Lilly(LLY) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew 38% compared to Q2 2024, driven by key products including Evglis, Jaypirca, Kisunla, Mounjaro, Omvoh, Verzenio, and Zepbound [9][19] - Gross margin as a percentage of revenue was 85% in Q2, an increase of three percentage points year-over-year, primarily due to improved production costs and a favorable product mix [19] - Earnings per share increased 61% to $6.31, including a negative impact of $0.14 from acquired IPR&D charges [21] Business Line Data and Key Metrics Changes - Mounjaro posted $5.2 billion in global sales and became the U.S. market leader in total prescriptions within the type 2 diabetes incretin market [28][29] - Zepbound contributed significantly to sales, with over 1 million TRX in Q2, and accounted for approximately 20% of total U.S. prescriptions [32][86] - Eplis showed strong performance in atopic dermatitis, with total prescriptions nearly doubling since Q1 [23] Market Data and Key Metrics Changes - U.S. revenue increased 38%, driven by strong volume growth of Zepbound and Mounjaro, partially offset by an 8% decline in price [22] - Revenue in Europe grew 77% in constant currency, reflecting strong uptake of Mounjaro [22] - Japan revenue grew 7% in constant currency, driven by Mounjaro and Eplis, while China saw a 19% increase in revenue [22] Company Strategy and Development Direction - The company aims to submit orforglipron for regulatory approval globally to address the obesity challenge [8] - Continued investment in R&D is emphasized, with a focus on expanding the pipeline and increasing manufacturing capacity [11][14] - The company is committed to addressing drug pricing reform while ensuring patient access to medications [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance and growth outlook for the company, raising revenue and earnings guidance for 2025 [12][35] - The management highlighted the importance of addressing patient safety concerns related to compounding and emphasized the need for regulatory action [72] - The company anticipates continued growth in the incretin market, with a focus on maintaining pricing strategies that reflect the value of their products [75] Other Important Information - The company announced the acquisition of SiteOne Therapeutics and Verve Therapeutics, expanding its portfolio in pain management and genetic medicines [14][54] - Manufacturing capacity has increased significantly, producing more than 1.6 times the amount of saleable incretin doses compared to 2024 [14][37] Q&A Session Summary Question: Context for orforglipron's weight loss profile compared to Wegovy - Management highlighted the efficacy of orforglipron, noting significant weight loss and improvements in key biomarkers, emphasizing its potential as a convenient oral option [61][66] Question: Pricing environment and compounding concerns - Management discussed the importance of addressing patient safety regarding compounding and indicated expectations for single-digit net pricing erosion while maintaining value [69][75] Question: Discontinuation rates and GI adverse events for orforglipron - Management confirmed that GI side effects were consistent with GLP-1 agonists, typically decreasing over time, with no significant differences noted [78][80] Question: Impact of Canadian generics on the market - Management indicated that the U.S. market remains strong, with continued growth in prescriptions despite potential competition from generics [83][86] Question: Evolution of U.S. employer coverage for anti-obesity medicines - Management confirmed that employer coverage has been steady, with ongoing efforts to improve access and simplify benefit designs [90][94] Question: Expectations for ATTAIN-two Phase III data - Management expressed confidence in the upcoming ATTAIN-two results, anticipating similar positive outcomes as seen in previous trials [97][100] Question: Differences in side effect profiles between studies - Management noted that side effect profiles can vary between populations, but overall confidence in the GLP-1 monotherapy profile remains high [103][106] Question: Gender split in the orforglipron study - Management reported a balanced gender split in the study population, with no notable differences impacting the results [111]