Eli Lilly and Co Q3 2024 Earnings Call Transcript

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

Question: Christopher Schott - JPMorgan Chase & Co - Analyst : Just to kick off the questions. Can you just help bridge a bit from the 3Q sales we just saw reported to the 4Q implied results? It's obviously a substantial step-up in sales. It sounds like part of this is you're now accelerating demand generation efforts, given the improved capacity. But I was just hoping to get a little bit more color on exactly what those efforts are and how quickly you expect those programs can translate to an acceleration in prescriptions.

Question: Geoffrey Meacham - Citigroup Inc. - Analyst : I guess related to that, I just want to dig into the 3Q volatility. I mean, Dave, you mentioned the script demand sequentially. I guess, so given that, why would you see such a big drawdown this quarter? I guess investors are trying to figure out if the sequential trends are perhaps a leading indicator of a moderation demand or if it's just the lumpiness of the rollout in access?

Question: Evan Seigerman - BMO Capital Markets Equity Research - Analyst : Joe, congrats on your new job. I want to touch on compounding. Given the headlines, do you believe that compounded drugs are impacting demand? And secondarily, how do you frame kind of the FDA's waffling on the shortage list as it relates to compounding? It seems that this has been a hot issue so I'd love your perspective.

Question: Seamus Fernandez - Guggenheim Securities - Analyst : My question is actually on how you feel the compounding situation could be resolved by the availability of an oral small molecule that can be provided at substantial scale. It seems like this is the easiest and most straightforward answer to the compounding crisis. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 2:00PM, LLY.N - Q3 2024 Eli Lilly and Co Earnings Call Once that occurs, does it make sense with that availability regardless of products, that the agency would move to resolve the crisis? Or is this a product-by-product situation such that if Novo can't get their house in order in that context, that we'll end up with having this compounding issue just draw out over time?

Question: Mohit Bansal - Wells Fargo Securities - Analyst : Maybe if I can ask the demand question and supply question differently. So now you will be starting some demand generation activities in the latter part of the year. How are you thinking about the access side of it? Do you think that there is some convergence between access, demand generation and supply into 2025? Because we are hearing that some of the payers are restricting it even more now. So I would love to understand your thoughts on the access side, given that you have done the negotiations at this point.

Question: Terence Flynn - Morgan Stanley - Analyst : I was just wondering, I know you've already framed out kind of where supply would be for the second half of this year. Again, as we look out to 2025, can you give us an early read on how your supply capacity efforts have been progressing and how we should think about the amount of new capacity, especially on the auto-injector side that you can bring on for 2025?

Question: Umer Raffat - Evercore ISI Institutional Equities - Analyst : Maybe just to spend 1 more minute on the inventory dynamic in the quarter. I'm trying to think out loud. Could the launch of cash pay a single vial option via LillyDirect have impacted channels interest in filling out their inventory given how the launch is going? And/or were there any changes in your incentives or fees to the distributors that could have impacted it?

Question: Steve Scala - TD Cowen - Analyst : For a product with a seemingly unlimited market opportunity, what appears to be great market awareness and persistent supply shortages, DTC for Zepbound really shouldn't be necessary, particularly now. DTC, in my experience usually signals concern about patient volumes, awareness, or competition. So the question is if DTC were not instituted, what would be the trajectory of Zepbound over the next, say, 12 months? Would consensus be achieved? And if competition is the concern, are you getting ahead of cagrisema data due out soon?

Question: David Risinger - Leerink Partners - Analyst : Yes. A number of my questions have been asked. So with respect to peresolimab, I'm hoping that you could just provide a little bit more color. You mentioned that it was dropped due to the benefit risk ratio. But did you see any specific safety problems? And what is your view of the opportunity to develop another PD-1 agonist for I&I disease in the future?

Question: Kerry Holford - Joh. Berenberg, Gossler & Co. KG - Analyst : Kerry Holford,Berenberg. My question actually on Verzenio, please. So your competitor in this space, Novartis Kisqali recently received a broad approval in early breast cancer, which obviously includes the high-risk patient group. So I would just be interested to hear you speak about your expectations for market share in that space, how you protect your position with Verzenio in the high-risk setting. And then also if you can talk to the impact of IRA that you expect on that brand as you move through Part D reform next year and whether or not you expect the drug to be on the negotiation list for 2027.

Question: Chris Shibutani - Goldman Sachs Group, Inc. - Analyst : Lucas, welcome to these calls. Just curious, there's a little bit of a tension point between of what the operating margins, and I know Lilly uses a very unique and specific precise calculus for that with most people longer term forecasting at least amongst the sell side, approaching high 40s percent. And I believe some of your commentary suggested that perhaps that would not be where you would aim for. Can you just maybe clarify for us your view, your take on where you think the operating margin trajectory would go under your purview?

Question: Trung Huynh - UBS Investment Bank - Analyst : So in your PR, you note favorable changes to estimates for rebates and discounts for Mounjaro. On our numbers, if you ex-out mid-single-digit destock, it does look like price has gone up for the year for that product. Also Zepbound pricing looks pretty stable. So perhaps can you just talk about what you see in pricing evolution for the rest of the year but also next year as you'll have potentially sleep apnea and HFPEF on the label, which may mean that you go into more government settings.

Question: Courtney Breen - Sanford C. Bernstein & Co. - Analyst : Coming back to obesity and perhaps looking a little longer term, you spoke to the ATTAIN-MAINTAIN trial off the back of SURMOUNT-5. I note that for orforglipron, this is placebo-controlled. And I just wanted to kind of get your thoughts on kind of that being the comparator. For us, kind of that being the comparator suggests that this is about kind of duration of treatment, expansion to patients, which would really be an expansion of the total market rather than kind of displacement of necessarily another obesity product. Can you just talk a little bit about orforglipron and kind of the future of how this could expand the market?