Eli Lilly and Company Q4 2021 Earnings Call Transcript

There are 22 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q4 2021 Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, Today's conference is being recorded. I would now like to turn the conference over to Vice President of Investor Relations, Kevin Hearn.

Operator

Please go ahead.

Speaker 1

Good morning. Thank you for joining us for Eli Lilly and Company's Q4 2021 earnings call. I'm Kevin Hearn, Vice President of Investor Relations. And joining me on today's call are Dave Ricks, Lilly's Chair and CEO Anat Ashkenazi, Chief Financial Officer Doctor. Dan Skovronsky, Chief Scientific and Medical Officer Ann White, President of Lilly Neuroscience Ilya Uffa, President of Lilly International Jake Van Narden, CEO of Loxo Oncology at Lilly and President of Lilly Oncology Mike Mason, President of Lilly Diabetes and Patrick Janssen, President of Lilly Immunology and Lilly USA.

Speaker 1

We're also joined by Lauren Zirki, Kent Oueda and Sarah Smith of the Investor Relations team. During this Conference call, we anticipate making projections and forward looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on Slide 3. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Forms 10 ks and subsequent Forms 10 Q and 8 ks filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community.

Speaker 1

It is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on non GAAP financial measures. Now I'll turn the call over to Dave.

Speaker 2

Thanks, Kevin. 2021 was another outstanding year for Lilly as we delivered strong top and bottom line growth and positive pivotal readouts for 5 important assets with the potential to launch in the next 2 years. As we move into 2022, we continue to build on this foundation and are determined to deliver on our long term outlook to drive top tier revenue growth, expand operating margins and innovate to develop and launch new medicines for patients that address significant unmet needs. Unpacking our 2021 performance, on Slide 4, you can see the progress we've made on our strategic deliverables. Q4 revenue was 8% and was driven by volume growth of 11%.

Speaker 2

Well, when excluding revenue from COVID-nineteen antibodies, revenue grew 6% for the quarter and 10% for the full year. This volume driven performance is attributable to our key growth products, which grew by 28% and now account for 61% of our core business in Q4. On our non GAAP gross margin was 76.1 percent in Q4, a decrease of approximately 250 basis points, driven by increased sales of COVID-nineteen antibodies, which have a lower gross margin profile. Our non GAAP operating margin was 31.7%, representing a decrease of approximately 130 basis points as a result of the lower gross margin percent just mentioned. For pipeline milestones, we have shared several important updates since our Q3 earnings call, including additional positive Phase 3 readouts for mirikizumab in ulcerative colitis and lebrikizumab in atopic dermatitis the initiation of a rolling submission in the U.

Speaker 2

S. For perturbrutinib in mantle cell lymphoma and our submission of bebtelovimab to the FDA for emergency use authorization for the treatment of mild to moderate COVID-nineteen. We also continue to put our cash flow to work to create long term value and recently announced Our plans to make significant investments in new manufacturing sites in both North Carolina and Ireland. These investments will bolster the resilience and capacity of our supply chain as we launch new products to drive meaningful long term growth. In addition, this quarter, we announced the strategic research collaborations with a focus on new modalities as we continue to augment internal discovery capabilities.

Speaker 2

Finally, on financials, we announced a 15% increase to the dividend for the 4th consecutive year. And in Q4, we distributed nearly $800,000,000 to shareholders via the dividend and completed another $750,000,000 in share repurchases. Moving to Slides 5 and 6, you'll see a list of key events since our Q3 earnings call, including several important regulatory, clinical, Visit development and COVID-nineteen therapy updates we are discussing today or that were part of the discussion during our December 15 Investment Community Meeting. So now I'll turn the call over to Anat to review our Q4 and full year 2021 results.

Speaker 3

Thanks, Dave. Slide 7 and 8 summarize financial performance in the Q4 and full year 2021. I'll focus my comments on non GAAP performance. In Q4, revenue grew 8% And revenue excluding COVID-nineteen antibodies increased 6%, highlighting solid momentum for our core business. Full year revenue growth was 10% on that letter basis.

Speaker 3

Gross margin as a percent of revenue declined 250 basis points 76.1% in Q4. The decrease in gross margin percent was driven by higher sales of COVID-nineteen antibodies with shipments this quarter of beblanivimab and edesifimab also having lower gross margin profile compared to beblanivimab sales in the base period. Total operating expenses grew 5% this quarter. Marketing, selling and administrative expenses increased 2%, While R and D expenses increased 7%, driven by higher development expenses for late stage pipeline opportunities, including denalimab, Fertubrutinib enters hepatitis, which were partially offset by lower development expenses for COVID-nineteen therapies. We invested approximately $40,000,000 in research and development for COVID-nineteen therapies in Q4, bringing our total COVID-nineteen R and D investment $400,000,000 for the full year.

Speaker 3

Operating income increased 3% compared to Q4 2020 And operating income as a percent of revenue was 31.7 percent for the quarter, a decrease of 130 basis points. This decrease was driven by lower gross margin percent, partially offset by lower marketing, selling and administrative expenses as a percent of revenue. Full year operating margin was 29.9 percent, in line with our expectations. Other income expense was an expense of approximately $7,000,000 this quarter compared to an expense of $31,000,000 in Q4 2020. Our Q4 effective tax rate was 10.3%, a decrease of 2 80 basis points, driven primarily by net discrete tax benefits.

Speaker 3

At the bottom line, we delivered solid growth as earnings per share increased 8% in Q4 and 20% for the full year. On Slide 9, we quantify the effect of price, rate and volume on revenue growth, and we continue to be encouraged by the growth seen across key geographies. This quarter, U. S. Revenue grew 13%.

Speaker 3

Excluding revenue from COVID-nineteen antibodies, revenue grew 11% in the U. S. This growth driven by volume was led by Trulicity, Taltz, Jardiance, Verzenio and Olumiant. The net price decline of 2% in the U. S.

Speaker 3

This quarter was driven by lower realized prices for insulins, primarily due to changes to estimates for rebates and discounts. For the full year, our U. S. Net price decrease of 1% was in line with our expectations. Moving to Europe, revenue in Q4 declined 3% in constant currency.

Speaker 3

Excluding the impact of the loss of exclusivity for Alimta, revenue grew 11% in constant currency, driven primarily by volume growth for Trulicity, ILUMIAN, We are encouraged with the momentum of our business in Europe and expect continued growth excluding the LYMTA. In Japan, revenue in Q4 decreased 14% in constant currency. Revenue in Japan continues to be negatively impacted by decreased demand for several products that have lost market exclusivity, including Cymbalta and Alimta, as well as by the COVID pandemic, With key growth products now representing 56% of total Japan revenue, we expect to return to growth beginning in 2023. In China, revenue grew 13% in constant currency, primarily driven by volume from our continued uptake of TYVET and Trulicity, as well as the timing of supply for Cialis to the 3rd party selling the product. Q4 revenue growth was negatively affected by the updated 2022 and our deal price reductions on inventory already in the channel, especially for TYVID.

Speaker 3

In 2022, we expect the NRDL price reduction headwind largely offset volume growth in Q1, but we also expect volume growth to accelerate throughout the year and exceed the impact of these price reductions. Moving forward, we're excited about the significant growth we're seeing in China, over 40% in constant currency in 2021, with improved access expected to continue to drive future growth. Revenue in the rest of the world increased 16% in constant currency this quarter, driven primarily by sales of Neuro Medicine. We continue to expect a mid single digit net price decline in 2022 for the U. S, Europe and Japan.

Speaker 3

In China, the expanded NRDL access for our products should lead to significant volume increase, but also high double digit decline in price. As a result, we expect total company net price decline in the high single digit in 2022. At the bottom of the slide is the price, rate and volume effect on revenue for all 2021, which shows strong double digit volume driven revenue growth across most major geographies. As shown on Slide 10, our key growth products continue to drive robust worldwide volume growth. These products drove 14 percentage points of growth this quarter and continue to bolster our overall performance and outlook.

Speaker 3

Slide 11 further highlights the contribution of our key growth products. This quarter, these brands generated over $4,200,000,000 in revenue and made up 61% of our core business revenue. In Q4, these newer medicines grew by 28% and Trulicity, Jardiance, Taltz and Verzenio all continue to outgrow their respective classes. We are particularly pleased with the continued market growth of both the GLP-one and the SGLP-two classes, where Trulicity and Jardiance are market leaders. We are also encouraged by the strong uptake of Verzenio we saw in Q4, driven by the approval and launch of the adjuvant indication, which has led to an inflection in both new and total prescriptions.

Speaker 3

On Slide 12, we provide an update on capital allocation. In 2021, we invested $9,300,000,000 to drive our future growth through a combination of R and D expenditures, business development outlays and capital investments. In addition, we returned approximately $3,100,000,000 to shareholders in dividends and repurchased approximately $1,300,000,000 in stock. Our capital allocation priorities remain unchanged As we continue to fund our marketed products and expected launches, invest in our pipeline, evaluate opportunities for external innovation to augment our future growth Prospects and return excess capital to shareholders. On Slide 13 is our 2022 financial guidance we issued in December.

Speaker 3

As I shared then, the financial impact from the loss of exclusivity of Alimta in Europe and Japan will continue in the first half of twenty twenty two, Well, the impact from Alimta's U. S. Patent expiry will start with the limited launch from a single generic company in Q1 before the full launch of additional generic entrants starting in Q2. We expect roughly 3.70 $5,000,000 of revenue from COVID-nineteen antibodies in Q1 from the shipment of the remaining doses attributable to last November's U. S.

Speaker 3

Government purchase agreement. We continue to invest in our bright future, advancing promising R and D opportunities and preparing for exciting potential launches from our late stage pipeline, which we believe will help drive top tier revenue growth through at least 23. Now I'll turn the call over to Dan to provide an update on our pipeline.

Speaker 4

Thank you, Anat. 2021 was a remarkable year for Lilly's pipeline. We delivered positive data on 5 molecules tirzepatide, zenenumab, In addition, we launched and submitted several key new indications for in market products, including important new indications for Verzenio and Jardiance. And also, we advanced our early stage pipeline. Just a few weeks ago, we provided an extensive R and D update across our therapeutic areas and shared our excitement about the next wave of innovation coming from Lilly.

Speaker 4

As a result, today's R and D update will be brief and focus on the progress we've made since our last earnings call. Slide 14 shows select pipeline opportunities as of January 31 and Slides 1516 show a recap of 2021 key events In diabetes, with the recent submission in Japan, we've now submitted tirzepatide across all major geographies for the treatment of Type 2 diabetes. We look forward to potential approvals for this important medicine this year. We anticipate U. S.

Speaker 4

Regulatory action in Type 2 diabetes as well as the top line readout from Surmount 1 both by mid year. In Japan, we submitted Jardiance for heart failure with preserved ejection fraction and received approval for Jardiance for treatment of heart failure with reduced ejection fraction. Moving to oncology. We shared encouraging updated data at ASH for perturbrutinib for both chronic lymphocytic leukemia and mantle cell lymphoma. We continue to progress this molecule and initiated another Phase 3 study in first line CLL comparing peterbrutinib to chemoimmunotherapy.

Speaker 4

During our December meeting, we also announced the initiation of a rolling submission for perturbutinib for MCL in the U. S. We plan to complete this submission this year with anticipated regulatory action in early 2023 and we're excited to potentially bring this important medicine to patients on this accelerated timeline. For Verzenio, we received approval for high risk early breast cancer in Japan for the Cohort 1 population study to MONARCHE and are pleased that this approval represents 90% of the intent to treat population. We've also made the difficult decision to terminate further enrollment in the Phase 3 study of Verzenio for HR positive, HER2 positive early breast cancer in response to the changing treatment landscape and global enrollment challenges.

Speaker 4

Importantly, this decision does not change our commitment to and investment in breast cancer. In addition, we began a Phase 3 study for selbratinib for the treatment of adjuvant RET positive non small cell lung cancer, And we also dosed the 1st patient in the U. S. Trial of our BCL-two inhibitor. In immunology, we announced positive top line data We're pleased that the study met all primary and key secondary endpoints, And we look forward to submissions in the first half of this year.

Speaker 4

We also announced positive top line Phase 3 results for lebrikizumab in combination with topical corticosteroids, and we're encouraged that data to date has demonstrated a competitive profile for treatment of atopic dermatitis. We await maintenance data for lebrikizumab in the first half of this year in advance of global submissions, which are expected by the end of 2022. Moving to baricitinib. We announced last week that based on top line efficacy results from 2 Phase III trials, we've decided to discontinue the Phase 3 development program for lupus. For atopic dermatitis in the U.

Speaker 4

S, we're in ongoing discussions with the FDA, but do not have alignment with the agency on the indicated population, which could possibly lead to a complete response letter. We expect regulatory action for this indication very soon. Finally, we have submitted baricitinib for alopecia areata in the U. S. And hope it will become the 1st medicine approved for patients living with this disease later this year.

Speaker 4

In our early phase immunology portfolio, we started a new Phase 1 study for CD19 antibody, we've discontinued our oral IL-seventeen inhibitor. Moving to neurodegeneration. In our early phase pipeline, We announced that we've received breakthrough therapy designation for N3VG4, an additional amyloid lowering agent for which we intend to initiate pivotal trials by the end of this year. We have evidence that this therapy has completely and rapidly cleared amyloid plaque and we're exploring flexible dosing regimens, including subcutaneous dosing. For the treatment of Alzheimer's disease, we also began a Phase II trial for our Oglich NACAs inhibitor, an oral small molecule targeting tau.

Speaker 4

While denanumab has been a primary focus for investors, we're pleased with the continued clinical advancement of the rest of our neurodegeneration pipeline. Now turning to denenamab. In December, we initiated 2 additional Phase 3 studies, TRAILBLAZER ALS3, our prevention study for asymptomatic Alzheimer's disease and Trailblazer ALS4, our head to head plaque clearance study compared to Aduhelm. It's been less than 1 year since we published the positive randomized controlled trailblazer ALT study, which demonstrated clinically meaningful benefits on endpoints of cognition and function. Since then, we have focused investors on the need for replication from our well designed expanded Phase 3 study, TRAILBLAZER ALS2, which is now fully enrolled and expected to read out in mid-twenty 23.

Speaker 4

While a lot has happened in this space during this last year And more events are likely before we get top line results next year. What hasn't changed for us is the importance of the trailblazer ALS2 readout and our confidence in both denenimab and the unique study design. Given the impact of this devastating disease, We believe that if trailblazer ALS2 provides positive confirmatory data, we can't see a scenario where there's not global reimbursement, patient access and broad use of denanimab. We noted last year that we had low expectations for the use of denanimab during the period between potential accelerated approval and the availability of confirmatory Phase 3 data in mid-twenty 23. We're disappointed with the position that Centers For Medicare and Medicaid Services has taken in its draft national coverage determination decision, And those low expectations could now extend for some months beyond the trailblazer ALS2 readout if reconsideration of CMS coverage determination is required, given historical timelines for this process.

Speaker 4

While the accelerated approval pathway was instituted by the FDA To allow for earlier approval of drugs that treat serious conditions and fill an unmet medical need, hence providing valuable access to more patients faster and what is available under clinical trials, the NCD as currently written essentially negates that patient benefit in Alzheimer's disease. Still, we intend to complete our application for accelerated approval for denenimab yet this year, but we now move completion of the accelerated approval submission out of Q1. We expect further volatility in expectations as competitor Alzheimer's disease trials readout prior to our definitive data. We remain confident in the differentiation of denenemab and in our uniquely designed trailblazer ALS2 study And importantly, the long term opportunity to help patients with denenemap remains unchanged. Lastly, with respect to our progress with COVID-nineteen therapies, Early this year, we submitted a request to the FDA for emergency use authorization for bebtelivimab for treatment of mild to moderate COVID-nineteen for patients at high risk for progression of severe COVID-nineteen, including hospitalization or death.

Speaker 4

This is the 3rd antibody we've developed for the treatment of COVID-nineteen An authentic virus and pseudovirus assays demonstrate that bebtelivimab retains neutralization activity against omicron as well as all other known variants of concern. We've produced several 100,000 doses of bebtelovimab and stand ready to supply as needed If this antibody receives EUA from the FDA. In addition, we've also submitted a supplemental NDA for baricitinib for treatment of hospitalized patients with COVID-nineteen and expect regulatory action by the middle of this year. Baricitinib currently has an EUA for this indication. We're proud of the therapies we've delivered to help combat the COVID-nineteen pandemic, and we'll continue to do our part as public health needs emerge.

Speaker 4

In summary, Q4 was another productive quarter for R and D at Lilly, capping what was an outstanding year of pipeline progress on behalf of patients. Now I'll turn the call back to Dave.

Speaker 2

Thanks, Dan. Before we move to Q and A, let me summarize the progress we made during 2021. We delivered strong revenue growth in our core business propelled by our key growth products. We continue to invest heavily in our pipeline and made significant progress in 2021 generating positive Phase 3 data for 5 new potential medicines, tirzepatide, Donanimab, perturbrutinib, mirikizumab and lebrikizumab that we expect we will launch in the next 2 years. We also delivered positive data and launched important new indications for Jardiance and Verzenio, while we continue to bolster our pipeline through business development with a focus on new modalities.

Speaker 2

Finally, we returned $4,350,000,000 to shareholders via the dividend and share repurchases and for the 4th consecutive year announced a 15% dividend increase. As we move into 2022, we are excited to continue the progress of turning pipeline value into cash flow, Starting with the potential launch of tirzepatide and the submissions of daneumab, pergabrutinib, mirikizumab and lebrikizumab. These opportunities remind us that our purpose has never been more relevant and highlight the promise of turning science into treatments or cures for some of the most challenging human diseases like diabetes, obesity, Alzheimer's, cancers and autoimmune disorders. We are steadfast in our commitment to improve the lives of millions of patients who rely on us and are confident in our business outlook. So now I'll turn the call over to Kevin to moderate the Q and A session.

Speaker 1

Thanks, Dave. We'd like to take questions from as many callers as possible,

Operator

You will hear an acknowledgment tone that you've been placed in the queue and you may remove yourself from queue at any time by repeating the one zero command. And our first question is from Seamus Fernandez from Guggenheim. Please go ahead.

Speaker 5

Great. Thanks for the question. So, first Dan, can you just give us a little bit of the thought process for Pushing out the accelerated filing for denanumab, it certainly makes sense, but How much did the NCD actually work into that calculus versus Needs or requests from the agency for additional data. And then the second question, Just really wanted to get a better understanding of where you guys think the Surmount 1 Data sets, where the thresholds would be, we're seeing 68 week data from Wegovy coming in at About 15% to 17% in a non diabetic patient population. Just wanted to get a

Speaker 6

sense of Some of the

Speaker 5

pushes and pulls that we should be thinking about in the context of the surmount 1 dataset. Thanks so much.

Speaker 1

Thanks, Seamus. We'll go to Dan for the question on accelerated approval timeline and then Mike Mason on expectations for surmount 1. Yes.

Speaker 4

Thank you, Seamus. It's a good question. Look, I think, as I said, the purpose of accelerated approval is to try and get medicines into To help patients faster without access that benefit is mainly negated unfortunately and clearly a very frustrating period for patients to Approval of a drug and no reimbursement. So the CMS draft NCD proposal weighed Heavily in our considerations around timing and clearly reduces some of the Ability to help patients faster than we were hoping for with accelerated approval. With respect to the other part of your question, which is How about requests from the FDA or new data or anything like that?

Speaker 4

There are none of those factors Here, we haven't had such requests. So it's really about CMS and about our own team's ability to just So get all of the data together and get the right amount of safety data compiled in a way that the FDA can analyze. So We'll continue to work towards accelerated approval yet this year, but no longer in Q1.

Speaker 1

Thanks, Dan. Mike?

Speaker 7

Yes. Thanks for the question. We are excited to see this from OUTLUN data. There's good theory on why someone who lives with Obesity would have greater weight loss on a product like tirzepatide than those that have type 2 diabetes. Those theories tend to play out when we looked at the Novosomaglutide STEP program, where Those who had, didn't have type 2 diabetes had 6 or 7 percentage points greater weight loss than those that had type 2 diabetes.

Speaker 7

We don't know what it's going to turn out to be for Surround 1. We do believe that it's going to be higher in the non type 2 diabetes patient And what we saw in the SURPASS studies. Good thing is we don't have to wait too long for those results. We expect those in the first half of this year. And so we'll be patient and look for the results and I think we'll be excited by what we see.

Speaker 1

Thanks, Mike. Seamus, thanks for your question. Next caller, please.

Operator

And the next caller is Ronny Gill from Bernstein. Please go ahead.

Speaker 8

Good morning and thank you very much for taking my questions. The first one is around the N3PG4 NERLYAD. You're starting a second agent fairly quickly. Can you talk about other distinguishing features for this product versus The nanomab, is it just that removes plaque festivals or there are others? For example, is it removing preferentially parenteral Plaque versus vascular plaque.

Speaker 8

And the second, you kind of mentioned your expectations in the NCD, but can you confirm to us that you do not Expect the NCD to materially change in its final form versus a draft form. And if you can talk a little bit about the process of requesting a change to that NCD once we have confirmatory data for the amyloid beta removing drugs.

Speaker 1

Thanks, Ronnie. We'll go to Dan for the first question on N3PEG4 and then Anne for The question on the NCD expectations.

Speaker 4

Yes. Thanks, Ronnie. On N3VG4, originally, we started working on this molecule because of Antidrug antibodies that we saw and continue to see against denanumab, because of those ADAs, we've dosed denanumab at pretty high levels And that in combination with the formulation of denenemab have precluded the ability of generating a subcutaneous Dosing form. So that was an important consideration, those two things, I would say, for development of N3VG4. It binds the same epitope as taneumab.

Speaker 4

So our understanding and data Suggested it clears exactly the same types of plaques. That's important to us. I think we've seen compelling efficacy here in trailblazer from denumab, and we want More of the same in the next molecule. So, no differences here in type of plaque. I think speed of plaque removal, Our expectations are it should be similar to denanimab, which is to say quite rapid.

Speaker 4

And the big advantage here This is likely to be around dosing and administration. Thanks, Dan. Ann?

Speaker 9

Well, thanks, Ronnie. We believe more than likely the final with that confirmatory Phase 3 data. And so that's going to be our focus with CMS. We believe that well designed and controlled registration Trials like Trailblazer ALZ and ALZ-two should certainly provide sufficient evidence of clinical benefit for denanumab and that CED is not needed or appropriate We're also going to see confirmation from CMS, really to your question, that once this Phase III efficacy and safety have been established, that denanimab and other medicines with this level of verified evidence would be fully covered by CMS, and we want that path for this coverage to be clearly laid out. As Dan mentioned, it may take some months after the TB2 readout to work through that, but we'll certainly focus on that.

Speaker 9

We have been and will continue to meet with CMS To make our points known and to work through what that process is. And I think our I think as Dan alluded to, what we believe is that with Phase 3 Confirmatory data and ultimately an FDA traditional approval, we cannot envision a reason why CMS would treat Alzheimer's disease differently than any other class of medicines. I mean, this would really be unprecedented, and I believe the pushback from the patient community, from their caregivers and from those that advocate for them would be significant, and CMS would have, we believe, no choice but to change it. So our focus is on that Phase 3 data.

Speaker 1

Thanks, Anne, Ronnie. Thanks for your questions. Next caller, please.

Operator

The next caller is Vamil Divan from Mizuho Securities. Please go ahead.

Speaker 10

Hi, great. Thanks So maybe one follow-up on denanimab and then one other one unrelated. So in terms of, obviously, Appreciate what you're saying around the accelerated approval and kind of changing your timelines there. I'm just wondering what Trailblazer for and if there's any reason I'm kind of wondering what the rationale for that trial is now given the limited uptake of Aduhelm to this point, it will get data later this year. But I'm just wondering if it makes Is there any sort of change in strategy or thinking around the need for that trial and what exactly that might accomplish?

Speaker 10

And then my second question is sort of You mentioned around Olumiant the updates from last week, but you also have submitted for alopecia areata. I'm just wondering if you could maybe just talk a little bit about what you see for The potential, I guess, for the JAK class overall in that space, but also for Olumiant specifically, just given, obviously, the safety concerns we've seen around that product in the class from before? Thank you.

Speaker 11

Thanks, Vamil. We'll go to Dan

Speaker 1

for the question on Trailblazer 4 and then Patrick for your question on alopecia areata.

Speaker 4

Yes. Thanks, Vamil. You raised a good point on TRABLAZER 4, which is a head to head against ADUHALM. Of course, there was a lot of excitement in Patient interest and investigator interest in this trial because it's 2 drugs compared to each other. So On the other hand, as you point out from a commercial perspective, the importance of showing superiority to Aduhelm may have dramatically diminished.

Speaker 4

That's okay. We're still committed to doing this trial. I think from a scientific perspective, there'll be important conclusions. We have a hypothesis, for example, that The more rapid and deep plaque clearance could lead to greater improvements on biomarkers. I think those kinds of assessments can only be done in head to head studies.

Speaker 4

So this will still be an important contribution

Speaker 1

Thanks, Dan. Patrick?

Speaker 6

Thank you very much for the question. Well, we submitted Olumiant for alopecia areata to the FDA late last year, and it's now submitted post to the European and the Japanese regulatory bodies. There are currently no treatments approved for alopecia areata. We have an opportunity here to be first in disease with Olumiant. And we have been encouraged with the data that we have seen from both BRAVE-one and BRAVE-two, both based upon physician assessment as well as self assessment by patients.

Speaker 6

And there is truly an unmet need in this space. We have currently approximately 360,000 patients diagnosed in the U. S. And we believe at least 100,000 of those would be eligible for a treatment with JAKKS. And based upon the profile that we have seen from other assets, we believe that we can launch share With a competitive profile to help patients with alopecia areata.

Speaker 1

Thanks, Patrick. Vamil, thanks for your questions. Next caller, please.

Operator

The next caller is Steve Scala from Cowen. Please go ahead.

Speaker 12

Thank you. I assume that you are Deep in labeling discussions on tirzepatide, what questions is FDA asking? Are you anticipating the label to read that tirzepatide Is a first line injectable or for use after other injectables fail? And since another very well managed The diabetes competitor has had supply issues. I'm curious where tirzepatide is being manufactured and whether the plant has been inspected?

Speaker 12

Thank you.

Speaker 1

Thanks, Steve. We'll go to Mike Mason for both of those questions.

Speaker 7

Thanks, Steve, for the question. The Tirzepatide submission in the U. S. Is going quite well. No surprises in that.

Speaker 7

We are not getting any unusual questions. We're confident in our supply And confident in our supply chain, that we'll be ready for launch. We did a comprehensive studies for our SURPASS 5 pivotal studies for the U. S. So I think that will give us a broad label And the label we need for success.

Speaker 7

So I think things are progressing quite nicely and we're quite confident going into our launch.

Speaker 1

Thanks, Mike. And we'll thanks for the question, Steve. Next caller, please.

Operator

The next caller is Chris Schott with JPMorgan. Please go ahead.

Speaker 13

Great. Thanks so much. Maybe just following up on the tirzepatide front. Can you just help maybe also set some expectations of the launch as we think about 2022 into 2023? So maybe specifically, How long should we think about post approval until you'd expect broad coverage of tirzepatide?

Speaker 13

And when we maybe compare and contrast, I guess, the large The last large GLP-one launch of Ozempic, are there similarities or differences we should think about as to what kind of state of the market today, the data you'll have, etcetera, just to help us, I think we all think about this a great long term opportunity, but more just the near term dynamics with that. And then my second question was just on insulin in 2020 Can you just elaborate a bit more about how to think about the magnitude of price erosion we could see for that franchise relative to what we saw in 2021? I'm just trying to a sense of how different is the market dynamic, I guess, this year versus last? Thanks.

Speaker 1

Thanks, Chris. We'll go to Mike for both of those questions as well.

Speaker 6

Yes. Thanks for

Speaker 7

the questions. As we approach the tirzepatide launch, we'll be playing for The long term and making sure that we set the foundations up strongly for long term success. When you have a retail product like this that goes to Nearly 100,000 primary care physicians as well as needing broad access. There is little that you can do to really accelerate the launch in the 1st 6 months. You're also working to get access and Having support programs so patients will have a good out of pocket experience at launch.

Speaker 7

And so I wouldn't look For the 1st 6 months to see a real accelerated uptake of net revenue versus other GLPs in that 1st 6 months, I think that That will be a focus for us. It's just laying a strong foundation, being patient focused, getting access, Driving awareness to a broad subset of physicians that will give us that foundation to be successful long term. And then on insulin, when we look at the Q4 results, we did have a in particular, A greater than usual decline in our price and that was really due to kind of a double whammy effect. We have a significant adjustments from our gross sales to our net sales. And so if our estimates are off just a little bit, That can have a significant impact on our net revenues.

Speaker 7

And so what we saw actually was that in the comparison period In Q4 2020, they experienced some positive one time gains. And then in this quarter, we You saw some negative one time adjustments. So that's what led to what looks like a greater than expected Net sales decline. I think for our portfolio, we have provided guidance that we would be at About mid single digit decline. I think we'll see that greater for insulin than our net portfolio, But I don't see anything largely unexpected in 2022 versus where we've seen the trends over the last couple of years.

Speaker 7

Thank you.

Speaker 2

Maybe just to add something there, Chris, that's a dynamic as well as patient assistance. And as you know, Lilly has led over the last 3 years with a number of solutions to reduce out of pocket costs given the problems in the insurance markets. And those have been in addition to the normal competitive dynamics in terms of gross to net, an important Solution for patients actually out of pocket costs for, correct me Mike, if I get this wrong, for patients in the U. S. Dropped over the last 3 years from $34 to $21 per month on average For Lilly insulins, that's quite a bit lower than our competitors, but that does hit the price line for us either through Now 70% off insulin lyspro product, which is available or through the Buydowns we do at the point of sale to $35 per month.

Speaker 2

So that's in the background. There is sort of a terminal Quantity to that, but we have seen good adoption. And I guess the good news is patients are taking advantage of that and it's showing up in retaining volume. It does hit the net price line though.

Speaker 1

Thanks, Steve and Mike. Chris, thanks for your questions. Next caller, please.

Operator

The next caller is Tim Anderson from Wolfe Research. Please go ahead.

Speaker 11

Hello. Thanks for taking our question. This is Alice Nettleton on for Tim Anderson. So a question on denanimab. The premise of denanimab is that you only dose to plaque negativity.

Speaker 11

However, to determine plaque negativity, you need a minimum of 2 PET scans and quite possibly 3, maybe even more. The CMS draft guidance only covers 1, Even if it ultimately gets revised to be more generous, if it doesn't also include increased coverage of pet scanning, then you could argue Lilly is uniquely disadvantaged versus competitors, would you be curious to hear your thoughts on this? Thank you.

Speaker 1

Thanks, Alice. We'll go to Anne White for that question.

Speaker 9

Well, thanks. And as you said, we're pleased that CMS acknowledged that There is an important role for amyloid PET in patient identification. We certainly agreed to that as well. And using amyloid PET to monitor plaque reduction and then confirm It's incredibly important, we believe, for patients receiving these therapies and incredibly important for the healthcare system because it provides clarity as to when you can Essentially stop dosing a medicine. Once you've cleared the target, we believe that's the time to stop dosing.

Speaker 9

And as As you know, in our data, we've shown that 40% even clear their plaque in 6 months. So incredibly important that we believe that the value that that brings to the healthcare system Far outweighs any cost that it might bring and we've done those analyses. So it's very, very clear that when you take into account all the costs of these medicines, the infusions, the Safety monitoring, you're much better off with clarity of when that plaque has cleared and stopping dosing. It's a unique attribute of denanumab that we've certainly talked to CMS and others about and they've recognized. So we believe the value proposition here is quite strong and look forward to working with CMS

Operator

The next caller is Andrew Baum with Citi. Please go ahead.

Speaker 14

Thank you. Question on Lebrikizumab and then one on Bizemius. On lebrikizumab, part of the premise in terms of differentiation versus DUPI, Given the IL-thirteen mechanism, there's a lower incidence of ocular events, particularly conjunctivitis, which are frequent with Dupion, occasionally problematic. I know you haven't fully shared the data, but I wonder whether you could talk to whether the data will support that premise and positioning in the market. And then second, in relation to Verzenio, given you're now rolling it out for the adjuvant setting, could you talk to what are the key barriers to adoption Among oncologists, is it tolerability in the adjuvant setting?

Speaker 14

Is it screening for the T67 patients What some other financial factors and how can you resolve them? Thank you.

Speaker 1

Thanks, Andrew. We'll go to Patrick for the question on lebrikizumab And then Jake for the question on Verzenio.

Speaker 6

Thank you very much, Andrew. Based upon the data that we've seen so far, we believe that we have Competitive assets with a market leader for atopic dermatitis, and we were very encouraged with the efficacy results With more than 50% of the patients achieving at least an EASI of 75% and also consistent across all the different measures, IGA, ESI-ninety and rutitus NRS met all the key secondary endpoints. Specific to your question on conjunctivitis, we need to wait for the 52 weeks data. In the induction data, we didn't see any difference to existing biologics, but the cases that we saw were all mild to moderate and One third of those had a history of chronic nephritis and only a few of them discontinued treatment. So we're looking forward to the database lock of the maintenance treatment during the First half of this year.

Speaker 1

Thanks, Patrick. Jake?

Speaker 15

Yes. Thanks for the question.

Speaker 4

So I think as it relates to

Speaker 15

the key barriers to adoption, I think the biggest one and the overlay and then I'll get more specific is just that this represents Really the first new standard of care in this setting in 20 years. And so there are just a lot of physicians who have entrenched behavior and comfort with what they're doing. And so The first barrier is really around education and getting comfort level changing behavior. And so that we have a lot of tactics in place To do that, to make sure that the data on the agent are known and to answer questions that physicians may have. More specifically, you highlighted a few things that are good things to know, which is The T67 testing requirement and the interpretation of those results and integrating them into patient selection is a new thing for docs in this setting, As well as the diarrhea management, which is a real phenomenon with Verzenio.

Speaker 15

We have protocols in place That allow it to be managed and it tends to be a short term

Speaker 6

side effect that

Speaker 15

can be managed. But there are a lot of physicians out there Who've literally never written a prescription of Verzenio because they've been historically large Ibrance users. And for that Segment in particular, there's an education component to get them comfortable and ensure they're using the protocols that we think work really well for Diarrhea Management. That all having been said, we're happy with what we're seeing so far, but it is early days obviously in this launch trajectory.

Speaker 1

Thanks, Jake. Andrew, thanks for your questions. Next caller, please.

Operator

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

Speaker 16

Good morning, everyone. Thanks for taking the question. Just have a couple of quick ones. For tirzepatide and obesity, What investments have to be made to help evolve the payer attitudes towards obesity as more of a medical condition? Obviously, it has a lot to do with benefit risk Starting with surmount 1 and you have a competitor leading the charge as well.

Speaker 16

And then the second question is for pertebrutinib. With the decision to file an MCL, was it based more on unmet need and opportunity versus regulatory feedback? I want to get a little bit more clarity on that. And with the Phase 3s And CLL not completing for at least a few years, was there more consideration for those Towards an interim look being built in. I'm just trying to think of the potential lag in commercial availability between the two indications.

Speaker 16

Thank you.

Speaker 1

Thanks, Jeff. We'll go to Mike for the first question and then Jake for the second.

Speaker 7

Yes, it's a good question on BC and what's going to take to Unlock and build that marketplace. When you look at historically, the agents just had kind of limited weight loss And because of that, they didn't really drive good health outcomes and that limited access, limited physicians from writing that. So we think, 1st of all, just having agent like tirzepatide that could have significant and clinically meaningful weight loss is the first step of the evolution of the marketplace and the interest in that. And we've seen that in market research. And then we've got to begin to build the evidence to show that significant weight loss From transeptide will lead to heart outcomes and that's what we're doing in our extended indication focus.

Speaker 7

We've announced a heart failure hep hep study. We announced in December Sleep apnea study as well as an important morbidity and mortality study or MMO study that will look at heart outcomes for other potential outcomes like CV and others. We'll give you more information on that Coming up, we also have a chronic kidney disease mechanism of action Phase 2 study that will help Demonstrate why tirzepatide may work for that patient population and doing work in NASH. So I think it's important for us to demonstrate, I think we're confident that with the level of weight loss that we'll see with tirzepatide But that should lead to hard outcomes, that should then lead to earlier use of an agent appetite to really slow and disrupt the progression of obesity and really turn this into a more of a preventive versus waiting for the hard outcomes to show. But that's going to be the evolution of it.

Speaker 7

We've got an extensive Phase 3 program in order to demonstrate the evidence we think we need to in order to unlock and grow access over time.

Speaker 1

Thanks, Mike. Jake on for tigrutenet.

Speaker 15

Yes. So the first part of your question around the decision to file for mantle cell, you framed it as what's an unmet need Versus regulatory feedback and the answer really is both. So we've had a longitudinal conversation with the agency around this indication, Showing them our clinical data at various snapshots over time and we got to a point where we had agreement On the key components of what an NDA could look like from a clinical package perspective. And so that informed our decision to In other words, this was not a sort of unilateral Lilly decision. This was done very much in concert with FDA.

Speaker 15

And I think they and us realize the unmet need of patients And the potential proposition of perturbinib there, obviously the ultimate approval is subject to a net fee review. So nothing's done until it's done, of course. As it relates to the potential lag between a mantle cell approval and a CLL approval, think it's just too early to really comment because the latter CLL is really subject to the enrollment dynamics of the Phase 3 program. And it's just a little too early days for us to really say exactly which one of those studies will be the first to read out and when, Because it is so enrollment kinetics, contingent. So over the course of this year, we'll have a lot more information about that, I presume, And be in a better position to prognosticate about CLL timing.

Speaker 1

Thanks, Jake. Jeff, thanks for your questions. Next caller, please.

Operator

The next caller is Louise Chen from Cantor. Please go ahead.

Speaker 17

Hi, thanks for taking my questions. So my first question is On lebrikizumab, if it's approved, do you expect sales to come from share gains from Dupixent or new patient starts? And then second question is on perturbrutinib. Do you see an opportunity for the drug in first line treatment? And if so, do you think you need to wait for the head to head results before that becomes a meaningful opportunity for you.

Speaker 17

Thank you.

Speaker 1

Thanks, Louise. We'll go to Patrick for the question on lebrikizumab, Our source of business and then back to Jake on pridabrutinib.

Speaker 6

Thank you very much, Louise. I think first and foremost, if we look at the call. So we definitely see an opportunity to significantly grow the market in atopic dermatitis. But as I mentioned earlier, we also believe that we have an Yes, but it's very competitive with a market leader. So I would foresee that we will see uptake both in terms of driven by market growth as well as competing very successfully with the peak sun.

Speaker 1

Thanks, Patrick. Jade?

Speaker 15

So the perturbutinib opportunity we see primarily and certainly initially is in patients who've been previously treated with a BTK inhibitor or more. Obviously, we think there's a potential for the drug in the first line and that's why we're running studies there. We have 2 studies that we're running in first line CLL. 1 is, as you mentioned, the head to head study against Ibrutinib, the other, which will The other is a study we just recently started against chemoimmunotherapy. That study will read out much, much quicker and therefore allow for the drug to be labeled in the first And I think what we've learned, particularly from other newer entrants in this space, is that You really need to generate a differentiating data set in some way, shape or form and then have the labeled that allow physicians and patients to have choice.

Speaker 15

And, I think in particular, the Calquence acalibrutinib program has shown that You really actually don't necessarily need direct head to head data to suggest differentiation or for at least physicians to Severe differentiation in different drugs, so long as you have a labeled indication that allows for unlabeled prescribing and reimbursement. So one of the reasons that we initiated the first line chemoimmunotherapy study was to have a path to that first line label more quickly and allow patients and physicians to make choices.

Speaker 1

Thanks, Jake. Louise, thanks for

Speaker 11

your questions. Next caller, please.

Operator

The next caller is Umer Raffat with Evercore ISI. Please go ahead.

Speaker 18

Hi, guys. This is Mike in for Umer. Thanks so much for taking my question. Just 2 for me, 1 on tirzepatide. If tirzepatide is priced at a slight premium over Trulicity on a list basis, that could Theoretically mean a massive increase on a net basis.

Speaker 18

So given where prices are paid in government channels for Trulicity, Can you remind us what percent of Trulicity is Medicare, Medicaid and VA? And how different is that price versus your commercial price? And Switching gears to denanimab, for Trailblazer 3, I was wondering if you guys had finalized the stat methodology for Assessing the primary endpoint, I know a little while back you had a nice poster on Trailblazer 2 showing how the primary endpoints were assessed by a Bayesian analysis versus an MRN, just kind of remind us where, if anything has been finalized for the and methodology for assessing the primary endpoint in DReBLADERS-three. Thank you.

Speaker 1

Thanks, Mike. We'll go to Mike Mason for the questions around tirzepatide Pricing in Trulicity segments in the U. S. And then Dan for the question on Trailblazer 3. Mike?

Speaker 7

Thanks Mike for your question. Obviously, I won't be able to talk in too much detail around the list price or next price for tirzepatide. Maybe the best way to answer your question is that typically for a new product, we tend to get commercial access first, Then Part D, then followed by Medicaid and other channels. And yes, the commercial net prices Are typically higher than Part D and Part D is typically higher than Medicaid. So you will see kind of the evolution of any retail product To be a higher net price at the beginning of the lifecycle And then as the lower if you reach volume in lower price segments, you'll see that decline like we've talked about it over with Trulicity over the last couple of years.

Speaker 7

Now we will have extensive patient support programs in the 1st 6 months For tirzepatide, so again, I wouldn't be looking too much at that for tirzepatide in the 1st 6 months. But overall, over the 1st couple of years, I think any product you'll see that dynamic. For your specific question on With Trulicity, that's currently around 10% of the volume. Thanks for the question.

Speaker 1

Thanks, Mike. Dan? Yes. Thanks, Mike, for

Speaker 4

the question on TRELBLAZER III. It's a good question you raised because this is a really interesting population. These are patients who have Amyloid plaque in their brain, but they're still cognitively normal. So what kind of endpoint is appropriate for a population like that? In our view, we're looking at Progression metrics.

Speaker 4

So do they progress to a CDR rating That indicates that they now have impairment. So it's a bit of a binary outcome for each patient. Did they progress or did they not progress? And then you have an event driven study with a Kaplan Meier type analysis. So that's how we're thinking about Trailblazer 3 right now and probably we haven't published the design paper yet, but that may yet be forthcoming And that study is currently enrolling.

Speaker 1

Thanks, Dan. Mike, thanks for your questions. Next caller, please.

Operator

The next Caller is Carter Gould with Barclays. Please go ahead.

Speaker 19

Good morning. Thanks for taking the question. I guess just first for Dan, maybe Maybe to clarify, I mean, the language you're using around no longer Q1, I noticed, I guess, you guys weren't explicitly confirming to 2Q. So just maybe just clarifying then, is that sort of time unknown, just still some time in 2022? Or is it just going to kind

Speaker 15

of spill over by a couple of

Speaker 19

weeks or months? And then maybe for Jake on TIVOT, when we spoke in December, I thought you were pretty balanced, just not even maybe negative on the prospects for approval based on some of the Commentary around data coming out of China. Now that you've got the questions in hand, I don't know if

Speaker 1

your stance has changed or if

Speaker 19

you have any additional color to add. Thank you.

Speaker 1

Thanks, Carter. We'll go to Dan for the question on denanumab and then Jake on cintillumab in the U. S.

Speaker 4

Yes. Thanks, Carter, exactly, you noted it correctly, which is that we're saying no longer Q1 and not providing more We do anticipate completing the submission yet this year. I think importantly here, we're trying to take investor focus off of Like the exact timing of accelerated approval given our very limited expectations for the impact of that accelerated approval commercially. We're still pursuing it. We think there's some opportunity to help patients faster through it.

Speaker 4

But I don't think investors should look at that as a big Commercial inflection point, it's really around our ability to communicate the trailblazer 2 confirmatory Phase 3 data And then work with CMS hopefully before that or immediately after that to make sure there's access once we have that confirmatory data. So that's the timing I think investors should be focused on.

Speaker 1

Thanks, Dan. Jake?

Speaker 15

Thanks for the question on cintilumab. So as you know, we have the FDA advisory committee meeting with an event a week from today. Our position on the matter really hasn't changed nor has our nor have our expectations. We believe that The risk benefit of the agent is demonstrable on the basis of the well conducted study, and we believe the results of the study are indeed applicable to U. S.

Speaker 15

Population. And we'll make our case in that respect a week from today. That having been said, we understand the stance The agency may have changed or maybe we misinterpreted it a few years ago. And so, we'll await The FDA's presentation on that topic and the feedback from the ODAC members. But we think this product, if approved, Could be meaningful for patients in the United States as a result of our disruptive pricing strategy.

Speaker 15

But we obviously don't know if we'll be able to execute on that.

Speaker 1

Thanks, Jake. Carter, thanks for your questions. Next caller, please.

Operator

The next caller is Keri Holford from Berenberg. Please go ahead.

Speaker 20

Hi, thank you. Two questions, please. Firstly, on Olumiant, I wonder if you could break out for us if abortion is found in the course of it were related to using COVID And what your expectations are here going forward? And also whether you can expand on the discussions you've had with the FDA On the atopic dermatitis indication and why you think CLL could be forthcoming. If additional studies would be required, would Continue to pursue in this indication.

Speaker 20

And then secondly, on the inflammation assets, we obviously have the positive headline data from the Phase 3. I'm wondering when you will publish the full data and whether we'll get to see that ahead of your filings. Thank you.

Speaker 1

Okay. Thanks, Carey. We'll go to Patrick for those questions. Okay.

Speaker 6

Thank you very much. Let's start with Olumiant and COVID-nineteen. If you look at the Q4 performance of Olumiant, I think you should assume that the underlying business in rheumatoid arthritis outside of U. S. And atopic dermatitis They continue to be strong.

Speaker 6

And in the U. S, the trend hasn't changed either when it comes to rheumatoid arthritis. So in the U. S, a significant chunk of the sale from Olumiant is coming from COVID-nineteen in Q4 and a minor chunk outside of the U. S.

Speaker 6

As well. It's really hard to predict the pandemic, but we expect to see continued sales from Olumiant also in 2022 for treating hospitalized patients With COVID-nineteen, however, at an enterprise level, we don't proceed to be material. For your second question in terms of atopic dermatitis, let me first reinforce that we are very confident when it comes to the risk benefit profile of Olumiant across All the indications approved and studied. And we conducted 8 Phase III studies for atopic dermatitis in U. S.

Speaker 6

And outside of the U. S. And both were conducted in patients moderate to severely ill patients suffering from atopic dermatitis in need of systemic treatment. That's really where we believe Olumiant is bringing the biggest benefits to patients early on in the treatment paradigm, While FDA currently has a position of saving Olumiant for the refractory patients, where we see the incremental value of Olumiant to be quite limited. And if that doesn't change, it's likely that we will see receive a complete response letter.

Speaker 6

And if so, we will continue to focus our efforts on the very Successful launches that we've seen outside the U. S. For atopic dermatitis as well as a very strong rheumatoid arthritis franchise we have as well as preparing for hopefully an approval of alopecia rata in the U. S. And other markets later on this year.

Speaker 6

Moving on to mirikeshumab. Yes, we had recently the readout of LUSEN-two just prior to the end of last year. And we met the primary endpoint and all the secondary endpoints. And we didn't only achieve statistical significance, but also clinically meaningful difference clinical symptomatic, histologic and endoscopic measures. And we have also conducted the first Sadly ever, we have an IL-twenty three P19 where we have demonstrated reduced bowel urgency, which we know is a major concern today for both clinicians, but mainly for patients.

Speaker 6

So therefore, we are looking forward to submit mirikizumab for ulcerative colitis during the first half of this year And most likely become the first IL-twenty three-twenty 19 in this very important space and with a big unmet need and with a profile that we believe is very competitive versus both currently approved medicines and other biologics and JAKKSIN developments.

Speaker 1

Thanks, Patrick. Carrie, thanks for your questions. Next caller, please.

Operator

The next caller is Chris Shibutni with Goldman Sachs. Please go ahead.

Speaker 21

Thank you very much. A question about the timeline plans for filing for dMAb. It's been an arena of influence from different parties, the agency, CMS, where it appears as if there is sort of instruction that have breadth of scope across multiple different A beta antibody. So would you say that since we know that competitor data is upcoming for additional approaches later this year. Does that impact your view on your approach and timing for filing a dMAb?

Speaker 21

And then a second question would be on tirzepatide, the anticipated transition in type 2 diabetes, Trulicity has been very strong. But can you perhaps give us a better sense about how you expect that transition to play out? I think broadly there's confidence in the profile and that tirzepatide eventually We'll succeed in continuing the franchise position in type 2 diabetes. But would you expect for the initial tirzepatide launch that to come primarily and importantly from the incident population, will there be patient switching, a little insight into how that actual transition could play out in your view

Speaker 1

We'll go to Dan for the question around denanumab filing timelines and then Mike for the transition with Trulicity and tirzepatide franchises. Thanks.

Speaker 4

Chris, you raise a good point with competitor readouts For amyloid lowering drugs coming yet this year, we have to take into account expectations for those readouts. I think from our perspective, those readouts could be challenging. Obviously, we designed denanimab as a molecule, our dosing strategy, our clinical trial strategy, including who we enrolled and what endpoints we look at In order to maximize the ability to see a positive signal, other trials haven't done that. So therefore, it's obvious that we would think that those trials should have lower probability of success. I think if Those trials are not successful.

Speaker 4

Competitor readouts fail either because CDR

Speaker 1

sub of

Speaker 4

the boxes is just too noisy an endpoint And that can help or it could hurt. We saw that in the 2 aducanumab readouts or because they have too many patients Who are outside the optimal window of tau pathology because they're not doing that or because they lower plaques too slowly. If any of those turn out to be correct and those trials turn out to be negative, I think that could further solidify CMS's reluctance to Reimburse these drugs under accelerated approval. It doesn't really fundamentally change our thinking though. As I said before, the key event for us is readout of our Phase 3 study.

Speaker 4

I think we've optimized everything for our chances of success. And regardless of competitor readouts, if we have a positive Phase 3 readout on top of our already first positive randomized controlled trial in TRILBLAZER 1, that is a very good position for denanumab And our expectation is that's a drug that will become globally available to patients and highly used by patients.

Speaker 1

Thanks, Dan. Mike?

Speaker 7

Yes. Thanks for the question on Felicity and tirzepatide. We're blessed to have both products. We're going to be taking again from a long term perspective On tirzepatide and Julicity, our goal is to continue to grow the market in type 2 diabetes and then really expand The Harrington class into the obesity market. Within Type 2 diabetes, Our goal not only is to expand the market, but continue to expand our share of market within the Edmonton market.

Speaker 7

When you look at the way we promote our products, we take a very patient centric approach of identifying those patients who could best benefit from a product like tirzepatide. In our market research, as we put the profile of tirzepatide up against existing Therapies including Trulicity, both payers and healthcare professionals And people who live with diabetes see the superior profile of tirzepatide and you compare that Trulicity, Our Phase 3 trials have showed greater weight loss, better A1C control and it's in the exact same device as Trulicity. So there is obviously interest in the product and they do see it as a superior product from Trulicity. Now, what I believe will happen Is that we will grow our overall share and you'll get a portion of patients who May have gone on Trulicity or may be on Trulicity and may be out of control, who needs greater weight loss or greater A1C control and those patients will grow on tirzepatide. So we do anticipate that there'll be some conversion from Trulicity Over tetrachapatide, but our focus is really going to be making sure that we grow the overall class and grow the overall share of market for the Lilly Androgen franchise.

Speaker 7

We don't think it's appropriate to necessarily promote Conversion of products who are doing well on Trulicity, so it's not going to be a kind of internally focused conversion strategy. It's going to be very much A patient focus product for those patients who are out of control or need additional weight loss, tirzepatide can offer So we're quite excited about the opportunity to have 2 entrants in our portfolio and grow the overall class. Thank you for the question.

Speaker 1

Thanks, Mike. Chris, thanks for

Speaker 11

your questions. Next caller, please.

Operator

The next caller is Evan Seagram from BMO, please go ahead.

Speaker 14

Evan?

Operator

Evan, your line is open.

Speaker 6

Your next question.

Speaker 1

All right. Well, if Evan is not there, the queue is exhausted. We'll go to Dave for the close.

Speaker 2

Okay. Thank you, Kevin. We appreciate everyone's participation in today's earnings call and of course your interest in our company. 2021 was an incredible year for the company as we produced strong financial results and delivered important pipeline progress in each of our core therapeutic areas on behalf of the patients who rely on us. We entered 2022 with positive momentum and great focus on execution to deliver on the meaningful opportunities we have ahead of us.

Speaker 2

So thanks for dialing in today and please follow-up with our IR team

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Earnings Conference Call
Eli Lilly and Company Q4 2021
00:00 / 00:00
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