Elanco Animal Health Inc at Morgan Stanley Global Healthcare Conference Summary

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

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Great. And another kind of bigger picture question, as you think about the $600 million to $700 million of innovation, I mean, that's a growth contribution, but at the same time, there's other drivers and underlying drivers across your business, I guess. Does that get you to more consistent top-line growth closer to industry average? Is it sort of low- to mid-single-digit growth as we kind of more consistently exit -- or see traction for some of these new products? Or is it higher than that?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. So let's start with Zenrelia since that's the topic of late. Can you provide an update on the exact timing around the admin review here whereas we head into the end of the month? And then when we'll also see the head-to-head study data for the product.

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. Great. We'll make sure to be on that. But Zenrelia's US label obviously includes the box warning on safety. Can you provide, I guess, an update on how you're thinking that this impacts adoption in the US versus kind of maybe your prior expectations? And I think you've previously said that it limits treatment days by about 25%. Is that still how you're thinking about it? How did you get to the 25% number?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And then you've conducted these surveys, I guess, and you've got to that 70% of veterinarians that want a second product on the shelf. But did that assume the narrative around -- or assume the assumption around kind of a box warning? And what was the feedback when you gave them that question as well? You surveyed your customer base

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And when I think about a second product on the shelf, I also have to think about veterinarians and inventory, what they're holding in terms of the inventory at their clinic, and do they want to have two different types of products. Do they have to have two different types of products to fully service the atopic dermatitis market, or do they have to have three types of products, for instance, like an injectable as well? And so do they have to have both in clinic to fully service the market?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Based on the disclosure to date, it sounds like every dog this can be used on -- like in terms of like every dog could use this product, but it depends on duration. And if I'm understanding it right, what is the limitations? Is it six months? Is it nine months? Is it just timing around vaccines? How do we think about that in educating the vet around timing and protocols around the product?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Do you think you can use it beyond seasonal chronic?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. And so if that's holding kind of two different products on the shelf, how are you then thinking about price and price as a lever? And how should we think about that and how willing are you to use that as a lever kind of from a competitive standpoint?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay, great. And I hate to belabor Zenrelia really just because -- but it is an important part of the story. And in the oral solid atopic dermatitis currently on the market, nearly half of it goes online. How do you address that? How do you think about leveraging your relationships with the Chewys of the world and how you can kind of penetrate that arena as well?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. Hey, one other question, how long will it take to get to blockbuster status for Zenrelia? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:20PM, ELAN.N - Elanco Animal Health Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. I'll skip the other 10 questions I have on Zenrelia and move to IL-31. But we'll stay on atopic dermatitis. An update on the timeline for the IL-31 product with the USDA. Is it fair to assume that this is a 2025 type of approval launch? And are you scaled up from a manufacturing perspective? And what has changed in terms of what the USA is looking for?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Your timing on the long-acting version of your injectable atopic dermatitis --

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Including pain? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:20PM, ELAN.N - Elanco Animal Health Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Switching gears to Quattro. I guess Quattro will be differentiated in that you've previously disclosed in terms of the parasite coverage that you'll have in terms of protection, making it somewhat differentiated on the market. But what's the strategy in terms of taking share? What's the strategy from a price perspective, leveraging distribution? Like, how are you thinking about the rollout strategy?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And the manufacturing ramp there --

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Will it be out by VMX? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 7:20PM, ELAN.N - Elanco Animal Health Inc at Morgan Stanley Global Healthcare Conference

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Thought I would ask. And then you just mentioned the cannibalization. A lot of that is already kind of played out. And so how much of there is left in terms of cannibalization that you would assume, because there's also -- you can leverage selling a broader portfolio and a comprehensive portfolio in parasiticide. I mean, even your competitors do that today successfully. So how are you going to navigate that with the sales force and with the various channels you play in?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And then talking about sort of that broader portfolio too in terms of what's next in parasiticides and a long-acting injectable product being worked on by, I think, yourselves as well as a lot of others too in the industry. But how do you think about the opportunity around that? It is a different type of practice protocol. It's a different type of product. Is it as quick of a roll-out in terms of as you think of it being a game changer relative to the overall combination?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And then commercialization efforts as we kind of ramp up these new blockbuster products and where are we at now in terms of the investments that you've already made but also incremental costs. And then as we think about the caveats to the label with Zenrelia, there's also incremental costs, but were some of that pushed out as well in terms of the ramp up or was it a reallocation of what would have been DTC, more now focused on the vet clinic in terms of promotion or in terms of education? How do I think about that? Sorry, there was a lot in there.

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Can you have those conversations with distributor partners already now, for instance, ahead of Zenrelia launch or ahead of Quattro launch? Or do you have to wait until everything is out there from a label and approval standpoint?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. Right. And then let's talk a little bit about near term then and in terms of the guidance, what's implied for the second half. In terms of top-line growth, can you parse out -- there's a bunch of moving pieces because there's FX and then there's aqua and some other things in there. So can you map out kind of how to think about the third quarter, fourth quarter from here?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. And then, Bovaer, I wanted to ask you kind of an update in terms of timeline magnitude of contributions, kind of margin profile, that sort of offering and expectations in terms of the ramp, just given the adoption and the customer education needed around that type of market.

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : And so thinking about all these different kind of moving pieces, you have Zenrelia, you have Quattro, you have Bovaer, and then the other innovation pieces that you're driving. You have the [base] business that there's some moving pieces there as well. But what's the update in terms of your long-term vision of the mix of this business, longer term in terms of livestock versus companion. And then also then inherently kind of how much more skewed are you towards those higher growth, higher margin segments and that long-term margin target you have in your mind at this point?

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. Great. And then just lastly here in the last minute because I didn't talk about it -- just like underlying industry fundamentals in terms of pet health versus livestock. Anything that we should be thinking about as you're thinking about your business into 2025? I know a lot of it's focused on innovation right now, but underlying demand trends across each of those segments.

Question: Erin Wright - Morgan Stanley & Co. LLC - Analyst : Okay. Great. Thanks so much. I appreciate the time.