Q2 2024 Elanco Animal Health Inc Earnings Call

Okay.

Sure.

Operator: Ladies and gentlemen, thank you for standing by.

Katy Grissom: Welcome to Elankel's Animal Health second quarter, 2024 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise.

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to Elanco's Animal Health Second Quarter 2024 Earnings Conference Call.

Speaker Change: At this time, all lines have been placed on mute to prevent any background noise.

Katy Grissom: After the speakers remark, so will be a question and answer session. If you would like to ask a question during this time, simply press star, follow by the number one on your telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you.

Speaker Change: After the speaker's remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Speaker Change: And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to hand the call over to Katy Grissom, Head of Investor Relations. Katy, you may begin.

Katy Grissom: I would now like to hand the call. Thank you for joining us for Elankel Animal Health second quarter, 2024 earnings call. I'm Katy Grissom, Head of Investor Relations and ESG. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer, Todd Young, our Chief Financial Officer and Scott Perucker from Investor Relations. The slides referenced during this call are available on the Investor Relations section of Elankel.com. Today's discussion will include forward-looking statements.

Katy Grissom: Good morning. Thank you for joining us for Elanco Animal Health's second quarter 2024 earnings call. I'm Katy Grissom, Head of Investor Relations and ESG. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer, Todd Young, our Chief Financial Officer, and Scott Perucker from Investor Relations.

Unknown Executive: Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer, Todd Young, our Chief Financial Officer, and Scott Perucker from Investor Relations. For more information, see the risk factors discussed in today's earnings process, as well as in our latest Form 10-K and 10-Q filed with the SEC. We do not undertake any duty to update any forward-looking statement. Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. After our prepared remarks, we'll be happy to take your questions. I will now turn the call over to Jeff.

Katy Grissom: On today's call are Jeff Simmons, our President and Chief Executive Officer, Todd Young, our Chief Financial Officer, and Scott Perucker from Investor Relations. The slides referenced during this call are available in the Investor Relations section of elanco.com. Today's discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors discussed in today's earnings process, as well as in our latest Form 10-K and 10-Q filed with the SEC.

Jeffrey Simmons: With improved operating cash flow and the proceeds from the sale of our aqua business, we have repaid $1.3 billion of debt in 2024 and expect net leverage to be in the mid four times level by the end of the year. We are also maintaining our adjusted EPS guidance with lower interest and tax expense offsetting the removal of ACWA. Moving to slide five, we provide year over year revenue growth for the first half of the year. This view excludes the quarterly phasing created by last year's ERP integration.

Jeffrey Simmons: In the first half of 2024, we delivered constant currency revenue growth of 4%, building on the mid single-digit growth in the back half of 2023. Our consistent strategic enablers drove improved execution over the last 18 months. However, in the first half of the year, U.S. pet health revenue declined 3%.

Jeffrey Simmons: However, retailer purchasing patterns created variability in our reported results, impacting net sales growth in the quarter. Todd will provide more details later, but we anticipate this dynamic to normalize in the back half of the year when retailers are expected to begin to order more in line with dispensing trends. Strategic Investments to Expand the Sales Force and Increased Opportunities with Corporate Clinics are laying the groundwork for improved performance as we look towards enhancing our portfolio with the addition of Zenrelia in the fourth quarter of this year and Credelio Quattro in the first quarter of next.

Jeffrey Simmons: Finally, strong delivery from the U.S. farm animal business continued with 17% revenue growth in the first half of the year, driven by cattle and poultry. Our portfolio benefited from strong demand driving higher values for both poultry and cattle as cattle prices remain low. On the other hand, swine, the smallest business for us, is faring less favorably with pork supply outpacing demand, pressuring producer profitability.

Jeffrey Simmons: This, along with our differentiated data services, is helping to stabilize and, in some cases, like Remensen, grow our base business. We expect continued growth from innovation with the incremental opportunity in heifers for Xperia and the launch of Bovair, which I'll touch on more in a moment. Moving now to slide six, let's look at the strategic drivers for our innovation portfolio and productivity strategy. Regarding productivity, we are delivering improved operating cash flow and debt pay-down.

Speaker Change: The slides referenced during this call are available on the Investor Relations section of elanco.com. Today's discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast.

Katy Grissom: These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors discussed in today's earnings press. As well as in our latest form 10K and 10Q filed with the SEC. We do not undertake any duty to update any forward-looking statement. Our remarks today will focus on our non-gap financial measures. Reconciliation of these non-gap measures are included in the appendix of today's slides and in earnings press release.

Speaker Change: For more information, see the risk factors discussed in today's earnings process.

Speaker Change: as well as in our latest Form 10-K and 10-Q filed with the SEC. We do not undertake any duty to update any forward-looking statement.

Katy Grissom: We do not undertake any duty to update any forward-looking statement. Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. After our prepared remarks, we'll be happy to take your questions. I will now turn the call over to Jeff.

Speaker Change: Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release.

Katy Grissom: After our prepared remarks, we'll be happy to take your questions.

Katy Grissom: I will now turn the call over to Jeff. Thanks, Katie.

Speaker Change: After our prepared remarks, we'll be happy to take your questions. I will now turn the call over to Jeff.

Jeffrey Simmons: Thanks, Katy. Good morning, everyone.

Jeff Simmons: Good morning, everyone. Elankel, continue to deliver in the second quarter, exceeding the top end of our guidance range on our key metrics, revenue, adjusted EBITDA and adjusted EPS. With four consecutive quarters of underlying revenue growth behind us, we continue to make significant progress on our three strategic outcomes, growing revenue, improving cash flow, and notably delivering innovation. Beginning on slide four, since our last earnings call, we delivered consistent operational results and achieved key milestones in advancing our innovation, portfolio, and productivity strategy.

Jeffrey Simmons: Elanco continued to deliver in the second quarter, exceeding the top end of our guidance range on our key metrics, revenue, adjusted EBITDA, and adjusted EPS. With four consecutive quarters of underlying revenue growth behind us, we continue to make significant progress on our three strategic outcomes, growing revenue, improving cash flow, and, notably, delivering innovation. Beginning on slide four, since our last earnings call, we have delivered consistent operational results and achieved key milestones in advancing our innovation, portfolio, and productivity strategy.

Jeff: Thanks, Katy. Good morning, everyone. Elanco continued to deliver in the second quarter, exceeding the top end of our guidance range on our key metrics, revenue, adjusted EBITDA, and adjusted EPS.

Jeff: With four consecutive quarters of underlying revenue growth behind us, we continue to make significant progress on our three strategic outcomes, growing revenue, improving cash flow, and notably, delivering innovation.

Jeff: Beginning on slide four, since our last earnings call, we delivered consistent operational results and achieved key milestones in advancing our innovation, portfolio, and productivity strategy.

Jeffrey Simmons: Elanco delivered its fourth consecutive quarter of underlying revenue growth, driven by strength in U.S. farm animal, international pet health, and added contributions from new products. On innovation, commercial activities are underway for Bovair after the FDA completed its review in May. Zenrelia and Credelio Quattro continue to track in line with our late June update, and we continue to expect to launch potential blockbusters in each of the next three quarters. For Zenrelia, the final 60-day administrative window is underway, with approval expected in late September.

Jeff Simmons: Elankel delivered our fourth consecutive quarter of underlying revenue growth driven by strength in U.S, farm animal, international pet health, and added contributions from new products. On innovation, commercial activities are underway for Bolvair after the FDA completed its review in May. Sanrelia and Criterio Quattro continue to track in line with our late June update, and we continue to expect to launch a potential blockbuster in each of the next three quarters. For Sanrelia, the final 60-day administrative window is underway with approval expected in late September.

Jeff: Elanco delivered our fourth consecutive quarter of underlying revenue growth, driven by strength in U.S. farm animal, international pet health, and added contributions from new products.

Jeff: On innovation, commercial activities are underway for Bovair after the FDA completed its review in May.

Jeff: Zenrelia and Credelio Quattro continue to track in line with our late June update and we continue to expect to launch a potential blockbuster in each of the next three quarters.

Jeff: For Zenrelia, the final 60-day administrative window is underway, with approval expected in late September . Cordelia Quattro remains on track for final approval in the fourth quarter.

Jeffrey Simmons: Cordelio Cuatro remains on track for final approval in the fourth quarter. With improved operating cash flow and the proceeds from the sale of our aqua business, we have repaid $1.3 billion of debt in 2024 and expect net leverage to be in the mid four times level by the end of the year. Looking forward, we remain confident in our full-year outlook. We now expect organic constant currency revenue growth of 3 to 4 percent for the full year.

Jeff Simmons: Criterio Quattro remains on track for final approval in the fourth quarter. With improved operating cash flow and the proceeds from the sale of our aqua business, we have repaid $1.3 billion of debt in 2024, and expect net leverage to be in the mid four times level by the end of the year. Looking forward, we remain confident in our full year outlook. We now expect organic constant currency revenue growth to be three to four percent for the full year.

Jeff: With improved operating cash flow and the proceeds from the sale of our aqua business, we have repaid 1.3 billion dollars of debt in 2024 and expect net leverage to be in the mid four times level by the end of the year.

Jeff: Looking forward, we remain confident in our full year outlook.

Jeff: We now expect organic constant currency revenue growth to be 3-4% for the full year. This reflects the removal of the aqua business, maintained expectations for the base business in the second half, and the expected increase in innovation contributions shared in June.

Jeffrey Simmons: This reflects the removal of the aqua business, maintained expectations for the base business in the second half, and the expected increase in innovation contributions shared in June. Excluding ACWA, we are maintaining expectations for adjusted EBITDA with improved sales offsetting increased investments in strategic launches in the second half. We are also maintaining our adjusted EPS guidance with lower interest and tax expense offsetting the removal of ACWA. Finally, we issued our 2023 ESG report demonstrating progress on Elanco's healthy purpose, sustainability efforts, and our internal operations, customer collaborations, and beyond. Moving to slide five.

Jeff Simmons: This reflects the removal of the aqua business, maintained expectations for the base business in the second half, and the expected increase in innovation contributions shared in June. Excluding Aqua, we are maintaining expectations for adjusted EBITDA with improved sales, offsetting increase investments in strategic launches in the second half. We are also maintaining our adjusted EPS guidance with lower interest and tax expense offsetting the removal of Aqua. Finally, we issued our 2023 ESG report demonstrating progress on Elanco's healthy purpose, sustainability efforts in our internal operations, customer collaborations, and beyond.

Jeff: Excluding ACWA, we are maintaining expectations for adjusted EBITDA with improved sales, offsetting increased investments in strategic launches in the second half.

Jeff: We are also maintaining our adjusted EPS guidance with lower interest and tax expense offsetting the removal of ACWA.

Jeff: Finally, we issued our 2023 ESG report demonstrating progress on Elanco's healthy purpose sustainability efforts in our internal operations, customer collaborations, and beyond.

Jeffrey Simmons: We provide year-over-year revenue growth for the first half of the year. This view excludes the quarterly phasing created by last year's ERP integration. In the first half of 2024, we delivered constant currency revenue growth of 4%, building on the mid-single-digit growth in the back half of 2023, looking deeper into our four business areas, starting with U.S. Pet Health. Our consistent strategic enablers drove improved execution over the last 18 months. Despite a competitive environment, this allows us to maintain a high level of optimism for the future of U.S. pet health as we bring Zanrelli and Cordelio Quatro to the market over the next two quarters. In the first half of the year, U.S. pet health revenue declined 3 percent.

Jeff Simmons: Moving to slide five, we provide year-over-year revenue growth for the first half of the year. This view excludes the quarterly phasing created by last year's ERP integration. In the first half of 2024, we delivered constant currency revenue growth of 4 percent, building on the mid-single-digit growth in the back half of 2023. Looking deeper at our four business areas, starting with U.S. Pet Health. Our consistent strategic enablers drove and proved execution over the last 18 months.

Jeff: Moving to slide 5. We provide year-over-year revenue growth for the first half of the year. This view excludes the quarterly phasing created by last year's ERP integration.

Jeff: In the first half of 2024, we delivered constant currency revenue growth of 4%, building on the mid-single-digit growth in the back half of 2023.

Jeff: Looking deeper at our four business areas, starting with U.S. Pet Health.

Jeff: Our consistent strategic enablers drove improved execution over the last 18 months. Despite a competitive environment, this allows us to maintain a high level of optimism for the future of U.S. pet health as we bring Zanrella and Credelio Quatro to the market over the next two quarters.

Jeff Simmons: Despite a competitive environment, this allows us to maintain a high level of optimism for the future of U.S. Pet Health as we brings Nrelian Criterio Quattro to the market over the next two quarters. In the first half of the year, U.S. Pet Health revenue declined 3 percent. On the retail side, the underlying business is strong. As dispensing growth, a key indicator of product demand accelerated significantly in May and June this year and continued into July.

Jeff: In the first half of the year, U.S. pet health revenue declined 3 percent.

Jeffrey Simmons: On the retail side, the underlying business is strong, as dispensing growth, a key indicator of product demand, accelerated significantly in May and June this year and continued into July. This growth was driven by increased share of voice from targeted investments in our flagship brands, expanded physical availability with more than 10,000 new points of distribution, as well as capitalizing on the elasticity of Seresto. However, retailer purchasing patterns created variability in our reported results, impacting net sales growth in the quarter.

Jeff: On the retail side, the underlying business is strong, as dispensing growth, a key indicator of product demand, accelerated significantly in May and June this year and continued into July .

Jeff Simmons: This growth was driven by increased share of voice from targeted investments in our flagship brands, expanded physical availability with more than 10,000 new points of distribution, as well as capitalizing on the elasticity of Sarasco. However, retailer purchasing patterns created variability and are reported results, impacting net sales growth in the quarter. Todd will provide more details later, but we anticipate this dynamic to normalize in the back half of the year when retailers are expected to begin to order more in line with dispensing trends.

Jeff: This growth was driven by increased share of voice from targeted investments in our flagship brands, expanded physical availability with more than 10,000 new points of distribution, as well as capitalizing on the elasticity of Soresto.

Jeffrey Simmons: Todd will provide more details later, but we anticipate this dynamic to normalize in the back half of the year when retailers are expected to begin to order more in line with dispensing trends. On the vet clinic side, improved vaccine supply and innovation drove stabilization across the business through the first six months of the year. The launch of our canine parvovirus monoclonal antibody, or CPMA, is progressing nicely.

Jeff: However, retailer purchasing patterns created variability in our reported results, impacting net sales growth in the quarter.

Jeff: Todd will provide more details later, but we anticipate this dynamic to normalize in the back half of the year when retailers are expected to begin to order more in line with dispensing trends.

Jeff Simmons: On the vet clinic side, improved vaccine supply and innovation drove stabilization across the business through the first six months of the year. The launch of our K-9 Parva virus monoclonal antibody or CPMA is progressing nicely. We have placed the product in a third of our target clinics and continue to strategically invest in dry penetration. However, competition in the U.S, vet clinic particularly in parasiticides and pain continues to pressure our business. Strategic investments to expand the sales force and increase opportunities with corporate clinics are laying the groundwork for improved performance as we look towards enhancing our portfolio with the addition of Zanrelia in the fourth quarter of this year and Cretelio Quattro in the first quarter of next.

Todd: On the vet clinic side, improved vaccine supply and innovation drove stabilization across the business through the first six months of the year. The launch of our canine parvovirus monoclonal antibody, or CPMA, is progressing nicely.

Jeffrey Simmons: We have placed the product in a third of our target clinics and continue to strategically invest to drive penetration. However, competition in the U.S. vet clinic market, particularly in parasiticides and pain, continues to pressure our business. Our strategic investments to expand the sales force and increase opportunities with corporate clinics are laying the groundwork for improved performance as we look towards enhancing our portfolio with the addition of Zenrelia in the fourth quarter of this year and Cordelio Quattro in the first quarter of next.

Jeff: We have placed the product in a third of our target clinics and continue to strategically invest to drive penetration.

Jeff: However, competition in the U.S. vet clinic, particularly in parasiticides and pain, continues to pressure our business.

Jeff: Strategic investments to expand the sales force and increase opportunities with corporate clinics are laying the groundwork for improved performance as we look towards enhancing our portfolio with the addition of Zenrelia in the fourth quarter of this year and Credelio Quattro in the first quarter of next.

Jeffrey Simmons: Next, revenue for our international pet health business grew 11% in constant currency in the first half. Our retail parasiticide leadership and share of voice continue to strengthen as we invest to drive the growth of key brands like Soresto and Abtab. We are encouraged by the performance of the Cordelio family globally, led by Cordelio Plus now three years into the market. Our international pet health business growth exemplifies the benefits of a strong, diverse portfolio, contributions from innovation, and a concentrated focus on major markets, all part of a well-executed strategy by Dr. Romero Cabral and his team. Moving to farm animal products, revenue for international business was flat on a constant currency basis compared to the first half of last year.

Jeff Simmons: Next revenue for our international pet health business grew 11 percent and constant currency in the first half. Our retail parasiticide leadership and share of voice continues to strengthen as we invest to drive the growth of key brands like Saresto and AdTab. We are encouraged by the performance of the Cretelio family globally led by Cretelio Plus now three years into the market. Our international pet health business growth exemplifies the benefits of a strong diverse portfolio, contributions from innovation and a concentrated focus on major markets, all part of a well-executed strategy by Dr. Romero Cabral and his 15.

Jeff: Next, revenue for our international pet health business grew 11% and constant currency in the first half.

Jeff: Our retail parasiticide leadership and share voice continues to strengthen as we invest to drive the growth of key brands like Soresto and AdTap.

Jeff: We are encouraged by the performance of the Credelio family globally, led by Credelio Plus, now three years into the market. Our international pet health business growth exemplifies the benefits of a strong diverse portfolio, contributions from innovation, and a concentrated focus on major markets.

Jeff: all part of a well-executed strategy by Dr. Romero-Cabral and his team.

Jeffrey Simmons: Excluding the aqua business decline, constant currency revenue growth was 2% in the first half of the year, driven by the strength in poultry, particularly offset by continued pressure in Asia swine. Poultry and cattle represent nearly three-quarters of our international farm animal business, and our momentum is strong in both areas. We have confidence in our relative market position and ability to continue to grow the business in these key areas of strength. Finally, strong delivery from the U.S. farm animal business continued with 17% revenue growth in the first half of the year, driven by cattle and poultry.

Jeff Simmons: Moving to farm animal, revenue for our international business was flat on a constant currency basis compared to the first half of last year. Excluding the aqua business decline, constant currency revenue growth was 2% in the first half of the year driven by the strength and poultry, particularly offset by continued pressure and Asia's wine. Poultry and cattle represent nearly three quarters of our international farm animal business and our momentum is strong in both areas.

Jeff: Moving to farm animal. Revenue for our international business was flat on a constant currency basis compared to the first half of last year.

Jeff: Excluding the aqua business decline, constant currency revenue growth was 2% in the first half of the year, driven by the strength in poultry, particularly offset by continued pressure in Asia Swine.

Jeff: Poultry and cattle represent nearly three-quarters of our international farm animal business and our momentum is strong in both areas. We have confidence in our relative market position and ability to continue to grow the business in these key areas of strength.

Jeff Simmons: We have confidence in our relative market position and ability to continue to grow the business in these key areas of strength. Finally, strong delivery from the US farm animal business continued with 17% revenue growth in the first half of the year driven by cattle and poultry. Strength in cattle was driven by continued expiry adoption, remence in growth in both beef and dairy and improve vaccine supply. This outside's growth is the outcome of both our strategy plain out and positive market factors.

Jeff: Finally, strong delivery from the U.S. farm animal business continued, with 17% revenue growth in the first half of the year, driven by cattle and poultry.

Jeffrey Simmons: Strengthened cattle were driven by continued expiry adoption, reminiscent growth in both beef and dairy, and improved vaccine supply. This outsized growth is the outcome of both our strategy playing out and positive market factors. Our portfolio benefited from strong demand driving higher values for both poultry and cattle as cattle on feed remain low. On the other hand, swine, the smallest business for us, is faring less favorably with pork supply outpacing demand, pressuring producer profitability.

Jeff: Strengthened cattle was driven by continued expiry adoption, reminiscent growth in both beef and dairy, and improved vaccine supply. This outsized growth is the outcome of both our strategy playing out and positive market factors.

Jeff Simmons: Our portfolio benefited from strong demand driving higher values for both poultry and cattle as cattle on feed remain low. On the other hand, swine, the smallest business for us, is fairing less favorably with pork supply outpacing demand, pressuring, producer, profitability. Overall, our US farm animal portfolio is well positioned in the market with scale and value that differentiates us from competitors. Dr. Jose Simif and his team are leveraging our innovation to strengthen our portfolio and increase our value proposition for customers.

Jeff: Our portfolio benefited from strong demand, driving higher values for both poultry and cattle, as cattle on feed remain low. On the other hand, swine, the smallest business for us, is faring less favorably with pork supply outpacing demand, pressuring producer profitability.

Jeffrey Simmons: Overall, our U.S. farm animal portfolio is well positioned in the market with scale and value that differentiates us from competitors. Dr. Jose Simas and his team are leveraging our innovation to strengthen our portfolio and increase our value proposition for customers. This, along with our differentiated data services, is helping to stabilize and, in some cases, like Remensen, grow our base business.

Speaker Change: Overall our U.S. farm animal portfolio is well positioned in the market with scale and value that differentiates us from competitors. Dr. Jose Simas and his team are leveraging our innovation to strengthen our portfolio and increase our value proposition for customers.

Jeff Simmons: This, along with our differentiated data services, is helping to stabilize and in some cases, like Remensen, grow our base business. We expect continued growth from innovation with the incremental opportunity and heifers for expiry and the launch of Bovair, which I'll touch on more in a moment. Moving now to slide six, let's look at the strategic drivers for innovation portfolio and productivity strategy. Starting with portfolio, our base business continues to stabilize and amplify our message through our increased sales force and digital engagement with veterinarians and farmers globally as well as increase pricing capabilities.

Jeff: This, along with our differentiated data services, is helping to stabilize, and in some cases like Remensen, grow our base business. We expect continued growth from innovation with the incremental opportunity in heifers for Xperia and the launch of Bovair, which I'll touch on more in a moment.

Jeffrey Simmons: We expect continued growth from innovation with the incremental opportunity in heifers for Xperia and the launch of Bovair, which I'll touch on more in a moment. Moving now to slide six, let's look at the strategic drivers for our innovation portfolio and productivity strategy. Starting with Portfolio, our base business continues to stabilize and amplify our message through our increased sales force and digital engagement with veterinarians and farmers globally as well as increased pricing capability. We've seen the portfolio strengthen even more in places where we've introduced new innovation. We see this with Credelio Plus and AdTab and International Pet, Xperia in U.S. cattle and in poultry globally.

Jeff: Moving now to slide six, let's look at the strategic drivers for our innovation portfolio and productivity strategy.

Jeff: Starting with Portfolio, our base business continues to stabilize, amplify our message through our increased sales force and digital engagement with veterinarians and farmers globally, as well as increased pricing capabilities.

Jeff Simmons: We've seen the portfolio strengthen even more in places where we've introduced new innovation. We see this with Crudellio Plus an ad tab in International Pet, Experier in US cattle and in poultry globally. We remain confident that the launch of Xenrelia and Crudellio Quattro will provide a similar catalyst for our US pet health business. Regarding productivity, we are delivering improved operating cash flow and debt paydown. We've taken a cross-functional approach to successfully diagnose, evaluate and deliver solutions to improve processes and reduce balance sheet inventory.

Jeff: We've seen the portfolio strengthen even more in places where we've introduced new innovation.

Jeff: We see this with Credelio Plus and AdTab in international pet, Xperia in U.S. cattle, and in poultry globally. We remain confident that the launch of Xenrelia and Credelio Quatro will provide a similar catalyst for our U.S. pet health business.

Jeffrey Simmons: We remain confident that the launch of Xenrelia and Credelio Quattro will provide a similar catalyst for our U.S. pet health business. Regarding productivity, we are delivering improved operating cash flow and debt pay-down. We've taken a cross-functional approach to successfully diagnose, evaluate, and deliver solutions to improve processes and reduce balance sheet inventory. In addition, we have transitioned from using cash from operations to fund necessary stand-up and integration costs to utilizing that cash for debt paydown.

Jeff: Regarding productivity, we are delivering improved operating cash flow and debt pay down.

Jeffrey Simmons: We've taken a cross-functional approach to successfully diagnose, evaluate, and deliver solutions to improve processes and reduce balance sheet inventory. In addition, we have transitioned from using cash from operations to fund necessary stand-up and integration costs to utilizing that cash for debt paydown.

Jeff: We've taken a cross-functional approach to successfully diagnose, evaluate, and deliver solutions to improve processes and reduce balance sheet inventory.

Jeff Simmons: In addition, we have transitioned from using cash from operations to fund necessary stand-up and integration costs to utilize in that cash for debt paydown. As I said earlier, with a combined proceeds from the close-over aqua sale and improved year-to-date operating cash flow of $286 million, we have repaid 1.3 billion of debt in 2024 and expect net leverage to be in the mid-four times level by the end of 2020. Now let's get to innovation on slide seven.

Jeff: In addition, we have transitioned from using cash from operations to fund necessary stand-up and integration costs to utilizing that cash for debt pay-down.

Jeffrey Simmons: As I said earlier, with the combined proceeds from the close of our aquaculture sale and improved year-to-date operating cash flow of $286 million, we have repaid $1.3 billion of debt in 2024 and expect net leverage to be in the mid four times level by the end of 2024. Now let's get to innovation on slide seven. Innovation sales contributed $109 million in the quarter with $209 million in the first half of 2024.

Jeff: As I said earlier, with the combined proceeds from the close of our aquasale and improved year-to-date operating cash flow of $286 million, we have repaid $1.3 billion of debt in 2024 and expect net leverage to be in the mid-4 times level by the end of 2024.

Jeffrey Simmons: In June, we increased our innovation sales expectations to $400 to $450 million for the full year. The just over $30 million improvement at the midpoint is driven by the strong, ongoing performance of Xperia and AdTab and the inclusion of Bovair and Zenrelia in the 2024 expectations. We remain on track to deliver $600 to $700 million in sales from our innovation portfolio by the end of 2025. On slide 8, we reflect progress on our late-stage innovation timeline as we continue to advance our ambition of delivering consistent, high-impact innovation.

Jeff Simmons: Innovation sales contributed $109 million in the quarter with $209 million in the first half of 2024. In June, we increased innovation sales expectations to $400 to $450 million for the full year. The just over $30 million improvement at the midpoint is driven by the strong ongoing performance of our Nav tab and the inclusion of Bovair and Zenrelia in the 2024 expectations. We remain on track to deliver $600 to $700 million in sales from our innovation portfolio by the end of 2025.

Jeff: Now let's get to innovation on slide 7. Innovation sales contributed $109 million in the quarter, with $209 million in the first half of 2024. In June , we increased innovation sales expectations to $400 to $450 million for the full year.

Jeff: The just over $30 million improvement at the midpoint is driven by the strong, ongoing performance of Xperia and AdTab, and the inclusion of Bovair and Zenrelia in the 2024 expectations.

Jeff: We remain on track to deliver $600 to $700 million in sales from our innovation portfolio by the end of 2025.

Jeff Simmons: On slide eight, we reflect progress on our late-stage innovation timeline as we continue to advance our ambition of delivering consistent high impact innovation. On slide nine, let's review further details on our three late-stage potential blockbusters with one expected to launch in each of the next three quarters. First on Bovair, we continue to make good progress on the steps necessary to successfully commercialize. To date, we have approximately 500,000 dairy cows activated in our uplift database, which tracks methane reduction based on approved protocols and it enables farmers to monetize carbon.

Jeff: On slide 8, we reflect progress on our late-stage innovation timeline as we continue to advance our ambition of delivering consistent, high-impact innovation.

Jeffrey Simmons: On slide 9, let's review further details on our three late-stage potential blockbusters, with one expected to launch in each of the next three quarters. First, on Beauvair, we continue to make good progress in the steps necessary to successfully commercialize it. To date, we have approximately 500,000 dairy cows activated in our Uplift database, which tracks methane reduction based on approved protocols, and it enables farmers to monetize carbon. The majority of state registrations are complete.

Jeff: On slide nine, let's review further details on our three late-stage potential blockbusters with one expected to launch in each of the next three quarters.

Jeff: First on Beauvair, we continue to make good progress in the steps necessary to successfully commercialize.

Speaker Change: To date, we have approximately 500,000 dairy cows activated in our Uplift database, which tracks methane reduction based on approved protocols, and it enables farmers to monetize carbon. The majority of state registrations are complete, however, we're still awaiting California a key dairy state.

Jeff Simmons: The majority of state registrations are complete, however we're still awaiting California a key dairy state. Athian is negotiating contracts with several consumer goods companies to purchase carbon based on the feeding of Bovair and remains into dairy cows. While the overall process is complex, we believe this creates a sustained competitive advantage for Elaine Coal and will enable our next era of farm animal growth from innovation. Overall, we're encouraged by the progress and high interest across the value chain while we expect producers to begin feeding Bovair to dairy cows in the coming months.

Jeffrey Simmons: However, we're still awaiting California, a key dairy state. Atheon is negotiating contracts with several consumer goods companies to purchase carbon based on the feeding of bovair and ruments into dairy cows. While the overall process is complex, we believe this creates a sustained competitive advantage for Elanco and will enable our next era of farm animal growth from innovation. Overall, we're encouraged by the progress and high interest across the value chain, while we expect producers to begin feeding bovair to dairy cows in the coming months. Next on Xenrelia:

Speaker Change: Atheon is negotiating contracts with several consumer goods companies to purchase carbon based on the feeding of bovair and rumens into dairy cows.

Speaker Change: While the overall process is complex, we believe this creates a sustained competitive advantage for Elanco and will enable our next era of farm animal growth from innovation.

Jeff: Overall, we're encouraged by the progress and high interest across the value chain while we expect producers to begin feeding Bovair to dairy cows in the coming months.

Jeffrey Simmons: Before the end of June, we received confirmation from the FDA that all major technical sections, effectiveness, safety, and CM&C, were complete. We're pleased to share that the final 60-day administrative review period is underway in the U.S. We expect the final FDA approval in late September with a nearly immediate launch in the U.S. in early October. We're also excited to begin globalizing the product, with a launch in Brazil expected in the fourth quarter as well.

Jeff Simmons: Next on Zanrelia, before the end of June, we received confirmation from the FDA that all major technical sections effectiveness safety and CMC were complete. We're pleased to share that the final 60 day administrator review period is underway in the US. We expect the final FDA approval in late September with a nearly immediate launch in the US in early October. We're also excited to begin globalizing the product with launch in Brazil, expected in the fourth quarter as well.

Speaker Change: Next on Venrelia.

Jeff: Before the end of June , we received confirmation from the FDA that all major technical sections of effectiveness, safety, and CM&C were complete.

Jeff: we're pleased to share that the final sixty day administratative review period is underway in the u s

Jeff: we expect the final fda approval in late september with an nearly immediate launch in the u s in early octoberwe're also excited to begin globalizing the product with launch in brazil expected in the fourth quarter as well

Jeff Simmons: We're very encouraged about the opportunity for Elaine Coal to enter the more than $1.5 billion global canine dermatology market and for the blockbuster potential of Zanrelia. We continue to expect that Zanrelia will be positively differentiated from the current jack inhibitor on the market with regards to effectiveness and convenience. Our view is informed by our expected US label and the head to head data submitted as part of the EU data package. As Sheridan June, the expected US label will include a box warning related to our vaccine response study.

Jeffrey Simmons: We're very encouraged about the opportunity for Elanco to enter the more than $1.5 billion global canine dermatology market and for the blockbuster potential of Xenrelia. We continue to expect that Xenrelia will be positively differentiated from the current JAK inhibitor on the market with regard to effectiveness and convenience, our view being informed by our expected U.S. label and the head-to-head data submitted as part of the EU data package.

Jeff: We're very encouraged about the opportunity for Elanco to enter the more than $1.5 billion global canine dermatology market and for the blockbuster potential of Xenrelia.

Jeff: We continue to expect that Xenrelia will be positively differentiated from the current JAK inhibitor on the market with regards to effectiveness and convenience.

Jeff: our view is informed by our expected u s label and the head to head data submitted as part of the eu data package

Jeffrey Simmons: As shared in June, the expected U.S. label will include a box warning related to our vaccine response study. We expect this label language will slow the initial product adoption curve in the U.S. as we believe it will require focused veterinary education on the product. Our expectations for treatment days being limited by approximately 25% are based on expected language in the box warning related to vaccine usage.

Jeff: As shared in June , the expected U.S. label will include a box warning related to our vaccine response study. We expect this label language will slow the initial product adoption curve in the U.S. as we believe it will require focused veterinary education on the product.

Jeff Simmons: We expect this label language will slow the initial product adoption curve in the US as we believe it will require focused veterinary education on the product. Our expectations for treatment days being limited by approximately 25% is based on expected language in the box warning related to vaccine usage. We have done extensive and broad market research that concludes efficacy and value matter most to veterinarians. And even with the expected label there is strong interest in Zanrelia as a treatment option for canine dermatology.

Jeff: our expectations for treatment days be unlimited by approximately twenty-five percent is based on expected language in the box warning related to vaccine usage

Jeffrey Simmons: We have done extensive and broad market research that concludes efficacy and value matter most to veterinarians. And even with the expected label, there is strong interest in Xenrelia as a treatment option for canine dermatology. Bobby Modi and the U.S. Pet Health Commercial Organization have an extensive launch plan and are eager to bring this product to customers. The sales force is being trained on the product, marketing materials are in final development, and we are lining up key opinion leaders.

Jeff: We have done extensive and broad market research that concludes efficacy and value matter most to veterinarians. And even with the expected label, there is strong interest in Xenrelia as a treatment option for canine dermatology.

Jeff Simmons: Bobby Modi and the U.S. Pet Health Commercial Organization have an extensive launch plan and are eager to bring this product to customers. The sale force is being trained on the product, marketing materials are in final development, and we are lining up key opinion leaders. Upon approval, the team will activate a vet-focused engagement plan that leverages robust technical data that we are confident will allow the merit of the product to drive clinic adoption.

Bobby Modi: Bobby Modi and the U.S. Pet Health Commercial Organization have an extensive launch plan and are eager to bring this product to customers. The Salesforce is being trained on the product, marketing materials are in final development, and we are lining up key opinion leaders.

Jeffrey Simmons: Upon approval, the team will activate a vet-focused engagement plan that leverages robust technical data that we are confident will allow the merits of the product to drive clinic adoption. Within days of approval, we intend to host a conference call for the investment community to provide clarity on the label, our differentiation, and our sales and marketing approach to help underwrite the opportunity we see for Zinrelia to contribute meaningful, accretive sales and EBITDA without link. We look forward to providing more details in the coming months. Finally, on Credelio Quattro.

Jeff: Upon approval, the team will activate a vet-focused engagement plan that leverages robust technical data that we are confident will allow the merits of the product to drive clinic adoption.

Jeffrey Simmons: Within days of approval, we intend to host a conference call for the investment community to provide clarity on the label, our differentiation, and our sales and marketing approach to help underwrite the opportunity we see for Zinrelia to contribute meaningful, accretive sales and EBITDA free link. We look forward to providing more details in the coming months. Finally, on Credelio Quattro, as previously shared, two of the three major technical sections, effectiveness, and safety, are complete.

Jeff Simmons: Within days of approval, we intend to host a conference call for the investment community to provide clarity on the label, our differentiation, and our sales and marketing approach to help underwrite the opportunity we see for Zenrelia to contribute meaningful, accretive sales in Ibadah, Sri Lanka. We look forward to providing more details in the coming months. Finally on Criterio Quattro, as previously shared, two of the three major technical sections of magnets and safety are complete.

Speaker Change: Within days of approval, we intend to host a conference call for the investment community to provide clarity on the label, our differentiation, and our sales and marketing approach to help underwrite the opportunity we see for Zinrelia to contribute meaningful, accretive sales in Ibiza-Frilanco.

Jeffrey Simmons: As previously shared, two of the three major technical sections, effectiveness and safety, are complete. We expect the final administrative review to begin later this quarter, with final approval expected in the fourth quarter of this year. In addition to the regulatory process, we are finalizing the manufacturing scale-up to optimize launch, which is targeted for the first quarter of 2025. We're very excited to bring this differentiated potential blockbuster to the largest and one of the fastest-growing market segments in our business.

Jeff: We look forward to providing more details in the coming months.

Jeff: Finally, on Credelio Quattro. As previously shared, two of the three major technical sections, effectiveness and safety, are complete. We expect the final administrative review to begin later this quarter, with the final approval expected in the fourth quarter of this year.

Jeffrey Simmons: We expect the final administrative review to begin later this quarter, with the final approval expected in the fourth quarter of this year. Now I'll pass it to Todd to provide more on our second quarter results and financial guidance.

Jeff Simmons: We expect the final administrator review to begin later this quarter with a final approval expected in the fourth quarter of this year. In addition to the regulatory process, we are finalizing the manufacturing scale-up to optimize launch, which is targeted for the first quarter of 2025. We are very excited to bring this differentiated potential blockbuster to the largest and one of the fastest growing market segments in our business. We estimate the US parasiticide market had approximately $3.8 billion with a broad spectrum products now making up nearly 25% of the market, demonstrating the massive gain since their introduction just three years ago.

Jeff: In addition to the regulatory process, we are finalizing the manufacturing scale-up to optimize launch, which is targeted for the first quarter of 2025.

Jeff: we are very excited to bring this differentiated potential blockbuster to the largest and one of the fastest growing market segments in our business

Jeffrey Simmons: We estimate the U.S. parasiticide market at approximately $3.8 billion, with broad-spectrum products now making up nearly 25% of the market, demonstrating massive gains since their introduction just three years ago. We expect the addition of Cordelio Quatro to our portfolio of U.S. prescription parasiticides, which represents about $300 million of sales in 2023, to significantly enhance the growth of our U.S. pet health business in 2025 and beyond. We expect these pet health innovations to position Elanco very competitively in the U.S. vet clinic as just the second company to bring a comprehensive product offering to veterinarians with broad-spectrum parasiticides, dermatology, vaccines, and therapeutics.

Jeff: We estimate the U.S. parasiticide market at approximately $3.8 billion with the broad-spectrum products now making up nearly 25% of the market, demonstrating the massive gains since their introduction just three years ago.

Jeff Simmons: We expect the addition of Criterio Quattro to our portfolio of US prescription parasiticides, which represents about $300 million of sales in 2023, to significantly enhance the growth of our US pet health business in 2025 and beyond. We expect these pet health innovations to position Ilanco very competitively in the US vet clinic as just the second company to bring a comprehensive product offering to veterinarians with broad spectrum parasiticides, dermatology, vaccines, and therapeutics.

Jeff: we expect the addition of corllio quadro to our portfolio of u s prescription paras iticides which represents about three hundred million dollarsofsales in two thousand and twenty three to significantly enhance the growth of our u s pet health business in two thousand and twenty five and beyond

Jeff: We expect these pet health innovations to position Elanco very competitively in the U.S. vet clinic as just the second company to bring a comprehensive product offering to veterinarians with broad-spectrum parasiticides, dermatology, vaccines, and therapeutics.

Jeffrey Simmons: We are encouraged by the progress by our R&D and regulatory colleagues, the diligence by our manufacturing teams to prepare product supply, the creativity of the marketing team to prepare for competitive launches, and the engagement and sheer excitement of our commercial colleagues as we enter this important era for Elanco. Now I'll pass it to Todd to provide more on our second quarter results and financial guidance.

Jeff Simmons: We are encouraged by the progress by our R&D and regulatory colleagues, the diligence by our manufacturing teams to prepare product supply, the creativity of the marketing team to prepare for competitive launches, and the engagement and sheer excitement of our commercial colleagues as we enter this important era for Ilanco.

Jeff: We are encouraged by the progress by our R&D and regulatory colleagues.

Jeff: the diligence by our manufacturing teams to prepare product supply, the creativity of the marketing team to prepare for competitive launches, and the engagement and sheer excitement of our commercial colleagues as we enter this important era for Elanco.

Todd Young: Now I'll pass it to Todd to provide more on our second quarter results in financial guidance. Thank you, Jeff, and good morning everyone. Today, I'll focus my comments on our second quarter adjusted measures, so please refer to today's earnings press release for a detailed description of the year-to-year changes in our reported results. Starting on slide 11, in the second quarter, we delivered $1.184 billion of revenue, an increase of 12% or 13%, excluding the unfavorable impact of foreign exchange rates.

Jeff: Now I'll pass it to Todd to provide more on our second quarter results and financial guidance.

Todd Young: Thank you, Jeff, and good morning, everyone. Today, I will focus my comments on our second quarter adjusted measures, so please refer to today's earnings press release for a detailed description of the year-over-year changes and our reported results. Starting on slide 11, in the second quarter, we delivered $1.184 billion of revenue, an increase of 12% or 13% excluding the unfavorable impact of foreign exchange rates. Price contributed 4% in the quarter. The DRP system blackout that occurred in 2023 impacts our year-over-year comparison for the second quarter.

Todd: Thank you, Jeff, and good morning, everyone. Today, I will focus my comments on our second quarter adjusted measures, so please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results.

Todd: Starting on slide 11, in the second quarter, we delivered $1.184 billion of revenue, an increase of 12% or 13% excluding the unfavorable impact of foreign exchange rates.

Todd Young: Price contributed 4% in the quarter. On the retail side of the business, lower second quarter revenue in 2024 was primarily attributable to changes in purchasing patterns and more conservative inventory management at several large retailers. Over the course of the first half of the year, our top retail customers built significantly less inventory compared to the same time period last year as a result of our ERP cutover and purchasing timing ahead of discount days.

Todd Young: Price contributed 4% in the quarter. The ERP system blackout that occurred in 2023 impacts our year-over-year comparison to the second quarter. Last year, we estimated sales of $9 million to $110 million shifted from the second quarter into the first quarter, reflecting a 9% to 10% percentage point benefit to growth in the second quarter of this- this year. We estimate the underlying business growth 3-4%, slightly ahead of our expectations. The estimated impacts are known on flight 13 for each business area.

Todd: Price contributed 4% in the quarter.

Todd: DRP system blackout that occurred in 2023 impacts our year-over-year comparison for the second quarter.

Todd Young: Last year, we estimated sales of $90 million to $110 million shifted from the second quarter into the first quarter, reflecting a 9 to 10 percentage point benefit to growth in the second quarter of this year. We estimate the underlying business grew 3 to 4 percent, slightly ahead of our expectations. The estimated impacts are noted on slide 13 for each business area.

Todd: Last year, we estimated sales of $90 million to $110 million shifted from the second quarter into the first quarter, reflecting a 9 to 10 percentage point benefit to growth in the second quarter of this year.

Todd: We estimate the underlying business group 3-4%.

Todd: Slightly ahead of our expectations, the estimated impacts are noted on slide 13 for each business area. For pet health, second quarter constant currency revenue growth was 13%, with an estimated benefit to year-over-year growth of 13 to 14 percentage points from the ERP blackout.

Todd Young: For pet health, second quarter constant currency revenue growth was 13 percent, with an estimated benefit to year-over-year growth of 13 to 14 percentage points from the ERP blackout. In the U.S., pet health revenue grew 1% in the second quarter, including a benefit to year-over-year growth of approximately 10 percentage points from the ERP blackout. In the veterinary clinic, the underlying decline was driven by competitive innovation pressure on legacy products. However, this pressure was partially offset by our recently launched products, specifically CPMA.

Todd Young: For pet health, second quarter constant currency revenue growth was 13% with an estimated benefit to year-over-year growth of 13-14% points from the ERP blackout. In the US, pet health revenue grew 1% in the second quarter, including a benefit to year-over-year growth of approximately 10% points from the ERP blackout. In the vet clinic, the underlying decline was driven by competitive innovation pressure on legacy products. This pressure was partially offset by a recently launched product, specifically CPMA.

Todd: In the U.S., pet health revenue grew 1% in the second quarter, including a benefit to year-over-year growth of approximately 10 percentage points from the ERP blackout. In the vet clinic, the underlying decline was driven by competitive innovation pressure on legacy products.

Todd: This pressure was partially offset by our recently launched products, specifically CPMA.

Todd Young: On the retail side of the business, lower second-quarter revenue in 2024 was primarily attributable to changes in purchasing patterns and more conservative inventory management at several large retailers. Additionally, over the course of the first half of the year, our top retail customers built significantly less inventory compared to the same time period last year as a result of our ERP cutover and purchasing timing ahead of discount days. However, as we focus on dispensing, we are encouraged by the positive momentum we see in in-market demand.

Todd Young: On the retail side of the business, lower second quarter revenue in 2024 was primarily attributable to changes in purchasing patterns and more conservative inventory management at several large retailers. Over the course of the first half of the year, our top retail customers built significantly less inventory compared to the same time period last year, as a result of our ERP cut-over and purchasing timing ahead of discount days. However, as we focus on dispensing, we are encouraged by the positive momentum we see in the in-market demand.

Todd: On the retail side of the business, lower second quarter revenue in 2024 was primarily attributable to changes in purchasing patterns and more conservative inventory management at several large retailers.

Todd: Over the course of the first half of the year, our top retail customers built significantly less inventory compared to the same time period last year, as a result of our ERP cutover and purchasing timing ahead of discount days.

Todd Young: However, as we focus on dispensing, we are encouraged by the positive momentum we see in in-market demand. In May and June, dispensing for our OTC products in our top six retailers grew approximately 13% compared to a mid-single-digit decline in the first four months of the year. In July, dispensing growth for Elanco continued in those key retailers.

Todd: However, as we focus on dispensing, we are encouraged by the positive momentum we see in the in-market demand.

Todd Young: In May and June, dispensing for our OTC products in our top six retailers grew approximately 13% compared to a mid-single-digit decline in the first four months of the year. In July, dispensing growth for Elanco continued in those key retailers.

Todd Young: In May and June, dispensing for our OTC products and our top six retailers grew approximately 13% compared to a mid-single-digit decline in the first four months of the year. In July, dispensing growth for a linko continues in those key retailers. As Jeff mentioned, the execution of our strategy is expected to drive continued dispensing growth throughout the back half of the year, and we will benefit from retailer purchases expected to be more in line with dispensing compared to the second half of last year.

Todd: In May and June , dispensing for our OTC products in our top 6 retailers grew approximately 13% compared to a mid-single-digit decline in the first four months of the year. In July , dispensing growth for Elanco continued in those key retailers.

Todd Young: As Jeff mentioned, the execution of our strategy is expected to drive continued dispensing growth throughout the back half of the year, and we will benefit from retailer purchases expected to be more in line with dispensing compared to the second half of last year. International pet health grew 34% in cost and currency, including a benefit to year-over-year growth of approximately 21 percentage points from the ERP blackout. Excluding the blackout impact, the underlying business growth was driven primarily by new products, led by ADTAB and Credelio Plus, and the rebound in the Spain retail business, offset by continued weakness in the China pet market.

Todd Young: As Jeff mentioned, the execution of our strategy is expected to drive continued dispensing growth throughout the back half of the year, and we will benefit from retailer purchases expected to be more in line with dispensing compared to the second half of last year. International pet health grew 34% in cost and currency, including a benefit to year-over-year growth of approximately 21 percentage points from the ERP blackout. Excluding the blackout impact, underlying business growth was driven primarily by new products, led by AdTap and Cradelo Plus, and the rebound in the Spain retail business, offset by continued weakness in the China pet market. Outside of the U.S., growth was driven by continued strength in poultry and increased demand for cattle products in Latin America, partially offset by reduced sales of Keck Stone.

Todd: As Jeff mentioned, the execution of our strategy is expected to drive continued dispensing growth throughout the back half of the year, and we will benefit from retailer purchases expected to be more in line with dispensing compared to the second half of last year.

Todd Young: International pet health grew 34% in constant currency, including a benefit to year-over-year growth of approximately 21 percentage points from the ERP blackout. Excluding the blackout impact, the underlying business growth was driven primarily by new products, led by ad tab and Crudello Plus and the rebound in the Spain retail business, offset by continued weakness in the China pet market. Moving to farm animal, our global business grew 14% in constant currency, with an estimated benefit to year-over-year growth of 5 percentage points from the ERP blackout.

Jeff: International pet health grew 34% in cost and currency, including a benefit to year-over-year growth of approximately 21 percentage points from the ERP blackout.

Speaker Change: Excluding the blackout impact, the underlying business growth was driven primarily by new products, led by AdTab and Credelo Plus, and the rebound in the Spain retail business, offset by continued weakness in the China pet market.

Todd Young: Moving to farm animals, our global business grew 14% in constant currency, with an estimated benefit to year-over-year growth of 5 percentage points from the ERP blackout. The underlying business growth was driven by strength in U.S. cattle, with continued expiry adoption and cattle vaccine resupply. Additionally, in the U.S., timing of poultry rotations provided a tailwind compared to the second quarter of last year. We expect these trends to continue in the third quarter, but we'll face a difficult comparison in the fourth quarter, lapping last year's initial resupply of cattle vaccines and positive poultry rotations. Outside of the U.S., growth was driven by continued strength in poultry and increased demand for cattle products in Latin America, partially offset by reduced sales of Keck Stone.

Todd: Moving to Farm Animal, our global business grew 14% in constant currency, with an estimated benefit to year-over-year growth of 5 percentage points from the ERP blackout.

Todd Young: The underlying business growth was driven by strength in U.S, cattle, with continued expere adoption and cattle vaccine resupply. Additionally, in the U.S., timing of poultry rotations provided a tailwind compared to the second quarter of last year. We expect these trends to continue in the third quarter, but will face a difficult compare in the fourth quarter, lapping last year's initial resupply of cattle vaccines and positive poultry rotations. Outside of the U.S., growth was driven by continued strength in poultry and increased demand for cattle products in Latin America, partially offset by reduced sales of kextone.

Speaker Change: The underlying business growth was driven by strength in U.S. cattle, with continued expiry adoption and cattle vaccine resupply. Additionally, in the U.S., timing of poultry rotations provided a tailwind compared to the second quarter of last year.

Speaker Change: We expect these trends to continue in the third quarter, but will face a difficult compare in the fourth quarter lapping last year's initial resupply of cattle vaccines and positive poultry rotations.

Todd: Outside of the U.S., growth was driven by continued strength in poultry and increased demand for cattle products in Latin America, partially offset by reduced sales of keck stone.

Todd Young: Continuing down the income statement on slide 14, the decline in gross margin was in line with our expectations of slowing the manufacturing plants, creating an approximate 190 basis point headwind in the quarter. We continue to expect this impact to be neutral in the third quarter and to flip to a positive in the fourth quarter as we mitigate the impact of our plant slowdowns starting in the back half of last year. Product mix was a headwind to margin in the quarter, partially offset by positive price. Operating expenses increased 2%, driven by employee-related expenses and investment in our European pet business.

Todd Young: Continuing down the income statement on slide 14, the declining gross margin was in line with our expectations, a slowing the manufacturing plants created an approximate 190 basis point headwind in the quarter. We continue to expect this impact to be neutral in the third quarter to flip to a positive in the fourth quarter as we lapped the impact of our plant flowdowns starting in the back half of last year. Product mix was a headwind of margin in the quarter, partially offset by positive price.

Todd: Continuing down the income statement on slide 14, the decline in gross margin was in line with our expectations of slowing the manufacturing plants, creating an approximate 190 basis point headwind in the quarter.

Todd: We continue to expect this impact to be neutral in the third quarter and to flip to a positive in the fourth quarter as we lap the impact of our plant slowdowns starting in the back half of last year.

Todd Young: Product mix was a headwind to margin in the quarter, partially offset by positive price. Operating expenses increased 2%, driven by employee-related expenses and investment in our European pet business. Timing of R&D spend, partially offset by the productivity benefits of being on one operating... On slide 15, we have provided walks to illustrate our year-over-year performance in Adjusted EBITDA and Adjusted EPS. Adjusted EBITDA was $275 million in the quarter. The year-over-year comparison includes a benefit of approximately $70 million to $90 million from the ERP blackout in the second quarter of last year. Adjusted EPS was $0.30 in the quarter.

Todd: Product mix was a headwind to margin in the quarter, partially offset by positive price. Operating expenses increased 2%, driven by employee-related expenses and investment in our European pet business. Timing of R&D spend, partially offset by productivity benefits of being on one operating system.

Todd Young: Operating expenses increased 2% driven by employee related expenses and investment in our European pet business, timing of R&D spend, partially offset by productivity benefits of being on one operating. System. On slide 15, we have provided walks to illustrate our year-of-year performance in adjusted EVA DAW and adjusted the EPS. Adjusted EVA DAW was $275 million in the quarter. The year-of-year comparison includes a benefit of approximately $70 million to $90 million from the ERP Blackout in the second quarter of last year.

Todd Young: Timing of R&D spend partially offset by the productivity benefits of being on one operating. On slide 15, we have provided walks to illustrate our year-over-year performance in Adjusted EBITDA and Adjusted EPS. Adjusted EBITDA was $275 million in the quarter. The year-over-year comparison includes a benefit of approximately $70 million to $90 million from the ERP blackout in the second quarter of last year. For the underlying business, the decline of $16 to $36 million was driven by lower gross margin from slowing manufacturing output to reduce balance sheet inventory, as well as negative product costs. Adjusted EPS was $0.30 in the quarter. The year-over-year comparison includes a benefit of approximately $0.11 to $0.14 from the ERP blackout in the second quarter of last year.

Todd: On slide 15, we have provided walks to illustrate our year-over-year performance in adjusted EVDA and adjusted EPS.

Todd: Adjusted EBITDA was $275 million in the quarter. The year-over-year comparison includes a benefit of approximately $70 million to $90 million from the ERP blackout in the second quarter of last year.

Todd Young: For the underlying business, the decline of $16 to $36 million was driven by lower gross margin from slowing manufacturing output to reduce balance sheet inventory as well as negative product mix. Adjusted EVA was $0.30 in the quarter. The year-of-year comparison includes a benefit of approximately $11 to $14 from the ERP Blackout in the second quarter of last year. Both interest expense and our tax rate were lower in 2024 than in 2023.

Todd: For the underlying business, the decline of $16 to $36 million was driven by lower gross margin from slowing manufacturing output to reduce balance sheet inventory, as well as negative product mix.

Todd Young: The year-over-year comparison includes a benefit of approximately $0.11 to $0.14 from the ERP blackout in the second quarter of last year. Next, let me offer a few words on our cash, working capital, and debt on slide 16. Cash provided by operations was $200 million in the quarter, or an increase of $139 million compared to the second quarter of last year. This increase reflects lower project expenses and our strategic efforts to reduce balance sheet inventory.

Todd: Adjusted EPS was $0.30 in the quarter. The year-over-year comparison includes a benefit of approximately $0.11 to $0.14 from the ERP blackout in the second quarter of last year. Both interest expense and our tax rate were lower in 2024 than in 2023.

Todd Young: Both interest expense and our tax rate were lower in 2024 than in 2023. Next, let me offer a few words on our cash, working capital, and debt on slide 16. Cash provided by operations was $200 million in the quarter, an increase of $139 million compared to the second quarter of last year.

Todd Young: Next, let me offer a few words on our cash working capital in debt on slide 16. Cash provided by operations was $200 million in the quarter or an increase of $139 million compared to the second quarter of last year. This increase reflects lower project expenses and our strategic efforts to reduce balance sheet inventory. Our strategy and focus execution are paying off to deliver improved cash generation. We entered the quarter with net debt of $5.3 billion, a reduction of $163 million in the quarter.

Speaker Change: Next, let me offer a few words on our cash, working capital, and debt on slide 16.

Todd: Cash provided by operations was $200 million in the quarter, or an increase of $139 million compared to the second quarter of last year.

Todd: This increase reflects lower project expenses and our strategic efforts to reduce balance sheet inventory. Our strategy and focused execution are paying off to deliver improved cash generation.

Todd Young: Our strategy and focused execution are paying off to deliver improved cash generation. Importantly, a significant portion of our taxes related to the transaction will be paid out in 2025. This allowed us to pay down more debt than initially expected in 2024, resulting in interest expense savings, but requires a cash tax increase next year of approximately $150 million related to the transaction. At the end of June, our net leverage ratio was 5.6 times, down from 6.1 times at the end of the first quarter.

Todd Young: This increase reflects lower project expenses and our strategic efforts to reduce balance sheet inventory. Our strategy and focused execution are paying off to deliver improved cash generation. We ended the quarter with net debt of $5.3 billion, a reduction of $163 million in the quarter. Subsequently, in July, we paid down $1.2 billion of debt with proceeds from the sale of our aquabusiness. Importantly, a significant portion of our taxes related to the transaction will be paid out in 2025.

Todd: We ended the quarter with net debt of $5.3 billion, a reduction of $163 million in the quarter. Subsequently, in July , we paid down $1.2 billion of debt with proceeds from the sale of our aqua business.

Todd Young: Subsequently, in July, we paid down $1.2 billion of debt with proceeds from the sale of our aqua business. Importantly, a significant portion of our taxes related to the transaction will be paid out in 2025. This allowed us to pay down more debt than initially expected in 2024 as all the interest expense savings, but requires a cash tax increase next year of approximately $150 million related to the transaction. We have updated slides 28 and 29 in the appendix to reflect our key debt information and factors impacting cash flow and leverage after the additional pay down. At the end of June, our net leverage ratio was 5.6 times down from 6.1 times at the end of the first quarter.

Todd: Importantly, a significant portion of our taxes related to the transaction will be paid out in 2025.

Todd Young: This allowed us to pay down more debt than initially expected in 2024, resulting in interest expense savings, but requires a cash tax increase next year of approximately $150 million related to the transaction. We have updated slides 28 and 29 in the appendix to reflect our key data information and factors impacting cash flow and leverage after this additional paydown. At the end of June, our net leverage ratio was 5.6 times, down from 6.1 times at the end of the first quarter.

Todd: This allowed us to pay down more debt than initially expected in 2024, resulting in interest expense savings, but requires a cash tax increase next year of approximately $150 million related to the transaction.

Todd: We have updated slides 28 and 29 in the appendix to reflect our key debt information and factors impacting cash flow and leverage after this additional pay down.

Speaker Change: At the end of June , our net leverage ratio was 5.6 times, down from 6.1 times at the end of the first quarter. We expect year-end net leverage in the mid 4 times range, and in 2025, expect this ratio to move lower to the low 4 times to high 3 times range.

Todd Young: We expect year-end net leverage in the mid-4 times range, and in 2025, we expect this ratio to move lower to the low-4 times to high-3 times range. For the full year, we now expect revenue to be between $4.41 billion and $4.46 billion, representing organic constant currency growth of approximately 3 to 4 percent. This is a slight increase over our May guidance driven by innovation sales expectations, increasing to $400 to $450 million. Second quarter overperformance in U.S. farm animal and international pet health is expected to be offset by incremental headwinds on gross margin and increased investments in launches in the second half of the year.

Todd Young: We expect year-end net leverage in the mid 4 times range, and in 2025, we expect this ratio to move lower to the low 4 times to high 3 times range. Now, let's move to our financial guidance, starting on slide 17. Today, we are introducing organic growth, a measure we intend to use over the next 12 months that excludes the impact of the aqua divestiture across the full P&L.

Todd Young: We expect year in net leverage in the mid four times range and in 2025, expect this ratio to move lower to the low four times to high three times range.

Todd Young: As Jeff said, we are maintaining guidance for the base business while increasing our organic growth expectations to include increased contribution from innovation, including Zinrelia and Bovair. For the full year, we now expect revenue to be between $4.41 billion and $4.46 billion, representing organic constant currency growth of approximately 3 to 4 percent. This is a slight increase over our May guidance driven by innovation sales expectations increasing to $400 to $450 million. Slides 19 and 20 provide walks from our May to August guidance, including removing the expected contribution of. We are maintaining our Organic Adjusted EBITDA guidance, which is now $900 to $940 million for the full year after removing approximately $60 million of Adjusted EBITDA attributable to ACWA.

Todd Young: Now, let's move to our financial guidance starting on slide 17. Today, we are introducing organic growth and measure we intend to use over the next 12 months that excludes the impact of the aqua investor across the full PNL. As Jeff said, we are maintaining guidance for the base business while increasing our organic growth expectations to include increased contribution from innovation, including Zinrelia and Bover. For the full year, we now expect revenue to be between $4.41 billion and $4.46 billion, representing organic constant currency growth of approximately 3 to 4%.

Todd: Now let's move to our financial guidance starting on slide 17. Today we are introducing Organic Growth, a measure we intend to use over the next 12 months that excludes the impact of the aqua divestiture across the full P&L.

Todd Young: Second quarter overperformance in U.S. farm animal and international pet health is expected to be offset by incremental headwinds on gross margin and increased investments in launches in the second half of the year. For Adjusted EPS, we are maintaining our range of 88 cents to 96 cents for the full year. We are able to fully offset the reduced Adjusted EBITDA flow through from the aqua business with approximately $40 million of interest savings associated with the debt reduction and lower tax rate.

Todd: As Jeff said, we are maintaining guidance for the base business while increasing our organic growth expectations to include increased contribution from innovation, including Zinrelia and Bovair.

Jeff: For the full year, we now expect revenue to be between $4.41 billion and $4.46 billion, representing organic constant currency growth of approximately 3 to 4 percent.

Todd Young: This is a slight increase over our May guidance driven by innovation sales expectations, increasing to $400 to $450 million. Slides 19 and 20 provide walks from our May to August guidance, including removing the expected contribution of aqua. We are maintaining our organic adjusted EBITDAG guidance, which is now $900 to $940 million of a full year after removing approximately $60 million of adjusted EBITDAG attributable to aqua. 2nd quarter, overperformance in US Farm Animal and International Pet Health is expected to be offset by incremental headwinds on gross margin and increased investments in launches in the second half of the year.

Speaker Change: This is a slight increase over our May guidance driven by innovation sales expectations increasing to $400 to $450 million. Slides 19 and 20 provide walks from our May to August guidance, including removing the expected contribution of ACWA.

Todd: We are maintaining our Organic Adjusted EBITDA guidance, which is now $900 to $940 million for the full year, after removing approximately $60 million of Adjusted EBITDA attributable to ACWA.

Speaker Change: Second quarter overperformance in U.S. farm animal and international pet health is expected to be offset by incremental headwinds on gross margin and increased investments in launches in the second half of the year.

Todd Young: For Adjusted EPS, we are maintaining our range of 88 cents to 96 cents for the full year. We are able to fully offset the reduced Adjusted EBITDA flow-through from the aqua business with approximately $40 million of interest savings associated with the debt reduction and lower taxes. Finally, moving to slide 23, our implied fourth quarter guidance represents a return to organic adjusted EBITDA and EPS growth. We are confident in the sequential trajectory change with gross margin headwinds expected to subside as we slow down our manufacturing output and the detriment from last year's devaluation of the Argentinian peso. Now I'll hand it back to Jeff for his closing comments.

Todd Young: For adjusted EPS, we are maintaining our range, the ADA to 96 cents for the full year. We are able to fully offset the reduced adjusted eva.flow through from the aqua business with approximately $40 million of interest savings associated with the debt reduction and lower tax expense. On a gap basis, we now expect EPS between 63 cents and 71 cents for the full year. This step up compared to our previous guidance includes a pretext gain of $1.31 on the sale of our aqua business.

Todd: For Adjusted EPS, we are maintaining our range of $0.88 to $0.96 for the full year. We are able to fully offset the reduced Adjusted EBITDA flow-through from the aqua business with approximately $40 million of interest savings associated with the debt reduction and lower tax expense.

Todd Young: On a gap basis, we now expect EPS between $0.63 and $0.71 for the full year. This step up compared to our previous guidance includes a pre-tax gain of $1.31 on the sale of our aqua business. On slide 21, we are introducing financial guidance for the third quarter. We expect revenue of $1.02 billion to $1.05 billion, representing organic constant currency growth of 1 to 4 percent. We expect adjusted EBITDA between $140 million and $170 million and adjusted EPS between $0.10 and $0.14.

Todd: On a gap basis, we now expect EPS between $0.63 and $0.71 for the full year. This step up compared to our previous guidance includes a pre-tax gain of $1.31 on the sale of our aqua business.

Todd Young: On flight 21, we are introducing financial guidance for the third quarter. We expect revenue of $1.02 billion to $1.05 billion, representing organic constant currency growth of 1 to 4%. We expect adjusted EBITDA between $140 million and $170 million and adjusted EPS of 10 cents to 14 cents.

Todd: On slide 21, we are introducing financial guidance for the third quarter. We expect revenue of $1.02 billion to $1.05 billion, representing organic constant currency growth of 1 to 4 percent.

Todd: We expect adjusted EBITDA between $140 million and $170 million, and adjusted EPS of $0.10 to $0.14.

Todd Young: Finally, moving to slide 23, our implied fourth quarter guidance represents a return to organic adjusted EBITDA and EPS growth. We are confident in the sequential trajectory change with gross margin headwinds expected to subside as we slow down our manufacturing output and the detriment from last year's devaluation of the Argentinian peso. Now I'll hand it back to Jeff for closing comments.

Todd Young: Finally, moving to slide 23, our implied fourth quarter guidance represents a return to organic adjusted EBITDA and EPS growth. We are confident in the sequential trajectory change with gross margin headwinds expected to subside as we lap slowing down our manufacturing output and the detriment from last year's devaluation of the Argentinian peso.

Todd: Finally, moving to slide 23. Our implied fourth quarter guidance represents a return to organic adjusted EBITDA and EPS growth.

Jeff: We are confident in the sequential trajectory change, with gross margin headwinds expected to subside as we lap slowing down our manufacturing output and the detriment from last year's devaluation of the Argentinian peso. Now I'll hand it back to Jeff for closing comments.

Jeff Simmons: Now I'll hand it back to Jeff proposing comments. Thanks, Todd. Momentum continued in Q2, marking the fourth consecutive quarter of mid-single-digit constant currency revenue growth in the underlying business.

Jeffrey Simmons: Thanks, Todd. Momentum continued in Q2, marking the fourth consecutive quarter of mid-single-digit constant currency revenue growth in the underlying business. With a stabilizing base business and increased contributions from innovation, our raised 3% to 4% expected organic constant currency revenue growth in 2024 demonstrates marked improvement over the past several years. We continue to execute on improving our leverage profile with the completion of the AQUA transaction and quick debt paydown. Importantly, our major innovation window is now upon us, with three potential Blockbuster product launches imminent in each of the next three quarters.

Jeff: Thanks, Todd. Momentum continued in Q2, marking the fourth consecutive quarter of mid-single-digit constant currency revenue growth in the underlying business.

Jeff Simmons: With a stabilizing base business and increased contribution to minivation, our raised 3 to 4% expected organic constant currency revenue growth in 2024 demonstrates marked improvement over the past several years. We continue to execute on improving our leverage profile with a completion of the aqua transaction and quick debt paydown.

Jeff: With a stabilizing base business and increased contributions from innovation, our raised 3-4% expected organic constant currency revenue growth in 2024 demonstrates marked improvement over the past several years.

Jeffrey Simmons: We continue to execute on improving our leverage profile with the completion of the Aqua transaction and quick debt paydown. Importantly, our major innovation window is now upon us with three potential Blockbuster product launches imminent in each of the next three quarters. We have differentiated assets, and we intend to invest strategically with no regrets to maximize the potential launch curve and peak sales trajectory. We look forward to hosting a conference call upon Zenrelia approval to provide more specifics on our expected differentiation, as well as more details on the label and our go-to-market strategies. With that, I'll turn it over to Katy to moderate the Q&A.

Jeff: We continue to execute on improving our leverage profile with the completion of the Aqua transaction and quick debt pay down.

Jeff Simmons: Importantly, our major innovation window is now upon us with three potential blockbuster product launches imminent in each of the next three quarters. We have differentiated assets and we intend to invest strategically with no regrets to maximize the potential launch curve and peak sales trajectory. We have been preparing for these launches for some time, including recruiting top industry talent and conducting extensive market research to support our launch efforts.

Jeff: Importantly, our major innovation window is now upon us, with three potential Blockbuster product launches imminent in each of the next three quarters. We have differentiated assets, and we intend to invest strategically with no regrets to maximize the potential launch curve and peak sales trajectory.

Jeffrey Simmons: We have differentiated assets, and we intend to invest strategically with no regrets to maximize the potential launch curve and peak sales trajectory. We have been preparing for these launches for some time, including recruiting top industry talent and conducting extensive market research to support our launch effort. We look forward to hosting a conference call upon Zenrelia approval to provide more specifics on our expected differentiation, as well as more details on the label and our go-to-market strategies. With that, I'll turn it over to Katy to moderate the Q&A.

Todd: We have been preparing for these launches for some time, including recruiting top industry talent and conducting extensive market research to support our launch efforts.

Katy Grissom: We look forward to hosting a conference call upon Zenrelia approval to provide more specifics on our expected differentiation as well as more details on the label and our go-to-market strategies. With that, I'll turn it over to Katie to moderate the Q&A. Thanks, Jeff. We'd like to take questions from as many callers as possible, so we ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session and then we'll take the first caller.

Jeff: We look forward to hosting a conference call upon Zenrelia approval to provide more specifics on our expected differentiation, as well as more details on the label and our go-to-market strategies. With that, I'll turn it over to Katy to moderate the Q&A.

Katy Grissom: We'd like to take questions from as many callers as possible, so we ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

Katy Grissom: We'd like to take questions from as many callers as possible, so we ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

Katy Grissom: Thanks, Jeff. We'd like to take questions from as many callers as possible, so we ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. Your first question comes from John Block from CFO. Please go ahead.

Katy Grissom: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand in, join the queue. And if you'd like to withdraw that question, again, press star one.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star 1.

John Block: Your first question comes from John Block from Cecil. Please go ahead. Thanks guys.

Speaker Change: Your first question comes from John Block from CFO . Please go ahead.

Jonathan Block: Thanks guys, good morning, on Zenrelia. And Jeff, can you just provide the timing of the head-to-head study? You know, will that be available for the launch? Call it launch slash ramp here in the fourth quarter of 2024.

John Block: Good morning. I'll start. Hansen Relia, and Jeff, can you just provide the timing of the head-to-head study? Will that be available for the long slash ramp here in the fourth quarter of 2024? And then one more Hansen Relia, and I know you'll have the earnings call, but any high-level comments you can provide on the VATs response study that seem to trigger the warning label, how do we think about that? In other words, was it more a function of euthanasia, non-responders to the VATs?

John Block: Thanks guys, good morning. I'll start...

Speaker Change: Unzenrelia. And Jeff, can you just provide the timing of the head-to-head study, you know, will that be available for the launch? Call it launch slash ramp here in the fourth quarter of 2024. And then one more Unzenrelia, and I know you'll have the earnings call, but

Jonathan Block: And then one more on Zenrelia, and I know you'll have the earnings call, but any high-level comments you can provide on the VAX response study that seemed to trigger the warning label? How do we think about that? In other words, was it more a function of euthanasia, or non-responders to the VAX? Maybe if you could help us out a little bit there, and then I'll add the follow-

Jonathan Block: Any high-level comments you can provide on the VAX response study that seemed to trigger the warning label? How do we think about that? In other words, was it more a function of euthanasias, and non-responders to the VAX? Maybe if you could help us out a little bit there, and then I'll add the follow-up.

Speaker Change: Any high-level comments you can provide on the VAX response study that seemed to trigger the warning label? How do we think about that? You know, in other words, was it more a function of euthanasias, non-responders to the VAX? Maybe if you could help us out a little bit there, and then I'll add the follow-up.

John Block: Maybe you could help us out a little bit there, and then I'll add the follow-up. Yeah, thank you, John, and I appreciate all the work you've done on this, and appreciate the questions. We do intend to answer one of your questions directly, then I want to add a little bit of broader context, because this is the first time we've spoken since the June release, but we do intend to have the head-to-head study that was done against the market incumbent that was part of the European submission package.

Jeffrey Simmons: Yeah, thank you, John, and I appreciate all the work you've done on this and appreciate the questions. We do intend, I'll just answer one of your questions directly, then I want to add a little bit of broader context, because this is the first time we've spoken since the June release, but we do intend to have the head-to-head study that was done against the market incumbent that was part of the European submission package.

Jeffrey Simmons: Yeah, thank you, John, and I appreciate all the work you've done on this and appreciate the questions. We do intend, I'll just answer one of your questions directly, then I want to add a little bit of broader context, because this is the first time we've spoken since the June release, but we do intend to have the head-to-head study that was done against the market incumbent that was part of the European submission package.

Jeff: Yeah, thank you, John, and I appreciate all the work you've done on this and appreciate the questions.

Speaker Change: We do intend, I'll just answer one of your questions directly then I want to add a little bit of broader context because this is the first time we've spoken since the June release, but we do intend to have the head-to-head study that was done against the market incumbent.

John Block: It is our intention to have that as part of the initial day-wunch launch materials. But let me just share, I'd like to share just a couple of messages just relative to Zen Relia in the greatest context. I think it helped everybody as there's continued interest in this product. First, we're excited about Zen Relia. We're excited about entering the Durham market. As you know, a fast growing market continues to grow double-digit in the US globally.

Speaker Change: that was part of the European submission package. It is our intention to have that as part of the initial day one launch materials. So, but let me just share, I'd like to share just a couple of messages just relative to Zenrelia in the greatest context that I think can help everybody as there's, you know, continued interest in this product. First, we're excited about Zenrelia. We're excited about entering the Durham market. As you know, a fast-growing market continues to grow double-digit in the U.S. and globally, millions of dogs that are still untreated. We're bringing Zenrelia. We're going to follow that with IL-31 and a pipeline that Ellen has in Durham. So, and it's weeks away and we're excited about it. A couple points just in context. You know, we're going to respect the FDA process.

Jeffrey Simmons: It is our intention to have that as part of the initial day one launch materials, so. Let me just share, I'd like to share just a couple of messages just relative to Xenrelia in the greatest context that I think can help everybody as there is, you know, continued interest in this product. First, we're excited about Xenrelia, and we're excited about entering the DERM market, which is, as you know, a fast-growing market that continues to grow double-digits in the U.S. and globally. Millions of dogs that are still untreated; we're bringing Xenrelia, and we're going to follow that with IL-31 and a pipeline that Ellen has in DERM. And it's just weeks away, and we're excited about it.

Jeffrey Simmons: It is our intention to have that as part of the initial day one launch materials, so. Let me just share, I'd like to share just a couple of messages, just relative to Zenrelia in the greatest context that I think can help everybody as there is, you know, continued interest in this product. First, we're excited about Zenrelia, and we're excited about entering the DERM market, which, as you know, is a fast-growing market that continues to grow double-digits in the U.S. and globally. Millions of dogs that are still untreated.

John Block: Millions of dogs that are still untreated. We're bringing Zen Relia. We're going to follow that with IL-31, and a pipeline that Ellen has in Durham. And it's weeks away, and we're excited about it. A couple of points just in context. You know, we're going to respect the FDA process. We will limit specific comments on the label and data packages until full approval of the product, John. Currently in the 60-day administrator review that has started, we're in that, and that puts us on track for that late September approval.

Jeffrey Simmons: We're bringing Zenrelia, and we're going to follow that with IL-31 and a pipeline that Ellen has in DERM, so, and it's weeks away, and we're excited about it. A couple points, just in context, you know; we're going to respect the FDA process. We will limit specific comments on the label and data packages until full approval of the product, John. Currently, in the 60-day administrative review that has started, we're in that, and that puts us on track for that late-September approval, and as I made a comment there at the end of the earnings call, we will, days after the approval, we anticipate holding a comprehensive investor call where John will share this study, other studies, and label details, and But here are some points that I think are important to take a look at how we're looking at this.

Jeffrey Simmons: A couple points just in context, you know; we're going to respect the FDA process. We will limit specific comments on the label and data packages until full approval of the product, John. Currently, in the 60-day administrative review that has started, we're in that, and that puts us on track for that late September approval, and as I made a comment there at the end of the earnings call, we will, days after the approval, we anticipate holding a comprehensive investor call where John will share this study, other studies, and label details, and I'm a little limited to do that now, as well as our go-to-market But here are some points that I think are important to take a look at how we're looking at this.

John Block: We will limit specific comments on the label and data packages until full approval of the product, John . Currently, in the 60-day administrative review that has started, we're in that, and that puts us on track for that late September approval. As I made a comment there at the end of the earnings, we will, days after the approval, we anticipate holding a comprehensive investor call where John will share this study, other studies, and label details, and I'm a little limited to do that now, as well as our go-to-market, and we look to have even outside experts, vets, and derm. But here's some points that I think are important to take.

John Block: And as I made a comment there at the end of the earnings, we will days after the approval. We anticipate holding a comprehensive investor call where John will share this study, other studies, and label details. And I'm a little limited to do that now as well as our go-to-market. And we look to have even outside experts vets and Durham. But here's some points that I think are important to take a look at how we're looking at this.

Jeffrey Simmons: First, you know, we do not expect anything in the package or on the label of Zenrelia will prevent the product from being widely adopted across all types of veterinary clinics. We do, as we've said, expect Zenrelia to be positively differentiated in efficacy in that head-to-head study with the market incumbent, as well as positive differentiation on convenience and value. Then, you know, the market research that we have done and others indicate that vets are most interested in two things: better efficacy and value. These are the top two DERM needs we see for veterinarians. It's very clear. It's very compelling.

Jeffrey Simmons: First, you know, we do not expect anything in the package or on the label of Xenrelia will prevent the product from being widely adopted across all types of veterinarian clinics. We do, as we've said, expect Xenrelia to be positively differentiated in efficacy in that head-to-head study with the market incumbent, as well as positive differentiation on convenience and value. Then, you know, the market research that we have done and others indicate that vets are most interested in two things: better efficacy and value. These are the top two DERM needs we see for veterinarians. It's very clear, and it's very compelling.

John Block: First, you know, we do not expect anything in the package or the label of a Zen Relia will prevent the product from being widely adopted across all types of bed clinics. We do, as we've said, expect Zen Relia to be positively differentiated in efficacy with that head-to-head study, with the marketing incumbent, as well as positive differentiation on convenience and value. Then, you know, the market research that we have done and others indicate vets are most interested in two things.

John Block: look at how we're looking at this first you know we do not expect anything in the package of the label of zenrea will prevent the product from being widely adopted across all types of about clinics

John Block: We do, as we've said, expect Venerelli to be positively differentiated in efficacy with that head-to-head study with the marketing incumbent, as well as positive differentiation on convenience and value.

John Block: Then, you know, the market research that we have done and others indicate vets are most interested in two things.

John Block: Better efficacy and value. These are the top two Durham needs we see for vets. It's very clear, it's very compelling. Additionally, 70% of vets surveyed here recently want more Durham options. And we think that will likely lead to them carrying another product on their shelves. And that will be a key objective we have. Another point that I think is important since the release that we think is very important is Zen Relia applicability can be for all itchy dogs, 12 months, chronic or acute or seasonal.

John Block: better efficacy and value these are the top two derm needs we see for evveentstsit's very clear it's very compelling additionally seventy percent of that surveyed here recently

Jeffrey Simmons: Additionally, 70% of vets surveyed here recently want more DERM options, and we think that will likely lead to them carrying another product on their shelves, and that'll be a key objective we have. Another point that I think is important since the release that we think is very important is that Xenrelia applicability can be for all itchy dogs over 12 months, chronic or acute, or seasonal. There are no dogs that should be excluded from the initial target population for Xenrelia, which is very important.

Jeffrey Simmons: Additionally, 70% of vets surveyed here recently want more DERM options, and we think that will likely lead to them carrying another product on their shelves, and that'll be a key objective we have. Another point that I think is important since the release that we think is very important is that Xenrelia applicability can be for all itchy dogs over 12 months, chronic or acute, or seasonal. There are no dogs that should be excluded from the initial target population for Xenrelia, which is very important.

John Block: want more DERM options, and we think that will likely lead to them carrying another product on their shelves, and that'll be a key objective we have.

Speaker Change: another point that i think s important since the release that we think is very important is zen rliia a plicability can be for all itchdogs or twelve months chronic or acute or seasonal there are no dogs that should be excluded

John Block: There are no dogs that should be excluded, from the initial target population for Zenrelia. Very important. And, you know, our expectations back on the days initially being limited to 25% is solely related to the timing of the vaccine administration, which maybe I can bridge then John to this question, you know, and just highlight, you know, this vaccine response study is all around Jackson's class. There are immune modulators, they modify the immune system, the potential to suppress the immune system.

Jeffrey Simmons: And, you know, our expectations back on the days initially being limited to 25% are solely related to the timing of the vaccine administration, which maybe I can bridge then, John, to this question and just highlight, you know, this vaccine response study is all about JAKS as a class. They're immune modulators. They modify the immune system. The potential to suppress the immune system is common in this class, and as part of any data package, even a 10-year incumbent 10 years ago, we completed what is called a vaccine response study.

Jeffrey Simmons: And, you know, our expectations back on the days initially being limited to 25% are solely related to the timing of the vaccine administration, which maybe I can bridge then, John, to this question and just highlight, you know, this vaccine response study is all about JAKS as a class. They're immune modulators. They modify the immune system. The potential to suppress the immune system is common in this class, and as part of any data package, even a 10-year incumbent, 10 years ago, we completed what is called a vaccine response study.

John Block: from the initial target population for Xenrelia, very important. And, you know, our expectations back on the days initially being limited to 25% is solely related to the timing of the vaccine administration, which maybe I can bridge then, John , to this question, you know, and just highlight, you know, this vaccine response study is all around Jax as a class.

Speaker Change: They're immune modulators, they modify the immune system, the potential to suppress the immune system is common in this class and is part of any data package, even a 10-year incumbent.

John Block: It's common in this class, and as part of any data package, even the 10-year incumbent, 10 years ago, we completed what is called a vaccine response study, and as it sounds, it studies and assesses the dog's response to, to the vaccine while receiving 3X, the labeled dose of Zenrelia. And again, we believe very clearly that we've got confidence that data supports, you know, our value proposition and look forward to educating bets directly.

Speaker Change: 10 years ago we completed what is called a vaccine response study and as it sounds it studies and assesses the dog's response to

Jeffrey Simmons: And, as it sounds, it studies and assesses the dog's response to the vaccine while receiving 3X the label dose of Xenrelia. And, again, we believe very clearly that we've got confidence in the data supporting our value proposition and look forward to educating veterinarians directly.

Jeffrey Simmons: And, as it sounds, it studies and assesses the dog's response to the vaccine while receiving 3X the label dose of Xenrelia. And, again, we believe very clearly that we've got confidence in the data supporting our value proposition and look forward to educating veterinarians directly.

Speaker Change: to the vaccine while receiving three x the label dosesof zenrelllia and again we believe very clearly that we've got confidence that data supports our value proposition and look forward to educating betss directly

Jonathan Block: That was great. Thanks, Jeff, for all that color.

John Block: That was great. Thanks, Jeff, for all that color. I think just as a quick follow-up, Todd, this one might be for you. You know, for 2025, I think the prior call at high level messaging was that these new blockbusters would be, you know, obviously gross profit, dollar or creative in 2025, but likely gross margin diluted due to some investments, you know, associated with the new products. You know, now we believe Zenrelia's price is going to be lower, maybe you need to make more investments to explain the label.

Jonathan Block: I think just as a quick follow-up, Todd, this one might be for you. You know, for 2025, I think the prior, call it high-level messaging, was that these new blockbusters would be, you know, obviously gross profit accretive in 2025 but likely gross margin dilutive due to some investments associated with the new products. You know, now that we believe Zenrelia's price is going to be lower; maybe you need to make more investments to explain the label. When we think about these new blockbusters, do we still think gross profit will be dollar accretive in 2025 or more neutral?

Speaker Change: That was great. Thanks, Jeff, for all that color. I think just as a quick follow-up, Todd, this one might be for you.

Speaker Change: Now, for 2025, I think the prior, call it high-level messaging, was that these new blockbusters would be, you know, obviously gross profit, dollar accretive in 2025, but likely

Todd: gross margin dilutedive due to some investments associated with the new products

Speaker Change: You know, now we believe Zenrelia's price is going to be lower, maybe you need to make more investments to explain the label. When we think about these new blockbusters, do we still think gross profit dollar accretive in 2025 or more neutral? Maybe you can just flush that out a bit. Thanks for your time.

John Block: When we think about these new blockbusters, do we still think gross profit, dollar or creative in 2025, or more neutral? Maybe you can just flush that out a bit. Thanks for your time. Sure, John. Appreciate the question and all the work you and your team have been doing over the last few months. Certainly, we're excited to bring Credelio Quattro, Zenrelia and Bover to the marketplace, two of those coming this year. And we're making investments behind those here in the second half where those will be, you know, not accreted to even down the second half, given the investments, including investments for Credelio Quattro.

Todd Young: Maybe you can just flush that out a bit. Thanks for your time. Sure, John. I appreciate the question.

Todd Young: Sure, John, I appreciate the question and all the work you and your team have been doing over the last few months. Certainly, we're excited to bring Cordelio Cuatro, Zanrella, and Bovair to the marketplace, two of those coming this year. And we're making investments behind those here in the second half, where those will not be accretive to even in the second half, given the investments, including investments for Cordelio Cuatro. We do expect that to flip in 2025, where they will be both gross margin accretive, but also that they're going to be accretive to EVADOT.

Speaker Change: Sure John , I appreciate the question and all the work you and your team have been doing over the last few months.

John Block: We do expect that to flip in 2025, where there will be both gross margin accreted, but also that they're going to be accreted to even down. We're not going to get into 25 guidance today. That'll be early next year, but as Jeff said, we're very excited for these products and excited to get Zenrelia in the hands of that here in the fourth quarter. Thank you.

Speaker Change: Certainly, we're excited to bring...

Speaker Change: Crudelio Cuatro, Zanrella, and Bovair to the marketplace, two of those coming this year. And we're making investments behind those here in the second half where those will be not accretive to EBITDA in the second half given the investments, including investments for Crudelio Cuatro. We do expect that to flip in 2025, where they will be both gross margin accretive, but also that they're going to be accretive to EBITDA. We're not going to get into 25 guidance today. That'll be early next year. But as Jeff said, we're very excited for these products and excited to get Zanrella in the hands of vets here in the fourth quarter.

Todd Young: We're not going to get into 25 guidance today; that'll be early next year. But as Jeff said, we're very excited for these products and excited to get Zanrella in the hands of vets here in the fourth quarter.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Michael Ryskin. Please go ahead.

Michael Ryskin: Your next question comes from the line of Michael Ryskin. Please go ahead. Great. Thanks for taking a question. I want to pick up where you left off on Zenrelia. Jeff, you keep highlighting value, efficacy and value as a differentiator, and we talked about pricing in the past. Obviously, there's the value component of it, the vet, and there's the price component to the vet.

Speaker Change: Your next question comes from the line of Michael Ryskin. Please go ahead.

Unknown Caller: Great. Thanks for taking the question. I want to pick up right where you left off with Zanrella.

Michael Ryskin: Great, thanks for taking the question. I want to pick up right where you left off with Zanrella.

Speaker Change: Great, thanks for taking the question. I want to pick up right where you left off on Zanrella.

Michael Ryskin: Jeff, you keep highlighting value, efficacy, and value as a differentiator. And we talked about pricing in the past. Obviously, there's, you know, there's the value component of it for the vet, and then there's the price component for the vet. But just to be clear, you know, how has your launch plan on Zenrelia changed following the Black Box morning development? You talked about more vet education and the spend that goes into that, but in terms of how it's positioned for the vets, just how willing are you to use the price lever to gain share?

Speaker Change: jeffie keep highlighting

Speaker Change: Efficacy and Value as a Differentiator, and we talked about pricing in the past. Obviously, there's the value component of it to the vet, and then there's the price component to the vet. But just to be clear, how has your launch plan on Finrelia changed following the Black Box morning development? You talked about...

Jeff Simmons: But just to be clear, how has your launch plan on Zenrelia changed following the black box morning development? You talked about more vet education and the spend that goes on that, but there's a how it's positioned to the vet, just how willing are you to use the price lever to gain share in that market? Yeah, thanks, Mike, for the question. Let me start by the first thing that we know will happen is we're going to increase share of voice.

Speaker Change: more bt education and the spend that goes in that but in sort ofhowit's position to the vets just how willing are youtu to use the price levever the g share in the market

Jeffrey Simmons: Yeah, thanks, Mike, for the question. Let me start by saying the first thing that we know will happen is we're going to increase the share voice. We're going to have a lot more marketing and attention. This is going to be one of the most expansive launches ever and second to the market. The first thing we're going to do is increase the size of the market. There are millions of dogs that are still untreated.

Speaker Change: Yeah, thanks Mike for the question. Let me let me start by the first thing that we know will happen is we're going to increase share voice.

Jeff Simmons: We're going to have a lot more marketing and attention. This is going to be one of the most expansive launches ever, and being second to the market. The first thing we're going to do is increase the size of the market. There's millions of dogs that are still untreated. And any new innovation when you see even the existing growth that's even occurred so far in the first half of this year in Durham, we expect the market size to grow.

Speaker Change: We're gonna have a lot more marketing and attention. This is going to be one of the most expansive launches ever and and be in second to the market. The first thing we're going to do is increase the size of the market. There's millions of dogs that are still untreated and any new innovation when you know you see even the existing growth that's even occurred so far in the first half of this year in Durham, we expect the market size to grow and so that will be the value driver number one as we see this market growing and we see it not just in the US but globally and I'll say in parallel we'll be in Brazil and we'll follow with other launches behind it.

Jeffrey Simmons: And any new innovation, when you see even the existing growth that's even occurred so far in the first half of this year in Durham, we expect the market size to grow. And so that will be the value driver, number one, as we see this market growing. And we see it not just in the U.S. but globally.

Jeff Simmons: And so that will be the value driver number one is we see this market growing and we see it not just in the US, but globally and I'll say in parallel will be in Brazil and we'll follow with other launches behind it. From a price perspective, we will do what we always do and that is take a value based approach. We will look at it holistically and we will look at all aspects of the value.

Jeffrey Simmons: And I'll say in parallel, we'll be in Brazil, and we'll follow with other launches behind it. From a price perspective, we will do what we always do, and that is take a value-based approach. We will look at it holistically, and we will look at all aspects of the value. We do believe that, upon approval, we overlay our positive differentiation against what vets want most. And that is, you know, better efficacy as well as, we believe, value. And that comes with convenience as well as other aspects.

Speaker Change: from a price perspective we will do it we always do and that is take a value based approach we will look at it holistically and we will look at all aspects of the value and we do believe that we overlay upon approval we overlay our positive differentiation against what that's what most

Jeff Simmons: We do believe that we overlay upon approval, we overlay our positive differentiation against what vets want most. And that is better efficacy as well as we believe value and that comes with convenience as well as other aspects. We will we have two objectives is we think about the launch plan as one is we will work closely with that so they understand the label, the science, the data. We want a vet to vet understanding.

Speaker Change: and that is better efficcasacy as well as we believe value and that comes with convenience as well as other aspects

Jeffrey Simmons: We have two objectives as we think about the launch plan. One is we will work closely with vets so they understand the label, the science, and the data. We want a vet-to-vet understanding.

Speaker Change: we will we have two objectiveives as we think about the launch plan as one is we will work closely with that so they understand the label the science the data we want that to that understanding so one way we veshiftedit iswere going to take a very you know that focus launch effort initially utilizing data and we will do that with a lot of intensity and you know preparednessandthen that's going to move us to want to have experience we're going to want this product in more clinics hands quickly so we can get into patal and so we can demonstrate the differentiation this product and we will you know we will use appropriate programs to ensure and encourage the use of this product quickly upon adoption but again those the thing

Jeffrey Simmons: So one way we've shifted is we're going to take a very, you know, vet-focused launch effort initially utilizing data, and we will do that with a lot of intensity and, you know, preparedness. And then that's going to move us to want to have experience. We're going to want this product in more clinics' hands quickly so it can get into pet owners' hands so we can demonstrate the differentiation of this product. And we will, you know, we will use appropriate programs to ensure and encourage the use of this product quickly upon adoption.

Jeff Simmons: So one way we've shifted is we're going to take a very vet focused launch effort initially utilizing data and we will do that with a lot of intensity and preparedness. And then that's going to move us to want to have experience we're going to want this product in more clinics hands quickly so it can get into pet owners hands so we can demonstrate the differentiation this product and we will you know we will use appropriate programs to ensure and encourage the use of this product quickly upon adoption.

Jeff Simmons: But again that those are the things that we've done to adjust it. It will be one of the most expansive launches ever. We will use a multifaceted approach and we've already started as you know with more share of voice larger sales force next generation capabilities. It will be much more of a digital army channel approach initially and also you know my forward dimensional offer we believe will help have in pair of therapeutics and vaccines as well.

Jeffrey Simmons: But again, those are the things that we've done to adjust it. It will be one of the most expansive launches ever. We will use a multifaceted approach. And we've already started, as you know, with more share of voice, a larger sales force, and next-generation capabilities. It'll be much more of a digital omni-channel approach initially. And also, you know, a four-dimensional offer that we believe will help, including paratherapeutics and vaccines as well. So, and we'll share more details of this again right after the approval on the call that we'll have.

Michael Ryskin: Okay, and again, Jeff, you actually just took it to the second part of my second question on the breadth of the portfolio. You talked about, you know, PARA, DERM, and therapeutic sex scenes.

Speaker Change: that we've done to adjust it. It will be one of the most expansive launches ever. We will use a multifaceted approach, and we've already started, as you know, with more share of voice, larger sales force, next-generation capabilities. It'll be much more of a digital, omni-channel approach.

Jeffrey Simmons: So breadth of portfolio comes up all the time when we talk to vets in terms of how they make their purchase decision, which vendor they prioritize. Now, you know, you jump from early 23 to early 24, adding a lot of products to the companion portfolio, you're going to have arguably First or Tide for First Broadest Portfolio, to the vet. How does that change the value proposition for the rest of the business in terms of the uplift for the other products, you know, beyond the Blockbusters, beyond the new launches? Is that coming up in conversations already? Is that part of your plan? and some of these distributor and large consolidator groups as you approach 2020. Yeah, it's a great question.

Speaker Change: initially and also by four dimensional offer we believe will help having parir a therapeutics and vaccines as well so and we'll share more details of this again right after the approval on the call that will have

Jeff Simmons: And we'll share more details of this again right after the approval on the call that we'll have. Okay, and again, Jeff, you actually just took it to the second part of my second question on the breath of the portfolio. You talked about, you know, para, derm therapy, expecting so breath of portfolio comes up all the time when we talked about in terms of how they make their purchase decision, which which founder they prioritize now, you know, you jumped from early 23 to early 24, adding a lot of products to the companion portfolio.

Speaker Change: Okay, and again, Jeff, you actually just took it to the second part of my second question on the breadth of the portfolio, you talked about, you know, PARA, DERM, therapeutic sex scenes.

Speaker Change: so

Speaker Change: The breadth of portfolio comes up all the time when we talk about in terms of how they make their purchase decision, which vendor they prioritize. Now, you know, you jump from early 23 to early 24, adding a lot of products to the companion portfolio, you're going to have arguably

Jeff Simmons: You're going to have arguably the first or tied for first, broadest portfolio to the vet. How does that change the value proposition for the rest of the business in terms of the uplift of the other products, you know, beyond the block buses, beyond the unconscious? Is that coming up in conversations already, is that part of your plan in some of these distributor and large consolidate groups as you approach 2025? Yeah, that's a great question.

Unknown Caller: First or Pi for First Broadest Portfolio, to the vet. How does that change the value proposition for the rest of the business in terms of the uplift for the other products, you know, beyond the blockbusters, beyond the new launches? Is that coming up in conversations already? Is that part of your plan?

Speaker Change: you know the first or tied for first broadest portfolio

Speaker Change: to the vet.

Speaker Change: How does that change the value proposition for the rest of the business in terms of the uplift of the other products, you know, beyond the Blockbusters, beyond the new launches? Is that coming up in conversations already? Is that part of your plan?

Speaker Change: and some of these distributor and large consolidator groups as you as you approach 2025.

Jeffrey Simmons: Yeah, it's a great question. I think that the other thing that I would add that's pretty important is that we are now in more clinics than we've ever been. I mean, I think between the increased sales force and the parvovirus monoclonal antibody, it's given us and given us more access to, even the diabetes product last year, it's given us more access. So that was our goal when we were about to launch two differentiated products, blockbuster products in the two largest pet markets in the largest pet market here in the US, Derm and Para.

Jeffrey Simmons: Yeah, it's a great question. I think the other thing that I would add that's pretty important is that we are now in more clinics than we've ever been. I mean, I think between the increased sales force and the parvovirus monoclonal antibody, it's given us and given us more access to, even the diabetes product last year, it's given us more access. So that was our goal when we were about to launch two differentiated, you know, products, blockbuster products in the two largest pet markets in the largest pet market here in the U.S., Derm and Para.

Jeff Simmons: I think the other thing that I would add that's pretty important is we are now in more clinics than we've ever been. I mean, I think between the increased sales force and the parable virus monoclonal antibody, it's put us and given us more access, even the diabetes product last year, it's given us more access. So that was our goal was when we were about to launch two differentiated, you know, products blockbuster products in the two largest pet markets in the largest pet market here in the US, Derm in Para.

Speaker Change: Yeah, it's a great question. I think that the other thing that I would add that's pretty important is we are now in more clinics than we've ever been. I mean, I think between the increased sales force and the parvovirus monoclonal antibody, it's put us and given us more access, even the diabetes product last year, it's given us more access. So that was our goal was when we're about to launch two differentiated, you know, products, blockbuster products in the two largest pet markets in the largest pet market here in the U.S., Derm and Para. And so as we look at this, one is, you know, access to clinics is one, and then two, no question, you know, as we look at offerings and even purchasing, there is an interest in, you know, which products are carried by which companies.

Jeffrey Simmons: And so as we look at this, one is, you know, access to clinics is one, and then two, no question, as we look at offerings and even purchasing, there is an interest in, you know, which products are carried by which companies. And we believe Derm allows us to help our Para portfolio as well as even our vaccine portfolio in some of the purchasing plans that are available today. And we've already started that engagement, and there's a lot of interest relative to that. And we will use appropriate from from corporates for distribution across the board. We will leverage the portfolio. Senrelia will help Quatro, and Quatro will help Senrelia.

Jeff Simmons: And so, as we look at this one is, you know, access to clinics is one and then two, no question, you know, as we look at offerings and even purchasing, there is an interest in, you know, which, which products are carried by which companies? And we believe Derm allows us to help our para portfolio as well as even our vaccine portfolio in some of the purchasing plans that are available today. And we've already started that engagement.

Jeffrey Simmons: And so as we look at this, one is, you know, access to clinics is one. And then two, no question, you know, as we look at offerings and even purchasing, there is an interest in, you know, which products are carried by which companies. And we believe Derm allows us to help our Para portfolio as well as even our vaccine portfolio in some of the purchasing plans that are available today. And we've already started that engagement, and there's a lot of interest in that. And we will use appropriate from corporates for distribution across the board. We will leverage the portfolio. Xenrelia will help Quatro, and Quatro will help Xenrelia.

Speaker Change: and we believe Durham allows us to help our para portfolio as well as even our vaccine portfolio in some of the purchasing plans that that are available today and we've already started that engagement and there's a lot of interest relative to that and we will use appropriate from corporates.

Jeff Simmons: And there's a lot of interest relative to that. And we will use appropriate from corporates to distribution to across the board. We will, we will leverage the portfolio. But Sanrelia will help Quattro, Quattro will help Sanrelia.

Speaker Change: to distribution to across the board we will we will leverage the portfolio. Zenrelia will help Quatro, Quatro will help Zenrelia.

Operator: Your next question comes from the line of Umer Raffat with Evercore ISI; please go ahead.

Jeff Simmons: Your next question comes from the line of Umar Rafat with Evercore ISI. Please go ahead. Hi guys, thanks for taking my question. It's good to hear all the constructive language on Sanrelia. So let me just pressure test that a little more. As I dig into it, I know the apical study, the vaccine response study had two out of eight dogs that were euthanized and the dose was three X human. I'm assuming the three X human dose is probably more standard than not.

Speaker Change: against

Speaker Change: Your next question comes from the line of Umer Raffat with Evercore ISI. Please go ahead.

Unknown Caller: Hi guys. Thanks for taking my question. It's good to hear all the constructive language on Zanrelia.

Umer Raffat: Hi guys. Thanks for taking my question. It's good to hear all the constructive language on Zanrelia.

Umer Raffat: Hi guys, thanks for taking my question. It's good to hear all the constructive language on Dendrelia, so let me just pressure test that a little more.

Jeff Simmons: So it sounds to me like considering you're getting a black box, your euthanizations were more than two out of eight. Could you, could you give us some more color on that? And then also was the timing of these euthanizations or whatever the safety finding is, more pronounced towards the back end of the study. I'm trying to understand why, why the cap on duration. And then finally in Crudelio, my sense is the CMC stuff is probably much more trivial and it's just information like sourcing packaging. Could you confirm that was, it was just a straightforward trivial request. Thank you. Yeah, thanks very much and I appreciate the questions. We will not and in just respecting the FDA process.

Umer Raffat: So let me just pressure test that a little more. As I dig into it, I know the APICOL study, the vaccine response study, had two out of eight dogs that were euthanized, and the dose was 3x human. I'm assuming that the 3x human dose is probably more standard than not. So it sounds to me like, considering you're getting a black box, your euthanizations were more than 2 out of 8. Could you give us some more color on that? And then also, was the timing of these euthanizations or whatever safety finding was more pronounced towards the back end of the study? I'm trying to understand why there is a cap on duration.

Umer Raffat: So let me just pressure test that a little more. As I dig into it, I know the APICOL study, the vaccine response study, had two out of eight dogs that were euthanized, and the dose was 3x human. I'm assuming the 3x human dose is probably more standard than not. So it sounds to me like, considering you're getting a black box, your euthanizations were more than two out of eight. Could you give us some more color on that? And then also, was the timing of these euthanizations or whatever the safety finding is more pronounced towards the back end of the study? I'm trying to understand why there is a cap on duration.

Umer Raffat: As I dig into it, I know the APOCO study, the vaccine response study, had two out of eight dogs that were euthanized and the dose was 3x human. I'm assuming the 3x human dose is probably more standard than not.

Speaker Change: so it sounds to me like considering you're getting a blackbox your utanizations were more than two out eight could you could you give us somewhere color on that and then also was the timing of these utanizations or whatever the safety finding is more pronounced towards the back end of the study i'm trying to understand why why the cap on duration

Jeffrey Simmons: And then finally, on Cordelio, my sense is the CMC stuff is probably much more trivial, and it's just information like sourcing and packaging. Could you confirm that it was just a straightforward, trivial request? Thank you.

Jeffrey Simmons: And then finally, on Cordelio, my sense is the CMC stuff is probably much more trivial, and it's just information like sourcing and packaging. Could you confirm that it was just a straightforward and trivial request? Thank you.

Umer Raffat: and then finally in corredlli my sense is the c m c stuff is probably much more trivial and it's just information like sourcing packaging could you confirm that was it was just straightforward trivial request thank you

Jeffrey Simmons: Thanks, Umer, very much, and I appreciate the questions. We will not, and in just respecting the FDA process, I can't get into the details of studies and the label until approval, but I can assure you that we will be sharing that very openly with you as investors, as well as the veterinarian community, upon approval, and looking at it holistically. I will point out, though, and you know this well, Umer, when thinking about safety, I think it's important that, you know, if you look at the FDA process, once a product is approved by the FDA, it is deemed safe and effective when used according to the label.

Jeffrey Simmons: Thanks, Umer, very much, and I appreciate the questions. We will not, and in just respecting the FDA process, I can't get into the details of studies and the label until approval, but I can assure you that we will be sharing that very openly with you as investors as well as the veterinarian community upon approval and looking at it holistically. I will point out, though, and you know this well, Umer, when thinking about safety, I think it's important that if you look at the FDA process, once a product is approved by the FDA, it is deemed safe and effective when used according to the label.

Speaker Change: Thanks, Umer, very much. And I appreciate the questions. We will not, and in just respecting the FDA process, I can't get into the details of studies and the label until approval, but I can assure you that we will be sharing that very openly with you as investors, as well as the vet community upon approval and looking at it holistically. I will point, though, and you know this well, Umer, you know, when thinking about safety, I think it's important.

Jeff Simmons: I can't get into the details of studies and the label until approval, but I can assure you that we will be sharing that very openly with you as investors as well as the vet community upon approval and looking at a holistically. I will point though and you know this well, you know, when thinking about safety, I think it's important that, you know, if you look at the FDA process once the product is approved by the FDA, it is deemed safe and effective when used according to the label.

Umer Raffat: that if you look at the fda process once the product is approved by the fda it is deemed safe and effective

Jeffrey Simmons: And then when you look at the label, it's about providing guidance to veterinarians to assure appropriate use and administration of the product, or maybe more simply said, a label indicates how to use the product safely, and that will be our primary focus out of the gate with this, to educate and inform the veterinarian community very extensively about this product.

Jeffrey Simmons: And then when you look at the label, it's about providing guidance to veterinarians to assure appropriate use and administration of the product, or maybe more simply said, a label indicates how to use the product safely, and that will be our primary focus out of the gate with this, to educate and inform the veterinarian community very extensively about this product.

Jeff Simmons: And then when you look at the label, it's about providing guidance to the veterinarians to assure appropriate use and administrative the product or maybe more simply set a label indicates how to use the product safely. And that will be our primary focus out of the gate with this is to educate and inform the vet community very extensively on this product. And again, that leads us to our confidence relative to will meet these standards and the differentiation will add value significantly in the marketplace.

Umer Raffat: when used toacing to the label and then when you look at the label it's about providing guidance to the veterinarians to assure appropriate use and administrative the product or maybe more simply set a label indicates how to use the product safely and that will be our primary focus out of the gate with this is to educate and inform that the that community very extensively on this product and again that leaves us to our confidence relative to will meet these standards

Jeffrey Simmons: Again, that leads us to our confidence relative to whether we'll meet these standards and the differentiation will add value significantly in the marketplace. Bridge over to Quatro, just to give you a sense, yes, we believe we have answered those questions, and we believe that that will move us through getting this last technical section complete, and that will move us into administrative approval to keep us on track for a fourth quarter approval and a first quarter launch.

Jeffrey Simmons: Again, that leads us to our confidence relative to whether we'll meet these standards and the differentiation will add value significantly in the marketplace. Bridge over to Quatro, just to give you a sense, yes, we believe we have answered those questions, and we believe that that will move us through getting this last technical section complete, and that will move us into administrative approval to keep us on track for a fourth quarter approval and a first quarter launch.

Umer Raffat: and the differentiation will add value significantly in the marketplace.

Jeff Simmons: Bridging over to Quattro just to give you a sense, yes, we believe we answer those questions and we believe that that will move us through and getting this last technical section complete. And that will move us into administrative approval to keep us on track for a fourth quarter approval and a first quarter launch. You know, I will say that following that and independently of the approval, we're still finalizing, as I said in my comments, the manufacturing scale up to optimize the launch on the manufacturing side and it's common with multiple active ingredients.

Speaker Change: Bridging over to Quattro, just to give you a sense, yes, we believe we answered those questions and we believe that that will move us through in getting this last technical section complete.

Speaker Change: and that will move into administrative approval to keep us on track for a fourth quarter approval and a first quarter launch you know i will say that following that and independently of the approval we're still finalizing as i said of my comments the manufacturing scale up to optimize the launch on the manufacturing side and itss common with multiple active ingredients you know the process validation side there's complexity but we've done this before and we've got a very experienced team and that's tracking again for the first quarter approvalwell

Jeffrey Simmons: You know, I will say that following that and independently of the approval, we're still finalizing, as I said in my comments, the manufacturing scale-up to optimize the launch on the manufacturing side, and it's common with multiple active ingredients, you know, the process validation side. There's complexity, but we've done this before, and we've got a very experienced team, and that's tracking again for the first quarter approval as well.

Jeffrey Simmons: I will say that following that and independently of the approval, we're still finalizing, as I said in my comments, the manufacturing scale-up to optimize the launch on the manufacturing side, and that's common with multiple active ingredients. The process validation side, there's complexity, but we've done this before, and we've got a very experienced team, and that's tracking again for the first quarter approval as well.

Jeff Simmons: You know, the process validation side there, there's complexity, but we've done this before and we've got a very experienced team and that's tracking again for the first quarter approval as well. Jeff, if I may, if I may, I feel like we're putting less of an emphasis on black box than we should be. Am I hearing because I know you're very confident in launch profile and everything else, but ultimately, the income has been on the market for a while and they don't have a black box.

Jeffrey Simmons: Jeff, if I may, I feel like... Thank you.

Unknown Caller: Jeff, if I may, I feel like...

Jeff Simmons: So I'm just trying to put that into perspective on what you're hearing and why you're so confident the black box is not as important. Yeah, the box warnings are, as I said, labels are all about the use and indication of the product. We're planning to again take an altered approach to our launch strategy, which is educating vets and we will make sure that the science and the data and that label is fully understood and how to use the products accordingly, no question about that.

Umer Raffat: Jeff, if I may, I feel like we're putting less of an emphasis on the black box than we should be. Am I hearing this right, because I know you're very confident in the launch profile and everything else, but ultimately, the incumbent's been on the market for a while, and they don't have a black box. So I'm just trying to put that into perspective on what you're hearing and why you're so confident the black box is not as important.

Speaker Change: just if i may um perort like

Speaker Change: Thank you. Jeff, if I may, I feel like, um...

Speaker Change: i feel like we're putting less of anemphasis on black box and we should be and i heing because i know you're very confident in launch profile thing else but ultimately the incumb been on the ket forawhileand they don't have a blockboxso i'm justtryingto into perspeive on what you're hearing and why you're confident the black box is not import

Jeffrey Simmons: Yeah, look, box warnings are, as I said, labels are all about the use and the indication of the product. We're planning to, again, take an altered approach to our launch strategy, which is educating veterinarians. And we will make sure that the science and the data and that label are fully understood, and how to use the products accordingly. No question about that.

Speaker Change: Look, box warnings are, as I said, labels are all about the use and the indication of the product. We're planning to, again, take an altered approach to our launch strategy, which is educating vets, and we will make sure that the science and the data and that label is fully understood and how to use the products accordingly. No question about that, so no, I wouldn't want you to read that at all. I do believe that veterinarians are very opportune and also able to understand labels and understand the science and use the products accordingly, and that's common.

Jeffrey Simmons: So, no, I wouldn't want you to read that at all. I do believe that, you know, veterinarians are very, you know, opportunistic and also able to understand labels and understand the science and use the products accordingly. And that's common.

Jeff Simmons: So no, I wouldn't want you to read that at all. I do believe that veterinarians are very, you know, opportune and also able to understand labels and understand the science and use the products accordingly and that's common and there's products that have have box warnings and are utilized very routinely in the industry and our goal initially is to educate and form. So I think that's, that's very important. And then to, you know, as Marka research shows, humor, you know, 70% of vets do want other Durham options and they do want better efficacy and value and that's what this product brings.

Operator: And there are products that have box warnings and are utilized very routinely in the industry. And our goal is, initially, to educate and inform. So, I think that's very important. And then, as market research shows, Zuma, 70% of vets do want other derm options, and they do want better efficacy and value. And that's what this product brings, and we won't stand away from the safety of the product. We will educate and inform accordingly. And again, we look forward to sharing more details with you and others days after the approval of this product.

Speaker Change: products that have have box warnings and are utilized very routinely in the industry and our goal initially is to educate and inform so I think that's that's very important and then to you know as market research shows Umer you know 70% of vets do want other derm options

Speaker Change: And they do want better efficacy and value, and that's what this product brings. And we won't stand away from the safety of the product. We will educate and inform accordingly. And again, we look forward to sharing more details, Umer, as days after the approval of this product with you and others.

Jeff Simmons: And we won't stand away from the safety of the product. We will, we will educate and form accordingly. And again, we look forward to sharing more details, humorous days after the approval of this product with you and others. Thank you very much.

Christopher Schott: Your next question comes from the line of Chris Schott with J.P. Morgan. Please go ahead.

Chris Schott: Your next question comes from the line of Chris Shock with the JP Morgan. Please go ahead. Great. Thanks so much. Just two for me. Maybe just another one on on Zanrelia. Can you just talk about the duration of this education process? And I'm showing my hands around how long you think it's going to take post launch to get vets into a place where they'll understand the label and we can expect normalize uptake.

Umer Raffat: thank you very much your

Speaker Change: Your next question comes from the line of Chris Schott with the JP Morgan. Please go ahead

Unknown Caller: Great. Thanks so much.

Christopher Schott: Great. Thanks so much.

Chris Schott: great thanks so much just a two for me majust another one on uns and ra you talk about

Unknown Caller: Just two for me. Maybe just another one on Zanrelia. Can you just talk about the duration of this education process? I'm showing my hands around how long you think it's going to take post-launch to get vets into a place where they'll understand the label, and we can expect normalized uptake. Is this a matter of quarters? Is it something longer than that?

Christopher Schott: Just two for me. Maybe just another one on Zanrelia. Can you just talk about the duration of this education process? I'm showing my hands around how long you think it's going to take post-launch to get vets into a place where they'll understand the label, and we can expect normalized uptake. Is this a matter of quarters? Is it something longer than that?

Speaker Change: the duration of this education process and I'm showing my hands around how long you think it's going to take

Unknown Caller: Post-launch to get vets into a place where they'll understand the label and we can expect normalized uptake I'm just is this a matter of you know, is this quarters? Is it is it something longer than that? I'm just trying to get it some sense there

Chris Schott: Is it a matter of, you know, is this quarters? Is it, is it something longer than that? I'm just trying to get it some sense there. My second question was just on the guidance update and the flow through the sales upside to EBITDA. I think you mentioned higher manufacturing losses and then some of this increased investment in the product launches. I guess what's the mix between how much of its investment versus manufacturing and what's happening on that manufacturing side? Thank you.

Unknown Caller: I'm just trying to make some sense out of it. My second question was just on the guidance update and the flow through of the sales upside to EBITDA. I think you mentioned higher manufacturing losses and then some of this increased investment in the product launches. I guess what's the mix between how much of it's investment versus manufacturing and what's happening on that manufacturing side?

Christopher Schott: I'm just trying to make some sense out of it. My second question was just on the guidance update and the flow through of the sales upside to EBITDA. I think you mentioned higher manufacturing losses and then some of this increased investment in the product launches. I guess what's the mix between how much of it's investment versus manufacturing and what's happening on that manufacturing side?

Speaker Change: My second question was just on the guidance update and the flow-through of the sales upside to EBITDA. I think you mentioned higher manufacturing losses and then some of this increased investment in the product launches. I guess what's the mix between how much of it's investment versus manufacturing and what's happening on that manufacturing side? Thank you.

Christopher Schott: Thank you.

Jeffrey Simmons: Thank you.

Chris Schott: Yeah, Chris, to take the first one we will and as we've said, we already are in parallel training sales force, our technical team, bringing together key opinion leaders. So it'll be a multifaceted approach. It'll be probably the most expansive launch we've ever done using these multifaceted approaches. We'll be, you know, backing away initially and phase one of DTC and we'll be increasing the resources. That increase in resources, sales force, the training and the KOLs will bring an accelerated approach to education.

Todd Young: Yeah, Chris, to take the first one, we will, and as we've said, we are already in parallel training the Salesforce, our technical team, and bringing together key opinion leaders, so it'll be a multi-faceted approach. It'll probably be the most expansive launch we've ever done using these multi-faceted approaches. We'll be, you know, backing away initially in phase one of DTC, and we'll be increasing the resources. That increase in resources, Salesforce, the training, and the KOLs will bring an accelerated approach to education, and today we can reach this vet community quite quickly.

Jeffrey Simmons: Yeah, Chris, to take the first one, we will, and as we've said, we are already in parallel training the Salesforce, our technical team, and bringing together key opinion leaders, so it'll be a multifaceted approach. It'll probably be the most expansive launch we've ever done using these multifaceted approaches. We'll be, you know, backing away initially in phase one of DTC, and we'll be increasing the resources. That increase in resources, Salesforce, the training, and the KOLs will bring an accelerated approach to education, and today we can reach this vet community quite quickly.

Todd Young: the chris to take the first one we will and as we've said we already or in parallel train sales force our tnical team bring together key opinion leaders so it'll be a mulultifacet approach it'will be probably the most expansive launch we've ever done using these multifacaset approaches will be know backing away initially and phase one of d t c and will be increasingin the resources of that increase in resources sales force the training in the k o wells

Todd Young: This will be our top priority. We'll be able to do this before the Quattro launch, so the timing is, you know, no question. A Q4 priority will be to educate and create an experience with the product in as many clinics as we can across the U.S., and that's what we want to do. Educate first, get the experience. In the fourth quarter, this will be our key priority. Chris, thanks for the question.

Chris Schott: And today we can reach this vet community quite quickly. This will be our top priority. We'll be able to do this before the quattro launch. So the timing is, you know, no question a Q4 priority will be to educate and to create an experience with the product to as many clinics as we can across the US. And that's what we want to do. Educate first, get the experience fourth quarter. This will be our key priority.

Todd Young: will bring an accelerated approach education and today we can reach this best community quite quickly this will be our top priority wewillll be able to do this before the quadro launch for the timing is you know no question a q four priority will be to educate and to create an experience with the product

Jeffrey Simmons: This will be our top priority. We'll be able to do this before the Quattro launch, so the timing is, you know, no question. A Q4 priority will be to educate and create an experience with the product in as many clinics as we can across the U.S., and that's what we want to do. Educate first, get the experience. In the fourth quarter, this will be our key priority. Chris, thanks for the question.

Speaker Change: to as many clinics as we can across the U.S. and that's what we want to do. Educate first, get the experience. Fourth quarter, this will be our key priority.

Todd Young: Chris, thanks for the question on the back half guidance. Very pleased with the Q2 beat that was primarily driven by underlying strength of sales in the business. There was some timing of off X between Q2 and Q3, but primarily, as we go into the back half, there are some additional headwinds in manufacturing with some additional losses on some of our vaccine supply that's hitting us.

Todd Young: Chris, thanks for the question on the back half guidance. Very pleased with the Q2 beat that was primarily driven by underlying strength of sales in the business. There was some timing of off X between Q2 and Q3, but primarily, as we go into the back half, there are some additional headwinds in manufacturing with some additional losses on some of our vaccine supply that's hitting us.

Todd Young: Chris, thanks for the question on the back half guidance. Very pleased with the Q2B that was primarily driven by underlying strength of sales in the business. There was some timing of off acts between Q2 and Q3, but primarily as we go into the back half, there is some additional headwinds and manufacturing with some additional losses on some of our vaccine supply that's hitting us. The other element really becomes, you know, investing behind these launches. We're going to, you know, continue to invest in Zinrelia. We're also going to be investing in Predator Quattro, but now given our update in June, we won't have any revenue from Predator Quattro in 2024.

Speaker Change: chris thanks for the question on the back half guidance very pleased with the q two be that was primarily driven by underlying strength of sales in the business there was some timing of opex between q two and q three but primarily as we go into the back half there is some additional headwinds and manufacturing with some additional losses on some of our vaccine supply thats hitting the other element really becomes investing buy these launches we re going to continue to invest going to be about qu but now given our update inje we won't have any revenue quad in two thousand and twenty four

Todd Young: The other element really becomes investing behind these launches. We're going to continue to invest in Zinrelia. We're also going to be investing in Cordella Quattro, but now, given our update in June, we won't have any revenue from Cordella Quattro in 2024. The other thing to remind folks of is that we're really excited about Bovair. We've got that set up.

Todd Young: The other element really becomes investing behind these launches. We're going to continue to invest in Zinrelia. We're also going to be investing in Crudella Quattro, but now, given our update in June, we won't have any revenue from Crudella Quattro in 2024. The other thing to remind folks of is that we're really excited about Bovair. We've got that set up.

Todd Young: The other thing to remind folks of is, you know, we're really excited for Bover. You know, we've got that set up. We've got, you know, 500,000 dairy cows on uplook, which is the critical element to build a measure of the methane. But as we've noted before, gross margin for that product is low below the corporate average, because of a high cost manufacturing process required. And because we've brought this product to the U.S., two years earlier than expected, the use of a different main fashion process that significantly reduces cops won't come into play. So, you know, those are the things that are driving it. But, you know, fundamentally, the base business continue to perform well as innovations driving portfolios across the world.

Todd Young: The other thing to remind folks of is...

Todd Young: We've got 500,000 dairy cows on Uplook, which is the critical element to be able to measure the methane. But, as we've noted before, gross margin for that product is well below the corporate average because of the high-cost manufacturing process required. Because we brought this product to the US two years earlier than expected, the use of a different manufacturing process that significantly reduces COPS won't come into play. Those are the things that are driving it, but fundamentally, the base business is continuing to perform as well as innovations driving portfolios across the world.

Todd Young: We've got 500,000 dairy cows on Uplook, which is the critical element to be able to measure the methane. But, as we've noted before, gross margin for that product is well below the corporate average because of the high-cost manufacturing process required. Because we brought this product to the US two years earlier than expected, the use of a different manufacturing process that significantly reduces COPS won't come into play. Those are the things that are driving it, but fundamentally, the base business is continuing to perform as well as innovations driving portfolios across the world.

Speaker Change: we're really cited for both there we've got that we've got five hundred thousand airy cows look which is the critical element to build measure the nothingthing but as we' ve before gross margin for that product is well below the corporate average because of the high cost mademanufacturing process required and because we ve brought this product to the two years earlier than expected the use of different man faction process that significantly reduceces cops come into play so you those the things that are driving it but fundamentally the base business continueing to performwellas innovations drive portfolio across the world

Operator: Your next question comes from the line of Erin Wright with Morgan Stanley. Please go ahead.

Operator: Your next question comes from the line of Erin Wright with Morgan Stanley. Please go ahead.

Aaron Wright: Here our next question comes from the line of Aaron Wright with Morgan Stanley. Please go ahead. Great.

Speaker Change: Your next question comes from the line of Erin Wright with Morgan Stanley . Please go ahead.

Erin Wright: Great, thanks. On Xenrelia, and apologies for another Xenrelia question here, but just in terms of a safety warning, presumably you do have to time it around the administration of Xenrelia or time the administration around vaccines. I guess, how much of the chronic market can you capture with that in mind? And just how do you ensure stickiness, or loyalty, kind of, for the product if you can't use it year-round, for instance? And is it geared more towards seasonal or chronic?

Aaron Wright: Thanks on Zinrelia in apology for another Zinrelia question here. But just in terms of the safety warning, presumably you do have to time it around the administration around vaccines. I guess, how much of the chronic market can you capture with that in mind? And just how do you ensure stickiness, loyalty, credit for the product? If you couldn't use it year round, for instance, and isn't geared more towards seasonal chronic, how do you think about the omni-tannel approach?

Erin Wright: great thanks on generria in apology for another than really a question here but just didn'in terms of the dty warning presumably you do have to time it around the advmin trying the administration around vaccines

Erin Wright: I guess, how much of the chronic market can you capture with that in mind, and just...

Speaker Change: how do you ensure

Erin Wright: stickiness, loyalty headed for the product if you couldn't use it year-round, for instance, and is it geared more towards seasonal, chronic? How do you think about the omni-channel approach? You can definitely leverage your experience there, but there's also auto-ship with online pharmacies and that kind of stuff that there may be some caveats there. And then can you clarify for us that the label and other geographies, will it have a similar safety caveat involved? Thanks.

Erin Wright: How do you think about the omni-channel approach? You can definitely leverage your experience there, but there's also auto-ship with online pharmacies and that kind of stuff that there may be some caveats there. And then, can you clarify for us that the label and other geographies will have a similar safety caveat involved? Thanks.

Aaron Wright: You can definitely leverage your experience there, but there's also auto shift with online pharmacies and that kind of stuff that there may be some caveats there. And then can you clarify for us that the label and other geographies will have a similar safety caveat involved? Thanks. Thanks, Aaron.

Erin Wright: Thanks, Erin. On the first one, we, you know, we'll take each country as it is. Brazil, as we will say, has no warning label on the package, and we expect that that will be the case as we go forward in other international markets. And, as we've said, we will work post-approval of this product with the FDA to continue to improve the label and do what's necessary to do that.

Jeffrey Simmons: Thanks, Erin. On the first one, we, you know, we'll take each country as it is. Brazil, as we will say, has no warning label on the package, and we expect that that will be the case as we go forward in other international markets. And, as we've said, we will work post-approval of this product with the FDA to continue to improve the label and do what's necessary to do that.

Jeff Simmons: On the first one, we will take each country as it is. Brazil, what we will say, has not a warning label on the label. And we expect that that will be the case as we go forward in other international markets. And as we've said, we will work close the approval of this product with the FDA to continue to improve the label and do what's necessary to do that. And relative to your question and why I wanted to really emphasize, we believe strongly that all itching dogs are part of the qualified market, chronic or acute.

Erin Wright: thanks there and on the first one we

Erin Wright: You know, we'll take each country as it is. Brazil, what we will say, has not a warning label on the label.

Erin Wright: We expect that that will be the case as we go forward in other international markets. And as we've said, we will work post the approval of this product with the FDA to continue to improve the label and do what's necessary to do that. Relative to your question and why I wanted to really emphasize, we believe strongly that all itching dogs are part of the qualified market, chronic or acute. We believe once vets understand this product and the label, we won't get into the specifics of it now until the product has been approved and we'll go through those details.

Jeffrey Simmons: You know, relative to your question and why I wanted to really emphasize, we believe strongly that, you know, all itching dogs are, you know, part of the qualified market, chronic or acute. We believe once vets understand this product and the label, we won't get into the specifics of it now until the product has been approved, and we'll go through those details. But we believe we can create stickiness with this, and this is really driven by the market research we see that there is a strong interest in having another option.

Erin Wright: You know, relative to your question and why I wanted to really emphasize, we believe strongly that, you know, all itching dogs are, you know, part of the qualified market, chronic or acute. We believe once vets understand this product and the label, we won't get into the specifics of it now until the product has been approved, and we'll go through those details. But we believe we can create stickiness with this, and this is really driven by the market research we see that there is a strong interest in having another option.

Jeff Simmons: We believe once that's understand this product in the label, we won't get into the specifics of it now until the product has been approved and we'll go through those details. But we believe we can create stickiness with this, and this is really driven by the market research we see that there is a strong interest in having another option. There are non-responders in the market, and there's an interest for better efficacy and value, and we believe we can provide those, not just with convenience, but overall, our approach to the marketplace.

Erin Wright: But we believe we can create stickiness with this, and this is really driven by the market research we see, that there is a strong interest in having another option. There are non-responders in the market.

Erin Wright: There are non-responders in the market, and there's an interest in better efficacy and value, and we believe we can provide those, not just with convenience, but overall with our approach to the marketplace. So, we believe we can address the top needs of veterinarians in the derm market, and we can create, yes, with our omni-channel and our approach to the marketplace, the ability to be able to use this product with the label, you know, the label that we are, you know, going to have initially, and that's been represented by the market research that we've already done with that label out there in the marketplace.

Jeffrey Simmons: There are non-responders in the market, and there's an interest in better efficacy and value, and we believe we can provide those, not just with convenience, but overall with our approach to the marketplace. So we believe we can address the top needs of veterinarians in the derm market and we can create, yes, with our omni-channel and our approach to the marketplace, the ability to be able to use this product with the label, you know, the label that we are, you know, going to have initially and that's been represented by the market research that we've already done with that label out there in the marketplace.

Erin Wright: And there's an interest for better efficacy and value, and we believe we can provide those. Not just with the convenience, but overall, our approach to the marketplace. So, we believe we can address top needs of veterinarians in the derm market, and we can create, yes, with our omni-channel and our approach to the marketplace.

Jeff Simmons: So we believe we can address top needs of veterinarians in the Durham market, and we can create, yes, with our army channel and our approach to the marketplace, the ability to be able to use this product with the label, you know, the label that we are going to have initially. And that's been represented by the market research that we've already done with that label out there with the market research.

Erin Wright: The ability to be able to use this product with the label, you know, the label that we are, you know, going to have initially, and that's been represented by the market research that we've already done with that label out there with the market research.

Erin Wright: Okay, and then my follow-up question on the retail channel: just how tightly are you keeping an eye on inventory levels there? It sounds like you feel comfortable that things will normalize here in the second half, and just given your exposure to over-the-counter products, what are you seeing in terms of the consumer, in terms of trade down, or any sort of consumer softness at retail? Thanks.

Erin Wright: Okay, and then my follow-up on the retail channel, just how tightly are you keeping an eye on inventory levels there? It sounds like you feel comfortable that things normalize here in the second half and just giving your exposure to over the counter products. What are you seeing in terms of the consumer in terms of trade down or any sort of consumer softness at retail? Sure, Erin, thanks for the question on retail.

Speaker Change: Okay, and then my follow-ups on the retail channel, just how tightly are you keeping an eye on inventory levels there? It sounds like you feel comfortable that things normalize here in the second half and just given your exposure to over-the-counter products, what are you seeing in terms of the consumer, in terms of trade-down or any sort of consumer softness at retail? Thanks.

Todd Young: Sure, Erin, thanks for the question on retail. As we noted, less inventory was built in the second quarter of this year than last year. That was the primary driver of US Pet Health sales being down in the quarter. We feel like the retailers have inventory levels that will require them to continue to buy in line with dispensing. And our focus is on dispensing. As noted, it continues to grow in July. It grew year-to-date in the first half of the year.

Todd Young: Sure, Erin, thanks for the question on retail. As we noted, less inventory was built in the second quarter of this year than last year. That was the primary driver of US pet health sales being down in the quarter. We feel like retailers have inventory levels that will require them to continue to buy in line with dispensing. And our focus is on dispensing. As noted, it continues to grow in July. It grew year-to-date in the first half of the year.

Erin Wright: The last inventory was built in the second quarter of this year, then last year, that was the primary driver, U.S, pet health sales being down in the quarter. We feel like the retailers have inventory levels that will require them to continue to buy and line with dispensing and our focus is on dispensing as noted. It continues to grow in July, it grew year to date in the first half of the year, and we're also transitioning out of the key element of the season so the consumer is something we do pay a lot of attention to.

Todd Young: sure thanks for the question of retail is re noted less inventory was built

Todd Young: In the second quarter of this year than last year, that was the primary driver of U.S. pet health.

Todd Young: Sales being down in the quarter. We feel like, you know...

Todd Young: The Retailers have inventory levels that will require them to continue to buy in line with dispensing, and our focus is on dispensing. As noted, it continues to grow. In July , it grew year-to-date in the first half of the year, and we're also transitioning out of the key element of the season, so the consumer is something we do pay a lot of attention to. We have seen some trade-down. It has been on pack sizes.

Todd Young: And we're also transitioning out of the key element of the season, so the consumer is something we pay a lot of attention to. We have seen some trade-down, but it has been on pack sizes. We've seen more two-packs purchased versus four-packs, and so that's something that we do continue to focus on. But over the last couple of years, we've expanded points of distribution by bringing back some lower-priced options that have been doing very well, primarily in dollar stores, as we've added all the 10,000 points of distribution we talked about. So overall, we feel like we're in a good spot as we move forward. Thanks.

Todd Young: And we're also transitioning out of the key element of the season, so the consumer is something we pay a lot of attention to. We have seen some trade-down, but it has been on pack sizes. We've seen more two-packs purchased versus four-packs, and so that's something that we do continue to focus on. But over the last couple of years, we've expanded points of distribution by bringing back some lower-priced options that have been doing very well, primarily in dollar stores, as we've added all the 10,000 points of distribution we talked about. So overall, we feel like we're in a good spot as we move forward. Thanks.

Erin Wright: We have seen some trade down, it has been on pack sizes, we've seen more two packs purchased versus four packs, and so that's something that we do continue to focus on, but over the last couple of years, we've expanded points of distribution with bringing back some lower priced options that have been doing very well, primarily in dollar stores as we've added all the 10,000 points of distribution we talked about. Overall, we feel like we're in a good spot as we move forward. Thanks.

Todd Young: We've seen more, you know, two-packs purchase versus four-packs.

Todd Young: And so that's something that, you know, we do continue to focus on, but over the last couple of years, you know, we've expanded points of distribution with bringing back some lower priced options that have been doing very well, you know, primarily in dollar stores as we've added, you know, all the 10,000 points of distribution we talked about. So, you know, overall, we feel like we're in a good spot.

Operator: Your next question comes from the line of Brandon Vazquez with William Blair. Please go ahead.

Brandon Vasquez: Your next question comes from the line of Brandon Vasquez with William Blair, please go ahead. Hey everyone, thanks for taking the question. Maybe I'll switch, we haven't talked about farm animal yet, and U.S, farm animal is actually really strong. Can you just give us a little bit more detail what was going on there, were there any one times in there, I think there was a common depress release about resupplying of vaccines.

Speaker Change: Your next question comes from the line of Brandon Vazquez with William Blair. Please go ahead.

Brandon Vazquez: Hey everyone, thanks for taking the question. Maybe I'll switch.

Brandon Vasquez: So basically just trying to get at what's the strength of how durable is that level of U.S, farm animal as we go through the rest of the year into 25. Yeah, thank you, Brandon. Yeah, the farm animal strategy globally is actually working very well, and especially in the U.S., we've got a diverse wide portfolio from medicated feed additives, vaccines, therapeutics. We're adding innovation, and that's making every portfolio cattle, both beef, dairy, and poultry stronger and swine.

Brandon Vazquez: We haven't talked about farm animals yet, and U.S. farm animal is actually really strong. Can you just give us a little bit more detail about what was going on there? Were there any one-time times in there? I think there was a comment in the press release about the resupplying of vaccines. So basically, just trying to get a feel for what the strength and how durable that level of U.S. farm animal is as we go through the rest of the year and into 25.

Speaker Change: Hey, everyone. Thanks for taking the question. Maybe I'll switch. We haven't talked about farm animal yet, and U.S. farm animal is actually really strong.

Speaker Change: Can you just give us a little bit more detail what was going on there? Were there any one-times in there? I think there was a comment in the press release about resupplying of vaccines, so basically just trying to get at what's the strength and how durable is that level of U.S. farm animal as we go through the rest of the year and into 2025.

Jeffrey Simmons: Yeah, thank you, Brandon. Yeah, the farm animal strategy globally is actually working very well, and especially in the U.S. We've got a diverse, wide portfolio of, you know, medicated feed additives, vaccines, and therapeutics. We're adding innovation, and that's making every portfolio, cattle, both beef, dairy, and poultry, stronger, and swine. And we're making, you know, with our value beyond the product and our portfolio, ultimately, our customers more money. And in low margin cyclical businesses, this is ultimately where the stickiness comes from with Elanco and why we're leading, we're growing, we're taking share, and we're, you know, Ellen's team is even building a continued pipeline, both on lifecycle management and new products. So great execution.

Todd Young: Yeah, thank you, Brandon. Yeah, the farm animal strategy globally is actually working very well, and especially in the U.S., we've got a diverse, wide portfolio.

Speaker Change: from, you know, medicated feed additives, vaccines, therapeutics. We're adding innovation and that's making every portfolio, cattle, both beef, dairy, and poultry, stronger and swine. And we're making, you know, with our value beyond product and our portfolio, we're making ultimately our customers more money. And in low margin cyclical businesses, this is ultimately where the stickiness comes from with Elanco and why we're leading, we're growing, we're taking share. And where, you know, Ellen's team's even building continued pipeline, both on lifecycle management and new products. So, great execution. We look forward to Xperia growing more with our heifer clearance, with Beauvair coming. So, two nice innovations coming in the second half of the year and, you know, we

Brandon Vasquez: And we're making, you know, with our value beyond product and our portfolio, we're making ultimately our customers more money, and in low margin, cyclical businesses. This is ultimately where the stickiness comes from with Elanco, and why we're leading, we're growing, we're taking share, and we're, you know, Ellen's teams even building continued pipeline both on life cycle management and new products. So great execution. We look forward to experience growing more with our heifer clearance, with boveair coming.

Jeffrey Simmons: We look forward to Xperia growing more with our heifer clearance and Beauvair coming. So, two nice innovations coming in the second half of the year. And, you know, we see this as really this next era of livestock sustainability. To Todd's point, the interest in Beauvair on the farmer side is extremely high. We've got 500,000 cows on our Uplift database headed to a million by the end of the year. And so farmer demand and that extra revenue stream have actually created a lot of interest in the dairy industry at the farmer level.

Brandon Vasquez: So two nice innovations coming in the second half of the year. And you know, we see this is really this next era of livestock sustainability to Todd's point. The interest in boveair on the farmer side is extremely high. We've got 500,000 cows on our uplift database headed to a million by the end of the year. And so the farmer demand and that extra revenue stream is actually created a lot of interest in the dairy industry on the farmer level.

Speaker Change: see this as really this next era of livestock sustainability.

Speaker Change: to tod's point the interest in bol bt on the farmer side is extremely got five hundred thousand calws on our up of database headed to a million by the end of the year and so the farmer demand in that extra a revenue stream has actually created a lot of interest in the dairy industry and the farmer level and it's you know other species poultry and beef are also leaning in as well so that's that's a bitof thefundamentalsi don't know which like ic comment relativeto the sales question

Brandon Vasquez: And it's, you know, other species poultry and beef are also leaning in as well. So that's that's a little bit of the fundamentals. I don't know, Todd would you like to make a comment relative to the sales? I think we're really pleased with how the Portfolio Innovation adds to the Portfolio, be it experience, be it our president, vaccine, per person, swine, continue to really drive this business. We returned to growth in U.S, farm in Q3 of last year at 2% that we put up 28% growth in Q4, 11% growth in Q1 of this year and now 24% growth in Q2.

Jeffrey Simmons: And it's, you know, other species, poultry, and beef are also leaning in as well. So that's a little bit of the fundamentals. I don't know, Todd. Would you like to make a comment relative to the sales question?

Todd Young: Yeah, right. I think we're really pleased with how the portfolio and innovation adds to the portfolio, be it Xperia, be it our prefacent vaccine for birds and swine, continue to really drive this business. And we returned to growth in U.S. farmland in Q3 of last year at 2%. Then we put up 28% growth in Q4, 11% growth in Q1 of this year, and now 24% growth in Q2. So, you know, that team is really, you know, leveraging that innovation and growth.

Speaker Change: Yeah, Brandon, I think we're really pleased with how the portfolio and innovation adds to the portfolio, be it Xperia or be it our prefacent, Vaccine for Persons, Swine, continue to really drive this business. We returned to growth in U.S. farm in Q3 of last year at 2%, then we put up 28% growth in Q4, 11% growth in Q1 of this year, and now 24% growth in Q2. So that team is really leveraging that innovation and growth. We expect that to have continued momentum with Bovair coming in to add to the dairy growth, and we've seen Xperia really pulling Rumensan forward.

Brandon Vasquez: So, that team is really leveraging that innovation and growth. We expect that has continued momentum with both air coming in to add to the dairy growth and we've seen expere really pulling ruments in forward. I'm not going to commit to double digit growth in U.S, farm for all the quarters to come, but certainly given that team and the portfolio it has, we're excited it'll continue to be a nice profitable growth driver for Alanco going forward.

Todd Young: We expect that, you know, continued momentum with Bovair coming in to add to the dairy growth. And we've seen Xperia really pulling Remensen forward. I'm not going to commit to double-digit growth in U.S. farm for all the quarters to come, but certainly given that team and the portfolio it has, we're excited it'll continue to be a nice profitable growth driver for Elanco going forward.

Todd Young: I'm not going to commit to double-digit growth in U.S. farm for all the quarters to come, but certainly given that team and the portfolio it has, we're excited it'll continue to be a nice profitable growth driver for Elanco going forward.

Todd Young: I'm not going to commit to double-digit growth in U.S. farm for all the quarters to come, but certainly given that team and the portfolio it has, we're excited it'll continue to be a nice profitable growth driver for Elanco going forward.

Unknown Caller: Great, and then maybe I'll take a shot and see if there's any other pipeline updates that you guys are willing to give beyond Zanrella and Quadra at this point. On the IL-31, any updates on your discussions with the FDA, thinking as we're getting closer to 25, is there like a first half, a second half kind of approval that you're timing for? And then, if there's any other segments within the R&D pipeline that you guys would be willing to discuss, that would be helpful. Thank you.

Brandon Vazquez: Great, and then maybe I'll take a shot and see if there's any other pipeline updates that you guys are willing to give beyond Zanrella and Quadra at this point. On the IL-31, any updates on your discussions with the FDA, thinking as we're getting closer to 25, is there like a first half, a second half kind of approval that you're timing for? And then, if there's any other segments within the R&D pipeline that you guys would be willing to discuss, that would be helpful. Thank you. Yeah, Ellen is.

Jeff Simmons: Great. And then maybe I'll take a shot and Chief, there's any other pipeline updates that you guys are willing to give beyond Zimrelian Quattro at this point. On the IL-31, any updates on your discussions with the FDA thinking as we're getting closer to 25 years, they're like a first half, a second half, kind of approval that you're timing for and then if there's any other segments within the R&D pipeline that you guys would be willing to discuss, that would be helpful.

Unknown Caller: Great, and then maybe I'll take a shot and see if there's any other pipeline updates that you guys are willing to give beyond Zanrelli and Quadro at this point. On the IL-31, any updates on your discussions with the FDA, thinking as we're getting closer to 25 here, is there like a first half, a second half kind of approval that you're timing for? And then if there's any other segments within the R&D pipeline that you guys would be willing to discuss, that would be helpful. Thank you.

Jeffrey Simmons: Yeah, Ellen is, and the team continues. There's a lot of momentum and excitement and innovation. First, you've got a blockbuster per quarter, the next three quarters.

Jeffrey Simmons: Yeah, Ellen is, and the team continues. There's a lot of momentum and excitement and innovation. First, you've got a blockbuster per quarter, the next three quarters. That's our intention, that's what we're tracking to. And two of those markets are going to be new accretive markets. Durham and Pat are going to be accretive sales and livestock sustainability. And then we're going into PARA, which has been growing in the broad-spectrum parasiticide market, as I mentioned.

David Westenberg: Thank you. Yeah, Ellen is, and the team continues, there's a lot of momentum and excitement and innovation. First, you've got a blockbuster per quarter, the next three quarters, that's our intention, that's what we're tracking to and two of those markets are going to be new accretive markets. Durham on PATH is going to be accretive sales and livestock sustainability. And then we're going into Pera that's been growing in the broad spectrum, Pera Citizen Decide Market, as I mentioned, now 25% of US Pera growing 40%.

Jeffrey Simmons: Yeah, Ellen is, and the team continues, there's a lot of momentum and excitement and innovation. First, you've got, you know, a blockbuster, you know, per quarter, the next three quarters. That's our intention. That's what we're tracking to. And two of those markets are going to be new accretive markets. DERM and PET is going to be accretive sales and livestock sustainability. And then we're going into PARA that's been growing in the broad-spectrum parasiticide market, as I mentioned. Now, 25% of U.S. PARA, growing 40%. So, one is there's a lot of excitement. There's still work to be done. Yes, the IL-31 will follow Zanrelia in the U.S. and we'll be globalizing that as well. That's coming in 25. We've not talked specifically about the timing. That's with the USDA, not the FDA. And so that's

Jeffrey Simmons: That's our intention. That's what we're tracking to. And two of those markets are going to be new accretive markets. DERM and PET are going to be accretive sales and livestock sustainability. And then we're going into PARA, which has been growing in the broad-spectrum parasiticide market, as I mentioned. Now, 25% of U.S. households use PARA, and it's growing 40%. So, one thing is that there's a lot of excitement, but there's still work to be done. Yes, the IL-31 will follow Zanrelia in the U.S., and we'll be globalizing that as well. That's coming in 25.

Jeffrey Simmons: Now, 25% of U.S. PARA is growing 40%. So, one is there's a lot of excitement; there's still work to be done. Yes, the IL-31 will follow Zenrelia in the U.S., and we'll be globalizing that as well. That's coming in 2025. We've not talked specifically about the timing.

David Westenberg: So one is there's a lot of excitement, there's still work to be done, yes, the IL-31 will follow Zimrelian, the US and will be globalizing that as well, that's coming in 25 and not talk specifically about the timing, that's what the USDA, not the FDA, and so that's tracking and we've said that's positively differentiated. And then behind that, yes, we continue to look at the big market spaces and others. So Pera, Durham, Pane, Monoclonal Antibodies with a second actually in Monoclonal Antibodies we're investing behind that and then some of the new spaces.

Jeffrey Simmons: That's with the USDA, not the FDA. And so that's tracking, and we've said that's positively differentiated. And then behind that, yes, we continue to look at the big market spaces and others. So, PARA, Durham, Payne, monoclonal antibodies were the second, actually, in monoclonal antibodies.

Jeffrey Simmons: We've not talked specifically about the timing. That's with the USDA, not the FDA. And so that's tracking, and we've said that's positively differentiated. And then behind that, yes, we continue to look at the big market spaces and others. So, PARA, DERM, pain, monoclonal antibodies were the second most popular class of monoclonal antibodies.

Speaker Change: that's tracking we' said that's possibly differentiated and then behind that yes we continue to look at the big market spaces and other so d pain monoonone antibodies with the second actually in monicical and bod were investine behind that and and then some of the new spaces and then i would sayyou knowthe other one is this livevestocks stain ability we are building a significant pipeline that we believe will create sustained competitive advantage and the creation of a new market that we see to be you one two billion dollars globally and we already can tell by the interest from the farmer side that that has a lot of potential so the next wave of innovation is being developed and as ellen says we want to constant flow

Jeffrey Simmons: We're investing behind that. And then some of the new spaces. And then I would say, you know, the other one is this livestock sustainability. We are building a significant pipeline that we believe will create sustained competitive advantage and the creation of a new market that we see to be, you know, one to two billion dollars globally. And we can already tell by the interest from the farmer side that this has a lot of potential.

Jeffrey Simmons: We're investing behind that. And then some of the new spaces. And then I would say, you know, the other one is this livestock sustainability. We are building a significant pipeline that we believe will create sustained competitive advantage and the creation of a new market that we see to be, you know, $1 to $2 billion globally. And we can already tell by the interest from the farmer side that this has a lot of potential.

David Westenberg: And then I would say, you know, the other one is this livestock sustainability. We are building a significant pipeline that we believe will create sustained competitive advantage and the creation of a new market that we see to be, you know, one to two billion dollars globally and we already can tell by the interest from the farmer side that has a lot of potential. So the next wave of innovation is being developed and as Ellen says, we want a constant flow of high impact innovation in major markets and that's exactly what the charge of that team is doing, never felt better about our R&D team and what they're doing.

Jeffrey Simmons: So the next wave of innovation is being developed. And as Ellen says, we want a constant flow of high-impact innovation and major markets. And that's exactly what the leadership of that team is doing. Never felt better about our R&D team and what they're doing.

Jeffrey Simmons: So the next wave of innovation is being developed. And as Ellen says, we want a constant flow of high-impact innovation in major markets. And that's exactly what the leadership of that team is doing. I've never felt better about our R&D team and what they're doing.

Jeffrey Simmons: of high impact innovation in major markets and that's that's exactly what the charge of team do and never felt better about our randd team and what they're doing

Operator: Your next question comes from Balaji Prasad from Barclays. Please go ahead.

Operator: Your next question comes from Balaji Prasad from Barclays. Please go ahead.

Balaji Prasad: Your next question comes from Belagie Persaud from Berkley's, please go ahead. Hi, good morning everyone and a couple of questions from me. Firstly, on the competitive dynamic side, I think you called out competition in the status of size and fame, could you quantify the market share laws if any for each of these segments and how the brands have been impacted, for example, is Gallipran just losing market share loan or are you seeing a decline in absolute number?

Operator: Your next question comes from Balaji Prasad from Barclays. Please go ahead.

Balaji Prasad: Hi, good morning, everyone, and a couple of questions from me. Firstly, on the competitive dynamic side, I think you called out competition in parasite size and pain. Could you quantify the market share loss, if any, for each of these segments, and how have the brands been impacted? For example, is Gallup just losing market share alone, or are you seeing a decline in absolute numbers? That's one. Two, maybe stepping up a bit more on the farm animal side, considering the strength that we have seen in it, I'm curious to see how the macro environment is impacting inflation rates. How are they influencing distributor behavior, and how is this different from the retailer's behavior that you're seeing?

Jeff Simmons: That's one. Two, maybe stepping up a bit more on the farm and the most side, considering the strength that we have seen in it. I'm curious to see how macro environment is impacting inflation and rates. How are they influencing this rid of behavior and how is this different from the retailers behavior that you're seeing? Thanks. Yeah, great, great questions. Again, paying the pain market with innovation, with more share of voice, with more diagnostics, the pain market continues to grow.

Balaji Prasad: i morning around couple questions from me firstly on the

Speaker Change: competitive dynamics i think it called out compleactationing

Balaji Prasad: parasites and pain. Could you quantify the market share loss, if any, for each of these segments and how are the brands been impacted? For example, is Gallup Brand just losing market share alone or are you seeing a decline in absolute number? That's one. Two, maybe stepping up a bit more on the farm animal side, considering the strength that we have seen in it, I'm curious to see how macro environment is impacting inflation and rates.

Balaji Prasad: How are they influencing distributor behavior and how is this different from the retailer's behavior that you're seeing? Thank you.

Jeffrey Simmons: Yeah, great, great questions. Again, pain, the pain market. With innovation, with more share of voice, with more diagnostics, the pain market continues to grow. Galluprant's meeting our expectations, but it's been challenged by some of the competition. But when we look at our pipeline and we look at our current portfolio, we like the prospects of the pain market. And again, Galluprant, we continue to see a very strong part of our portfolio

Balaji Prasad: Thank you. Yeah, great, great questions. Again,

Balaji Prasad: Yeah, great, great questions. Again,

Speaker Change: a great great questions again paying the pain market with with innovation with more share voice with more diagnostics the pain market continues to grow gallo prants meeting our expectations but you know it's been challenged with with some of the competition but when we look at our

Jeff Simmons: Galloprans meeting are expectations, but it's been challenged with some of the competition, but when we look at our pipeline and we look at our current portfolio, we like the prospects of the pain market and again, Galloprans, we continue to see a very strong part of our portfolio going forward. And then on just protein economics, what I would just say at the highest level, you know, if I look at our two biggest segments, which is cattle and poultry, they are the strongest.

Speaker Change: Our pipeline, and we look at our current portfolio, we like the prospects of the pain market, and again, Gallup-Rant, we continue to see a very strong part of our portfolio going forward.

Jeffrey Simmons: And then on just protein economics, what I would just say at the highest level, you know, if I look at our two biggest segments, which are cattle and poultry, they are the strongest. So when you look at cattle, there are fewer cattle on the confined side, which has kept protein economics stronger. So even when feed costs have come down, our portfolio continues to have significant economic value because the protein and meat value are up. So that's been beneficial to Remenz and Xperia across the whole portfolio overall. And we've got these tools that can help even measure that.

Jeff Simmons: So when you look at cattle, there's fewer cattle numbers on the confine side, which is kept protein economic stronger. So even when feed costs have come down, our portfolio continues to have significant economic value because the protein, the meat value is up. So that's been beneficial to remence an experience in the whole portfolio overall. And we've got these tools that can help even measure that. On the poultry side globally, probably no more sustainable and more demanded protein in more significant way.

Balaji Prasad: And then on just protein economics, what I would just say at the highest level, you know, if I look at our two biggest segments, which is cattle and poultry, they are the strongest. So when you look at cattle, there's fewer cattle numbers on the confined side, which has kept protein economics stronger. So even when feed costs have come down, our portfolio continues to have significant economic value because the protein, the meat value is up. So that's been beneficial to Remensen and Xperia in the whole portfolio overall. And we've got these tools that can help even measure that.

Jeffrey Simmons: On the poultry side, globally, probably no more sustainable and more demanded protein in a more significant way. And we've got a leading portfolio. We continue to see consistent growth, as Todd mentioned, quarter to quarter globally on poultry, and we're bringing innovation there, from food safety to non-antibiotic replacements to our Ionophore package. So and then swine, you know, what I'd say is we look at swine as if we've got, you know, good leadership in North America and China.

Speaker Change: On the poultry side, globally, probably no more sustainable and more demanded protein in a more significant way, and we've got a leading portfolio. We continue to see consistent growth, as Todd mentioned, quarter to quarter globally on poultry, and we're bringing innovation there from food safety to non-antibiotic replacements to our Ionifor package. And then swine, what I'd say is we look at swine as we've got good leadership in North America and China. China, we saw a little bit of a green shoot with prices getting up over break-even in China and pork prices for the first time, first quarter in quite some time. Still need to see that play out as we look at multinational portfolios being benefited.

Jeff Simmons: And we've got a leading portfolio. We continue to see consistent growth, as Todd mentioned, quarter to quarter globally on poultry. And we're bringing innovation there from food safety to non antibiotic replacements to our own afford package. And then swine, you know what I'd say is we look at swine as we've got good leadership in North America and China. China, we saw a little bit of a green shoot with prices getting up over break even in China and port prices for the first time, first quarter and quite some time.

Jeffrey Simmons: China, we saw a little bit of a green shoot with, you know, prices getting up over break even in China and pork prices for the first time, first quarter in quite some time. Still need to see that play out as we look at multinational, you know, portfolios being benefited. But, you know, as a whole, as I step back, you know, with our portfolio, whether it's feed conversion advantage, protein economics, or even food safety and disease, we are well positioned, especially in poultry, dairy, and beef, going forward to continue to have sustained growth and sustained competitive advantage.

Jeff Simmons: Still need to see that play out as we look at multinational, you know, portfolios being benefited. But you know, as a whole, as I step back, you know, with our portfolio, whether it's the conversion advantage, protein economics or even food safety and disease, we're well positioned, especially in poultry, dairy and beef going forward to continue to have sustained growth and sustained a better advantage. Your next question comes from the line of David Westenberg with Piper Sandler.

Balaji Prasad: You know, as a whole, as I step back, you know, with our portfolio...

Speaker Change: Whether it's feed conversion advantage, protein economics, or even food safety and disease, we are well positioned, especially in poultry, dairy, and beef going forward to continue to have sustained growth and sustained competitive advantage.

Operator: Your next question comes from the line David Westenberg with Piper Sandler. Please go ahead.

Speaker Change: your next question comes from the line of david westdenburg with piper sandl please go ahead

Jeff Simmons: Please go ahead. Hi, thanks for taking the question. We're up at the hour, so I'll just ask one here. Can you talk about the IAL31 product in light of the different label than expected with the jack? Just in my research, we do suggest that new patient starts tend to be on side-up point rather than Apple Quill and at least in the U.S. So does the different label change your strategy versus before when it comes to the IAL31 product, marketing, et cetera?

Balaji Prasad: Hi, thanks for taking the question. We're up for the hour, so I'll just ask one here.

David Westenberg: Hi, thanks for taking the question. We're up for the hour, so I'll just ask one here.

Balaji Prasad: Hi, thanks for taking the question. We're up at the hour, so I'll just ask one here. Can you talk about the IL-31 product in light of the different label than expected with the JAK? At least in my research, we do suggest that new patient starts tend to be on Cytopoint rather than Apoquil, at least in the U.S. Does the different label change your strategy versus before when it comes to the IL-31 product, marketing, etc.? And then in terms of differentiation, I know Kindred used to really focus on half-life extension technology. Any other questions?

David Westenberg: Can you talk about the IL-31 product in light of the different labeling than expected with the JAK? At least in my research, we do suggest that new patient starts tend to be on Cytopoint rather than Apoquil, at least in the U.S. So does the different label change your strategy versus before when it comes to the IL-31 product, marketing, etc.? And then, in terms of differentiation, I know Kendred used to really focus on half-life extension technology? Any other thoughts on what that could be?

David Westenberg: Can you talk about the IL-31 product in light of the different labeling than expected with the JAK? At least in my research, we do suggest that new patient starts tend to be on Cytopoint rather than Apoquil, at least in the U.S. So does the different label change your strategy versus before when it comes to the IL-31 product, marketing, etc.? And then, in terms of differentiation, I know Kindred used to really focus on half-life extension technology. Any other thoughts on what that could be?

Jeff Simmons: And then in terms of differentiation, I know kindred use to really focus on half light extension technology. Any other thoughts on what that could be? I realize you probably don't want to get too far ahead on that, but you know, I'm going to at least try. Yeah, thanks David. As you look at the Derm market, really both product forms and categories are growing nicely and they bring different benefits and we continue to see that.

Speaker Change: thoughts on what that could be. I realize you probably don't want to get too far ahead on that but you know I'm going to at least try.

David Westenberg: I realize you probably don't want to get too far ahead on that, but I'm going to at least try.

David Westenberg: I realize you probably don't want to get too far ahead on that, but I'm going to at least try.

Speaker Change: Yeah, thanks, David. As you look at the DERM market, really both...

Jeffrey Simmons: Yeah, thanks, David. As you look at the DERM market, really both product forms and categories are growing nicely, and they bring different benefits, and we continue to see that. So, and again, we see Xenrelia, with its existing label, will have blockbuster potential. It will be launched globally, and we will follow with IL-31.

Jeffrey Simmons: Yeah, thanks, David. As you look at the DERM market, really both product forms and categories are growing nicely, and they bring different benefits, and we continue to see that. So, and again, we see Xenrelia, with its existing label, will have blockbuster potential. It will be launched globally, and we will follow with IL-31.

Jeffrey Simmons: product forms and categories are growing nicely and they bring different benefits and we continue to see that so and again we we see Zenrelia with its existing label will you know have blockbuster potential it'll be launched globally and we will follow with IL-31 I won't comment on the differentiation but again we see really it'll be a nice complement and then we'll follow that with with other assets as it's known we've got a long-acting that came from Kindred and we've got other other forms of new technology in DERM so real excited about that see both categories growing and no real change of strategy at this point in time

Jeff Simmons: So again, we see Zen Relia with its existing label will have blockbuster potential, it'll be launched globally and we will follow with IAL31. I won't comment on the differentiation, but again, we see really it'll be a nice complement and then we'll follow that with with other assets as it's known. We've got a long acting that came from Kindred and we've got other other forms of new technology in Derms. So real excited about that see both categories growing and no real change of strategy at this point in time.

Jeffrey Simmons: I won't comment on the differentiation, but again, we see that it'll be a nice complement, and then we'll follow that with other assets, as it is known. We've got a long-acting ingredient that came from Kindred, and we've got other forms of new technology in DERM. So, I'm real excited about that. I see both categories growing, and no real change of strategy at this point in time. Maybe I'll close just very briefly and really with just two key comments. First of all, thank you for your time.

Jeffrey Simmons: I won't comment on the differentiation, but again, we see that it'll be a nice complement, and then we'll follow that with other assets as it's known. We've got a long-acting that came from Kindred, and we've got other forms of new technology in DERM. So, we're really excited about that.

Jeff Simmons: Maybe I'll close just very briefly and really with just two key comments, first of all, thank you for your time. We say inside Elanco that a growth innovation in cash have been the priorities for investors for the future of this company, and I believe the second quarter represents significantly progress in all these areas, as Todd highlighted, we're growing four quarters in a row of mid-single digits, we're seeing a stabilizing base which is critical as we start to move towards launching innovation on top of that.

Jeffrey Simmons: Maybe I'll close just very briefly and really with just two key comments. First of all, thank you for your time. We say inside Elanco that, hey, growth, innovation, and cash have been the priorities for investors for the future of this company. And I believe the second quarter represents significantly progress in all these areas. As Todd highlighted, we're growing four quarters in a row at mid-single digits. We're seeing a stabilizing base, which is critical as we start to move towards.

Jeffrey Simmons: I see both categories growing, and no real change of strategy at this point in time. Maybe I'll close just very briefly and really with just two key comments. First of all, thank you for your time.

Jeffrey Simmons: We say inside Elanco that, hey, growth, innovation, and cash have been the priorities for investors for the future of this company, and I believe the second quarter represents significant progress in all these areas. As Todd highlighted, we're growing four quarters in a row at mid-single digits.

Jeffrey Simmons: We say inside Elanco that, hey, growth, innovation, and cash have been the priorities for investors for the future of this company, and I believe the second quarter represents significant progress in all these areas. As Todd highlighted, we're growing four quarters in a row at mid-single digits.

Jeffrey Simmons: We're seeing a stabilizing base, which is critical as we start to move towards launching innovation on top of that. We have strength and leadership, and we're seeing share growth in farm animal products globally at retail. And on the vet side, we're launching two major blockbusters with positive differentiation in the biggest. A lot of work by the company around cash flow. We've reduced over 20% of our debt since the beginning of the year, and we're excited about three blockbusters over the next three quarters. And that really links to these priorities.

Jeffrey Simmons: We're seeing a stabilizing base, which is critical as we start to move towards launching innovation on top of that. We have strength and leadership, and we're seeing share growth in farm animal retail globally, and on the vet side, we're launching two major blockbusters with positive differentiation in the biggest. A lot of work by the company around cash flow.

Jeff Simmons: We have strength and leadership and we're seeing share growth and farm animal globally cut retail and on the vet side, we're launching two major blockbusters with positive differentiation in the biggest, a lot of work by the company around cash flow. We reduced over 20% of our debt since the beginning of the year and we're excited with three blockbusters over the next three quarters and that really links to these priorities. So we're laser focused on our strategy and as I close I just personally want to thank globally, Elanco T. This is one of the strongest quarters of string of four consistent quarters of growth.

Jeffrey Simmons: Launching Innovation on top of that. We have strength and leadership and we're seeing share growth in farm animal globally, pet retail, and on the vet side, we're launching two major blockbusters with positive differentiation in the biggest. A lot of work by the company around cash flow. We reduced over 20 percent of our debt since the beginning of the year, and we're excited with three blockbusters over the next three quarters.

Jeffrey Simmons: We've reduced over 20% of our debt since the beginning of the year, and we're excited about three blockbusters over the next three quarters, and that really links to these priorities. So we're laser-focused on our strategy, and as I close, I just personally want to thank the global Elanco team. This is one of the strongest quarters, a string of four consistent quarters of growth.

Jeffrey Simmons: So we're laser focused on our strategy. And as I close, I just personally want to thank the global Elanco team. This is one of the strongest quarters, a string of four consistent quarters of growth.

Jeffrey Simmons: And that really links to these priorities. So we're laser-focused on our strategy. And as I close, I just personally want to thank the global Elanco team. This is one of the strongest quarters, a string of four consistent quarters of growth. The Elanco team's excited. I know inside. The engagement, the belief, and the resolve is high because of the next wave of innovation, what it's actually going to do and the difference it's going to make.

Jeffrey Simmons: The Elanco team's excited. I know inside that the engagement, the belief, and the resolve are high because of the next wave of innovation, what it's actually going to do, and the difference it's going to make. So there's a belief and a passion and a resolve around making animals' lives better. It makes life better. And I'm thankful to everybody and the one Elanco approach that's been taken. Thank you. We look forward to visiting with you shortly after the Zenrelia launch. And again, thank you for your time and interest in Elanco.

Jeffrey Simmons: The Elanco team's excited. I know inside that the engagement, the belief, and the resolve are high because of the next wave of innovation, what it's actually going to do, and the difference it's going to make. So there's a belief and a passion and a resolve around making animals' lives better, making life better, and I'm thankful to everybody and the one Elanco approach that's been taken. Thank you. We look forward to meeting with you shortly after the Zenrelia launch, and again, thank you for your time and interest in Elanco.

Jeff Simmons: The Elanco team's excited, I know inside the engagement, the belief and the resolve is high because of the next wave of innovation, what it's actually going to do and the difference it's going to make. There's a belief and a passion and a resolve around making animals lives better, makes life better and I'm thankful to everybody and the one Elanco approach that's been taken. Thank you, we look forward to busy with you shortly after the Zen Relia launch. And again, thank you for your time and interest in Elanco. This concludes today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change: there's a belief and a passion in a resolve around making animals lives better makes life better and i'm thankful to everybody and the one l approach that's been taken

Jeffrey Simmons: Thank you. We look forward to visiting with you shortly after the Zenrelia launch. And again, thank you for your time and interest in Elanco.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation and you may now disconnect.