Elanco Animal Health Inc at Evercore ISI HealthCONx Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Outstanding. So there's a lot of things to drill down. Obviously, next year is a growth year for you guys, adjusting for Aqua business. I think you

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : I guess, Todd, the way I think about it is it's -- if you start the trial now or, let's say, over the course of the next month, you could have that trial wrapped up in 6 months and have something ready for resubmission by next summer. I know you mentioned it could take couple of years or a multiyear process? Why is that?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. And as it relates to -- look -- got it. So when you say a 2-year process, you're saying next year spent on the trial 2026 bent on FDA review. Is that the way you're thinking about it?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Todd, I think there's a little bit of confusion from the dinner last night. I think one of the points you made was you said you're definitely seeing orders, reorders are very good. But the size of the orders, I think you implied were a little smaller than -- maybe if you could clarify that because I think there's some confusion in the marketplace on that comment.

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : I guess -- yes --

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : So maybe ask differently because I think everyone really zoomed in on when you said size of reorders is a little lesser than anticipated. Let's ask...

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Averaging out to being a nonevent. So is it reasonable to say the launch is tracking in line with expectations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 4:15PM, ELAN.N - Elanco Animal Health Inc at Evercore ISI HealthCONx Conference

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. And maybe I think it will be helpful for folks to let's just remind ourselves of the expectations. I think you guys have put out some numbers on launch expectations for next year. And it's not specifically on Zenrelia. But I know if you're launch bucket is, let's call it, $450 million this year, midpoint for next year's $650 million. So it's about a $200 million in sales add. I think could you remind us of the $200 million, how much is non Zenrelia, Quattro so that we could kind of put some parameters?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. So maybe -- and there's 2 things there, but just to specify. For about $200 million year-over-year in sales growth on the launch products, considering there are 6 of them, is it reasonable to assume that at half of that $200 million could come from non-Zenrelia, Quattro, perhaps even more than half.

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. So again, I'm kind of going back to that $200 million constantly just to keep it all in a framework. A couple of hundred million in additional new product revs. Zenrelia is some subset of that, somewhere between $20 million, $40 million, whatever that range would be. And I think based on some of the FDA label discussions, it sounds like the scenario where Zenrelia just puts up a $70 million or $80 million a year next year, that's probably not on the table. But conversely, a scenario where it grossly under performs the base because that's also off the table. So it's tracking at least in line with expectations probably ahead of that. Is that a reasonable way to summarize that situation?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : And are we finding physicians sort of pause Zenrelia ahead of vaccination is that dynamically playing out?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Excellent. Mike? Unidentified Participant No, I think we could transient some questions on Quattro.

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. Maybe in the last minute or so, Todd, I think it will be helpful for folks to -- I think from the broader stock set of perspective, one dynamic was value story transitioning to potentially growth. I think you've spoken to mid-single-digit growth. But there was another dynamic that's also holding back a lot of investors, which is the leverage. So could you remind us where we are on balance sheet? And what do you realistically see happening over the next 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 4:15PM, ELAN.N - Elanco Animal Health Inc at Evercore ISI HealthCONx Conference

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : And what about credit ratings, what should we expect on that?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Got it. Should we envision some sort of credit upgrade perhaps in the back half of '25? Or is that more a 2026 phenomenon?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : We need to be in the mid-3s for a consistent period, I think, right?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Excellent. Unless anything else from the audience, we'll wrap it up right here. Thank you again, Todd. Thank you.