Q2 2024 Eli Lilly & Co Earnings Call

August 8, 2024

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q2 2024 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.

Joe Fletcher: Thanks, Paul, and good morning, everyone. Thanks for joining us for Eli Lilly and Company's Q2 2024 earnings 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, Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology, Gordon Brooks, Interim Chief Financial Officer, Anne White, President of Lilly Neuroscience, Ilya Yuffa, President of Lilly International, Jake Van Naarden, President of Lilly Oncology, and Patrik Jonsson, President of Lilly Cardiometabolic Health and Lilly USA.

Joe Fletcher: Thanks, Paul. Good morning, everyone. Thanks for joining us for Eli Lilly and Company's Q2 2024 earnings 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; and Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology; Gordon Brooks, Interim Financial--Chief Financial Officer; Anne White, President of Lilly Neuroscience; Ilya Yuffa, President of Lilly International; Jake Van Naarden, President of Lilly Oncology; and Patrik Jonsson, President of Lilly Cardiometabolic Health and Lilly USA. And we're also joined by Michala Irons, Mike Sprengnether, and Lauren Zierke of the IR team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to several factors, including those listed on Slide 4. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. 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.

Joe Fletcher: And we're also joined by Michaela Irons, Mike Springnether, and Lauren Zierke of the IRT. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. However, our actual results could differ materially due to several factors, including those listed on slide four.

Joe Fletcher: During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. However, our actual results could differ materially due to several factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. 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. Thanks, Joe.

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

However, our actual results could differ materially due to several factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. 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. Thanks, Joe.

Joe Fletcher: Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. 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-gap financing. Now, I'll turn the call over to Dave.

Dave Ricks: Thanks, Joe! It's an exciting time here at Lilly, as our growth trajectory accelerated in the second quarter. Our investments in advancing innovative medicines and our focus on manufacturing expansion are bringing Lilly medicines to more people around the world. On slide five, you can see details of the financial performance in the second quarter and progress related to our strategic deliverables.

David A. Ricks: Thanks, Joe. It's an exciting time here at Lilly as our growth trajectory accelerated in the second quarter. Our investments in advancing innovative medicine are focused on manufacturing expansion are bringing Lilly medicines to more people around the world. On Slide 5, you can see details of the financial performance in the second quarter and progress related to our strategic deliverables. Revenue grew 36% in Q2 with our new products growing nearly $3.5 billion compared to the same period last year. U.S. demand for MOUNJARO and ZEPBOUND is strong and growing as access and supply continue to expand. While weekly prescription volume was volatile in the first half of the year due to challenges fulfilling high demand, our progress on supply gives us confidence in our outlook. Q2 saw impressive performance across other areas of the business as well. Excluding the sale of the rights to BAQSIMI last year, non-incretin growth was 17% worldwide with growth spread across geographies, including 25% growth in the United States. And our $3 billion increase in revenue guidance reflects our expectation that momentum will accelerate through the balance of the year. We achieved several key pipeline milestones, including the approval of Kisunla, the brand name for donanemab in the U.S.

Dave Ricks: It's an exciting time here at Lilly as our growth trajectory accelerated in the second quarter. Our investments in advancing innovative medicines and our focus on manufacturing expansion are bringing Lilly medicines to more people around the world. On slide five, you can see details of the financial performance in the second quarter and progress related to our strategic deliverables.

Dave Ricks: We're having a group of 36% on YouTube with our new products growing nearly $3.5 billion compared to the same period last year. U.S. demand for Manjaro and ZepBound is strong and growing as access and supply continue to expand. While weekly prescription volume was volatile in the first half of the year due to challenges fulfilling high demand, our progress on supply gives us confidence in our outlook. Q2 saw impressive performance across other areas of the business as well. Excluding the sale of the rights to back see me last year, Naane Kripton growth was 17% worldwide, with growth spread across geographies, including 25% growth in the United States.

Dave Ricks: Revenue grew 36% in Q2, with our new products growing by nearly $3.5 billion compared to the same period last year. U.S. demand for Manjaro and ZepBound is strong and growing as access and supply continue to expand. While weekly prescription volume was volatile in the first half of the year due to challenges fulfilling high demand, our progress on supply gives us confidence in our outlook. Q2 saw impressive performance across other areas of the business as well. Excluding the sale of the rights to Baksimi last year, non-inkerton growth was 17% worldwide, with growth spread across geographies, including 25% growth in the United States.

Revenue grew 36% in Q2, with our new products growing by nearly $3.5 billion compared to the same period last year. U.S. demand for Manjaro and ZepBound is strong and growing as access and supply continue to expand. While weekly prescription volume was volatile in the first half of the year due to challenges fulfilling high demand, our progress on supply gives us confidence in our outlook.

Q2 saw impressive performance across other areas of the business as well. Excluding the sale of the rights to Baksimi last year, non-inkerton growth was 17% worldwide, with growth spread across geographies, including 25% growth in the United States. And our $3 billion increase in revenue guidance reflects our expectation that momentum will accelerate through the balance of the year. We achieved several key pipeline milestones, including the approval of Casunla, the brand name for Denonimab in the U.S.

Dave Ricks: And our $3 billion increase in revenue guidance reflects our expectation that momentum will accelerate through the balance of the year. We achieved several key pipeline milestones, including the approval of Casunla, the brand name for Denonimab in the U.S. for the treatment of Alzheimer's, and the approval of J-PERCA in Japan for people with relapse or refractory mantle cell lymphoma who are resistant or intolerant to other

And our $3 billion increase in revenue guidance reflects our expectation that momentum will accelerate through the balance of the year. We achieved several key pipeline milestones, including the approval of Casunla, the brand name for Denonimab in the U.S.

David A. Ricks: We achieved several key pipeline milestones, including the approval of KISUNLA, the brand name for donanemab in the U.S. for the treatment of Alzheimer's disease, the approval of JAYPIRCA in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other BTK inhibitors, the submission of tirzepatide in the U.S. and the EU for the treatment of moderate to severe obstructive sleep apnea in adults with obesity and the positive top-line results from the SUMMIT Phase III trial evaluating tirzepatide in adults with heart failure with preserved injection fraction and obesity. Lilly now has a significant opportunity to create new medicines through a broad internal portfolio and active business development to support our long-term growth. In obesity, our strategy is to comprehensively address this global public health crisis, pursuing opportunities against every rational mechanism, indication, and dosage form. We are investing broadly in this disease and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late-stage Phase III programs. We recently shared the positive data of tirzepatide in OSA and [inaudible]. ORFORGLIPRON, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity with nine trials currently running and readout starting mid-next year. With tirzepatide, our GIP/GLP-1 glucan tri-agonist.

David A. Ricks: We achieved several key pipeline milestones, including the approval of KISUNLA, the brand name for donanemab in the U.S. for the treatment of Alzheimer's disease, the approval of JAYPIRCA in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other BTK inhibitors, the submission of TIRZEPATIDE in the U.S. and the EU for the treatment of moderate to severe obstructive sleep apnea in adults with obesity and the positive top-line results from the SUMMIT Phase III trial evaluating TIRZEPATIDE in adults with heart failure with preserved injection fraction and obesity. Lilly now has a significant opportunity to create new medicines through a broad internal portfolio and active business development to support our long-term growth. In obesity, our strategy is to comprehensively address this global public health crisis, pursuing opportunities against every rational mechanism, indication, and dosage form. We are investing broadly in this disease and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late-stage Phase III programs. We recently shared the positive data of TIRZEPATIDE in OSA and [inaudible].

for the treatment of Alzheimer's, and the approval of J-PERCA in Japan for people with relapse or refractory mantle cell lymphoma who are resistant or intolerant to other The submission of terzapatide in the U.S. and the E.U. for the treatment of moderate to severe obstructive sleep apnea in adults with obesity and the positive top-line results from the SUMMIT Phase 3 trial, evaluating Zepatite in adults with heart failure. Preserved Injection Fraction, Andrew B. Lilly now has a significant opportunity to create new medicines through a broad internal portfolio and active business development to support our long-term growth. In obesity, our strategy is to comprehensively address this global public health crisis, and we are pursuing opportunities against every rational mechanism, indication, and dosage. We are investing broadly in this disease and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late stage phase three programs that originally shared the positive data of Drus hepatitis OSA and Heftel. Or Foldapron, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity, with nine trials currently running and readouts starting mid-next year, with Ratatouille style, or GIP, GLP-1, glucagon triagonal.

Dave Ricks: The submission of terzapatide in the U.S. and the E.U. for the treatment of moderate to severe obstructive sleep apnea in adults with obesity and the positive top-line results from the SUMMIT Phase 3 trial, evaluating Zepatite in adults with heart failure. Preserved Injection Fraction, Andrew B. Lilly now has a significant opportunity to create new medicines through a broad internal portfolio and active business development to support our long-term growth. In obesity, our strategy is to comprehensively address this global public health crisis, and we are pursuing opportunities against every rational mechanism, indication, and dosage. We are investing broadly in this disease and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late stage phase three programs that originally shared the positive data of Drus hepatitis OSA and Heftel. Or Foldapron, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity, with nine trials currently running and readouts starting mid-next year, with Ratatouille style, or GIP, GLP-1, glucagon triagonal.

Dave Ricks: We are investing broadly in this disease, and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late stage phase three program, who originally shared the positive data of Drus hepatitis OSA and Heftel. Or Foldapron, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity, with nine trials currently running and readouts starting mid-next year, with Rotatri So, our G-I-Kee, G-O-P-1, Luke Agon, Tri Agon, We have initiated a broad phase 3 development program, studying the molecule in obesity, OSA, osteoarthritis, cardiovascular, and renalox, as well as type 2 diabetes.

Dave Ricks: We are investing broadly in this disease and now have 11 new molecules currently in the clinic across multiple indications. We're also investing in a wide range of late stage phase three programs that originally shared the positive data of Drus hepatitis OSA and Heftel. Or Foldapron, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity, with nine trials currently running and readouts starting mid-next year, with Ratatouille style, or GIP, GLP-1, glucagon triagonal.

David A. Ricks: ORFORGLIPRON, our oral GLP-1 small molecule, has a comprehensive Phase III program underway in diabetes and obesity with nine trials currently running and readout starting mid-next year. With TIRZEPATIDE, our GIP/GLP-1 glucan tri-agonist. We have initiated a broad Phase III development program studying the molecule in obesity, OSA, osteoarthritis, cardiovascular and renal outcomes as well as type 2 diabetes. These readouts start in 2026. Our top priority remains executing on our ambitious manufacturing expansion agenda. In May, we announced plans to invest an additional $5.3 billion in our Lebanon, Indiana manufacturing sites, bringing our total investment there to $9 billion. We believe this is the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in the history of the United States. Importantly, this expansion will enhance capacity to manufacture active pharmaceutical ingredients for ZEPBOUND and MOUNJARO. Since 2020, we have committed more than $18 billion to build, upgrade, or acquire facilities in the U.S. and Europe, and we began to see the benefit of these investments.

Dave Ricks: We have initiated a broad phase three development program studying the molecule in obesity, OSA, osteoarthritis, cardiovascular and renal outcomes, as well as type 2 diabetes. These readouts start in 2026. Our top priority remains executing on our ambitious manufacturing expansion agenda. In May, we announced plans to invest an additional $5.3 billion in our Lebanon, Indiana manufacturing site, bringing our total investment there to nine billion dollars. We believe this is the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in the history of the United States. Most importantly, this expansion will enhance the capacity to manufacture active pharmaceutical ingredients for Zepp-Bound and Moncharo.

We have initiated a broad phase three development program studying the molecule in obesity, OSA, osteoarthritis, cardiovascular and renal outcomes, as well as type 2 diabetes. These readouts start in 2026. Our top priority remains executing on our ambitious manufacturing expansion agenda. In May, we announced plans to invest an additional $5.3 billion in our Lebanon, Indiana manufacturing site, bringing our total investment there to nine billion dollars.

Dave Ricks: These readouts start in 2026, and our top priority remains executing on our ambitious manufacturing expansion agenda. In May, we announced plans to invest an additional $5.3 billion in our Lebanon, Indiana manufacturing site, bringing our total investment there to nine billion dollars. We believe this is the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in the history of the United States. Most importantly, this expansion will enhance capacity to manufacture active pharmaceutical ingredients for Zepp-Bound and Moncharo.

We believe this is the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in the history of the United States. Most importantly, this expansion will enhance the capacity to manufacture active pharmaceutical ingredients for Zepp-Bound and Moncharo. Since 2020, we have committed more than $18 billion to build, upgrade, or acquire facilities in the U.S. and Europe, and we are beginning to see the benefit of these investments.

Dave Ricks: In 2020, we have committed more than $18 billion to build, upgrade, or acquire facilities in the U.S. and Europe, and we've begun to see the benefit of these investments. We are making near-term progress to ramp production, including at new sites like Research Triangle Park, existing Lilly sites, and a contract manufacturing organization. Our conquered North Carolina site is progressing well. We're in the process of running validation, and expect this facility will initiate production by the end of 2024, with product available to ship in 2025. We also continue to make progress on different presentations for Tracepotide.

Dave Ricks: Since 2020, we have committed more than $18 billion to build, upgrade, or acquire facilities in the U.S. and Europe, and we are beginning to see the benefit of these investments. We are making near-term progress to ramp production, including at new sites like Research Triangle Park, existing Lilly sites, and a contract manufacturing organization. Our Concord, NC, site is progressing well. We're in the process of running validation, and expect this facility will initiate production by the end of 2024, with product available to ship in 2025. We also continue to make progress on different presentations for Traceptide.

Since 2020, we have committed more than $18 billion to build, upgrade, or acquire facilities in the U.S. and Europe, and we are beginning to see the benefit of these investments.

David A. Ricks: We are making near-term progress to ramp production, including at new sites like Research Trial Park, existing Lilly sites, and contract manufacturing organizations. Our Concur North Carolina site is progressing well. We're in the process of running validation and expect this facility will initiate production by the end of 2024 with product available to ship in 2025. We also continue to make progress on different presentations for TIRZEPATIDE. We have now launched our multidose quick pen in multiple markets outside the U.S. with positive early indicators of patient adoption. And in Gordon's remarks, he will preview our plans to launch vials here in the U.S. Lastly, in terms of external innovation. In July, we announced a definitive agreement to acquire Morphic, a biopharma company developing oral Integrin therapies for treatment of serious chronic diseases, including a Phase II asset being evaluated in inflammatory bowel disease. On Slide 6, you'll see a list of key events since our Q1 call, including the milestones I mentioned earlier and several other important updates. As we announced in June, Anat Ashkenazi resigned as Lilly's Chief Financial Officer to become the CFO of Alphabet. We wish Anat well in her new role and thank her for her partnership and leadership of our financial organization in the last three years.

Dave Ricks: We've now launched our Multados quick pen in multiple markets outside the US, and there are positive early indicators of patient adoption. In Engordium Arts, you will preview our plans to launch Biles here in the U.S. Lastly, in terms of external innovation, in July, we announced the definitive agreement to acquire Morphic, a biopharmac company developing oral integrin therapies for the treatment of serious chronic diseases, including a face-to- On slide six, you'll see a list of key events since our key one call, including the milestones I mentioned earlier and several other important updates.

Dave Ricks: We've now launched our multi-dose QuickPen in multiple markets outside the US, and there are positive early indicators of patient adoption. And in Gordon's remarks, he will preview our plans to launch Vials here in the US. Lastly, in terms of external innovation, in July, we announced a definitive agreement to acquire Morphic, a biopharma company developing oral intervention therapies for the treatment of serious chronic diseases, including a phase two asset being evaluated in inflammatory bowel. On slide six, you'll see a list of key events since our Q1 call, including the milestones I mentioned earlier and several other important updates. As we announced in June, Anat Ashkenazi resigned as the league's chief financial officer to become the CFO of Alpha. We wish her well in her new role and thank her for her partnership and leadership of our financial organization over the last three years.

Dave Ricks: As we announced in June, Anat Ashkenazi resigned as the least chief financial officer to become the CEO of Alpha. We wish her not only well in our new role but thank you for our partnership and leadership of our financial organization over the last three. We have named Gordon Brooks interim CFO as an internal and external search for a successor is currently underway. Gordon has been with the company for 29 years and also serves as our controller and the leader of the corporate strategy group for the company.

Dave Ricks: As we announced in June, Anat Ashkenazi resigned as the league's chief financial officer to become the CFO of Alpha. We wish her well in her new role and thank her for her partnership and leadership of our financial organization over the last three years. We have named Gordon Brooks interim CFO as an internal and external search for a successor is currently underway. Gordon has been with the company for 29 years and also serves as our controller and the leader of the corporate strategy group for the company.

As we announced in June, Anat Ashkenazi resigned as the league's chief financial officer to become the CFO of Alpha. We wish her well in her new role and thank her for her partnership and leadership of our financial organization over the last three years.

David A. Ricks: We have named Gordon Brooks, interim CFO as an internal, and external search for Anat successor is currently underway. Gordon has been with the company for 29 years and also serves as our controller and the leader of the corporate strategy group for the company. In other leadership news, Alonzo Weems, our Executive Vice President of Enterprise Risk Management and our Chief Ethics and Compliance Officer, will retire at the end of the year after 27 years of service. And Melissa Seymour has joined the company as Executive Vice President of Global Quality and a member of the company's executive committee following Johna Norton's recent retirement. I want to thank Alonzo for his many years of service and welcome Melissa to the Lilly team. Now let me turn the call over to Gordon to review our Q2 financial results.

Dave Ricks: In other leadership news, Alonza Weens, our Executive Vice President of Enterprise Risk Management and our Chief Ethics and Compliance Officer, will retire at the end of the year after 27 years of service. And Melissa Seymour has joined the company as Executive Vice President of Global Quality and a member of the company's Executive Committee following John Naarden's recent retirement. I want to thank Alonzer for his many years of service and welcome Melissa to the team. Now, let me turn the call over to Gordon to review our Q2 financial results. Thanks.

Dave Ricks: In other leadership news, Alonzo Wiens, our Executive Vice President of Enterprise Risk Management and our Chief Ethics and Compliance Officer, will retire at the end of the year after 27 years of service. And Melissa Seymour has joined the company as Executive Vice President of Global Quality and a member of the company's Executive Committee following John Naarden's recent retirement. I want to thank Alonzo for his many years of service and welcome Melissa to the... Now, let me turn the call over to Gordon to review our Q2 financial results. Thanks.

Gordon Brooks: Someone slides seven, which summarizes the financial performance in the second quarter of 2024. Second quarter revenue growth of 36% was primarily driven by Manchara and Z-Bond as well as Visenio, although excluding revenue from the sales of rights to Bexini, in Q2 of last year, revenue growth was 46%. Gross margins and percent of revenue increased from 79.8% in Q2 of 23, to 182% in Q2 of 24. Rose Margin and the court have benefited from a favorable product mix and higher realized prices, partially offset by higher production costs.

Gordon Brooks: Thanks, Dave. So I'm on Slide 7, which summarizes the financial performance in the second quarter of 2024. Second quarter revenue growth of 36% was primarily driven by MOUNJARO and ZEPBOUND as well as VERZENIO. When excluding revenue from the sale of rights to BAQSIMI in Q2 of last year, revenue grew 46%. Gross margin as a percent of revenue increased from 79.8% in Q2 of '23 to 82% in Q2 of '24. Gross margin in the quarter benefited from favorable product mix and higher realized prices, partially offset by higher production costs. R&D expenses increased 15% driven by continued investment in our portfolio and in our people. Marketing, selling, and administrative expenses increased 10%, primarily driven by promotional efforts associated ongoing and future launches as well as investments in our people. Operating income increased 90% in Q2, driven by higher revenue from new products, partially offset by operating expense growth. The effective tax rate on a non-GAAP basis was 16.5% in Q2 of '24 compared with 16.1% in Q2 of '23. The Q2 '24 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2 '23 rate reflected the impact of earnings from the sale of rights for BAQSIMI. At the bottom line, we delivered earnings per share of $3.92 in Q2, an 86% increase compared to the prior year.

Gordon Brooks: R&D expenses increased 15% driven by continued investment in our portfolio and in our people. Marketing, selling, and administrative expenses increased 10%, primarily driven by promotional efforts associated with ongoing and future launches, as well as investment in our people. Operating revenue increased by 90% in Q2, driven by higher revenue from new products, partially offset by operating expense growth. The effective tax rate on a non-GAAP basis was 16.5% in Q2 of 24 compared with 16.1% in Q2 of 23.

Gordon Brooks: Marketing, selling, and administrative expenses increased 10%, primarily driven by promotional efforts associated with ongoing and future launches, as well as investment in our people. Operating income increased 90% in Q2, driven by higher revenue from new products, partially offset by operating expense growth. The effective tax rate on a non-GAAP basis was 16.5% in Q2 of 24 compared with 16.1% in Q2 of 23. The Q2'24 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2'23 rates reflected the impact of earnings from the sale of rights for the vaccine. At the bottom line, we delivered earnings per share of $3.92 in Q2, an 86% increase compared to the prior year.

Gordon Brooks: The Q2'24 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2'23 rates reflected the impact of earnings from the sale of rights for the vaccine. At the bottom line, we delivered earnings per share of $3.92, an 86% increase compared to the prior year. Q2-24 results include the negative impact of $0.14 from acquired IPR&D charges compared to $0.09 in the prior quarter, Q2-23.

Gordon Brooks: At the bottom line, we delivered earnings per share of $3.92 in Q2, an 86% increase compared to the prior year. Q2-24 results include the negative impact of $0.14 from acquired IPR&D charges compared to $0.09 in the prior quarter, Q2-23.

At the bottom line, we delivered earnings per share of $3.92 in Q2, an 86% increase compared to the prior year.

Gordon Brooks: Q2 '24 results include a negative impact of $0.14 from acquired IPR&D charges compared to $0.09 in the prior quarter, Q2 of '23. On Slide 9, we quantify the effect of price, rate, and volume on revenue growth. U.S. revenue increased 42% in Q2. Volume growth of 27% was driven by ZEPBOUND, MOUNJARO, and VERZENIO, partially offset by sale of rights for BAQSIMI in Q2 of '23 and declines in TRULICITY. Realized prices increased 15%, largely driven by MOUNJARO access and savings card dynamics. As noted in our Q4--Q1 2024 earnings call, unprecedented demand for our incretin medicines led to wholesaler back orders at the end of Q1. In Q2, we fulfilled the majority of these back orders, improving wholesaler stocking levels. We estimate that U.S. MOUNJARO and ZEPBOUND aggregate sales in the second quarter were positively impacted by channel stocking that we estimate totaled high teens to mid-20s as a percent of U.S. sales as we rebuilt inventory from extremely low levels in the spring and to account for the growth of these brands. We are pleased that the group's supply situation is reflected on the FDA shortage website, which currently shows all doses of MOUNJARO and ZEPBOUND, listed as available and the two lower doses of TRULICITY as available.

Q2-24 results include the negative impact of $0.14 from acquired IPR&D charges compared to $0.09 in the prior quarter, Q2-23. On slide nine, we quantify the effects of price, rate, and volume on revenue growth. U.S. revenue increased 42% in Q2. Volume growth of 27% was driven by Zepan, Manjaro, and Visenio, partially offset by the sale of rights for Maximi in Q2 of 23, and declines in Chilisa. Realized prices increased 15%, largely driven by Manjaro access and savings card dynamics. As noted in our Q1 2024 earnings call, unprecedented demand for our inkjet medicines led to wholesaler backorders at the end of Q1. In Q2, we've fulfilled the majority of these back orders, improving wholesalers' stocking levels.

Gordon Brooks: On slide nine, we quantify the effects of price, rate, and volume on revenue growth. U.S. revenue increased 42% in Q2. Volume growth of 27% was driven by Zepan, Manjaro, and Visenio, partially offset by the sale of rights for Maximi in Q2 of 23, and declines in Chilisa. Realized prices increased 15%, largely driven by Majoro Axis and Savings Card Dynamics. As noted in our Q1 2024 earnings call, unprecedented demand for our inkjet medicines led to wholesaler backorders at the end of Q1. In Q2, we proposed a majority of these back orders, improving wholesale stocking levels. We have submitted that U.S. Majorans found aggregate sales of the second quarter responsibly impacted by channel stocking.

Gordon Brooks: On slide nine, we quantify the effects of price, rate, and volume on revenue growth. U.S. revenue increased 42% in Q2. Volume growth of 27% was driven by Zepan, Manjaro, and Visenio, partially offset by the sale of rights for Maximi in Q2 of 23, and declines in Chilisa. Realized prices increased 15%, largely driven by Manjaro access and savings card dynamics. As noted in our Q1 2024 earnings call, unprecedented demand for our inkjet medicines led to wholesaler backorders at the end of Q1. In Q2, we've fulfilled the majority of these back orders, improving wholesalers' stocking levels.

Gordon Brooks: In Q2, we've fulfilled the majority of these back orders, improving wholesalers' stocking levels. We estimate that U.S. Majora and Zip Bound aggregate sales in the second quarter were positively impacted by channel stocking that we estimate totaled high teens to mid-20s as a percent of U.S. sales, as we rebuild our infantry from extremely low levels in the spring and to account for the growth of these brands. We're pleased that the improved supply situation is reflected on the FDA shortage website, which currently shows all doses of Menjara and ZepBound listed as available, and the two lower doses of Trulicity listed as available.

In Q2, we've fulfilled the majority of these back orders, improving wholesalers' stocking levels.

We estimate that U.S. Majora and Zip Bound aggregate sales in the second quarter were positively impacted by channel stocking that we estimate totaled high teens to mid-20s as a percent of U.S. sales, as we rebuild our infantry from extremely low levels in the spring and to account for the growth of these brands. We're pleased that the improved supply situation is reflected on the FDA shortage website, which currently shows all doses of Menjara and ZepBound listed as available, and the two lower doses of Trulicity listed as available.

Gordon Brooks: While wholesaler back orders in the U.S. have been reduced substantially, it's important to note that the pharmaceutical supply chain is complex, more so for medicines that require refrigeration and offer at several different doses. These factors may continue to result in variability in the patient experience at the pharmacy counter. While supply and demand has come into better balance, we expect increase in demand may result in periodic supply tightness for certain presentations and dose levels. We have a continued broad agenda to further increase supply, and we'll continue to look at all options. Today, we are excited to announce plans to further expand access to ZEPBOUND with the launch of the 2.5-milligram and 5-milligram single-dose files in the coming weeks with more details to come at that time. In Europe, revenue grew 20% in constant currency, primarily driven by MOUNJARO launch uptake in the U.K. and Germany. We also had strong volume growth from VERZENIO and JARDIANCE, which was partially offset by decreased volume from TRULICITY. Japan performance was strong in the second quarter with 15% revenue growth in constant currency. Volume growth of 21% was driven by uptake of MOUNJARO and VERZENIO.

Gordon Brooks: While supply and demand have come into better balance, we expect increases in demand may result in periodic supply tightness for certain presentations and those levels. We have continued to broaden the range of products to further increase supply, and we'll continue to look at all of you. Today, we are excited to announce plans to further expand access to ZepBound with the launch of the 2.5mg and 5mg single-dose vials in the coming weeks, with more details to come at that time.

Gordon Brooks: While supply and demand have come into better balance, we expect increases in demand may result in periodic supply tightness for certain presentations and those levels. We have a continued broad agenda to further increase supply and will continue to look at all options. Today, we are excited to announce plans to further expand access to ZepBound with the launch of the 2.5mg and 5mg single-dose vials in the coming weeks, with more details to come at that time.

Gordon Brooks: In Europe, revenue grew 20% in constant currency, primarily driven by Majora launch uptake in the UK and Germany. We also had strong volume growth from Blasenia and Jardians, which was partially offset by decreased volume from Japan. Japan's performance was strong in the second quarter with 15% revenue growth in constant currency. Volume growth of 21% was driven by uptake of Menjaro and Misenio. Moving to China, Q2 revenue increased 1% in constant currency. Growth was driven by Tyvert, Illumiate, and Tulz, partially offset by Trilicity and Cialis. Majora was recently approved in China for type 2 diabetes and chronic weight management. We have not yet announced the expected launch timing in this market.

In Europe, revenue grew 20% in constant currency, primarily driven by Majora launch uptake in the UK and Germany. We also had strong volume growth from Blasenia and Jardians, which was partially offset by decreased volume from Japan. Japan's performance was strong in the second quarter with 15% revenue growth in constant currency. Volume growth of 21% was driven by uptake of Menjaro and Misenio.

Gordon Brooks: Moving to China, Q2 revenue increased 1% in constant currency, [inaudible] Growth was driven by Tyvert, Illumiate, and Tulz, partially offset by Trilicity and Cialis. Mendozaura was recently approved in China for Type 2 diabetes and chronic weight management. We have not yet announced the expected launch timing in this market. Revenue and rest of the world increased 61% in constant currency, primarily driven by the majority of volunteers from demand and channel dynamics. Slide 10 provides additional perspective on performance across our product categories.

Gordon Brooks: Moving to China. Q2 revenue increased 1% in constant currency. Growth was driven by--OLUMIANT and TALTZ, partially offset by TRULICITY and CIALIS. MOUNJARO was recently approved in China for type 2 diabetes and chronic weight management. We have not yet announced expected launch timing in this market. Revenue in Rest of World increased 61% in constant currency, primarily driven by MOUNJARO volume growth from demand and channel dynamics. Slide 10 provides additional perspective on performance across our product categories. VERZENIO solid growth in the second quarter across major geographies with worldwide sales increasing 44%, driven by the early breast cancer indication. JAYPIRCA revenue increased to $92 million worldwide, which included a $19 million partner milestone payment related to Japan. JAYPIRCA continued impressive quarter-over-quarter growth, building on the brand's uptake from both the MCL and CLL patient populations. OMVOH is launched in the U.S. and 14 international markets with sales of $26 million in Q2. These launches continue to progress well with increasing patient starts. And in the U.S., we expect sales to accelerate as the product-specific code went live on July 1.

Gordon Brooks: Revenue in the rest of the world increased 61% in constant currency, primarily driven by major volume growth from demand and channel dynamics. Slide 10 provides additional perspective on performance across our product categories. There was solid growth in the second quarter across major geographies with worldwide sales increasing 44 percent, driven by the early breast cancer indication. Jay Berger revenue increased to $92 million worldwide, which included a $19 million partner milestone payment related to Japan. Jafoka continued impressive quarter-over-quarter growth, building on the brand's uptake from both the MCL and CLL patient populations. Convo was launched in the US and 14 international markets with sales of $26 million in Q2. These launches continue to progress well at Increasing Patient Sights, and in the US, we expect sales to accelerate as the product-specific J code went live on July 1st.

Gordon Brooks: The Zeya showed solid growth in the second quarter across major geographies with worldwide sales increasing 44%, driven by the early breast cancer indication. Jepurka revenue increased to 92 million dollars worldwide, which included a 19 million dollar partner milestone payment related to Japan. Jafoka continued impressive quarter-over-quarter growth, building on the brand's uptake from both the MCL and CLL patient populations. Convo was launched in the US and 14 international markets with sales of $26 million in Q2.

Gordon Brooks: Jafoka continued impressive quarter-over-quarter growth, building on the brand's uptake from both the MCL and CLL patient populations. Convo was launched in the US and 14 international markets with sales of $26 million in Q2. These launches continue to progress well at Increasing Patient Sights, and in the US, we expect sales to accelerate as the product-specific J code went live on July 1st. Manjaro sales in Q2 were $3.1 billion globally, with $2.4 billion in the US.

Jafoka continued impressive quarter-over-quarter growth, building on the brand's uptake from both the MCL and CLL patient populations. Convo was launched in the US and 14 international markets with sales of $26 million in Q2. These launches continue to progress well at Increasing Patient Sights, and in the US, we expect sales to accelerate as the product-specific J code went live on July 1st.

Gordon Brooks: Please launch us continue to progress well. Increasing Patient Start, And in the US, we expect sales to accelerate as the product-specific J code went live on July 1st. Manjaro sales in Q2 were $3.1 billion globally, with $2.4 billion in the US.

Gordon Brooks: MOUNJARO sales in Q2 were $3.1 billion globally with $2.4 billion in the U.S. Revenue growth in the U.S. reflected continued strong demand as well as the improved channel dynamics discussed earlier. We're seeing solid uptake in Mounjaro outside the U.S., with sales in Q2 totaling $677 million. In the first half of the year, we launched the quick pen presentation in the U.K., Germany and the UAE. So far in Q3, we've also launched MOUNJARO Quick Pen in Spain and plan to launch an additional market throughout 2024. In Q2, worldwide TRULICITY revenue declined 31%. U.S. TRULICITY revenue decreased 36% driven by lower volume, primarily due to competitive dynamics and supply constraints, partially offset by improved wholesaler stocking levels on services. Turning to Slide 11. We have an update on the U.S. launch of ZEPBOUND. We've seen exceptional growth trends for ZEPBOUND that have accelerated as production has ramped leading to sales of over $1.2 billion in Q2. We are rapidly building our formulary coverage for ZEPBOUND in the U.S. and as of July 1 had approximately 86% access in the commercial segment. We estimate over 50% of employers have opted into anti-obesity medicine coverage and see that modestly growing as we work to expand coverage.

Gordon Brooks: Revenue growth in the U.S. reflected continued strong demand, as well as the improved channel dynamics discussed earlier. We're seeing solid uptake of Majora outside the US, with sales in Q2 totaling $677 million. In the first half of the year, we launched the Quickpen presentation in the UK, Germany, and the UAE. So far in Q3, we've also launched Majora QuickPay in Spain and plan to launch it in additional markets throughout 2024. In Q2, worldwide Felicity revenue declined 31%, and U.S. electricity revenue decreased 36%, driven by lower volume, primarily due to competitive dynamics and supply constraints, partially offset by improved wholesaler stocking levels on certain doses. Turning to slide 11, we have an update on the U.S. launch of Z-Bond. We've seen exceptional growth trends for Zbound that have accelerated as production has ramped, leading to sales of over $1.2 billion in Q2. We're rapidly building up formulary coverage for SEC bound in the US and, as of July the 1st, had approximately 86% access in the commercial segment. We estimate that over 50% of employers have opted in to anti-obesity medicine coverage and see that modestly growing as we work to expand coverage.

Gordon Brooks: Watch the video set by Pooot Hosella on stocking levels on certain days. Turning to slide 11, we have an update on the U.S. launch of Z-Bond. We've seen exceptional growth trends for Zbound that have accelerated as production has ramped up, leading to sales of over $1.2 billion in Q2. We're rapidly building up formulary coverage for SEC bound in the US, and as of July the 1st, we had approximately 86% access in the commercial segment. We estimate that over 50% of employers have opted in to anti-obesity medicine coverage and see that modestly growing as we work to expand coverage.

Gordon Brooks: Turning to slide 11, we have an update on the U.S. launch of Z-Bond. We've seen exceptional growth trends for Zbound that have accelerated as production has ramped, leading to sales of over $1.2 billion in Q2. We're rapidly building up formulary coverage for SEC bound in the US and, as of July the 1st, had approximately 86% access in the commercial segment. We estimate that over 50% of employers have opted in to anti-obesity medicine coverage and see that modestly growing as we work to expand coverage.

Gordon Brooks: On slide 12, we provide an update on our capital allocation, and slide 13 shows our updated 2024 financial guidance. We're raising our full year revenue outlook by $3 billion to be between $45.4 billion and $46.6 billion. This increase is due to strong performance across our non-incredent medicines, as well as the majority of Zepan. Additionally, we've improved clarity into the timing and scope of our production expansion and Majora launches outside the US. We achieved a number of supply-related milestones in Q2 and have increased confidence regarding our expectation that production of saleable doses of infant and medicines in the second half of 2024 will be at least one and a half times the saleable doses in the second half of 2023.

Gordon Brooks: On Slide 12, we provide an update on our capital allocation. Slide 13 shows our updated 2024 financial guidance. We are raising our full year revenue outlook by $3 billion to be between $45.4 million and $46.6 billion. This increase is due to strong performance across our non-incretin medicines as well as MOUNJARO and ZEPBOUND. Additionally, we have improved clarity into the timing and pace of our production expansion and MOUNJARO launches outside the U.S. We achieved a number of supply-related milestones in Q2 and have increased confidence regarding our expectation that production of salable doses of incretin medicines in the second half of 2024 will be at least 1.5 times the salable doses taken half of 2023. Based on the midpoint of the range, our updated guidance implies revenue growth of 38% in the second half of the year, below 31% in the first half. In the second half of the year, we expect a more significant growth in Q4 compared to Q3.

Gordon Brooks: We achieved a number of supply-related milestones in Q2 and have increased confidence regarding our expectation that production of saleable doses of infant and medicines in the second half of 2024 will be at least one and a half times the saleable doses in the second half of 2023. Based on the midpoint of the range, our updated guidance implies revenue growth of 38% in the second half of the year, following 31% in the first half. In the second half of the year, we're expecting more significant growth in Q4 compared to Q3.

Gordon Brooks: Mason Limit point of the rain chart that is guidance implies revenue growth of 38% in the second half of the year, while on 31% in the first half. In the second half of the year, we're expecting more significant growth in Q4 compared to Q3. Given the update to Revenue Gardens, when I expect the ratio of Chris Marchen, later updates divided by Revenue, to be in the range of 36 to 38% on a reported basis.

Gordon Brooks: In the second half of the year, we're expecting more significant growth in Q4 compared to Q3. Given the update to revenue guidance, we now expect the ratio of gross margin less op-eds divided by revenue to be in the range of 36 to 38% on a reported basis. 37% to 39% on a non-gap basis. For other income and expense, we now expect between $525 million and $425 million of expense on a reported basis and between $400 billion and $300 billion of expense on a non-gap basis.

In the second half of the year, we're expecting more significant growth in Q4 compared to Q3.

Gordon Brooks: Given the update to revenue guidance, we now expect the ratio of gross margin less OpEx divided by revenue to be in the range of 36% to 38% on a reported basis and 37% to 39% on a non-GAAP basis. For other income and expense, we now expect between $525 million and $425 million of expense on a reported basis, and between $400 million and $300 million of expense on a non-GAAP basis. Both ranges reflect lower expected net interest expense and the reported range reflects net losses on investments in equity securities through Q2 of '24. We have increased our estimated effective tax rate to be approximately 15%, driven by changes in our forecasted mix of earnings in higher tax jurisdictions. Earnings per share is now expected to be in the range of $15.10 to $15.60 on a reported basis $16.10 to $16.60 on a non-GAAP basis. Both ranges--the updates mentioned earlier as well as acquired IPR&D charges through Q2 of $0.24. The reported range includes a charge in Q2 of '24 associated with anticipated litigation payments. Now I'll turn the call over to Dan to highlight our progress on R&D.

Gordon Brooks: 37% to 39% on a non-gap basis. For other income and expense, we now expect between $525 million and $425 million of expense on a reported basis and between $400 billion and $300 billion of expense on a non-gap basis. Both ranges reflect lower expected net interest expense, and the reported range reflects net losses on investments in equity securities through Q2 of 24. We've increased our estimated defective tax rates by approximately 15% driven by changes in our forecast that mix of earnings in higher tax jurisdictions.

Gordon Brooks: Both ranges reflect lower expected net interest expense, and the reported range reflects net losses on investments in equity securities through Q2 of 2024. We've increased our estimated effective tax rate to be approximately 15% driven by changes in our forecasted mix of earnings in higher tax jurisdictions. Earnings per share is now expected to be in the range of $15.10 to $15.60 on a reported basis and $16.10 to $16.60 on a non-GA Both ranges reflect the updates mentioned earlier, as well as acquired IPR&D charges through Q2 of $0.24. The reported range includes a charge in Q2 of $ 24 associated with anticipated litigation payment. Now I'll turn the call over to Dan to highlight our progress on R&D.

Gordon Brooks: Thanks for sharing this now. I expect it to be in the range of $15.10 to $15.60 on a reported basis and $16.10 to $16.60 on a non-gabbed basis. Both ranges reflect the updates mentioned earlier, as well as acquired IPR and D charges, 22 of 24 cents. The reported range includes a charge in Q2 of 24 associated with anticipated litigation payment. Now I'll turn the call over to Dan to highlight our

Gordon Brooks: Both ranges reflect the updates mentioned earlier, as well as acquired IPR&D charges through Q2 of $0.24. The reported range includes a charge in Q2 of $ 24 associated with anticipated litigation payment. Now I'll turn the call over to Dan to highlight our progress on R&D.

Dan Skovronsky: Thanks for it. It's been another busy quarter. I'll start with comments on the Kassunla FDA approval, then the Terseptide Heart Failure phase 3 read out, and finally, I'll cover the rest of the updates for the quarter. We are, of course, very excited about the FDA approval of Kisselam Lothford for treatment of Alzheimer's disease. And follow the June Advisory Committee meeting, where we had another chance to present and discuss the compelling data package describing the safety and efficacy of this product.

Daniel M. Skovronsky: Thanks, Gordon. It's been another busy quarter. I'll start with comments on the KISUNLA FDA approval, then the TIRZEPATIDE heart failure Phase III readout. Then finally, I'll cover the rest of the updates for the quarter. We are, of course, very excited about the FDA approval of KISUNLA for treatment of Alzheimer's disease. This followed the June Advisory Committee meeting where we had another chance to present and discuss the compelling data package characterizing the safety and efficacy of this medicine. We were pleased by the discussion of the FDA advisers, particularly with regard to our data supporting stopping of KISUNLA therapy when amyloid plaques are removed to minimal levels. In our trial, nearly half of study participants completed their course of treatment with KISUNLA in 12 months. We believe limited duration therapy, along with a once monthly infusion schedule, could result in lower patient out-of-pocket treatment costs and fewer infusions required.

Dan Skovronsky: We were pleased by the discussion of the FDA advisors, particularly with regard to our data supporting stopping of consumer therapy when AMOLED plaques are removed to a minimal level. In our trial, nearly half the study participants completed their course of treatment with GoodSunline in 12 months. We believe limited duration therapy, along with a once monthly infusion schedule, could result in lower patient out of pocket treatment costs and fewer infusions required.

Dan Skovronsky: We were pleased by the discussion of the FDA advisors, particularly with regard to our data supporting stopping Casimile therapy when amyloid plaques are removed to a minimal level. In our trial, nearly half the study participants completed their course of treatment with GoodSunline in 12 months. We believe limited-duration therapy, along with a once-monthly infusion schedule, could result in lower patient out-of-pocket treatment costs and fewer infusion

Dan Skovronsky: The vote was unanimously positive on all questions presented, and a few weeks later, the FDA approved Kassala, including labeling that physicians may consider stopping dosing Kassala based on a reduction in landlord class. Following the July approval, we launched Gesundlut, and we're delighted to see that patients have already begun receiving this new Lilly medicine as part of clinical practice. We know that Kassunla is broadly covered for medicare patients through approved CED regions. However, regulatory reviews continue around the world with potential action this year in several countries.

Daniel M. Skovronsky: The vote was unanimously positive on all questions presented. Then a few weeks later, the FDA approved KISUNLA, including labeling that physicians may consider stopping dosing of KISUNLA based on reduction of amyloid plaques. Following the July approval, we launched KISUNLA, and we're delighted to see that patients have already begun receiving this new Lilly medicine as part of clinical practice. We note that KISUNLA is broadly covered for Medicare patients through approved CED registries. Regulatory reviews continue around the world with potential action yet this year in several countries. We're pleased to have recently received a positive opinion for genenimab from the Pharmaceuticals and Medical Devices Agency in Japan. And finally, our Phase III prevention study, TRAILBLAZER ALS 3, continues to progress as planned. Moving to TIRZEPATIDE. On Slide 14, you'll see the recent positive results of our SUMMIT Phase III trial, which evaluated TIRZEPATIDE for the treatment of heart failure with preserved detection fraction and obesity. This study demonstrated statistically significant improvements in both primary endpoints for TIRZEPATIDE, maximum tolerated dose compared to placebo.

Dan Skovronsky: We're pleased to have recently received a positive opinion for Denimab from the Pharmaceuticals and Medical Devices Agency in Japan. And finally, our Phase 3 prevention study, Trailblazer ALS 3, continues to progress as planned. Moving to terzapatide, on slide 14, you'll see the recent positive results of our Summit Phase 3 trial, which evaluated terzapatide for the treatment of heart failure with preserved ejection fraction and obesity. This study demonstrated statistically significant improvements in both primary endpoints versus appetite, and maximum tolerated dose compared to placebo.

Dan Skovronsky: In the first primary endpoint, Terzapatide reduced the risk of worsening heart failure by 38% compared to placebo, as measured by a composited outcome of heart failure, urgent visit or hospitalization, oral diuretic intensification, or cardiovascular death. The median follow-up to this endpoint was 104 weeks. In the second primary endpoint, terzapathite significantly improved heart failure symptoms and physical limitations compared to placebo, as measured by the Kansas City Cardiomyopathy Questionnaire, KCCQ, Clinical Summaries, Meach changes from baseline this month.

Daniel M. Skovronsky: In the first primary endpoint, TIRZEPATIDE reduced the risk of worsening heart failure by 38% compared to placebo as measured by a composite outcome of heart failure urgent visit or hospitalization, oral diuretic intensification or cardiovascular death. The median follow-up for this endpoint was 104 weeks. In the second primary endpoint, TIRZEPATIDE significantly improved heart failure symptoms and physical limitations compared to placebo as measured by the Kansas City Cardiomyopathy Questioner, KCCQ, Clinical Summary score. Main changes from baseline in this measurement is 24.8 points for TIRZEPATIDE, while placebo was 15 points based on the efficacy as demand at 52 weeks. All key secondary endpoints were met in the study, including mean body weight reduction of 15.7% compared to 2.2% for placebo. The overall safety profile of TIRZEPATIDE in the SUMMIT trial was consistent with previously reported TIRZEPATIDE studies, including SURMOUNT and SURPASS. We will present detailed results at an upcoming medical--and submit to a peer-reviewed journal. We plan to submit results to the FDA and other regulatory agencies starting later this year.

Dan Skovronsky: 24.8, while placebo was 15 points based on the efficacy estimate of 52. All key secondary endpoints were met in the study, including mean body weight reduction of 15.7% compared to 2.2% for placebo. The overall safety profile of terzapotite in the summit trial was consistent with previously reported terzapotite studies, including surmount and surpass.

Dan Skovronsky: 24.8 points for trizepatide while placebo was 15 points based on the efficacy estimate at 52. All key secondary endpoints were met in the study, including mean body weight reduction of 15.7% compared to 2.2% for placebo. The overall safety profile of terzapotite in the summit trial was consistent with previously reported terzapotite studies, including surmount and surpass. We will present detailed results at an upcoming medical meeting and submit them to a peer-reviewed journal. We plan to submit results to the FDA and other regulatory agencies starting later this year.

Dan Skovronsky: We will present detailed results at an upcoming medical meeting and submit them to a peer-reviewed journal. We plan to submit results to the FDA and other regulatory agencies starting later this year. In other updates across our portfolios, like 15, just select pipeline opportunities as of August 6, it's like 16, just potential key events for the year.

Dan Skovronsky: We will present detailed results at an upcoming medical meeting and submit them to a peer-reviewed journal. We plan to submit results to the FDA and other regulatory agencies starting later this year. In other updates across our portfolio, slide 15 shows select pipeline opportunities as of August 6th, and slide 16 shows potential key events for the year.

We will present detailed results at an upcoming medical meeting and submit them to a peer-reviewed journal. We plan to submit results to the FDA and other regulatory agencies starting later this year.

Daniel M. Skovronsky: In other updates across our portfolio, Slide 15 shows select pipeline opportunities as of August 6. Slide 16 shows potential key events for the year. I'll start with updates in cardiometabolic health, which is the new name of our internal business, formerly known as Lilly diabetes and obesity. In June, we published detailed results for our Phase III trials of TIRZEPATIDE for the treatment of moderate to severe obstructive sleep apnea and obesity in the New England Journal of Medicine, and we presented results at the American Diabetes Association Meeting. All primary and key secondary endpoints were achieved in these studies. Notably, in one of our key secondary endpoints, as shown on Slide 17, TIRZEPATIDE demonstrated that up to 51.5% of participants met the criteria for disease resolution of sleep apnea. We've now submitted TIRZEPATIDE for the treatment of moderate to severe obstructive sleep apnea and obesity to the FDA as well as the EMA. We are pleased that the FDA has granted breakthrough therapy designation, and we expect U.S. regulatory action as early as the end of 2024, which will be dependent on the FDA granting priority review.

Dan Skovronsky: I'll start by updating CardiMetabolic Health, which is the new name of our internal business, formerly known as Lily Diabetes. In June, we published detailed results for our phase three trials of terzapatide for the treatment of moderate to severe obstructive sleep apnea and obesity in the New England Journal of Medicine. And we presented results with the American Diabetes Association Meach. All primary and key secondary endpoints were achieved in these studies. Notably, in one of our key secondary endpoints, as shown in 517, there's appetite demonstrated that up to 51.5% of participants met the criteria for disease resolution, sleeping back.

Dan Skovronsky: I'll start with updates in cardiometabolic health, which is the new name of our internal business, formerly known as Lilly Diabetes and Obesity. In June, we published detailed results for our phase three trials of terzapatide for the treatment of moderate to severe obstructive sleep apnea and obesity in the New England Journal of Medicine, and we presented results at the American Diabetes Association meeting. All primary and key secondary endpoints were achieved in these studies. Notably, in one of our key secondary endpoints, as shown on slide 17, Terzapotai demonstrated that up to 51.5% of participants met the criteria for disease resolution of sleep apnea. We've now submitted Zepatite for the treatment of moderate to severe obstructive sleep apnea and obesity to the FDA as well as the EMS. We are pleased that the FDA has granted breakthrough therapy designation, and we expect U.S. regulatory action as early as the end of 2024, which would be dependent on the FDA granting priority review.

Dan Skovronsky: Notably, in one of our key secondary endpoints, as shown on slide 17, Terzapotai demonstrated that up to 51.5% of participants met the criteria for disease resolution of sleep apnea. We've now submitted Zepatite for the treatment of moderate to severe obstructive sleep apnea and obesity to the FDA as well as the EMS. We are pleased that the FDA has granted breakthrough therapy designation, and we expect U.S. regulatory action as early as the end of 2024, which would be dependent on the FDA granting priority review.

Dan Skovronsky: We've now submitted Zepatite for the treatment of moderate to severe obstructive sleep apnea and obesity to the FDA as well as the EMS. We are pleased that the FDA has granted breakthrough therapy designation, and we expect U.S. regulatory action as early as the end of 2024, which would be dependent on the FDA granting priority review. Also in June, we published results in the New England Journal from our phase two trial of Thursday's appetite for metabolic dysfunction associated with Diato Hepatitis or MASH, mistakes two or three fibers, and we presented these results at the European Association for the Study of the Lips. We are pleased to show that in a secondary endpoint, more than half of the patients taking Trezepidab met the secondary endpoint.

Daniel M. Skovronsky: Also, in June, we published results in the New England Journal from our Phase II trial of TIRZEPATIDE for metabolic dysfunction associated steatohepatitis, or MASH, with Stage 2 or Stage 3 fibrosis, and we presented these results at the European Association for the Study of donanemab. We are pleased to show that in a secondary endpoint, more than half of the patients taking TIRZEPATIDE achieved improvement in fibrosis at 52 weeks as shown on Slide 18. We're engaged with regulatory authorities on a potential Phase III registration strategy, and we're also encouraged by the potential read-through of these results to retatrutide, which also showed significant improvements in liver fats in Phase II. This quarter, we also announced top-line data from two Phase III trials for our once weekly insulin called efsitora alfa, the QWINT-2 and QWINT-4 trials for the treatment of type 2 diabetes each met their primary endpoints of non-inferior A1c reduction. QWINT-2 compared to efsitora once-daily insulin degludec for 52 weeks in insulin naive adults. QWINT-4 compared efsitora to insulin glargine for 26 weeks in adult previously treated with daily basal insulin and at least two injections per day of meal time line.

Dan Skovronsky: The Chief Improvement in Vibrosis of 52 Weeks as John and Buddy team. We're engaged with regulatory authorities on a potential Phase 3 registration strategy, and we're also encouraged by the potential read-through of these results to read a True Tide, which also showed significant improvements in liver fat in Phase 2. This quarter, we also announced top-line data from two phase three trials for our once-weekly insulin called f-suturin alpha. The QUINT2 and QUINT4 trials for the treatment of type 2 diabetes each met their primary endpoints of non-inferior A1C reduction.

Dan Skovronsky: achieved improvement in fibrosis at 52 weeks, as shown on slide 18. We're engaged with regulatory authorities on a potential Phase 3 registration strategy, and we're also encouraged by the potential read-through of these results to read a True Tide, which also showed significant improvements in liver fat in Phase 2. This quarter, we also announced top-line data from two phase three trials for our once-weekly insulin called f-suturin alpha. The QUINT2 and QUINT4 trials for the treatment of type 2 diabetes each met their primary endpoints of non-inferior A1C reduction. Quint, too, compared Epsitora to once-daily insulin Degladec for 52 weeks in insulin-naive adults. Quint 4 compared Epsitora to insulin Glargine for 26 weeks in adults previously treated with daily basal insulin and at least two injections per day at meal time,

Dan Skovronsky: Quake 2, compared to Absetora to one's daily insulin deglidec for 52 weeks in an insulin nave adult. Quinn Ford compared F-satorant to insulin blarging for 26 weeks and adults previously treated with daily baselines and at least two injections per day at meal time in both Quint 2 and Quint 4, as Satora was safe and well-timed, detail trial results will be presented in September at the European Association for the Study of Diabetes Annual Meeting.

Dan Skovronsky: Quint, too, compared Epsitora to once-daily insulin Degladec for 52 weeks in insulin-naive adults. Quint 4 compared Epsitora to insulin Glargine for 26 weeks in adults previously treated with daily basal insulin and at least two injections per day at meal time, in both Quint 2 and Quint 4, as Satora was safe and well-timed. Detailed trial results will be presented in September at the European Association for the Study of Diabetes Annual Meeting. We look forward to sharing additional data from the Quinn Program.

Quint, too, compared Epsitora to once-daily insulin Degladec for 52 weeks in insulin-naive adults. Quint 4 compared Epsitora to insulin Glargine for 26 weeks in adults previously treated with daily basal insulin and at least two injections per day at meal time,

Daniel M. Skovronsky: In both QWINT-2 and QWINT-4 efsitora, was safe and well tolerated. Detailed trial results will be presented in September at the European Association for the Study of Diabetes Annual Meeting. We look forward to sharing additional data from the QWINT program later this year. We are pleased with our progress to provide breakthrough innovation to patients who require insulin, progressing our glucose-sensing insulin receptor agonist molecule in Phase I and investing in approaches aimed at disease modification for type 1 diabetes, such as [inaudible] cell therapy. In other late-phase updates, we've initiated Triumph outcomes, a Phase III trial evaluating cardiovascular outcomes and renal function for patients taking retatrutide. Earlier in our cardiometabolic pipeline, you'll see additional incretin molecules in Phase I. Incretins are an important part of our portfolio strategy and having multiple molecules in clinical development offers us potential optionality as we look at opportunities to help patients across mechanisms, indications, dosages, formulations and treatment schedules.

Dan Skovronsky: We look forward to sharing additional data from the Quinn Program. We're pleased with our progress to provide breakthrough innovation to patients who require it, progressing our Glucosensing Insulin Receptor Agonist Molecule in Phase 1 and investing in approaches aimed at disease modification for type 1 diabetes, such as islet cell therapy. In other late-phase updates, we've initiated Triumph Outcomes, a phase three trial evaluating cardiovascular outcomes and renal function for patients taking retitrutide. Earlier in our cardiometabolic pipeline, you'll see additional incretin molecules in phase one. Incretins are an important part of our portfolio strategy, and having multiple molecules in clinical development offers us potential optionality as we look at opportunities to help patients across mechanisms, indications, dosages, formulations, and treatment schedules.

Dan Skovronsky: We're pleased with our progress to provide breakthrough innovation to patients who require it, progressing our Glucosensing Insulin Receptor Agonist Molecule in Phase 1 and investing in approaches aimed at disease modification for type 1 diabetes, such as islet cell therapy. In other late-phase updates, we've initiated Triumph Outcomes, a phase three trial evaluating cardiovascular outcomes and renal function for patients taking retitrutide Earlier in our cardiometabolic pipeline, you'll see additional incretin molecules in phase one. Incretins are an important part of our portfolio strategy, and having multiple molecules in clinical development offers us potential optionality as we look at opportunities to help patients across mechanisms, indications, dosages, formulations, and treatment schedules.

Dan Skovronsky: GLP1 and PA2 is a small molecule non-peptide agonist of the GLP1 receptor designed for once-daily oral administration. We expect this asset to move to Phase 2 later this year, so we now identify it in our pipeline. Where I said I'd previously been listed is not disclosed.

Daniel M. Skovronsky: To highlight a few. GLP-1 NPA2 is a small molecule non-peptide agonist of the GLP-1 receptor designed for once daily oral administration. We expect this asset to move to Phase II later this year, so we now identify it on our pipeline slide whereas it had previously been listed as not disclosed. Given the diversity of indications to potentially pursue with incretins, we are excited about the possibility of having another oral option to help more patients with different diseases. We also highlight today the GLP-1 coagonist III, which is a next-generation dual agonist molecule and we are planning to explore weekly and monthly dosing given its longer halfway. Elsewhere in our cardiometabolic health portfolio, we have stopped development of our NRG4 agonist as the profile was insufficient for further clinical development. Turning to oncology. We are pleased that JAYPIRCA has now been approved in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other BTK inhibitors.

Dan Skovronsky: Given the diversity of indications to potentially pursue with Inquitines, we are excited about the possibility of having another oral option to help more patients with different diseases. We also highlight today DipClip1, Coagonist3, which is a next-generation dual agonist molecule, and we are planning to explore weekly and monthly dosing, given its longer history. Elsewhere in our cardiometabolic health portfolio, we have stopped development of an NRG-4 agonist as the profile is insufficient for further clinical development. Turning to oncology, we are pleased that JPERCA has now been approved in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other BTK inhibitors.

Given the diversity of indications to potentially pursue with Inquitines, we are excited about the possibility of having another oral option to help more patients with different diseases. We also highlight today DipClip1, Coagonist3, which is a next-generation dual agonist molecule, and we are planning to explore weekly and monthly dosing, given its longer history. Elsewhere in our cardiometabolic health portfolio, we have stopped development of an NRG-4 agonist as the profile is insufficient for further clinical development.

Turning to oncology, we are pleased that JPERCA has now been approved in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other BTK inhibitors.

Dan Skovronsky: In early phase oncology, we've initiated the phase one trial for the second Nectin 4 ADC. We view this as an important target, and having two compounds in the clinic provides more opportunities to improve our conservation. We've also initiated a phase one trial for our ADC target in the full numbers. This asset, which came from our acquisition of MadLink, is the next generation construct designed to have efficacy at all full receptor expression levels, and with an approved therapeutic index, we'll also do existing it.

Daniel M. Skovronsky: In early phase oncology, we've initiated the Phase I trial for a second Nectin-4 ADC. We view this as an important target and having two compounds in the clinic provides more opportunities to improve outcomes for patients. We've also initiated a Phase I trial for our ADC targeting the folate receptor. This asset, which came from our acquisition of Mablink is the next-generation construct design of efficacy at all fully receptor expression levels and with an improved therapeutic index relative to existing agents. We're also announcing that we've terminated the LOXO-783 program, which targeted PI3 kinase alpha. We evaluated the ongoing clinical data from the program and compared the molecule to next-generation candidates that we have progressed from our discovery efforts. We believe our next molecules have greater potential to benefit patients and we look forward to putting our next candidate into the clinic in 2025 and sharing more about its profile later this year. In immunology, we've now submitted mirikizumab for the treatment of moderately to severely active Crohn's disease in Japan. We've terminated development for our GITR agonist, antagonists due to insufficient efficacy. We also announced our acquisition of Morphic. And pending completion of the deal we plan to reflect the oral alpha-4-beta-7 integrin inhibitor, MORF-057, in Phase II for ulcerative colitis and Crohn's disease.

Dan Skovronsky: We're also announcing that we've terminated the LOXO783 program, which targeted PI3 kinase alpha. We evaluated the ongoing clinical data for the program and compared the molecule to next-generation candidates that we have progressed from our discovery of. We believe our next molecules have greater potential to benefit patients. We look forward to putting our next candidate into the clinic in 2025 and sharing more about its profile later this year. In Inameenology, we've now submitted Meachism for the treatment of moderately to severely active Crohn's disease in Japan. We've terminated development of our getter agonist antagonist due to insufficient efficacy. We also announced our acquisition of Morphic and the pending completion of the deal.

Dan Skovronsky: We're also announcing that we've terminated the LOXO783 program, which targeted PI3 kinase alpha. We evaluated the ongoing clinical data from the program and compared the molecule to next-generation candidates that we have progressed from our discovery efforts. We believe our next molecule has the greater potential to benefit patients. We look forward to putting our next candidate into the clinic in 2025 and sharing more about its profile later this year. In immunology, we've now submitted mirakizumab for the treatment of moderately to severely active Crohn's disease in Japan. We've terminated development for our getter agonist antagonist due to insufficient efficacy. We also announced our acquisition of Morphic, and pending completion of the deal, we plan to initiate the oral alpha 4 beta 7 integrin inhibitor Morph 057 in phase 2 for ulcerative colitis and Crohn's.

Dan Skovronsky: We've terminated development for our getter agonist antagonist due to insufficient efficacy. We also announced our acquisition of Morphic, and pending completion of the deal, we plan to initiate the oral alpha 4 beta 7 integrin inhibitor Morph 057 in phase 2 for ulcerative colitis and Crohn's. Finally, in neuroscience, our anti-tau small molecule OGA inhibitor recently concluded its phase 2 study in early symptom OGA failed to meet the primary endpoint of decreasing the change from baseline as measured by ADRESS at either of the two dose levels.

We've terminated development for our getter agonist antagonist due to insufficient efficacy. We also announced our acquisition of Morphic, and pending completion of the deal, we plan to initiate the oral alpha 4 beta 7 integrin inhibitor Morph 057 in phase 2 for ulcerative colitis and Crohn's.

Daniel M. Skovronsky: Finally, in neuroscience, our anti-TAU small molecule OGA inhibitor, recently concluded its Phase II study in early symptomatic Alzheimer's disease. OGA failed to meet the primary endpoint of decreasing the change of baseline as measured by iADRS in either of the two dose levels tested. We're reviewing the data for presentation of detailed results of the study at the clinical trials in Alzheimer's Disease conference later this year. While this negative outcome is disappointing, we remain committed to tau as a high conviction target in Alzheimer's disease and plan to continue studying tau biology. I'll now turn the call back to Dave for closing remarks.

Dan Skovronsky: We're reviewing the data for presentation of the detailed results of the study at the Clinical Trials on Alzheimer's Disease conference later this year. While this negative outcome was disappointing, we remain committed to Tau as a high conviction target in Alzheimer's disease and plan to continue studying Tau biology. And I'll turn the call back to Dave for closing.

Dave Ricks: Thanks Dan, before we go to Q&A, let me briefly sum up our progress in the second quarter. Exceptional revenue growth in Q2 was driven by Manjaro, ZepBound, and Verzeni. We are pleased with the rampant production in the first half of the year and expect continued expansion ahead. Significant advances in our pipeline include the approval of Casunla for Alzheimer's, The Submission of Terzapatide for Moderate to Severe Obstructive Sleep Apnea and Obesity in the U.S. and Europe, and positive results from the Phase III Study of Terzapatide for Heart Failure with Preserved Injection Fraction and Obesity.

David A. Ricks: Thanks, Dan. Before we go to Q&A, let me briefly sum up our progress in the second quarter. Exceptional revenue growth in Q2 was driven by MOUNJARO, ZEPBOUND and VERZENIO. We are pleased with the ramp in production in the first half of the year and expect continued expansion ahead. Significant advances in our pipeline include the approval of KISUNLA for Alzheimer's disease, the submission of TIRZEPATIDE for moderate to severe obstructive sleep apnea and obesity in the U.S. and Europe and positive results from the Phase III study of TIRZEPATIDE for heart failure with preserved injection fraction and obesity. We are investing in product launches, the advancement of our pipeline as well as our ambitious manufacturing expansion agenda. All of this and the incredible work of our teams around the world give Lilly leadership confidence that we have a very bright future ahead and better opportunity than at any time in our company's history to impact human health on a global scale. Now I'll turn the call over to Joe to moderate the Q&A session.

Joe Fletcher: We are investing in product launches and the advancement of our pipeline, as well as our ambitious manufacturing expansion agenda. All of this, and the incredible work of our teams around the world, gives Lilly leadership confidence that we have a very bright future ahead and a better opportunity than at any time in our history to impact human health on a global scale. Now, we'll turn the call over to Joe to moderate the Q&A. Thanks, Dave.

Joe Fletcher: We are investing in product launches, the advancement of our pipeline, as well as our ambitious manufacturing expansion agenda. All of this and the incredible work of our teams around the world give Lilly leadership confidence that we have a very bright future ahead and a better opportunity than at any time in our history to impact human health on a global scale. Now I'll turn the call over to Joe to moderate the Q&A. Thanks, Dave.

We are investing in product launches, the advancement of our pipeline, as well as our ambitious manufacturing expansion agenda. All of this and the incredible work of our teams around the world give Lilly leadership confidence that we have a very bright future ahead and a better opportunity than at any time in our history to impact human health on a global scale. Now I'll turn the call over to Joe to moderate the Q&A.

Joe Fletcher: Thanks, Dave. We'd like to take questions from as many callers as possible and conclude our call in a timely manner. So, consistent with prior quarters, we'll respond to one question per caller. So I ask that you limit your questions to one per caller as we'll end the call at 11 AM. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. So Paul, please provide the instructions for the Q&A, and we're ready for the first caller.

Operator: We'd like to take questions from as many colors as possible and conclude our call on the time we manner, so consistent with fire quarters. We'll respond to one or five to four calls or so ask that you limit to one question per call or as we'll end the call at 11 a.m. If you have more than one question, you can answer the cue; we'll get to your question when time allows. So Paul, please provide instructions for the Q&A, and we're ready for the first caller.

Operator: We'd like to take questions from as many callers as possible and conclude our call in a timely manner. So, consistent with prior quarters, we'll respond to one question per caller. So I ask that you limit your questions to one per caller as we'll end the call at 11 a.m. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. So Paul, please provide the instructions for the Q&A, and we're ready for the first caller.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you have any questions, please press star 1 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 1 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. Please hold while we poll for questions. And the first question today is coming from Seamus Fernandez from Guggenheim. Seamus, your line is live.

Seamus Fernandez: Great. Thanks so much. And just I'll stick with my one question. It really is on your awareness of ASP movements in the market, so the average selling price. By our calculations, when we sort of look at the ASP averages, removing rebates, inventory, et cetera, relative to comments made yesterday on Novo's call, I'm just trying to get a better understanding of what you're seeing in the market with regard to average selling price. The prices look actually reasonably close to us with the TIRZEPATIDE franchise having higher sort of ASP per script, but not dramatically higher given concerns of real pricing deterioration. I guess the only question that I have here is, what are you seeing from an ASP perspective? And do you see this as kind of a natural evolution of this market as competition emergence as we saw with OZEMPIC historically and TRULICITY in 2019? Thanks so much.

Seamus Fernandez: Oh, great, thanks so much, and I'll stick with my one question. It really depends on your awareness of ASP movements in the market to the average selling price. By our calculations when we sort of look at the ASP averages, removing rebates and inventory, et cetera, relative to comments made yesterday on Noble's call, I'm just trying to get a better understanding of what I've been doing. I've been trying to get a better understanding of what I've been doing.

Operator: And just I'll stick with my one question. It really depends on your awareness of ASP movements in the market, so the average selling price. By our calculations, when we sort of look at the ASP averages, removing rebates, inventory, etc., relative to comments made yesterday on Novo's call, I'm just trying to get a better understanding of what you're seeing in the market with regard to average selling price. The prices look actually reasonably close to us, with the Terzepatide franchise having a higher, you know, sort of ASP per script, but not dramatically higher, you know, given concerns of real pricing deterioration. I guess the only question that I have here is, what are you seeing from an ASP perspective? And do you see this as kind of the natural evolution of this market as competition emerges, as we saw with Ozempic historically and Trulicity in 2019? Thanks so much.

Operator: I guess the only question that I have here is, what are you seeing from an ASP perspective? And do you see this as kind of the natural evolution of this market as competition emerges, as we saw with Ozempic historically and Trulicity in 2019? Thanks so much.

Gordon Brooks: Thanks, Seamus. I think I'll go to... Gordon, do you want to touch on that or Patrik? Yeah, I'll let you know about that in the same insect equation. Yeah, so it's just...

Joe Fletcher: Thanks Seamus. I think I'll go to Gordon, do you want to touch on that or Patrick? Sure, I'll hang up, and then Seamus, thanks for the question, yeah, so just

Joe Fletcher: Thanks Seamus. I think I'll go to Gordon, do you want to touch on that or Patrick?

Gordon Brooks: Sure. I'll hang [inaudible] with that. Seamus, thanks for the question. Yes. So just on price streams, initial favorability in the first half of the year was driven by MOUNJARO. That goes away in the second half of the year as the co-pay program moves out of the base period. In terms of pricing, we see stable pricing sequentially across quarters in '24. So, nothing unusual, Q1 to Q2 and our guidance Q3 and Q4 continue stable sequential pricing. For the second half of the year when you don't have the MOUNJARO dynamic pricing in the second half will be similar to prior year pricing. So those are kind of the dynamics we see in pricing. Good. Paul, next question.

Gordon Brooks: Sure, I'll cover that. Seamus, thanks for the question.

Operator: Sure, I'll cover that. Seamus, thanks for the question. Yeah, so just on price strains, initial favorability in the first half of the year was driven by Majoro. But that goes away in the second half of the year as the copay program moves out of the base period. In terms of pricing, we see stable pricing sequentially across quarters in 24, so nothing unusual Q1 to Q2, and our guidance for Q3 and Q4 continues stable sequential pricing. For the second half of the year, when you don't have the Majoro dynamic pricing, the second half will be similar.

Gordon Brooks: Yeah, so just on price strains, initial favorability in the first half of the year was driven by Majoro. But that goes away in the second half of the year as the copay program moves out of the base period. In terms of pricing, we see stable pricing sequentially across quarters in 24, so nothing unusual Q1 to Q2, and our guidance for Q3 and Q4 continues stable sequential pricing. For the second half of the year, when you don't have the Majoro dynamic pricing, the second half will be similar.

Operator: Yeah, so just on price strains, initial favorability in the first half of the year was driven by Majoro. But that goes away in the second half of the year as the copay program moves out of the base period. In terms of pricing, we see stable pricing sequentially across quarters in 24, so nothing unusual Q1 to Q2, and our guidance for Q3 and Q4 continues stable sequential pricing. For the second half of the year, when you don't have the Majoro dynamic pricing, the second half will be similar.

Joe Fletcher: Good. Paul, next question.

Operator: The next question will be from Terrence Flynn from Morgan Stanley. Terrence, your line is live.

Operator: The next question will be from Terence Flynn from Morgan Stanley. Terence your line is live.

Terrence Flynn: Great. Thanks for taking the question. Congratulations on all the progress on the manufacturing. Maybe just a two-part question for me on that one.

Terence C. Flynn: Great. Thanks for taking my question. Congrats on all the progress on the manufacturing. Maybe just a two-part for me on that one. Just wondering if you're unit guidance for the at least 1.5-fold increase in sellable doses include the ZEPBOUND bound star vials that you're rolling out in the U.S. or if that's a potential driver of upside? And then as we think about RTP, I know you continue to make progress there. The scripts suggests you're at about a third of the way through the ramp to peak. But this inventory restock that you talked about today suggests maybe more of a meaningful step-up. So just can you quantify for us where you are in the ramp in RTP? Thank you.

Terence C. Flynn: Just wondering if your initial guidance for the at least 1.5-fold increase in sellable doses includes the zep-bound starter vials that you're rolling out in the U.S. or if that's a potential driver of upside. And then as we think about RTP, I know you're continuing to make progress there. The script suggests you're at about a third of the way through the ramp to peak, but this inventory restock that you talked about today suggests maybe more of a meaningful step up. So just can you quantify for us where you are on the ramp in RTP? Thank you.

Terrence Flynn: Just wondering if your initial guidance for the at least 1.5-fold increase in sellable doses includes the zep-bound starter vials that you're rolling out in the U.S. or if that's a potential driver of upside. And then as we think about RTP, I know you're continuing to make progress there. The script suggests you're at about a third of the way through the ramp to peak, but this inventory restock that you talked about today suggests maybe more of a meaningful step up. So just can you quantify for us where you are on the ramp in RTP? Thank you.

Dave Ricks: Um, yeah, sure. Uh, Dave, you want to hop in? Yeah, I can just add.

Operator: Um, yeah, sure. Uh, Dave, you want to hop in? Yeah, I can just add.

Joe Fletcher: Yes, sure. I think, Dave, do you want to hop in and--

David A. Ricks: Yes, I can just can [inaudible]. So I think what we're saying today is just reiterating the 1.5 is sort of like a floor on how we think about second half volume. I would say the vials are part of that. But given that we have about 20 weeks left in the year. So, there's a limit to how much of that will ship anyway. But they certainly open up a node of the most constrained part of the supply chain, which is still finish in the final container closure and it uses different lines obviously, then syringes or cartridges. So, it just adds to our capacity, probably the most meaningful part of that will show up in the early '25 to be honest, as that new form ramps and details on that rollout will be coming in the coming weeks. As it relates to RTP, I wouldn't read through that the Q2 step-up in volume we shipped was primarily to RTP. That site is on track, and we are steadily escalating production per our goals. I also mentioned Concord is doing well against its time schedule, and we expect product out of that site end of this year, early next year. But rather, maybe performance out of the totality of the network that allowed us to recover wholesaler inventory levels in Q2 and now come off the FDA shortage list. It's more just overall performance across many, many nodes of our supply network.

Dave Ricks: So I think what we're saying today is just reiterating that 1.5 is sort of like a floor on how we think about second half volume. I would say the vials are part of that, but given that we have about 20 weeks left in the year, so there's a limit to how much of that will ship anyway, but they certainly open up a node of the most constrained part of the supply chain, which is spill finish and the final container closure, and it uses different lines, obviously, than syringes or cartridges, so it just adds to our, Capacity, probably the most meaningful part of that will show up in early 25, to be honest, as that new form ramps and details on that rollout will be coming in the coming weeks. As it relates to RTP, I wouldn't say that the Q2 step-up in volume we shipped was primarily due to RTP. That site is on track, and we are steadily increasing production for our goals. I also mentioned Concord is doing well against its time schedule, and we expect product out of that site end of this year, and early next year, but rather maybe performance out of the totality of the network that allowed us to recover wholesale inventory levels in Q2 and now come off the FDA shortage list. It's more just overall performance across many, many nodes of our supply network.

Dave Ricks: As relates to RTP, I wouldn't read through that the Q2 step up in volume we ship was primarily due to RTP. That side is on track, and we are steadily increasing production for our goals. I also mentioned Concord is doing well against its time. To get a visual aspect, I'll probably get to that side end of this year or early next year, but rather maybe performance out of the totality that that work that allowed us to recover wholesale inventory levels in Q2 and now come off the FDA short list. It's more just overall performance across many, many nodes of our planning.

Dave Ricks: As it relates to RTP, I wouldn't say that the Q2 step-up in volume we shipped was primarily due to RTP. That site is on track, and we are steadily increasing production for our goals. I also mentioned Concord is doing well against its time schedule, and we expect product out of that site end of this year, and early next year, but rather maybe performance out of the totality of the network that allowed us to recover wholesale inventory levels in Q2 and now come off the FDA shortage list. It's more just overall performance across many, many nodes of our supply network.

David A. Ricks: That site is on track, and we are steadily escalating production per our goals. I also mentioned Concord is doing well against its time schedule, and we expect product out of that site end of this year, early next year. But rather, maybe performance out of the totality of the network that allowed us to recover wholesaler inventory levels in Q2 and now come off the FDA shortage list. It's more just overall performance across many, many nodes of our supply network.

Operator: Thanks Dave. Paul's next question. The next question will be from Chris Schott from JP Morgan. Chris, your line is open.

Operator: Thanks Dave. Paul next question. The next question will be from Chris Schott from JP Morgan. Chris, your line is open. All right, great. Thanks so much for the question and congratulations on all the progress. There seems to be a broader debate on the role emerging at an earlier stage.

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

The next question will be from Chris Schott from JP Morgan. Chris, your line is open. All right, great. Thanks so much for the question and congratulations on all the progress. There seems to be a broader debate on the role emerging at an earlier stage.

Operator: The next question will be from Chris Schott from JP Morgan. Chris, your line is live.

Chris Schott: Great, thanks so much for the question and congrats all the progress. There seems to be a broader debate on the role emerging earlier-stage competition in the obesity market could play where that fits in the market broadly. I'm sure you're not surprised by the breadth of agents being developed in the space. But just interested in your latest views, in terms of barriers to entry you see for some of these newer competitors and how you think about defending Lilly's market position over time? Thank you.

Operator: The next question will be from Chris Schott from J.P. Morgan. Chris, your line.

Chris Schott: Great, thanks so much for the question and congrats on all the progress. This seems to be a broader debate on the role emerging at an earlier stage.

Dan Skovronsky: Maybe Dan, do you want to start on that and then, yeah, I'll start with some R&D comments on Bear's Century. The first, I think, is having a successful drug in basically clinical trials and getting it approved. You can see it if you invest thoroughly. We say in our Bay Street portfolio, it's often pursuing multiple indications in multiple populations that have one. Just being able to get to that point, you know, investors have gotten excited about various releases of phase one data, but it's still a challenging space to develop drugs, and we usually wait until we've seen pretty robust phase two data before we get too excited about a particular molecule.

Operator: Maybe Dan, you want to start on that, and then I'll start with some R&D comments on baricentry. The first, I think, is having a successful drug in phase two clinical trials and getting it approved. You can see if you have invested thoroughly, I would say, in our phase three portfolios, often pursuing multiple indications in multiple populations at once. Just being able to get to that point, you know, investors have gotten excited about various releases of phase one data, but it's still a challenging space to develop drugs, and we usually wait until we've seen pretty robust phase two data before we get too excited about a particular molecule.

Joe Fletcher: Maybe Dan, you want to start on that, and then--

Daniel M. Skovronsky: Yes, I'll start some R&D comments on barriers to entry. The first, I think, is having a successful drug in Phase III clinical trials and getting it approved. You can see that we've invested thoroughly, I would say, in our Phase III portfolio is often pursuing multiple indications in multiple populations at once. Just being able to get to that point, I know investors have gotten excited about various releases of Phase I data. But it's still a challenging space to develop drugs and we usually wait until we've seen pretty robust Phase II data before we get too excited about a particular molecule. So that's the first thing. And I think a lot of the news we've seen from different companies only sort out as we get to see Phase II data and which molecules make it and which have the right profile and which don't. But I wouldn't be expecting 100% success here.

Dan Skovronsky: So that's the first thing, and I think a lot of the news that we've seen from different companies will probably sort themselves out as we get to see phase two data and which molecules make it and which have the right profile and which don't, but I wouldn't be expecting 100% success here.

Operator: So that's the first thing, and I think a lot of the news that we've seen from different companies will probably sort themselves out as we get to see phase two data and which molecules make it and which have the right profile and which don't, but I wouldn't be expecting 100% success here.

Patrik Jonsson: I think when we look at the marketplace, there are two very important barriers. We have been extremely successful in gaining access across both Mongaro, where we currently have 93% access in commercial and 89 in part team. And similarly, for setbound, it is 6% off to 7 months in the marketplace. That's quite significant.

Patrik Jonsson: A few additional comments. I think when we look at the marketplace, about two are very important barriers. We have been extremely successful in gaining access across both MOUNJARO, where we are currently 93% access in commercial and 89% in Part D. And similarly, for ZEPBOUND, 86% after 7 months in the marketplace, that's quite significant. The second piece is the amount of outcome indications. We are investing heavily in both Mounjaro and Zepbound, and similarly for the Phase III assets of our ZEPBOUND and retatrutide. So, I think, overall, we think that we are extremely well positioned to compete here. And we are not surprised to see that most of the firms are actually leaning into this very important space. But with the cost we have not had in the market today, the Phase III assets and what we referred in the prepared remarks, we are well positioned to compete today and tomorrow. And that goes across both different indications, assets [inaudible] therapy, et cetera, all hands-on deck on our side.

Patrik Jonsson: The second piece is, we amount to outcome. We are investing heavily in both Monjard and Seth Bound and Sim Larley for the phase 3 assets of our public loan and a rate of appetite. So I think overall that we are extremely well positioned to compete here, and we are not surprised to see what moves to the firm. So we are actually leaning into this very important space. But with the cost we have in our hands in the market today, the phase 3 assets, and what we are referring to in the prepared remarks, we are well positioned to compete today and tomorrow. And that goes across different indications, assets, things of therapy, etc.

Dan Skovronsky: Maybe one last thing to pile on, but you know here we're highlighting our Flying Dads 11, Massette Salt, different targets, Mr. Minder, Chris, and we had our phase 1 mad data for Dr. Zepatide in 2016, that was eight years ago. And with that, we have a massive lead, I think, over other GFET GOP Agnes that are behind us. On the oral side, you can't get more differentiation in category differentiation based on target engagement, safety proposals, et cetera.

David A. Ricks: Maybe one last thing--follow-on. But here, we're highlighting our [inaudible] 11 assets, all different targets. And maybe just a reminder, Chris, we had our Phase I MAD data for TIRZEPATIDE in 2016, that was 8 years ago. And that's a massive lead, I think, over other GIP/GLP agonists that are behind us. On the oral side, you can get more in category differentiation, based on target engagement, safety profile, et cetera. But here, again, we have the most advanced program, and as Dan highlighted today, a follow-on program to add to that sort of portfolio we have there. And finally, one other, I don't know if it's barrier, but certainly is work to do is scaling manufacturing. The volume is really high in this category, probably will end up being one of the highest volume categories in the history of the industry. And you're talking about making things on the $1 billion scale, which takes time and it's technically difficult and very capital intensive. So of course, competitors will come. But there's a road ahead for all these two leading companies have already walked in large part.

Dan Skovronsky: But here again, we have the most advanced program in this game. I'd like to introduce today a follow-on program, to add to that sort of portfolio we have there. And finally, one more.

Operator: But here again, we have the most advanced program, and as Dan highlighted today, a follow-on program, to add to that sort of portfolio we have there. And finally, one more. You're talking about making things on the billion scale, which takes time and is technically difficult and very capital-intensive. So, you know, of course, competitors will come, but there's a road ahead for all these that the two leading companies have already walked, in large part. Thank you all. Next question, Paul.

But here again, we have the most advanced program, and as Dan highlighted today, a follow-on program, to add to that sort of portfolio we have there. And finally, one more. You're talking about making things on the billion scale, which takes time and is technically difficult and very capital-intensive. So, you know, of course, competitors will come, but there's a road ahead for all these that the two leading companies have already walked, in large part.

Dave Ricks: ...... And you're talking about making things on the billion scale, which takes time and is technically difficult and capital intensive. Intensive F. So, of course, competitors will come, but... There's a road ahead for all these that the two leading companies have already walked, in large part. Thank you all. Next question, Paul.

Joe Fletcher: Thank you all. Next question, Paul.

Operator: The next question will be from Tim Anderson from Wolfe Research. Tim, your line is live.

Tim Anderson: Thank you. I have a question about compounders of GLP1s, including, you know, but not limited to your trisepatide. So companies like HIMSS or anyone else. How can this not infringe patent protection? And is this something that is likely to get adjudicated in the courts, meaning the U.S. and presumably Novo Su? An article just yesterday in the New York Times talked about patients getting upside down with compounded group ones. I think they used the term overdosing on these compounded formulations. So, you know, not only do compounders take away sales from you guys, but it could also tarnish the reputation of the class. So what can we expect Lilly to do about it?

Tim Anderson: Thank you, I have a question on compounders of GLP-1s, including, but not limited to, your TIRZEPATIDE. So, companies like IMS or anyone else. How can this not infringe patent protection? And is this something that is likely to get adjudicated in the courts, meaning the you and presumably Novo, too? So, an article just yesterday in New York Times talked about patients getting upside down with compounded GLP-1s. I think they used the term "overdosing" on these compounded formulations. So not only do compounders take away sales from you guys, but it could also turn its reputation of the class. So, what can we expect Lilly to do about it?

Dan Skovronsky: Thanks, Tim, and Daniel Restart with some comments. Yeah, thanks for reading this important topic, Tim. Of course, we've been watching this carefully, not, you know, really out of concern that they're taking away our business, as you know, we've been largely sublabbing here, but rather because of the impact it is having on patient health. We often are able to secure samples from these kinds of compounding laboratories and analyze them in our own labs. And what we found is that, for the most part, in most instances, this isn't compounded, it's all, our drug is not available to compounders, rather they're purchasing either other chemicals entirely, which we often find, or fake producers of a treasured type that is, you know, often full of impurities, sometimes contaminated by bacteria. This is a safety risk to patients that we take seriously and try to do everything we So that we can help.

Joe Fletcher: Thanks, Tim. Daniel, would you start with some comments?

Daniel M. Skovronsky: Yes. Thanks for raising this important topic, Tim. Of course, we've been watching this carefully, not really out of concern that they're taking away our business. We've been largely supply constraint here, but rather the impact it's having on patient health. We often are able to secure samples from these kinds of compounding labs and analyze them in our own labs. And what we found for the most part, in most instances is this isn't compound of TIRZEPATIDE at all. Our drug is not available to compounders, rather they're purchasing either other chemicals entirely, which we often find, or make producers of TIRZEPATIDE that is often full of impurities, sometimes contaminated by bacteria. This is a safety risk to patients that we take seriously and try to think we can to make patients aware of the potential dangers here so that we can help them.

Dan Skovronsky: Our drug is not available to compounders. Rather, they are purchasing either other chemicals entirely, which we often find, or fake producers of tergapatite that is often full of impurities and sometimes contaminated by bacteria. This is a safety risk to patients that we take seriously and are trying to do everything we can to make patients aware of the potential dangers here so that we can help them. Yeah, and just from a policy standpoint, I mean, you can expect us to be active here.

Our drug is not available to compounders. Rather, they are purchasing either other chemicals entirely, which we often find, or fake producers of tergapatite that is often full of impurities and sometimes contaminated by bacteria. This is a safety risk to patients that we take seriously and are trying to do everything we can to make patients aware of the potential dangers here so that we can help them.

David A. Ricks: Yes. And just from a policy standpoint, I mean, you can expect us to be active here. We've taken public positions. We're obviously engaged with regulators and considering all kinds of legal actions and filed some. Of course, compounding is a long-standing practice under the 503A provisions of FDA, which is meant to customize doses for individual patient needs that we don't--it's not clear to me medically what that would be for TIRZEPATIDE. But I guess that's legal in a sense. It's the mass production that's concerning. And we don't see a lot of that with our medicine more with the other one. But I think if we just step back and reflect them why this is happening, there's shortages because of parenteral manufacturing constraints in the industry and the leading companies. A lot of that constraint is investing and proving those processes are compliant with the GMP standards that the FDA and Europe or NX1 have enforced. And we agree, by the way, with that strict enforcement.

Dave Ricks: Yeah, and just from a policy standpoint, I mean, you can expect us to be active here; we've taken public positions, we're obviously engaged with regulators, considering all kinds of legal actions, and have filed some. Of course, you know, compounding is a longstanding practice under the 503A provisions of FDA, which is meant to customize doses for individual patient needs that we don't know. It's not going to mean medically what that would be for Joseph, but I guess that's legal in the sense.

Dan Skovronsky: We've taken public positions, we're obviously engaged with regulators, considering all kinds of legal actions, and have filed some. Of course, you know, compounding is a longstanding practice under the 503A provisions of FDA, which is meant to customize doses for individual patient needs that we don't. It's not clear to me medically what that would be for terzapazak, but I guess that's legal in a sense. It's the mass production that's concerning, and we don't see a lot of that with our medicine, more with the other one, but, You know, I think if we just step back and reflect on why this is happening, there are just shortages because of parenteral manufacturing constraints in the industry and in the leading companies. A lot of that constraint is investing in and proving that those processes are compliant with the GMP standards that the FDA and Europe, under Annex 1, have enforced. And we agree, by the way, with that strict enforcement.

Dave Ricks: Um, it's the mass production that's concerning, and we don't see a lot of that with our medicine, more with the other one, but you know, I think if we just step back and reflect on why this is happening, there are just shortages because of parenteral manufacturing constraints in the industry and in the leading companies. A lot of that constraint is investing in and proving that those processes are compliant with the GMP standards that the FDA and Europe, under Annex 1, have enforced.

Dave Ricks: It's the mass production that's concerning, and we don't see a lot of that with our medicine, more with the other one, but, You know, I think if we just step back and reflect on why this is happening, there are just shortages because of parenteral manufacturing constraints in the industry and in the leading companies. A lot of that constraint is investing in and proving that those processes are compliant with the GMP standards that the FDA and Europe, under Annex 1, have enforced. And we agree, by the way, with that strict enforcement.

Dave Ricks: And we agree, by the way, with that strict enforcement. So it's a little odd that the answer to that constraint, which is about raising the standards of the industry to have sterile products, is to create another industry that has non-sterile products. So we're pointing that out, and I think you can see Lilly on the front foot here over the coming months to address this. But ultimately, the real thing to address is increasing coverage on insurance and increasing supply.

Dave Ricks: And we agree, by the way, with that strict enforcement. So it's a little odd that the answer to that constraint, which is about raising the standards of the industry to have sterile products, is to create another industry that has non-sterile products. So we're just pointing that out, and I think you can see Lilly on the front foot here over the coming months to address this. But ultimately, the real thing to address is increasing coverage on insurance and increasing supply.

And we agree, by the way, with that strict enforcement.

David A. Ricks: So, it's a little odd that the answer to that constraint, which is about raising the standards of the industry to a sterile product is to create another industry that is non-sterile product. So, we're just pointing that out. And I think you can see Lilly on the front foot here over the coming months to address this. But ultimately, the real thing to address is the increasing coverage on insurance and increasing supply. We've made a lot of strides on supply. We'll step that up another notch with the availability of vials, and we need to work with primarily the government, as well as employers to expand coverage, so obesity medicines are affordable. People when we get to those points, this will be an issue. But in the meantime, people can get hurt. And as Dan said, it's pretty concerning what's happening.

Dave Ricks: We've made a lot of strides in supply, and we'll step that up another notch with the availability of vials, and we need to work with primarily the government as well as employers to expand coverage so obesity medicines are affordable. I think when we get to those points, this will not be an issue, but in the meantime, people can get hurt, and as Dan said, it's pretty concerning what's happened. Thanks. Paul, next question.

Dave Ricks: We've made a lot of strides in supply. We'll step that up another notch with the availability of vials. And we need to work with primarily. I think when we get to those points, this will be a non-issue, but in the meantime, people can get hurt, and as Dan said, it's pretty concerning what's happening. Thanks. Paul, next question.

We've made a lot of strides in supply. We'll step that up another notch with the availability of vials. And we need to work with primarily. I think when we get to those points, this will be a non-issue, but in the meantime, people can get hurt, and as Dan said, it's pretty concerning what's happening.

Joe Fletcher: Thanks. Paul, next question.

Operator: The next question will be from Umar Rafat from Evercore. Umar, your line of live.

Operator: Next question will be from Umer Raffat from Evercore. Umer your line is live.

Umar Rafat: Hi guys, thanks for taking my question. I want to ask you about operating leverage, if I may. I know in the first quarter, when you guys raised the guidance by $2 billion on the top line, it dropped down to EPS by $1.30. This quarter, guidance went up by $3 billion, but it dropped down at a much higher leverage at $2.16 EPS, almost a 90% incremental margin. And my question is not so much what your operating leverage is going to be in 2025 or any four-year guidance, but instead, I'm basically asking, if you annualize the momentum of your 4Q numbers per this year's guidance, the EPS upside implied to consensus could be almost as much as half of Lilly's entire full-year EPS where it stands right now. So, I'm just trying to think through how much you plan on spending on various functions and what the incremental margins could look like as the revenue momentum really kicks in with the improving supply.

Umer Raffat: Hi, guys. Thanks for taking my question. I want to ask on operating leverage, if I may. I know in the first quarter, when you guys raised the guidance by $2 billion on top line, it dropped down to EPS by $1.30. This quarter, guidance went up by $3 billion, but it dropped down at a much higher leverage at $2.16 EPS, almost a 90% incremental margin. And my question is not so much what your operating leverage is going to be in 2025 or a forward year guidance. But instead, I'm basically asking if you annualize the momentum of your 4Q numbers per this year's guidance, the EPS upside implied to consensus could be almost as much as half of Lilly's entire full year EPS where it stands right now. So, I'm just trying to think through, how do you plan on spending on various functions and what the incremental margins could look like as the revenue momentum really kicks in with the improving supply? Thank you.

Gordon Brooks: Thank you, Umar, there's a lot of financial mechanics around handing over to Gordon to comment on, I think effectively capital allocation considerations. Good, thanks Umar, appreciate the question. Yeah, I think we've been speaking for a long time about operating margins and getting to the mid to high 30% range, as we've, you know, as we've seen this year, Majora and Bound are taking an inflection.

Operator: Thanks, Umar. There's a lot of financial mechanics there. I'll hand it to Gordon to comment on, I think, effectively capital allocation considerations. Good. Thanks, Umar. I appreciate the question. Yeah, I mean, we've been speaking for a long time about operating margins and getting to the mid to high 30% range, as we've seen this year, Majora and Bound are taking an inflection.

Joe Fletcher: Thanks, Umer. There's a lot of financial mechanics. So, I'll hand to Gordon to comment on, I think, effectively capital allocation considerations.

Gordon Brooks: Good. Thanks. Appreciate the question. Yes, I mean, we've been speaking for a long time about operating margins and getting to the mid- to high 30% range. As we've seen this year, MOUNJARO and ZEPBOUND are taking an inflection point upwards and so we're seeing ourselves at the top end of that range. For the first half, margins are a little inflated. We haven't yet lend in to all of our promotional channels and incretins. You don't see, for instance, TV commercials in the incretins. We haven't done that looking at the--given the supply situation. And in R&D, it takes time to scale R&D thoughtfully. So, it doesn't always move exactly in sync quarter-by-quarter with revenue. That said, our guidance for the year does indicate we will stay in the upper 30% range for the full year, with growth first half, if you look at the first half, as the two quarters' growth into the second half. And you should also expect to see within that mix, stronger sales and marketing growth as we get to new launches in the second part of the year and the R&D continue to scale the growth from what we've seen thus far. So, those are the dynamics we see on operating margin for 2024.

Gordon Brooks: We're seeing ourselves at the top end of that range. For the first half, margins are a little inflated.

Gordon Brooks: We're seeing ourselves at the top end of that range. For the first half, margins are a little inflated. We haven't yet lensed into all of our promotional channels and incretins. You don't see, for instance, TV commercials on incretins. We haven't done that, given the supply situation. And on R&D, it takes time to scale R&D thoughtfully, so it doesn't always move exactly in sync, quarter by quarter, with revenue. That said, you know, our guidance for the year does indicate we will stay in the upper 30% range for the full year with growth in the first half. If you look at the first half, the two quarters of growth into the second half, And you should also expect to see, within that mix, stronger sales and marketing growth as we get to new launches in the second part of the year, and R&D continue to scale and grow from what we've seen thus far.

Gordon Brooks: We haven't yet lensed into all of our promotional channels and incretins. You don't see, for instance, TV commercials on incretins. We haven't done that, given the supply situation. And on R&D, it takes time to scale R&D thoughtfully, so it doesn't always move exactly in sync, quarter by quarter, with revenue. That said, you know, our guidance for the year does indicate we will stay in the upper 30% range for the full year with growth in the first half. If you look at the first half, the two quarters of growth into the second half, And you should also expect to see within that mix strong, stronger cells in marketing growth as we get to new launches in the second part of the year, and R&D continue to scale and grow from what we've seen thus far.

Gordon Brooks: We haven't yet lensed into all of our promotional channels and incretins. You don't see, for instance, TV commercials on incretins. We haven't done that, given the supply situation. And on R&D, it takes time to scale R&D thoughtfully, so it doesn't always move exactly in sync, quarter by quarter, with revenue. That said, you know, our guidance for the year does indicate we will stay in the upper 30% range for the full year with growth in the first half. If you look at the first half, the two quarters of growth into the second half, And you should also expect to see, within that mix, stronger sales and marketing growth as we get to new launches in the second part of the year, and R&D continue to scale and grow from what we've seen thus far.

Gordon Brooks: Thanks, Gordon. Paul, next question.

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

Operator: The next question will be from Mohit Pansal, from Wells Fargo, on Your Line of Life.

Operator: The next question will be from Mohit Bansal from Wells Fargo. Mohit, your line is live.

Mohit Bansal: Great, thank you very much for taking my question and congratulations on the quarter. My question is regarding the rest of the world's sales for Incretins. It seems like Munjaro is doing quite well there and if I take out the 15% or so for stocking in the US, it seems like Axios is already about 33% this early in the launch. So I would love to understand how your experience so far has been and whether there is going to be any different. Uptake for XUS versus your prior generation in cretins for both Munjaro and ZepBound given that these are really efficacious drugs.

Mohit Bansal: Great. Thank you, very much for taking my question. Congrats on the quarter. My question is regarding the rest of the world sales for incretins. It seems like MOUNJARO is doing quite well there. And if I take out the, like 15% or so for stocking in the U.S., it seems like ex-U.S. is already about 33% this early in the launch. So, I would love to understand how has been your experience so far? And is there going to be any different uptake for ex-U.S. versus your prior generation incretins for both MOUNJARO and ZEPBOUND, given that these are really efficacious drugs?

Ilya Yuffa: Yeah, thanks Mohit for the question. Ilya, do you want to comment on the OUS rollout for Mijara?

Joe Fletcher: Yes. Thanks, Mohit, for the question. Ilya, do you want to comment on OUS rollout for MOUNJARO?

Ilya Yuffa: Sir, thanks for the question. You know, we've seen some great progress with the launch of Majara outside of the US. I think what you've seen in terms of growth and in the earlier launch countries such as the UK, UAE, and Saudi Arabia, which are both key markets that make up the rest of the world, have already achieved a leading share and continue to drive momentum and overall market growth. And so, as you take a look at Q2, the main driver of that growth has been in, on jarrow, in markets where we've already launched earlier in the cycle, and the majority of that coming from the quick presentation, with a lot of that in the UAE.

Ilya Yuffa: Sure. Thanks, Mohit, for the question. We've seen some great progress with the launch of MOUNJARO outside of the U.S. I think what you've seen in terms of growth in the earlier launch countries, such as the U.K., UAE and Saudi, UAE and Saudi are both key markets that make up rest of world, have already achieved a leading share and continue to drive momentum and overall market growth. And so, as you take a look at Q2, the main driver of that growth has been in MOUNJARO in markets where we've already launched earlier in the cycle and majority of that coming from the Quick Pen presentation with a lot of that in the UAE. Some of that is channel dynamics similar to the U.S. At the same time, if you take a look at Q2 and the trajectory for Q2, relative to historical peak sales of any of our brand, has already surpassed that with a limited number of markets where we've launched. And so, as we look at the coming quarters, obviously, we just recently launched in Germany and now also Spain with Quick Pen presentation. We'll also look and monitor the demand and also supply capacity and expect to launch in new markets. The near-term growth, I would expect predominantly coming from already launched markets of MOUNJARO.

Ilya Yuffa: And the majority of that coming from the QuickPen presentation with a lot of that in the UAE. Some of that is channel dynamics similar to the US. At the same time, if you take a look at Q2 and the trajectory for Q2 relative to historical peak sales of any of our brands, it's already surpassed that in a limited number of markets where we've launched. And so, as we look at the coming quarters, obviously, we just recently launched in Germany and now also Spain with the QuickPen presentation. We'll also look at monitoring the demand and also supply capacity and expect to launch in your markets. The near term growth, I would expect predominantly coming from already launched markets of Manjaro.

Operator: Thanks, Ilya. Paul, next question. The next question will be from Alex Hammond from Bank of America. Alex, your line is live. Thanks for taking the question in the prepared remarks Dan mentioned earlier.

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

The next question will be from Alex Hammond from Bank of America. Alex, your line is live. Thanks for taking the question in the prepared remarks Dan mentioned earlier.

Operator: The next question will be from Alex Hammond from Bank of America. Alex, your line is live.

Alex Hammond: Thanks for taking my question. In the prepared remarks, Dan mentioned engagement with regulatory authorities on a potential pivotal trial in NASH. Can you provide any color on these discussions and how Lilly is thinking about TIRZEPATIDE versus RETATRUTIDE for this indication? When could we receive updates? Thank you.

Operator: The next question will be from Alex Hammond from Bank of America and Alex Irline from Life.

Operator: The next question will be from Alex Hammond from Bank of America. Alex, your line is live.

Dan Skovronsky: Dan. Yeah, thanks for the question.

Dan Skovronsky: Dan? Yeah, thanks for the question. We're really excited about the opportunity to help patients suffering from MASH. I think the data that we shared in phase two for just appetite is really quite profound in terms of the size of the effect we can have. There are a couple of issues in MASH drug development that we're trying to tackle, probably the most significant of which is the current standard of liver biopsy to identify the patients to enroll in these trials and also to measure the outcome.

Joe Fletcher: Dan?

Daniel M. Skovronsky: Yes. Thanks for the question. We're really excited about the opportunity to help patients suffering from NASH. I think the data that we shared in Phase II for TIRZEPATIDE appetite is really quite profound in terms of the size of effect we can have. There's a couple of issues in mass drug development that we're trying to tackle, probably the most significant of which is current standard of liver biopsy to identify the patients to enroll in these trials and also then measure the outcome. Liver biopsy is obviously an invasive procedure and difficult to find patients to consent to these trials and of course, there's risk to patients. We're working hard to develop noninvasive biomarkers that can be used to identify the right patients to enroll in mass studies and also potentially could be used as an outcome to know if a drug is working. My hope is that we could develop those kinds of biomarkers that could be used both purposes and could be suitable for accelerated or approval of mass drugs in the future. Of course, long-term traditional approval from Astra still requires demonstration of outcomes. So, in that environment, we have two drugs that I think could both be great mass drugs and we'll have to decide whether to invest in one or both of those drugs, depending on the regulatory path we see. We'll keep investors updated as we make decisions about these molecules in NASH.

Dan Skovronsky: Liver biopsy is obviously an invasive procedure, and it's difficult to find patients to consent to these trials. And, of course, there's risk to patients. We're working hard to develop non-invasive biomarkers that can be used to identify the right patients to enroll in MASH studies and also potentially could be used as an outcome to know if a drug's working. My hope is that we could develop those kinds of biomarkers that could be used for both purposes and could be suitable for accelerated approval of mass drugs in the future. Of course, you know, long-term traditional approval for mass drugs still requires demonstration of outcome. So in that environment, we have two drugs that I think could both be great MASH drugs. And we'll have to decide whether to invest in one or both of those drugs, depending on the regulatory paths we see. We'll keep investors updated as we make decisions about the future of these molecules in MASH.

Operator: My hope is that we could develop those kinds of biomarkers that could be used for both purposes and could be suitable for accelerated approval of mass drugs in the future. Of course, you know, long-term traditional approval for mass drugs still requires demonstration of outcome. So in that environment, we have two drugs that I think could both be great mass drugs, and we'll have to decide whether to invest in one or both of those drugs depending on their records or paths we see. We'll keep investors updated as we make decisions about these molecules and mesh.

Operator: My hope is that we could develop those kinds of biomarkers that could be used for both purposes and could be suitable for accelerated approval of mass drugs in the future. Of course, you know, long-term traditional approval for mass drugs still requires demonstration of outcome. So in that environment, we have two drugs that I think could both be great MASH drugs. And we'll have to decide whether to invest in one or both of those drugs, depending on the regulatory paths we see. We'll keep investors updated as we make decisions about the future of these molecules in MASH.

Operator: Thanks, Paul. Next question. The next question will be from Evan Seigerman from BMO Capital Markets, on your line of life. Hi guys, thank you so much for taking my question. I wanted to touch on manufacturing and specifically on

Operator: Thanks, Paul. Next question. The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live. Hi guys, thank you so much for taking my question. I wanted to touch on manufacturing and specifically on

Joe Fletcher: Thanks, Paul. Next question.

The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live. Hi guys, thank you so much for taking my question. I wanted to touch on manufacturing and specifically on

Operator: The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live.

Evan Seigerman: Hi, guys. Thank you so much for taking my question. I wanted to touch on manufacturing and specifically, on the concern that you raised back in February around the proposed acquisition of Catalent by Novo Holdings and the subsequent sale to Novo Nordisk. Are you still as concerned as you were in February? Or given what you've been able to do with your own footprint? Is this less of an issue? Thank you so much.

Operator: The next question will be from Evan Seigerman, from BMO Capital Markets, on Your Line of Life.

Operator: The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live.

Dave Ricks: Yeah, I can take it. You know, we remain concerned about that transaction. I don't think it was ever really about the trajectory of our ramp, although, as we've disclosed, we do rely on one of the Catalan sites for GLP-1 and other diabetes production. It's more the oddity of your Maine competitor being also your contract manufacturer and how to resolve that situation. There's also an industry structure issue; you know CDMOs are important for managing capacity across the sector.

David A. Ricks: Yes, I can take it. We remain concerned about that transaction. I don't think it was ever really about the trajectory of our ramp, although as we've disclosed, we do rely on one of the Catalent sites for GLP-1 and other diabetes production. It's more the oddity of your main competitor being also your contract manufacturer and how to resolve that situation. There's also an industry structure issue. CDMOs are important for managing capacity across the sector. And if we ended up in an outcome where that sector didn't really exist, they all became captive of large pharma would really constrain, I think, availability in the development of medicines, particularly out of biotech. So, we've aired those concerns publicly and privately since the proposed transaction was announced, and we're waiting to see what happens. But in terms of the long-term outlook for our company, as you may have noticed, we're building aggressively ourselves. Our primary strategy is self-run sites. And we've got $18 billion we've announced in the last several years, probably not done there. And we're quite comfortable building operating sites and as the newest large sites of begun to come online, we know we can execute that drill and repeat it, and that's our base plan.

Dave Ricks: And if we ended up in an outcome where that sector didn't really exist, maybe I'll became captive of large pharma, who would really constrain, I think, a availability in the development, medicines, particularly out of biotechs. So we've aired those concerns, publicly and privately, the proposed transaction was announced and we're waiting to see what happens, but in terms of the long-term outlook for our company, as you may have noticed, we're building aggressively ourselves, our primary strategy, self-run site, and we've got 18 billion, we've announced some last several years, you know, probably not done there, and we're quite comfortable building operating sites in this book, newest large sites have begun to come online you know we we know we can execute that drill and repeat it and that's that's our base, Thanks, Evan, for the question. Paul, next.

Dave Ricks: So we've aired those concerns publicly and privately. The proposed transaction was announced, and we're waiting to see what happens. But in terms of, you know, the long-term outlook for a company, as you may have noticed, we're building aggressively ourselves. Our primary strategy is a self-run site. And we've got $18 billion we've announced in the last several years, you know, probably not done there, and we're quite comfortable building and operating sites, and that's the newest large sites have begun to come online. We know we can execute that drill and repeat it, and that's our base. Thanks, Evan, for the question. Paul, next.

So we've aired those concerns publicly and privately. The proposed transaction was announced, and we're waiting to see what happens. But in terms of, you know, the long-term outlook for a company, as you may have noticed, we're building aggressively ourselves. Our primary strategy is a self-run site. And we've got $18 billion we've announced in the last several years, you know, probably not done there, and we're quite comfortable building and operating sites, and that's the newest large sites have begun to come online. We know we can execute that drill and repeat it, and that's our base.

Joe Fletcher: Thanks, Evan, for the question. Paul, next.

Operator: The next question will be from Dave Risinger from Leerink. Dave, your line is live

Dave Risinger: Yes, thanks so much. Let me add my congratulations on the results as well as the corporate updates.

David R. Risinger: Yes, thanks so much. Let me add my congrats on the results as well and the corporate updates. So ZEPBOUND's breadth of health and work or productivity benefits seem to be underappreciated by many. There are articles from time to time, let's say, that patients need an off-ramp from therapy, et cetera. And my question is, what is Lilly doing to encourage patients to stay persistent with therapy? And how does Lilly intend to better communicate not just ZEPBOUND's health benefits, but its worker productivity benefits to employers in order to drive much greater employer inclusion of obesity drugs as part of employee benefits? Thanks very much.

Dave Reisinger: So Zep-Bound's breadth of health and worker productivity benefits seems to be underappreciated by many. You know, there are articles from time to time that say that, you know, patients need an off ramp from therapy, etc. And my question is, what is Lilly doing to encourage patients to stay persistent with therapy? And how does Lilly intend to better communicate not just Zep-Bound's health benefits but its worker productivity benefits to employers in order to drive much greater employer inclusion of obesity drugs as part of employee benefits?

Operator: So [inaudible]

Joe Fletcher: Thanks, Dave. Patrik, do you want to comment on persistency and benefits?

Patrik Jonsson: Thanks, Dave. Patrik, do you want to comment on persistency and benefits?

Patrik Jonsson: Absolutely. I think first overall, when we look at persistency, it's very early after the launch. But based on the feedback we have from providers, and from patients as well, this is a drug that patients want to stay on because they experience the benefits, such as weight loss and also the downstream implications on comorbidities. You're right, the employee opt-in efforts are extremely key, and we believe that our outcome data, OSA, now have [inaudible] will help us tremendously and more readout to come over the coming years. We're also having value-based agreement with several other payers where we are looking into the benefits of tirzepatide in the workplace in terms of reduced absentees, increased productivity, et cetera, as well and that has gained a lot of interest. In terms of the consumer, yes, the ease to start and stay on is a key priority for us. And then we're working with consumer, improving our consumer platforms and also digital channels to really enable patients to experience the benefits that ZEPBOUND provides over time.

Patrik Jonsson: Absolutely. You know, first of all, when we look at the assistance, it's very early after the launch, but based upon the feedback we hear from providers and from patients as well, this is a drug that patients want to stay on because they experience the benefits firsthand of weight loss and also the downstream implications on comorbidities. You're right, the employer opt-in efforts are extremely key, and we believe that our outcome data, OSA now has passed, will help us tremendously, with more readout to come over the coming years.

Patrik Jonsson: We're also having value-based agreements with several of the payers where we're looking into the benefits of TifTepatide in the workplace in terms of reduced absenteeis, increased productivity, etc., as well, and that has gained a lot of interest. In terms of the consumer, yes, the easy start and stay on is a key priority for us, and we're working with consumers, improving our consumer platforms and also digital channels to really enable patients to experience the benefits that Cephon provides over time.

Operator: Thanks, Patrik. Paul, next question. The next question will be from Kerry Holford from Berenberg. Kerry, your line is live.

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

Operator: The next question will be from Kerry Holford from Berenberg. Kerry, your line is live.

Operator: The next question will be from Kerry Holford from Baramburg, Kerry Your Line of Life, [inaudible] Thank you for taking the question to bring back to the launch in question earlier, giving you an out of your question, giving you an out of your question to meet forward. Apologies team.

Kerry Holford: Thank you for taking my question, just going back to the margin question earlier, given you're now expecting your 2024 waiting Apologies team. We will get Kerry reconnected with a better line momentarily, and we'll move on to the next question. In the meantime, if that's okay with Chris Shibutani from Goldman Sachs. Chris, your line is live. Yes.

Kerry Holford: Thank you for taking my question, just coming back to the margin question earlier, given another expense in the 2024--

Operator: Apologies, team. We will get Kerry reconnected with a better line momentarily, and we'll move on to the next question. In the meantime, if that's okay with Chris Shibutani from Goldman Sachs. Chris, your line is live.

Operator: We will get Kerry reconnected with a better line momentarily, and we'll move on to the next question. In the meantime, if that's okay with Chris Shibutani from Goldman Sachs. Chris, your line is live. Yes.

Operator: With all the different oral mechanisms, in particular, variations on it from yourselves as well as competitors, can you update us on your thinking on what the basis of competition is going to be and what kind of opportunities you really envisage? I think there has been, for a while now, a comparison on the basis of percent weight loss, particularly for the injectables. But as we move into orals, it seems as if tolerability profiles really matter.

Chris Shibutani: Yes, thank you. With all the different oral mechanisms in particular, variations on it from yourselves as well as competitors, can you update us on your thinking on what the basis of competition is going to be? And what kind of opportunities do you really envision? I think there has been for a while now a comparison on the basis of percent weight loss, particularly for the injectables. But as we move into orals, it seems as if tolerability profiles really matter. So how are you thinking about it? And how do you recommend investors think when we compare datasets across these other oral products in development? Even if the mechanisms are different, how do we get smarter about differentiating and interpreting data? Thank you.

Operator: How are you thinking about it, and how do you recommend investors think when we compare datasets across these other oral products in development? Even if the mechanisms are different, how do we get smarter about differentiating and interpreting data?

Chris Shibutani: Thank you.

Operator: Thank you.

Dan Skovronsky: Anyone want to chime in? Yeah, thanks, Chris.

Operator: Anyone want to chime in? Yeah, thanks, Chris.

Joe Fletcher: Dan, you want to chime in?

Daniel M. Skovronsky: Yes. Thanks. I'll start, and then we'll see Patrik to anything to add on commercial differentiation. But in the clinical trials, I think first of all, as I'm saying before, just take some caution on the small short Phase I trials. There's more to see. Most of the drugs that we've seen actually aren't different mechanisms that are GLP-1 agonists. In this class, I don't expect there to be differentiation in terms of efficacy, weight loss. You can pretty much dial in the amount of weight loss you want depending on how aggressively you dose it and what population. Tolerability is another issue that usually comes along with the efficacy. The faster you ramp to higher doses, the less tolerability you have. Then the different companies have to work through their own escalation of dosing to match the desired efficacy with some reasonable tolerability. The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug. And we think that's what drives the tolerability issues. So, what you want is a long half-life molecule that can be dose escalated more smoothly. So that probably will be the differentiation rather than anything that companies are currently talking about in terms of efficacy.

Dan Skovronsky: I'll start and then we'll see if Patrik has anything to add on commercial differentiation. But in the clinical trials, I think, you know, first of all, as I was saying before, just take some caution on the small, short Phase I trials. There's more to see. Most of the drugs that we've seen actually have different mechanisms. They're GLP-1 agonists. And in this class, I don't expect there to be differentiation in terms of efficacy and weight loss. You can pretty much dial in the amount of weight loss you want, depending on how aggressively you dose it in what population. Tolerability is another issue that usually comes along with efficacy. The faster you ramp to higher doses, the less tolerability you have. Then the different companies will have to work through their own. The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues. So what you want is a long-half-life molecule that can be dose escalated more smoothly, so that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy.

Dan Skovronsky: Most of the drugs that we've seen actually have different mechanisms. They're GLP-1 agonists. In this class, I don't expect there to be differentiation in terms of efficacy for weight loss. You can pretty much style in the amount of weight loss you want depending on how aggressively you dose it in what population. And tolerability is another issue that usually comes along with efficacy, that the faster you go to higher doses, the less tolerability you have, and the different companies have to work through their own. The variable that links those two things together is often the half-life of the molecule.

Operator: Most of the drugs that we've seen actually have different mechanisms. They're GLP-1 agonists. And in this class, I don't expect there to be differentiation in terms of efficacy and weight loss. You can pretty much dial in the amount of weight loss you want, depending on how aggressively you dose it in what population. Tolerability is another issue that usually comes along with efficacy. The faster you ramp to higher doses, the less tolerability you have. Then the different companies will have to work through their own. The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues. So what you want is a long-half-life molecule that can be dose escalated more smoothly, so that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy.

Operator: Tolerability is another issue that usually comes along with efficacy. The faster you ramp to higher doses, the less tolerability you have. Then the different companies will have to work through their own. The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues. So what you want is a long-half-life molecule that can be dose escalated more smoothly, so that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy.

Operator: The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues. So what you want is a long-half-life molecule that can be dose escalated more smoothly, so that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy.

Dan Skovronsky: So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues. So what you want is a long half-life molecule that can be dose escalated more smoothly, so that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy. As I said before, it's a long road from early data to phase three clinical trials like we have with orforglypron, and we can expect some attrition.

Daniel M. Skovronsky: So, what you want is a long half-life molecule that can be dose escalated more smoothly. So that probably will be the differentiation rather than anything that companies are currently talking about in terms of efficacy. As I said before, it's a long road from early data to Phase III clinical trials like we have with orforglipron and we can expect some attrition. I'm pretty excited also about next-generation molecule. All of these ones that we've been talking about now are GLP-1s and will offer efficacy sort of in the range of injectable semaglutide. I think ultimately, we'd like to see drugs that offer efficacy and tolerability that exceeds that things that could combine multiple incretins like tirzepatide does and we are certainly working on orals that could also agonize GIP-1, for example. So exciting progress there and more to come on that in the future for us.

Operator: As I said before, it's a long road from early data to phase three clinical trials, like we have with orforglypron, and we can expect some attrition. But I'm pretty excited also about next-generation molecules. All these ones that we've been talking about now are GLP-1s and will offer efficacy sort of in the range of injectable semaglutide. I think ultimately we'd like to see drugs that offer efficacy and tolerability that exceeds that, things that could combine multiple incretins like terzapatide does, and we are certainly working on orals that could also aggravate GIP-1, for example. So exciting progress there, and more to come on that in the future.

Dan Skovronsky: I'm pretty excited about next-generation molecules. All these ones that we've been talking about now are GLP-1s and will offer efficacy sort of in the range of injectable semaglutide. I think ultimately we'd like to see drugs that offer efficacy and tolerability that exceeds that, things that could combine multiple incretins like terzapatide does, and we are certainly working on orals that could also inhibit GIP-1, for example. Exciting progress there, and more to come on that in the future.

Patrik Jonsson: Just from a commercial point of view, we regularly conduct both consumer and provider market research, and when we look into their preferences, the true drivers today are still the degree of weight loss and safety and tolerability. When we look at the needs beyond that, it's actually the need for an oral treatment, an oral treatment with injectable-like efficacy. So that's probably the need that goes beyond what we're currently serving today, and we'll take a line to serve those stations that have the fear of injections. When we look at our aspects, I think what counts beyond that would be the compensation for weight loss, the mass versus fat, and durability, and I think we're looking at all of those aspects of it.

Patrik Jonsson: Just from a commercial point of view, we are regularly conducting both consumer and provider market research. And when we're looking into the preferences, the true drivers today is still the degree of weight loss and safety and tolerability. And when we look at the needs beyond that, it's actually the need of an oral, and an oral with an injectable-like efficacy. So that's probably the new that comes beyond what we're currently serving today, and particularly to serve those patients that have a fear of injections. When we look at over aspects, I think what comes beyond that would be the compensation of weight loss, lean mass versus fats and durability. And I think we are looking into all of those aspects as well.

Operator: Thank you. And thanks for the answers. Paul, next question. I know we're running short on time, so we'll do our best to kind of compress our answers as we get through as many questions as possible.

Joe Fletcher: Thank you. And thanks for the answers. Paul, next question. I know we're running short on time, so we'll do our best to kind of compress our answers as we get through as many questions as possible. Paul?

I know we're running short on time, so we'll do our best to kind of compress our answers as we get through as many questions as possible.

Operator: Thank you. And we have Kerry Holford from Bairnberg Reconnected. Kerry, your line is live.

Operator: Thank you. And we have Kerry Holford from Bernberg reconnected. Kerry, your line is live.

Kerry Holford: lovely Thank you for taking my question. Hopefully, you can hear me better this time around. Much better. My question is on margin. So given you are now landing, and expecting to land in that mid to high 30s range this year, so soon after Tezepatai launches, where can we expect your midterm operating margin to land? You know, is a margin in the mid 40s perhaps higher achievable? And Dave, I know you've previously suggested that an operating margin above 40% is not sustainable for an innovation-focused company. But given your progress so far, I wonder if you've changed your view on that. Thank you.

Kerry Holford: Lovely, thank you for taking my question. Hopefully, you can hear me better this time around.

Kerry Holford: Much better. My question is on margin. So given you are now landing, and expecting to land in that mid to high 30s range this year, so soon after Tezepatai launches, where can we expect your midterm operating margin to land? You know, is a margin in the mid 40s perhaps higher achievable? And Dave, I know you've previously suggested that an operating margin above 40% is not sustainable for an innovation-focused company. But given your progress so far, I wonder if you've changed your view on that. Thank you.

Joe Fletcher: Much better.

Gordon Brooks: My question is on margin. So given you are now landing, and expecting to land in that mid to high 30s range this year, so soon after Tezepatai launches, where can we expect your midterm operating margin to land? You know, is a margin in the mid 40s perhaps higher achievable? And Dave, I know you've previously suggested that an operating margin above 40% is not sustainable for an innovation-focused company. But given your progress so far, I wonder if you've changed your view on that. Thank you.

Operator: My question is on margin. So given you are now landing, and expecting to land in that mid to high 30s range this year, so soon after Tezepatai launches, where can we expect your midterm operating margin to land? You know, is a margin in the mid 40s perhaps higher achievable? And Dave, I know you've previously suggested that an operating margin above 40% is not sustainable for an innovation-focused company. But given your progress so far, I wonder if you've changed your view on that. Thank you.

Kerry Holford: Lovely. My question was on margins. So, given you are now landing--expecting to land in that mid- to high 30s range this year so soon after the TIRZEPATIDE launches, where can we expect your midterm operating margin to land? Is the margin in the mid-40%, perhaps higher achievable? And Dave, I know you previously suggested that an operating margin above 40% is not sustainable from an innovation-focused company. But given your progress so far, I wonder if you've changed your view on that. Thank you.

Gordon Brooks: Gordon, you want to touch on that briefly? I will do so.

Operator: Gordon, you want to touch on that briefly? I will do so.

Joe Fletcher: Gordon, do you want to touch on that briefly?

Gordon Brooks: Will do. Thanks, Kerry. I appreciate the question. Yes. I think as we said, like guidance, as I said earlier, we do expect to end in that upper 30s range this year. There's still a lot at play here. Yes, on the top line, we see inflection points on revenue. But through the first half, you've had an inflated position. We haven't yet leaned in to any of our promotional channels. That's going to be a dynamic that we lean to more starting in the second half. And R&D, we do intend to scale that, and that's not going quarter-by-quarter exactly in line with revenue. So, all of those things are still going to play through. I think that said, at this point, we're just talking about 2024. And when we do guidance for '25, we'll chat about the longer-term picture there. Thanks. Next question, Paul.

Operator: Thanks, Kerry. Appreciate the question. Yeah, I think, you know, as we said in our guidance, as I said earlier, we do expect to end in that upper 30s range this year. There's still a lot at play here. Yes, on the top line, we see inflection points on revenue, but through the first half, you've had an inflated position. We haven't yet leaned into any of our promotional channels That's going to be a dynamic that we lean into more starting in the second half. And R&D, we do intend to scale that, and that's not going quarter by quarter exactly in line with revenue. So all of those things are still going to play out. You know, I think that said. At this point, we're just talking about 2024. And when we do guidance for 25, we'll chat about the longer term picture then.

Operator: That's going to be a dynamic that we lean into more starting in the second half. And R&D, we do intend to scale that, and that's not going quarter by quarter exactly in line with revenue. So all of those things are still going to play out. You know, I think that said. At this point, we're just talking about 2024. And when we do guidance for 25, we'll chat about the longer term picture then.

Operator: Thanks, next question, Paul. The question will be from Akash Tewari, from Geoffrey's, Akash Irlanders. Hey, thanks so much. So we're starting to see that my sense may not be the only way to kind of preserve lean muscle mass. In particular, it looks like Amlin Gidd Glybka.

Joe Fletcher: Thanks. Next question, Paul.

Operator: The next question will be from Akash Tewari, from Geoffrey's Akash.

Operator: The next question will be from Akash Tewari from Jeffreys. Akash, your line is live.

Akash Tewari: Hey, thanks so much. So, we're starting to see that myostatin may not be the only way to kind of preserve lean muscle mass. In particular, it looks like Amlin GLP combos are showing the potential for maybe 90% versus 10% fat versus muscle loss. Can you talk about what you think ALORALINTIDE+TIRZEPATIDE combo could show both in terms of absolute weight loss, but also the quality of that weight loss? And then where would myostatin fit in a world where next-gen amlet triplet could show that level of muscle preservation? Thank you.

Operator: Okay, Dan can focus on that first question about alluralintide. Thanks.

Joe Fletcher: Dan can focus on that first question about ALORALINTIDE.

Operator: The next question will be from Dave Risinger from Learing. Dave, your line of life.

Dan Skovronsky: So we have multiple mechanisms in play here. Starting maybe with amylin, we have a phase two molecule called alluralintide, which is a pure amylin agonist, and we're evaluating that both as monotherapy and in combination with terzapatide kicklip. So that'll be interesting to see.

Daniel M. Skovronsky: So, we have multiple mechanisms in play here, starting maybe with the amylin. We have a molecule Phase II called ALORALINTIDE, which is a pure AML agonist, and we're evaluating that both as monotherapy and in combination with TIRZEPATIDE GLP clip. So that will be interesting to see. I don't have a strong preconceived notions about what to expect in terms of lean versus fat mass loss with that particular combination. Probably the people who have the most data about that would be the scientists at Novo since they've investigated cagrilintide in combination with semaglutide. I think that brings us probably to another mechanism, which is dual amylin calcitonin agonism, which cagrilintide probably is a dual agonist, and we have a molecule like that in Phase I called DACRA and we'll also investigate that and composition of biomass will be one of the aspects in which we evaluate it. And then finally, you talk of myostatin, we have a molecule in this family, and that's the bimagrumab that we acquired from Versatis, which is an [inaudible] receptor and that's proceeding in a Phase II trial in combination with semaglutide. And we look forward to having data to share with that in the future.

Operator: I don't have strong preconceived notions about what to expect in terms of lean versus fat mass loss with that particular combination. Probably the people who have the most data about that would be the scientists at Novo, since they've investigated curgillatide in combination with semaglutide. I think that brings us probably to another mechanism, which is dual amylin-calcitonin agonism, of which curgillatide probably is a dual agonist. And we have a molecule like that in phase one called DACRA, and we'll also investigate that. And composition of body mass will be one of the aspects on which we evaluate it. And then finally, you talk about myostatin; we have a molecule in this family, and that's the bimagramab that we acquired from Drosnanus, which is an antibody against the receptor, and that's proceeding in a phase two trial in combination with semaglutide. And we look forward to having data to share on that in the future.

Dan Skovronsky: I don't have strong preconceived notions about what to expect in terms of lean versus fat mass loss with that particular combination. Probably the people who have the most data about that would be the scientists at Novo, since they've investigated curgillatide in combination with semaglutide. I think that brings us probably to another mechanism, which is dual amylin-calcitonin agonism, of which curgillatide probably is a dual agonist.

Dan Skovronsky: And we have a molecule like that in phase one called DACRA, and we'll also investigate that. And composition of body mass will be one of the aspects on which we evaluate it. And then finally, you talk about myostatin; we have a molecule in this family, and that's the bimagramab that we acquired from Drosnanus, which is an antibody against the receptor, and that's proceeding in a phase two trial in combination with semaglutide.

Operator: And we have a molecule like that in phase one called DACRA, and we'll also investigate that. And composition of body mass will be one of the aspects on which we evaluate it. And then finally, you talk about myostatin; we have a molecule in this family, and that's the bimagramab that we acquired from Drosnanus, which is an antibody against the receptor, and that's proceeding in a phase two trial in combination with semaglutide. And we look forward to having data to share on that in the future.

Dan Skovronsky: And we look forward to having data to share on that in the future. All of these mechanisms could have variable effects on body mass composition, but I point out that so far we've not seen any disadvantages to the types of weight loss that we get with tersepatide. In fact, patients show improved functional outcomes on a variety of things, including improved function in heart failure, as we just demonstrated. So could we have further improvements with even higher ratio of fatally mass? That's the question of these trials.

Operator: And we look forward to having data to share on that in the future. All of these mechanisms could have variable effects on body mass composition, but I point out that so far we've not seen any disadvantages to the types of weight loss that we get with tersepatide. In fact, patients show improved functional outcomes on a variety of things, including improved function in heart failure, as we just demonstrated. So could we have further improvements with even a higher ratio of fat to lean mass?

And we look forward to having data to share on that in the future.

Daniel M. Skovronsky: All of these mechanisms, I think, could have variable effects on body mass composition. I point out that so far, we've not seen any disadvantages to the types of weight loss that we get with TIRZEPATIDE. In fact, patients show improved functional outcomes on a variety of things, including fruit function and heart failures we just demonstrated. So, could we have further improvements with even more higher ratio of fat to lean mass? That's the question of these trials makes. Paul, next question.

Joe Fletcher: Paul, next question.

Operator: The next question will be from Trung Huynh from UBS. Trung, your line is live.

Trung Huynh: Hi guys, thank for taking my question. Just following on from the previous question on ex-U.S. GLP-1. You saw MOUNJARO ex-U.S. sales this quarter jumped to $677 million from $286 million. Can you give us some color on how ex-U.S. reimbursement is going with the bigger countries? And is this more of an out-of-pocket drug in these countries? And what percentage of the $677 million is obesity sales versus diabetes? Thanks very much.

The next question will be from Trung Huynh from UBS. Trung, your line is: Hi guys, thanks for taking my question. Just following on from the previous question on XUS GLP-1, you saw Monjaro XUS sales this quarter jump.

Operator: The next question will be from Trung Huynh from UBS. Trung, your line is live.

Operator: Good. All next question. The next question will be from Trung Hoon from UBS, Trung Leolinas. Hi guys, thanks for taking my question. Um, just following on from the previous question on XUSGLP1, you saw Monjaro XUS sales this quarter jump.

Operator: That's that's the question for these trials. Good. All next question. The next question will be from Trung Huynh from UBS. Trung, your line is: Hi guys, thanks for taking my question. Just following on from the previous question on XUS GLP-1, you saw Monjaro XUS sales this quarter jump.

Joe Fletcher: Paul, next question.

Ilya Yuffa: Okay. On that second one, I don't think we'll probably be able to give much of a good answer on that. So I'll maybe ask Ilya to weigh in just on that first question around how the ex-US reimbursement is going.

Joe Fletcher: Okay. On that second one, I don't think we'll probably give much of a good answer on that. So, I'll maybe ask Ilya to weigh in just on that first question around how ex-U.S. reimbursement is going.

Ilya Yuffa: Stewart, well first I think the momentum overall is progressing quite nicely and both the reimbursed as well as the out-of-park segment, we have achieved reimbursement in the UK, we have the reimbursement in Germany and we're continuing to look for reimbursement and expand reimbursement in other markets that we've launched, we have some reimbursement in the UAE in Saudi as well and type two diabetes and we continue to expand on that in the markets that we will enter but a lot of that momentum is covering both the type two and chronically manager market and both in the reimbursed and out-of-pocket segment and we're seeing both the progress in share as well as market expansion in the markets that we've been in.

Ilya Yuffa: Sure. Well, of course, I think the momentum overall is progressing quite nicely in both the reimbursed, as well as the out-of-pocket segments. We have achieved reimbursement in the U.K. We have reimbursement in Germany, and we're continuing to look for reimbursement and expand reimbursement in other markets that we've launched. We have some reimbursement in UAE in Saudi as well in type 2 diabetes. And we continue to expand on that in the markets that we will enter. But a lot of that momentum is covering both the Type 2 and chronically management market and both in the reimbursed and out-of-pocket segment, and we're seeing both the progress in share as well as market expansion in the markets that we've been in.

Operator: But a lot of that momentum is covering both the type 2 and chronic leap management market, and both in the reimbursed and out-of-pocket segment. And we're seeing progress in share as well as market expansion in the markets that we've been in.

Operator: Thanks, Ilya. Paul, I know we have a lot in the queue. Maybe we'll just have two more questions and then wrap things up. Sure. The next question is coming from Steve Scala from TD Account. Steve, your line is open. Oh, thank you so much. The FDA definition of shortage seems clear, and trazepatide no longer meeting the definition of shortage seems to imply Lilly is meeting the

Joe Fletcher: Thanks, Ilya. Paul, I know we have a lot in the queue. Maybe we just have two more questions and then wrap things up.

Sure. The next question is coming from Steve Scala from TD Account. Steve, your line is open. Oh, thank you so much. The FDA definition of shortage seems clear, and trazepatide no longer meeting the definition of shortage seems to imply Lilly is meeting the

Operator: Certainly. The next question is coming from Steve Scala from TD Cowen. Steve, your line is live.

Steve Scala: Thank you so much. The FDA definition of shortage seems clear and tirzepatide no longer meeting the definition of shortage seems to imply Lilly is meeting demand. I assume you will say that that's not the case, but the definition at least in black and white is quite clear. I assume this is FDA's determination. So, does Lilly agree with FDA's conclusion? How is demand being met--how is demand being measured? And what does demand look like? Thank you.

Operator: Certainly. The next question is coming from Steve Scala from TD Account. Steve, your line is live.

Operator: Yeah, thanks for the important question. And, you know, as we think about the compounding question, it is important as well.

David A. Ricks: Yes. Thanks for the important question. As we think about the compounding question is important as well. As we've said earlier, we're available in all dosage forms in the U.S. What that means is, as you know, we can fill orders as they receive versus what we're doing. That does not mean that any pharmacy, or certainly every pharmacy, has all 12 dosage forms sitting on their shelf. That's infeasible economically probably for a lot of them and even logistically. So, I think we'll continue to see, because there's not an abundance of supply, it's more of a real-time fulfillment situation, patients going to pharmacy counters and being told to wait a few days while their orders filled. But product is flowing and it's flowing at a pretty high rate. We're shipping part of it, and you can see that in these results from the quarter. So, files will add to that picture, but demand will increase as well. So, I think we're doing well given the situation. But the end pharmacy experience will continue to be choppy. We point that out to the FDA. So that means people may call and say, I couldn't get what I wanted, on the moment I wanted it, at the pharmacy I choose to. That's not the definition that we think applies here. So, we'll continue to--we'll be channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Dave Ricks: We, as we've said earlier, are available in all dosage forms in the US. What that means is that we can fill orders as they're received, which is what we're doing. That does not mean that any pharmacy, or certainly every pharmacy, has all 12 dosage forms sitting on their shelf. That's infeasible economically, probably for a lot of them, and even logistically.

Operator: We, as we've said earlier, are available in all dosage forms in the US. What that means is that we can fill orders as they're received, which is what we're doing. That does not mean that any pharmacy, or certainly every pharmacy, has all 12 dosage forms sitting on their shelf. That's infeasible economically, probably for a lot of them, and even logistically. So I think we'll continue to see, because there's not an abundance of supply, it's more of a real-time fulfillment situation, with patients going to pharmacy counters and being told to wait a few days while their order's filled. But product is flowing, and it's flowing at a pretty high rate, shipping quite a bit. And you can see that in these results from the quarter. So files will add to that picture, but demand will increase as well. So I think we're doing well given the situation, but the end pharmacy experience will continue to be choppy. We point that out to the FDA, so that means people may call and say, I couldn't get what I wanted at the moment. I wanted it at the pharmacy I choose to go to. That's not the definition that we think applies here. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Dave Ricks: So I think we'll continue to see because there's not an abundance of supply; it's more of a real-time fulfillment situation, patients going to pharmacy counters and being told the way a few days while their orders failed, but product is flowing, and it's going to get a pretty high rate in a word, shipping quite a bit. And you can see that in these results from the quarter. So files will add to that picture, but demand will increase as well.

Operator: So I think we'll continue to see, because there's not an abundance of supply, it's more of a real-time fulfillment situation, with patients going to pharmacy counters and being told to wait a few days while their order's filled. But product is flowing, and it's flowing at a pretty high rate, shipping quite a bit. And you can see that in these results from the quarter. So files will add to that picture, but demand will increase as well. So I think we're doing well given the situation, but the end pharmacy experience will continue to be choppy. We point that out to the FDA, so that means people may call and say, I couldn't get what I wanted at the moment. I wanted it at the pharmacy I choose to go to. That's not the definition that we think applies here. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Dave Ricks: So I think we're doing well given the situation, but the end pharmacy experience will continue to be choppy. As we pointed out to the FDA, that means people may call and say they couldn't get what they wanted at the moment they wanted it at the pharmacy they chose. That's not the definition that we think applies here. So we'll continue to work with channel partners in the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs. Thanks. Paul, the last question and the last question today will be from Lewis Chen.

Operator: So I think we're doing well given the situation, but the end pharmacy experience will continue to be choppy. We point that out to the FDA, so that means people may call and say, I couldn't get what I wanted at the moment. I wanted it at the pharmacy I choose to go to. That's not the definition that we think applies here. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

David A. Ricks: So that means people may call and say, I couldn't get what I wanted, on the moment I wanted it, at the pharmacy I choose to. That's not the definition that we think applies here. So, we'll continue to--we'll be channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Operator: That's not the definition that we think applies here. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs. Thanks. Paul. Last question, and the last question today, will be from Lewis Chen.

That's not the definition that we think applies here. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Thanks. Paul. Last question, and the last question today, will be from Lewis Chen.

Joe Fletcher: Thanks. Paul, last question,

Operator: Last question today will be from Louise Chen from Cantor. Louise, your line is live.

Operator: Thanks. Paul, last question. And the last question today will be from Lewis Chen from Camtasia. It's your line of life.

Louise Chen: Hi. Thank you for taking my question. I wanted to ask you how excited you are about this muscle preserving obesity drugs, and if you see that as a true unmet need? Thank you.

Operator: Thanks. Dan, anything to add on? Yeah, no, thanks for the question, Lisa. I think it's an interesting area of science, for sure. It is too early to know exactly how these kinds of mechanisms will translate into benefits for patients. At a high level, we know that the ratio of lean mass to fat mass is really important in determining metabolic health, probably more important as an indicator of overall metabolic health than, for example, BMI. And so that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss.

Operator: Thanks. Dan, anything to add on? Yeah, no. Thanks for the question, Lisa.

Joe Fletcher: Thanks. Dan, anything to add on?

Daniel M. Skovronsky: Yes. No, thanks for the question, Lisa. I think it's an interesting area of science for sure. Too soon to know exactly how these kinds of mechanisms will translate into benefits for patients. At a high level, we know that the ratio of lean mass to fat mass is really important in determining metabolic health, probably more important as an indicator of overall metabolic health than, for example, BMI. And so, that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss and we'll wait to see data from our own donanemab and wait to see how that translates into health benefits for patients.

Operator: I think it's an interesting area of science, for sure, but too soon to know exactly how these kinds of mechanisms will translate into benefits for patients. At a high level, we know that the ratio of lean mass to fat mass is really important in determining metabolic health, probably more important as an indicator of overall metabolic health than, for example, BMI. And so that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss. We'll wait to see data from our own macromap and wait to see how that translates into health benefits for patients.

Operator: And so that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss. We'll wait to see data from our own macromap and wait to see how that translates into health benefits for patients. Great. So I think we'll wrap it up. Dave, my closing remarks. Great. Thanks, Joe. And thanks to the team here. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Company. Please follow up with the Investor Relations team if you have any questions we didn't address, and it sounds like there's a few that are holding. I'm happy to answer all of those questions. Have a great day, everyone!

And so that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss. We'll wait to see data from our own macromap and wait to see how that translates into health benefits for patients.

Dan Skovronsky: We'll wait to see data from our own macromap and wait to see how that translates into health benefits for patients. Great, so I think we'll wrap up Dave's closing remarks. Great, thank you, and thanks to the team here. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Co. Please follow up with the Investor Relations team if you have any questions we didn't address, and it sounds like there's a few that are holding. I'm happy to answer all of those. Have a great day, everyone!

Great. So I think we'll wrap it up. Dave, my closing remarks. Great. Thanks, Joe. And thanks to the team here. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Company. Please follow up with the Investor Relations team if you have any questions we didn't address, and it sounds like there's a few that are holding. I'm happy to answer all of those questions. Have a great day, everyone!

Joe Fletcher: Great. So I think we'll wrap it up. Dave, closing remarks?

David A. Ricks: Great. Thanks, Joe, and thanks to the team here. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Company. Please follow up with the Investor Relations team if you have any questions we didn't address, and it sounds like there's a few that are holding. Happy to answer all of those. Have a great day, everyone.

Thank you, and ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1pm today and running through September 12 at midnight. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 297-484. International callers can call 973-528005. Again, those numbers are 800-332-6854 and 973-528005, with the access code 297-484. Thank you for your participation; you may now disconnect your lines.

Operator: Thank you. And ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1:00 PM. today running through September 12 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 297484. International dollars can call (973) 528-0005. Again, those numbers are: (800) 332-6854 and (973) 528-0005 with the access code 297484. Thank you for your participation. You may now disconnect your lines.

Kerry Holford: Lovely, thank you for taking my question; hopefully, you can hand me the pass over this time round. Much better.

Dan Skovronsky: We plan to reflect the oral Alpha 4 Beta 7, Integrant and Hibiter, Morpho 5 7, in phase 2 for ulcerative colitis and crumes. Finally, in neuroscience, our anti-tau small molecule OGA inhibitor recently concluded its phase 2 study in early symptomatic Alzheimer's disease. Olga failed to meet the primary endpoint of decreasing the change from baseline, as measured by address, in either of the two dose levels. We're reviewing the data for presentation and details of the results of the study at the clinical trials and Alzheimer's disease conference later this year. While this negative outcome is disappointing, we remain committed to town as a high conviction target in Alzheimer's disease and plan to continue studying town. And I'll turn the call back to Dave for closing remarks.

Dan Skovronsky: We're really excited about the opportunity to help patients suffering from mash. I think the data that we shared in phase two for just appetite are really quite profound in terms of the size of the effect we can have. There are a couple of issues in mastery development that we're trying to tackle, probably the most significant of which is the current standard of liver biopsy to identify the patient's syndrome role in these trials and also to measure the outcome. Liver biopsy is obviously an invasive procedure, and it's difficult to find patients to consent to these trials.

Gordon Brooks: We have submitted totaled high teens to mid-20s as a percent of U.S. sales, as we rebuild our infantry from extremely low levels in the spring and to account for the growth of these brands. We're pleased that the improved supply situation is reflected on the FDA shortage website, which currently shows all doses of Majora and Zepound as available, as well as the two lower doses of Tula City. White Horses at the back of Austin, U.S. have been reduced substantially, it's important to note that the pharmaceutical supply chain is complete. More so for medicines that require refrigeration and offer several different doses. These factors may continue to result in variability in the patient experience at the pharmacy counter.

Operator: with you soon. Please hold the line, and we'll be right back with you.

The line will be right back with you.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q2 2024 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.

Thanks, Paul and good morning, everyone. Thanks for joining us for Eli Lilly and company's Q2 2024 earnings 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, Dr. <unk>, <unk>, Chief Scientific officer, and President of Lilly Immunology, Gordon Brooks interim financial Chief Financial Officer.

And white President of Lilly neuroscience.

<unk> President of <unk> International Jake Vanorden, President of Lilly oncology, and Patrik Jonsson, President of Lilly Cardio metabolic health and Lula USA and we're also joined by Mikael Irons, Mike Spring, another and Lorne therapy of the IR team. During this conference call, we anticipate making projections and forward looking statements based on our current expectations our actual results could.

Differ materially due to several factors, including those listed on slide for additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K, and subsequent filings with the SEC.

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.

Thanks, Joe.

Dave Ricks: It's an exciting time here at Lilly as our growth trajectory accelerated in the second quarter. Our investments in advancing innovative medicines and our focus on manufacturing expansion are bringing Lilly medicines to more people around the world, and the positive top-line results from the SUMMIT Phase III trial evaluating trizepatite in adults with heart failure. Preserved Injection Fraction, Andrew B., and we are pursuing opportunities against every rational mechanism, indication

It's an exciting time here at Lilly as our growth trajectory accelerated in the second quarter.

Our investments in advancing innovative medicines and our focus on manufacturing expansion are bringing Lilly medicines to more people around the world.

On slide five you can see details of the financial performance in the second quarter and progress related to our strategic deliverables.

Revenue grew 36% in Q2 with our new products growing nearly three 5 billion compared to the same period last year.

U S demand for my Gyro and ZIP out is strong and growing as access and supply continues to expand.

Well weekly prescription volume was up was volatile in the first half of the year due to challenges fulfilling high demand our progress on supply gives us confidence in our outlook.

Q2 saw impressive performance across other areas of the business as well.

<unk> the sale of the rights to vaccine.

Last year non anchor 10 growth was 17% worldwide with growth spread across geographies, including 25% growth in the United States.

And our $3 billion increase in revenue guidance reflects our expectation that momentum will accelerate through the balance of the year.

We achieved several key pipeline milestones, including the approval of <unk> is somewhat the brand name for <unk> in the U S for the treatment of Alzheimer's disease, the approval of <unk> in Japan for people with relapsed or refractory mantle cell lymphoma, who are resistant or intolerant to other PTK inhibitors.

Submission of <unk> appetite in the U S and the EU for the treatment of moderate to severe obstructive sleep apnea in adults with obesity.

And the positive topline results from the summit phase III trial evaluating <unk> appetite in adults with heart failure with preserved ejection fraction and obesity.

Let me now has a significant opportunity to create new medicines through a broad internal portfolio.

Active business development to support our long term growth.

Obesity, our strategy is to comprehensively address this global public health crisis pursuing opportunities against every rational mechanism indication and dosage form.

We are investing broadly in this disease.

Daniel Skovronsky: I now have 11 new molecules currently in the clinic across multiple indications. We have initiated a broad phase three development program studying the molecule in obesity, OSA, osteoarthritis, cardiovascular, and renal outcomes. In May, we announced plans to invest an additional $5.3 billion in our Lebanon, Indiana manufacturing site. More importantly, this expansion will enhance capacity to manufacture active pharmaceutical ingredients for ZeppFound and Moncharo. We are making near-term progress to ramp production, including at new sites like Research Triangle Park, existing Lilly sites, and a contract manufacturing organization.

And now have 11, new molecules currently in the clinic across multiple indications.

We're also investing in a wide range of late stage phase III programs. We recently shared the positive data of Giuseppettite OSA and hostile.

Further proud our oral GOP, one small molecule has a comprehensive phase III program underway in diabetes and obesity with nine trials currently running and Readouts starting mid next year.

With retention side, our GIC GOP, one glucagon Tri agonist, we have initiated a broad phase III development program studying <unk> molecule and obesity, OSA osteoarthritis, cardiovascular and renal outcomes as well as type two diabetes. These readouts start in 2026.

A temporary already remains executing on our ambitious manufacturing expansion agenda.

In May we announced plans to invest an additional $5 3 billion and our Lebanon, Indiana manufacturing site.

Bringing our total investment there to $9 billion.

We believe this is the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in the history of the United States.

Importantly, this expansion will enhanced capacity to manufacture active pharmaceutical ingredients for stepped down in much of Europe.

Since 2020, we are committed more than $18 billion to build upgrade or acquired facilities in the U S and Europe and we've begun to see the benefit of these investments.

We are making near term progress to ramp production, including a new sites like research triangle park existing really sites and a contract manufacturing organizations.

Daniel Skovronsky: Our Concord, NC, site is progressing well. We're in the process of running validation, and expect this facility will initiate production by the end of 2024, with product available to ship in 2025. We also continue to make progress on different presentations for Trisepatide. We've now launched our multi-dose Quick Pen in multiple markets outside the U.S., and there are positive early indicators of patient adoption. In other leadership news, Alonzo Wiens, our Executive Vice President of Enterprise Risk Management and our Chief Ethics and Compliance Officer, will retire at the end of the year after 27 years of service, and Melissa Seymour has joined the company as Executive Vice President of Global Quality. Now, I will turn the call over to Gordon to review our Q2 financial results.

Our Concord, North Carolina site is progressing well we're in the process of running validation and expect this facility will initiate production by the end of 2024 with product available to ship in 2025.

We also continue to make progress on different presentations purchase appetite. We've now launched our multi dose quick pattern in multiple markets outside the U S with positive early indicators of patient adoption.

And Gordon's remarks, he will preview our plans to launch vials here in the U S.

Lastly in terms of external innovation in July we announced the definitive agreement to acquire Morphic, a biopharma company developing oral <unk> therapies for treatment of serious chronic diseases, including a phase two asset being evaluated in inflammatory bowel disease.

On slide six you'll see a list of key events since our Q1 call, including the milestones I mentioned earlier and several other important updates.

As we announced in June an artist can Aussie resigned as the least chief financial officer to become the CFO of alphabet, we wish her well in her new role and thank her for her partnership and leadership of our financial organization over the last three years.

We have named Gordon Brooks interim CFO as an internal and external search for <unk> successor is currently underway Gordon has been with the company for 29 years and also serves as our controller and the leader of the corporate strategy group for the company.

In other leadership news Alonzo <unk>, our executive Vice President of Enterprise risk management, and our Chief Ethics, and compliance officer will retire at the end of the year after 27 years of service.

And Melissa <unk> has joined the company as executive Vice President of global quality.

And a member of the company's Executive Committee, following John and Oregon's recent retirement.

I want to thank Alonso for his many years of service and welcome Melissa to the Lilly team now let me turn the call over to Gordon to review, our Q2 financial results.

Thanks, Dave Simon.

So I'm on slide seven which summarizes the financial performance in the second quarter of 2024.

Second quarter revenue growth of 36% was primarily driven by majority Zip bond as well as with any other.

And excluding revenue from the sale of rights to <unk> in Q2 of last year revenue grew 46%.

Anat Ashkenazi: Gross margins and percent of revenue increased from 79.8% in Q2 of 23 to 82% in Q2 of 24. Gross margin in the quarter benefited from favorable product mix and higher realized prices, partially offset by higher production costs. R&D expenses increased 15% driven by continued investment in our portfolio and in our people. The effective tax rate on a non-GAAP basis was 16.5% in Q2 of 24 compared with 16.1% in Q2 of 23.

Gross margin the substantive revenue increased from 79, 8% in Q2 of 'twenty three to.

82% in Q2 of 'twenty four.

Gross margin in the quarter benefited from favorable product mix and higher realized prices, partially offset by higher production costs.

R&D expenses increased 15% driven by continued investment in our portfolio and in our people.

Marketing selling and administrative expenses increased 10%, primarily driven by promotional efforts associated with ongoing and future launches as well as investments in our people.

Operating income increased 19% in Q2, driven by higher revenue from new products, partially offset by operating expense growth.

The effective tax rate on a non-GAAP basis was 16, 5% in Q2 of <unk> 24, compared with $16, 1% in Q2 of 'twenty three.

The Q2 2004 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2 2003 rates reflected the impact of earnings from the sale of <unk>.

At the bottom line, we delivered earnings per share of $3 92 in Q2, and 86% increase compared to the prior year.

Q2, 24 results include the negative impact of <unk> 14 cents from acquired IP R&D charges.

Eight to nine in the prior quarter Q2 of 'twenty three.

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

Patrik Jonsson: U.S. revenue increased 42% in Q2. Volume growth of 27% was driven by Zepan, Menjara, and Visenio, partially offset by the sale of rights for Maximi in Q2 of 23, and declines in Chilisa. Realized prices increased 15%, largely driven by Manjaro access and savings card dynamics. As noted in our Q1 2024 earnings call, unprecedented demand for our infant medicines led to wholesaler backorders at the end of Q1, as we rebuild our infantry from extremely low levels in the spring and to account for the growth of these brands, which currently shows all doses of Menjara and Zepfound listed as available, and the two lower doses of Trulicity listed as available. While wholesaler back orders in the U.S. have been reduced substantially More so for medicines that require refrigeration and offer several different doses.

Okay.

U S revenue increased 42% in Q2 volume growth of 27% was driven by ZIP bond majority of azania, partially offset by the sale of <unk> in Q2 of 'twenty three and declined Centricity.

Realized prices increased 15% largely driven by <unk> and savings cost dynamics.

As noted in our Q4 Q1, 'twenty 'twenty four earnings call unprecedented demand for our inkjet medicines led to wholesale of back orders at the end of Q1.

In Q2, we propose the majority of these back orders improving wholesaler stocking levels.

We estimate that U S majority zip on aggregate sales in the second quarter were positively impacted by channel stocking that we estimate total high teens to mid <unk> as a percent of U S sales.

We have rebuilt inventory from extremely low levels in the spring and to account for the growth of these brands.

We are pleased that the improved supply situation is reflected on the FDA shortage websites.

Which currently shows all doses of <unk>.

It is available and the two lower doses of <unk> available.

While wholesale it that goes in the U S have been reduced substantially.

Important to note that the pharmaceutical supply chain is complex.

Most of it for medicines that require refrigeration and offer several different doses.

These factors May continue to result in variability in the patient experience at the pharma at the pharmacy counter.

While supply and demand is coming to better balance we expect increases in demand may result in periodic supply tightness.

And presentations and dose levels.

Ilya Yuffa: We have a continued broad agenda to further increase supply, and we'll continue to look at all options. Today, we are excited to announce plans to further expand access to ZepBound with the launch of the 2.5mg and 5mg single-dose vials in the coming weeks, with more details to come at that time. In Europe, revenue grew 20% in constant currency, primarily driven by Majora launch uptake in the UK and Germany. Japan's performance was strong in the second quarter with 15% revenue growth in constant currency.

We have a continued broad agenda to further increase supply and we will continue to look at all options.

Today, we are excited to announce plans to further expand access was that bond with the launch of the two five milligram and five milligram single dose vials in the coming weeks with more details to come at that time.

In Europe revenue grew 20% in constant currency, primarily driven by Majora launch uptake in the UK and Germany.

We also had strong volume growth from <unk> any other audience, which was partially offset by decreased volume from Tennessee.

Ben Japan performance was strong in the second quarter with 15% revenue growth in constant currency.

Volume growth of 21% was driven by uptake of <unk> and <unk>.

Ilya Yuffa: Moving to China, Q2 revenue increased 1% in constant currency. Growth was driven by Tyverts, Alumiate, and Tults, partially offset by Trilicity and Cialis. We have not yet announced expected launch timing in this market. There was solid growth in the second quarter across major geographies with worldwide sales increasing 44 percent. Manjaro sales in Q2 were $3.1 billion globally, with $2.4 billion in the US. In the first half of the year, U.S. electricity revenue decreased 36% driven by lower volume, primarily due to competitive dynamics and supply constraints, partially offset by improved wholesaler stocking levels on certain doses.

Moving to China, Q2 revenue increased 1% in constant currency.

Growth was driven by <unk> illuminates adults, partially offset by choice at the NCI.

<unk> was recently approved in China for type two diabetes and chronic weight management.

We have not yet announced expected launch timing in this market.

Revenue in rest of world increased 61% in constant currency, primarily driven by majority of volume growth from demand and channel dynamics.

Slide 10 provides additional perspective on performance across our product categories.

This solid growth in the second quarter across major geographies with worldwide sales, increasing 44% driven by the early breast cancer indication.

Jay Poker revenue increased to $92 million worldwide, which included a $19 million partner milestone payment related to Japan.

Despite the continued impressive quarter over quarter growth building on the brand's uptake from both the mcl and <unk> patient populations.

Although it was launched in the U S and 14 international markets with sales of $26 million in Q2.

These launches continue to progress well with increasing patient starts.

And in the U S. We expect sales to accelerate as the product specific J code went live on July the first.

<unk> sales in Q2 with $3 $1 billion globally with $2 $4 billion in the U S.

Revenue growth in the U S reflected continued strong demand as well as the improved channel dynamics discussed earlier.

We're seeing solid uptake of majority outside the U S with sales in Q2 totaling $677 million.

In the first half of the year, we launched the quick <unk> presentation in the UK, Germany and the UAE.

So far in Q3, we have also launched Majora quick pay in Spain, and plans to launch in additional markets throughout 2024.

In Q2 worldwide Felicity revenue declined 31% U.

<unk> revenue decreased 36% driven by lower volume, primarily due to competitive dynamics and supply constraints.

The offset by improved wholesaler stocking levels on certain doses.

Turning to slide 11, we have an update on the U S launch of that bond.

Michael Mason: We've seen exceptional growth trends for Z-Bond that have accelerated as production has ramped up, leading to sales of over $1.2 billion in Q2. We're rapidly building up formulary coverage for SEC bound in the US, and as of July the 1st, we had approximately 86% access in the commercial segment. Based on the midpoint of the range, our updated guidance implies revenue growth of 38% in the second half of the year, following 31% in the first half. We've increased our estimated effective tax rate to be approximately 15%, driven by changes in our forecasted mix of earnings in higher tax jurisdictions.

We have seen exceptional growth trends for <unk> band that have accelerated as production has ramped leading to sales of over $1 2 billion in Q2.

We are rapidly building out formulary coverage was that bond in the U S and as of July the first had approximately 86% excess in the commercial segment.

We estimate that about 50% of employers have opted in to MTBC medicine coverage and see that modestly growing as we look to expand coverage.

On slide 12, we provide an update on our capital allocation.

Slide 13 shows our updated 2024 financial guidance.

We are raising our full year revenue outlook by $3 billion to be between $45 $4 billion and $46 6 billion.

This increase was due to strong performance across our non existent medicines as well as majority Zip bond.

Additionally, we've improved clarity into the timing and phasing of our production expansion and major launches outside the U S.

We achieved a number of supply related milestones in Q2 and have increased confidence regarding our expectation that production of salable doses of inkjet medicines in the second half of 2024 will be at least one and I'll hop times decidable doses in the second half of 2023.

Okay.

Based on limited midpoint of the range, our updated guidance implies revenue growth of 38% in the second half of the year.

31% in the first half.

In the second half of the year, we expect a more significant growth in Q4 compared to Q3.

Given the update the revenue guidance, we now expect the ratio of gross margin opex divided by revenue to be in the range of 36% to 38% on a reported basis and 37% to 39% on a non-GAAP basis.

Other income and expense, we now expect between $525 million and $425 million of expense on a reported basis.

Between 400 billion and $300 million of <unk>.

On a non-GAAP basis.

Both ranges reflect lower expected net interest expense and the reported range reflects net losses on investments in equity securities through Q2 of 'twenty four.

We have increased our estimated effective tax rate to be approximately 15% driven by changes in our forecast it makes up earnings in higher tax jurisdictions.

Earnings per share is now expected to be in the range of $15 10 to $15 60 on a reported basis and $16 <unk> to $16 60 on a non-GAAP basis.

Both ranges reflect the updates mentioned earlier as well as acquired IP R&D charges through Q2 of 2004.

The reported range includes a charge in Q2 of 'twenty four associated with anticipated litigation payments.

Now I will turn the call over to Dan to highlight our progress on R&D. Thanks, Gordon it's been another busy quarter.

Start with comments on the <unk> FDA approval, then that there's appetite heart failure phase three readout and finally I'll cover the rest of the updates for the quarter.

We are of course very excited about the FDA approval, because some off the treatment of Alzheimer's disease.

This followed the June Advisory Committee meeting, where we had another chance to present and discuss the compelling data package characterizing the safety and efficacy of this medicine.

We were pleased by the discussion of the FDA advisors, particularly with regard to our data supporting stopping of consumer therapy with amyloid plaques are removed to minimal levels.

In our trial nearly half of study participants completed their course of treatment Lucas online 12 months.

We believe limited duration therapy, along with a once monthly infusion schedule could result in lower patient out of pocket treatment costs and fewer infusions required.

The vote was unanimously positive on all questions presented in a few weeks later, the FDA approved <unk>, including labeling that physicians may consider stopping dosing based.

Based on reduction of amyloid plaques.

Daniel Skovronsky: Following the July approval, we launched Kusunla, and we're delighted to see that patients have already begun receiving this new Lilly medicine as part of clinical practice. In the second primary endpoint, terzaphatide significantly improved heart failure symptoms and physical limitations compared to placebo, as measured by the Kansas City Cardiomyopathy Questionnaire, KCCQ, Clinical Summaries. In other updates across our portfolio, slide 15 shows select pipeline opportunities as of August 6 Slide 16 shows potential key events for the year, and we presented results at the American Diabetes Association meeting.

Following the July approval, we launched <unk> and we are delighted to see that patients have already begun receiving this new Lilly medicine as part of clinical practice.

We note that <unk> broadly covered for Medicare patients through approved CBD registries.

Regulatory reviews continue around the world with potential action, yet this year and several countries.

We're pleased to have recently received a positive opinion for <unk> from the pharmaceuticals and medical devices agency in Japan.

Finally, our phase III prevention study Trailblazer <unk> III continues to progress as planned.

Moving to <unk> appetite on slide 14, you'll see the recent positive results of our summit phase III trial, which evaluated <unk> appetite for the treatment of heart failure with preserved ejection fraction and obesity.

This study demonstrated statistically significant improvements in both primary endpoints for <unk> appetite Mexican tolerated dose compared to placebo.

In the first primary endpoint tours appetite reduce the risk of worsening heart failure by 38% compared to placebo as measured by a composite outcome of heart failure urgent visit or hospitalization oral diuretic intensification or cardiovascular death.

The median follow up for this endpoint was 104 weeks.

In the second primary endpoint, there's appetite significantly improved heart failure symptoms and physical limitations compared to placebo as measured by the Kansas City Cardiomyopathy questionnaire Casey CQ clinical summary score mean changes from baseline in this measurement 24 eight points for tours appetite, while placebo was 15 points.

Based on the efficacy estimate of 52 weeks.

All key secondary endpoints were met in the study, including mean body weight reduction of 15, 7% compared to two 2% for placebo.

The overall safety profile of <unk> appetite in the summit trial was consistent with previously reported Giuseppettite studies, including surmount and surpass.

We will present detailed results at an upcoming medical meeting.

Bit to appear in future, we plan to submit results to the FDA and other regulatory agencies. Starting later this year.

In other updates across our portfolio slide 15 shows select pipeline opportunities as of August six and slide 16 shows potential key events for the year.

I'll start with updates in cardio metabolic health, which is the new name of our internal business, formerly known as Lilly diabetes and obesity.

In June we published detailed results for our phase III trials of <unk> appetite for the treatment of moderate to severe obstructive sleep apnea Adobe city in the New England Journal of Medicine.

And we presented results at the American Diabetes Association meeting.

All primary and key secondary endpoints were achieved in these studies.

Notably in one of our key secondary endpoints as shown on slide 17, there is appetite demonstrated that up to 51, 5% of participants met the criteria for disease resolution of sleep apnea.

We've now submitted to his appetite for the treatment of moderate to severe obstructive sleep apnea and obesity to the FDA as well.

Daniel Skovronsky: We are pleased that the FDA has granted breakthrough therapy designation, and we expect U.S. regulatory action as early as the end of 2024, which would be dependent on the FDA granting priority review. Also in June, we published results in the New England Journal from our Phase 2 trial of terzapotite for metabolic dysfunction associated steatohepatitis or MASH with stage 2 or 3 fibrosis.

We are pleased that the FDA has granted breakthrough therapy designation and we expect U S regulatory action as early as the end of 2024, which will be dependent on the FDA granted priority review.

Also in June we published results from the New England Journal from our Phase II trial of tours appetite for metabolic dysfunction associated Seattle, hepatitis or Nash with stage, two or three fibrosis and we presented these results at the European Association for the study of the liver.

We were pleased to show that in a secondary endpoint more than half of the patients taking <unk> appetite achieved improvement in fibrosis at 52 weeks as shown on slide 18.

Daniel Skovronsky: We're engaged with regulatory authorities on a potential Phase 3 registration strategy, and we're also encouraged by the potential read-through of these results to read a True Tide, which also showed significant improvements in liver fat in Phase 2. This quarter, we also announced top-line data from two phase three trials for our once-weekly insulin called f-suturin-alpha. Quint, too, compared Epsitora to once-daily insulin Degladec for 52 weeks in insulin-naive adults.

We're engaged with regulatory authorities on a potential phase III registration strategy and we're also encouraged by the potential read through these results to <unk>, which also showed significant improvements in liver fat in phase II.

This quarter, we also announced topline data from two phase III trials for once weekly insulin called <unk> Alpha between two and four trials for the treatment of type two diabetes each met their primary endpoints of non inferior <unk> reduction.

To compare to <unk> once daily insulin <unk> for 52 weeks in insulin naive adults quick four compared to <unk> instant Garching for 26 weeks and adult previously treated with daily basal insulin and at least two injections per day at meal time insulin.

And both Quinn to quit for <unk> was safe and well tolerated.

Daniel Skovronsky: Detailed trial results will be presented in September at the European Association for the Study of Diabetes Annual Meeting. We look forward to sharing additional data from the Quinn program later, progressing our Glucose Sensing Insulin Receptor Agonist Molecule in Phase 1 and investing in approaches aimed at disease modification for Type 1 diabetes, such as islet cell therapy. GLP1 and PA2 is a small molecule non-peptide agonist of the GLP1 receptor designed for once-daily oral administration.

Detailed trial results, we presented in September at the European Association for the study of diabetes annual meeting.

We look forward to sharing additional data for the <unk> program later this year.

We're pleased with our progress to provide breakthrough innovation to patients who require insulin.

Progressing our glucose sensing insulin receptor agonist molecule in phase, one and investing in approaches aimed at disease modification for type one diabetes, such as islands out there.

Another late phase updates, we've initiated trials outcome, the phase III trial, evaluating cardiovascular outcomes and renal function for patients taking <unk>.

Earlier in our cardio metabolic pipeline youll see additional acreage and molecules in phase one.

<unk> are an important part of our portfolio strategy and having multiple molecules in clinical development offers as potential optionality as we look at opportunities to help patients across mechanisms indications dosages formulations and treatment schedules.

To highlight a few.

Good one NPA too is a small molecule non peptide agonist of the clip one receptor designed for once daily oral administration, we expect this asset to move to phase two later this year.

So we now identify it on our pipeline slide.

It had previously been listed is not disclosed.

Given the diversity of indications to potentially pursue with anchor tenants. We are excited about the possibility of having another oral option.

Help more patients with different diseases.

We also highlight today give quick one co agonist three.

Which is a next generation dual agonist molecule and we are planning to explore weekly and monthly dosing.

Given its longer half life.

Elsewhere in our cardio metabolic health portfolio, we have stopped development of NRG four agonist as a profile with insufficient for further clinical development.

Turning to oncology, we were pleased that <unk> has now been approved in Japan for people with relapsed or refractory mantle cell lymphoma, who are resistant or intolerant to other PTK inhibitors.

Daniel Skovronsky: In early phase oncology, we initiated the phase one trial for the second Nectin 4 ADC. This asset, which came from our acquisition of Mablink, is a next-generation construct designed to have efficacy at all full receptor expression levels and with an improved therapeutic index relative to existing agents. We're also announcing that we've terminated the LOXO783 program, which targeted PI3 kinase alpha. In immunology, we've now submitted mirakizumab for the treatment of moderately to severely active Crohn's disease in Japan.

In early phase oncology, we've initiated the phase one trial for a second <unk> for EDC.

We view this as an important target and having two compounds in the clinic provides more opportunities to improve outcomes for patients.

We've also initiated a phase one trial for our <unk> ADC targeting the folate receptor this asset which came from our acquisition of <unk> is a next generation construct designed to have efficacy at all fully receptor expression levels and with an improved therapeutic index relative to existing agents.

We're also announcing that we've terminated the locks are 73 program, which targeted Pi three kinase alpha.

We evaluated the ongoing clinical data for the program and compared the molecule to next generation candidates that we have progressed from our discovery efforts. We believe our next molecule is a greater potential to benefit patients. We look forward to putting our next candidate into the clinic in 2025 and sharing more about its profile later this year.

Immunology, we've now submitted <unk> for the treatment of moderately to severely active crohns disease in Japan.

We've terminated development for our gitter agonist antagonist due to insufficient efficacy.

We also announced our acquisition of Morphic and pending completion of the deal we plan to reflect the oral alpha four beta seven integrin inhibitor morph over 507 in phase two for ulcerative colitis and Crohn's disease.

Finally in neuroscience, our anti Tau small molecule <unk> inhibitor recently concluded its phase II study in early symptomatic Alzheimer's disease.

Okay failed to meet the primary endpoint of decreasing the change from baseline as measured by address in either of the two dose levels tested.

Daniel Skovronsky: We're reviewing the data for presentation of the detailed results of the study at the Clinical Trials on Alzheimer's Disease conference later this year. While this negative outcome is disappointing, we remain committed to Tau as a high conviction target in Alzheimer's disease and plan to continue studying Tau bile. And I'll turn the call back to Dave for closing.

We're reviewing the data for presentation of detailed results of the study at the clinical trials on Alzheimer's disease Conference later this year while.

While this negative outcome was disappointing we remain committed to tap as a high conviction targeted Alzheimer's disease and plan to continue studying Tau biology.

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

Dave Ricks: Thanks, Dan. Before we go to Q&A, let me briefly sum up our progress in the second quarter. We are pleased with the rampant production in the first half of the year and expect continued expansion ahead. Significant advances in our pipeline include the approval of Kesunla for Alzheimer's, and we are investing in product launch.

Thanks, Dan before we go to Q&A, let me briefly sum up our progress in the second quarter.

Exceptional revenue growth in Q2 was driven by <unk> and presenting them.

We are pleased with the ramp in production in the first half of the year and expect continued expansion ahead.

Significant advances in our pipeline include the approval of <unk> for Alzheimer's disease, the submission of <unk> appetite for moderate to severe obstructive sleep apnea and obesity in the U S and Europe and positive results from the Phase III study of <unk> appetite for heart failure with preserved injection fraction and obesity.

We are investing in product launches.

The advancement of our pipeline as well as our ambitious manufacturing expansion agenda.

All of this and the incredible work of our teams around the world.

Lilly leadership confidence do we have a very bright future ahead.

And better opportunity than at any time in our house history to impact human health on a global scale.

Now I will turn the call over to Joe to moderate the Q&A session.

Operator: Thanks, Dave. We'd like to take questions from as many callers as possible and conclude our call in a timely manner. Consistent with prior quarters, we'll respond to one question per caller. So I ask that you limit yourself to one question per caller as we'll end the call at 11 a.m. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. So Paul, please provide the instructions for the Q&A, and we're ready for the first caller.

Thanks, Dave we'd like to take questions from as many callers as possible and conclude our call in a timely manner. So consistent with prior quarters. We will respond to one question per caller. So that you limit to one question per caller as we'll end the call at 11 a M.

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

Thank you at this time, we'll 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 anytime we also Africa, while posting your question you. Please pickup your handset of lifting on speaker phone to provide optimum sand quality. Please hold while we pull for questions.

And the first question today is coming from Seamus Fernandez from Guggenheim Seamus Your line of life.

Oh, great. Thanks, so much and just.

Sticking with my one question it really is on.

Your awareness of ASP movements in the market so the average selling price.

By our calculations when we sort of look at the.

Asps.

Average is removing rebates inventory et cetera.

Relative to comments made yesterday on <unk> call I'm, just trying to get a better understanding of what you're seeing in the market with regard to average selling price the prices look actually reasonably close to us with the <unk> appetite franchise, having higher.

Sort of Asps per script.

But not dramatically higher.

Given concerns of real pricing deterioration I.

I guess the only question that I have here is what are you seeing from an ASP perspective, and do you see this as kind of a natural evolution of this market as competition emerges as we saw with <unk> historically and <unk>.

In 2019, thanks, so much.

Thanks Seamus.

I think I will go to.

Patrick: Gordon, do you want to touch on that or Patrick? Sure, I'll hang up, and then Seamus, thanks for the question, yeah, so just on that.

Gordon do you want to touch on that Patrick.

Seamus Thanks for the question, yes, so just on the price strength initial favorability in the first half of the year was driven by a majority of that goes away in the second half of the year as the copay program lose side of the base period in.

In terms of pricing, we see stable pricing sequentially across quarters in 'twenty four.

Nothing unusual Q1 to Q2, and our guidance Q3, and Q4 continued stable sequential pricing.

For the second half of the year when you don't have the Majora dynamic.

In the second half will be similar to prior year pricing. So those are kind of the dynamics, we see in pricing.

Good.

Paul next question.

The next question will be from Terence Flynn from Morgan Stanley. Your line is live.

Caller: Great. Thanks for taking the question. Congratulations on all the progress on the manufacturing. Maybe just a two-part question for me on that one.

Great. Thanks for taking the question congrats on all the progress on the manufacturing maybe just a two part for me on that one just wondering if your initial guidance for the at least one five fold increase in Sellable doses.

Michael Mason: Just wondering if your initial guidance for the at least 1.5-fold increase in sellable doses includes the zep-bound starter vials that you're rolling out in the U.S. or if that's a potential driver of upside. And then as we think about RTP, I know you're continuing to make progress there. The script suggests you're at about a third of the way through the ramp to peak, but this inventory restock that you talked about today suggests maybe more of a meaningful step up. So just can you quantify for us where you are on the ramp in RTP? Thank you.

Include the Zap bound starter vials that you are rolling out in the U S or if thats a potential driver of upside and then as we think about <unk>. I know you are continue to make progress there. The script suggest you're at about a third of the way through the ramp to peak, but this inventory restock that you talked about today. So.

Just maybe more of a meaningful step ups. So just can you quantify for US where you are in the ramp in RTP. Thank you.

Yes sure.

Dave you want to hop in here I wanted to if I can just can add so I think what we're saying today is just reiterating the $1 five is sort of like a floor.

How we think about second half volume.

Michael Mason: I would say the vials are part of that, but given that we have about 20 weeks left in the year or so, there's a limit to how much of that will ship anyway, but they certainly open up a node of the most constrained part of the supply chain, which is spill finish and the final container closure, and it uses different lines, obviously, than syringes or cartridges, so it just adds to our Capacity, probably the most meaningful part of that will show up in early 25, to be honest, as that new form ramps and details on that rollout will be coming in the coming weeks. As it relates to RTP, I wouldn't read through that the Q2 step-up in volume we shipped was primarily due to RTP.

I would say the vials are part of that.

<unk>.

Given the.

Two weeks left in the year so.

There is a limit to how much of that will ship anyway, but they certainly open up a node of the most constrained part of the supply chain, which is still finishing the final container closure and he uses different.

Lines, obviously than syringes or cartridges. So it just adds to our capacity probably the most meaningful part of that will show up in early 'twenty five to be honest as that new form ramps in.

Details on that rollout will be coming in the coming weeks.

Michael Mason: That site is on track, and we are steadily increasing production for our goals. I also mentioned Concord is doing well against its time schedule, and we expect product out of that site at the end of this year and early next year. But rather, maybe performance out of the totality of the network that allowed us to recover wholesale inventory levels in Q2 and now come off the FDA shortage list; it's more just overall performance across many, many nodes of our supply network.

As it relates to RTP I don't I wouldn't read through the Q2 step up in volume. We ship was primarily due to RTP that site is on track and we are steadily escalating production per our goals. I also mentioned Concord is doing well against its time schedule and we expect product out of that site end of this year.

The next year, but rather maybe performance out of the totality of the network that allowed us to recover wholesaler inventory levels in Q2.

Now come off the FDA.

<unk> list.

It's more just overall performance across many many nodes.

Our supply network.

Operator: Thanks Dave. Paul next question. The next question will be from Chris Schott from J.P. Morgan. Chris, your line is, All right, great. Thanks so much for the question and congratulations on all the progress. There seems to be a broader debate on the role emerging at an earlier stage.

Thanks, Dave Paul next question the.

Our next question will be from Chris Schott from Jpmorgan, Chris Your line is live.

Alright, great. Thanks, so much for the question and congrats on all the progress it.

It seems to be a broader debate.

On the role emerging earlier stage competition in the obesity market could could play.

That fits in the market broadly.

Sure you're not surprised by the breadth of agents being developed in this space, but just finished in your latest views in terms of barriers to entry you see for some of these newer competitors and how you think about defending the lease market position over time. Thank you.

Maybe Dan you want to start on that and then.

I'll start with some R&D comments on <unk> century. The first I think is having a successful drug in phase three clinical trials and getting it approved you can see it.

Invested.

Third, let's say in our phase III portfolio is often pursuing multiple indications in multiple populations that type ones.

Just being able to get to that point I know investors have gotten excited about various releases of phase one data.

But it's still a challenging space to develop drugs.

We usually wait until we've seen pretty robust phase II data.

We get too excited about a particular molecule. So that's the first thing and I think a lot of the news that we've seen from different companies will probably sort out as we get to see phase II data, which molecules make it and which are the right profile and which don't track it wouldnt be expecting 100% success here.

Maybe a few on <unk>.

<unk> I think when we look at the marketplace.

Two very important barriers, we have been extremely successful in gaining access across the both mangano, where we are currently 93% access in commercial and eight to nine in part D and <unk> found 86% after seven months in the marketplace that's quite significant.

The amount of outcome indications, we are investing heavily in both the Mongolian set bound and similar in April the phase III assets of <unk> and <unk>.

<unk>. So I think overall, we think that we are extremely well positioned to compete.

And we're not surprised to receive at most of the firms are actually leaning into this very important space with the cost we have in our hands in the market today, the phase III assets and what we referred to in the in the prepared remarks, we are well positioned to compete today and tomorrow and that goes across both different indications.

Same for therapy et cetera, all hands on deck on our side.

One last thing.

But here we're highlighting are.

Daniel Skovronsky: Flying DAF-11 assets, all different targets. Maybe just a reminder, Chris, that we had our phase one MADD data for Drosopetide in 2016, to add to that sort of portfolio we have there. And finally, one more. So, you know, competitors will come, but there's a road ahead for all these that the two leading companies have already walked, in large part.

GAAP 11 assets all different targets, but.

Maybe just a reminder, Chris and we had our phase <unk> data for <unk> in 2016.

That was eight years ago.

And that's a massive lead I think over others.

<unk> agonists that are behind us.

On the oral side.

Can't get more in category differentiation based on target engagement safety profiles et cetera, but here again, we have the most advanced program and as Dan highlighted today a follow on program.

To add to that sort of portfolio, we have there and finally one other.

And if it's barrier certainly has work to do.

As scaling manufacturing the volume is really high in this category, probably will end up being one of the highest volume categories in the history of the industry.

And youre talking about making things on the 1 billion scale.

Which takes time and it's technically difficult and very capital.

Tensive App.

So.

Course competitors will come but.

There is a road ahead for all of these.

The two leading companies have already walked in large part.

Thank you all next question Paul.

Next question will be from Tim Anderson from Wolfe Research Your line is live.

Caller: Thank you. I have a question about compounders of GLPP-1s, including, you know, but not limited to your trisepatide.

Yes.

Thank you I have a question on compound or as a clip ones, including but not limited to your turns appetite so companies like him or anyone else.

How can this not infringe patent protection and is this something that is likely to get adjudicated in the courts, meaning that you and presumably novo who an article just yesterday, the New York times talked about patients getting upside down with compounded coupons I think to use the term.

Overdosing on these compounded formulations.

So not only do compounds takeaway sales from you guys.

It could also tarnished reputation on the class. So what can we expect to do about it.

Thanks, Tim.

Let's start with some comments, yes, thanks for raising this important topic Tim of course, we've been watching this carefully not really out of concern that they are taking away our business. As you know we've been largely supply constrained here, but rather the impact it's having on patient health.

We often are able to secure samples from these kinds of compounding lots and analyze them in our own labs and what we found for the most part in most instances this isn't compounded to jeopardize at all.

Our drug is not available to compound <unk>.

Rather they are purchasing.

Neither other chemicals entirely which we often find or.

Okay.

Producers are trajectory tied that is often full of impurities, sometimes contaminated by bacteria. This is a safety risk to patients.

Take seriously and trying to do everything we can to make patients aware of the potential dangers here.

So that.

We can help them.

Yes, and just from a policy standpoint, I mean, you can expect us to be active here.

Public positions, we're obviously engaged with regulators.

Daniel Skovronsky: So companies like HIMSS or anyone else

Considering all kinds of legal actions filed some.

Daniel Skovronsky: are considering all kinds of legal actions and have filed some. Of course, you know, compounding is a longstanding practice under the 503A provisions of FDA, which are meant to customize doses for individual patient needs. You know, I think if we just step back and reflect on why this is happening, there are just shortages because of parenteral manufacturing constraints in the industry and in the leading companies.

Of course, you know compounding is a long standing practice under the 503 a provisions of FDA.

Which is meant to customize doses for individual patient needs.

We don't.

It's not clear to me basically what that would be for tours episodic but.

I guess thats legal and assessed.

It's the mass production Thats concerning and we don't see a lot of that with our medicine more with the other one but.

I think if we just step back and reflect on why this is happening there is shortages.

Parental manufacturing constraints in the industry and the leading companies.

A lot of that constraint is investing and improving.

Those processes are compliant with the GMP standards that the FDA in Europe under annex one have enforced and we agreed by the way with that strict enforcement.

So it's a little odd that the answer to that constraint, which is about raising the standards of the industry to a sterile product is to create another industry that is non sterile products.

So were just pointing that out and I think you can see really on the front foot here over the coming months to address this but ultimately the real thing to address increasing coverage on insurance and increasing supply.

We've made a lot of strides in supply will step that up another notch with the availability of vials and we need to work with primarily.

The government as well as employers to expand coverage. So obesity medicines are affordable I think when we get to those points. This will.

There will be a non issue, but in the meantime people can get hurt and as Dan said its pretty concerning what's happening.

Thanks, Paul next question.

The next question will be from <unk> <unk> from Evercore. Your line is live.

Hi, guys. Thanks for taking my question I wanted to ask on the operating leverage if I may.

I know in first quarter. When you guys raised the guidance by $2 billion on topline it dropped down to EPS by $1 30.

This quarter guidance went up by $3 billion, but a dropdown at a much higher leverage at $2 16, EPS almost a 90% incremental margin.

And my question is not so much what your operating leverage is going to be in 2025 or a forward year guidance, but instead I'm basically asking if you annualize the momentum of your <unk> numbers for this year's guidance the EPS upside implied to consensus could be almost as much as half of lilly's entire full year EPS, where it stands right now so.

I'm just trying to think through how do you plan on spending on various functions and what the incremental margins could look like as the revenue momentum really kicks in with the improving supply. Thank you.

Thank you tomer sort of met our financial mechanics, I'll hand to Gordon to comment on I think effectively capital allocation considerations. Good. Thanks I. Appreciate the question, yes, we've been speaking.

A long time about operating margins and getting to the mid to high 30% range.

As we've seen the <unk> bound to take in.

An infection point upwards and so we're seeing ourselves at the top end of that range.

For the first half margins, notably inflated, we havent yet links into all of our promotional channels in increments.

See for instance, T TV commercials on the anchor tenants, we havent done that looking at the given the supply situation and.

Anat Ashkenazi: And on R&D, it takes time to scale R&D thoughtfully, so it doesn't always move exactly in sync quarter by quarter with revenue. That said, you know, our guidance for the year does indicate we will stay in the upper 30% range for the full year with growth in the first half. If you look at the first half, the two quarters of growth into the second half,

And in R&D. It takes time to scale R&D thoughtfully. So it doesn't always move exactly in sync quarter by quarter with revenue.

That's it.

Guidance for the year. It does indicate we will stay in the upper 30% range for the full year with growth first half. If you look at the push of the two quarters growth into the second half.

And you should also expect to see within that mix strong stronger sales and marketing growth as we get to our new launches in the second part of the year and R&D continue to scale of growth from what we've seen thus far so it doesn't the dynamics, we see an operating margin for 2024. Thanks Gordon Paul next question.

The next question will be from Mohit Bansal from Wells Fargo Mohit Your line is nice.

Thank you very much for taking my question and congrats on the quarter.

My question is regarding.

The rest of the world sales for <unk>.

It seems like majority is doing quite well, there and if I take out the.

Like 15% or so far stocking in the U S. It seems like excess is already about 33%. This early in the launch so I would love to understand how has been your experience so far and is there going to be any different.

Ilya Yuffa: Uptake for XUS versus prior generation incretins for both Munjaro and ZebBound, given that these are really efficacious drugs.

Uptake for <unk>.

Ex U S.

Versus your prior generation and credit and for <unk>.

<unk> and <unk> given that these are really efficacious drug.

Yes, Thanks Mohit.

The question earlier do you want to comment on U S rollout for <unk>.

Ilya Yuffa: Sure, thanks Mohit for the question. You know, we've seen some great progress with the launch of Manjaro outside of the US. I think what you've seen in terms of growth in the earlier launch countries such as the UK, UAE, and Saudi Arabia, UAE and Saudi are both key markets that make up the rest of the world, have already achieved a leading share, and continue to drive momentum and overall market growth. And so, as you take a look at Q2, the main driver of that growth has been Manjaro in markets where we have already launched earlier in the cycle.

Sure. Thanks Mohit for the question, we've seen some great progress with the launch of <unk> outside of the U S.

<unk> seen in terms of growth in the earlier launch countries, such as the U K UAE and Saudi UAE and Saudi are both key markets that make up the rest of world have already achieved a leading share and continue to drive momentum and overall market growth and so as you take a look at Q2.

The main driver of that growth has been in.

Ilya Yuffa: And the majority of that coming from the QuickPen presentation with a lot of that in the UAE. Some of that is channel dynamics similar to the US. At the same time, if you take a look at Q2 and the trajectory for Q2 relative to historical peak sales of any of our brands, it's already surpassed that in a limited number of markets where we've launched. And so, as we look at the coming quarters, obviously, we just recently launched in Germany and now also Spain with the QuickPen presentation. We'll also look at monitoring the demand and also supply capacity and expect to launch in your markets. The near-term growth, I would expect predominantly coming from already launched markets of Manjaro.

In markets, where we've already.

Launched earlier in the cycle.

And majority of that coming from the quick presentation.

With a lot of that in the UAE. Some of that is channel dynamics similar to the U S. At the same time, if you take a look at Q2 and the trajectory.

For Q2 relative to.

Historical peak sales of any of our brands has already surpassed that with limited number of markets, where we've launched and so as we look at the coming quarters. Obviously, we just recently launched in Germany, and now also Spain with a quick presentation.

Also look at monitor the demand and also our supply capacity and expect to launch in newer markets the near term growth.

I would expect predominantly coming from already launched markets of non genre.

Thanks, Paul next question.

The next question will be from Alex Hammond from Bank of America, Alex Your line is live.

Thanks for taking the question in your prepared remarks, Dan mentioned engagement with regulatory authorities on a potential pivotal trial match can.

Can you provide any color on your discussions and how are you thinking about true upside versus what you guys for this indication could.

Could we see an update thank you.

Okay. Yes. Thanks for the question, we're really excited about the opportunity to help patients suffering from mash.

I think the data that we shared in phase II purchase appetite is really quite profound in terms of the.

The size of effect, we can have.

A couple of issues and master development that we're trying to tackle quickly. The most significant of which is current standard liver biopsy to identify the patients to enroll in these trials and also to measure the outcome.

<unk>, obviously, an invasive procedure and difficult to find patients to consent to these trials and of course, there's risk to patients. We are working hard to develop non invasive biomarkers that can be used to identify the right patients to enroll in Nash studies and also potentially could be used as an hour.

Come to know if a drug is working.

My hope is that we can develop those kinds of biomarkers that could be used for both purposes could be suitable for accelerated approval of <unk> in the future of course long term traditional approval for metrics still requires demonstration of outcomes. So in that environment. We have two drugs that I think could both be.

Great match drugs, and we will have to decide whether to invest in one or both of those drugs depending on their regulatory path. We see we'll keep investing investors updated as we make decisions about which of these molecules in mesh.

Operator: Thanks, Paul. Next question.

Thanks, Paul next question.

Operator: The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live.

The next question will be from <unk> <unk> from BMO capital markets. Your line is live.

Hi, guys. Thank you so much for taking my question I wanted to touch on manufacturing and specifically on the concern that you raised back in February around the pro.

Post acquisition of catalyst by Novo Holdings and the subsequent sale to Novo Nordisk are you still as concerned as you were in February or given what you've been able to do with your own footprint is this less of an issue. Thank you so much.

Michael Mason: Yeah, I can take it, your main competitor being also your contract manufacturer and how to resolve that situation. There's also an industry structure issue, you know, CDMOs are important for managing capacity across the sector, and they would really constrain, I think, availability and the development of the self-run site. The new large sites have begun to come online. You know, we we know we can execute that drill and repeat it. And that's why that's our base. Thanks, Evan, for the question. Paul, next.

Yes, I can take it.

We remain concerned about that transaction I don't think it was ever really about.

Trajectory of our ramp although as we've disclosed we do rely on one of the Catlin sites for <unk> and other diabetes production, it's more of the oddity of your.

Main competitor being also your contract manufacturer and how to resolve that situation.

There is also an industry structure issue CD moes are important for or managing capacity across the sector.

And if we ended up in an outcome where that sector. It didn't really exist, maybe all became captive of large pharma.

It would really constrain I think availability in the development of medicines, particularly out of biotech so.

Are those considered.

Publicly and privately since.

<unk> transaction was announced and we're waiting to see what happens.

But in terms of the long term outlook for our company as you may have noticed we are building aggressively ourselves. Our primary strategy is self run sites and we've got 18 billion, we've announced in the last several years.

Probably not done there and we're quite comfortable building and operating sites and is the <unk>.

Newest large sites have begun to come online.

We can execute that drill and repeat it that's our base plan.

Thanks, Evan for the question Paul next.

Operator: The next question will be from Dave Reisinger from Lyrinc. Dave, your line is live.

The next question will be from Dave Risinger from Leerink Your line of lives.

Caller: Yes, thanks so much. Let me add my congratulations on the results as well as the corporate updates.

Yes, thanks, so much.

Let me add my congrats on the results as well and the corporate update so.

Caller: So Zep-Bound's breadth of health and worker productivity benefits seems to be underappreciated by many. You know, there are articles from time to time that say that, you know, patients need an off ramp from therapy, etc. And my question is, what is Lilly doing to encourage patients to stay persistent with therapy? And how does Lilly intend to better communicate not just Zep-Bound's health benefits but its worker productivity benefits to employers in order to drive much greater employer inclusion of obesity drugs as part of employee benefits?

Because that bounds breath of health and worker productivity benefits seem to be underappreciated by many.

There are articles from time to time that say that patients need an off ramp from therapy et cetera.

My question is what is Lilly doing to encourage patients to stay persistent with therapy and how does Lilly intend to better communicate not just zipped bounds health benefits, but its worker productivity benefits to employers in order to drive much greater employer inclusion of.

Obesity drugs as part of employee benefits, thanks very much.

Patrick: Thanks, Dave. Patrick, do you want to comment on persistency and benefits?

Thanks, Dave and Patrick do you want to comment on persistency and benefits.

Absolutely I think first overall when we look at persistency is very early after the launch but based upon the feedback we have from providers and from patients as we are and this is a drag but patients want to stay on because they experience the benefits of weight loss and also the downstream implications on comorbidities.

You are right the employer opt in airports are extremely key and we believe with our outcome data OSA now have passed we don't have has tremendous BMO readout to come over the coming years, while also having value based agreement with several novel pay us where we are looking into the benefits of the Tampa tied in the workplace in terms of reduced <unk>.

<unk> increased productivity etcetera as wisdom that has gained a lot of interest in terms of the consumer yes.

<unk> to start and stay on is a key priority for us and that we are working with consumer improving our consumer platforms and also digital channels to really enable patients to experience the benefits that <unk> provides and overtime.

Thanks, Patrick Paul next question.

Operator: The next question will be from Kerry Holford from Berenberg. Kerry, your line is live.

Next question will be from Kerry Holford from Barnburner carry your line is live.

Operator: I'll thank you for taking my question, um, just going back to the margin question earlier: can you not expect in 2024? Like the Apologies team, we will get Kerry reconnected with a better line momentarily. And we'll move on to the next question in the meantime, if that's okay with Chris Shibutani from Goldman Sachs. Thanks.

So my question.

Okay.

Yeah.

Alex.

Thank you.

Apologies team, we will get carried reconnected with a better line momentarily.

And we will move on to the next question I mean time, if that's okay from Christian <unk> from Goldman Sachs. Thanks, Paul.

Chris Your line is nice yes. Thank you.

With all of the different <unk>.

Oral mechanisms in particular variations on it from yourselves as well as competitors can you update us on your thinking on what the basis of competition is going to be and what kind of opportunities do you really envision I think there has been for a while now a comparison on the basis of percent weight loss, particularly for the injectables, but as we move into oral.

It seems as if tolerability profile is really matter. So how are you thinking about it and how do you recommend investors think when we compare data sets across these other oral.

<unk> products and development, even if the mechanisms are different how do we get smarter about differentiating in interpreting data. Thank you.

Dan you want to chime in yeah. Thanks, Chris I'll start and then we'll see Patrick is there anything that on commercial differentiation, but in the clinical trials.

First of all as I was saying before just take some caution on the small short phase one trials there is more to see.

Most of the drugs that we've seen actually are different mechanisms that are <unk> agonists.

In this class I don't expect there to be differentiation in terms of efficacy weight loss.

You can pretty much style in the amount of weight loss, you want depending on how aggressively you're dosing what population.

Tolerability is another issue that usually comes along with the efficacy that the faster you ramp to higher doses less tolerability, you have and the different companies have to work through their own.

Daniel Skovronsky: The variable that links those two things together is often the half-life of the molecule. So shorter half-life molecules will give you bigger peak trough excursions in the pharmacokinetics of the drug, and we think that's what drives the tolerability issues.

The escalation of dosing to match the desired efficacy with some reasonable tolerability the variable that links those two things together is often the half life of the molecule. So shorter half life molecules will give you bigger peak trough excursions.

And the pharmacokinetics of the drug and we think that's what drives the tolerability issues. So what you want as long half life molecule that can be dose escalated more smoothly.

Daniel Skovronsky: So what you want is a long-half-life molecule that can be dose escalated more smoothly. So that probably will be the differentiation rather than anything that the companies are currently talking about in terms of efficacy. As I said before, it's a long road from early data to phase three clinical trials like we have with or for glipron, and we can expect some attrition. But I'm pretty excited also about next-generation molecules.

That probably will be the differentiation.

Rather than anything that the companies are currently talking about in terms of efficacy.

As I said before it's a long road from early data two phase III clinical trials like we have with <unk> and <unk>.

Can expect some attrition.

I'm pretty excited also about next generation molecules all of these ones that we've been talking about now or GOP ones and offer efficacy sort of in the range of injectable <unk> tied.

Daniel Skovronsky: All these ones that we've been talking about now are GLP-1s and offer efficacy sort of in the range of injectable semaglutide. I think, ultimately, we'd like to see drugs that offer efficacy and tolerability that exceeds that. Things that could combine multiple incretins like terzapatide does, and we are certainly working on orals that could also inhibit GIP-1, for example. So exciting progress there, and more to come on that in the future.

Ultimately, we'd like to see drugs that offer efficacy and tolerability that exceeds that things that could combine multiple anchor tenants like pictures appetite does and we are certainly working on an oral <unk> that could also agonize Gi PD. One for example, so exciting progress there and more.

To come on that in the future for us.

From a commercial point of view, we are regularly conducting both consumer and provider market research when we look into the preferences for to drive US today is the degree of weight loss and safety and Tolerability.

When we look at the needs beyond that it's actually a a need of a NOLA and anoro within injectable like efficacy. So that's probably the NIPA accounts beyond what we're currently serving today and particularly to serve those patients that have the P&L of injections. When we look at top of aspects I think what counts beyond that would be the compensation of weight loss.

And lean mass versus fast and durability and I think we're looking at all of those aspects as well.

Operator: Thank you, and thanks for the answers. Paul, next question. I know we're running short on time, so we'll do our best to kind of compress our answers as we get through as many questions as possible.

Thank you and thanks for the answers Paul next question I know, we're running short on time, So we'll do our best to kind of compress our answer is as we get through as many questions as possible Paul.

Thank you and we have a carry Hartford from Baird Mercury connected carry your line is live.

Certainly thank you for taking my question hopefully you can hear me better this time around.

Better.

Yes.

My question is on margin.

When you are now landing connection to London mid to high <unk> range.

Stacy and often presented on launches.

When can we expect youll midterm operating margin.

Is the margin and mid Forty's, perhaps higher achievable.

Dave I know you previously suggested that.

Operating margin above 40% is sustainable.

Innovation at this company.

Company.

Given your frankly.

I wonder if you've changed.

Thanks Keith.

Gordon: Gordon, you want to touch on that briefly? I will do so.

Gordon you want to touch on that we will do thanks, Gary I. Appreciate the question, Yes, I think.

Gordon: Thanks, Kerry. I appreciate the question. Yeah, I think, you know, as we said, like Aydan says, and I said earlier, we do expect to end in that upper 30s range this year. There's still a lot at play here. Yes, on the top line, we see inflection points on revenue, but through the first half, you've had an inflated position. We haven't yet leaned into any of our promotional channels.

As we sit in our guidance as I said earlier would you expect to end in that upper Thirty's range. This year, there's still a lot at play here on the top line, we see inflection points on revenue, but through the first half <unk> had mislaid that position, we havent yet lead to any of our promotional channels, that's going to be a dynamic that we lean into more starting in the second half.

Gordon: That's going to be a dynamic that we lean into more starting in the second half. And R&D, we do intend to scale that, and that's not going quarter by quarter exactly in line with revenue. So all of those things are still going to play out. You know, I think that said. At this point, we're just talking about 2024. And when we do guidance for 25, we'll chat about the longer term picture then.

In R&D, we do intend to scale that and then that starts getting quoted by quota exactly in line with revenue.

All of those things just a little bit of phase III.

That said at this point, we're just talking about 2024 is when we do guidance for 'twenty five we'll chat about the longer term picture then.

Thanks next question Paul.

Operator: The next question will be from Akash Tewari from Jeffreys.

The next question will be from a cash tomorrow from Jefferies. Your line is nice.

Hi, Thanks, so much so we're starting to see that might that may not be the only way to kind of preserve lean muscle mass and particular, it looks like amlin gift combos are showing the potential for maybe 90%, 10% fat versus muscle loss can you talk about what you think a loral impact because that protect combo could shell both in terms of absolute.

Weight loss, but also the quality of that weight loss, and then where would that fit in a world where our next gen Amlin triple it could show that level of muscle preservation. Thank you.

Okay, Dan can focus on that first question.

And Todd. Thanks, So we have multiple mechanisms in play here.

Starting maybe with the ammo and we have a molecule fix to called <unk>, which is a pure <unk> agonist and we're evaluating that both as monotherapy and in combination with tours appetite kept clip so.

That will be interesting to see I don't have a strong preconceived notions about what to expect in terms of lean versus fat mass loss with that particular combination.

Probably the people who have the most data about that would be the scientists at novo since they've investigated curriculum tied.

In combination with <unk> Ted.

I think that brings us probably to another mechanism, which is dual amland calcitonin, agonism, which cucolo type probably the dual agonist and we have a molecule that in phase one called.

<unk> will also investigate that in.

Composition of Ipass will be one of the aspects in which we evaluate it.

And then finally can you talk.

Of Myostatin, we have a molecule in this family.

And that's the macro mab that required from various dentists.

Which is an antibody against the receptor.

That's proceeding in a phase II trial in combination with some good times and we look forward to having data to share with that.

Future.

All of these mechanisms could have variable effects on biomass composition, but I point out that.

So far we've not seen any disadvantages to the types of weight loss that we get with <unk> appetite in fact patients show.

Improved functional outcomes on a variety of things, including function heart failures, we just demonstrated.

So could we have further improvements with even more higher ratio of effectively mass. That's that's the question of these trials.

Good Paul next question.

Operator: The next question will be from Trung Huynh from UBS. Trung, your line is: Hi guys, thanks for taking my question. Just following on from the previous question on XUS GLP-1, you saw Monjaro XUS sales this quarter jump.

Question will be from Trung Nguyen from UBS. Your line is live.

Caller: Okay. On that second one, I don't think we'll probably be able to give much of a good answer on that. So I'll maybe ask Ilya to weigh in just on that first question around how the ex-US reimbursement is going.

Hi, guys. Thanks for taking my question just following on from the previous question on ex U S. G. L. P. One.

You saw <unk> ex U S sales this quarter jumped to six $7 7 million from $286 million can.

Can you give us some color on how ex U S reimbursement is going with the bigger countries and is this more of an out of pocket drug in these countries and what percentage of the $677 million is obesity sales message diabetes.

Thanks very much.

Okay.

On that second one I don't think we will probably give much of a good answer on that so I'll, maybe ask Iliad away and just on that first question around how ex U S reimbursement is going.

Ilya Yuffa: Sure. Well, of course, I think the momentum overall is progressing quite nicely in both the reimbursed as well as the out-of-pocket segments. We have achieved reimbursement in the UK, we have reimbursement in Germany, and we're continuing to look for reimbursement and expand reimbursement in other markets that we have launched. We have some reimbursement in UAE and Saudi Arabia as well as for type 2 diabetes, and we will continue to expand on that in the markets that we will enter.

Sure.

First I think the momentum overall is progressing quite nicely in both the reimbursed as well as the out of pocket segment, we have achieved reimbursement in the UK.

Have reimbursement in Germany, and we're continuing to look for reimbursement and expand reimbursement in other markets that we've launched we have some reimbursement.

In Saudi as well in type two diabetes and we continue to.

Ilya Yuffa: But a lot of that momentum is covering both the type 2 and chronic weight management market, and both in the reimbursed and out-of-pocket segment. And we're seeing progress in share, as well as market expansion in the markets that we've been in.

Expand on that in the markets that we will enter.

But a lot of that momentum is covering both the type two.

And chronically management market and both in the reimbursed and out of pocket segment, and we're seeing both the progress in share as well as market expansion in the markets that we've been in.

Thanks, Dahlia, Paul I know, we have a lot in the Q, maybe we just have two more questions and then wrap things up.

Operator: Certainly. The next question is coming from Steve Scala from TD Account. Steve, your line is open.

Certainly the next question is coming from Steve Scala from TD Count Steve Your line is live.

Oh. Thank you so much the FDA definition of shortage seems clear intercept betide no longer meeting the definition of shortage seems to imply Lilly is meeting demand I assume you will say that that's not the case, but the definition at least in black and white is quite clear I assume this is <unk>.

FDA determination, so does Lilly agree with Fda's conclusion, how is demand being met.

Demand being measured and what does demand look like thank you.

Yes, thanks for the question.

As we think about the compounding question is important as well.

We've said earlier, we're available in all dosage forms in the U S. What that means is as U S.

As you know we can fill orders as they receive versus what we're doing.

Michael Mason: That does not mean that any pharmacy, or certainly every pharmacy, has all 12 dosage forms sitting on their shelf. That's unrealistic economically, probably for a lot of them, and even logistically, shipping quite a bit. And you can see that in these results from the quarter. So files will add to that picture, but demand will increase as well.

That does not mean that any pharmacy or certainly every pharmacy has all 12 dosage forms sitting on their shelf.

In feasible economically probably for a lot of them and even logistically.

So I think we'll continue to see because there is not a abundance of supply it's more of a real time fulfillment situation patients go into pharmacy counters are being told to wait a few days, while their orders filled but product is flowing and it's flowing at a pretty high rate.

We are.

Michael Mason: So I think we're doing well given the situation, but The end pharmacy experience will continue to be choppy. We point that out to the FDA, so that means people may call and say, I couldn't get what I wanted at the moment. I wanted it at the pharmacy I choose to go to. That's not the definition that we think applies here, though. So we'll continue to work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Shipping.

And you can see that in these results from the quarter. So.

<unk> will add to that picture, but demand will increase as well.

So I think we're we're doing well given the situation but.

The and pharmacy experience will continue to be choppy, we point that out to the FDA. So that means people who may call in today I Couldnt get what I wanted on the moment I wanted it at the pharmacy I choose to that's not the definition that we think applies here.

We will continue to.

Work with channel partners and the agency to try to clear up the confusion and improve the consumer experience, which is our responsibility along with theirs.

Thanks, Paul last question.

Operator: And the last question today will be from Lewis Chen from Cantor. Lewis, your line is live.

The last question today will be from Louise Chen from Cantor.

Your line is live.

Hi, Thank you for taking my question I wanted to ask you. How excited you are about the muscle preserving obesity drug and if you see that as a true unmet need. Thank you.

Dan Skovronsky: Thanks. Dan, anything to add on? Yeah, no. Thanks for the question, Lisa.

Thanks, Dan anything to add on yes. Thanks for the question, let me say I think.

Testing area of science for sure.

<unk> to know exactly how these kinds of mechanisms will translate into benefits for patients at a high level, we know that the ratio.

Dan Skovronsky: I think it's an interesting area of science for sure, but too soon to know exactly how these kinds of mechanisms will translate into benefits for patients. At a high level, we know that the ratio of lean mass to fat mass is really important in determining metabolic health, probably more important as an indicator of overall metabolic health than, for example, BMI.

Lean mass department is really important in determining metabolic health, probably more important as an indicator of overall metabolic health.

Ample BMI.

Dan Skovronsky: And so that's what spurs these kinds of efforts to increase lean mass while causing fat mass loss. And we'll wait to see data from our own macromap and wait to see how that translates into health benefits for patients. Great. So I think we'll wrap up. Dave, closing remarks. Thanks, Joe. And thanks to the team here. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Company.

And so thats whats first these kinds of efforts to increase lean mass, while while causing fat mass loss, we will wait to see data from our own macro mab and wait to see how that translates to health benefits for patients.

Great. So I think we'll wrap up Dave for.

Closing remarks, great.

Thanks, Joe and thanks to the team here. We appreciate your participation in todays earnings call and your interest in Eli Lilly and company. Please follow up with Investor Relations team. If you have any questions. We didn't address in it sounds like Theres a few that were holding happy to answer all of those have a great day everyone.

Operator: Thank you, and ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1 p.m. today and ending at midnight on September 12th. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 297484. International callers can call 973-528-0005. Again, those numbers are 800-332-6854 and 973-528-0005, with the access code 297484. Thank you for your participation. You may now disconnect your lines.

Thank you and ladies and gentlemen, this does conclude our conference for today.

This conference will be made available for replay beginning at one PM today running through September 12 at Midnight you may access the replay system at anytime by dialing 803, three to six to 854 and entering the access code 290, 7484 International Dialers can call 970 352800.

Zero five again those numbers are 833 to 6854 and 97 five to 80005 with the access code 297484. Thank.

Thank you for your participation you may now disconnect your lines.

Seamus Fernandez: I've been trying to get a better understanding of what you're seeing in the market with regard to average selling price. The prices look actually reasonably close to us, with the Trezzepatide franchise having higher, you know, sort of ASP prescript, but not dramatically higher, given concerns of real pricing deterioration. I guess the only question that I have here is what you are seeing from an ASP perspective, and do you see this as kind of the natural evolution of this market as competition emerges as we saw with Zembeck historically and tru-licity in 2019. Thanks so much.

Operator: Hold hands on next on our side.

Dan Skovronsky: And, of course, there's risk to patients. We're working hard to develop non-invasive biomarkers that can be used to identify the right patients to enroll in mash studies and also potentially could be used as outcomes to know if a drug's working.

Ilya Yuffa: Some of that is a channel dynamic similar to the US. At the same time, if you take a look at Q2 and the trajectory, for Q2, relative to historical key sales of any of our brands, we have already surpassed that in a limited number of markets where we've launched. And so, as we look at the coming quarters, obviously, we just recently launched in Germany and now also Spain with a quick pen presentation. We'll also look at monitoring the demand and also supply capacity and expect a launch in your markets. The near-term growth, I would expect predominantly coming from the already launched markets of Majara.

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