Eli Lilly and Co at UBS BioPharma Conference Transcript

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

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : We've got Lilly on a momentous day today with the approval of Zepbound. So I appreciate there's going to be a lot of interest in diabetes and the obesity space, but I will be touching later on in immunology, which is Patrik's current day job at the moment. But I think it'll be wrong if I didn't start off with obesity and the approval today. We see in the press release the price is 20% less than Wegovy, so on par with Mounjaro today. It's a surprise to me that you've come in lower than a competitor. You don't often see that. Perhaps why? Can you -- why did you price at this price point? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA First and foremost, let me say I think it's quite natural to start with questions on obesity today. Having the approval of Zepbound, I think it's a game-changing day for people with obesity and it's definitely a historic day for the efforts that we have been putting into R&D in this space. So the press release came out a couple of hours ago, and I -- we announced a price of $1,059 for Zepbound, very close to Mounjaro. Now I think we have been listening to the key players in this space for quite some time. Getting access for obesity is going to be very different compared to type 2 diabetes. So of course, we need to get the access through the PBMs, but we have also the employer opt-in. And I think currently, 50 million patients opted in through their employers for obesity treatments that are in the marketplace. I think we are aiming for more than that over time. But the only price that is visible to the employers of a list price. So that's just a signal from our side that we are taking that feedback and that concern seriously. So that's why we are pricing it pretty much at parity with Mounjaro. So that's just taking into account the feedback we hear from employers and improving access and increasing employer opt-in. That's the rationale for the pricing we have decided to go for. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2023 / 8:00PM, LLY.N - Eli Lilly and Co at UBS BioPharma Conference

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Okay. And given this and the price on par with Mounjaro, is it reasonable to expect the rebates to be in the same sort of range as with Mounjaro? Or given the fact that you've now gone for 2 different brand names, you think that rebates in diabetes will be different from rebates in obesity? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Maybe I address the last part of your question first, 2 brand names or trademarks. Why? I think the fact that we are talking about 2 different diseases is extremely important. The access piece, of course, we know that the process to gain access for obesity is going to be very different compared to type 2 diabetes. Some similarities but also some significant differences in terms of opt-in. That's why we believe 2 trademarks are important. The second piece would be 2 trademarks also enabled us to target and do some more precision marketing efforts for the different patient segments here because the needs of a person with obesity are very different from a person with type 2 diabetes, so it actually generates an opportunity for precision communication. So I think in terms of pricing, a lot of different dynamics. And what we are seeing in the obesity market today is with the employer opt-in, we have different qualities of access as well. So I think there are so many factors that are playing a role here. Like now you see prior authorizations, you see utilization management. So I think it's very difficult to compare gross to net across 2 different disease areas and with different dynamics. But the drivers for the 2 trademarks were the ones I refer to. It is actually to make sure that our access efforts in obesity doesn't negatively impact type 2 diabetes and vice versa, but also to be able to reach patients with information that is relevant to them.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Okay, excellent. And you have a broad portfolio of other GLP-1s in obesity. How do you think about balancing what you have here? You've got certainly some towards the higher end of the efficacy scale in your pipeline. You've got some which are oral. You've now got one which is approved. So how do you think about when these are out -- and it's probably going to be in the next few years, how are you balancing all of this? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Yes. I actually get that question quite often. And it's probably quite natural because if you look upon the data on Mounjaro in type 2 diabetes, having 75% to 90% of patients achieving an HbA1c below 7, which is a target by the American Diabetes Association and in obesity actually getting up to a weight reduction in the most recent study, above 26%. That's huge. That's significant. That's a game changer across both type 2 and obesity. However, having said that, we know from the study populations that there is a huge variation in terms of response, and we will just continue to raise the bar. So when we look at the assets that are currently in development for obesity and type 2 diabetes, retatrutide, for example, that or sometimes [it's rather just] triple G. We believe that we will probably see even greater weight loss with retatrutide than we see with tirzepatide. That is relevant if you think of a patient with a BMI of 35 or both. They might actually need even further weight decrease beyond the 25%, 26% we can see with tirzepatide. So particularly target the Class 2, Class 3 obesity patients for retatrutide. And I think we have currently an unmet need but we probably can address even better with retatrutide. Moving on to orforglipron, which is the second asset in Phase III. Currently, that's the oral medication for obesity. We have learned through patient market research, that is quite a big group of patients that have a strong preference for oral treatment. And that's particularly true for the ones that are injection-naive. So I think that's one reason to be really excited about orforglipron because you can meet other patient segments compared to what we are able to address today with tirzepatide. But it's also another factor when it comes to oral, so markets outside the U.S. that are heavily oral markets. I used to run our business in Japan for 6 years. And Japan is one of those markets that are very heavily leaning in towards oral in China as well. So I think when you look at the portfolio, I think we're providing both health care providers and patients an opportunity to even further target the therapy to the needs of the individual patients. And lastly, Dave Ricks stated very clearly in the last earnings call last week, when it comes to the incretins and the medications for chronic weight management, the flywheel within Lilly is swinging quite fast today. And we just want to out-innovate ourselves and maintaining that leadership position far beyond tirzepatide. It's really exciting today, but we see us making a significant difference for patients suffering from obesity, not just during the remainder of this decade and next but even beyond that. So that symbolizes our efforts in that space.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : There's a hell of a lot of different mechanism is being studied within obesity today by all other companies. Is there any other mechanism out there that sort of excites you guys? What -- any particular area that you're looking in big focus beyond GLP-1? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA I think, Trung, the way you should read this today, I think we are defined as being a leader in the chronic weight management. And there is nothing going on in this industry that we are not very much digging into. And I don't think there is a BD deal being done in this space without us being consulted with. We have some of the leading experts in the world and across research and development and commercialization. So I think, yes, we are always curious and we look into whatever is going on. And if we believe in it, we will fully lean in.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Excellent. And touching upon some of that, what should -- what's your expectations of some of the data that we should see next year for things like sleep apnea, heart failure and NASH? Perhaps can you talk about your expectations for when this data comes out? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA I think first and foremost, sleep apnea, I think we have been very encouraged with the data we have seen in smaller scale so far. And we know that there is a huge need, where there's no other pharmacological treatment approved. And we're talking about a significant need, 80 million Americans. And of course, we have a strong belief that this is going to read out positively. But I think that's pretty much what I can say today, but we are really, really excited about the readout next year in sleep apnea, and the same goes for HFpEF. And I think we have reasons to believe that those are going to read out well. When it comes to CKD and NASH, those are only in Phase II. And I think we haven't declared yet if we are going to proceed to Phase III and indications for those, but we want to bring the science forward in the GIP/GLP space for both NASH and CKD and at the time of readouts. But those will inform our decisions for further development with tirzepatide or potentially with any of the other assets we have in our pipeline.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : And you touched upon your readout in 2025. What are the main differences between the 2 studies here, so as a risk reading across this data to your clinical study? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Well, in terms of the major differences between SELECT and the Novo trial, I have to say I can't respond to that one today. But I think particularly the mobility and mortality study includes significantly more endpoints, and I think it's a slightly longer study as well. So I think the mobility/mortality study is going to be really breakthrough data in this space.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : So pricing pressure within GLP-1, is that still sort of the kind of low single-digit to mid-single-digit space? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA No, we haven't announced specific discount rates by product. I think we have stated as a company also in the most recent earnings call that we are expecting a mid-single-digit pricing headwind over the coming years, and that's for the entirety of the portfolio. But I think this is a space where you will see a lot of competition. So I think you have seen more or less every major pharmaceutical company is announcing an appetite to move into chronic weight management. I think for us, it's just coming back to out-innovating ourselves. That's why we have a very rich pipeline, and we will continue those efforts to constantly raise the bar and being able to target treatments even better for patients. And we know that when you bring superior profiles to the market, you have a better position when you negotiate for access as well.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Can I talk a bit about the multidose pen? I mean one of the things that initially set tirzepatide apart from the competition was the administration device and excellence. Can you talk about how this multidose pen kind of differentiates perhaps, needle size, what makes it convenient? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA I think first and foremost, we still believe that the auto-injector is a premium device. So I think the auto-injector is what we are foreseeing to continue to be the presentation in the U.S. market. However, we always need to have some flexibility coming back to the discussion we had in terms of supply uncertainties and the competitive landscape, et cetera. But the auto-injector is a premium device, and that's how we view it as well. But taking into account the challenges we faced in 2023, we have had experiences in -- with other medicines with a multidose device, and that has been very well received in the marketplace. And that's why we had an opportunity to breach the markets outside the U.S. with a multidose device, which is really good, and it's a good breaching from the vials. I think the vials are probably the ones that we don't foresee remaining on the marketplace for a very long time. But taking into account the huge demand across the globe, that was a good entry point in several markets outside of the U.S. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2023 / 8:00PM, LLY.N - Eli Lilly and Co at UBS BioPharma Conference

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Yes, it's interesting you talk about the access side of things because when you see $100 billion market for GLP-1 being thrown around, I mean, how realistic is that from: one, the capacity standpoint; and two, an access standpoint? And do you think, and we discussed very briefly there with orals, do you need to have orals there so you can have $100 billion market because of the capacity sizing? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Yes. I think there are several aspects to take into account here as well. If you think of the entire global need for obesity medications, I think even if you combine the capacity of us and Novo Nordisk in a few years from now, that will probably not be sufficient to satisfy close to 1 billion people across the globe. So I think that's one important aspect of it. B, I think, yes, we have stated very often that we will need to have an effective oral, and I think that's what excites us with orforglipron, because orforglipron actually has demonstrated in Phase II a weight loss in parity with the most effective GIP, not comparable to tirzepatide, but the most effective GIP and with no restrictions in terms of food and water intake. So I think that represents a tremendous opportunity for us as well. So yes, I think you need more options here in this space to really meet the entire needs, but I think it's going to be a gradual ramp up here as well. The last component would be just if you look at markets outside of the U.S., currently, most of those are single-payer markets. And in most those markets, in a majority of those, obesity is not yet reimbursed and probably driven by the prior experiences in the obesity space, medications that REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2023 / 8:00PM, LLY.N - Eli Lilly and Co at UBS BioPharma Conference were launched 10 years ago, in best case, generated a weight loss of 5% to 6%, some significant side effects. When those one single payer starts seeing outcome data, seeing the benefit from a cardiovascular perspective, from a hepatic perspective, from a type 2 diabetes perspective, I think there are quite a few of those single payers that actually will change their mind as well. And we will see reimbursement of chronic weight management medicines outside of the U.S. to a significantly higher extent than we do today.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : And you have a recent approval with miri or -- oops, I think how do you pronounce that, is that Omvoh? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Yes.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Excellent. And is there much infrastructure that's being put in here? Because like you say, this is a novel or a different area than you're used to. Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Well, yes. When we are moving into a new disease area, we need to new some -- build some new capabilities and bring in some new expertise. But I think this -- that was something that we started pretty much by the investments in IBD. And we announced, I think it's 3 years ago, that with mirikizumab, we also have the data for psoriasis. But we said we don't see a huge unmet need in that space, but we have much more to do in IBD. So we actually, we started those investments 3 years ago. And of course, we have a separate sales force for gastroenterology. But we also have a strong infrastructure base foundation in immunology that we capitalize on across the different disease areas.

Question: Trung Chuong Huynh - UBS Investment Bank, Research Division - Analyst : Okay, excellent. I can see the clock is counting down for a minute. So I have one last question left for you. As you exit your role in immunology, what's the main challenges that you leave behind for Dan? Patrik Jonsson - Eli Lilly and Company - EVP, Chief Customer Officer, President of Lilly Diabetes & Obesity and President Lilly USA Well, I want to make sure I keep him busy for a few years. So I think for Dan, probably different levels. The first one is not unique to immunology, but IRA is impacting immunology development as well, particularly with the orals. So I think it's just how we are lining up the different unmet needs by molecule. I think that's a big one and a very important one. The second one, specifically immunology, are the rebate walls. I think immunology has been very particular in that regard. I see some light at the end of the tunnel. And I think the launch of a biosimilar will partly change the landscape here. And I also think our presence in immunology will make a difference because we will have a nice portfolio, the only ones with both an IL-13, -17, -23 and a JAK inhibitor hopefully by the end of 2024. And lastly would be just all hands on deck with the CRL, continue the efforts to solve this as soon as possible for lebrikizumab. But I think also are at a macro and a more detailed level, what I believe we've done on top of everything that needs to be done on a daily basis, to remain extremely competitive in the marketplace and continue to raise the bar in terms of how we best serve patients with immune-mediated diseases.