Q3 2024 Eli Lilly & Co Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Lily Q3 2024 earnings call. At this time, I'll participate in the Snowny mode. Later we will be conducting a question and answer session and instructions will be given at that time.
Speaker Change: Judy request the system during the call, please press star then zero and an operator will assist you offline. I would now like to turn the conference over to your host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you Paul and good morning everybody, thanks for joining us for Ilya Lillene, company Q3204 earnings call. I'm Joe Fletcher, Senior Vice President of Investor Relations.
Speaker Change: and joining me on today's call, our Dave Rick, Slyley's chair in CEO, Dr. Dan Skavronsky, Chief Scientific Officer, President of the Lille Viennology.
Speaker Change: Lucas Montarse, Chief Financial Officer, Robert Bansal,
Speaker Change: Anne White, President of Lillian Neuroscience, Gilles Ufa, President of Lillian National, Jake Van Nardin, President of Lillian College, and Patrick Johnson, President of Lillian Cardiomitt of Allic Health, and Lillian USA. We're also joined by Susan Hegel and McKayla Eirens, Mike Springtender and Lauren Zurti of the Iyrteam.
Speaker Change: During this call, we anticipate making projections and forward looking to stay in space on our current expectations. Our actual results could differ materially do several factors, including those listed in slide four.
Speaker Change: Additional information concerning factors that could cause actual results of different materialies contained in early to form 10K and subsequent filings with the SEC. The information we provide about our product and pipeline is for the benefit of the investment community. It's not intended to be promotional and is not sufficient for prescribing decisions.
Speaker Change: As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures. Now I'll turn the call over to Dave.
Dave Rick: Okay, thanks, Joe. In Q3, Lilly continued to make progress across the business. We delivered strong revenue growth, we advanced and expanded our pipeline, and we invested in new product launches and continued expanding our manufacturing network.
Dave Rick: On slide five, you can see details of our financial performance and progress related to our strategic deliverables.
Dave Rick: Revenue grew 42% after excluding the impact of revenue from the Lansipine portfolio, which we divested in Q3 2023. New product revenue grew by over $3 billion, led by Manjaro and Zeppel.
Dave Rick: U.S. demand for Manjaro and ZepFound has been strong and continues to grow as we expand both access and supply. U.S. sequential quarter-over-quarter prescription volume growth was 25% in Q3.
Dave Rick: All doses are available for order from Lilly in both the Wholesale Channel and Lilly Direct Pharmacy Solutions.
Dave Rick: The launch of a single-dose Zepound vials in the U.S. exclusively through Lilly Direct's self-pay channel further expanded supply and access in the quarter.
Dave Rick: And finally, we remain on track to exceed the production target of at least 1.5 times the saleable doses of Incredithin medicines in the second half of this year compared to the second half of last year.
Dave Rick: We continue to see strong performance across the balance of our portfolio in oncology, immunology, and neuroscience. Excluding revenue from the olanzapine portfolio, the non-anchoragin growth of the company was 17% in Q3.
Dave Rick: We achieved several key pipeline milestones this quarter, including the approval of Evglyst in the U.S. for the treatment of moderate to severe atopic dermatitis, the approval of Kisunla in Japan and Great Britain for the treatment of early symptomatic Alzheimer's disease.
Dave Rick: Disclosure of positive 176-week data from the CIRMAP-1 phase 3 study of trizepatide in adults with pre-diabetes and obesity or overweight.
Dave Rick: And, the recent presentation of positive data from the Phase III Trailblazer ALT-6 study evaluating different dosing regimens for Denonimab.
Dave Rick: Our manufacturing expansion agenda remains a top priority.
Dave Rick: In September, we invested nearly $2 billion to increase our manufacturing footprint in Ireland. This brings the total commitments to build, upgrade, and acquire manufacturing facilities announced since 2020 to more than $20 billion.
Dave Rick: And beyond this $20 billion commitment, we also announced a separate $4.5 billion investment to develop the Lilly Medicine Foundry.
Dave Rick: This first-of-its-kind facility will be dedicated to research and development for manufacturing process design and to develop high-quality investigational medicines for our clinical trials. It will be located in Lebanon, Indiana, a short drive from the corporate headquarters.
Dave Rick: This investment underscores our confidence in our pipeline and the urgency we bring to bring our medicines, innovative medicines, to patients around the world. In August, we closed the acquisition of Morphic Therapeutics, adding oral intergen assets to our early phase immunology portfolio.
Dave Rick: And lastly, we returned over $1.6 billion to shareholders via dividends and share repurchases.
Speaker Change: On slide six, you'll see key events since our Q2 call, including the milestones I mentioned earlier and several other key updates.
Speaker Change: Last month, we appointed Lucas Montarse as Louie's Executive Vice President and Chief Financial Officer.
Speaker Change: Lucas has 23 years of experience at Lilly and has worked with the executive team and the board for a long time. So congratulations, Lucas. Now let me turn the call over to Lucas to review our Q3 financial results and provide an update on our 2024 financial guidance.
Lucas Montarse: Thanks Dave. Slide 7 summarizes our financial performance in the third quarter, which is highlighted by strong revenue growth across our new products, as well as our non-increting medicines.
Lucas Montarse: As Dave mentioned, revenue grew 42% after excluding the impact of revenue from the Alansapine portfolio and was primarily driven by Monjaro and Zedbank. Revenue from our non-increting portfolio grew 17% after excluding the impact of revenue from the Alansapine portfolio.
Lucas Montarse: Gross margin as a percentage of revenue increased to 82.2%.
Lucas Montarse: Gross Marching primarily benefited from favorable product mix and higher realized prices, partially offset by the sale of rights for the landscaping portfolio in Q3 2023 and higher manufacturing costs.
Lucas Montarse: R&D expenses increased 13% driven by continued investment in both our early and late-stage portfolios. We recognized $2.8 billion of acquired IPR&D charges primarily related to the acquisition of morphic therapeutics.
Lucas Montarse: Marketing, selling, and administrative expenses increased 16%, primarily driven by promotional efforts supporting ongoing and future launches.
Lucas Montarse: Operating income increased to nearly $1.8 billion, driven by higher revenue from new products, partially offset by operating expenses growth.
Lucas Montarse: The effective tax rate was 37.6%, reflecting the unfavorable impact of non-deductible acquired IVR&D charges.
Lucas Montarse: Other than the impact of acquiring PR&D, the underlying tax rate was consistent with previously provided guidance.
Lucas Montarse: We deliver earnings per share of $1.18, up from $0.10 in Q3 2023, and this includes a negative impact of $3.08 from acquired IPR&D charges.
Speaker Change: On slide 9, we quantify the effect of price, rate, and volume on revenue growth.
Speaker Change: U.S. revenue increased 46%, with volume growing 35% driven by Sebban and Monchado, partially offset by declines in Trulicity.
Speaker Change: Realized prices increased 11% in the U.S., primarily driven by Trulicity, Humalog, and Versene.
Speaker Change: While Monjaron's setback demand remains strong and growing, quarter-by-quarter revenue growth in 2024 has been impacted by supply and channel dynamics.
Speaker Change: As we highlighted in Q2, increasing supply led to higher shipments that allow us to fulfill the majority of wholesalers' back orders, serving as a tailwind to sales.
Speaker Change: In Q3, we saw channel inventory decrease as wholesalers continue to navigate the complexities of high-volume cold chain products across a dozen different dose and brand combinations.
Speaker Change: We estimate this inventory decrease impacted Q3 sales of Mojaro and Sedban by mid-single digits as a percentage of aggregate used sales of these products.
Speaker Change: Europe revenue grew 39% in cost and currency when excluding the impact of the divestiture of the Olanzapin portfolio.
Speaker Change: This growth was primarily driven by Moncharo, Versenio, and Jardins.
Speaker Change: We continue to be pleased with the Monjaro Quickpen launches in Europe, and our now launched in the UK, Germany, Spain, and most recently, Italy.
Speaker Change: Revenue in the rest of the world grew 45% in cost and currency, driven by volume growth of Monjaro and, to a lesser extent, strong performance of Versenio and Jardins.
Speaker Change: Movin' to China, revenue increase 17% in Gaussian currency.
Speaker Change: This increase was driven by volume, growth of typhoid, and favorable pricing impacts for humanoids.
Speaker Change: Finally, Japan grew 17% in revenue, costs, and currency.
Speaker Change: Volume growth of 20% was driven by uptake of Monjaro, Persenio, and Jardins.
Speaker Change: Slide 10 provides additional perspective of performance across our product categories.
Speaker Change: Monjaro's sales were $3.1 billion globally, with almost $2.4 billion of net sales in the U.S.
Speaker Change: We continue to see solid uptake of Monchar outside the U.S., with sales in Q3 totaling $728 million.
Speaker Change: Barsenio continues growth trajectory with worldwide sales increasing 32%, driven by strong execution in the early breast cancer indication.
Speaker Change: Chalpirka Worldwide Revenue was $81 million.
Speaker Change: When excluding the impact of Japan-Covid-19 collaboration milestones recognized in Q2, Chimperka continued its sequential quarter-over-quarter growth trend, demonstrating sustained uptake in both the MCL and CLL patient population.
Speaker Change: Worldwide OMBO revenue increased to $41 million.
Speaker Change: We are pleased with our progress gaining commercial access for OMBO in the U.S.
Speaker Change: As of January 2025, we will have first-line access at two out of the three major PVMs.
Speaker Change: We were also excited to receive U.S. approval for Kizanla and Eclipse in Q3. The Kizanla launch is underway and progressing.
Speaker Change: And the EPLIS launch began early this month. We are pleased to have already secured formulary access for EPLIS with one of the major PBMs.
Speaker Change: Worldwide trulicity revenue declined 22%, driven by lower volume, partially offset by higher realized prices.
Speaker Change: Slide 11 provides an update on the U.S. launch of ZPAL.
Speaker Change: We continue to see strong growth trends leading to sales of over $1.2 billion.
Speaker Change: We have broad formulary coverage for SEMBA.
Speaker Change: As of October 1, CEPAN has approximately 87% access in the commercial segment, and we are making ongoing progress expanding our employer opt-ins.
Speaker Change: We are in the early days of launching single-dose Z-band vials in the U.S. exclusively through LilyDirect.
Speaker Change: 2.5 and 5 mg single-dose vials are currently available to self-pay patients at a 50% or greater discount compared to the list price of other ingredient medicines for obesity.
Speaker Change: This offering helps even more adults living with obesity access Z-Bond, including Medicare beneficiaries and those without MPC.
Speaker Change: 12th, we provide an update on capital allocation.
Speaker Change: On slide 13, you can see our updated guidance for the full year.
Speaker Change: We are updating our revenue guidance range to $45.4 billion to $46 billion.
Speaker Change: The new midpoint range represents approximately 50% growth in Q4 2024 compared to the same quarter last year, demonstrating a continuation of revenue growth acceleration.
Speaker Change: We are investing heavily in increasing supply of triseptide and have been carefully balancing our demand creation activities and launches into new markets with our production to support continuity of care for patients.
Speaker Change: In Q3, we continue to be prudent scaling up and demand generation activities.
Speaker Change: This is the driver for lowering the top end of the wrench.
Speaker Change: We continue to expect that we will exceed our goals to increase production of increase in salable doses by at least 50% in the second half of 2024 compared to the second half of 2023.
Speaker Change: Now, with all the doses of Monchar on CEPAN available, we will accelerate demand activities, and while there is a lack to flow through revenue, we expect to see the impact of these efforts in Q2 and into 2025.
Speaker Change: Lastly, we also expect new Moncharo launches internationally to contribute to growth in Q4.
Speaker Change: Our expected ratio of gross margin less OPEX divided by revenue remains unchanged on both a reported and a non-GAAP basis.
Speaker Change: Other income and expense is now expected to be in the range of $425 to $325 million of expense on a reported basis and is unchanged on a non-GAAP basis.
Speaker Change: We have updated our estimated effective tax rate to be approximately 17%, driven by the impact of non-deductible IPR&D in Q3.
Speaker Change: EPS is now expected to be in the range of $12.05 to $12.55 on a reported basis and $13.02 to $13.52 on a non-GAAP basis.
Speaker Change: Both ranges reflect the updated mentioned earlier.
Speaker Change: as well as acquiring IPR&D charges through Q3 of approximately $3.1 billion.
Speaker Change: Now I will turn the call over to Dan to highlight our progress on R&D.
Dan Skavronsky: Thanks, Lucas.
Dan Skavronsky: So, Lilliardi had another productive quarter. Let me begin by sharing some late phase updates, including some exciting phase 3 data that we shared at recent medical congresses.
Dan Skavronsky: Starting with neuroscience.
Dan Skavronsky: Yesterday, at the Clinical Trials in Alzheimer's Disease Conference, we were pleased to share positive results from our Phase 3 Trailblazer L6 trial, which evaluated different dosing regimens for initiation of Denetimab treatments to understand their effect on ARIA-E.
Dan Skavronsky: In this trial, we tested a modified titration, which shifted one biologen enema from the first infusion to the third, as shown on slide 14. We designed this modified titration.
Dan Skavronsky: to achieve identical total dose of Denenimab administered in the first three months, as does our standard dosing regimen.
Dan Skavronsky: But we hypothesize that the smoother increase in dose could result in less ARRA.
Dan Skavronsky: We are pleased to see in this trial that indeed, by pharmacokinetic analysis, we achieved equivalent cumulative exposure between the modified titration and the standard dosing regimen. And as a result, we achieved similar levels of amyloid plaque removal and phospho-tau-217 reduction.
Dan Skavronsky: Importantly, we also confirmed our hypothesis on ARIA and showed that the modified titration reduced the incidence of ARIA-E to 14% compared to 24% for those receiving the standard dosing regime.
Dan Skavronsky: As well, lower frequency of symptomatic ARIA-E, lower radiographic severity of all categories of ARIA-E, and lower ARIA-E in APOE4 genotype carriers was observed using the modified titration as compared to the standard dosing regimen.
Dan Skavronsky: We plan to submit a supplemental BLA to the FDA in the coming weeks for this modified titration.
Dan Skavronsky: Our efforts on remtarnatug continue to progress, and we are starting a Phase III efficacy study of remtarnatug focused on the preclinical stage of the disease, similar to our ongoing Trailblazer ALS-3 trial for genetomab, where we are trying to reduce the risk of progression of symptomatic Alzheimer's disease.
Dan Skavronsky: In this upcoming Phase 3 Registrational Trial, called Trail Runner 3,
Dan Skavronsky: We are evaluating a fixed duration of monthly subcutaneous administration.
Dan Skavronsky: offering what we see as a potentially convenient option for this earlier patient population.
Dan Skavronsky: We'll share more details about the study design of Trailrunner 3 tomorrow at CTAD.
Dan Skavronsky: Turning to cardiometabolic health, last month we shared data from our remaining phase 3 studies for our weekly basal insulin called insulin eschatera alpha.
Dan Skavronsky: As a reminder, the SITORA Phase 3 consists of five global registration studies, four of which are in adults with type 2 diabetes, and one is in adults with type 1 diabetes.
Dan Skavronsky: We are pleased that each study met its primary endpoint of non-inferior A1C reduction versus insulin glargine or insulin deglidec, which are the most frequently used daily basal insulins.
Dan Skavronsky: In the studies evaluating F-sitora in people with type 2 diabetes, the results demonstrated that F-sitora achieved meaningful A1C reduction with relatively low hypoglycemia rates.
Dan Skavronsky: We were particularly excited with the results for QUINT-1, in which S-sitora was administered via fixed doses using a single-use autoinjector.
Dan Skavronsky: In this 52-week study in people with type 2 diabetes, Epsitora lowered participants' A1c by 1.31% compared to 1.27% for insulin glargine.
Dan Skavronsky: This impressive A1C reduction was achieved with low hypoglycemia rates.
Dan Skavronsky: Actually, S. sitora had approximately 40% lower rates of severe or clinically significant hypoglycemia than did daily insulin glargine.
Dan Skavronsky: These data highlight the power of an easier-to-use dose form of a weekly insulin for people who are just initiating basal insulin therapy for the first time.
Dan Skavronsky: We look forward to discussing the results from the QUINT Phase III program with global regulatory agencies.
Dan Skavronsky: It has also been a productive quarter for our late phase Inkerton programs.
Dan Skavronsky: First, as shown on slide 15, we shared positive 176-week data from the SRMT-1 phase 3 study of terzapatide in adults with prediabetes.
Dan Skavronsky: and Obesity or Overweight, which demonstrated a remarkable 94% reduction in the risk of developing type 2 diabetes.
Dan Skavronsky: This is the longest duration for Zepedai data to date and we are highly encouraged to see that patients on the 15 milligram test
Dan Skavronsky: Thank you very much.
Dan Skavronsky: We look forward to sharing the detailed results next week at Obesity Week.
Dan Skavronsky: These results add to compelling data showing the benefit of the combined pharmacology of dual GIP and GLP-1 receptor agonism in several obesity-related complications, including type 2 diabetes,
Dan Skavronsky: Metabolic Dysfunction Associated Steatohepatitis or MASH
Dan Skavronsky: moderate to severe obstructive sleep apnea and heart failure.
Dan Skavronsky: Thank you for tuning in.
Dan Skavronsky: We are working quickly to bring Terzapotide to more adults living with obesity and its complications, and we are pleased to share that we expect U.S. regulatory action for Terzapotide in adults with obesity and obstructive sleep apnea yet this year.
Dan Skavronsky: And, that we will submit for U.S. approval in terms of Appetite in Adults with Obesity and Heart Failure with Preserved Ejection Traction before the end of this year.
Dan Skavronsky: Another avenue to advance patient care is the maintenance of body weight reductions.
Dan Skavronsky: We're conducting two Phase 3b weight loss maintenance trials.
Dan Skavronsky: The first is Surmount Maintain, which compares either Truzapidide 5 mg or Truzapidide maximum tolerated dose to placebo.
Dan Skavronsky: The second is attain-maintain.
Dan Skavronsky: which evaluates our oral GLP-1, or for glipron, versus placebo after terzepatide or semaglutide in participants who complete SURMOUT5, the 3B head-to-head study of terzepatide versus semaglutide.
Dan Skavronsky: We look forward to sharing the top-line data readout for CMOP5 later this year.
Dan Skavronsky: Next, in Oncology.
Dan Skavronsky: The Phase 3, EMBR3 study evaluating our oral CERD immunostrands in patients with second-line ER-positive, HER2-negative metastatic breast cancer was positive.
Dan Skavronsky: The study evaluated three arms, Imulin esterant as a monotherapy, investigators' choice of endocrine therapy monotherapy, and Imulin esterant in combination with abamiciclip.
Dan Skavronsky: Based on the results from this trial, we expect to submit an NDA to the FDA by year end, and we look forward to sharing detailed results at an upcoming medical meeting.
Dan Skavronsky: The Phase III portion of the Olomoracib first-line KRAS G12c lung cancer study is now underway, the first Phase III trial for this class of medicines in newly diagnosed locally advanced or metastatic lung cancer, regardless of PD-L1 expression.
Dan Skavronsky: This comes after recently defining the dose of the medicine in combination with standard of care regimens in consultation with the FDA under Project Optimist.
Dan Skavronsky: We continue to believe we could have a leading agent in this class and look forward to execution of the late stage program.
Dan Skavronsky: Finally, in immunology, we're cited by the recent U.S. FDA approval of lebrakizumab as EBGLS for adults and children 12 years and older with moderate to severe atopic dermatitis.
Dan Skavronsky: EBGLS provides a new first-line biologic treatment that targets a main cause of eczema inflammation that offers significant early skin clearance and itch relief with convenient once-monthly maintenance dosing following the initial phase of treatment.
Dan Skavronsky: We recently shared compelling long-term data showing that labortizumab provides sustained disease control for up to three years in more than 80 percent of patients with moderate to severe atopic dermatitis who responded to EPGOS treatment at 16 weeks.
Dan Skavronsky: We have also initiated two Phase III studies of leprosy in adults with perennial allergic rhinitis and chronic rhinitis with nasal polyps.
Dan Skavronsky: As we continue to expand our immunology portfolio to help more patients, we're conducting two Phase III studies evaluating exakizumab and tercepatide together in patients with obesity or overweight and either psoriatic arthritis or moderate to severe plaque psoriasis.
Dan Skavronsky: Obesity is associated with an increased risk of developing autoimmune diseases and can negatively impact disease outcomes.
Dan Skavronsky: PELPS has already demonstrated strong efficacy in treating psoriatic arthritis and plaque psoriasis.
Dan Skavronsky: And we are excited to see the potential for additional benefits for patients when combined with the significant and sustained weight loss offered by ZepBank.
Speaker Change: Slide 16 shows select pipeline opportunities as of October 28th, and slide 17 shows potential key events for the year. I've already covered our late phase progress, so now I quickly cover updates for the early phase pipeline.
Speaker Change: Starting again with neuroscience, we recently initiated a phase 2 study of an epiregulant antibody in chronic neuropathic pain associated with distal sensory polyneuropathy.
Speaker Change: We also have begun Phase I studies on two new neurodegeneration assets.
Speaker Change: an alpha-synuclein-directed siRNA and a tau-directed siRNA.
Speaker Change: Earlier this morning at CTAD, we disclosed detailed results from our Phase 2 study of separate rhodinostats, our oral O-glycinactase anti-tau agent.
Speaker Change: While neither dose slowed clinical decline in early symptomatic Alzheimer's disease, biomarker data suggest potential impacts on tau pathology, brain volume, and neuroinflammation.
Speaker Change: Safety follow-ups for the study are ongoing.
Speaker Change: Turning to cardiometabolic health.
Speaker Change: In the coming days, we will initiate a Phase II study of Elora Lentide, our long-acting amyloid receptor agonist, for chronic weight management in combination with Therzepatide in patients with Type II diabetes.
Speaker Change: and the Phase II study of DimagraMap alone or in combination with Terzapotide for chronic weight management in participants without type 2 diabetes.
Speaker Change: We will also be advancing vol and relaxin, our long acting relaxin molecule into phase two and adults with chronic kidney disease.
Speaker Change: We removed the Phase 1 ApoC3 siRNA asset in cardiovascular disease as it did not meet our bar for continuing clinical development.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: In oncology, 2024 continues to be a very productive year for new clinical starts.
Speaker Change: Since the last call, we advanced three new molecules into Phase I studies. Our Oral SMARCA2, or BRM, inhibitor,
Speaker Change: RK-RAS G12D inhibitor
Speaker Change: and our PAN-KRAS inhibitor.
Speaker Change: These three initiations bring the total new clinical starts in oncology in 2024 to seven, exceeding the goal we shared earlier this year to put at least five new potential medicines in the clinic. And we've done that across three different modalities emblematic of our strategy to utilize therapeutic modality diversification to combat treatment resistance and improve patient outcomes.
Speaker Change: We expect this new slate of clinical programs will set us up for an exciting 2025 as we look to see which programs deliver differentiated and important early clinical data sets for patients.
Speaker Change: Finally, in early-stage immunology, we're also excited to initiate several new Phase 2 studies.
Speaker Change: First, we move DC853, an oral IS-17 inhibitor from the Dice Therapeutics Acquisition, into Phase 2 in adults with moderate to severe plaque psoriasis.
Speaker Change: And we removed DC806 from the pipeline in favor of 853, which is a more potent molecule.
Speaker Change: Second, we are initiating a Phase II study combining Altrecabart and Mirakizumab in adults with moderately to severely active ulcerative colitis.
Speaker Change: In addition, we are terminating the Phase 2b study of parasolumab in rheumatoid arthritis due to the overall benefit-risk profile of the molecule in this study.
Speaker Change: Finally, after welcoming our morphic colleagues to Lilly in August, our pipeline now reflects the oral alpha-4-beta-7 integrin inhibitor morph-057 in phase 2 for moderate to severe ulcerative colitis and moderate to severe Crohn's disease.
Speaker Change: Q3 was an exceptionally productive quarter for Lilly R&D, and we're pleased with our important progress we're making for patients across all of our therapeutic areas.
Speaker Change: Now I'll turn the call back to Dave for closing remarks.
Dave Rick: Okay, thanks, Dan. Before taking questions, let me briefly summarize our progress in the quarter. We had strong revenue growth across both Monjaro and ZepBound, as well as our Oncology, Immunology, and Neurosciences medicines.
Dave Rick: Significant advancements in our pipeline included approval of EBGLS for moderate to severe atopic dermatitis in the U.S., KIS-SUNLA for early symptomatic Alzheimer's disease in Japan and Great Britain, and positive data disclosures for phase 3 studies of trizepatide and denonumab.
Dave Rick: We are confident in Lilly's bright future. We have now launched in major geographies the cohort of medicines that we expect will serve as the driver of our growth through the balance of this decade.
Speaker Change: That is Manjaro, Jay Purka, Ambao, ZepBound, Kisanla, and Epos.
Speaker Change: We expect these products, together with our already launched products, will contribute to strong growth of the company in 2025.
Speaker Change: In addition, we plan to continue to scale R&D and step up our investment across manufacturing and commercial to support the successful launches of these medicines to help even more patients next year.
Speaker Change: So now I'll turn the call over to Joe to moderate a Q&A session.
Joe Fletcher: Thanks, Dave. We'd like to take questions from as many callers as possible and conclude our call in a timely manner, so consistent with prior quarters. We'll respond to one question per caller, so I ask that you limit to one question per caller, as we will end the call at 11 a.m.
Joe Fletcher: If you have more than one question, you can reenter the queue, and we'll get to your question if time allows. So, Paul, please provide the instructions for the Q&A session, and then we're ready for the first follow-up.
Paul: Certainly, at this time, we will be conducting a question and answer session. If you have any questions, please press star 1 on your phone at this time. We ask that participants limit themselves to one question on today's call.
Paul: If you do have a follow-up question, please rejoin the queue by pressing star 1 at any time. We would also ask that while posing your question, you please pick up your handset, if listening on speakerphone, to provide optimum sound quality. Please hold while we poll for questions.
Speaker Change: And the first question today is coming from Chris Schott from J.P. Morgan. Chris, your line is live.
Chris Schott: Alright, great. Thanks so much. Just to kick off the questions, can you just help bridge a bit from the 3Q sales we just saw reported to the 4Q implied results?
Chris Schott: It's obviously a substantial step up in sales. It sounds like part of this is you're now accelerating demand generation efforts given the improved capacity. But I was just hoping to get a little bit more color on exactly what those efforts are and how quickly you expect those programs can translate to an acceleration in prescriptions. Thank you.
Speaker Change: Thanks, Chris, for the question. I'll maybe hand over to Patrik, since I'm guessing a lot of the question is around trisepticide-related, but let Lucas jump in as needed. Patrik?
Patrik: Thank you very much, Chris. I think it's first important to emphasize that the overall performance and health of both Monjaro and SetBound are very strong.
Patrik: And we saw a slightly accelerated growth in Q3 of more than 25%, and also the underlying market for both type 2 and obesity continues to grow.
Patrik: We took a more prudent approach than we anticipated in Q3, pretty much driven by the need to deliver a good consumer experience.
Patrik: That has been one of our triggers for any investment.
Patrik: Based upon the experience we faced in the first half of the year, when a lot of the calls to our customer service center was about supply, actually more than 20%. We are now down to less than 1% of those being supply-related.
Patrik: So what we are doing right now is that we are investing heavily in our DTC efforts, which we haven't done in the past, but supply allows us to invest strongly there. But it's not a demand issue.
Patrik: And similarly, we're fully leaning in on all the HCP promotional efforts, also providing samples in the marketplace to providers.
Patrik: So we remain very confident based upon the underlying trend in the marketplace today and also the growth of both SEPA and Monjaro in terms of TRX, MBRX and TRX that we are up for a good few more.
Speaker Change: Maybe just to add to that, thank you, Chris, for the question, when you look at the midpoint that I mentioned, 50% growth that we expect for the fourth quarter compared with the 42%, it's a step up of 8%.
Speaker Change: When you remove the channel dynamics that we alluded in Q2, the step-up of growth is very consistent throughout the quarters.
Speaker Change: So, the acceleration and the drivers are the ones that Patrik mentioned, maybe just to add to that, all US as well, we continue to advance and get new countries that we are going to be launching, Monjaro as well, that will drive that part of that growth acceleration in the fourth quarter.
Speaker Change: Thanks.
Speaker Change: Paul, next question. The next question will be from Geoff Meacham from Citigroup. Geoff, your line is live.
Geoff Meacham: are perhaps a leading indicator of a moderation demand, or if it's just a lumpiness of the rollout in excess. Thanks.
Speaker Change: Yeah, maybe because it's kind of a macro thing you're asking there, but I think, first of all, there is a lot of lumpiness in channel stocking. I think
Speaker Change: All the sell-side analysts on this call have probably struggled with that, as we have. You know, aging in Q1, we can recall that we had a number of our dosage forms on backorder, and we pretty much reached a nadir of supply in the wholesalers. That was...
Speaker Change: restocked in Q2 and then we saw a drawdown in Q3.
Speaker Change: I think what...
Speaker Change: We really don't control and don't attempt to, but as a reality is that downstream customers from Lilly, wholesalers and retailers are making their own decisions about which of the 12 different dosage forms they want to stock and at what level. There are some physical constraints to that. Cold chain capacity is...
Speaker Change: Constrained and their financial constraints working capital that they're managing to those are their decisions to maintain their customer service levels I think what we've done is sort of move our set point of how much
Speaker Change: stock we want to have on hand before we go initiate demand stimulating activities which we had more or less paused from a jar on the first half and never started for a ZEF bound
Speaker Change: I'm remembering we launched in December of last year. So I think in-market data, you guys can all read, and you see, Geoff, yourself, and we do see acceleration of both brands.
Speaker Change: In Q3 over Q2 in actual consumption. And our estimate is that will continue or accelerate as we add U.S. stimulation to that demand, which, as Patrik said, we're going to begin doing here really mid-November in earnest.
Speaker Change: Thank you.
Speaker Change: XUS demand is another factor that affects sales, and that too, we moved out launches by about a quarter.
Speaker Change: Just to make sure we had enough buffer. So when customers wanted a prescription, they could get it filled reliably.
Speaker Change: And I think that's an important thing for us.
Speaker Change: At a macro level, is there a demand problem here? No, actually. Is there a supply problem? No, although if we had unlimited demand, there would be. So we're carefully gating those two things together as we escalate supply in Q4, which, as I mentioned, we're going to beat the 50% growth number.
Speaker Change: You'll see us grow our demand stimulation as well, and I think that's really about Q4, but even more about Q1 of 2025.
Speaker Change: and continuing acceleration there. So business is super healthy. We feel good about where we are. Obviously, you know, there was some choppiness this quarter, but I think underlying growth here is as strong as we would have hoped.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thanks, Dave. Paul, next question?
Paul: The next question will be from Evan Seigerman from...
Paul: BMO Capital. Evan Yearline is live.
Evan Seigerman: Hi guys, thank you so much for the question, and Joe, congrats on your new job. I want to touch on compounding. You know, given the headlines, do you believe that compounded drugs are impacting command? And, you know, secondarily, how do you frame kind of the FDA's waffling on the shortage list as it relates to compounding? It seems that this has been a hot button issue. I'd love your perspective. Thank you so much.
Speaker Change: Thanks, Evan. Yeah, a hot topic indeed. Maybe in terms of talking about whether there's a financial impact where you see that, I'll let Patrik field that, and then maybe the broader question around the FDA, I'll let Dave chime in. So, Patrik?
Speaker Change: Thank you very much, Evan. I think as we all know that it's not one reliable source when it comes to quantifying the compounding market. We also know that it's a pagan, mainly cash, and there are probably reasons to believe that some of those patients are off-label.
Patrik: So, from our perspective, we actually don't estimate...
Patrik: There could be a huge financial impact of compounding on our business, but our major concern here has been driven by safety. But thousands of people in the US are getting medicine that is not approved by the FDA for quality, safety, or efficacy purposes.
Patrik: So that has been our concern, and we are mainly leaning in now, as we said earlier, to drive demand in the U.S. marketplace for patients with obesity and type 2 diabetes.
Patrik: Yeah, I mean, I can't really speculate too much what's going through the FDA's mind, but I think other commentators have mentioned that, you know, the longer this goes on,
Patrik: The more risks they have to their own regulatory framework.
Patrik: And so my guess is the FDA is concerned about that, and they want to win this case.
Patrik: and they're putting their ducks in a row to do so.
Patrik: There is an alternate.
Patrik: I guess perspective, that they don't care, but I think they do care. The other thing I'll say is we work closely with the FDA to approve new capacities, and it's important to note here, we could do more with them, and we communicate this to them directly. They're not hearing anything here. They haven't heard from me already, but we have invested massively.
Patrik: in parenteral filling capacity and API capacity. And a big part of the delivery schedule for that, which can take two and a half to four years, is actually the regulatory process itself.
Patrik: So it's difficult to think about a world where the workaround to that is to unleash unregulated product. The workaround should be to collaborate with the companies to speed up legitimate product delivery.
Patrik: And we would embrace that discussion fully. We have a lot of things in queue now at the FDA, or about to be, that could speed up what already is an impressive production ramp. We would welcome that opportunity.
Speaker Change: Thanks, both. Paul, next question.
Paul: The next question will be from Seamus Fernandez from Guggenheim. Seamus, your line is live.
Seamus Fernandez: Oh, thanks.
Seamus Fernandez: My question is actually on how you feel the compounding situation could be resolved by...
Seamus Fernandez: It seems like this is the easiest and most straightforward answer to the compounding crisis.
Seamus Fernandez: Once that occurs, does it make sense with that availability, regardless of product, that the agency would move to resolve the crisis, or is this a product-by-product situation?
Seamus Fernandez: such that if Novo can't get their house in order, in that context, that we'll end up with having this compounding issue just draw out over time. Thanks.
Speaker Change: Thanks, Seamus. Yeah, I'll hand back to Dave. Although, I mean, if you're referring to our, of course, our RO-GLP-1 nonpeptide agonist or for Glibron, I mean, that's still a ways away from the phase 3 turning over and then ultimately coming to market. But Dave, maybe what would you add to your prior comments? Yeah, well, I mean, in the long run, of course, there's
Dave Rick: There's a potential billion customers on the planet, and I think we've said, I've said that probably the only way that a big chunk of those are served well is with oral products because of the production system efficiencies there versus parenteral filling of proteins.
Dave Rick: So it's important. Of course, we're in the lead there, and we want to see our four group run be successful, but we need the data and that, you know, submission and launch. We'll put that sometime.
Speaker Change: you know, something like less than two years from now. But first of all, I wouldn't characterize compounding as a crisis. It certainly isn't one for us. I think the problem is people are being harmed and duped, right? And so that's kind of what we'd like to see stop. But as Patrick said, we don't really see a financial impact.
Speaker Change: on a lily of compounding.
Speaker Change: I think, you know, that as an industry, we should probably be worried that if this grows and is allowed to continue, then it sort of creates this backdoor generic world. But as I said, I think the FDA wants to stop that for good reasons, for public safety reasons.
Speaker Change: And they'll do that.
Speaker Change: At the end of the day, a few.
Speaker Change: We use this stuff as a product-by-product analysis, and right now it's our Zepatitis.
Speaker Change: not in shortage and therefore for mass compounding should not be permitted.
Speaker Change: There's a stay, et cetera, in the court, but we think that should be the state there. As it relates to semaglutide, you'll have to ask NOVA that, although we're working hard to help NOVA with their supply problem by reducing demand for semaglutide and increasing your purchase appetite. So, maybe it'll resolve that way.
Speaker Change: Thanks, Dave. Paul, next question.
Paul: The next question will be from Mohit Bansal from Wells Fargo. Mohit, your line is live.
Mohit Bansal: Great, thank you very much for taking my question. Maybe if I can ask the demand question and supply question differently. So now you will be starting some demand generation activities in the later part of the year.
Mohit Bansal: How are you thinking about the access?
Mohit Bansal: side of it. Do you think that there is some convergence between access, demand generation, and supply into 2025? Because we are hearing that some of the payers are restricting it even more now. So we'd love to understand your thoughts on access side, given that you are probably, you have done the negotiations at this point.
Speaker Change: Thank you for watching. See you next time.
Speaker Change: Thanks, Mohit. I'll hand over to Patrik to talk about maybe access updates and go forward.
Speaker Change: Maybe just a few comments with Bongiato, but prior to moving into Saffron, I think with Bongiato we have really good access and it's 93% and I think pretty much where we need to be across commercial and Medicare.
Patrik: In terms of setbound, I think we've made progress in record time here, close to 90% commercial access, and we'll continue to see improvement in terms of employers opt-in.
Speaker Change: You're correct, Mohit, we have stories about some employers opting out, but the major trend is actually in favor of opting in to be anti-obesity medications.
Speaker Change: We are definitely north of the 50% and I think we will have some new data in the first part of 2026 since most of the employees are making those decisions, effective one-one in the new year to come. So I think we are very, very...
Speaker Change: And just as we connected last time, we have gained six incremental states for Medicaid and most recently effective 10-1 with California and Massachusetts. So big states are now covering more than 30 million lives and we expect to continue to make progress in that space.
Speaker Change: And lastly, I would just emphasize the potential approval here of obstructive sleep apnea.
Speaker Change: The approval of Strategy CD Partner will help us with employer opt-in because we know that outcome studies are critical to convince employers. But on top of that,
Speaker Change: It also opens up the door for access in Medicare, and with the decision that CMS announced back in April this year, we are confident that we will gain access also for OSA in Medicare. So I think we have many reasons to be excited about the Outlook for 2025, driven by improved access across the commercial and Medicare space, as well as the investments we have done with Lely Direct.
Speaker Change: Thanks, Patrik. And Mohit, even though you didn't ask about OUS access, and I don't allow multi-part questions, maybe I'll see if Ilya wants to chime in and talk a little bit about OUS access progress to date and what we see going forward. Ilya, would you like to chime in on that?
Ilya: Sure, overall, we have seen significant progress on our launches.
Speaker Change: In those places, of course, we need to continue to develop access in other markets.
Speaker Change: And then on the chronic re-management side, we feel good about the prospects of adding countries to drive access.
Speaker Change: At the same time, there's also developed self-paying markets like the UK, UAE, and Saudi, where we're already seeing significant progression of our share penetration, where we actually have leading share of market in TRX in these markets.
Speaker Change: And we continue to focus on both developing the self-pay, but also increasing access for both type 2 diabetes and chronic weight management over time. And that will be gradual as we enter new markets.
Speaker Change: Thanks, Ilya. Paul, next question.
Speaker Change: Next question will be from Terence Flynn from Morgan Stanley. Terence, your line is live.
Terence Flynn: Thanks for taking the question. I was just wondering, I know you've already framed out kind of where, you know, supply would be for the second half of this year. Again, as we look out to 2025, can you give us an early read on how your supply capacity efforts have been progressing and how we should think about
Terence Flynn: The amount of new capacity, especially on the auto-injector side, that you can bring on for 2025. Thank you.
Speaker Change: We'll have a chance to lay out that as we did this year in our guidance call in early February, but qualitatively, you can see the flow of our investment and CapEx into the space, and you could kind of go backwards
Speaker Change: three years or so, and expect the capacities we announced then to be coming on full line in
Speaker Change: in that time frame and then you know rolling that forward. So of course we made an announcement this year and those are a couple years away from having full impact but if you go back to 21, 22, 23 we are working hard to bring those online and expect good growth next year.
Speaker Change: I think Luke has mentioned we're seeing acceleration in demand, but that means acceleration in supply during this year. We expect strong growth on the total for next year, and we'll lay out the details.
Speaker Change: Let me get another guide called. I don't know if you have anything else to add to that.
Luke: Maybe just one comment from my side. When we talk about more so from the demand perspective, I think in the U.S. in particular, the proxy that we alluded to on the growth that we see across both the Mocharo and SEP bounding TRX of that 25% sequential quarter-on-quarter is a good proxy to start basically trending out into next year, more so to provide more perspective from the market side and the demand side than the manufacturer.
Speaker Change: Thanks both. Paul, next question. Next question will be from Umer Raffat from Evercore ISI. Umer, your line is live.
Umer Raffat: Thank you very much.
Umer Raffat: Thank you. Thank you.
Speaker Change: Thanks. I'll let Patrick quickly handle that.
Speaker Change: Well, overall, we launched the Lilly Direct self-pay file just a month ago.
Speaker Change: Now we are pleased with the uptake, but we also realize that it takes some time for health care systems to adopt the self-pay in their EMR systems.
Speaker Change: But so far, I would say that the impact of TRX has been quite limited and would be defined as being at a low single-digit level. We expect LilyDirect's sales pay, though, to be a very important channel to grow new therapy stocks moving forward, but not significant in Q3.
Speaker Change: I think a short answer to both your questions is no and no. We didn't change our terms and I don't think we see any change in retail stocking of the auto injector because the vials are failed.
Speaker Change: Thanks, Umer. Paul, next question?
Speaker Change: The next question will be from Steve Scala from TD Cowen. Steve, your line is live. Thank you so much. For a product with a seemingly unlimited market opportunity, what appears to be great market awareness
Steve Scala: and Persistent Supply Shortages.
Steve Scala: DTC for ZepBound really shouldn't be necessary, particularly now. DTC, in my experience, usually signals concern about patient volumes, awareness, or competition.
Steve Scala: So the question is, if DTC were not instituted, what would be the trajectory of ZEP bound over the next, say, 12 months? Would consensus be achieved?
Steve Scala: And if competition is the concern, are you getting ahead of Kagarsema data due out soon? Thank you.
Speaker Change: That's a lot to unpack, Steve. I don't think we're going to speculate around a hypothetical demand curve, but maybe, I think Patrick kind of touched on this in his first answer.
Speaker Change: With regard to why we're doing DTC now, maybe just reiterate that point very briefly, Patrik, around
Speaker Change: Yes, you know, I think we are comparing a very different market, the first half of 2025 versus the second half of 2025. We face some significant supply constraints and it wouldn't be responsible for us at that point in time to drive any major GDC investments.
Speaker Change: and just provide consumers with a bad experience at the pharmacy level. We have much more confidence now in terms of the supply moving forward and this is not a demand issue problem. It's actually just a supply opportunity and we want to drive up that consumer awareness.
Speaker Change: So, while we're doing extremely well, we just need to have in mind that the penetration in terms of obesity is just at the low single-digit level, four to five percent. And there is still a huge stigma, so whatever we can do here to drive patient activation is going to serve us very well moving forward.
Speaker Change: I would just add that, actually, unaided awareness for Zepan, although we're, everyone on this call is highly aware of the brand name, is actually not very hot, and that we launched this drug almost a year ago and have done no advertising. So, I think it is time to introduce the brand, and so people are aware of that when they speak to their doctor.
Speaker Change: Great, thank you. Paul, next question. The next question will be from Dave Risinger from Lyrinc. Dave, your line is live.
Dave Risinger: Yes, thanks very much. A number of my questions have been asked. So, with respect to Parasolumab, I'm hoping that you could just provide a little bit more color. You mentioned that it was dropped due to the benefit-risk ratio, but did you see any specific safety problems and, you know, what is your view of the opportunity to develop another PD-1 agonist for INI disease in the future? Thank you.
Speaker Change: Thanks Dave and I was getting worried that Dan wouldn't get a chance to speak in the Q&A so maybe I'll hand this over to Dan for his thoughts.
Dan Skavronsky: Good. Thanks for your concern, Joe. And thanks for the good question, Dave.
Dan Skavronsky: Yeah, I mean, Parasolamide was a really interesting mechanism for us, and we were excited when we saw the Phase IIa data. It was a small number of patients, but...
Dan Skavronsky: had a relatively profound effect on R.A.
Dan Skavronsky: symptoms, particularly in patients who had failed a previous biologic. So we sought out to replicate that.
Dan Skavronsky: in a larger Phase IIb study.
Dan Skavronsky: Unfortunately, when we came to the end of that study, the benefit-risk that we'd seen in the Phase 2a study was not fully borne out in Phase 2b.
Dan Skavronsky: So just based on the overall profile, which includes both the efficacy and the safety of the drug.
Dan Skavronsky: We decided not to pursue that. I see a question on the follow-on PD-1 agonist. We don't have one that we're pursuing right now. So that's all I'll say about that. And I think, of course, we'll look forward to presenting the full data package at a future meeting. Thanks.
Speaker Change: Thanks, Dan. Paul, next question?
Paul: The next question will be from Kerry Holford from Barenburg. Kerry, your line is live.
Kerry Holford: Thank you.
Speaker Change: Thank you very much, Kerry Holford-Berenberg. My question actually on the ZENEO, please. So, your competitor in this space, Novartis, Kiscali, recently received a broad approval in early breast cancer, which obviously includes the high-risk patient group. So, I would just be interested to hear you speak about your expectations.
Speaker Change: for Mockingjay Revolution in Outer Space.
Speaker Change: How you protect your position with Visenio in a high-risk setting. And then also if you can talk to the impact of IRA that you expect on that brand.
Speaker Change: As we move through Part D reform next year, and whether or not you expect the drug to be on the negotiation list for 2027. Thank you.
Speaker Change: Thanks, Kerry.
Speaker Change: Sort of a two-part question, but I'm excited to ask Jake to chime in and maybe talk about presenting on the potential Kaskali impact as well as IRA. Jake?
Jake: Yeah, happy to take it. Thanks for the question. You know, our position and expectation here around market share with respect to the adjuvant setting for Presenio versus Kisgali hasn't really changed sort of pre-approval versus now. I think we have
Jake: A very robust clinical data package with a lot of follow-up on our data set, which is critically important for prescribers.
Jake: and a two-year regimen where patients can finish their adjuvant therapy and move on with their life, hopefully remaining recurrence-free. That's a pretty compelling proposition. It has been, and I think it's recognized as such.
Jake: in a variety of treatment guidelines that, for the high-risk population,
Jake: the Monarch E patient population prefer
Jake: Vresenio, Overkin, Scalia, Standard of Care. Those expert guidelines have weighed in over the past couple of months. I don't expect that to change materially. Of course,
Jake: With a new market entrance, the percentage of patients in this setting who get any CDK4-6 inhibitor as adjuvant therapy could go up, and that would benefit us.
Jake: And I expect that there will be some patients for whom Cascale is a more appropriate choice, but I don't expect it to be a significant shift in our overall market dynamics. And, of course, the node negative population is not where we're indicated and not where we're used, and that's a story for them to tell.
Jake: On the second part of your question around Part D reform, you know, it will have an impact. Of course, there's a push and pull here on the...
Jake: And that we have to contribute for catastrophic coverage being a downside, and of course, the copay cap, out-of-pocket cap on patients.
Jake: particularly in Medicare where, you know, that could be a tailwind on the brand. I think it's hard to know exactly where that will net out. It probably nets out sort of.
Jake: In the neutral range, I don't think it'll end up being a headwind or a tailwind in totality, but we have to see how that shakes out. On the last part of your question around negotiation lists, I don't want to speculate on that. I don't think we have enough information yet, given the evolving nature of all of the different medicines that could be up for negotiation, to actually say one way or another which ones will be there just yet.
Speaker Change: Thank you, Jake. I know we're running short on time, so Paul, maybe just two or three more questions. Next question.
Paul: The next question will be from Chris Shibutani from Goldman Sachs. Chris, your line is live.
Chris Shibutani: Great, thank you very much. Luca, welcome to these calls. Just curious, there's a little bit of a tension point between the thought of what the operating margins, and I know Louie used
Chris Shibutani: is a very unique and specific, precise calculus for that. With most people longer term forecasting, at least amongst the snow side, approaching high 40s percent. And I believe some of your commentary suggested that perhaps that would not be where you would aim for. Can you just maybe clarify for us your view, your take on where you think the operating margin trajectory
Chris Shibutani: would go under your purview.
Chris Shibutani: Lucas, go ahead. Yeah, sorry. Thank you, Chris, for your question, and thank you for quoting me about this new ratio, the gross margin minus OPEX divided by revenue. It's quite a lengthy ratio, but just going to your question.
Chris Shibutani: In the short run, you see that we have grown our...
Chris Shibutani: ratio in the last few quarters.
Chris Shibutani: As we have been having this cycle of significant growth trajectory and we are starting to ramp up our investment both in HG&A and R&D.
Chris Shibutani: That effect will continue, for sure, for getting into the fourth quarter of the year. That is included as part of our guidance. And what we expect to see moving into 2025, going into your question, is
Chris Shibutani: It justifies the investments that we do in SCNA and R&D.
Speaker Change: The next question will be from Trung Huynh from UBS. Trung, your line is live.
Trung Huynh: Hi guys, thanks for squeezing me in. So in your PR, you note favourable changes to estimates for rebates and discounts for Monjaro. If you X on our numbers, if you X our mid-single digit D stock, it does look like price has gone up for the year.
Trung Huynh: for that product. Also, z-bound pricing looks pretty stable. So, perhaps, can you just talk about what you see in pricing evolution for the rest of the year, but also next year as you'll have...
Trung Huynh: potentially sleep apnea and HFPEF on the label which may mean that you go into more government settings. Thank you.
Speaker Change: Lucas, Felix, Clark, kind of high level or any net pricing dynamics.
Speaker Change: Yeah, sure.
Speaker Change: And thank you for the questions. Going back to the Moncharo so far in the year, we kind of signaled throughout the year that once we were sunsetting last year, the copay program that we had, that we would see that basically tailwind on the price year-on-year comparison that played out as what we expected. And the sunset, of course, takes, again, a little bit of time to see that playing out. So you see a little bit of that spillover effect getting into Q3.
Speaker Change: Getting into Q4, we don't expect to see major dynamics on that, and what you're starting to see basically in Q3 is what we project into the fourth quarter of the year. Maybe getting into the strategic flip-up near high indication, any comments that you would like to add, Patrik, on that front? I would just say, in terms of set-pound, we are still very early on in launch, and I think
Speaker Change: What we need to have in mind is that we will continue to increase access, we will see launches outside the US as well, now with QuickPay being approved, that also can impact the global net pricing dynamics moving forward.
Speaker Change: Thanks both. Maybe the last question, Paul, and then we'll wrap up.
Speaker Change: Yes, the final question today will be from Courtney Breen from Bernstein. Courtney, your line is live.
Courtney Breen: Hi there, thank you so much for the question and for squeezing me in.
Courtney Breen: Thank you. Thank you.
Courtney Breen: Coming back to obesity and perhaps looking a little longer term, you spoke to the ATTAIN, MAINTAIN trial.
Courtney Breen: off the back of Thermite 5.
Courtney Breen: I note that for Ophogopon, this is placebo-controlled, and so I just wanted to kind of get your thoughts on kind of that being the comparator. For us, kind of that being the comparator suggests that this is about kind of duration of treatment.
Speaker Change: Patrik Jonsson. Expansion to patients, which would really be an expansion of the total market rather than kind of displacement of necessarily another obesity product. Can you just talk a little bit about off of the prawn and kind of the future of how this could expand the market? [inaudible]
Speaker Change: Yeah, thanks, Courtney, for the question on ORFA. Maybe I'll hand to Patrik to talk about that and some of the potential commercial strategy and the attain-maintain trial. Thank you for noticing that. Patrik, would you?
Speaker Change: Phase III trials next year, 2025.
Speaker Change: But I think overall we see a significant opportunity here. It's going to be the first oral if we deliver along the lines that we saw in Phase 2 with an efficacy along the lines of an injectable, along the lines of semaglutide.
Speaker Change: So I think that will really position us to scale globally, we are avoiding the cold chain requirements etc. But also in the U.S. we see an opportunity to further penetrate because we know that even if the experience with the auto-injector, once you have tried it, it's really good, we know that there is a need out there in the marketplace.
Speaker Change: 20-25% of the population. So I think there is a huge opportunity to expand.
Speaker Change: James, when you refer particularly to be a same maintained, I think there is an obligation now as I have to really better understand how can you best keep patients on treatment for a longer period of time knowing that obesity is a chronic disease? [inaudible]
Speaker Change: led by clinicians from injectables to orals. But I think this is one alternative to continue to treat patients for the periods they need to be on medication, which is a chronic disease, and we are doing whatever we can to improve adherence and improve patient outcomes.
Speaker Change: Great. All right. Thank you, Patrik, and I think we're wrapping up. Dave? Okay, great. Well, thanks for joining us today, everyone. I want to end the call by just thanking Joe Fletcher, who is moving on from his role as head of IR to a new role, critical role, of CFO Manufacturing.
Speaker Change: I think you'll all agree Joe did a great job in representing Lilly to the street over the last many years. And we welcome Mike Sapar into the role, returning to IR actually after various rotations in the business, and it'll be an exciting time ahead with Mike.
Speaker Change: as your main point of contact. So thank you all for joining us today and as usual if you have follow-up questions, please give us a call at the IR team and look forward to seeing everyone on the road over the coming months. Take care.
Speaker Change: Thank you, and ladies and gentlemen, this does conclude our conference for today.
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Speaker Change: Again, those numbers are 800-332-6854 and 973-528-0005 with the access code 987-332-6854.
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