Key highlights from Eli Lilly and Company (LLY) Q2 2023 Earnings Concall
Q&A Highlights:
- [00:36:01] Louise Chen from Kantor asked about the implications of the NOVO Select Study for the obesity-overweight drug industry and reimbursement. Michael Mason said that the Select Trial results are a major win for the anti-obesity medication class and should help to improve access to these medications for people living with obesity.
- [00:38:47] Jeff Meacham at Bank of America asked if people are taking Mounjaro for obesity stopping the medication after they reach a weight loss plateau and are there differences in persistent rates between people taking Mounjaro for diabetes and obesity. Michael Mason said Mounjaro has shown good persistency rates in type 2 diabetes patients, even better than Trulicity, which has historically had the best compliance in the diabetes market. LLY is confident that Mounjaro will also be well-received by people living with chronic weight management.
- [00:40:34] Tim Anderson with Wolfe Research asked if Novo, being the only drug with a proven cardiovascular benefit, could have a commercial advantage in the marketplace and if this could be to LLY’s detriment. Michael Mason believes that positive results benefit the entire class of drugs rather than any individual product, and that payers opt into the class, not a particular drug, so it won’t give any one drug a differential impact within payer access.
- [00:41:39] Kerry Holford from Berenberg enquired what has changed in the quarter to prompt the company to raise its opex outlook versus its previous forecast and what are the key drivers of the higher operating costs. Anat Ashkenazi CFO replied that LLY is raising its R&D and SG&A guidance for 2023 due to increased investment in upcoming launches, new Phase 3 studies, early stage pipeline success, and enrollment rates for Phase 3 programs.
- [00:43:53] Chris Schott from J.P. Morgan asked about asks about the expectations for Mounjaro volumes and ASP in 3Q and 4Q and if the IQVIA scripts reflect the change to the patient assistance program. Michael Mason said Lilly expects to see tight supply and some spot outages of Mounjaro through the end of the year, but the company is working to increase manufacturing capacity to address the demand.
- [00:46:26] Terence Flynn from Morgan Stanley asks for the company’s perspective on the potential for a single or split brand for Mounjaro ahead of the potential FDA action on the obesity indication. Michael Mason replied that LLY is evaluating all alternatives and will announce its decision at approval.
- [00:47:17] Colin Bristow from UBS enquired how likely it is that supply will cap sales potential in 2024 and if the decision to move forward with vials and multi-dose pens is related to delays at the RTP site. Anat Ashkenazi CFO said that LLY has a comprehensive manufacturing agenda to increase capacity for Mounjaro and other products in 2024, including RTP, internal capacity elsewhere, CMOs, and additional presentations.
- [00:50:52] Steve Scala from Cowen queried how the mace reduction powering in Surmount MMO should be considered given the select results, and whether a 20% mace reduction would be considered a win or disappointing for LLY. Daniel Skovronsky replied that LLY expects tirzepatide to show a large benefit in the Surmount MMO study, possibly even larger than the benefit seen in the NOVO Select Trial.
- [00:58:10] Chris Shibutani of Goldman Sachs asked about the dynamics between Trulicity and Mounjaro, specifically if there is any switching between the two drugs and how the supply and revenue dynamics are being affected. Michael Mason answered that LLY has seen no trend breaks in the conversion of Trulicity patients to Mounjaro. About 13-14% of patients coming on to Mounjaro come on from trulicity. Lilly is pleased with the growth of its LLY Incrantin franchise and is excited to grow it further in the quarters to come.
- [01:06:18] Andrew Baum from Citi asked how the launch of Lebrikizumab is being considered, given the relatively little clinical differentiation from Dupixent and the need to displace it, and if a large bridge program will be launched to secure formulary access and tap into the high deductible patient population. Patrick repilied that Lilly is confident that lebrikizumab will be a successful first-line biologic for atopic dermatitis, with less frequent dosing than Dupixent and a strong safety profile. The company is working with payers to ensure rapid access to lebrikizumab and will focus on value and differentiation in the marketplace.
- [01:11:22] Trung Huynh from Credit Suisse enquired how the Part D redesign will impact LLY’s earnings in the next few years, given the mix of products in its portfolio at various different price points. Anat Ashkenazi CFO said The Part D redesign will have a mixed impact on LLY’s earnings, with some products benefiting and others being hurt. The more significant impact will come from the negotiation process, which could result in significant price discounts for some of LLY’s drugs.