronsky : Yes, happy to answer that. Of course as we enter this phase of really strong growth in the incretins, we're very focused on allocating capital, but our top priority is creating new capacities. The gating factors are not really financial for us right now, so you can expect us to be investing fully. We're not slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online. That's particularly true in the parenteral side.

Speaker Change: The endpoints here with respect to the improvement in fibrosis, I think I, probably previously stated it was unsure of whether it would be possible for <unk> based therapies to reverse fibrosis and patients.

Enter this phase of really strong growth in the anchor turns were very focused on allocating capital, but our top priority is creating new capacities.

Gating factors are not really financial for US right. Now so you can expect us to be investing fully.

Speaker Change: Based on competitor Readouts in the field.

Lucas: Really excited to see this data with good clinically meaningful improvement in fibrosis theres different doses theres different statistical methods that can be applied here accounting for drop outs, particularly in the placebo group. So we'll have to wait for the scientific presentation to see all the P values there.

We're not. Slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online that's particularly true in the parental side now you're referencing or formula Pran here, we do plan to build ahead of phase III at risk.

Slowing down because of cash flow or whatever.

It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online that's particularly true in the parental side now you're referencing or formula Pran here, we do plan to build ahead of phase III at risk.

Lucas: But we're pretty pretty positive on this data package as a whole.

Now you're referencing ORFORGLIPRON. Here, we do plan to build ahead of phase III at risk. I think given the probability we assess internally as well as the opportunity on the other side of a positive Phase III, we see that as a wise investment. And as we've commented on before, it relies, as you would know, on very different assets inside Lilly as well as outside of Lilly. So here, you have organic chemistry, API and tablets and capsules, so a pretty different set up. So we can-- we're paralleling that with our robust injectable investments. And if we're wrong, Okay, we'll have to eat that in the end, if ORFORGLIPRON isn't a strong product. But if is, I think it does begin to change the math on supply in this category. And I think that's about worth taking.

Lucas: And what this.

Lucas: This could mean for patients both in terms of stopping progression of Nash and reversing fibrosis.

I think given the probability we assess internally as well as. The opportunity on the other side of a positive phase III, we see that as a wise investment and as we've commented on before it relies as you would know. Very different assets inside Lilly as well as outside of Louis So here you have. Organic chemistry API and. Tablets and capsules, so it's a pretty different set up so we can we're paralleling that with our robust injectable investments. And if we're wrong, Okay, we'll have to we'll have to eat that in the end. If we're further prana has a strong product, but it is I think it does begin to change the math on supply in this category and I think Thats a bet worth taking.

Speaker Change: Thanks, Dan Paul next question.

The opportunity on the other side of a positive phase III, we see that as a wise investment and as we've commented on before it relies as you would know.

Speaker Change: Question is coming from Nomura <unk> from Evercore. Your line is live.

Nomura: Hi, guys. Thanks for taking my question.

Nomura: Dave as you think about manufacturing build out in various sites, which is obviously very important for all of the existing with demand I'm curious how are you balancing that.

Very different assets inside Lilly as well as outside of Louis So here you have.

Organic chemistry API and.

Lucas: Investment with your probabilities on orphan <unk> clinical and commercial odds, especially with all the blinded data that's coming in.

Tablets and capsules, so it's a pretty different set up so we can we're paralleling that with our robust injectable investments.

So we can-- we're paralleling that with our robust injectable investments. And if we're wrong, Okay, we'll have to eat that in the end, if ORFORGLIPRON isn't a strong product. But if is, I think it does begin to change the math on supply in this category. And I think that's about worth taking.

Lucas: Thanks, Tim or Dave, Yes, happy to answer that of course as we are.

And if we're wrong, Okay, we'll have to we'll have to eat that in the end. If we're further prana has a strong product, but it is I think it does begin to change the math on supply in this category and I think Thats a bet worth taking.

David A. Ricks: Enter this phase of really strong growth in the anchor turns were very focused on allocating capital, but top priority is creating new capacities.

Lucas: Gating factors are not really financial for US right. Now so you can expect us to be investing fully.

Joe Fletcher: Thanks, Paul, next question.

Operator: Our next question is coming from Tim Anderson from Wolfe Research.

We're not.

Lucas: Slowing down because of cash flow or whatever.

Tim Anderson: Thanks. On SURPASS-CVOT, you mentioned that slipped to 2025. I assume that implies the one interim look has come and gone. And then you're evaluating both non-inferiority and superiority Would you agree that superiority is really what you need to show here, and what your confident in achieving that?

Surpass cbot.

Lucas: It's really a function of the technical capacities, both in people and in suppliers to be able to bring facilities online that's particularly true in the parental side now you're referencing or forklift Pran here, we do plan to build ahead of phase III at risk.

You mentioned that slipped to 2025 I assume that implies the one interim look has come and gone and then you're evaluating both non inferiority and superiority would you agree that superiority is really what you need to show here and what's your confidence in achieving that.

Joe Fletcher: Thanks, Tim, for those couple of questions. Maybe we'll field the one on the interim look. Dan?

Lucas: I think given the.

Lucas: Probably we assess internally as well as the.

Yes, sure. Well, thanks for that question Tim. As you know, Lilly doesn't comment on interims. Probably, most trials within our portfolio do have opportunities for interim looks. But that has-- is not I think germane at all to the question on the timing on clinicaltrials.gov, which was before and continues to be the time point at which we'll have final data. When we initially put the time point in the clinicaltrials.gov, it was in early 2020, we hadn't started enrolling the trial yet so that was based on our assumption on enrollment rates,

Dan Skovronsky : Yes, sure. Well, thanks for that question Tim. As you know, Lilly doesn't comment on interims. Probably, most trials within our portfolio do have opportunities for interim looks. But that has-- is not I think germane at all to the question on the timing on clinicaltrials.gov, which was before and continues to be the time point at which we'll have final data.

Lucas: The opportunity on the other side of a positive phase III, we see that as a wise investment and as we've commented on before it relies as you would know.

Thanks for that question Tim.

No it really doesn't comment on Interims.

Most trials within our portfolio do have opportunities for interim looks.

Lucas: Different assets inside Lilly as well as outside of Louis So here you have.

But that has.

It is not I think germane at all to the question on the timing on <unk> Gov, which was before and continues to be the time point at which we'll have final data. When we initially put the time point in the clinical trials Dot Gov soon.

Lucas: Organic chemistry API and.

Lucas: Tablets and capsules, so pretty different setup. So we can we're paralleling that with our robust injectable investments.

When we initially put the time point in the clinicaltrials.gov, it was in early 2020, we hadn't started enrolling the trial yet so that was based on our assumption on enrollment rates, but probably more importantly on event rates. And as the trial matures, we get a view on event rate. So I know it's frustrating for investors and for us perhaps to wait to longer time to get events. But of course, that's great news for patients when the event rates are slower, remembering that this is a head-to-head trial with a drug TRULICITY, that we already know is active in preventing MACE events.

Lucas: And if we're wrong, Okay, we'll have to we'll have to eat that in the end. If we're further upon us in a strong product, but if it is I think it does begin to change the math on supply in this category and I think Thats a bet worth taking.

Early 2020, we hadn't started enrolling the trial yet so that was based on our assumption on enrollment rates.

But probably more importantly on event rates. And as the trial matures, we get a view on event rate site I know, it's frustrating for investors and for us perhaps to wait to longer time to get events, but of course, that's great news for patients when the event rates are slower. Remembering that this is a head to head trial. It's a drug triplicity that we already know is at. <unk> in preventing makes sense.

And as the trial matures, we get a view on event rate site I know, it's frustrating for investors and for us perhaps to wait to longer time to get events, but of course, that's great news for patients when the event rates are slower.

So I know it's frustrating for investors and for us perhaps to wait to longer time to get events. But of course, that's great news for patients when the event rates are slower, remembering that this is a head-to-head trial with a drug TRULICITY, that we already know is active in preventing MACE events.

Speaker Change: Thanks, Paul next question the.

Speaker Change: Our next question is coming from Tim Anderson from Wolfe Research Tim Your line is live.

Lucas: Thanks.

Tim Anderson: <unk> surpassed cbot.

Remembering that this is a head to head trial.

Tim Anderson: You mentioned slipped to 2025 I assume that implies the one interim look has come and gone and then you're evaluating both non inferiority and superiority would you agree that superiority is really what you need to show here and what's your confidence in achieving that.

It's a drug triplicity that we already know is at.

<unk> in preventing makes sense.

Joe Fletcher: Thanks, Dan. Paul, next question.

Operator: The next question is coming from Mohit Bansal from Wells Fargo.

Mohit Bansal: Great. Thank you very much for taking my question, and congrats on the progress. I have a question regarding your sleep apnea study. How much benefit do you think from baseline is required for this to be clinically meaningful? Is it 50% or more? And do you think the trial is big enough to seek a label in sleep apnea? Thank you.

Speaker Change: Thanks, Tim with a couple of questions maybe it will field the one on the interim look Dan.

How much benefit do you think from baseline is required for this to be clinically meaningful is it 50% or more and do you think the trial is big enough to seek a label and see that thank you.

Dan Paul: Yes, sure well.

Dan Paul: So that question, Tim as you know really doesn't comment on Interims, probably most trials within our portfolio do have opportunities for interim looks.

Thanks, Mohit, for the question. Dan, back to you. Thanks.

Joe Fletcher: Thanks, Mohit, for the question. Dan, back to you.

Lucas: But that has.

Lucas: Is not I think germane at all to the question on the timing on <unk> Gov, which was before and continues to be the time point at which we'll have final data. When we initially put that time point in the clinical trials Dot Gov soon.

Yes, thanks. There isn't really a well-established threshold for clinical meaningfulness in sleep apnea. O course, the commonly used measure here is an index of how many apnea or hypoxic events a patient has while sleeping. Certainly, drugs in this category, I think have great potential to improve that. We're excited to see what TIRZEPATIDE can see. Probably in addition to the absolute percent improvement in AHI that we'll be looking for I would also like to see patients switching from one category, for example, intermediate to mild disease or things like that. So we'll be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

Dan Skovronsky : Yes, thanks. There isn't really a well-established threshold for clinical meaningfulness in sleep apnea. O course, the commonly used measure here is an index of how many apnea or hypoxic events a patient has while sleeping. Certainly, drugs in this category, I think have great potential to improve that.

There isn't really a well established. Threshold for clinical meaningfulness in. Sleep apnea. The commonly used measure here is is the index of how many ethnic or hypoxic events, a patient has while sleeping. Certainly in this category. They've got great potential. To improve that we're excited to see what turns appetite can see. Probably in addition to the absolute percent improvement nahi that we'll be looking for I would also like to see patients switching from one category for example, intermediate two mild disease or things like that so it will be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

Threshold for clinical meaningfulness in.

Sleep apnea.

The commonly used measure here is is the index of how many ethnic or hypoxic events, a patient has while sleeping.

Lucas: Early 2020, we hadn't started enrolling the trial yet so that was based on our assumption on enrollment rates.

Certainly in this category.

We're excited to see what TIRZEPATIDE can see. Probably in addition to the absolute percent improvement in AHI that we'll be looking for I would also like to see patients switching from one category, for example, intermediate to mild disease or things like that. So we'll be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

They've got great potential.

To improve that we're excited to see what turns appetite can see.

Lucas: But probably more importantly on event rates.

Probably in addition to the absolute percent improvement nahi that we'll be looking for I would also like to see patients switching from one category for example, intermediate two mild disease or things like that so it will be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

Lucas: And as the trial matures, we get a view on <unk> site.

Frustrating for investors and for us perhaps to wait to longer time to get events, but of course, that's great news for patients when the event rates are slower.

Lucas: Remembering that this is a head to head trial.

Lucas: Drug Triplicity that we already know is active in preventing makes sense.

Joe Fletcher: Thanks, Dan. Paul, next question next.

Operator: The next question is from Louise Chen from Cantor.

Speaker Change: Thanks, Dan Paul next question.

Louise Chen: All right, Thanks for taking my question. I wanted to ask you, how you think about sizing the downstream opportunity for GLP-1, such as TIRZEPATIDE, maybe in NASH, some of the other indications that you're going after as well? Thank you.

Speaker Change: Next question is coming from Mohit Bansal from Wells Fargo Rohit. Your line is live.

Mohit Bansal: Great. Thank you very much for taking my question and congrats on the progress I have a question regarding your sleep apnea study.

Speaker Change: How much benefit do you think from baseline as required.

Joe Fletcher: Thanks, Louis, for that question. So about the downstream opportunities in NASH and elsewhere, Patrick do you want to field that?

At least for that question.

About the downstream opportunities in Nash and elsewhere to Patrick do you want to think about in March I think there are two important aspects. The first one is when we refer to employ it off theme I think employers are really looking actively into benefits of listing anti obesity medications and whatever date that we can again <unk>. In the cardiovascular space being in OSA or being in Nash and other indications will be extremely important for increased employer opt in. Second piece will be in Medicare part D. As long, it's true it's not paused I think data in those comorbidities will be critical to enable access for patients in Medicare part D. So those are probably the key drivers for those indications.

About the downstream opportunities in Nash and elsewhere to Patrick do you want to think

Speaker Change: This can be clinically meaningful is it 50% or more and do you think the trial is big enough to seek a label and see that thank you.

Thank you very much. I think there are 2 important aspects. The first one is when we refer to employer opt-in, I think employers are really looking actively into benefits of listing anti-obesity medications. And whatever data we can generate here being in the cardiovascular space, being in OSA or being in NASH and other indications will be extremely important for increased employer opt in. Second piece will be in Medicare part D. As long, it's true it's not paused I think data in those comorbidities will be critical to enable access for patients in Medicare part D. So those are probably the key drivers for those indications.

Patrik Jonsson: Thank you very much. I think there are 2 important aspects. The first one is when we refer to employer opt-in, I think employers are really looking actively into benefits of listing anti-obesity medications. And whatever data we can generate here being in the cardiovascular space, being in OSA or being in NASH and other indications will be extremely important for increased employer opt in.

Speaker Change: Thanks for the question Dan back to you.

Speaker Change: There isn't really a well established.

Lucas: Threshold for clinical meaningfulness.

Lucas: <unk>.

Lucas: Of course, the commonly used measure here is is index of how many ethnic or hypoxic events, a patient has while sleeping.

In the cardiovascular space being in OSA or being in Nash and other indications will be extremely important for increased employer opt in.

Lucas: Certainly.

The second piece will be in Medicare part D. As long as TROA is not passed, I think data in those comorbidities will be critical to enable access for patients in Medicare part D. So those are probably the key drivers for those indications.

Second piece will be in Medicare part D. As long, it's true it's not paused I think data in those comorbidities will be critical to enable access for patients in Medicare part D. So those are probably the key drivers for those indications.

Lucas: This category I think have great potential to improve that we're excited to see what turns appetite can see.

Lucas: Probably in addition to the absolute percent improvement nahi that we'll be looking for I would also like to see patients switching from one category. For example, intermediate two mild disease or things like that so we will be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

Joe Fletcher: Thanks, Patrick. Paul next question.

Operator: Our next question is coming from Kerry Holford from Berenberg.

Kerry Holford: Thank you for taking my question. It's on TIRZEPATIDE obesity. I'm interested to hear why you're taking the decision not to launch under the ZEPBOUND brand outside the U.S. but rather seek a label expansion for weight loss on MOUNJARO. Does that relate to simplicity, perhaps faster reimbursement access? And I wonder if you foreseen any risk here that ex U.S. government prefer ultimately to keep diabetes and obesity budgets separate. Thank you.

Speaker Change: Thanks, Dan Paul next question next.

I'm interested to hear why you're taking the decision.

Lucas: The next question is from Louise Chen from Cantor. Please your line is live alright.

Under this brand.

Louise Chen: Alright, Thanks for taking my question I wanted to ask you. How you think about sizing the downstream opportunity for TLLP. Once it turns appetite maybe in Nash and the other indications that youre going after as well. Thank you.

The U S.

And they are an extension of the weight loss amount does that relate to simplicity.

With regards to reimbursement.

And I wanted to actually foreseen in West, Canada ex U S government.

Speaker Change: Thanks Luis.

Speaker Change: Luis for that question.

So ultimately to Cape town.

Lucas: About the downstream opportunities in Nash and elsewhere, Patrick do you want to Peel that so thank you very much I think that two important aspects. The first one is when we refer to employ it off theme I think employers are really looking actively into benefits of listing anti obesity medications and whatever date that we can again <unk>.

I think it may get steep budget.

Yes.

Thank you.

Joe Fletcher: Thank you, Kerry, for the questions. I'll hand over to Iluya to talk about the branding of TIRZEPATIDE OUS.

The branding of trees appetite O U S. Sure alright, so the more tours appetite outside of the U S. It depends on a number of different factors, whether it's regulatory or. Better market dynamics are some payer dynamics as well, but we don't anticipate that being a challenge in terms of negotiating reimbursement either for type two diabetes or <unk>. For chronic weight management and continue to have those discussions and a number of markets and are optimistic about our ability to commercialize <unk>. Different brand scenarios.

The branding of trees appetite O U S.

Iluya Yuffa: Sure. Yes, so the broader TIRZEPATIDE outside of the U.S., it depends on a number of different factors, whether it's regulatory or competitor market dynamics. There are some payer dynamics as well, but we don't anticipate that being a challenge in terms of negotiating reimbursement either for type 2 diabetes or for chronic weight management. We continue to have those discussions and a number of markets and are optimistic about our ability to commercialize under different brand scenarios.

Patrick: In the cardiovascular space being in OSA or being in Nash and other indications will be extremely important for increased employer opt in.

Better market dynamics are some payer dynamics as well, but we don't anticipate that being a challenge in terms of negotiating reimbursement either for type two diabetes or <unk>.

Lucas: Second piece will be in Medicare part D. As long, it's true it's not paused I think data in those comorbidities will be critical to enable access for patients in Medicare part D. So those are truly the key drivers for those indications.

For chronic weight management and continue to have those discussions and a number of markets and are optimistic about our ability to commercialize <unk>.

Different brand scenarios.

Joe Fletcher: Great. Thank you, Iluya. Paul, next question.

Speaker Change: Thanks, Patrick Paul next question the.

Operator: Next question is from Geoff Meacham from Bank of America.

Speaker Change: The next question is coming from Kerry Holford from Bahrenburg carrying your line of life.

Geoff Meacham: Good morning, guys. Thanks so much for the question. Dave I know you guys formally announced LillyDirect last fall. Should we view it as a platform to just streamline access to providers and Lilly meds? Or is there a monetization model or some market differentiation that could also play out over time? Thank you.

Kerry Holford: Thank you for taking my question I, just wanted to hepatitis B K.

Thanks, so much for the question. Dave I know you guys formally announced slowly direct last fall. Should we view it as a platform just streamline streamlined access to providers and newly met or is there a monetization model or some market differentiation that could also play out over time. Thank you.

Dave I know you guys formally announced slowly direct last fall.

Speaker Change: Interested to hear why you've taken the decision.

Should we view it as a platform just streamline streamlined access to providers and newly met or is there a monetization model or some market differentiation that could also play out over time. Thank you.

Speaker Change: Turning to the brand.

Speaker Change: Now the U S.

Speaker Change: Okay.

Speaker Change: And then as an extension to wane.

Speaker Change: Does that relate to simplicity.

Dave Ricks: I can start, patrik, jump in. Thanks for the question. The idea was really actually born out of the challenges patients face every day in the U.S. in sometimes seeing doctors. And we have a doctor finder tool as well as telehealth partners on the platform for migraine, diabetes and obesity. Finding medicines in their pharmacies, that's been a challenge. And I think particularly as supplies are tight, many patients report driving to 5, 6, 7 pharmacies to find the medicine they need. Well, this simplifies that process.

Lucas: Fox to reinvest.

Got it if I can start patrik jump in thanks for the question.

Speaker Change: And I wanted to actually for Feeney with Canada.

Speaker Change: Okay.

The idea was really actually born out of the challenges patients face every day in the U S.

Speaker Change: Alright, thank you.

Speaker Change: Right.

Speaker Change: Alright.

Lucas: Thank you.

Yes.

So perhaps seeing doctors.

Speaker Change: Thank you Carrie for the questions I'll hand over to <unk> to talk about.

We have a doctor finder tool as well as telehealth partners on the platform for migraine diabetes and obesity.

Speaker Change: The branding of truth appetite O U S sure.

Speaker Change: Yes, so the four tours appetite outside of U S. It depends on a number of different factors, whether it's regulatory or.

Finding medicines in their pharmacies.

That's been.

Been a challenge and I think particularly as supplies are tight.

Speaker Change: Competitive market dynamics, there are some payer dynamics as well, while we don't anticipate that being a challenge in terms of negotiating reimbursement either for type two diabetes or.

Many patients report driving that 567 pharmacies defined the medicine. They need this simplifies that process and then I think in addition, there's been a lot of noise about. Drugs that are illicit or copies or compounded versions of that bound. Bound or other weight loss drugs and thats concerning to us and I think it's concerning to patient so by going to Lilly direct literally they have confidence. In the supply and finally application of our savings programs has also been a challenge at the pharmacy counter and that happens 100% of the time on <unk>.

Many patients report driving that 567 pharmacies defined the medicine. They need this simplifies that process

And then I think in addition, there's been a lot of noise about drugs that are illicit or copies or compounded versions of ZEPBOUND or other weight loss drugs. And that's concerning to us. And I think it's concerning to patients. So by going to LillyDirect literally, they have confidence in the supply. And finally, application of our savings programs has also been a challenge at the pharmacy counter and that happens 100% of the time on LillyDirect.

Lucas: For chronic weight management, we continue to have those discussions and a number of markets and are optimistic about our ability to commercialize <unk>.

Drugs that are illicit or copies or compounded versions of that bound. Bound or other weight loss drugs and thats concerning to us and I think it's concerning to patient so by going to Lilly direct literally they have confidence.

Drugs that are illicit or copies or compounded versions of that bound.

Lucas: Under different brand scenarios.

Bound or other weight loss drugs and thats concerning to us and I think it's concerning to patient so by going to Lilly direct literally they have confidence.

Lucas: Great. Thank you Paul next question.

Lucas: Next question is from Geoff Meacham from Bank of America, Jeff Your line of life.

Good morning, guys.

In the supply and finally application of our savings programs has also been a challenge at the pharmacy counter and that happens 100% of the time on <unk>.

Thanks, so much for the question.

Speaker Change: Dave I know you guys formally announced slowly direct last fall.

Lucas: Should we view it as a platform just streamline streamlines access to providers and newly meds or is there a monetization model or some market differentiation that could also play out over time. Thank you.

We haven't thought about it as a way to create some new retail distribution business. It's a way to serve the patients that want our medicines better. That's sort of the framework now. Early days, we're trying to develop it to be smoother better, include more products over time, have better information about physicians and telehealth providers. So look for more developments there but good start so far a lot of energy and enthusiasm from the patient community.

Some new retail distribution business, it's a way to serve the patients that want our medicines better. That's that's sort of the framework now early days, we're trying to develop it to be smoother better <unk>.

Speaker Change: Yes, I can start patrik jump in thanks for the question.

Include more products over time.

Speaker Change: The idea was really actually born out of the challenges patients face everyday in the U S.

They have better information about physicians in telehealth providers, so look for more developments there but good.

Lucas: Yes.

Lucas: Subtype seeing doctors.

Good start so far a lot of energy and enthusiasm from the patient community.

Lucas: Dr Finder tool as well as telehealth partners on the platform for migraine diabetes and obesity.

Joe Fletcher: Thanks, Dave. Paul, next question.

Operator: The next question is coming from David Risinger from Leerink.

Lucas: Finding medicines in their pharmacies.

Lucas: That's.

Lucas: Been a challenge and I think particularly as supplies are tight.

David R. Risinger: Yes. Thank you and congrats on today's updates. So my question is for Dave and Dan on lean muscle loss associated with incretin use. Could you help us understand Lilly's take on this debate, and comment on TIRZEPATIDE data to date relative to semaglutide? What I've observed is that SURMOUNT-1 showed 3:1 to lean muscle loss ratio, whereas semas's STEP-1 trial showed a 1.5:1 ratio, albeit with slightly different assessment. Thank you.

Lucas: Patients report driving that 567 pharmacies defined the medicine they need.

Lucas: <unk> that that process and then I think in addition, there's been a lot of noise about.

And comment on <unk> data to date relative to some are glued tide.

Lucas: Drugs that are illicit or copies or compounded versions of zip bound or other weight loss drugs and thats concerning to us and I think it's concerning to patients.

I have observed is that surmount one showed a three to one to lean muscle loss ratio, whereas some of the step one trial showed a one five to one ratio, albeit with slightly different assessment.

Lucas: By going to Lilly direct literally they have confidence.

Lucas: In in the supply and finally application of our savings programs has also been a challenge at the pharmacy counter and that happens 100% of the time on <unk>, we havent thought about it as a way to create.

Thank you.

Thanks, Dave. I'll have Dan field that. Thanks for your question, maybe just starting with our take on. Lean versus fat mass I think the ratio. Lean to the pass is an important thing to think about. <unk> body composition, not just body weight matters to patients for example in risk of type two diabetes or cardiovascular disease that body ratio seems to be important. The good news is that for patients on <unk> appetite that ratio appears to improve as. As you pointed out they lose far more fat mass and Lee mass and so in every trial we've done at the end of the trial, if you measure body composition. Better. A higher ratio of lean to fat than. At the beginning of the trial. So we see this changing body composition as it benefit potential benefit of <unk> appetite to be further explored.

Joe Fletcher: Thanks, Dave. I'll have Dan field that.

Thanks for your question. Maybe just starting with our take on lean versus fat mass, I think the ratio of lean to fat mass is an important thing to think about. Body composition, not just body weight matters to patients for example in risk of type 2 diabetes or cardiovascular disease, that body ratio seems to be important. The good news is that for patients on <unk> appetite that ratio appears to improve as. As you pointed out they lose far more fat mass and Lee mass and so in every trial we've done at the end of the trial, if you measure body composition. Better. A higher ratio of lean to fat than. At the beginning of the trial. So we see this changing body composition as it benefit potential benefit of <unk> appetite to be further explored.

Dan Skovronsky : Thanks for your question. Maybe just starting with our take on lean versus fat mass, I think the ratio of lean to fat mass is an important thing to think about. Body composition, not just body weight matters to patients for example in risk of type 2 diabetes or cardiovascular disease, that body ratio seems to be important.

Thanks for your question, maybe just starting with our take on.

Lean versus fat mass I think the ratio.

Lucas: Some new retail distribution business, it's a way to serve the patients that want our medicines better. That's that's sort of a framework now early days, we're trying to develop it to be smoother better.

Lean to the pass is an important thing to think about.

<unk> body composition, not just body weight matters to patients for example in risk of type two diabetes or cardiovascular disease that body ratio seems to be important.

Lucas: Include more products over time.

Lucas: We have better information about physicians in telehealth providers, so look for more developments there but.

The good news is that for patients on TIRZEPATIDE that ratio appears to improve, as you pointed out, they lose far more fat mass than lean mass. And so in every trial we've done at the end of the trial, if you measure body composition, it's better, a higher ratio of lean to fat than at the beginning of the trial. So we see this changing body composition as a benefit, a potential benefit of TIRZEPATIDE to be further explored.

The good news is that for patients on <unk> appetite that ratio appears to improve as.

Lucas: Good start so far a lot of energy and enthusiasm from the patient community.

As you pointed out they lose far more fat mass and Lee mass and so in every trial we've done at the end of the trial, if you measure body composition.

David R. Risinger: Dave Paul next question.

Lucas: The next question is coming from David David Risinger from Leerink, David Your line is live.

Better.

A higher ratio of lean to fat than.

David R. Risinger: Yes. Thanks.

David R. Risinger: Congrats on today's updates. So my question is for Dave and Dan on lean muscle loss associated with anchor 10 use could you help us understand lilly's take on this debate.

At the beginning of the trial. So we see this changing body composition as it benefit potential benefit of <unk> appetite to be further explored.

Of course, it is also a benefit we want to further extend. You've seen us try to improve the total amount of body weight loss. We're also trying to improve--further improve, I should say, the change in body mass composition. And that's why you saw us acquire Vesanis experiment with drugs like BIMAGRUMAB. Number two you quote from the tours appetite and some good type studies. Seem right to me of course, they are not head to head studies. But it does raise a question here about whether there is a potential benefit of <unk> <unk>. <unk> Agonism here in addition to <unk> one agonist, that's probably the way I would interpret this data.

<unk> seen us try to improve the total amount of.

Lucas: And comment on <unk> data to date relative to some are glued side.

Body weight loss, we're also trying to improve the.

Speaker Change: What I've observed is that surmount one showed a three to one to lean muscle loss ratio, whereas some of step one trial showed a one five to one ratio.

Further improve I should say.

The change in body mass composition, that's why you saw us acquire <unk>.

Experiment with drugs like <unk>.

The number you quote from the TIRZEPATIDE and SEMAGLUTIDE studies seem right to me. Of course, they are not head-to-head studies. But it does raise a question here about whether there is a potential benefit of GIP-1--GIP agonism here in addition to GLP-1 agonist, that's probably the way I would interpret this data.

Lucas: With <unk>.

Lucas: Slightly different.

Number two you quote from the tours appetite and some good type studies.

Speaker Change: Assessment. Thank you.

Speaker Change: Thanks, David.

Seem right to me of course, they are not head to head studies.

Speaker Change: Got that.

Speaker Change: Thanks for your question, maybe just starting with our take on.

But it does raise a question here about whether there is a potential benefit of <unk> <unk>.

Speaker Change: Lean versus fat mass I think the ratio of.

<unk> Agonism here in addition to <unk> one agonist, that's probably the way I would interpret this data.

Lucas: Lean to the fat mass is an important thing to think about.

Lucas: Body composition, and not just body weight matters to patients for example in risk of type two diabetes or cardiovascular disease that body ratio seems to be important.

Joe Fletcher: Thanks, Dan. Paul, next question.

Operator: Next question is coming from Evan Seigerman from BMO capital markets.

Hi, all. Thank you for taking my question. I would love to get your take on how you're thinking about the opportunity for the oral GLP-1s. We've seen some mixed data from competitors. And I just would love to get how you see this evolving in context of your investment in ORFORGLIPRON for both Brian Thank you.

Evan Seigerman: Hi, all. Thank you for taking my question. I would love to get your take on how you're thinking about the opportunity for the oral GLP-1s. We've seen some mixed data from competitors. And I just would love to get how you see this evolving in context of your investment in ORFORGLIPRON? Thank you.

Lucas: Good news is that for patients on <unk> appetite that ratio appears to improve.

Lucas: As you pointed out the least far more fat mass and Lee mass and so in every trial we've done at the end of the trial, if you measure body composition.

Your investment in <unk> for both Brian Thank you.

Thank you,

Lucas: Better.

Joe Fletcher: Thanks, Evan for the question. Patrick, maybe how about you talk about how we think about an oral agent?

Lucas: Your ratio of lean to fat than.

Lucas: At the beginning of the trial. So we see this changing body composition as it benefit potential benefit of <unk> appetite to be further explored.

Thank you very much. When we look at the opportunity in obesity, we have more than 110 million in the U.S. We have 650 million globally. I think taking into account the current supply constraints across market, it's impossible to reach all of those with Injectables. So I think that's the big opportunity, we have for ORFORGLIPRON. all called upon on what we're seeing so far in phase II. If we can replicate those data in phase III with an aura. <unk> here.

Patrik Jonsson: Thank you very much. When we look at the opportunity in obesity, we have more than 110 million in the U.S. We have 650 million globally. I think taking into account the current supply constraints across market, it's impossible to reach all of those with Injectables. So I think that's the big opportunity, we have for ORFORGLIPRON.

When we look at the opportunity in NAND obesity, where more than $110 million in the U S, where the 650 million globally I think taking into account the current supply constraints across market.

Lucas: Of course it is also a benefit we want to further extend <unk>.

Lucas: <unk> seen us tried to improve the total amount of.

Lucas: Body weight loss, we're also trying to improve the.

It's impossible to reach all of the liquid Injectables. So I think that's the big opportunity. We are all called upon on what we're seeing so far in phase II. If we can replicate those data in phase III with an aura.

Lucas: Further progression.

And what we've seen so far in Phase II, if we can replicate those data in Phase III, we have an oral medicine here with a weight loss along the lines of the best competitive incretin, not at the level of TIRZEPATIDE, but at the level of the best incretin in the marketplace, and with no food and water restrictions. So we can really see the opportunity here with ORFORGLIPRON to reach patients across the globe. and there is another component of this where if we look at the current market approximately to approximately 20% of patients who have obesity or actually concern to take an injectable. So that's another opportunity that we have all four get wrong. We believe that's a really strong quarter in our hands moving forward in the space of chronic weight management.

Lucas: The change in body mass composition, that's why you saw us acquire <unk>.

Lucas: Experiment with truck cycle, the macro map.

<unk> here.

Weight loss, along the lines of the best competitive in <unk> not at the level of its appetite, but that's the level of investing both in and walk in the marketplace. Food water restrictions. So we can really see the opportunity here, we are prone to reach patients across the globe and there is another component of this where if we look at the current market approximately to approximately 20% of patients who have obesity or actually concern to take an injectable. So that's another opportunity that we have all four get wrong.

Lucas: Number two you quote from the tours appetite and some good type studies.

Lucas: Seem right to me of course, Theyre not head to head studies.

Food water restrictions. So we can really see the opportunity here, we are prone to reach patients across the globe and there is another component of this where if we look at the current market approximately to approximately 20% of patients who have obesity or actually concern to take an injectable. So that's another opportunity that we have all four get wrong.

Lucas: But it does raise a question here about whether there is a potential benefit of <unk> <unk>.

And there is another component as well. If we look at the current market, approximately 20% of patients who have obesity are actually concerned to take an injectable. So that's another opportunity with ORFORGLIPRON. We believe that's a really strong quarter in our hands moving forward in the space of chronic weight management.

Lucas: <unk> Agonism here in addition to <unk> one agonist, that's probably the way I would interpret this data.

Speaker Change: Thanks, Dan Paul next question.

Speaker Change: Next question is coming from Evan <unk> from BMO capital markets. Your line is now.

We believe that's a really strong quarter in our hands moving forward in the space of chronic weight management.

Evan: Hi, all thank you for taking my question I would love to get your take on how Youre thinking about the opportunity for the oral <unk> ones. We've seen some mixed data from competitors and I just would love to get how you see this evolving.

Joe Fletcher: Thank you, Patrick. Paul, next question.

The next question is from Steve Scala from Cowen Steve Your line of life. Thank you. So much there could be several reasons why Lilly is not initiating a phase III trial of terms appetite in that first Lilly believes it has better molecules second there is something in the phase two data, which is less than ideal.

Operator: The next question is from Steve Scala from Cowen.

Your investment in <unk>, Brian Thank you.

Steve Scala: Thank you so much. There could be several reasons why Lilly is not initiating a Phase III trial of TIRZEPATIDE in NASH. First Lilly believes it has better molecules. Second there is something in the Phase II data, which is less than ideal. Or third, Lilly will do a Phase III, it just hasn't gotten around to finalizing plans, but that really can't be yet. To draw a parallel you're starting a Phase III with LPA without even telling us the Phase II was positive. So what would be best for us to conclude about TIRZEPATIDE in NASH? Thank you.

Brian: Thanks, Evan for the question Patrick maybe whether you talk about how do we think about.

Lucas: An oral agent.

Speaker Change: So thank you very much.

Speaker Change: When we look at the opportunity in obesity, where more than $110 million in the U S, where the 650 million globally I think taking into account the current supply constraints across market.

Third Lilly will do a phase III, just hasn't gotten around to finalizing plans, but that really can't be yet to draw parallel youre, starting a phase III with LPGA without even telling us the phase two was positive.

Lucas: It's impossible to reach all of the liquid Injectables. So I think that's the big opportunity. We are all called upon on what we have seen so far in phase II. If we can replicate those data in phase III with an oral medicine.

So what would be best for us to conclude about truth appetite enough. Thank you.

Joe Fletcher: Thank you, Steve.

Lucas: It made us in here with the weight loss along the lines of the best competitive in <unk> not at the level of tapes appetite, but thats, the best thing, but being in market in the marketplace.

Thanks, Steve for the clever analysis here. So first of all, I should just say literally just got the Phase II data, so give us a chance to determine our next steps on plans to probably debunk at least one of the hypotheses here. There is nothing bad in the data that would stop us from going to Phase III. In terms of having a better molecule probably we do in Red are true tied so of course, we don't have that kind of phase II data here for <unk> and so thats based on liver fat reduction, which was just an incredible in the phase III trial.

Dan Skovronsky : Thanks, Steve for the clever analysis here. So first of all, I should just say literally just got the Phase II data, so give us a chance to determine our next steps on plans to probably debunk at least one of the hypotheses here. There is nothing bad in the data that would stop us from going to Phase III.

Clever analysis here soon.

First of all I should say.

Literally just got the phase II data.

So give us a chance to determine our next steps on plans probably debug at least one of the hypotheses here. There is nothing bad in the data that would stop us from going to phase III.

Food water restrictions. So we see the opportunity here, we are prone to reach patients across the globe and there is another component of this where if we look at the current market approximately to approximately 20% of patients who have obesity or actually can sell them to take an injectable. So that's another opportunity that we have all the problems.

In terms of having a better molecule, probably we do in RETATRUTIDE. Of course, we don't have that kind of Phase II data here for RETATRUTIDE. So that's based on liver fat reduction, which was just incredible in the Phase II trial. Still though, I think having a positive Phase III trial here with really a meaningful data in NASH obligates us to think about next steps, as I said that's going to the FDA to talk to them. I would say in terms of planning a phase III for any drug in Nash, but really important priority for us is to move away as much as we can from liver biopsies and replace them with noninvasive testing I think we and others in the field that made a lot of progress there we see analogies here to other disease areas and we hope that.

In terms of having a better molecule probably we do in Red are true tied so of course, we don't have that kind of phase II data here for <unk> and so thats based on liver fat reduction, which was just an incredible in the phase III trial.

Lucas: We believe that's a really strong quarter in our hands moving forward in the space of chronic weight management.

Still though I think having a positive phase III trial here with really. A meaningful data in Nash obligates us to think about next steps as I said thats going to the FDA. To talk to them. I would say in terms of planning a phase III for any drug in Nash, but really important priority for us is to move away as much as we can from liver biopsies and replace them with noninvasive testing I think we and others in the field that made a lot of progress there we see analogies here to other disease areas and we hope that.

Speaker Change: Thank you Patrick all next question.

A meaningful data in Nash obligates us to think about next steps as I said thats going to the FDA.

Lucas: The next question is from Steve Scala from Cowen Steve Your line of life. Thank you. So much there could be several reasons why Lilly is not initiating a phase III trial of tours appetite in Nash first Lilly believes it has better molecules second there is something in the phase two data, which is less than ideal.

I would say in terms of planning a Phase III for any drug in NASH, but really important priority for us is to move away as much as we can from liver biopsies and replace them with noninvasive testing. I think we and others in the field have made a lot of progress there. We see analogies here to other disease areas and we hope that in the future it will be possible to conduct Phase III NASH trials without relying on biopsies. that would really have a profound effect on the feasibility of fronting. These trials quickly, but also in the clinical application of Nash drugs. There was non invasive biomarkers could be used to identify patients for treatment and monitor response to therapy rather than <unk>. Biopsy.

To talk to them.

I would say in terms of planning a phase III for any drug in Nash, but really important priority for us is to move away as much as we can from liver biopsies and replace them with noninvasive testing I think we and others in the field that made a lot of progress there we see analogies here to other disease areas and we hope that.

Steve Scala: Or third Lilly will do a phase III, just hasn't gotten around to finalizing plans, but that really can't be yet to draw parallel youre, starting a phase III with <unk> without even telling us the phase two was positive.

In the future it will be possible to conduct phase III Nash trials without relying on biopsies that would really have a profound effect on the feasibility of fronting. These trials quickly, but also in the clinical application of Nash drugs. There was non invasive biomarkers could be used to identify patients for treatment and monitor response to therapy rather than <unk>. Biopsy.

Lucas: So what would be best for us to conclude about <unk> appetite in that thank you.

That would really have a profound effect on the feasibility of running these trials quickly, but also in the clinical application of NASH drugs, where those non invasive biomarkers could be used to identify patients for treatment and monitor response to therapy rather than biopsies.

Speaker Change: Thank you Steve Thanks.

Speaker Change: Thanks, Steve.

Speaker Change: Our analysis here so.

There was non invasive biomarkers could be used to identify patients for treatment and monitor response to therapy rather than <unk>.

Speaker Change: First of all I should just say.

Speaker Change: We literally just got the phase II data.

Lucas: So give us a chance to determine our next steps on plans probably debug at least one of the hypothesis here. There is nothing bad in the data that would stop us from going to phase III.

Biopsy.

Joe Fletcher: Thank you Dan. Paul, next question.

Operator: The next question is from Chris Shibutani from Goldman Sachs.

Chris Shibutani: Thank you. Duration of use of the GLP-1s across the diabetes and obesity populations, previously, you've characterized the duration in the range of 15 months for diabetes and have commented that you don't believe we have enough experience. Any updates there? And when do you think we will have enough experience to be able to get a better gauge of duration of use median in the obesity population at least initially?

Lucas: In terms of having a better molecule probably we do in Red are true tide of course, we don't have that kind of phase II data here for <unk> tied in so thats based on liver fat reduction, which was just an incredible in the phase III trial.

Duration of use of the GOP ones across the diabetes and obesity populations previously you've characterized the duration in the range of 15 months for diabetes and <unk> commented that you don't believe we have enough experience any updates there and when do you think we will have enough experience to be able to get a better gauge of duration of use median.

Lucas: Still though I think having a positive phase III trial here with <unk>.

Lucas: Really a meaningful data in Nash obligates us to think about next steps as I said thats going to the FDA.

In the obesity population at least initially.

Thanks, Chris Patrick do you want to comment on duration of therapy. Thank you very much Chris I think youre right. Its quite challenging it's still early days with both Macchiato in particular is that bond and we have been facing some specific dynamics in terms of supply and all of the changes to the co pay program. When we look at the recent data from <unk>, it's encouraging and it suggests the patients let's start there it'd be backing to 'twenty to 'twenty three are having a persistency at least along the line.

Joe Fletcher: Thanks, Chris. Patrick, do you want to comment on duration of therapy?

Lucas: To talk to them I would say in terms of planning a phase III for any drug in Nash, but really important priority for us is to move away as much as we can from liver biopsies and replace them with noninvasive testing I think we and others in the field have made a lot of progress there, we see analogies here to other disease areas.

Patrik Jonsson: Thank you very much, Chris. I think you're right. It's quite challenging. It's still early days with both MOUNJARO and particularly ZEPBOUND. And we have been facing some specific dynamics in terms of supply and also changes to the co-pay program. However, when we look at the recent data for MOUNJARO, it's encouraging. And it suggests that patients that start their therapy back in Q1 2023 are having a persistency at least along the lines of other injectable incretins.

When we look at the recent data from <unk>, it's encouraging and it suggests the patients let's start there it'd be backing to 'twenty to 'twenty three are having a persistency at least along the line.

Lucas: And we hope that in the future it will be possible to conduct phase III Nash trials without relying on biopsies that would really have.

Lucas: Profound effect on the feasibility of fronting these trials quickly, but also in the clinical application of Nash drugs, where there was non invasive biomarkers could be identified patients for treatment and monitor response to therapy rather than.

Alliance of other injectable inked routines. Yeah. I found it definitely would be too early but we strongly believe that patients will be motivated when they see the benefits of the drug and that will of course be manufactured many factors impacting both the supply macroeconomic and microeconomic.

Alliance of other injectable inked routines.

For ZEPBOUND, definitely too early. But we strongly believe that patients will be motivated when they see the benefits of the drug. And there will, of course, be many factors impacting both supply macroeconomic and microeconomic. But we are convinced that there will be a final duration of treatment also for obesity, since when we look into even heart failure in type 2 diabetes, more than a 12 month period of adherence is considered long.

Yeah.

I found it definitely would be too early but we strongly believe that patients will be motivated when they see the benefits of the drug and that will of course be manufactured many factors impacting both the supply macroeconomic and microeconomic.

Lucas: Biopsy.

Speaker Change: Thank you Dan.

Speaker Change: Our next question.

We are convinced that that will be a finite duration of treatment for obesity. When we're looking to even heart failure in type two diabetes more than 12 months. Period of adherence is considered long about encouraging data in type two diabetes, so far and. <unk>, we will see that we'd put you'll be in end of duration based upon what we've seen in other chronic diseases that we believe that the. Joseph <unk> would've been motivating propane ships. Thanks.

But we are convinced that there will be a final duration of treatment also for obesity, since when we look into even heart failure in type 2 diabetes, more than a 12 month period of adherence is considered long.

Speaker Change: The next question is from Chris <unk> from Goldman Sachs. Chris Your line is live.

Chris Schott: Thank you.

When we're looking to even heart failure in type two diabetes more than 12 months.

Chris Schott: <unk> of use of the GOP ones across the diabetes and obesity populations previously you've characterized the duration in the range of 15 months for diabetes and have commented that you don't believe we have enough experience any updates there and when do you think we will have enough experience to be able to get a better gauge of duration of use median.

Period of adherence is considered long about encouraging data in type two diabetes, so far and.

But encouraging data in type 2 diabetes so far. And with ZEPBOUND, we will see that will for sure be an end of duration based upon what we've seen in other chronic diseases. But we believe that the features itself will be motivating for patients. Thanks.

<unk>, we will see that we'd put you'll be in end of duration based upon what we've seen in other chronic diseases that we believe that the.

Joseph <unk> would've been motivating propane ships. Thanks.

Lucas: In the obesity population at least initially.

Joe Fletcher: Thanks, Patrick. Paul, next question.

Thanks, Patrick Paul next question the.

Speaker Change: Thanks, Chris Patrick do you want to comment on duration of therapy. Thank you very much Chris I think youre right. Its quite challenging it's still early days with both Macchiato in particular is that bond and we have been facing some specific dynamics in terms of supply and all of the changes to the co pay program.

Operator: Our next question is coming from Akash Tewari from Jefferies.

Akash Tewari: Thanks so much. So David at J.P. Morgan, you made an interesting comment on ORFORGLIPRON, where you mentioned the molecule has lots to prove here. Can you elaborate a bit on what you mean by this? And what's your confidence on ORFO's DDI profile? It seems to have a bit of CYP3A4 inhibition. So will this drug be able to get dosed with SGLT2s, given they were excluded in some of your earlier studies? Thanks.

Speaker Change: When we look at the recent data from one job, it's encouraging and it suggests that patients let's start the F&I pay back in 2023, having a persistency at least along the line.

They were excluded in some of your earlier studies. Thanks.

Dave Ricks: Sorry, that was for me? Although I could frame like why I said that, but maybe Dan can get on the specific DDI question and SGLT2 co-administration. I just said that because we're just starting the Phase III. And we all know small molecule, there's a bit of empiricism in terms of eliminating safety risk. And of course, every day, as we expose more patients to the drug and we have higher doses, that's a good day where we don't announce that the drug has a problem.

Lucas: So the other injectable linked routines.

I can frame like why I said that but maybe you can elaborate on this. Specific DDI questions. <unk> Co administration I'd, just say that because we're just starting the phase III and we all know small molecule. So theres a bit of appearances in terms of. Eliminating safety risks and of course every day as we expose more patients to the drug and we have higher doses.

Lucas: <unk> definitely too early but we strongly believe that patients will be motivated when they see the benefits of the drug and that will of course be matter of fact that many factors impacting both the supply macroeconomic and microeconomic, but we are convinced that that will be a finite duration of treatment or it's about.

Specific DDI questions.

<unk> Co administration I'd, just say that because we're just starting the phase III and we all know small molecule.

So theres a bit of appearances in terms of.

Eliminating safety risks and of course every day as we expose more patients to the drug and we have higher doses.

Lucas: <unk> seen is when we're looking to even heart failure in type two diabetes more than 12 months.

That's a good day, where we don't announce that the drug has a problem. At some point you reach a lot of confidence we just weren't at that point, we are not at it now I think we're running the phase II experiment and we need to discharge. The off target safety. I think inherent in small molecule discovery than we've seen in this class from others.

That's a good day, where we don't announce that the drug has a problem.

At some point, we reach a lot of confidence. We just weren't at that point. We are not at it now. I think we're running the Phase II experiment, and we need to discharge the off target safety that is inherent in small molecule discovery. But we've seen in this class from others. But nothing specific on my mind. Maybe Dan can further reassure us.

At some point you reach a lot of confidence we just weren't at that point, we are not at it now I think we're running the phase II experiment and we need to discharge.

Lucas: Period.

Hey, Ron this is considered long about encouraging data in type two diabetes, so far and.

The off target safety.

Speaker Change: <unk>, we will see that we'd be in end of duration based upon what we have seen in other chronic diseases, but we believe that the chose it said we'd been motivating propane ships. Thanks, Patrick Paul next question.

I think inherent in small molecule discovery than we've seen in this class from others.

But nothing specific on my mind, maybe Dan can. Further reassurance. Dave of course, just the normal phase III types of risks. Safety signals, which could could always arise I think with respect to DDI and co administration with <unk>. We expect that to be possible and we have that ongoing in our phase III trials. There are patients who achieved. We'll we'll be just with the car being dosed with offer <unk> as well as other drugs like Este altitudes.

But nothing specific on my mind, maybe Dan can. Further reassurance.

Further reassurance.

Dan Skovronsky : Yes. Thanks, Dave. Of course, just the normal Phase III types of risk, new safety signals, which could always arise. I think with respect to DDI and co-administration with SGLT2s. we expect that to be possible. And we have that ongoing in our Phase III trials. There are patients who achieve--will be dosed with--are being dosed with ORFORGLIPRON as well as other drugs like SGLT2s.

Dave of course, just the normal phase III types of risks.

Patrick Paul: Next question is coming from a cash tomorrow from Jefferies. Your line is live.

Safety signals, which could could always arise I think with respect to DDI and co administration with <unk>.

Cash: Hey, Thanks, so much David at Jpmorgan, you made an interesting comment on <unk>, where you mentioned the molecule has locked to prove here can you elaborate a bit on what you mean by that and what's your confidence on ortho DDI profile. It seems to have a bit of hit 384 inhibition. So we'll based drug be able to get dosed with <unk>.

We expect that to be possible and we have that ongoing in our phase III trials.

There are patients who achieved.

We'll we'll be just with the car being dosed with offer <unk> as well as other drugs like Este altitudes.

Joe Fletcher: Thanks, both. Paul, next question.

Speaker Change: Given they were excluded in some of your earlier studies. Thanks.

Operator: The next question is from Trung Huynh from UBS.

Speaker Change: Sorry that was for me.

Trung Huynh: Hi, guys. Thanks for taking my questions. Can only just ask your thoughts on GIP agonism versus antagonism, given data yesterday from a competitor suggesting more limited effects on things like blood pressure and lipid modifications? Just how differentiated do you think an agonism approach is versus antagonism and why you think agonism is the way forward? Thank you.

Speaker Change: I would like to frame like why I said that but maybe you can just comment.

Speaker Change: On the specific DDI questions <unk> Co administration I would just say that because we're just starting the phase III and we all know small molecule.

Speaker Change: There's a bit of empiricism in terms of.

Speaker Change: Eliminating safety risks.

Lucas: And of course every day as we expose more patients to the drug and the higher doses.

Agonism approach is fastest antagonism and why you think agonism is the way forward. Thank you.

Speaker Change: That's a good day, where we don't announce that the drug has a problem.

Yeah well. First of all often unfair comparison, we have so much data now on the benefits of <unk> agonism from. Tens of thousands of participants in randomized clinical trials for tours appetite. So we're extremely confident here about the benefits of Gi P agonism, adding to that data we have experimented with. The pure <unk> one agonist. So it doesn't have any <unk>, we reported the benefits there in a phase one study were contracting that here to a small phase <unk> study that was recently published with a drug that has both <unk> agonism and GI antagonism I noted in that publication that Gis and <unk>. <unk> is at a much lower affinity so probably only starts to antagonize GIC. Very high doses, probably a question for that company, but I noted at the high doses.

Joe Fletcher: Dan?

Yes. Well, first of all, it's an unfair comparison. We have so much data now on the benefits of GIP agonism from tens of thousands of participants in randomized clinical trials for TIRZIPATIDE. So we're extremely confident here about the benefits of GIP agonism. Adding to that data, we have experimented with a pure GIP agonist that doesn't have any GLP-1, and we reported the benefits there in a Phase I study. were contracting that here to a small phase <unk> study that was recently published with a drug that has both <unk> agonism and GI antagonism I noted in that publication that Gis and <unk>. <unk> is at a much lower affinity so probably only starts to antagonize GIC. Very high doses, probably a question for that company, but I noted at the high doses.

Dan Skovronsky : Yes. Well, first of all, it's an unfair comparison. We have so much data now on the benefits of GIP agonism from tens of thousands of participants in randomized clinical trials for TIRZIPATIDE. So we're extremely confident here about the benefits of GIP agonism. Adding to that data, we have experimented with a pure GIP agonist that doesn't have any GLP-1, and we reported the benefits there in a Phase I study.

First of all often unfair comparison, we have so much data now on the benefits of <unk> agonism from.

Speaker Change: At some point, we reach a lot of confidence we just weren't at that point, we are not at it now I think we're running the phase II experiment and we need to discharge.

Tens of thousands of participants in randomized clinical trials for tours appetite. So we're extremely confident here about the benefits of Gi P agonism, adding to that data we have experimented with.

Lucas: The off target safety.

Lucas: Inherent in small molecule discovery than we've seen in this class from others.

Lucas: But nothing specific on my mind, maybe Dan can.

The pure <unk> one agonist. So it doesn't have any <unk>, we reported the benefits there in a phase one study were contracting that here to a small phase <unk> study that was recently published with a drug that has both <unk> agonism and GI antagonism I noted in that publication that Gis and <unk>.

Lucas: Further reassurance.

Dan Paul: Thanks, Dave of course, just the normal phase III types of risks.

Speaker Change: Safety signals, which could always arise I think with respect to DDI and co administration with <unk>.

We're contrasting that here to a small Phase I study that was recently published with a drug that has both GLP-1 agonism and GIP antagonism. I noted in that publication, the GIP antagonism is at a much lower affinity. So it probably only starts to antagonize GIP at very high doses. It's probably a question for that company. but I noted at the high doses.

Lucas: We expect that to be possible and we have that ongoing in our phase III trials, there are patients who achieved.

<unk> is at a much lower affinity so probably only starts to antagonize GIC. Very high doses, probably a question for that company, but I noted at the high doses.

Lucas: We'll be just with our car being dosed with <unk> as well as other drugs like STL duties.

Paul: Thanks, Paul next question.

Very high doses, probably a question for that company, but I noted at the high doses.

Paul: The next question is from Trung Nguyen from UBS. Your line is live.

But I noted at the high doses, actually an increase in free fatty acids and complete attenuation of the decrease in triglycerides in the clinical trial. Those are some effects that we attribute to GIP. And so I'm not surprised that antagonism of GIP is starting to have some negative effects once that kicks in. we also see G. IP agonism is having positive benefits on tolerability, reducing potentially nausea, and vomiting, and again I think maybe at the higher doses you could probably see some hints of the opposite effect with antagonism so pretty glad with the decision we took and let's see how the field. Continues to evolve.

Actually an increase in free fatty acids and. Complete attenuation of the decrease in triglycerides and the clinical trial. Those are some effects that we attribute to <unk> and so I'm not surprised that antagonism of CIP is starting to have some negative effects. Once that kicks in we also see G. IP agonism is having positive benefits on tolerability, reducing potentially nausea, and vomiting, and again I think maybe at the higher doses you could probably see some hints of the opposite effect with antagonism so pretty glad with the decision we took and let's see how the field. Continues to evolve.

Trung Huynh: Hi, guys. Thanks for taking my questions can only just ask your thoughts on <unk> agonism versus antagonism given data yesterday from a competitor, suggesting more limited effects on things like lots of pressure in lipid modifications just how differentiated you think.

Complete attenuation of the decrease in triglycerides and the clinical trial. Those are some effects that we attribute to <unk> and so I'm not surprised that antagonism of CIP is starting to have some negative effects.

Once that kicks in we also see G. IP agonism is having positive benefits on tolerability, reducing potentially nausea, and vomiting, and again I think maybe at the higher doses you could probably see some hints of the opposite effect with antagonism so pretty glad with the decision we took and let's see how the field.

We also see GIP agonism is having positive benefits on tolerability, reducing potentially nausea and vomiting. Then again, I think maybe at the higher doses you could probably see some hints of the opposite effect with antagonism. So pretty glad with the decision we took. And let's see how the field continues to evolve.

Agonism approach is fastest antagonism and why you think agonism into the way forward. Thank you.

Lucas: Yes.

Lucas: First of all from unfair comparison, we have so much data now on the benefits of <unk> agonism from.

Lucas: Tens of thousands of participants in randomized clinical trials for <unk> appetite. So we're extremely confident about the benefits of Gi P agonism, adding to that data we have experimented with.

Continues to evolve.

Joe Fletcher: Thanks, Dan. Paul, next question.

Operator: The next question is from Carter Gould from Barclays.

Lucas: The pure <unk> one agonist. So it doesn't have any <unk>, we reported the benefits there interface. One study were contracting that here to a small phase. One study that was recently published with a drug that has both <unk> agonism and GI antagonism I noted in that publication that Gis and <unk>.

Carter Gould: Great. Good morning. Thanks for taking the questions. I guess over the prior 2 earnings call, there have been at least an acknowledgment that CMOs were going to be part of the equation going forward for supply on the incretin side. I guess, does the development seen yesterday have any sort of direct or indirect impacts as you think about that part of the equation going forward?

Great. Good morning, Thanks for taking the questions.

I guess over the prior two earnings call for it had been at least an acknowledgment that CMO is we're going to be part of the equation going forward.

For supply on the <unk> side.

This development yesterday have any sort of direct or indirect impacts as you think about that part of the equation going forward.

Dan Paul: Agonism as is.

Joe Fletcher: Thanks, Carter. Anat, do you want to field that?

Dan Paul: At a much lower affinity so probably only starts to antagonize Gis at very high doses, probably a question for that company, but I noted at the high doses.

Sure. So we've--and I've mentioned on this call as well that we have a very extensive expansion agenda, which does include third parties. While our strategy is and has always been to develop more internally, we do have third parties as well. So yes, we saw the announcement that came out from Novo yesterday, regarding the intent to acquire Catalent. And we certainly have questions about that transaction and need to learn more. and we don't know Caroline is an integral part of our manufacturer.

Anat Ashkenazi: Sure. So we've--and I've mentioned on this call as well that we have a very extensive expansion agenda, which does include third parties. While our strategy is and has always been to develop more internally, we do have third parties as well. So yes, we saw the announcement that came out from Novo yesterday, regarding the intent to acquire Catalent. And we certainly have questions about that transaction and need to learn more.

And I've mentioned on this call as well that we have a very extensive menu expansion agenda, which does include third parties. While our strategy is and has always been to develop more a truly we do have third parties as well. So we have we saw the announcement that came out from Novo yesterday.

Dan: Actually an increase in free fatty acids and.

Dan: Complete attenuation of the decrease in triglycerides and the clinical trial. Those are some effects that we attribute to <unk> and so I'm not surprised that antagonism of Gi P is starting to have some negative effects.

Regarding the intent to acquire <unk> and we certainly have questions about that transaction and need to learn more and we don't know Caroline is an integral part of our manufacturer.

Dan: Once that kicks in we also see G. IP agonism is having positive benefits on tolerability, reducing potentially nausea, and vomiting, then again I think maybe at the higher doses you could probably see some hints of the opposite effect with antagonism so pretty glad with the decision we took in.

And we all know Catalent is an integral part or manufacturer of both commercial and pipeline products for the industry, especially in diabetes and obesity. And we have products with these sites as well. So our focus today is on ensuring the continuity of supply of medicines for patients is uninterrupted, as well as we intend on holding Catalent accountable to their contract with us as we look and we gain more information on this proposed transaction.

Commercial and pipeline products for the industry. Specially in diabetes, and obesity and we have products. With these sites as well so our focus today is on ensuring the continuity of supply of medicines for patients is uninterrupted.

Specially in diabetes, and obesity and we have products. With these sites as well so our focus today is on ensuring the continuity of supply of medicines for patients is uninterrupted.

With these sites as well so our focus today is on ensuring the continuity of supply of medicines for patients is uninterrupted.

Speaker Change: Let's see how the field continues to evolve.

Speaker Change: Thanks, Dan Paul next question.

As well as we intend on holding Catlin accountable to their contract with US is as we look out and we gained more infill.

Speaker Change: The next question is from Carter Gould from Barclays Carter Your line.

Dan: Thanks.

Carter Gould: Great. Good morning, Thanks for taking the questions I guess over the prior two earnings calls there have been at least an acknowledgment that CMO is we're going to be part of the equation going forward for supply on the <unk> side.

Information on this proposed transaction.

Joe Fletcher: Thank you. Paul, next question.

Operator: Our next question is coming from James Shin from Deutsche Bank.

Dan: I guess does the development fee yesterday have any sort of direct or indirect impacts as you think about that part of the equation going forward.

James Shin: Hi, good morning. Thanks for taking my question. I just want to circle back to Carter's question. Given Lilly is well-capitalized and manufacturing capacity being the priority, I mean could you expect more buy versus build to get around some of the technical bottlenecks in the non-trivial FDA process? I just want to get your thoughts there.

Want to circle back to the Carters question.

Given the well capitalized and manufacturing capacity being the priority.

Speaker Change: Thanks Carter.

Dan: Sure.

Carter Gould: And I've mentioned on this call as well that we have a very extensive expansion agenda, which does include third parties, while our strategy is and has always been to.

I mean could you expect more buybacks is build to get around some of the technical bottlenecks in the non trivial FDA process.

Just wanted to get your thought there.

Dave, Yes, maybe I'll give it a shot thanks for the question James.

Joe Fletcher: Dave?

Yes, maybe I'll give it a shot. Thanks for the question James. Yes, as I mentioned on the earlier question related to ORFORGLIPRON, we are not-- we don't think of ourselves as capital-constrained buying or building in this space. The reality is there just isn't build capacity that's available. Most of it that's being used is already deployed against the leading products in the GLP-1 space, at least any scale. And new capacity has a lead time of 3 to 4 years. so all of the things that are coming online now like we mentioned today are very large site in <unk>. <unk> North Carolina, that's a big node of capacity for the sector and certainly for Lilly I mean that was announced two and a half years ago and it will just begin production at the end of this year. So.

Dave Ricks: Yes, maybe I'll give it a shot. Thanks for the question James. Yes, as I mentioned on the earlier question related to ORFORGLIPRON, we are not-- we don't think of ourselves as capital-constrained buying or building in this space. The reality is there just isn't build capacity that's available. Most of it that's being used is already deployed against the leading products in the GLP-1 space, at least any scale. And new capacity has a lead time of 3 to 4 years.

Dan: More internally, we do have third parties as well. So we have we saw the announcement that came out from Novo yesterday regarding the two.

As I mentioned on the.

Earlier question related to our former Prime we are not we don't think of ourselves as capital constrained buying or building in this space. The reality is there just isn't built capacity.

Dan: Two acquired Cat Linde and <unk>.

Speaker Change: Certainly have questions about that transaction and need to learn more.

Dan: And we don't know Caroline is growth.

That's available most of it is being used is already deployed against the leading products in the GOP line space at least any scale and new capacity has a lead time.

Dan: Our manufacturer.

Dan: Commercial and pipeline products for the industry, especially in diabetes and obesity, we have products.

So all of the things that are coming online now, like we mentioned today our very large site in Concord, North Carolina, that's a big node of capacity for the sector and certainly for Lilly. I mean that was announced 2.5 years ago. And it will just begin production at the end of this year. So that's the problem.

Three to four years, so all of the things that are coming online now like we mentioned today are very large site in <unk>.

Dan: With these sites as well so our focus today is on ensuring the continuity of supply of medicines for patients is uninterrupted.

<unk> North Carolina, that's a big node of capacity for the sector and certainly for Lilly I mean that was announced two and a half years ago and it will just begin production at the end of this year. So.

Dan: Well as we intend to holding catlin accountable to their contract with us.

Dan: We look.

Dan: Gain more.

And why is that? Well, of course, greenfield building is difficult. Repurposing is difficult, but also these are technically complex facilities. There is not infinite number of people, who know how to set them up. And the supply chain for the machines that make the products is also constrained. so. At this point. Don't think there is an easy way forward and I think even in. Yesterday's announcements, we have a lot of questions about that but I think even the purchaser of our competitors. Take many years for them to be able to increase capacity within that purchase.

Dan: Information on this proposed transaction.

Speaker Change: Thank you Paul next question the.

Speaker Change: The next question is coming from James Shin from Deutsche Bank James Your line is live.

Is not infinite number of people, who know how to set the market.

Hi, good morning, Thanks for taking the question.

James Shin: Want to circle back to the Carters question.

And the supply chain for the machines that make the products is also constrained so.

Speaker Change: Given Lilly is well capitalized and manufacturing capacity being the priority.

So at this point, I don't think there is an easy way forward. And I think even in yesterday's announcements, we have a lot of questions about that. But I think even the purchaser of our competitor said it will take many years for them to be able to increase capacity within that purchase.

At this point.

Speaker Change: I mean could you expect more buybacks is build to get around some of the technical bottlenecks in the non trivial FDA process.

Don't think there is an easy way forward and I think even in.

Yesterday's announcements, we have a lot of questions about that but I think even the purchaser of our competitors.

Dan: Just want to get your thought there.

Speaker Change: Yes, maybe I'll give it a shot thanks for the question James.

Take many years for them to be able to increase capacity within that purchase.

Dan: As I mentioned earlier.

So it's just not an easy problem to solve. I think over time it will ease. There'll be more capacity brought online by us, our competitor and maybe others, including third parties. And new technologies will emerge like ORFORGLIPRON or other oral options that tap into a different asset bases. So I know it's frustrating for investors, it's frustrating for us, it's even more frustrating for patients. But it's just sort of the situation we're in as there'll be steady gains in manufacturing over the coming several years and perhaps bigger gains after that.

Dan: Earlier question related to <unk>, we are not we don't think of ourselves as capital constrained buying or building in this space. The reality is there just isn't built capacity.

It's just not an easy problem to solve I think.

Over time, it will ease there'll be more capacity brought online by us or a competitor and maybe others, including third parties and new technologies will emerge like or <unk> or other oral options.

Dan: That's available most of it is being used is already deployed against the leading products in the GOP line space at least any scale.

A different asset basis, so I know it's frustrating.

So I know it's frustrating for investors, it's frustrating for us, it's even more frustrating for patients. But it's just sort of the situation we're in as there'll be steady gains in manufacturing over the coming several years and perhaps bigger gains after that.

For investors, it's frustrating for us, it's even more frustrating for patients, but it's just sort of the situation. We're in is there'll be steady gains in manufacturing over the coming several years and perhaps bigger gains after that.

Dan: And new capacity has a lead time.

Dan: Three to four years, so all of the things that are coming online now like we mentioned today are very large site and <unk>.

Dan: <unk> North Carolina, that's a big node capacity for the sector and certainly for Lilly I mean that was announced two and a half years ago and it will just begin production at the end of this year. So.

Joe Fletcher: Thank you, Dave. Paul, next question.

Operator: The next question is from Rajesh Kumar from HSBC.

Rajesh Kumar: Hi, there. Can you give us some color on how the access with employers is playing out? Are you getting exclusive access for your drugs or you're being added to the existing access your competitor's drugs have? And what is the nature of discussions, especially given that ZEPBOUND is priced at a more attractive list price? I'm assuming with rebate, differences might be a bit smaller. But any color there might be super helpful.

Dan: The problem and why is that well of course Greenfield building is difficult repurposing is difficult, but also the these are technically complex facilities.

Can you give us some color on.

Uh huh, how the access with employers.

Playing out.

Getting exclusive access for your drug for <unk> being added to the existing access your competitive drugs have and what is the nature of discussions, especially given that.

Dan: Is not infinite number of people, who know how to set them up.

And the supply chain for the machines that make the products is also constrained so.

Dan: At this point.

Dan: Don't think there is an easy way forward and I think even in.

The pound is.

At a more attractive lift price.

Dan: Yesterday's announcements, we have a lot of questions about that but I think even the purchaser of our competitors.

Do you mean.

Right.

It might be a bit smaller.

Dan: Take many years for them to be able to increase capacity within that purchase.

Any color there might be super helpful.

Joe Fletcher: Thanks, Rajesh. I think we covered that in Chris Schott's question earlier. I don't know if Patrick would have anything to add or if we could just move on.

Dan: So.

It's just not an easy problem to solve I think.

Chris Schott's question earlier, I don't know if Patrick I have anything to add or if we could just move on. The only addition would be but we are always aiming for open access we believe thats important for the provide us and the patients. We are serving so thats going to be out and when it counts the employer opt in as well and we believe the move by pricing set down 22% below the competition despite launching with a best in class profile. It's also a good signal for increase. And enhanced employer opt in.

Chris Schott's question earlier, I don't know if Patrick I have anything to add or if we could just move on.

Dan: Over time, it will ease there'll be more capacity brought online by us or a competitor and maybe others, including third parties and new technologies will emerge like or <unk> or other oral options that tap into different asset base. So I know it's frustrating.

The only addition would be but we are always aiming for open access we believe thats important for the provide us and the patients. We are serving so thats going to be out and when it counts the employer opt in as well and we believe the move by pricing set down 22% below the competition despite launching with a best in class profile. It's also a good signal for increase.

Patrik Jonsson: No. I think the only addition would be that we are always aiming for open access. We believe that's important for the providers and patients we are serving. So that's going to be our aim when it comes to employer opt-in as well. And we believe the move by pricing ZEPBOUND 22% below the competition despite launching with a best-in-class profile is also a good signal for increased and enhanced employee opt-in.

Dan: For investors, it's frustrating for us, it's even more frustrating for patients, but it's just sort of the situation. We're in is there'll be steady gains in manufacturing over the coming several years.

And enhanced employer opt in.

Dan: <unk> bigger gains after that.

Joe Fletcher: Thank you, Patrick. Paul, next question.

Speaker Change: Thank you Dave our next question.

Operator: The next question is from Andrew Baum from Citi, Andrew.

Speaker Change: The next question is from Raj Kumar from HSBC Rich asked your line is live.

Certainly the next question is from Andrew Baum from Citi, Andrew Your line of lives.

Andrew Baum: Thank you. Could you talk to your scenario planning for post 2032, when the potential exists for generic SEMAGLUTIDE to be launched? There seems to be significant interest and investments in capacity expansion. Now, obviously this is complex, as you outlined, given not just API but [Inaudible] and IP and the rest of it. But I'm just curious, how you think about that in terms of future-proofing your business against step edits and other, thinking about your broader encretin portfolio.

Raj Kumar: Hi, there.

Could you talk to your scenario planning for post 'twenty two when the potential exists for generic <unk> launched that seems to be significant interest in investments in capacity expansion. Now. Obviously this is complex as you've outlined given not just API that fit and finish and IP in the rest of it but I'm just.

Raj Kumar: Can you give us some color on.

Speaker Change: Uh huh.

Speaker Change: Axis with employers.

Speaker Change: Playing out.

Speaker Change: Getting exclusive extra for your drug for <unk> being added to the existing access your competitive drugs have and what is the nature of discussions, especially given that.

Curious, how you think about that in terms of future proofing your business again step edits.

Dan: The pound is priced at a more attractive lift price.

Thinking about your broader enriching portfolio.

Dan: You mean with rebate differences might be a bit smaller, but any color there might be super helpful.

Thanks, Andrew for the very long term question I'll pass over to not talk about 2032 and beyond. We do look at 2003 until you actually do look beyond and the way we look at our business. It is a long term business, it's not a business that changes every year or two so we do look at the long term horizon, both in terms of commercial products as well as what's coming through the pipeline and as we think through the events of that next spring weather for our products. Sure. As our competitors are way of managing through that is to bring new breakthrough innovation to the marketplace that to raise the bar on our own innovation, we don't wait for that to occur or happened by competition, but to bring something into the market that provides a meaningfully improved outcomes for patients.

Joe Fletcher: Thanks, Andrew, for the very long-term question. I'll pass over to Anat to talk about 2032 and beyond.

We do look at 2032, and we actually do look beyond. And the way we look at our business, it is a long-term business, it's not a business that changes every year or 2. So we do look at the long-term horizon, both in terms of commercial products as well as what's coming through the pipeline. And as we think through the events of that next freeze, weather for our products or those of competitors, our way of managing through that is to bring new breakthrough innovation to the marketplace. So to raise the bar on our own innovation, we don't wait for that to occur or happened by competition, but to bring something into the market that provides a meaningfully improved outcomes for patients.

Anat Ashkenazi: We do look at 2032, and we actually do look beyond. And the way we look at our business, it is a long-term business, it's not a business that changes every year or 2. So we do look at the long-term horizon, both in terms of commercial products as well as what's coming through the pipeline. And as we think through the events of that next freeze, weather for our products or those of competitors, our way of managing through that is to bring new breakthrough innovation to the marketplace.

We do look at 2003 until you actually do look beyond and the way we look at our business. It is a long term business, it's not a business that changes every year or two so we do look at the long term horizon, both in terms of commercial products as well as what's coming through the pipeline and as we think through the events of that next spring weather for our products.

Speaker Change: Yes, Thanks for Josh I think we covered that in.

Speaker Change: Chris Schott's question earlier, I don't know if Patrick I have anything to add or if we could just move on and I think the only addition would be but we had always saving for open access we believe thats important provide us and the patients. We are serving so thats going to be out of England counsellor employer opt in as well and we believe the new bi pricing set down 22%.

Sure.

As our competitors are way of managing through that is to bring new breakthrough innovation to the marketplace that to raise the bar on our own innovation, we don't wait for that to occur or happened by competition, but to bring something into the market that provides a meaningfully improved outcomes for patients.

Speaker Change: Below the competition, despite launching with a best in class profile. It's also a good signal for increased and enhanced employee at <unk>.

So to raise the bar on our own innovation, we don't wait for that to occur or happened by competition, but to bring something into the market that provides a meaningfully improved outcomes for patients. The specific example, you use the GLPs. Certainly TIRZEPATIDE brought in a higher bar for weight loss for patients with chronic weight management. And RETATRUTIDE that Dan referenced in his comments, currently in Phase III has the potential to bring even further improved outcomes for patients. So that's how we see that.

Speaker Change: Thank you Patrick.

Speaker Change: Paul next question is theyre going to ask questions anymore.

Speaker Change: Certainly the next question is from Andrew Baum from Citi, Andrew Your line of lives.

The specific example, you use the GOP surely turns appetite, but in a higher bar for weight loss for patients with chronic weight management. And Richard trip tied that Dan referenced in his comments. Currently in phase III has the potential to bring even. Further improved. Improved outcomes for patients. So that's how we see that in terms of capacity and whether the question is on where the company should be or shouldn't be building given that there is a patent expiry at the end, we do look at that and we look at the long term horizon.

Speaker Change: Okay.

Andrew Baum: Thank you could you talk to your scenario planning for post 2032, when the potential exists for generic <unk> relaunched that seems to be significant interest in investments in capacity expansion.

And Richard trip tied that Dan referenced in his comments.

Currently in phase III has the potential to bring even.

Further improved.

Improved outcomes for patients. So that's how we see that in terms of capacity and whether the question is on where the company should be or shouldn't be building given that there is a patent expiry at the end, we do look at that and we look at the long term horizon.

Andrew Baum: Obviously this is complex as you've outlined given not just API that fit and finish and IP in the rest of it but I'm. Just curious how you think about that in terms of future proofing your business again step edits and author.

In terms of capacity, and one of the question is on whether the company should be or shouldn't be building, given that there is a patent expiry at the end, we do look at that and we look at the long-term horizon. But certainly, the investments in our manufacturing facility for example, the ones we've just mentioned whether it's in Concord, North Carolina or Research Triangle Park, between the 2 of them, it's about $4 billion investment, are certainly a good investment of our capital, given that size of opportunity over the long-term

Andrew Baum: About your broader Englishman portfolio.

But certainly the investments in our manufacturing facility for example, the ones. We just mentioned whether it's in Concord, North Carolina or research Triangle Park between the two of them about a $4 billion investment.

Speaker Change: Thanks, Andrew for the very long term question I'll pass over to not talk about 2032 and beyond.

Speaker Change: They look at 2032, and you actually do look beyond and the way we look at our business. It is a long term basis its not a business that changes every year or two so we do look at the long term horizon, both in terms of commercial products as well as what's coming through the pipeline and as we think through the events of that next spring's weather for our products.

Certainly a good investment of our capital given that size of opportunity over the long over the long term I. I will say that as you think about potential for the generic or Biosimilar entry in this space in general. We will require quite a massive investment in capital. Just the sites that I've mentioned today on the call and we've talked about for the past year or so. Total about $11 billion and that's on top of or in a substantial network. We have around the globe, primarily in the U S and Europe. For production so. As you think about entering into that space the work by some significant capital commitments.

Certainly a good investment of our capital given that size of opportunity over the long over the long term

I will say that as you think about potential for the generic or biosimilar entry in this space in general, it will require quite a massive investment in capital. Just the sites that I've mentioned today on the call and we've talked about for the past year or so, total about $11 billion. And that's on top of already substantial network we have around the globe, primarily in the U.S. and Europe, for production. So as you think about entering into that space, it will require some significant capital commitments.

I will say that as you think about potential for the generic or Biosimilar entry in this space in general.

We will require quite a massive investment in capital.

Speaker Change: For those of competitors are way of managing through that is to bring new breakthrough innovation to the marketplace to raise the bar on our own innovation, we don't wait for that to occur or have been by competition.

Just the sites that I've mentioned today on the call and we've talked about for the past year or so.

Total about $11 billion and that's on top of or in a substantial network. We have around the globe, primarily in the U S and Europe.

Speaker Change: Bring something into the market that provides a meaningfully.

Speaker Change: Improved outcomes for patients.

For production so.

Speaker Change: A specific example, you use the GOP surely tours appetite, but in a higher bar for weight loss for patients with chronic weight management in <unk>.

As you think about entering into that space the work by some significant capital commitments.

Joe Fletcher: Thank you, Anat. Maybe a final question, Paul, and then we'll wrap up.

Joe Fletcher: Maybe a final question, Paul, and then we'll wrap up.

Speaker Change: Tie that Dan referenced in his comments.

Operator: The next question is from Tim Anderson from Wolfe Research.

Speaker Change: Currently in phase III has the potential to bring even.

Thank you so much. So one of the competitor datasets, obviously, everyone's watching as the Amgen data this year. And their messaging is around longer dosing frequency, monthly dosing and then possibly a greater effect of weight loss off-therapy. Can you comment on your views of the value of extended dosing like monthly or longer? And then do you believe in that argument about efficacy being sustained off-therapy? Or is that just a function of the fact that this drug last longer? Dan ill start with the second and then maybe Patrick will weigh in on potential value here. Although that could be a good question for Amgen. I think the sustainability data I saw that colocation or a bit underwhelmed. It's a very high dose drug.

Timothy Anderson: Thank you so much. So one of the competitor datasets, obviously, everyone's watching as the Amgen data this year. And their messaging is around longer dosing frequency, monthly dosing and then possibly a greater effect of weight loss off-therapy. Can you comment on your views of the value of extended dosing like monthly or longer? And then do you believe in that argument about efficacy being sustained off-therapy? Or is that just a function of the fact that this drug last longer?

Speaker Change: Further improved.

So one of the competitor data sets, obviously everyone's watching as the Amgen data this year and their messaging is around <unk>.

Speaker Change: Improved outcomes for patients. So that's how we see that in terms of capacity and whether the question is on where the company should be or shouldnt be building given that there is a patent expiry at the end.

Longer.

Dosing frequency monthly dosing and then possibly a greater effect of weight loss off therapy.

Speaker Change: Look at that and you look at the long term horizon.

Can you comment on your value.

Speaker Change: But certainly the investments in our manufacturing facility for example, the ones. We just mentioned whether it's in Concord, North Carolina or research Triangle Park between the two events about a $4 billion investment.

On your views of the value of extended dosing like monthly or longer and then do you believe in that argument about.

Efficacy.

Being sustained off therapy or is that just a function of the fact that this drug class longer.

Speaker Change: Alright, certainly a good investment of our capital given that size of opportunity over the long over the long term.

Dan ill start with the second and then maybe Patrick will weigh in on potential value here. Although that could be a good question for Amgen. I think the sustainability data I saw that colocation or a bit underwhelmed. It's a very high dose drug.

Joe Fletcher: Dan?

Dan Skovronsky : I'll start with the second and then maybe Patrick will weigh in on potential value here, although that could be a good question for Amgen. Look, I think the sustainability data I saw in that publication are a bit underwhelming. And it's a very high-dose drug at half-life of an antibody. So just based on plasma concentrations that would be extended to--expected to remain there after a month or 2.

Dan ill start with the second and then maybe Patrick will weigh in on potential value here.

Speaker Change: I will say that as you.

Speaker Change: You think about potential for either generic or Biosimilar entry in this space in general.

Although that could be a good question for Amgen.

I think the sustainability data I saw that colocation or a bit underwhelmed.

Speaker Change: All required quite a massive investment in capital.

Speaker Change: Just the sites that I've mentioned today on the call and we've talked about for the past year or so.

It's a very high dose drug.

<unk>. Half life of an antibody. So just based on plasma concentrations that would be extended to expect it to remain there after a month or two. It doesn't surprise me, but. What we're seeing is that at doses that are reasonably well tolerated. If there were any doses that are reasonably well tolerated a weight losses lower than what we would need to see to take a molecule to phase III for sure. Sustainability doesn't appear to be at all differentiated okay.

<unk>. Half life of an antibody. So just based on plasma concentrations that would be extended to expect it to remain there after a month or two.

Half life of an antibody. So just based on plasma concentrations that would be extended to expect it to remain there after a month or two.

Speaker Change: Total about $11 million and that's on top of or the substantial network. We have around the globe, primarily in the U S and Europe.

It doesn't surprise me, but what we're seeing is that at doses that are reasonably well tolerated, if there were any doses that are reasonably well tolerated, a weight loss is lower than what we would need to see to take a molecule to Phase III for sure. And sustainability doesn't appear to be at all differentiated.

It doesn't surprise me, but.

Speaker Change: For production.

What we're seeing is that at doses that are reasonably well tolerated. If there were any doses that are reasonably well tolerated a weight losses lower than what we would need to see to take a molecule to phase III for sure.

Speaker Change: As you think about entering into that space. So we're quite some significant capital commitments.

Speaker Change: Maybe the final question, Paul and then we'll wrap up.

Speaker Change: Certainly the next question is from Tim Anderson from Wolfe Research, Tim Your line is live.

Sustainability doesn't appear to be at all differentiated okay.

Oh, thank you so much.

Patrik Jonsson: My only addition would be that the way we look at the market research, of course, convenience is one factor. But it's not necessarily the most important factor when it comes to provider and consumer selecting treatment. So I'm really excited about the cores we have in our hands, of course, TIRZEPATIDE remaining a foundational treatment for obesity, but also with the addition of RETATRUTIDE and ORFORGLIPRON, and also the opportunities here to look into options with additional non-weight loss-dependent pharmacology to complement the asset we have in the pipeline.

Tim Anderson: So one of the competitor datasets, obviously everyone's watching as the Amgen data this year and their messaging is around <unk>.

Tim Anderson: Longer.

Tim Anderson: Dosing frequency monthly dosing and then possibly a greater effect of weight loss off therapy.

Of course, its appetite, Romania Thunder foundational treatment for obesity, but also with the addition of <unk> and also the opportunities that they're looking to options with additional non weight loss dependent pharmacology to to complement the asset we have in the pipeline.

Can you comment on your value.

Tim Anderson: Your views of the value of extended dosing like monthly or longer and then do you believe in that argument about.

Tim Anderson: Efficacy.

Tim Anderson: <unk> sustained off therapy or is that just a function of the fact that this drug class longer.

Joe Fletcher: Thank you, both. Dave, do you want to wrap this up?

Okay. Dave do you want to wrap it so

Dave do you want to wrap it so yes absolutely.

Dave do you want to wrap it so

Tim Anderson: Dan ill start with the second and then maybe Patrick will weigh in on potential value here.

Dave Ricks: Yes, absolutely. That's good, Joe. Thanks. We appreciate everyone participating today and, of course, your interest in the company. 2023 was a really productive year for Lilly. And we look forward to continued momentum in 2024 with a strong guide today. Thanks again for dialing in. And please follow up with Joe and the IR team, if you have additional questions that weren't answered. Thanks.

That's good Joe. Thanks, we appreciate everyone participating today and of course your interest in the company.

Speaker Change #100: Although that could be a good question for Amgen.

Speaker Change #100: I think the sustainability data I saw that colocation or a bit underwhelmed.

2023 was a really productive year for Lilly and we look forward to continued momentum in 2024.

Speaker Change #101: It's a very high dose drug.

Speaker Change #101: The half life of an antibody. So just based on plasma concentrations that would be extended to expect it to remain there after a month or two it doesn't surprise me but.

With a strong guide today, thanks again for dialing in and please follow up with Joe and the IR team. If you have additional questions that weren't answered. Thanks.

Operator: Thank you. Ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1 p.m. today running through February 20th at midnight. You may access the replay system at anytime by dialing (803) 332-6854 and entering the access code 187676. International dialers can call (973) 528-0005. Thank you for your participation. You may now disconnect your lines.

Speaker Change #101: What we're seeing is that at doses that are reasonably well tolerated. If there were any doses that are reasonably well tolerated a weight loss is lower than what we would need to see to take a molecule to phase III for sure.

Thank you ladies and gentlemen, this does conclude our conference for today.

The conference will be made available for replay beginning at one P. M. Today running through February 20th at Midnight. You may access the replay system at anytime by dialing 803, three to 6854 and entering the access code 187676 International Dialers can call nine 735, 280005 again those numbers are 833 to 685. <unk> and 90 735 280005 with the access code 187676. Thank you for your participation you may now disconnect your lines.

Speaker Change #101: Sustainability doesn't appear to be at all differentiated.

You may access the replay system at anytime by dialing 803, three to 6854 and entering the access code 187676 International Dialers can call nine 735, 280005 again those numbers are 833 to 685.

Speaker Change #102: My only addition would be that the way we look at the market research. Our core convenience is one factor, but it's not necessarily the most important factor when it comes to provider and consumer set that can treat Matt. So I'm really excited about the costs, we have in our hands of course, its appetite, Romania foundational treatment for obesity.

<unk> and 90 735 280005 with the access code 187676. Thank you for your participation you may now disconnect your lines.

Also with the addition of <unk> and also the opportunities here to look into options with additional non weight loss dependent pharmacology to complement the asset we have in the pipeline.

Speaker Change #103: Thank you both.

Speaker Change #103: Dave do you want to wrap it so yes absolutely.

David A. Ricks: That's good. Thanks, we appreciate everyone participating today and of course your interest in the company.

David A. Ricks: 2023 was a really productive year for Lilly and we look forward to continued momentum in 2024.

David A. Ricks: With a strong guide today, thanks again for dialing in and please follow up with Joe and the IR team. If you have additional questions that weren't answered. Thanks.

David A. Ricks: Okay.

Speaker Change #104: Thank you ladies and gentlemen, this does conclude our conference for today.

Speaker Change #105: The conference will be made available for replay beginning at one P. M. Today running through February 20th at Midnight.

Speaker Change #105: You may access the replay system at anytime by dialing 803, three to six to 854 and entering the access code 187, 676 International Dialers can call nine $735 280005 again those numbers are 833 to six to eight five.

Speaker Change #105: <unk> and 90 735 280005 with the access code 107 676. Thank you for your participation you may now disconnect your lines.

Speaker Change #105: [music].

Speaker Change #106: Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q4 2023 earnings call.

Speaker Change #107: At this time all participants are in a listen only mode. Later, we will be conducting a question and answer session and instructions will be given at that time.

Speaker Change #107: Should you request assistance during the call. Please press Star then zero and an operator will assist you offline.

Speaker Change #107: I would now like to turn the conference over to your host Joe Fletcher Senior Vice President of Investor Relations. Please go ahead.

Joe Fletcher: Good morning, and thank you Paul and thanks for joining us totally <unk> Company's Q4 2020 earnings in 2024 guidance call and Joe <unk> Senior Vice President of Investor Relations and joining me on today's call are Dave Ricks, Lilly's, Chairman and CEO and not Ashkenazi Chief Financial Officer, Dr. Dan <unk>, Chief Scientific officer, and President of Lilly.

Joe Fletcher: <unk> and white President of Lilly neuroscience.

Joe Fletcher: President of <unk> International Jacob <unk>, President of blocks of ability and Patrik Jonsson, President of Lilly diabetes, and obesity and liver USA. We're also joined by MS. You have of IR insights trying other law in Turkey of the Investor Relations team.

Joe Fletcher: During this conference call, we anticipate making projections and forward looking statements based on our current expectations 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.

Joe Fletcher: Commission the.

Joe Fletcher: The information, we provide about our products and pipeline is for the benefit of the investment community. It's not intended to be promotional and is not sufficient for prescribing decisions.

Joe Fletcher: We transitioned our prepared remarks. Please note that our commentary will focus on non-GAAP financial measures.

Joe Fletcher: Now I'll turn the call over to David Alright. Thanks, Joe 2023 was a year of advancement across our company. We grew our topline we progressed our pipeline advanced our external innovation agenda through partnerships and collaborations with.

Joe Fletcher: We continue to invest in quality.

David R. Risinger: The reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new lifesaving and life changing medicines to more patients.

Speaker Change #108: In 2023 revenue grew 20% for the full year and 28% for the most recent quarter.

Speaker Change #109: Our newly launched portfolio continued to gain momentum.

Speaker Change #109: This past year, we announced positive phase III for <unk> appetite mirror, Kitimat, and <unk> burden that we have.

Speaker Change #109: Also announced positive phase II results for <unk> as well as our Tatro Todd and move these two important molecules into phase III.

Speaker Change #109: In terms of external innovation in 2023, we continue to complement our pipeline through acquisitions and collaborations. These transactions included the acquisition of dice therapeutics points Biopharma for Santos bio emergence therapeutics <unk> biosciences.

Speaker Change #109: No track as well as signal on therapeutics.

Speaker Change #109: We announced several significant investments and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

Speaker Change #109: Most recently, we announced plans to construct a new high Tech manufacturing site in Germany. This.

Speaker Change #109: This facility will further expand the company's global injectable product and device manufacturing network.

Speaker Change #109: <unk> for our diabetes and obesity portfolio.

Speaker Change #109: Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk>.

Speaker Change #109: Herb glass in the U S and EU EU, rather and an expanded label for <unk> and two new indications for <unk>.

Speaker Change #109: This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

Speaker Change #109: As you can see on slide four we continued to make progress against our strategic deliverables in Q4.

Speaker Change #109: Revenue grew 28% with our new products growing by over $2 billion.

Speaker Change #109: Since our last earnings call, we achieved several key pipeline milestones. In addition to this earthbound at JP <unk> approvals today, we announced topline results for the tourist appetite phase III synergy Nash trial.

As well as the Virginia Phase III cyclone two trial.

Speaker Change #109: Dan will talk more about these update in his update.

Speaker Change #109: In terms of business development in Q4, we completed the acquisition of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio ligand therapies.

Speaker Change #109: Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

Speaker Change #109: On slide five Youll see a list of key events since our Q3 earnings call.

Operator: A question-and-answer session, and instructions will be given at that time. Should you request assistance during the call, please press star, then zero, and an operator will assist you offline. I would now like to turn the conference over to your host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead.

Later, we will be conducting a question and answer session and instructions will be given at that time.

Should you request assistance during the call. Please press Star then zero on an operator will assist you offline.

I would now like to turn the conference over to your host Joe Fletcher Senior Vice President of Investor Relations. Please go ahead.

Joe Fletcher: Good morning and thank you, Paul, and thanks for joining us for Eli Lilly and Company's Q4 2023 earnings and 2024 guidance call. I'm Joe Fletcher, Senior Vice President of Investor Relations, and joining me on today's call are Dave Ricks, Lilly's Chair and CEO; Anat Ashkenazi, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology; Anne White, President of Lilly Neuroscience; Ilya Yufa, President of Lilly International; Jake Van Naarden, President of Loxo@Lilly; and Patrik Jonsson, President of Lilly Diabetes and Obesity and Lilly USA. We're also joined by Michaela Irons, Vice President, and Lauren Zierke of the Investor Relations team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations, actual results that could differ materially due to several factors, including those listed on slide three.

Good morning, and thank you Paul and thanks for joining us totally in company's Q4 2020 earnings in 2024 guidance call I'm, Joe <unk> Senior Vice President of Investor Relations and joining me on today's call are Dave Ricks, Lilly's, Chairman and CEO and not Ashkenazi Chief Financial Officer, Dr. Dan <unk>, Chief Scientific officer, and President of alumina.

<unk> and white President of Lilly neuroscience.

President of <unk> International Jake Van Norton President of blocks of what Lilly and Patrik Jonsson, President of Lilly diabetes, and obesity and Louis USA. We're also joined by Mccabe of Iron by spring another more in Turkey of the Investor Relations team.

During this conference call, we anticipate making projections and forward-looking statements based on our current expectations, actual results that could differ materially due to several factors, including those listed on slide three.

During this conference call, we anticipate making projections and forward looking statements based on our current expectations 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 10-K and subsequent forms 10-Q, and 8-K filed with the securities and exchange can.

Joe Fletcher: 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's 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.

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's 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.

Mission.

Dave Ricks: All right, thanks, Joe. 2023 was a year of advancement across our company. We grew our top line, we progressed our pipeline, advanced our external innovation agenda through partnerships and collaborations. We continue to invest in quality, the reliability, and the resilience of our company's manufacturing infrastructure, and most importantly, delivered new, life-saving and life-changing medicines to more patients. In 2023, revenue grew 20% for the full year and 28% for the most recent quarter as our newly launched portfolio continued to gain momentum. This past year, we announced positive phase 3s for donanemab, tirzepatide, mirikizumab, and pirtobrutinib. We also announced a positive phase 2 result for orforglipron as well as retatrutide and moved these two important molecules into phase 3. In terms of external innovation, in 2023, we continued to complement our pipeline through acquisitions and collaborations.

Thanks, Joe 2023 was a year advanced spend across our company. We grew our topline we progressed our pipeline advanced our external innovation agenda through partnerships and collaborations.

We continue to invest in quality.

The reliability and the resilience of our company's manufacturing infrastructure and most importantly delivered new lifesaving and life changing medicines to more patients.

In 2023 revenue grew 20% for the full year and 28% for the most recent quarter.

This past year, we announced positive phase 3s for donanemab, tirzepatide, mirikizumab, and pirtobrutinib. We also announced a positive phase 2 result for orforglipron as well as retatrutide and moved these two important molecules into phase 3. In terms of external innovation, in 2023, we continued to complement our pipeline through acquisitions and collaborations.

As our newly launched portfolio continued to gain momentum.

This past year, we announced positive phase III for Donut, Imap tours appetite mirror Kitimat and <unk> Burton.

We also announced positive phase II results for <unk>.

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These two important molecules into phase III.

In terms of external innovation in 2023, we continue to complement our pipeline through acquisitions and collaborations.

Dave Ricks: These transactions included the acquisition of DICE Therapeutics, POINT Biopharma, Versanis Bio, Emergence Therapeutics, Mablink Biosciences, ImmunoTrack, as well as Sigilon Therapeutics. We announced several significant investments in manufacturing, including plans to expand capacity at the company's Research Triangle Park facility and the two manufacturing sites within the LEAP Innovation Park in Boone County, Indiana. Most recently, we announced plans to construct a new high-tech manufacturing site in Germany. This facility will further expand the company's global injectable product and device manufacturing network, including for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients. In 2023, we received regulatory approvals for Zepbound, Jaypirca, Omvoh, Ebglyss in the US, in the EU, rather, and an expanded label for Verzenio and two new indications for Jardiance. This progress will serve as a foundation to drive top-tier revenue growth and margin expansion over time.

These transactions included the acquisition of DICE Therapeutics, POINT Biopharma, Versanis Bio, Emergence Therapeutics, Mablink Biosciences, ImmunoTrack, as well as Sigilon Therapeutics. We announced several significant investments in manufacturing, including plans to expand capacity at the company's Research Triangle Park facility and the two manufacturing sites within the LEAP Innovation Park in Boone County, Indiana. Most recently, we announced plans to construct a new high-tech manufacturing site in Germany.

These transactions included the acquisition of Dice Therapeutics point, Biopharma <unk> bio emergence therapeutics Madeline Biosciences.

No track as well as signal on therapeutics.

We announced several significant investments and investments in manufacturing, including plans to expand capacity at the Companys Research Triangle Park facility and the two manufacturing sites within the Leap Innovation Park in Boone County, Indiana.

This facility will further expand the company's global injectable product and device manufacturing network, including for our diabetes and obesity portfolio. Most importantly, this past year, we brought innovative new medicines to patients. In 2023, we received regulatory approvals for Zepbound, Jaypirca, Omvoh, Ebglyss in the US, in the EU, rather, and an expanded label for Verzenio and two new indications for Jardiance. This progress will serve as a foundation to drive top-tier revenue growth and margin expansion over time.

Most recently, we announced plans to construct a new high Tech manufacturing site in Germany. This.

This facility will further expand the company's global injectable product and device manufacturing network, including for our diabetes and obesity portfolio.

Most importantly, this past year, we brought innovative new medicines to patients in 2023, we received regulatory approvals for <unk> <unk>.

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This progress will serve as a foundation to drive top tier revenue growth and margin expansion over time.

Dave Ricks: As you can see on slide four, we continue to make progress against our strategic deliverables in Q4. Revenue grew 28% with our new products growing by over $2 billion. Since our last earnings call, we achieved several key pipeline milestones. In addition to the Zepbound and Jaypirca CLL approvals, today we announced top-line results for the tirzepatide Phase 2 Synergy NASH trial, as well as the Verzenio Phase 3 Cyclone 2 trial. Dan will talk more about these updates in his update. In terms of business development, in Q4, we completed the acquisitions of Mablink Biosciences and POINT Biopharma, the latter of which expands our capacity and capability into radioligand therapies. Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

As you can see on slide four, we continue to make progress against our strategic deliverables in Q4. Revenue grew 28% with our new products growing by over $2 billion. Since our last earnings call, we achieved several key pipeline milestones. In addition to the Zepbound and Jaypirca CLL approvals, today we announced top-line results for the tirzepatide Phase 2 Synergy NASH trial, as well as the Verzenio Phase 3 Cyclone 2 trial.

Joe Fletcher: As you can see on slide four we continued to make progress against our strategic deliverables in Q4.

Joe Fletcher: Revenue grew 28% with our new products growing by over $2 billion.

Joe Fletcher: Since our last earnings call, we achieved several key pipeline milestones. In addition to the ZIP bound and <unk> approvals today, we announced topline results for the tourist appetite phase two synergy Nash trial as.

Dan will talk more about these updates in his update. In terms of business development, in Q4, we completed the acquisitions of Mablink Biosciences and POINT Biopharma, the latter of which expands our capacity and capability into radioligand therapies. Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

Joe: As well as the Virginia Phase III cyclone two trial.

Joe: Dan will talk more about these update in his update.

Joe: In terms of business development in Q4, we completed the acquisition of <unk> Bioscience and point Biopharma, the latter of which expands our capacity and capability into radio ligand therapies.

Speaker Change: Lastly, we announced a 15% dividend increase for the sixth consecutive year and distributed over $1 billion in dividends in the fourth quarter.

Dave Ricks: On slide five, you'll see a list of key events since our Q3 earnings call, including several important regulatory, clinical, and other updates. Now I'll turn the call over to Anat to review our Q4 results.

On slide five, you'll see a list of key events since our Q3 earnings call, including several important regulatory, clinical, and other updates. Now I'll turn the call over to Anat to review our Q4 results.

Speaker Change: On slide five Youll see a list of key events since our Q3 earnings call, including several important regulatory clinical and other updates.

Anat Ashkenazi: Thanks, Dave. Slide six summarizes financial performance in the fourth quarter of 2023, and I'll focus my comments on non-GAAP performance. We are pleased with the strong financial performance in the fourth quarter and for the full year. Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products. Q4 revenue increased 28% compared to Q4 2022. Excluding divestiture, this represents a quarter-over-quarter acceleration in revenue growth driven by Mounjaro, Verzenio, Jardiance, and the recent launch of Zepbound. For the full year, revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82.3%. Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses.

Speaker Change #108: Now I will turn the call over to and not to review our Q4 results.

David A. Ricks: Thanks, Dave.

David A. Ricks: <unk> six summarizes <unk> financial performance in the fourth quarter of 2023.

Joe Fletcher: Lucas My comment on non-GAAP performance.

Joe Fletcher: We are pleased with the strong financial performance in the fourth quarter and for the full year our.

Terence Flynn: Our performance was highlighted by continued acceleration of revenue growth driven by our new products and growth products.

Excluding divestiture, this represents a quarter-over-quarter acceleration in revenue growth driven by Mounjaro, Verzenio, Jardiance, and the recent launch of Zepbound. For the full year, revenue increased 20% driven by robust volume growth of 16%. Gross margin as a percent of revenue increased to 82.3%. Gross margin in the quarter benefited from higher realized prices, partially offset by higher manufacturing expenses.

Q4 revenue increased 20.

Anat Ashkenazi: Marketing, selling, and administrative expenses increased 17%, primarily driven by higher expenses associated with launches of new products and additional indications, as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research, as well as higher incentive compensation costs. In Q4, we recognized acquired IPR&D charges of $623 million, which negatively impacted EPS by $0.62. In Q4 2022, acquired IPR&D charges totaled $240 million, or $0.23 negative impact to EPS. Operating income increased 29% in Q4, driven by higher revenue from new launches, partially offset by operating expense growth. Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately 7 percentage points attributable to acquired IPR&D charges. Our Q4 effective tax rate was 13.1% compared to 7.3% in Q4 2022.

Marketing, selling, and administrative expenses increased 17%, primarily driven by higher expenses associated with launches of new products and additional indications, as well as higher incentive compensation costs. R&D expenses increased 28%, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research, as well as higher incentive compensation costs.

In Q4, we recognized acquired IPR&D charges of $623 million, which negatively impacted EPS by $0.62. In Q4 2022, acquired IPR&D charges totaled $240 million, or $0.23 negative impact to EPS. Operating income increased 29% in Q4, driven by higher revenue from new launches, partially offset by operating expense growth. Operating income as a percent of revenue was approximately 28% for the quarter and included a negative impact of approximately 7 percentage points attributable to acquired IPR&D charges. Our Q4 effective tax rate was 13.1% compared to 7.3% in Q4 2022.

Anat Ashkenazi: The higher effective tax rate for Q4 2023 was primarily driven by a lower net discrete tax benefit compared to the same period in 2022 and the new Puerto Rico tax regime. At the bottom line, we delivered earnings per share of $2.49 in Q4, a 19% increase compared to Q4 2022, inclusive of the negative impact of $0.62 from acquired IPR&D charges compared to $0.23 in Q4 2022. On slide eight, we quantify the effect of price, rate, and volume on revenue growth. US revenue increased 39% in Q4, driven by robust growth of Mounjaro, Verzenio, and Zepbound. Net price in the US increased 27% for the quarter, driven by Mounjaro access and savings cards dynamic, as well as a one-time favorable change in estimates for rebates and discounts. Excluding Mounjaro, net price in the US decreased by high single digits.

The higher effective tax rate for Q4 2023 was primarily driven by a lower net discrete tax benefit compared to the same period in 2022 and the new Puerto Rico tax regime. At the bottom line, we delivered earnings per share of $2.49 in Q4, a 19% increase compared to Q4 2022, inclusive of the negative impact of $0.62 from acquired IPR&D charges compared to $0.23 in Q4 2022.

On slide eight, we quantify the effect of price, rate, and volume on revenue growth. US revenue increased 39% in Q4, driven by robust growth of Mounjaro, Verzenio, and Zepbound. Net price in the US increased 27% for the quarter, driven by Mounjaro access and savings cards dynamic, as well as a one-time favorable change in estimates for rebates and discounts. Excluding Mounjaro, net price in the US decreased by high single digits.

Anat Ashkenazi: Europe continued to show strong growth in Q4, excluding $65 million in revenue associated with milestones received for the EU approval and launch of Ebglyss. Revenue was up 11% in constant currency, driven primarily by volume growth of Verzenio, Jardiance, and Taltz. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of Verzenio and Mounjaro. Moving to China, Q4 revenue increased 7% in constant currency with volume growth of 10%, partially offset by price declines. Volume growth in Q4 was primarily driven by private investments. We were pleased to see China return to growth in 2023. Revenue in the rest of the world decreased 10% in constant currency.

Europe continued to show strong growth in Q4, excluding $65 million in revenue associated with milestones received for the EU approval and launch of Ebglyss. Revenue was up 11% in constant currency, driven primarily by volume growth of Verzenio, Jardiance, and Taltz. For Japan, we were pleased to see robust growth in Q4 as revenue increased 15% in constant currency, driven primarily by volume growth of Verzenio and Mounjaro.

Moving to China, Q4 revenue increased 7% in constant currency with volume growth of 10%, partially offset by price declines. Volume growth in Q4 was primarily driven by private investments. We were pleased to see China return to growth in 2023. Revenue in the rest of the world decreased 10% in constant currency.

Anat Ashkenazi: However, when you exclude the impact of the Q4 2022 sales of rights for LIMTEN Korea and Taiwan, sales grew 9% in constant currency, driven primarily by volume growth of Mounjaro and Verzenio. Slide nine shows the contribution to worldwide volume growth by product category. As you can see, the new products and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter. Slide 10 provides additional perspective across our product categories. First, I would like to highlight Verzenio, which saw worldwide sales growth of 42% in Q4, driven by robust demand growth and, to a lesser extent, higher realized prices. The continued positive momentum is driven by the early breast cancer indication, with steady performance in the metastatic indication. Jardiance continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter.

However, when you exclude the impact of the Q4 2022 sales of rights for LIMTEN Korea and Taiwan, sales grew 9% in constant currency, driven primarily by volume growth of Mounjaro and Verzenio. Slide nine shows the contribution to worldwide volume growth by product category. As you can see, the new products and growth product categories combined contributed approximately 15 percentage points of volume growth for the quarter. Slide 10 provides additional perspective across our product categories.

First, I would like to highlight Verzenio, which saw worldwide sales growth of 42% in Q4, driven by robust demand growth and, to a lesser extent, higher realized prices. The continued positive momentum is driven by the early breast cancer indication, with steady performance in the metastatic indication. Jardiance continued its strong 2023 performance with worldwide revenue growth of 30% for the quarter.

Anat Ashkenazi: In the US, Jardiance revenue increased 29%, driven by increased demand. In Q4, worldwide Trulicity revenue declined 14%. US revenue decreased 18%, driven by lower volume and lower realized prices. We experienced intermittent delays for filling orders of Trulicity. Starting in early December and going through January, all dose strengths of Trulicity were indicated as having limited availability on the FDA drug shortage site. We expect to experience intermittent delays for filling orders of certain doses in the coming months. In international markets, Trulicity volume continued to be affected by measures we have taken to minimize potential disruption to existing patients, including communications to healthcare professionals not to start new patients on Trulicity. Moving to seven, Mounjaro continued its robust growth as more type 2 diabetes patients benefited from the medicine. Q4 revenue grew to over $2.2 billion globally, up from $1.4 billion in Q3 2023.

In the US, Jardiance revenue increased 29%, driven by increased demand. In Q4, worldwide Trulicity revenue declined 14%. US revenue decreased 18%, driven by lower volume and lower realized prices. We experienced intermittent delays for filling orders of Trulicity. Starting in early December and going through January, all dose strengths of Trulicity were indicated as having limited availability on the FDA drug shortage site.

We expect to experience intermittent delays for filling orders of certain doses in the coming months. In international markets, Trulicity volume continued to be affected by measures we have taken to minimize potential disruption to existing patients, including communications to healthcare professionals not to start new patients on Trulicity. Moving to seven, Mounjaro continued its robust growth as more type 2 diabetes patients benefited from the medicine. Q4 revenue grew to over $2.2 billion globally, up from $1.4 billion in Q3 2023.

Anat Ashkenazi: In the US, Mounjaro revenue of $2.1 billion in Q4, up from $1.3 billion in Q3 2023, benefited from a one-time change in estimates for rebates and discounts. Adjusting for this one-time change, sequential net sales in the US would have grown approximately 30% in Q4. Since our last call, we further expanded patient access to Mounjaro. As of 1 February, access for patients with type 2 diabetes in the US was 90% in aggregate across commercial, and Part D, including 92% access for commercial patients. This expanded access puts Mounjaro near parity with established injectable incretins and gives more patients the opportunity to start therapy on Mounjaro for type 2 diabetes. Since the $25 non-covered copay card program expired on 30 June, we now consider all prescriptions paid.

In the US, Mounjaro revenue of $2.1 billion in Q4, up from $1.3 billion in Q3 2023, benefited from a one-time change in estimates for rebates and discounts. Adjusting for this one-time change, sequential net sales in the US would have grown approximately 30% in Q4. Since our last call, we further expanded patient access to Mounjaro. As of 1 February, access for patients with type 2 diabetes in the US was 90% in aggregate across commercial, and Part D, including 92% access for commercial patients.

This expanded access puts Mounjaro near parity with established injectable incretins and gives more patients the opportunity to start therapy on Mounjaro for type 2 diabetes. Since the $25 non-covered copay card program expired on 30 June, we now consider all prescriptions paid.

Anat Ashkenazi: Compared to Q4 2022, Mounjaro net price in Q4 2023 benefited from this change to the copay card program in the US. Recall that after a change to the non-covered copay program in late 2022, patients already started on the $25 copay card could remain in the program until 30 June 2023. Today, commercially insured patients without coverage utilize the current non-covered copay program and pay roughly half the list price for Mounjaro prescription. Turning to slide 12, in November, we received FDA approval for Zepbound for adults with obesity or those who are overweight and have weight-related comorbidities. We then announced on 5 December 2023 that Zepbound was available at US pharmacies, and we started building commercial formulary access before the end of the year. We are pleased with the early access of approximately 1/3 of commercial lives covered as of 1 February 2024.

Compared to Q4 2022, Mounjaro net price in Q4 2023 benefited from this change to the copay card program in the US. Recall that after a change to the non-covered copay program in late 2022, patients already started on the $25 copay card could remain in the program until 30 June 2023. Today, commercially insured patients without coverage utilize the current non-covered copay program and pay roughly half the list price for Mounjaro prescription.

Turning to slide 12, in November, we received FDA approval for Zepbound for adults with obesity or those who are overweight and have weight-related comorbidities. We then announced on 5 December 2023 that Zepbound was available at US pharmacies, and we started building commercial formulary access before the end of the year. We are pleased with the early access of approximately 1/3 of commercial lives covered as of 1 February 2024.

Anat Ashkenazi: Access in this market will be more gradual as individual employers need to opt in to coverage after the typical formulary contracting takes place. We are focused on building formulary access and employer opt-ins, but we expect that it will take some time before we reach broad open access in this market. Meanwhile, a commercial savings card program is available at US pharmacies for those who do not yet have coverage. In Medicare Part D, weight loss drugs are still prohibited from reimbursement. In Q4, we recognized $176 million in sales for Zepbound, with approximately 3/4 of that coming from initial channel stocking. The initial prescription trends we have seen are encouraging. On slide 13, we provide an update on capital allocation.

Meanwhile, a commercial savings card program is available at US pharmacies for those who do not yet have coverage. In Medicare Part D, weight loss drugs are still prohibited from reimbursement. In Q4, we recognized $176 million in sales for Zepbound, with approximately 3/4 of that coming from initial channel stocking. The initial prescription trends we have seen are encouraging. On slide 13, we provide an update on capital allocation.

Anat Ashkenazi: Looking forward to 2024 and beyond, we have confidence in our existing commercial portfolio, bolstered by the recent launches of Mounjaro, Jaypirca, Omvoh, and Zepbound, and the potential launches of donanemab and lebrikizumab, all of which we expect to serve as drivers for continued growth through the balance of the decade. On slide 14, you'll see a summary of our outlook outlining our capital deployment decisions in relation to achievement of our strategic deliverables. We will invest in our current portfolio and in the future innovation through R&D, business development, and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life-changing medicines to patients. We will continue to return capital to our shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital. Moving to slide 15, we highlight some of the dynamics that may impact our 2024 financial results.

Looking forward to 2024 and beyond, we have confidence in our existing commercial portfolio, bolstered by the recent launches of Mounjaro, Jaypirca, Omvoh, and Zepbound, and the potential launches of donanemab and lebrikizumab, all of which we expect to serve as drivers for continued growth through the balance of the decade. On slide 14, you'll see a summary of our outlook outlining our capital deployment decisions in relation to achievement of our strategic deliverables.

We will invest in our current portfolio and in the future innovation through R&D, business development, and a comprehensive manufacturing expansion agenda designed to drive revenue growth and speed life-changing medicines to patients. We will continue to return capital to our shareholders through dividend increases in line with earnings growth over time and share repurchases with excess capital. Moving to slide 15, we highlight some of the dynamics that may impact our 2024 financial results.

Anat Ashkenazi: We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture, growing nearly 30% at the midpoint of our guidance range, driven by positive momentum from recently launched products. In incretins, anticipated growth will be led by Mounjaro and Zepbound. In 2023, we made tremendous strides in expanding access from Mounjaro, and we entered 2024 with 90% of commercial and Part D lives covered. Zepbound coverage is off to a good start since its early December launch, and we expect both Trulicity and Zepbound to contribute substantially to Lilly's revenue growth in 2024. While we expect Mounjaro and Zepbound to be drivers of revenue growth, this will be partially offset by an expected continuation of the softer Trulicity sales trends that we saw in the second half of 2023. Recent revenue declines for Trulicity in the US have been driven by supply tightness.

We expect continued robust revenue growth with revenue from our core business, which excludes revenue from divestiture, growing nearly 30% at the midpoint of our guidance range, driven by positive momentum from recently launched products. In incretins, anticipated growth will be led by Mounjaro and Zepbound. In 2023, we made tremendous strides in expanding access from Mounjaro, and we entered 2024 with 90% of commercial and Part D lives covered.

Zepbound coverage is off to a good start since its early December launch, and we expect both Trulicity and Zepbound to contribute substantially to Lilly's revenue growth in 2024. While we expect Mounjaro and Zepbound to be drivers of revenue growth, this will be partially offset by an expected continuation of the softer Trulicity sales trends that we saw in the second half of 2023. Recent revenue declines for Trulicity in the US have been driven by supply tightness.

Anat Ashkenazi: Volume has also been impacted by our actions outside the US. As for supply outlook for incretins, our manufacturing organization continues to execute well on the most ambitious expansion agenda in our company's long history. Given strong demand and time required to bring capacity fully online, we continue to expect demand to outpace supply in 2024. In late 2022, we shared our expectation that by year-end 2023, our capacity for incretins onto injector pens would double. This goal was achieved through significant efforts from our manufacturing colleagues and partners around the globe. In 2024, our capacity expansion efforts will continue with equal urgency and will be accomplished not just through increased auto injector capacity, but also through alternative presentation like our multi-use KwikPen, which received regulatory approval in the UK in late January.

Volume has also been impacted by our actions outside the US. As for supply outlook for incretins, our manufacturing organization continues to execute well on the most ambitious expansion agenda in our company's long history. Given strong demand and time required to bring capacity fully online, we continue to expect demand to outpace supply in 2024. In late 2022, we shared our expectation that by year-end 2023, our capacity for incretins onto injector pens would double.

This goal was achieved through significant efforts from our manufacturing colleagues and partners around the globe. In 2024, our capacity expansion efforts will continue with equal urgency and will be accomplished not just through increased auto injector capacity, but also through alternative presentation like our multi-use KwikPen, which received regulatory approval in the UK in late January.

Anat Ashkenazi: We expect our parenteral manufacturing site in Concord, North Carolina, will initiate production as early as the end of 2024, with product available to ship in 2025, and we are pursuing a host of other projects, internal and external, large and small, to further expand capacity. Now, I'll provide a bit more context on the timing and pace of our increases and supply plans in 2024. While we're continuing to expand supply every quarter, we expect the most significant production increases to come in the second half of the year. We expect our production of sellable doses in the second half of 2024 will be at least 1.5x the production in the second half of 2023.

We expect our parenteral manufacturing site in Concord, North Carolina, will initiate production as early as the end of 2024, with product available to ship in 2025, and we are pursuing a host of other projects, internal and external, large and small, to further expand capacity.

Now, I'll provide a bit more context on the timing and pace of our increases and supply plans in 2024. While we're continuing to expand supply every quarter, we expect the most significant production increases to come in the second half of the year. We expect our production of sellable doses in the second half of 2024 will be at least 1.5x the production in the second half of 2023.

Anat Ashkenazi: Note that while last year, our commentary focused on capacity of auto injectors devices compared to 2022, we're now referring sellable doses produced, which is more relevant to patients and investors. Beyond incretins, we look forward to progressing our launch trajectory for two other Lilly medicines approved to launch in 2023, Jaypirca and Omvoh. Jaypirca was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program, received FDA approval also under the accelerated approval program in December 2023 for adult patients with CLL or SLL who have received at least two prior lines of therapy. We look forward to the ongoing opportunity to help patients with this medicine as our best phase 3 program continues.

Note that while last year, our commentary focused on capacity of auto injectors devices compared to 2022, we're now referring sellable doses produced, which is more relevant to patients and investors. Beyond incretins, we look forward to progressing our launch trajectory for two other Lilly medicines approved to launch in 2023, Jaypirca and Omvoh.

Jaypirca was initially approved by the FDA in January 2023 for adult patients with relapsed or refractory mantle cell lymphoma under the accelerated approval program, received FDA approval also under the accelerated approval program in December 2023 for adult patients with CLL or SLL who have received at least two prior lines of therapy. We look forward to the ongoing opportunity to help patients with this medicine as our best phase 3 program continues.

Anat Ashkenazi: Omvoh was approved in October 2023 in the US and earlier that year in Japan, Europe, and other markets and represents a compelling new option for patients struggling with moderate to severe ulcerative colitis. In 2024, we look forward to potential US launches of two more medicines, donanemab and lebrikizumab. We continue to expect FDA regulatory actions on donanemab in Q4 2024 and remain confident in the substantial potential for donanemab to benefit patients with Alzheimer's disease. Due to the current state of diagnostic and treatment readiness, initial uptake will be somewhat limited, and we expect donanemab to contribute only modestly to growth in 2024 once approved. Lebrikizumab, which last year was approved and launched in Europe under the brand name Ebglyss by our partner Almirall, received regulatory approval in Japan in January.

Omvoh was approved in October 2023 in the US and earlier that year in Japan, Europe, and other markets and represents a compelling new option for patients struggling with moderate to severe ulcerative colitis. In 2024, we look forward to potential US launches of two more medicines, donanemab and lebrikizumab. We continue to expect FDA regulatory actions on donanemab in Q4 2024 and remain confident in the substantial potential for donanemab to benefit patients with Alzheimer's disease

. Due to the current state of diagnostic and treatment readiness, initial uptake will be somewhat limited, and we expect donanemab to contribute only modestly to growth in 2024 once approved. Lebrikizumab, which last year was approved and launched in Europe under the brand name Ebglyss by our partner Almirall, received regulatory approval in Japan in January.

Anat Ashkenazi: As for the US, we look forward to the potential approval of lebrikizumab by the end of the year. We believe the efficacy, safety, and dosing of lebrikizumab can make it a compelling option for patients and prescribers in a large and growing market for the treatment of moderate to severe atopic dermatitis. Given the expected timing of FDA regulatory action, we expect lebrikizumab to contribute only modestly to revenue growth in 2024. Beyond our recently launched portfolio of medicine, we expect continued growth from Verzenio driven by the early breast cancer indication, where the magnitude and maturity of our clinical data reinforces it as a standard of care treatment in node-positive high-risk early breast cancer.

As for the US, we look forward to the potential approval of lebrikizumab by the end of the year. We believe the efficacy, safety, and dosing of lebrikizumab can make it a compelling option for patients and prescribers in a large and growing market for the treatment of moderate to severe atopic dermatitis. Given the expected timing of FDA regulatory action, we expect lebrikizumab to contribute only modestly to revenue growth in 2024.

Beyond our recently launched portfolio of medicine, we expect continued growth from Verzenio driven by the early breast cancer indication, where the magnitude and maturity of our clinical data reinforces it as a standard of care treatment in node-positive high-risk early breast cancer.

Anat Ashkenazi: Jardiance has been another outstanding contributor to growth, and we expect revenue growth to continue in 2024, though at a slower pace as strong strip growth may be dampened by pricing dynamics in the US. Outside the US, we expect an acceleration of growth in every major geography, led not only by the anticipated launches of Trulicity but also continued strong growth of Verzenio, Jardiance, and Taltz. Lastly, we seek to create long-term value beyond this decade. We will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint. Slide 16 summarizes our initial 2024 financial guidance. Starting at the top line, revenue is expected to be between $40.4 billion and $41.6 billion.

Jardiance has been another outstanding contributor to growth, and we expect revenue growth to continue in 2024, though at a slower pace as strong strip growth may be dampened by pricing dynamics in the US. Outside the US, we expect an acceleration of growth in every major geography, led not only by the anticipated launches of Trulicity but also continued strong growth of Verzenio, Jardiance, and Taltz. Lastly, we seek to create long-term value beyond this decade.

We will continue to invest across our value chain in our recent and upcoming potential launches in our pipeline and in our manufacturing footprint. Slide 16 summarizes our initial 2024 financial guidance. Starting at the top line, revenue is expected to be between $40.4 billion and $41.6 billion.

Anat Ashkenazi: Using the midpoint of the 2024 range, this represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023. In terms of phasing of our revenue growth throughout 2024, while we don't provide quarterly guidance, we expect revenue growth to accelerate in the second half of the year, consistent with the increased availability of increases and doses. In terms of pricing for our core business, which excludes divestitures, we expect a high single-digit percent price decline in 2024. The lingering base period impact of the Mounjaro non-covered copay card dynamics will dampen these price declines in the first half of 2024, with more significant price declines expected in the second half of the year. Starting this year, we're taking a streamlined approach to our guidance line items relating to expenses.

Using the midpoint of the 2024 range, this represents roughly 20% growth or 29% growth for our core business, which excludes the impact of divestitures that took place in 2023. In terms of phasing of our revenue growth throughout 2024, while we don't provide quarterly guidance, we expect revenue growth to accelerate in the second half of the year, consistent with the increased availability of increases and doses.

In terms of pricing for our core business, which excludes divestitures, we expect a high single-digit percent price decline in 2024. The lingering base period impact of the Mounjaro non-covered copay card dynamics will dampen these price declines in the first half of 2024, with more significant price declines expected in the second half of the year. Starting this year, we're taking a streamlined approach to our guidance line items relating to expenses.

Anat Ashkenazi: Rather than providing three separate guidance line items for gross margin, research and development costs, and marketing and sales administrative costs, we are presenting a single new ratio representing our margin after planned costs, calculated by subtracting R&D costs and marketing, sales, and administrative costs from gross margin and dividing that figure by revenue. We express this ratio as a percentage, and for 2024, we expect it to be in the range of 31% to 33% on a non-GAAP basis. While we are not providing a specific guidance number for gross margin as a percent of sales, our expectations remain consistent that we will maintain gross margin of approximately 80% on a non-GAAP basis as productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

Rather than providing three separate guidance line items for gross margin, research and development costs, and marketing and sales administrative costs, we are presenting a single new ratio representing our margin after planned costs, calculated by subtracting R&D costs and marketing, sales, and administrative costs from gross margin and dividing that figure by revenue. We express this ratio as a percentage, and for 2024, we expect it to be in the range of 31% to 33% on a non-GAAP basis.

While we are not providing a specific guidance number for gross margin as a percent of sales, our expectations remain consistent that we will maintain gross margin of approximately 80% on a non-GAAP basis as productivity gains and volumes are offset by pricing pressures and the cost of new manufacturing facilities.

Anat Ashkenazi: As for expense growth across key categories, we expect marketing, sales, and administrative expenses to again grow in 2024, though at a slower pace than revenue, with growth driven by marketing investments in our recently launched and upcoming launch products. We also expect R&D expenses in 2024 to increase, driven by growing investments across all phases of our pipeline as we invest for the future, with the majority of dollar growth driven by ongoing and new late-phase opportunities. We expect R&D expenses to increase at a higher rate than marketing, sales, and administrative expenses. Other income and expenses are expected to be between $400 million and $500 million of expense, primarily driven by higher interest expense. Turning to taxes, we expect our 2024 non-GAAP effective tax rate to be approximately 14%.

As for expense growth across key categories, we expect marketing, sales, and administrative expenses to again grow in 2024, though at a slower pace than revenue, with growth driven by marketing investments in our recently launched and upcoming launch products. We also expect R&D expenses in 2024 to increase, driven by growing investments across all phases of our pipeline as we invest for the future, with the majority of dollar growth driven by ongoing and new late-phase opportunities.

We expect R&D expenses to increase at a higher rate than marketing, sales, and administrative expenses. Other income and expenses are expected to be between $400 million and $500 million of expense, primarily driven by higher interest expense. Turning to taxes, we expect our 2024 non-GAAP effective tax rate to be approximately 14%.

Anat Ashkenazi: Note that this rate does not assume withdrawal or repeal of the provision in the 2017 tax act requiring capitalization and amortization of research and development expenses for tax purposes. Should such a change take effect, our effective tax rate for 2024 would be moderately higher. Earnings per share is expected to be in the range of $12.20 to 12.70 on a non-GAAP basis. Consistent with our prior practice, we're not including any potential or pending acquired IPR&D and development milestone charges in our 2024 guidance, and we will provide updates each quarter on the impact of IPR&D on earnings per share if acquired IPR&D and development milestone charges are incurred. For guidance modeling purposes, we're currently estimating diluted weighted average share outstanding for 2024 to be approximately 903 million. We entered 2024 with strong momentum and a remarkable opportunity to help millions more patients with our medicines.

Note that this rate does not assume withdrawal or repeal of the provision in the 2017 tax act requiring capitalization and amortization of research and development expenses for tax purposes. Should such a change take effect, our effective tax rate for 2024 would be moderately higher. Earnings per share is expected to be in the range of $12.20 to 12.70 on a non-GAAP basis.

Consistent with our prior practice, we're not including any potential or pending acquired IPR&D and development milestone charges in our 2024 guidance, and we will provide updates each quarter on the impact of IPR&D on earnings per share if acquired IPR&D and development milestone charges are incurred. For guidance modeling purposes, we're currently estimating diluted weighted average share outstanding for 2024 to be approximately 903 million. We entered 2024 with strong momentum and a remarkable opportunity to help millions more patients with our medicines.

Anat Ashkenazi: For our investors, 2024 should be another exciting year driven by expected revenue growth in our core business nearing 30% and continued investment to drive future growth. Our outlook for top-tier revenue growth and operating margin expansion remains on track. Now, I'll turn the call over to Dan to highlight our continued progress in R&D. Thanks, Anat. I'll start with our progress against diabetes, obesity, and complications thereof. Today, we announced positive results from Synergy NASH, a phase 2 study of Trulicity in adults with biopsy-proven metabolic dysfunction-associated steatohepatitis, also known as MASH. As shown on Slide 17, the study met its primary endpoint, with up to 74% of participants achieving an absence of MASH with no worsening of fibrosis at 52 weeks, compared to less than 13% of participants reaching this endpoint on placebo.

For our investors, 2024 should be another exciting year driven by expected revenue growth in our core business nearing 30% and continued investment to drive future growth. Our outlook for top-tier revenue growth and operating margin expansion remains on track. Now, I'll turn the call over to Dan to highlight our continued progress in R&D.

Daniel Skovronsky: Thanks, Anat. I'll start with our progress against diabetes, obesity, and complications thereof. Today, we announced positive results from Synergy NASH, a phase 2 study of Trulicity in adults with biopsy-proven metabolic dysfunction-associated steatohepatitis, also known as MASH. As shown on Slide 17, the study met its primary endpoint, with up to 74% of participants achieving an absence of MASH with no worsening of fibrosis at 52 weeks, compared to less than 13% of participants reaching this endpoint on placebo.

Anat Ashkenazi: We are equally encouraged by results seen in the secondary endpoint evaluating improvement in fibrosis. While the study was not designed to be statistically powered to evaluate improvement in fibrosis, the study results showed a clinically meaningful treatment effect across all doses on the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of MASH to placebo. The adverse events were consistent with those observed in other clinical trials studying Trulicity in people living with obesity or type 2 diabetes. The full Synergy NASH results will be presented at a medical conference later this year. As you know, late last year, we received FDA approval of Zepbound, which marks Lilly's first approved treatment for obesity. This is a landmark occasion for patients and for the field.

We are equally encouraged by results seen in the secondary endpoint evaluating improvement in fibrosis. While the study was not designed to be statistically powered to evaluate improvement in fibrosis, the study results showed a clinically meaningful treatment effect across all doses on the proportion of participants achieving a decrease of at least one fibrosis stage with no worsening of MASH to placebo.

The adverse events were consistent with those observed in other clinical trials studying Trulicity in people living with obesity or type 2 diabetes. The full Synergy NASH results will be presented at a medical conference later this year. As you know, late last year, we received FDA approval of Zepbound, which marks Lilly's first approved treatment for obesity. This is a landmark occasion for patients and for the field.

Anat Ashkenazi: Zepbound is the first and only approved treatment activating two incretin hormone receptors, GIP and GLP-1, to tackle an underlying cause of excess weight. Also, in early-stage development, we have now advanced our glucose-sensing insulin receptor agonist for the treatment of diabetes into phase 1 and our long-acting atrial natriuretic peptide for treatment of heart failure into phase 1. We've advanced mazdutide into phase 2 for obesity as we've begun to dose patients in that study. We are pleased that early this year, our partner Innovent reported positive results in the phase 3 GLORY-1 study of mazdutide in Chinese adults with obesity. Innovent holds the development and commercialization rights for mazdutide in China, and Lilly retains the rights in the rest of the world. Moving to oncology.

Zepbound is the first and only approved treatment activating two incretin hormone receptors, GIP and GLP-1, to tackle an underlying cause of excess weight. Also, in early-stage development, we have now advanced our glucose-sensing insulin receptor agonist for the treatment of diabetes into phase 1 and our long-acting atrial natriuretic peptide for treatment of heart failure into phase 1.

We've advanced mazdutide into phase 2 for obesity as we've begun to dose patients in that study. We are pleased that early this year, our partner Innovent reported positive results in the phase 3 GLORY-1 study of mazdutide in Chinese adults with obesity. Innovent holds the development and commercialization rights for mazdutide in China, and Lilly retains the rights in the rest of the world. Moving to oncology.

Anat Ashkenazi: Today, we shared that in the Phase 3 CYCLONE-2 trial, Verzenio added to abiraterone did not meet the primary endpoint of improved radiographic progression-free survival in men with metastatic castration-resistant prostate cancer. For the study, we employed an adaptive Phase 2/3 design, and while the Phase 2 stage met the pre-specified threshold for the independent data monitoring committee to recommend initiation of Phase 3, the signal was not confirmed in the Phase 3 portion in a larger sample size. The overall safety and tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the CYCLONE-2 study at a future medical meeting.

Today, we shared that in the Phase 3 CYCLONE-2 trial, Verzenio added to abiraterone did not meet the primary endpoint of improved radiographic progression-free survival in men with metastatic castration-resistant prostate cancer.

For the study, we employed an adaptive Phase 2/3 design, and while the Phase 2 stage met the pre-specified threshold for the independent data monitoring committee to recommend initiation of Phase 3, the signal was not confirmed in the Phase 3 portion in a larger sample size. The overall safety and tolerability profile was consistent with the known profiles of the medicines. We anticipate sharing full results from the CYCLONE-2 study at a future medical meeting.

Anat Ashkenazi: Since our last earnings call, Jaypirca received approval under the FDA's accelerated approval program for the treatment of adult patients with CLL or SLL who have received at least two prior lines of therapy, including a BTK inhibitor and a BCL-2 inhibitor. We also reported that the Phase 3 confirmatory trial intended to convert this approval to traditional approval, known as Bruin CLL 321, met its primary endpoint, and we plan to present these data at an upcoming medical meeting. With the CLL and SLL approvals, Jaypirca is now the first and only FDA-approved non-covalent BTK inhibitor that can extend the benefit of targeting the BTK pathway in CLL and SLL patients previously treated with a covalent BTK inhibitor and a BCL-2 inhibitor. This was the second approval for Jaypirca in 2023, with the first in patients with MCL.

Since our last earnings call, Jaypirca received approval under the FDA's accelerated approval program for the treatment of adult patients with CLL or SLL who have received at least two prior lines of therapy, including a BTK inhibitor and a BCL-2 inhibitor.

We also reported that the Phase 3 confirmatory trial intended to convert this approval to traditional approval, known as Bruin CLL 321, met its primary endpoint, and we plan to present these data at an upcoming medical meeting. With the CLL and SLL approvals, Jaypirca is now the first and only FDA-approved non-covalent BTK inhibitor that can extend the benefit of targeting the BTK pathway in CLL and SLL patients previously treated with a covalent BTK inhibitor and a BCL-2 inhibitor. This was the second approval for Jaypirca in 2023, with the first in patients with MCL.

Anat Ashkenazi: We believe these two indications only represent the beginning of the eventual impact Jaypirca can have for patients, and we look forward to seeing the data from the rest of the Phase 3 program across CLL, SLL, and MCL. In Q4, we completed the acquisition of Point Biopharma, which begins Lilly's entry into radioligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers. We welcome our new Point colleagues to Lilly, and we look forward to building on their work to grow this capability at Lilly. 2024 is also poised to be a particularly productive year for new clinical starts in oncology, as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago after the Loxo acquisition.

We believe these two indications only represent the beginning of the eventual impact Jaypirca can have for patients, and we look forward to seeing the data from the rest of the Phase 3 program across CLL, SLL, and MCL. In Q4, we completed the acquisition of Point Biopharma, which begins Lilly's entry into radioligand therapy, a promising technology with potential to deliver meaningful advances against a range of cancers.

We welcome our new Point colleagues to Lilly, and we look forward to building on their work to grow this capability at Lilly. 2024 is also poised to be a particularly productive year for new clinical starts in oncology, as we begin to see the results of the new oncology R&D strategy that we implemented about four years ago after the Loxo acquisition.

Anat Ashkenazi: Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year: a wild-type selective KRAS G12D inhibitor, a pan-KRAS inhibitor, two antibody-drug conjugates with topoisomerase payloads, one against Nectin-4 and one against folate receptor alpha, and an actinium PSMA radioligand therapy. I'll speak in a moment about our clinical KRAS G12C program, but you can see that we're putting real effort into developing a suite of RAS-directed therapeutics, and we're excited to see those discovery efforts result in three potential medicines so far. Of course, we'll have to see which of these deliver on our target clinical profiles, but we're optimistic about this early-phase portfolio, and we've certainly diversified the modalities in our pipeline.

Through a combination of internal discovery efforts and business development, we expect to put at least five new molecules into the clinic this year: a wild-type selective KRAS G12D inhibitor, a pan-KRAS inhibitor, two antibody-drug conjugates with topoisomerase payloads, one against Nectin-4 and one against folate receptor alpha, and an actinium PSMA radioligand therapy.

I'll speak in a moment about our clinical KRAS G12C program, but you can see that we're putting real effort into developing a suite of RAS-directed therapeutics, and we're excited to see those discovery efforts result in three potential medicines so far. Of course, we'll have to see which of these deliver on our target clinical profiles, but we're optimistic about this early-phase portfolio, and we've certainly diversified the modalities in our pipeline.

Anat Ashkenazi: In addition, we're excited that olomorasib, our KRAS G12C inhibitor, has progressed into phase 2 as we're finalizing dose selection under Project Optimus for the phase 3 program, which we plan to start later this year. You can now see the full design of that study on clinicaltrials.gov. By way of reminder, we started this program years behind our competitors, and through focused effort behind what looks like a great molecule to us, we've made up the vast majority of that time. We believe we're now neck and neck with our closest competitors with a medicine that we hope to show combines better with PD-1. Lastly, in oncology, we've terminated development of our RET inhibitor 2 as it did not meet our threshold to move forward with internal development. In immunology, we moved two new assets into phase 1, and we advanced our Kv1.3 antagonist for psoriasis into phase 2.

In addition, we're excited that olomorasib, our KRAS G12C inhibitor, has progressed into phase 2 as we're finalizing dose selection under Project Optimus for the phase 3 program, which we plan to start later this year. You can now see the full design of that study on clinicaltrials.gov. By way of reminder, we started this program years behind our competitors, and through focused effort behind what looks like a great molecule to us, we've made up the vast majority of that time.

We believe we're now neck and neck with our closest competitors with a medicine that we hope to show combines better with PD-1. Lastly, in oncology, we've terminated development of our RET inhibitor 2 as it did not meet our threshold to move forward with internal development. In immunology, we moved two new assets into phase 1, and we advanced our Kv1.3 antagonist for psoriasis into phase 2.

Anat Ashkenazi: Lebrikizumab was approved in the EU for atopic dermatitis under the brand name Ebglyss, which is marketed by our partner Almirall there. In January of this year, we were pleased to have Ebglyss approved in Japan. In neuroscience, in January, our wholly owned subsidiary Akouos announced positive clinical results from the phase 1/2 AK-OTOF-101 study, which demonstrated hearing restoration within 30 days of a single administration in the first participant, an individual with more than a decade of profound hearing loss. The surgical administration and the investigational therapy were well tolerated, and no serious adverse events were reported. These results highlight our commitment to help solve some of humanity's most challenging healthcare problems and make life better for individual patients. We now show OTOF gene therapy in phase 2 on our pipeline chart as we've begun enrolling younger patients in the phase 2 portion of the study.

Lebrikizumab was approved in the EU for atopic dermatitis under the brand name Ebglyss, which is marketed by our partner Almirall there. In January of this year, we were pleased to have Ebglyss approved in Japan. In neuroscience, in January, our wholly owned subsidiary Akouos announced positive clinical results from the phase 1/2 AK-OTOF-101 study, which demonstrated hearing restoration within 30 days of a single administration in the first participant, an individual with more than a decade of profound hearing loss.

The surgical administration and the investigational therapy were well tolerated, and no serious adverse events were reported. These results highlight our commitment to help solve some of humanity's most challenging healthcare problems and make life better for individual patients. We now show OTOF gene therapy in phase 2 on our pipeline chart as we've begun enrolling younger patients in the phase 2 portion of the study.

Anat Ashkenazi: On slide 18, we highlight our select pipeline assets with updates of the last earnings call, and slide 19 summarizes our key events for 2023. I noted the key updates on each of these slides in my therapeutic area comments. Turning to slide 20, we'd like to highlight potential key events for 2024. As you can see, this year will be another important year as we look to progress our late-stage pipeline. In 2023, we initiated phase 3 development programs for our next generation of incretins, which are our oral agent orforglipron and our novel weekly injectable triagonist retatrutide. These programs are progressing and enrolling well. We look forward to seeing the first set of phase 3 results on orforglipron next year. This year, we're planning to initiate a phase 3 program in type 2 diabetes for retatrutide, complementing the ongoing trials in obesity and related complications.

On slide 18, we highlight our select pipeline assets with updates of the last earnings call, and slide 19 summarizes our key events for 2023. I noted the key updates on each of these slides in my therapeutic area comments. Turning to slide 20, we'd like to highlight potential key events for 2024. As you can see, this year will be another important year as we look to progress our late-stage pipeline.

In 2023, we initiated phase 3 development programs for our next generation of incretins, which are our oral agent orforglipron and our novel weekly injectable triagonist retatrutide. These programs are progressing and enrolling well. We look forward to seeing the first set of phase 3 results on orforglipron next year. This year, we're planning to initiate a phase 3 program in type 2 diabetes for retatrutide, complementing the ongoing trials in obesity and related complications.

Anat Ashkenazi: Also this year, we are planning to initiate a Phase 3 program for lepodisiran, our Lp(a)-lowering siRNA therapy in cardiovascular disease. On Trulicity, we're looking forward to a number of additional key data readouts this year. Beyond Synergy NASH, we expect to see results from the Phase 3 obstructive sleep apnea, and Phase 3 heart failure studies this year. We note increased investor interest in the timing of CVOT, and we can reiterate that we expect the data in 2025, notwithstanding the clinicaltrials.gov listing, which will be updated soon to reflect our current assumptions based on event rate. By the end of 2024, we expect to have results of SURMOUNT-5, which is our head-to-head study of Trulicity compared to high-dose semaglutide in participants with obesity. We also expect the full Phase 3 program readout on our weekly basal insulin, insulin efsitora alfa, later this year.

Also this year, we are planning to initiate a Phase 3 program for lepodisiran, our Lp(a)-lowering siRNA therapy in cardiovascular disease. On Trulicity, we're looking forward to a number of additional key data readouts this year. Beyond Synergy NASH, we expect to see results from the Phase 3 obstructive sleep apnea, and Phase 3 heart failure studies this year.

We note increased investor interest in the timing of CVOT, and we can reiterate that we expect the data in 2025, notwithstanding the clinicaltrials.gov listing, which will be updated soon to reflect our current assumptions based on event rate. By the end of 2024, we expect to have results of SURMOUNT-5, which is our head-to-head study of Trulicity compared to high-dose semaglutide in participants with obesity. We also expect the full Phase 3 program readout on our weekly basal insulin, insulin efsitora alfa, later this year.

Anat Ashkenazi: Moving to neuroscience, we're looking forward to FDA action and the potential launch of donanemab in Q1 of this year, and we are progressing with regulatory reviews around the world. We've now launched a p-tau217 blood-based diagnostic test, and we will continue to scale this throughout 2024. We'll also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease. In immunology, following the mirikizumab positive phase 3 data in Crohn's disease, we plan to submit to the FDA for this indication this year. Additionally, following the US FDA complete response letter on lebrikizumab, we expect regulatory action by the end of the year in the US. Finally, in oncology, as I mentioned before, we look forward to moving our KRAS G12C inhibitor, olomorasib, into phase 3 later this year following phase 2 dose selection.

Moving to neuroscience, we're looking forward to FDA action and the potential launch of donanemab in Q1 of this year, and we are progressing with regulatory reviews around the world. We've now launched a p-tau217 blood-based diagnostic test, and we will continue to scale this throughout 2024.We'll also continue to partner with others in the field to ensure physicians have multiple tools to aid in timely and accurate diagnosis of Alzheimer's disease.

In immunology, following the mirikizumab positive phase 3 data in Crohn's disease, we plan to submit to the FDA for this indication this year. Additionally, following the US FDA complete response letter on lebrikizumab, we expect regulatory action by the end of the year in the US. Finally, in oncology, as I mentioned before, we look forward to moving our KRAS G12C inhibitor, olomorasib, into phase 3 later this year following phase 2 dose selection.

Anat Ashkenazi: Lastly, we're looking forward to seeing the results of our imlunestrant Phase 3 study, EMBER-3, in participants with metastatic breast cancer in both monotherapy and in combination with Verzenio. This past year was busy and productive, and we expect more of the same in 2024 as we make meaningful progress advancing our pipeline for the benefit of patients. I'll turn the call back to closing remarks. Yeah, thanks, Dan, and congrats to you and the Lilly team for a big year. Before we go to Q&A, let me briefly sum up our progress in the fourth quarter. Q4 revenue growth accelerated as our recently launched product portfolio continued to gain momentum. We achieved meaningful advances in our late-stage pipeline with the FDA approvals of Zepbound and Jaypirca.

Lastly, we're looking forward to seeing the results of our imlunestrant Phase 3 study, EMBER-3, in participants with metastatic breast cancer in both monotherapy and in combination with Verzenio. This past year was busy and productive, and we expect more of the same in 2024 as we make meaningful progress advancing our pipeline for the benefit of patients. I'll turn the call back to closing remarks.

Dave Ricks: Yeah, thanks, Dan, and congrats to you and the Lilly team for a big year. Before we go to Q&A, let me briefly sum up our progress in the fourth quarter. Q4 revenue growth accelerated as our recently launched product portfolio continued to gain momentum. We achieved meaningful advances in our late-stage pipeline with the FDA approvals of Zepbound and Jaypirca.

Anat Ashkenazi: We continue to invest in recent and upcoming launches, late-stage medicines, early-phase capabilities, and in business development, all of which will serve as a foundation for future growth. In Q4, we completed the acquisition of Point Biopharma and announced plans to build a new manufacturing site in Germany. We returned over $1 billion to shareholders via the dividend. Lastly, in January, we announced that Johna Norton, our Executive Vice President of Global Quality, will be retiring at the end of July after 34 years of service. During her tenure, Johna has overseen significant expansion, modernization, and improvements in our quality and manufacturing processes. I'd like to thank her for her many years of outstanding service to Lilly. Now I'll turn the call over to Joe to moderate our Q&A session. Thanks, Dave. Before diving into the Q&A, I wanted to clarify one point.

We continue to invest in recent and upcoming launches, late-stage medicines, early-phase capabilities, and in business development, all of which will serve as a foundation for future growth. In Q4, we completed the acquisition of Point Biopharma and announced plans to build a new manufacturing site in Germany. We returned over $1 billion to shareholders via the dividend. Lastly, in January, we announced that Johna Norton, our Executive Vice President of Global Quality, will be retiring at the end of July after 34 years of service.

During her tenure, Johna has overseen significant expansion, modernization, and improvements in our quality and manufacturing processes. I'd like to thank her for her many years of outstanding service to Lilly. Now I'll turn the call over to Joe to moderate our Q&A session.

Joe Fletcher: Thanks, Dave. Before diving into the Q&A, I wanted to clarify one point.

Anat Ashkenazi: We may have had some muffled sound during Dan's prepared remarks regarding the timing of regulatory action on donanemab, and as Dan mentioned, that timing is expected to be Q1 of 2024 this year. I received some notes that there were some muffled sounds, so I just wanted to clarify on that important point. Now, for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner. So, consistent with prior quarters, we'll respond to one question per caller, so we ask you to limit to one question per caller. We'll end the call at 11:15AM. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. Paul, please provide the instructions for the Q&A, and we're ready for the first caller. Thank you.

We may have had some muffled sound during Dan's prepared remarks regarding the timing of regulatory action on donanemab, and as Dan mentioned, that timing is expected to be Q1 of 2024 this year. I received some notes that there were some muffled sounds, so I just wanted to clarify on that important point. Now, for Q&A, we'd like to take questions from as many callers as possible and conclude the call in a timely manner.

So, consistent with prior quarters, we'll respond to one question per caller, so we ask you to limit to one question per caller. We'll end the call at 11:15AM. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. Paul, please provide the instructions for the Q&A, and we're ready for the first caller. Thank you.

Anat Ashkenazi: At this time, we will be conducting a question-and-answer session. If you have any questions, please press star one on your phone at this time. We ask that participants limit themselves to one question on today's call. If you do have a follow-up question, please rejoin the queue by pressing star one at any time. We also ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. The first question today is coming from Terrence Flynn from Morgan Stanley. Terrence, your line is live. Great. Thanks so much for taking the question. Congrats on all the progress. Just wondering for your GLP-1 franchise, ex-US under index versus your key competitor, just wondering what are some of the hurdles to closing that gap as we think about the ramp in 2024, but also into 2025? Thank you.

Operator: At this time, we will be conducting a question-and-answer session. If you have any questions, please press star one on your phone at this time. We ask that participants limit themselves to one question on today's call. If you do have a follow-up question, please rejoin the queue by pressing star one at any time. We also ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality.The first question today is coming from Terrence Flynn from Morgan Stanley. Terrence, your line is live.

Terence Flynn: Great. Thanks so much for taking the question. Congrats on all the progress. Just wondering for your GLP-1 franchise, ex-US under index versus your key competitor, just wondering what are some of the hurdles to closing that gap as we think about the ramp in 2024, but also into 2025? Thank you.

Anat Ashkenazi: Thanks, Terrence, for the question. I'll hand it over to Ilya Yufa, president of Lilly International, for that question. Great. Thanks, Terrence. As we think about Mounjaro launches outside of the US, we have already launched in a number of select markets. We have a foundation to be competitive in many of our markets, and we anticipate continued launches. We've just launched in vial format in select markets outside of the US, namely in Australia, Canada, Germany, and Poland. And we just received a KwikPen approval in the UK, and so we're anticipating launch there as we get additional regulatory approvals for our multi-use KwikPen. And we monitor our ramp-up and capacity for supply. We'll continue to launch in other markets throughout the year, and so we anticipate further growth anticipated for launches of Mounjaro outside of the US.

Anat Ashkenazi: Thanks, Terrence, for the question. I'll hand it over to Ilya Yufa, president of Lilly International, for that question.

Ilya Yufa: Great. Thanks, Terrence. As we think about Mounjaro launches outside of the US, we have already launched in a number of select markets. We have a foundation to be competitive in many of our markets, and we anticipate continued launches.

We've just launched in vial format in select markets outside of the US, namely in Australia, Canada, Germany, and Poland. And we just received a KwikPen approval in the UK, and so we're anticipating launch there as we get additional regulatory approvals for our multi-use KwikPen. And we monitor our ramp-up and capacity for supply. We'll continue to launch in other markets throughout the year, and so we anticipate further growth anticipated for launches of Mounjaro outside of the US.

Anat Ashkenazi: and continue with that throughout the year as well as into 2025. Thanks, Ilya. Paul, next question. The next question is coming from Chris Schott from J.P. Morgan. Chris, your line is live. Great. Thanks so much. On Zepbound, it seems like you're making strong progress on coverage, but just interested in expectations for the remainder of this year as we think about just where coverage could go and just how to think about ASP. I guess the core question is, is it reasonable to think that most payers who cover will add Zepbound this year? Thank you. Thanks, Chris. I'll hand over to Patrik to comment on that question about Zepbound coverage. Yes, thank you very much, Chris. As stated, we are pleased. We are so early in launch with 35% commercial access, having contract release and Cigna.

and continue with that throughout the year as well as into 2025.

Dave Ricks: Thanks, Ilya. Paul, next question.

Operator: The next question is coming from Chris Schott from J.P. Morgan. Chris, your line is live.

Chris Schott: Great. Thanks so much. On Zepbound, it seems like you're making strong progress on coverage, but just interested in expectations for the remainder of this year as we think about just where coverage could go and just how to think about ASP. I guess the core question is, is it reasonable to think that most payers who cover will add Zepbound this year? Thank you.

Dave Ricks: Thanks, Chris. I'll hand over to Patrik to comment on that question about Zepbound coverage.

Patrik Jonsson: Yes, thank you very much, Chris. As stated, we are pleased. We are so early in launch with 35% commercial access, having contract release and Cigna.

Anat Ashkenazi: Our efforts moving forward will really be to continue to expand payer access, but not only. We will do that with a very disciplined approach as we did with Mounjaro, but also to make sure that we get to employer opt-in. As I alluded to in her prepared remarks, that's going to take some time, but we are assuming that with the current access we have, that our access will be along the lines of what the competition has referred to, around 50%. Let me just emphasize that when it comes to employer opt-in, there is not one reliable source for employer opt-in. I think that's something that we need to continue to monitor, and we'll come back with more data during coming earnings calls. Overall, a good start, and we will continue our efforts to increase payer access.

Our efforts moving forward will really be to continue to expand payer access, but not only. We will do that with a very disciplined approach as we did with Mounjaro, but also to make sure that we get to employer opt-in. As I alluded to in her prepared remarks, that's going to take some time, but we are assuming that with the current access we have, that our access will be along the lines of what the competition has referred to, around 50%.

Let me just emphasize that when it comes to employer opt-in, there is not one reliable source for employer opt-in. I think that's something that we need to continue to monitor, and we'll come back with more data during coming earnings calls. Overall, a good start, and we will continue our efforts to increase payer access.I think we're quite encouraged with what we have heard from the marketplace so far. Employer opt-in will take longer, but we believe that we are well positioned in that regard as well.

Anat Ashkenazi: I think we're quite encouraged with what we have heard from the marketplace so far. Employer opt-in will take longer, but we believe that we are well positioned in that regard as well. Thanks, Patrick. Next question, Paul. The next question is coming from Seamus Fernandez from Guggenheim. Seamus, your line is live. Oh, thanks very much, and congrats on all the progress and the success here. But just wanted to get a quick sense from Dan. Do you see a prospect from Synergy NASH for accelerated approval, and can you confirm that while clinically significant, the secondary endpoint of fibrosis stage improvement was not statistically significant? Thanks. Thanks, Seamus, for the question. Dan? Yeah, thanks, Seamus. This data is really quite new to us, but we're really excited about it.

Dave Ricks: Thanks, Patrick. Next question, Paul.

Operator: The next question is coming from Seamus Fernandez from Guggenheim. Seamus, your line is live.

Seamus Fernandez: Oh, thanks very much, and congrats on all the progress and the success here. But just wanted to get a quick sense from Dan. Do you see a prospect from Synergy NASH for accelerated approval, and can you confirm that while clinically significant, the secondary endpoint of fibrosis stage improvement was not statistically significant? Thanks. Thanks, Seamus, for the question. Dan?

Daniel Skovronsky: Yeah, thanks, Seamus. This data is really quite new to us, but we're really excited about it.

Anat Ashkenazi: We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity. Of course, this was a small trial, about 190 participants, but it did use liver biopsies, of course, to assess the endpoints here. With respect to the improvement in fibrosis, I think I probably previously stated that I was unsure whether it would be possible for incretin-based therapies to reverse fibrosis in patients based on competitor readouts in the field. But really excited to see this data with clinically meaningful improvement in fibrosis. There's different doses. There's different statistical methods that can be applied here, accounting for dropouts, particularly in the placebo group. So we'll have to wait for the scientific presentation to see all the p-values there.

We haven't had a chance yet to talk to the FDA here at all about next steps, but we're looking forward to having that opportunity. Of course, this was a small trial, about 190 participants, but it did use liver biopsies, of course, to assess the endpoints here. With respect to the improvement in fibrosis, I think I probably previously stated that I was unsure whether it would be possible for incretin-based therapies to reverse fibrosis in patients based on competitor readouts in the field.

But really excited to see this data with clinically meaningful improvement in fibrosis. There's different doses. There's different statistical methods that can be applied here, accounting for dropouts, particularly in the placebo group. So we'll have to wait for the scientific presentation to see all the p-values there.

Anat Ashkenazi: But we're pretty positive on this data package as a whole and what this could mean for patients, both in terms of stopping progression of NASH and reversing fibrosis. Thanks, Dan. Paul, next question. The next question is coming from Umer Rafat from Evercore ISI. Umer, your line is live. Hi, guys. Thanks for taking my question. Dave, as you think about manufacturing build-out in various sites, which is obviously very important for all the existing GLP-1 demand, I'm curious, how are you balancing that dollar investment with your probabilities on orforglipron's clinical and commercial odds, especially with all the blinded data that's coming in? Thanks, Umer. Dave? Yeah, happy to answer that. Of course, as we enter this phase of really strong growth in the incretins, we're very focused on allocating capital, but top priority is creating new capacities. The gating factors are not really financial for us right now.

But we're pretty positive on this data package as a whole and what this could mean for patients, both in terms of stopping progression of NASH and reversing fibrosis.

Joe Fletcher: Thanks, Dan. Paul, next question.

Joe Fletcher: The next question is coming from Umer Rafat from Evercore ISI. Umer, your line is live.

Joe Fletcher: Hi, guys. Thanks for taking my question. Dave, as you think about manufacturing build-out in various sites, which is obviously very important for all the existing GLP-1 demand, I'm curious, how are you balancing that dollar investment with your probabilities on orforglipron's clinical and commercial odds, especially with all the blinded data that's coming in?

Joe Fletcher: Thanks, Umer. Dave?

Dave Ricks: Yeah, happy to answer that. Of course, as we enter this phase of really strong growth in the incretins, we're very focused on allocating capital, but top priority is creating new capacities. The gating factors are not really financial for us right now.

Anat Ashkenazi: So you can expect us to be investing fully. We're not slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers, to be able to bring facilities online. That's particularly true in the parenteral side. You're referencing orforglipron. Here, we do plan to build ahead of phase 3 at risk. I think given the probability we assess internally, as well as the opportunity on the other side of a positive phase 3, we see that as a wise investment. And as we've commented on before, it relies as you would know on very different assets inside Lilly as well as outside of Lilly. So here you have organic chemistry, API, and tablets and capsules. So pretty different setup. So we're paralleling that with our robust injectable investments.

So you can expect us to be investing fully. We're not slowing down because of cash flow or whatever. It's really a function of the technical capacities, both in people and in suppliers, to be able to bring facilities online. That's particularly true in the parenteral side. You're referencing orforglipron. Here, we do plan to build ahead of phase 3 at risk. I think given the probability we assess internally, as well as the opportunity on the other side of a positive phase 3, we see that as a wise investment.

And as we've commented on before, it relies as you would know on very different assets inside Lilly as well as outside of Lilly. So here you have organic chemistry, API, and tablets and capsules. So pretty different setup. So we're paralleling that with our robust injectable investments.

Anat Ashkenazi: If we're wrong, okay, we'll have to eat that in the end if orforglipron isn't a strong product. But if it is, I think it does begin to change the math on supply in this category, and I think that's a bet worth taking. Thanks, Dave. Paul, next question. The next question is coming from Tim Anderson from Wolfe Research. Tim, your line is live. Thanks. On SURPASS CVOT, you mentioned it's slipped to 2025. I assume that implies the one interim look has come and gone, and then you're evaluating both non-inferiority and superiority. Would you agree that superiority is really what you need to show here, and what's your confidence in achieving that? Thanks, Tim, for those couple of questions. Maybe we'll field the one on the interim look, Dan. Yeah, sure. Well, thanks for that question, Tim. As you know, Lilly doesn't comment on interims.

If we're wrong, okay, we'll have to eat that in the end if orforglipron isn't a strong product. But if it is, I think it does begin to change the math on supply in this category, and I think that's a bet worth taking. Thanks, Dave.

Joe Fletcher: Paul, next question.

Operator: The next question is coming from Tim Anderson from Wolfe Research. Tim, your line is live.

Tim Anderson: Thanks. On SURPASS CVOT, you mentioned it's slipped to 2025. I assume that implies the one interim look has come and gone, and then you're evaluating both non-inferiority and superiority. Would you agree that superiority is really what you need to show here, and what's your confidence in achieving that?

Dave Ricks: Thanks, Tim, for those couple of questions. Maybe we'll field the one on the interim look, Dan.

Daniel Skovronsky: Yeah, sure. Well, thanks for that question, Tim. As you know, Lilly doesn't comment on interims.

Anat Ashkenazi: Probably most trials in our portfolio do have opportunities for interim looks, but that is not, I think, germane at all to the question on the timing on ClinicalTrials.gov, which was before and continues to be the time point at which we'll have final data. When we initially put that time point in ClinicalTrials.gov, it was in early 2020. We hadn't started enrolling the trial yet, so that was based on our assumption on enrollment rates, but probably more importantly on event rates. And as the trial matures, we get a view on event rates. I know it's frustrating for investors and for us, perhaps, to wait a longer time to get events, but of course, that's great news for patients when the event rates are slower, remembering that this is a head-to-head trial with a drug, Trulicity, that we already know is active in preventing MACE events. Thanks, Dan.

Probably most trials in our portfolio do have opportunities for interim looks, but that is not, I think, germane at all to the question on the timing on ClinicalTrials.gov, which was before and continues to be the time point at which we'll have final data. When we initially put that time point in ClinicalTrials.gov, it was in early 2020. We hadn't started enrolling the trial yet, so that was based on our assumption on enrollment rates, but probably more importantly on event rates.

And as the trial matures, we get a view on event rates. I know it's frustrating for investors and for us, perhaps, to wait a longer time to get events, but of course, that's great news for patients when the event rates are slower, remembering that this is a head-to-head trial with a drug, Trulicity, that we already know is active in preventing MACE events.

Joe Fletcher: Thanks, Dan.

Anat Ashkenazi: Paul, next question. The next question is coming from Mohit Bansal from Wells Fargo. Mohit, your line is live. Great. Thank you very much for taking my question and congrats on the progress. I have a question regarding your sleep apnea study. How much benefit do you think from baseline is required for this to be clinically meaningful? Is it 50% or more? And do you think the trial is big enough to seek a label in sleep apnea? Thank you. Thanks, Mohit, for the question. Dan, back to you. Yeah, thanks. There isn't really a well-established threshold for clinical meaningfulness in sleep apnea. Of course, the commonly used measure here is an index of how many apneic or hypoxic events a patient has while sleeping. Certainly, drugs in this category, I think, have great potential to improve that. We're excited to see what tirzepatide can see.

Paul, next question.

Operator: The next question is coming from Mohit Bansal from Wells Fargo. Mohit, your line is live.

Mohit Bansal: Great. Thank you very much for taking my question and congrats on the progress. I have a question regarding your sleep apnea study. How much benefit do you think from baseline is required for this to be clinically meaningful? Is it 50% or more? And do you think the trial is big enough to seek a label in sleep apnea?

Joe Fletcher: Thank you. Thanks, Mohit, for the question. Dan, back to you.

Daniel Skovronsky: Yeah, thanks. There isn't really a well-established threshold for clinical meaningfulness in sleep apnea. Of course, the commonly used measure here is an index of how many apneic or hypoxic events a patient has while sleeping. Certainly, drugs in this category, I think, have great potential to improve that. We're excited to see what tirzepatide can see.

Anat Ashkenazi: Probably in addition to the absolute percent improvement in AHI that we'll be looking for, I'd also like to see patients switching from one category, for example, intermediate to mild disease or things like that. So we'll be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic. Thanks, Dan. Paul, next question. The next question is from Louise Chen from Cantor. Louise, your line is live. Hi, thanks for taking my question. I wanted to ask you how you think about sizing the downstream opportunities for a GLP-1 such as tirzepatide, maybe in NASH, some of the other indications that you're going after as well. Thank you. Thanks, Louise, for that question. So about the downstream opportunities in NASH and elsewhere, Patrik, do you want to field that? No, thank you very much. I think there are two important aspects.

Probably in addition to the absolute percent improvement in AHI that we'll be looking for, I'd also like to see patients switching from one category, for example, intermediate to mild disease or things like that. So we'll be looking at a number of things to assess clinical meaningfulness here, but I'm quite optimistic.

Joe Fletcher: Thanks, Dan. Paul, next question.

Operator: The next question is from Louise Chen from Cantor. Louise, your line is live.

Louise Chen: Hi, thanks for taking my question. I wanted to ask you how you think about sizing the downstream opportunities for a GLP-1 such as tirzepatide, maybe in NASH, some of the other indications that you're going after as well. Thank you.

Joe Fletcher: Thanks, Louise, for that queston. So about the downstream opportunities in NASH and elsewhere, Patrik, do you want to field that?

Patrik Jonsson: No, thank you very much. I think there are two important aspects.

Anat Ashkenazi: The first one is when we refer to employer opt-in. I think employers are really looking actively into benefits of listing anti-obesity medications. And whatever data we can generate here, being in the cardiovascular space, being in OSA, or being in NASH and other indications, will be extremely important for increased employer opt-in. The second piece will be in Medicare Part D. As long as CROA is not passed, I think data in those comorbidities will be critical to enable access for patients in Medicare Part D. So those are truly the key drivers for those indications. Thanks, Patrik. Paul, next question. The next question is coming from Kerry Holford from Berenberg. Kerry, your line is live. Thank you for taking my question. It's on tirzepatide obesity. I'm interested to hear why you've taken the decision not to launch under the Zepbound brand outside the US.

The first one is when we refer to employer opt-in. I think employers are really looking actively into benefits of listing anti-obesity medications. And whatever data we can generate here, being in the cardiovascular space, being in OSA, or being in NASH and other indications, will be extremely important for increased employer opt-in. The second piece will be in Medicare Part D. As long as CROA is not passed, I think data in those comorbidities will be critical to enable access for patients in Medicare Part D. So those are truly the key drivers for those indications.

Joe Fletcher: Thanks, Patrik. Paul, next question.

Operator: The next question is coming from Kerry Holford from Berenberg. Kerry, your line is live.

Kerry Holford: Thank you for taking my question. It's on tirzepatide obesity. I'm interested to hear why you've taken the decision not to launch under the Zepbound brand outside the US.

Anat Ashkenazi: but rather seek a label expansion for weight loss for Mounjaro. Does that relate to simplicity, perhaps faster reimbursement access? And I wonder if you foresee any risk here that ex-US governments prefer ultimately to keep diabetes and obesity budgets separate? Thank you. Thank you, Kerry, for the questions. I'll hand over to Ilya to talk about the branding of tirzepatide OUS. Sure. Yeah, so for tirzepatide outside of the US, it depends on a number of different factors, whether it's regulatory or competitor market dynamics. There are some payer dynamics as well. We don't anticipate that being a challenge in terms of negotiating reimbursement either for type 2 diabetes or for chronic weight management. We continue to have those discussions in a number of markets and are optimistic about our ability to commercialize under different brand scenarios. Great. Thank you, Ilya. Paul, next question.

but rather seek a label expansion for weight loss for Mounjaro. Does that relate to simplicity, perhaps faster reimbursement access? And I wonder if you foresee any risk here that ex-US governments prefer ultimately to keep diabetes and obesity budgets separate? Thank you.

Joe Fletcher: Thank you, Kerry, for the questions. I'll hand over to Ilya to talk about the branding of tirzepatide OUS.

Ilya Yufa: Sure. Yeah, so for tirzepatide outside of the US, it depends on a number of different factors, whether it's regulatory or competitor market dynamics. There are some payer dynamics as well. We don't anticipate that being a challenge in terms of negotiating reimbursement either for type 2 diabetes or for chronic weight management. We continue to have those discussions in a number of markets and are optimistic about our ability to commercialize under different brand scenarios.

Joe Fletcher: Great. Thank you, Ilya. Paul, next question.

Anat Ashkenazi: The next question is from Jeff Meacham from Bank of America. Jeff, your line is live. Morning, guys. Thanks so much for the question. Dave, I know you guys formally announced LillyDirect last fall, but should we view it as a platform that just streamlines access to providers and LillyMeds, or is there a monetization model or some market differentiation that could also play out over time? Thank you. I can start, Patrick. Yeah, jump in. Yeah, thanks for the question. The idea was really actually born out of the challenges patients face every day in the US and sometimes seeing doctors. And you'll note we have a Doctor Finder tool as well as telehealth partners on the platform for migraine, diabetes, and obesity. Finding medicines in their pharmacies, that's been a challenge.

Operator: The next question is from Jeff Meacham from Bank of America. Jeff, your line is live.

Geoff Meacham: Morning, guys. Thanks so much for the question. Dave, I know you guys formally announced LillyDirect last fall, but should we view it as a platform that just streamlines access to providers and LillyMeds, or is there a monetization model or some market differentiation that could also play out over time?

Dave Ricks: Thank you. I can start, Patrick. Yeah, jump in. Yeah, thanks for the question. The idea was really actually born out of the challenges patients face every day in the US and sometimes seeing doctors. And you'll note we have a Doctor Finder tool as well as telehealth partners on the platform for migraine, diabetes, and obesity. Finding medicines in their pharmacies, that's been a challenge.

Anat Ashkenazi: And I think particularly as supplies are tight, many patients report driving to five, six, seven pharmacies to find the medicine they need. This simplifies that process. And then I think in addition, there's been a lot of noise about drugs that are illicit or copies or compounded versions of Zepbound or other weight loss drugs. And that's concerning to us, and I think it's concerning to patients. So by going to LillyDirect, literally, they have confidence in the supply. And finally, application of our savings programs has also been a challenge at the pharmacy counter, and that happens 100% of the time on LillyDirect. We haven't thought about it as a way to create some new retail distribution business. It's a way to serve the patients that want our medicines better. That's sort of the frame we're in now.

And I think particularly as supplies are tight, many patients report driving to five, six, seven pharmacies to find the medicine they need. This simplifies that process. And then I think in addition, there's been a lot of noise about drugs that are illicit or copies or compounded versions of Zepbound or other weight loss drugs. And that's concerning to us, and I think it's concerning to patients.

So by going to LillyDirect, literally, they have confidence in the supply. And finally, application of our savings programs has also been a challenge at the pharmacy counter, and that happens 100% of the time on LillyDirect. We haven't thought about it as a way to create some new retail distribution business. It's a way to serve the patients that want our medicines better. That's sort of the frame we're in now.

Anat Ashkenazi: Early days, we're trying to develop it to be smoother, better, include more products over time, have better information about physicians and telehealth providers. So look for more developments there, but good start so far. A lot of energy and enthusiasm from the patient community. Thanks, Dave. Paul, next question. The next question is coming from David. David Risinger from Leerink Partners. David, your line is live. Yes. Thank you and congrats on today's updates. So my question is for Dave and Dan on lean muscle loss associated with incretin use. Could you help us understand Lilly's take on this debate and comment on tirzepatide's data to date relative to semaglutide? What I've observed is that SURMOUNT-1 showed a 3:1 to lean muscle loss ratio, whereas semaglutide's STEP 1 trial showed a 1.5:1 ratio, albeit with slightly different assessment. Thank you. Thanks, Dave. I'll have Dan field that. Yeah.

Early days, we're trying to develop it to be smoother, better, include more products over time, have better information about physicians and telehealth providers. So look for more developments there, but good start so far. A lot of energy and enthusiasm from the patient community.

Joe Fletcher: Thanks, Dave. Paul, next question.

Operator: The next question is coming from David. David Risinger from Leerink Partners. David, your line is live.

David Risinger: Yes. Thank you and congrats on today's updates. So my question is for Dave and Dan on lean muscle loss associated with incretin use. Could you help us understand Lilly's take on this debate and comment on tirzepatide's data to date relative to semaglutide? What I've observed is that SURMOUNT-1 showed a 3:1 to lean muscle loss ratio, whereas semaglutide's STEP 1 trial showed a 1.5:1 ratio, albeit with slightly different assessment. Thank you. Thanks, Dave.

Dave Ricks: I'll have Dan field that. Yeah.

Anat Ashkenazi: Thanks for your question. Maybe just starting with our take on lean versus fat mass, I think the ratio of lean to fat mass is an important thing to think about. Body composition, not just body weight, matters to patients. For example, in risk of type 2 diabetes or cardiovascular disease, that body ratio seems to be important. The good news is that for patients on tirzepatide, that ratio appears to improve. As you pointed out, they lose far more fat mass than lean mass. And so in every trial we've done, at the end of the trial, if you measure body composition, it's better, a higher ratio of lean to fat than at the beginning of the trial. So we see this changing body composition as a potential benefit of tirzepatide to be further explored. Of course, it's also a benefit we want to further extend.

Daniel Skovronsky: Thanks for your question. Maybe just starting with our take on lean versus fat mass, I think the ratio of lean to fat mass is an important thing to think about. Body composition, not just body weight, matters to patients. For example, in risk of type 2 diabetes or cardiovascular disease, that body ratio seems to be important.

The good news is that for patients on tirzepatide, that ratio appears to improve. As you pointed out, they lose far more fat mass than lean mass. And so in every trial we've done, at the end of the trial, if you measure body composition, it's better, a higher ratio of lean to fat than at the beginning of the trial. So we see this changing body composition as a potential benefit of tirzepatide to be further explored. Of course, it's also a benefit we want to further extend.

Anat Ashkenazi: You've seen us try to improve the total amount of body weight loss. We're also trying to further improve, I should say, the change in body mass composition, and that's why you saw us acquire Versanis and experiment with drugs like bimagrumab. The numbers you quote from the tirzepatide and semaglutide studies seem right to me. Of course, they're not head-to-head studies, but it does raise a question here about whether there's a potential benefit of GIP agonism here in addition to GLP-1 agonism. That's probably the way I would interpret those data. Thanks, Dan. Paul, next question. The next question is coming from Evan Seigerman from BMO Capital Markets. Evan, your line is live. Hi, all. Thank you for taking my question. I would love to get your take on how you're thinking about the opportunity for the oral GLP-1s.

You've seen us try to improve the total amount of body weight loss. We're also trying to further improve, I should say, the change in body mass composition, and that's why you saw us acquire Versanis and experiment with drugs like bimagrumab. The numbers you quote from the tirzepatide and semaglutide studies seem right to me. Of course, they're not head-to-head studies, but it does raise a question here about whether there's a potential benefit of GIP agonism here in addition to GLP-1 agonism.That's probably the way I would interpret those data.

Joe Fletcher: Thanks, Dan. Paul, next question.

Operator: The next question is coming from Evan Seigerman from BMO Capital Markets. Evan, your line is live.

Evan Seigerman: Hi, all. Thank you for taking my question. I would love to get your take on how you're thinking about the opportunity for the oral GLP-1s.

Anat Ashkenazi: We've seen some mixed data from competitors, and I just would love to get how you see this evolving in context of your investment in oral orforglipron. Thank you. Thanks, Evan, for the question. Patrik, maybe I'll go to you to talk about how we think about an oral agent. Well, thank you very much. When we look at the opportunity in obesity, we have more than 110 million in the US. We have 650 million globally. I think taking into account the current supply constraints across markets, it's impossible to reach all of those with injectables. So I think that's the big opportunity with our orforglipron.

We've seen some mixed data from competitors, and I just would love to get how you see this evolving in context of your investment in oral orforglipron. Thank you.

Joe Fletcher: Thanks, Evan, for the question. Patrik, maybe I'll go to you to talk about how we think about an oral agent.

Patrik Jonsson: Well, thank you very much. When we look at the opportunity in obesity, we have more than 110 million in the US. We have 650 million globally. I think taking into account the current supply constraints across markets, it's impossible to reach all of those with injectables. So I think that's the big opportunity with our orforglipron.

Anat Ashkenazi: What we have seen so far in Phase 2, if we can replicate those data in Phase 3, we have an oral medicine here with a weight loss along the lines of the best competitive incretin, not at the level of tirzepatide, but at the level of the best incretin in the marketplace and with no food or water restrictions. So we really see the opportunity here with orforglipron to reach patients across the globe. There is another component as well. If we look at the current market, approximately 20% of patients with obesity are actually concerned to take an injectable. So that's another opportunity with orforglipron. So we believe that's a really strong card in our hands moving forward in the space of chronic weight management. Thank you, Patrik. Paul, next question. The next question is from Steve Scala from TD Cowen.

What we have seen so far in Phase 2, if we can replicate those data in Phase 3, we have an oral medicine here with a weight loss along the lines of the best competitive incretin, not at the level of tirzepatide, but at the level of the best incretin in the marketplace and with no food or water restrictions. So we really see the opportunity here with orforglipron to reach patients across the globe.

There is another component as well. If we look at the current market, approximately 20% of patients with obesity are actually concerned to take an injectable. So that's another opportunity with orforglipron. So we believe that's a really strong card in our hands moving forward in the space of chronic weight management.

Joe Fletcher: Thank you, Patrik. Paul, next question.

Operator: The next question is from Steve Scala from TD Cowen.

Anat Ashkenazi: Steve, your line is live. Oh, thank you so much. There could be several reasons why Lilly is not initiating a phase 3 trial of tirzepatide in NASH. First, Lilly believes it has better molecules. Second, there's something in the phase 2 data which is less than ideal. Or third, Lilly will do a phase 3. It just hasn't gotten around to finalizing plans. But that really can't be it to draw a parallel. You're starting a phase 3 with Lp(a) without even telling us the phase 2 was positive. So what would be best for us to conclude about tirzepatide in NASH? Thank you. Thank you, Steve. Yeah, thanks, Steve, for the clever analysis here. So first of all, I should just say we literally just got this phase 2 data. So give us a chance to determine our next steps on plans.

Steve, your line is live.

Steve Scala: Oh, thank you so much. There could be several reasons why Lilly is not initiating a phase 3 trial of tirzepatide in NASH. First, Lilly believes it has better molecules. Second, there's something in the phase 2 data which is less than ideal. Or third, Lilly will do a phase 3. It just hasn't gotten around to finalizing plans. But that really can't be it to draw a parallel. You're starting a phase 3 with Lp(a) without even telling us the phase 2 was positive. So what would be best for us to conclude about tirzepatide in NASH?Thank you.

Daniel Skovronsky: Thank you, Steve. Yeah, thanks, Steve, for the clever analysis here. So first of all, I should just say we literally just got this phase 2 data. So give us a chance to determine our next steps on plans.

Anat Ashkenazi: Probably I debunk at least one of the hypotheses here. There's nothing bad in the data that would stop us from going to Phase 3. In terms of having a better molecule, probably we do in retatrutide. Of course, we don't have that kind of Phase 2 data here for retatrutide, and so that's based on liver fat reduction, which was just incredible in the Phase 2 trial. Still, though, I think having a positive Phase 2 trial here with really meaningful data in NASH obligates us to think about next steps. As I said, that's going to the FDA to talk to them. I would say in terms of planning a Phase 3 for any drug in NASH, the really important priority for us is to move away as much as we can from liver biopsies and replace them with non-invasive testing.

Probably I debunk at least one of the hypotheses here. There's nothing bad in the data that would stop us from going to Phase 3. In terms of having a better molecule, probably we do in retatrutide. Of course, we don't have that kind of Phase 2 data here for retatrutide, and so that's based on liver fat reduction, which was just incredible in the Phase 2 trial. Still, though, I think having a positive Phase 2 trial here with really meaningful data in NASH obligates us to think about next steps.

As I said, that's going to the FDA to talk to them. I would say in terms of planning a Phase 3 for any drug in NASH, the really important priority for us is to move away as much as we can from liver biopsies and replace them with non-invasive testing.

Anat Ashkenazi: I think we and others in the field have made a lot of progress there. We see analogies here to other disease areas, and we hope that in the future it'll be possible to conduct Phase 3 NASH trials without relying on biopsies. That would really have a profound effect on the feasibility of running these trials quickly, but also in the clinical application of NASH drugs where those non-invasive biomarkers could be used to identify patients for treatment and monitor their response to therapy rather than biopsy. Thank you, Dan. Paul, next question. The next question is from Chris Shibutani from Goldman Sachs. Chris, your line is live. Thank you. Duration of use of the GLP-1s across the diabetes and obesity populations. Previously, you've characterized the duration in the range of 15 months for diabetes and have commented that you don't believe we have enough experience. Any updates there?

I think we and others in the field have made a lot of progress there. We see analogies here to other disease areas, and we hope that in the future it'll be possible to conduct Phase 3 NASH trials without relying on biopsies. That would really have a profound effect on the feasibility of running these trials quickly, but also in the clinical application of NASH drugs where those non-invasive biomarkers could be used to identify patients for treatment and monitor their response to therapy rather than biopsy.

Joe Fletcher: Thank you, Dan. Paul, next question.

Operator: The next question is from Chris Shibutani from Goldman Sachs. Chris, your line is live.

Chris Shibutani: Thank you. Duration of use of the GLP-1s across the diabetes and obesity populations. Previously, you've characterized the duration in the range of 15 months for diabetes and have commented that you don't believe we have enough experience. Any updates there?

Anat Ashkenazi: When do you think we will have enough experience to be able to get a better gauge of duration of use median in the obesity population, at least initially? Thanks, Chris. Patrik, do you want to comment on duration of therapy? Yeah. Thank you very much, Chris. I think you're right. It's quite challenging. It's still early days with both Mounjaro and particularly Zepbound, and we have been facing some specific dynamics in terms of supply and also changes to the copay program. However, when we look at the recent data for Mounjaro, it's encouraging, and it suggests that patients that start therapy back in Q1 2023 are having a persistency at least along the lines of other injectable incretins. For Zepbound, definitely too early, but we strongly believe that patients will be motivated when they see the benefits of a drug.

When do you think we will have enough experience to be able to get a better gauge of duration of use median in the obesity population, at least initially?

Joe Fletcher: Thanks, Chris. Patrik, do you want to comment on duration of therapy?

Patrik Jonsson: Yeah. Thank you very much, Chris. I think you're right. It's quite challenging. It's still early days with both Mounjaro and particularly Zepbound, and we have been facing some specific dynamics in terms of supply and also changes to the copay program. However, when we look at the recent data for Mounjaro, it's encouraging, and it suggests that patients that start therapy back in Q1 2023 are having a persistency at least along the lines of other injectable incretins.

For Zepbound, definitely too early, but we strongly believe that patients will be motivated when they see the benefits of a drug.

Anat Ashkenazi: And there will, of course, be many factors impacting both supply, macroeconomic, and microeconomic. But we are convinced that there will be a finite duration of treatment also for obesity since when we look into even heart failure and type 2 diabetes, more than a 12-month period of adherence is considered long. But encouraging data in type 2 diabetes so far, and with Zepbound, we will see that there will for sure be an end of duration based upon what we have seen in other chronic diseases, but we believe that the features itself will be motivating for patients. Thanks, Patrick. Paul, next question. The next question is coming from Akash Tiwari from Jefferies. Akash, your line is live. Hey, thanks so much. So David, at J.P. Morgan, you made an interesting comment on orforglipron where you mentioned the molecule has lots to prove here.

And there will, of course, be many factors impacting both supply, macroeconomic, and microeconomic. But we are convinced that there will be a finite duration of treatment also for obesity since when we look into even heart failure and type 2 diabetes, more than a 12-month period of adherence is considered long. But encouraging data in type 2 diabetes so far, and with Zepbound, we will see that there will for sure be an end of duration based upon what we have seen in other chronic diseases, but we believe that the features itself will be motivating for patients.

Joe Fletcher: Thanks, Patrick. Paul, next question.

Operator: The next question is coming from Akash Tiwari from Jefferies. Akash, your line is live.

Akash Tiwari: Hey, thanks so much. So David, at J.P. Morgan, you made an interesting comment on orforglipron where you mentioned the molecule has lots to prove here.

Anat Ashkenazi: Can you elaborate a bit on what you mean by this? And what's your confidence on Orfo's DDI profile? It seems to have a bit of CYP3A4 inhibition. So will this drug be able to get dosed with SGLT2s given they were excluded in some of your earlier studies? Thanks. That was for me. I feel like I could frame why I said that, but maybe David can comment on the specific DDI questions in SGLT2 co-administration. I just said that because we're just starting the phase 3. We all know small molecule, there's a bit of empiricism in terms of eliminating safety risks. Of course, every day as we expose more patients to the drug and we have higher doses, that's a good day where we don't announce that the drug has a problem. At some point, we reach a lot of confidence.

Can you elaborate a bit on what you mean by this? And what's your confidence on Orfo's DDI profile? It seems to have a bit of CYP3A4 inhibition. So will this drug be able to get dosed with SGLT2s given they were excluded in some of your earlier studies?

Joe Fletcher: Thanks. That was for me. I feel like I could frame why I said that, but maybe David can comment on the specific DDI questions in SGLT2 co-administration. I just said that because we're just starting the phase 3. We all know small molecule, there's a bit of empiricism in terms of eliminating safety risks. Of course, every day as we expose more patients to the drug and we have higher doses, that's a good day where we don't announce that the drug has a problem. At some point, we reach a lot of confidence.

Anat Ashkenazi: We just weren't at that point. We're not at it now. I think we're running the phase 3 experiment, and we need to discharge the off-target safety that is, I think, inherent in small molecule discovery. And we've seen in this class from others, but nothing specific on my mind. Maybe Dan can further reassure us. Yeah. Thanks, David. Of course, that's just the normal phase 3 types of risk, new safety signals which could always arise. I think with respect to DDI and co-administration with SGLT2s, we expect that to be possible, and we have that ongoing in our phase 3 trials. There are patients who will be dosed with or being dosed with orforglipron as well as other drugs like SGLT2s. Thanks, both. Paul, next question. The next question is from Trung Huynh from UBS. Trung, your line is live. Hi guys. Thanks for taking my questions.

We just weren't at that point. We're not at it now. I think we're running the phase 3 experiment, and we need to discharge the off-target safety that is, I think, inherent in small molecule discovery. And we've seen in this class from others, but nothing specific on my mind. Maybe Dan can further reassure us.

Daniel Skovronsky: Yeah. Thanks, David. Of course, that's just the normal phase 3 types of risk, new safety signals which could always arise. I think with respect to DDI and co-administration with SGLT2s, we expect that to be possible, and we have that ongoing in our phase 3 trials. There are patients who will be dosed with or being dosed with orforglipron as well as other drugs like SGLT2s.

Joe Fletcher: Thanks, both. Paul, next question.

Operator: The next question is from Trung Huynh from UBS. Trung, your line is live.

Trung Huynh: Hi guys. Thanks for taking my questions.

Anat Ashkenazi: Can I just ask your thoughts on GIP agonism versus antagonism given data yesterday from a competitor suggesting more limited effects on things like blood pressure and lipid modifications? Just how differentiated do you think an agonism approach is versus antagonism and why you think agonism is the way forward? Thank you. Yeah. Yeah. Well, first of all, for the unfair comparison, we have so much data now on the benefits of GIP agonism from tens of thousands of participants in randomized clinical trials for tirzepatide. So we're extremely confident here about the benefits of GIP agonism. Adding to that data, we have experimented with a pure GIP agonist that doesn't have any GLP-1, and we reported the benefits there in a Phase 1 study. We're contrasting that here to a small Phase 1 study that was recently published with a drug that has both GLP-1 agonism and GIP antagonism.

Can I just ask your thoughts on GIP agonism versus antagonism given data yesterday from a competitor suggesting more limited effects on things like blood pressure and lipid modifications? Just how differentiated do you think an agonism approach is versus antagonism and why you think agonism is the way forward? Thank you.

Daniel Skovronsky: Yeah. Yeah. Well, first of all, for the unfair comparison, we have so much data now on the benefits of GIP agonism from tens of thousands of participants in randomized clinical trials for tirzepatide. So we're extremely confident here about the benefits of GIP agonism. Adding to that data, we have experimented with a pure GIP agonist that doesn't have any GLP-1, and we reported the benefits there in a Phase 1 study. We're contrasting that here to a small Phase 1 study that was recently published with a drug that has both GLP-1 agonism and GIP antagonism.

Anat Ashkenazi: I noted in that publication that GIP antagonism is at a much lower affinity. So it probably only starts to antagonize GIP at very high doses. That's probably a question for that company. But I noted at the high doses, actually an increase in free fatty acids and complete attenuation of the decrease in triglycerides in the clinical trial. Those are some effects that we attribute to GIP. And so I'm not surprised that antagonism of GIP is starting to have some negative effects once that kicks in. We also see GIP agonism as having positive benefits on tolerability, reducing potentially nausea and vomiting. And again, I think maybe at the higher doses, you could probably see some hints of the opposite effect with antagonism. So pretty glad with the decision we took, and let's see how the field continues to evolve. Thank you, Dan. Paul, next question.

I noted in that publication that GIP antagonism is at a much lower affinity. So it probably only starts to antagonize GIP at very high doses. That's probably a question for that company. But I noted at the high doses, actually an increase in free fatty acids and complete attenuation of the decrease in triglycerides in the clinical trial.

Those are some effects that we attribute to GIP. And so I'm not surprised that antagonism of GIP is starting to have some negative effects once that kicks in. We also see GIP agonism as having positive benefits on tolerability, reducing potentially nausea and vomiting. And again, I think maybe at the higher doses, you could probably see some hints of the opposite effect with antagonism. So pretty glad with the decision we took, and let's see how the field continues to evolve.

Joe Fletcher: Thank you, Dan. Paul, next question.

Anat Ashkenazi: The next question is from Carter Gould from Barclays. Carter, your line is live. Great. Good morning. Thanks for taking the questions. I guess over the prior two earnings calls, there had been at least an acknowledgment that CMOs were going to be part of the equation going forward for supply on the incretin side. I guess does the development yesterday have any sort of direct or indirect impacts as you think about that part of the equation going forward? Thanks, Carter. Anat, do you want to field that? Sure. And I've mentioned on this call as well that we have a very extensive manufacturing agenda which does include third parties. While our strategy is and has always been to develop more internally, we do have third parties as well. So we saw the announcement that came out from Novo yesterday regarding the intent to acquire Catalent.

Operator: The next question is from Carter Gould from Barclays. Carter, your line is live.

Carter Gould: Great. Good morning. Thanks for taking the questions. I guess over the prior two earnings calls, there had been at least an acknowledgment that CMOs were going to be part of the equation going forward for supply on the incretin side. I guess does the development yesterday have any sort of direct or indirect impacts as you think about that part of the equation going forward?

Joe Fletcher: Thanks, Carter. Anat, do you want to field that?

Anat Ashkenazi: Sure. And I've mentioned on this call as well that we have a very extensive manufacturing agenda which does include third parties. While our strategy is and has always been to develop more internally, we do have third parties as well. So we saw the announcement that came out from Novo yesterday regarding the intent to acquire Catalent.

Anat Ashkenazi: We certainly have questions about that transaction and need to learn more. We don't know Catalent is an integral part or manufacturer of both commercial and pipeline products for the industry, especially in diabetes and obesity. And we have products with these sites as well. So our focus today is on ensuring that continuity of supply of medicine for patients is uninterrupted, as well as we intend on holding Catalent accountable to their contract with us as we look and we gain more information on this proposed transaction. Thank you. Paul, next question. The next question is coming from James Shin from Deutsche Bank. James, your line is live. Hi. Good morning. Thanks for taking the question. I just want to circle back to Carter's question.

We certainly have questions about that transaction and need to learn more. We don't know Catalent is an integral part or manufacturer of both commercial and pipeline products for the industry, especially in diabetes and obesity. And we have products with these sites as well. So our focus today is on ensuring that continuity of supply of medicine for patients is uninterrupted, as well as we intend on holding Catalent accountable to their contract with us as we look and we gain more information on this proposed transaction.

Joe Fletcher: Thank you. Paul, next question.

Operator: The next question is coming from James Shin from Deutsche Bank. James, your line is live.

James Shin: Hi. Good morning. Thanks for taking the question. I just want to circle back to Carter's question.

Anat Ashkenazi: Given Lilly is well-capitalized and manufacturing capacity being the priority, I mean, could you expect more buy versus build to get around some of the technical bottlenecks and the non-trivial FDA process? Just want to get your thoughts there. David? Yeah, maybe I'll give it a shot. Thanks for the question, James. As I mentioned, on the earlier question related to orforglipron, we don't think of ourselves as capital-constrained buying or building in the space. The reality is there just isn't built capacity that's available. Most of it that's being used is already deployed against the leading products in the GLP-1 space, at least any at scale. And new capacity has a lead time of three to four years. So all of the things that are coming online now, like we mentioned today, are very large site in Concord, North Carolina.

Given Lilly is well-capitalized and manufacturing capacity being the priority, I mean, could you expect more buy versus build to get around some of the technical bottlenecks and the non-trivial FDA process? Just want to get your thoughts there.

Dave Ricks: David? Yeah, maybe I'll give it a shot. Thanks for the question, James. As I mentioned, on the earlier question related to orforglipron, we don't think of ourselves as capital-constrained buying or building in the space. The reality is there just isn't built capacity that's available. Most of it that's being used is already deployed against the leading products in the GLP-1 space, at least any at scale. And new capacity has a lead time of three to four years. So all of the things that are coming online now, like we mentioned today, are very large site in Concord, North Carolina.

Anat Ashkenazi: That's a big note of capacity for the sector and certainly for Lilly. I mean, that was announced two and a half years ago, and it will just begin production at the end of this year. So that's the problem. And why is that? Well, of course, greenfield building is difficult. Repurposing is difficult. But also, these are technically complex facilities. There's not an infinite number of people who know how to set them up. And the supply chain for the machines that make the products is also constrained. So at this point, I don't think there's an easy way forward. And I think even in yesterday's announcements, we have a lot of questions about that. But I think even the purchaser or our competitor said it will take many years for them to be able to increase capacity within that purchase.

That's a big note of capacity for the sector and certainly for Lilly. I mean, that was announced two and a half years ago, and it will just begin production at the end of this year. So that's the problem. And why is that? Well, of course, greenfield building is difficult. Repurposing is difficult. But also, these are technically complex facilities. There's not an infinite number of people who know how to set them up.

And the supply chain for the machines that make the products is also constrained. So at this point, I don't think there's an easy way forward. And I think even in yesterday's announcements, we have a lot of questions about that. But I think even the purchaser or our competitor said it will take many years for them to be able to increase capacity within that purchase.

Anat Ashkenazi: So it's just not an easy problem to solve. I think over time it will ease. There'll be more capacity brought online by us or a competitor and maybe others, including third parties. And new technology will emerge like orforglipron or other oral options that tap into different asset bases. So I know it's frustrating for investors. It's frustrating for us. It's even more frustrating for patients. But it's just sort of the situation we're in, is there'll be steady gains in manufacturing over the coming several years and perhaps bigger gains after that. Thank you, Dave. Paul, next question. The next question is from Rajesh Kumar from HSBC. Rajesh, your line is live. Hi there. Can you give us some color on how the access with employers is playing out?

So it's just not an easy problem to solve. I think over time it will ease. There'll be more capacity brought online by us or a competitor and maybe others, including third parties. And new technology will emerge like orforglipron or other oral options that tap into different asset bases. So I know it's frustrating for investors. It's frustrating for us. It's even more frustrating for patients. But it's just sort of the situation we're in, is there'll be steady gains in manufacturing over the coming several years and perhaps bigger gains after that.

Joe Fletcher: Thank you, Dave. Paul, next question.

Operator: The next question is from Rajesh Kumar from HSBC. Rajesh, your line is live.

Rajesh Kumar: Hi there. Can you give us some color on how the access with employers is playing out?

Anat Ashkenazi: Are you getting exclusive access for your drugs, or you're being added to the existing access your competitors' drugs have? And what is the nature of discussion, especially given that Zepbound is priced at a more attractive list price? I'm assuming with rebate, the differences might be a bit smaller, but any color there might be super helpful. Yeah. Thanks, Rajesh. I think we covered that in Chris Schott's question earlier. I don't know if Patrik had anything to add or if we could just move on. No, I think the only addition would be that we are always aiming for open access. We believe that's important for the providers and the patients we are serving. So that's going to be our aim when it comes to employer opt-in as well.

Joe Fletcher: Yeah. Thanks, Rajesh. I think we covered that in Chris Schott's question earlier. I don't know if Patrik had anything to add or if we could just move on.

Patrik Jonsson: No, I think the only addition would be that we are always aiming for open access. We believe that's important for the providers and the patients we are serving. So that's going to be our aim when it comes to employer opt-in as well.

Anat Ashkenazi: And we believe a move by pricing Zepbound 22% below the competition despite launching with a best-in-class profile is also a good signal for increased and enhanced employer opt-in. Thanks. Thank you, Patrick. Paul, next question. These are going to be maybe two more. Apparently, the next question is from Andrew Baum from Citi. Andrew, your line is live. Thank you. Could you talk to your scenario planning for post-2032 when the potential exists for generic semaglutide to be launched? There seems to be significant interest and investment in capacity expansion. Now, obviously, this is complex, as you outlined, given not just API, but fit and finish and IP and the rest of it. But I'm just curious how you think about that in terms of future-proofing your business against step edits and other thinking about your broader incretin portfolio. Thanks, Andrew. It's a very long-term question.

And we believe a move by pricing Zepbound 22% below the competition despite launching with a best-in-class profile is also a good signal for increased and enhanced employer opt-in.

Joe Fletcher: Thanks. Thank you, Patrick. Paul, next question.

Operator: These are going to be maybe two more. Apparently, the next question is from Andrew Baum from Citi. Andrew, your line is live.

Andrew Baum: Thank you. Could you talk to your scenario planning for post-2032 when the potential exists for generic semaglutide to be launched? There seems to be significant interest and investment in capacity expansion. Now, obviously, this is complex, as you outlined, given not just API, but fit and finish and IP and the rest of it. But I'm just curious how you think about that in terms of future-proofing your business against step edits and other thinking about your broader incretin portfolio.

Joe Fletcher: Thanks, Andrew. It's a very long-term question.

Anat Ashkenazi: I'll pass over to Anat to talk about 2032 and beyond. We do look at 2032, and we actually do look beyond. The way we look at our business, it is a long-term business. It's not a business that changes every year or two. So we do look at the long-term horizon, both in terms of the commercial products as well as what's coming through the pipeline. And as we think through the events of the patent cliff, whether for our products or those of competitors, our way of managing through that is to bring new breakthrough innovation to the marketplace. So to raise the bar on our own innovation, we don't wait for that to occur or happen by competition, but to bring something into the market that provides a meaningfully improved outcome for patients.

I'll pass over to Anat to talk about 2032 and beyond.

Anat Ashkenazi: We do look at 2032, and we actually do look beyond. The way we look at our business, it is a long-term business. It's not a business that changes every year or two. So we do look at the long-term horizon, both in terms of the commercial products as well as what's coming through the pipeline.

And as we think through the events of the patent cliff, whether for our products or those of competitors, our way of managing through that is to bring new breakthrough innovation to the marketplace. So to raise the bar on our own innovation, we don't wait for that to occur or happen by competition, but to bring something into the market that provides a meaningfully improved outcome for patients.

Anat Ashkenazi: So in this specific example, you use the GLPs. Certainly tirzepatide brought in a higher bar for weight loss for patients with chronic weight management. And retatrutide that Dan referenced in his comments currently in Phase 3 has the potential to bring even further improved outcome for patients. So that's how we see that. In terms of capacity and whether the question is on whether companies should be or shouldn't be building given that there is a patent expiry at the end, we do look at that, and we look at the long-term horizon. But certainly, the investments in a manufacturing facility, for example, the ones we've just mentioned, whether it's in Concord, North Carolina, or Research Triangle Park, North Carolina, between the two of them, it's about a $4 billion investment, are certainly a good investment of our capital given that size of opportunity over the long term.

So in this specific example, you use the GLPs. Certainly tirzepatide brought in a higher bar for weight loss for patients with chronic weight management. And retatrutide that Dan referenced in his comments currently in Phase 3 has the potential to bring even further improved outcome for patients. So that's how we see that. In terms of capacity and whether the question is on whether companies should be or shouldn't be building given that there is a patent expiry at the end, we do look at that, and we look at the long-term horizon.

But certainly, the investments in a manufacturing facility, for example, the ones we've just mentioned, whether it's in Concord, North Carolina, or Research Triangle Park, North Carolina, between the two of them, it's about a $4 billion investment, are certainly a good investment of our capital given that size of opportunity over the long term.

Anat Ashkenazi: I will say that as you think about potential for either generic or biosimilar entry in this space in general, it will require quite a massive investment in capital. Just the sites that I've mentioned today on the call, and we've talked about for the past year or so, total about $11 billion. And that's on top of already substantial network we have around the globe, primarily in the US and Europe for production. So as you think about entering into that space, it will require some significant capital commitments. Thank you, Anat. Maybe the final question, Paul, and then we'll wrap up. Certainly. The next question is from Tim Anderson from Wolfe Research. Tim, your line is live. Oh, thank you so much. So one of the competitor data sets, obviously, everyone's watching is the Amgen data this year.

I will say that as you think about potential for either generic or biosimilar entry in this space in general, it will require quite a massive investment in capital. Just the sites that I've mentioned today on the call, and we've talked about for the past year or so, total about $11 billion. And that's on top of already substantial network we have around the globe, primarily in the US and Europe for production. So as you think about entering into that space, it will require some significant capital commitments.

Louise Chen: Thank you, Anat. Maybe the final question, Paul, and then we'll wrap up.

Operator: Certainly. The next question is from Tim Anderson from Wolfe Research. Tim, your line is live.

Tim Anderson: Oh, thank you so much. So one of the competitor data sets, obviously, everyone's watching is the Amgen data this year.

Anat Ashkenazi: Their messaging is around longer dosing frequency, monthly dosing, and then possibly a greater effect of weight loss off therapy. So can you comment on your views of the value of extended dosing, like monthly or longer? And then do you believe in that argument about efficacy being sustained off therapy, or is that just a function of the fact that this drug lasts longer? Dan, yeah. I'll start with the second, and then maybe Patrik will weigh in on potential value here. But, although that could be a good question for Amgen. Look, I think the sustainability data I saw in that publication are a bit underwhelming. It's a very high-dose drug at half-life of an antibody. So just based on plasma concentrations that would be expected to remain there after a month or two, it doesn't surprise me.

Their messaging is around longer dosing frequency, monthly dosing, and then possibly a greater effect of weight loss off therapy. So can you comment on your views of the value of extended dosing, like monthly or longer? And then do you believe in that argument about efficacy being sustained off therapy, or is that just a function of the fact that this drug lasts longer?

Joe Fletcher: Dan, yeah.

Daniel Skovronsky: I'll start with the second, and then maybe Patrik will weigh in on potential value here. But, although that could be a good question for Amgen. Look, I think the sustainability data I saw in that publication are a bit underwhelming. It's a very high-dose drug at half-life of an antibody. So just based on plasma concentrations that would be expected to remain there after a month or two, it doesn't surprise me.

Anat Ashkenazi: But what we're seeing is that at doses that are reasonably well tolerated, if there were any doses that were reasonably well tolerated, weight loss is lower than what we would need to see to take a molecule to Phase 3, for sure. And sustainability doesn't appear to be at all differentiated. My only addition would be that when we look at market research, of course, convenience is one factor, but it's not necessarily the most important factor when it comes to provider and consumer selecting treatments. So I'm really excited about the cards we have in our hands. Of course, tirzepatide remaining a foundational treatment for obesity, but also with the addition of retatrutide and orforglipron. And also, the opportunity is here to look into options with additional non-weight loss dependent pharmacology to complement the assets we have in the pipeline. Thank you both.

Patrik Jonsson: My only addition would be that when we look at market research, of course, convenience is one factor, but it's not necessarily the most important factor when it comes to provider and consumer selecting treatments. So I'm really excited about the cards we have in our hands. Of course, tirzepatide remaining a foundational treatment for obesity, but also with the addition of retatrutide and orforglipron. And also, the opportunity is here to look into options with additional non-weight loss dependent pharmacology to complement the assets we have in the pipeline.

Joe Fletcher: Thank you both.

Anat Ashkenazi: Dave, do you want to wrap us up? Yeah, absolutely. That's good, Joe. Thanks. We appreciate everyone participating today and, of course, your interest in the company. 2023 was a really productive year for Lilly, and we look forward to continued momentum in 2024 with a strong guide today. Thanks again for dialing in. Please follow up with Joe and the IR team if you have additional questions that weren't answered. Thanks. Thank you. Thank you, ladies and gentlemen. This does conclude our conference for today. This conference will be made available for replay beginning at 1:00PM today, running through 20 February 2024 at midnight. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 187676. International dialers can call 973-528-0005. Again, those numbers are 800-332-6854 and 973-528-0005 with the access code 187676. Thank you for your participation.

Dave, do you want to wrap us up?

Dave Ricks: Yeah, absolutely. That's good, Joe. Thanks. We appreciate everyone participating today and, of course, your interest in the company. 2023 was a really productive year for Lilly, and we look forward to continued momentum in 2024 with a strong guide today. Thanks again for dialing in. Please follow up with Joe and the IR team if you have additional questions that weren't answered. Thanks.

Operator: Thank you. Thank you, ladies and gentlemen. This does conclude our conference for today. This conference will be made available for replay beginning at 1:00PM today, running through 20 February 2024 at midnight. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 187676. International dialers can call 973-528-0005. Again, those numbers are 800-332-6854 and 973-528-0005 with the access code 187676. Thank you for your participation.

Anat Ashkenazi: You may now disconnect your lines.

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Q4 2023 Eli Lilly & Co Earnings Call

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