Eli Lilly and Company Q2 2025 Earnings Report

Eli Lilly and Company EPS Results

• Actual EPS: $6.31
• Consensus EPS: $5.59
• Beat/Miss: Beat by +$0.72
• One Year Ago EPS: $3.92

Eli Lilly and Company Revenue Results

• Actual Revenue: $15.56 billion
• Expected Revenue: $14.40 billion
• Beat/Miss: Beat by +$1.16 billion
• YoY Revenue Growth: +37.60%

Eli Lilly and Company Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

Eli Lilly and Company (NYSE:LLY) discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity. It also provides oncology products, including Alimta, Cyramza, Erbitux, Jaypirca, Retevmo, Tyvyt, and Verzenio. In addition, the company offers Olumiant for rheumatoid arthritis, atopic dermatitis, severe alopecia areata, and COVID-19; Taltz for plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondylarthritis; Omvoh for ulcerative colitis; Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain; Ebglyss for severe atopic dermatitis; and Emgality for migraine prevention and episodic cluster headache. Further, it provides Cialis for erectile dysfunction and benign prostatic hyperplasia; and Forteo for osteoporosis. It has collaborations with Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; F. Hoffmann-La Roche Ltd and Genentech, Inc.; Biologics, Inc., AbCellera Biologics Inc.; and Chugai Pharmaceutical Co., Ltd. The company was founded in 1876 and is headquartered in Indianapolis, Indiana.

Eli Lilly and Company Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Lilly’s ATTAIN-one trial showed patients on the highest oforgopron dose lost 12.4% of body weight (over 27 lbs) with a safety profile in line with injectable GLP-1s, positioning a once-daily oral obesity treatment.
• Positive Sentiment: Q2 revenue grew 38% year-over-year, driven by key launches (Evglis, Jaypirca, Kisunla, Mounjaro, Omvoh, Verzenio, Zepbound), prompting an upward revision of 2025 revenue and EPS guidance.
• Positive Sentiment: Mounjaro became the U.S. market leader in type 2 diabetes incretin prescriptions and Zepbound gained share in both covered and cash-pay channels, marking the fourth consecutive quarter of incretin market share gains.
• Positive Sentiment: The pipeline advanced with positive Phase III results in the SURPASS CVOT (tirzepatide reduced MACE-3 events by 8% and all-cause mortality by 16% vs dulaglutide) and the BRUIN CLL-314 pirtobrutinib trial, supporting cardiovascular and oncology expansion.
• Negative Sentiment: CVS’s decision to exclude Zepbound from its template formulary is expected to create a headwind for new prescriptions in Q3, underscoring payer challenges and broader pricing reform risks in the U.S.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q2 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will be conducting a question and answer session and instructions will be given at that time. I would now like to turn the conference over to your host, Mike Senior Vice President of Investor Relations. Please go ahead.

[Michael Czapar, SVP - IR at Eli Lilly]

Good morning. Thank you for joining us for Eni Lilly and Company's Q2 twenty twenty five earnings call. I'm Mike Saffar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO Lucas Mondarce, Chief Financial Officer Doctor. Dan Skorowsky, Chief Scientific Officer and President of Lilly Immunology Ann White, President of Lilly Neuroscience Ilya Yufa, President of Lilly USA and Global Customer Capabilities Jake Van Arden, President of Lilly Oncology Patrick Janssen, President of Lilly International and Ken Custer, newly appointed President of Lilly Cardiometabolic Health.

[Michael Czapar, SVP - IR at Eli Lilly]

We're also joined by Mark Heumann, Susan Hedgeland and Wyatt Wong of the Investor Relations team. During this call, we anticipate making projections and forward looking statements based on our current expectations. Our actual results may differ materially due to several factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10 ks and subsequent filings with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community.

[Michael Czapar, SVP - IR at Eli Lilly]

It is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note our commentary will focus on our non GAAP financial measures. Now, I'll turn the call over to Dave.

[David Ricks, Chair and CEO at Eli Lilly]

Thanks, Mike. Q2 was a strong quarter. We delivered robust revenue growth, shared top line clinical data from multiple Phase III programs and invested in several initiatives that will support our future growth. Today, we shared positive top line data from the ATTAIN-one or Forgopron trial in people with obesity. In ATTAIN-one, patients taking the highest dose of Orforgopron lost more than 27 pounds, or 12.4% of their body weight.

[David Ricks, Chair and CEO at Eli Lilly]

In addition, the safety and tolerability in ATAIN-one was consistent with the injectable GLP-one class. Orforglipron also met all secondary endpoints in this study, improving key markers of metabolic health, such as blood pressure, cholesterol, and inflammation. This is the second positive phase three trial for orforglipron we reported this year, and we're encouraged by these results. Our goal from the beginning was to create a medicine that has a clinical profile consistent with approved GLP-one, while offering the convenience of a once daily pill and the production flexibility of small molecule chemistry to meet global demand. We believe this medicine has the potential to make a significant impact on human health, and we will now work with urgency to submit oforgopron around the world to meet the global challenge of obesity.

[David Ricks, Chair and CEO at Eli Lilly]

On slide six, we list key Q2 financial metrics and highlight progress related to our strategic deliverables. Revenue grew 38% compared to Q2 twenty twenty four, driven by our key products. These include Evglis, Jaypirca, Kisunla, Mounjaro, Omvoh, Verzenio and Zepbound. In The U. S, we continue the robust uptake of Zepbound and Mounjaro, and Lilly gained market share in the incretin analog class for the fourth quarter in a row.

[David Ricks, Chair and CEO at Eli Lilly]

Mounjaro also recently became the market leader in The U. S. In total prescriptions within the type two diabetes incretin market. Outside The U. S, we continue to launch Mounjaro in new countries.

[David Ricks, Chair and CEO at Eli Lilly]

These include Mexico and Brazil most recently. We have now launched Mounjaro in most major markets. Q2 was also a quarter of continued investment for Lilly. In addition to increasing commercial activities to support our newest medicines, we started multiple new clinical programs. While the company is experiencing rapid revenue growth, we're also increasing our R and D investment, as early phase program data continues to impress us, and to support our future growth of the company.

[David Ricks, Chair and CEO at Eli Lilly]

Our financial performance in the 2025 was strong. And as a result, we raised our revenue and earnings per share guidance. Lucas will cover this in more detail during the financial update. In addition to the results from ATTAIN-one, we achieved several key milestones since our last earnings call. These include the U.

[David Ricks, Chair and CEO at Eli Lilly]

S. FDA approval of a new dosing schedule for Kisumla, positive European CHMP opinion for Kisunla. Announced positive results in the SURPASS CVOT Phase three trial for tirzepatide in people with type two diabetes and heart disease. We announced positive results in the BREWIN CLL-three 14 Phase three trial of pirtobrutinib in CLL and SLL. And we launched the two highest doses of Zepbound in vials in The United States.

[David Ricks, Chair and CEO at Eli Lilly]

We announced and closed the acquisition of SiteOne Therapeutics, which expands Lilly's pain portfolio and adds a clinical stage non opioid pain program to our mix. And Verve Therapeutics, which adds new genetic medicines for cardiovascular disease with potential to only be administered once in a person's lifetime. We made progress in Q2 and throughout the 2025 to bring new manufacturing capacity online. We produced more than 1.6 times the amount of saleable incretive doses during the 2025 when compared to the 2024. This includes a significant step up in capacity from our recently constructed facility in Research Triangle Park, North Carolina.

[David Ricks, Chair and CEO at Eli Lilly]

We will continue to bring more capacity online in the 2025 and expect our production capabilities to increase further. We also plan to announce the location of two of our new U. S. Manufacturing facilities later this quarter. During the quarter, we distributed $1,300,000,000 in dividends and executed approximately $700,000,000 in share repurchases.

[David Ricks, Chair and CEO at Eli Lilly]

Before I turn the call over to Lucas, I'd like to offer some perspective on the drug pricing reform discussion that's going on. While we support the administration's position that medical research costs need to be shared more equitably across developed countries, it's also true that The US pharmaceutical market has significant defects, which shift costs to consumers and increase red tape. These problems also require urgent reform and make apples to apples comparisons of ex factory pricing inaccurate and misleading. At Lilly, we've already implemented several initiatives which directly lower patient costs for our most commonly used medicines. We operate a direct to consumer model at scale through Lilly Direct, which provides more affordable access to Lilly medicines.

[David Ricks, Chair and CEO at Eli Lilly]

This includes our leading weight loss medications that found at a discount of more than 50% off the list price. We also led in resolving insulin pricing issues in our country by reducing list prices by 70% and ensuring broad access to $35 monthly patient costs, including for Medicare. Negotiated prices in Europe come with broad access, low patient co pays, and without administrative hurdles like prior authorizations. There are also no intermediaries that distort prices, and hospitals do not seek profit by selling medicines and marking them up. If we import foreign price controls and insert them into a U.

[David Ricks, Chair and CEO at Eli Lilly]

S. System that isn't built to function for patients, we risk embracing the worst of two worlds, the low productivity and output of Europe's biopharma sector, with the high out of pocket and distorted prices of The US insurance market. Both today's patients and the future of new cures and treatments will suffer, along with The United States' competitiveness. Of course, we will engage and are committed to working constructively with the administration to find solutions that both benefit patients while preserving the hope for tomorrow's cures and the scientific base that has made America the envy of all in global pharmaceutical innovation. Now I'll turn the call over to Lucas to review our Q2 results.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Thanks, Dave. As shown on slide seven, Q2 was another strong quarter of financial performance. Revenue grew 38% compared to Q2 twenty twenty four, driven by our key products. Gross margin as a percentage of revenue was 85% in Q2, an increase of three percentage points versus the same quarter last year. The increase in gross margin was primarily driven by improved cost of production and favorable product mix, which were partially offset by lower realized prices.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Marketing, selling and administrative expenses increased by 30% as we continue to increase investment to support our newest launches across therapeutic areas and geographies. R and D expenses increased 23%, driven by higher expenses for late stage assets and additional investment in early stage research. Our non GAAP performance margin, which we define as gross margin less R and D, marketing, selling and administrative expenses as a percentage of revenue was 45.9%. Performance margin increased by more than six percentage points from Q2 twenty twenty four, driven by revenue growth. Our Q2 effective tax rate was 16.5%, consistent with Q2 twenty twenty four.

[Lucas Montarce, EVP & CFO at Eli Lilly]

At the bottom line, earnings per share increased 61% to $6.31 including of a negative impact of $0.14 from acquired IPR and D charges. This compares to March in Q2 twenty twenty four, which also include $0.14 of acquired IPR and D charges. On Slide eight, we quantify the effect of price, rate and volume on revenue growth. U. S.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Revenue increased 38% in Q2, driven by strong volume growth of Zepan and Mojaro, partially offset by an 8% decline in price. In Europe, revenue grew 77% in constant currency, reflecting the strong uptake of Mounjaro. Japan revenue grew 7% in constant currency, driven by Mounjaro and Eplis. In China, revenue increased 19% in constant currency driven by volume growth of Mounjaro. Revenue in the rest of the world decreased by 1% in constant currency driven primarily by stocking in the base period related to Mounjaro launches in new markets.

[Lucas Montarce, EVP & CFO at Eli Lilly]

This impact was largely offset by volume growth of Mounjaro and Verzenio this year. Slide nine provides an update of the performance of our key products. Beginning with immunology, Eplis continues to perform well in atopic dermatitis. New patient starts and revenue trends are strong and total prescriptions have nearly doubled since Q1. We also made progress securing access and Evolus is now covered by all three of the largest pharmacy benefit managers that represent 90% of people with commercial insurance.

[Lucas Montarce, EVP & CFO at Eli Lilly]

For Ombo, we are one full quarter into the launch in Crohn's disease and are making progress in a competitive market. The new citrate free formulation is available in most major markets and we are seeing positive trends in new patient starts in The U. S, Germany, Japan and other international markets. Moving to oncology, physician feedback on JYPRICA continued to be very positive. While still only approving later lines of CLL and MCL, we have seen a strong uptake within the label population and encouraging trends regarding time on therapy.

[Lucas Montarce, EVP & CFO at Eli Lilly]

We continue to generate additional data in Phase III trials that we believe will support an expanded label and use in early settings. We recently announced positive results of BERUIN three point four in CLL and SCLL is another positive step forward those goals. Verzenio global sales grew 12% in Q2, driven by volume growth. Verzenio continued to be the NBRx and TRx market leader in The U. S.

[Lucas Montarce, EVP & CFO at Eli Lilly]

And standard of care in high risk early breast cancer. U. S. Prescriptions grew by 4% in Q2 compared to Q2 twenty twenty four, and international volume grew by 18%. Within neuroscience, Kisanda is continuing a steady launch trajectory, and we are making significant progress in driving healthcare system readiness and adoption.

[Lucas Montarce, EVP & CFO at Eli Lilly]

In The U. S, we are seeing a strong diagnostic growth driven by PET and the acceleration of blood biomarker tests. This momentum is leading to more people being diagnosed and accessing treatment. Over 1,500 physicians and 150 of the top healthcare organizations have started patients on Keysondra. Outside The U.

[Lucas Montarce, EVP & CFO at Eli Lilly]

S, efforts are progressing as well, with approval in 13 countries. In Europe, we anticipate approval and launch later this year, following the recent CHMP positive opinion. Finally, moving to cardiometabolic health, Moncharo and Zepan both delivered impressive performance. Moncharo posted $5,200,000,000 of global sales and exited the quarter with more than fifty percent of new type two diabetes increasing prescriptions in The U. S.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Mounjaro also became The U. S. Market leader in total type two diabetes in creatine prescriptions in July and has gained eight percentage points in total prescription share of market during the first seven months of 2025. With the recently announced positive results from SURPARS CVOT, we look forward to submitting this data to global regulators to support a labeled cardiovascular indication. Outside The U.

[Lucas Montarce, EVP & CFO at Eli Lilly]

S, tirzepedau is now launched in most major markets. As a reminder, Mounjaro is marketed as a single brand for both chronic weight management and type two diabetes in all international markets except Canada and Japan. While the initial reception of recent launches in Mexico, Brazil, China and India has been excellent, the commercial activities have been measured to ensure demand doesn't exceed supply and that patients and physicians have a good experience. SEPAN performance was strong in Q2, contributing $3,400,000,000 of sales. SEPAN continues to be The U.

[Lucas Montarce, EVP & CFO at Eli Lilly]

S. Market leader in the branded anti obesity market, with two thirds of total patients taking SEPAN. We recently launched the twelve point five and fifteen milligram single use vials in Libidirect. All doses of Zeppelin are not available in the vial presentation. While we work to secure broader reimbursement of anti obesity medicines, we are encouraged by the uptake of Zeppelin in vials.

[Lucas Montarce, EVP & CFO at Eli Lilly]

The cash pay vials were approximately 20% of total U. S. Zeppelin prescriptions and over 35% of new prescriptions in Q2. As a reminder, effective July 1, the CVS Pharmacy Benefit Manager began excluding SEPAN as an offering for patients on its template formulary insurance plans. This has caused significant disruption to patients, and we strongly disagree with the decision to restrict access to medicines for patients.

[Lucas Montarce, EVP & CFO at Eli Lilly]

As demonstrated in randomized clinical trials, incretin medicines for chronic weight management are not all the same. While it's still early, we have seen this decision negatively impact Zepbound prescriptions during July and expect it to be a headwind to the rate of volume growth in Q3. We remain confident in the long term growth outlook for SEBON as the most widely used incretin therapy in the branded anti obesity market. On Slide 10, we provide a view on The U. S.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Incretin analog market, which include prescription for both type two diabetes and chronic weight management. Q2 was another quarter of steady market growth as total prescription grew by 41% compared to Q2 twenty twenty four. Lilly performance was again strong with share of market reaching above 57%, an increase of 3.8 percentage points compared to Q1 twenty twenty five. While market growth continued to be robust, overall penetration into the addressable population is still low and we believe significantly more patients can benefit from incretin therapy. On slide 11, we provide an update on capital allocation.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Moving to slide 12 is our updated expectation for our 2025 financial performance. We are encouraged by the underlying performance we saw across the business in the first half of the year. We are increasing the bottom and the top end of the revenue range, as well as our expectation for performance margins and earnings per share. We now anticipate our revenue will be between 60,000,000,000 and $62,000,000,000 This range reflects the strong performance and a tailwind from foreign exchange rates. We will continue to invest to support our newest launches and to develop new medicines.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Given our updated expectations for revenue growth, we now expect non GAAP performance margin to be between 4345.5% as a percentage of revenue. The potential effect of tariffs remains dynamic, and we will continue to update our estimate as the situation changes. We expect the 2025 impact of currently announced tariffs to be modest, and this has been factored into our 2025 guidance range. At the bottom line, we have increased our outlook for non GAAP earnings per share and expect EPS of $21.75 to $23 As Dave mentioned earlier, we exceeded our increasing sellable doses production in the first half of the year and expect to bring more capacity online during the 2025. We expect to produce at least 1.8 times the number of sellable incretin doses in the 2025 compared to the 2024.

[Lucas Montarce, EVP & CFO at Eli Lilly]

Now I will turn the call over to Dan to highlight our progress on R and D.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Thanks, Lucas. We've made quite a bit of progress since our last earnings call. During just the past two weeks, we shared three Phase III readouts from some of our most important molecules. I'll start with these. Last week, we announced results from the tirzepatide SURPASS CVOT trial, where tirzepatide demonstrated cardiovascular protection in a landmark head to head trial, which was the first ever cardiovascular outcomes trial comparing two incretin therapies in people with type two diabetes and cardiovascular disease.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

It included over 13,000 participants across 30 countries, and it is the largest and longest study of tirzepatide to date. As shown on slide 13, tirzepatide achieved the primary objective of the study, demonstrating noninferiority compared to Trulicity with an eight percent lower rate of MACE-three events. Tirzepatide showed consistent results across all three components of the MACE-three composite endpoint. We were particularly impressed to see the rate of all cause mortality was sixteen percent lower on tirzepatide versus dulaglutide. Because this trial did not include a placebo arm, we conducted a pre specified indirect comparison analysis of matched patient level data from the REWIND and SURPASS CBOT studies.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

This analysis showed that tirzepatide reduced the risk of MACE three by twenty eight percent and reduced all cause mortality by thirty nine percent compared to putative placebo. We're very pleased with these results, which show that in addition to the well established best in class weight loss and A1C control, tirzepatide now also provides a cardioprotective benefit and may provide more wide reaching health improvements, including greater kidney protection and a reduced overall risk of death. We look forward to detailed results being presented at the EASD meeting in September and published in a peer reviewed journal. We plan to submit these data to global regulators by the end of this year. The SURPASS CVOT results reinforce our enthusiasm for Surmount MMO, which enrolled over fifteen thousand participants with obesity, and will assess the impact of tirzepatide on reducing morbidity and mortality.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

This is an event based study, and the rate of accrual will dictate the timing of the readout. While SURPASS CBOT and SURMUNT MMO are likely the largest randomized trials we'll conduct with tirzepatide, we'll still explore additional indications for this molecule. And we're excited to have started a new phase three trial in people with type one diabetes. Moving on to orforglipron. As Dave mentioned, today we're excited to announce top line results from our second orforglipron phase three trial, ATTAIN-one.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

This trial included people with obesity but without type two diabetes. As shown on slide 14, patients in a TAIN one lost on average between 7.812.4% of their body weight after seventy two weeks, depending on the dose. At the highest dose, the average participant on orforglipron lost more than 27 pounds. And approximately forty percent of people on this dose lost more than 15% of their body weight. We also saw notable improvements on important drivers of cardiovascular risk, including non HDL cholesterol, triglycerides, and blood pressure.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Moving to slide 15, we are very pleased with the safety profile of orforglipron in ATTAIN-one. The most commonly reported adverse events were gastrointestinal, which is consistent with the GLP-one class. Discontinuations due to adverse events were low, with five percent to ten percent of patients discontinuing orforglipron across doses. Doses. There were no hepatic safety signals.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

We look forward to sharing detailed results from ATTAIN-one also at the EASD meeting in September and in a peer reviewed publication. With today's readout, we've now seen results from two large phase three clinical trials involving over 3,600 participants, and we're highly encouraged with what we've seen thus far. The data from these first two pivotal studies provide evidence that a once daily oral GLP-one can achieve efficacy and safety in line with injectable GLP-1s. Orforglipron has the potential to be a more convenient alternative to injectable treatments and to be utilized to support early disease intervention in the primary care setting. With these data in hand, we're now working to move quickly towards our first regulatory submissions yet this year.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

We expect results from four additional orforglipron Phase III trials over the next five months, three trials in people with diabetes from our Achieve program, and one additional trial from the ATTAIN program in people with diabetes and obesity. ATTAIN one and ATTAIN two will support global submissions for chronic weight management, which we expect in Q4. In addition to the ongoing phase three trials for orforglipron in diabetes, obesity, weight maintenance, and obstructive sleep apnea, we initiated a new program for orforglipron this quarter, Attain Hypertension, focused on reducing systolic blood pressure at thirty six weeks as the primary endpoint. This is the first study of orforglipron that includes patients with a baseline BMI as low as twenty five. We also announced plans to initiate a new phase three trial in people with knee osteoarthritis pain and overweight or obesity starting later this year.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Moving to pirtobrutinib. We announced positive results from the Bruin CLL-three 14 phase three trial of pirtobrutinib compared to ibrutinib in people with CLL, SLL. This trial included treatment naive patients as well as patients previously treated but not with a BTK inhibitor. Pirtobrutinib met the primary endpoint of response rate non inferiority compared to ibrutinib and had a nominal p value for superiority that was less than 0.05. While progression free survival data were immature, there was a positive trend in favor of pirtobrutinib.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Additional testing for progression free survival is planned as part of a future analysis. Of note, the subpopulation of treatment naive patients had a particularly pronounced progression free survival trend in favor of pirtobrutinib. This subpopulation had the longest follow-up, which is encouraging for what we might see more broadly across the total study population over time. This is second positive phase three trial to read out for pirtobrutinib as we continue to build evidence supporting the potential role for this medicine in earlier settings. We look forward to the readout of Bruin CLL-three 13, which assesses pirtobrutinib versus chemo immunotherapy in treatment naive CLL, SLL later this year.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

We expect these data in combination with Bruin CLL-three 14 to form the basis of regulatory submissions globally. In addition to our recent Phase III readouts, we also have updates on several other important molecules, danenemab, retreutide, and ola moracib. For danenemab, we had three important milestones since our last earnings call. First, we were pleased to receive a positive opinion from the CHMP in The EU. We look forward to approval and launch there later this year.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Second, the modified dosing schedule was approved in The US, further strengthening the safety profile for danenemab, and we expect the modified dosing regimen to be part of the EU labeling at launch as well. Finally, we shared long term extension data from TRAILblazer ALS two, which demonstrated that over three years, danetumab treated participants showed increasing clinical benefit, despite most participants having completed treatment within the first eighteen months of the trial. In a separate part of the extension study, patients initiating dananemab after eighteen months of placebo also demonstrated disease slowing once they started dananemab. These data reinforce the value of early intervention and support the limited duration dosing approach with sustained and increasing long term benefits for treatment. For retreotide, we started a new phase three trial in chronic low back pain and overweight or obesity called TRIUMF seven.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

This is our second pain study for retreotide in addition to the ongoing study in osteoarthritis pain of the knee, TRIUMF four, from which we expect results later this year. We are excited to announce plans to initiate a Phase III study in high risk metabolic dysfunction associated steatotic liver disease, or MACEL D, later this year. This trial includes both retreotide and tirzepatide, and it will utilize noninvasive tests to enroll patients who are at high risk of major adverse liver outcomes, with a primary objective of reducing the occurrence of such outcomes. This novel trial design more closely mirrors how physicians diagnose this disease in clinical practice and will enable simultaneous development of both medicines, each compared to placebo. In a prior phase II trial in MACEL D, retreutide reduced liver fat by over 80%.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

And in a phase II trial in NASH, tirzepatide led to over half of patients meeting criteria for resolution of NASH without worsening of fibrosis. We believe each of these medicines has the potential to make a profound impact on this disease, and we look forward to initiating the study later this year. Moving to ola moracet, we started a Phase III trial in unresected adjuvant lung cancer. This marks the fourth indication we are simultaneously pursuing for olimarasib in KRAS G12C mutant lung cancer as part of the SUNRAY I and SUNRAY II programs. We believe olimarasib, in combination with immuno oncology agents in an early setting, could improve the standard of care for patients with KRAS G12C mutant lung cancer.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

I'm also excited that through business development, we've added new molecules to our portfolio and new colleagues to our team. And it's a pleasure to welcome new team members from SiteOne and Verve to Lilly this quarter. With SiteOne, we added a new pain asset into our neuroscience portfolio, STC004, is a Nav1.8 inhibitor that's shown encouraging early data to treat pain. We believe this molecule could be an important non opioid therapy for pain in the future. Through the acquisition of Verve Therapeutics, we added several genetic medicines for cardiovascular disease that may only need to be given once in a lifetime.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

The most advanced programs are VIRV-one 102, which targets PCSK9, and VIRV-two zero one, which targets ANGPTL3. And in our early phase portfolio, we advanced nisotirastide, our PYY analog agonist, into a Phase II trial in people with diabetes. And we initiated Phase I clinical trials for glucose sensing insulin, a PTK7 antibody drug conjugate in oncology, and a next generation triple agonist in cardiometabolic health. We also discontinued two phase II programs, KB1.3 antagonist for psoriasis and mazisotine for pain. And two phase I programs at Econic mimetic immunology and SCAPT siRNA in mesh.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

It was a productive period since our last earnings call, and we still have an ambitious R and D agenda for the last five months of 2025. I'll now turn the call back to Dave for some closing remarks.

[David Ricks, Chair and CEO at Eli Lilly]

Thanks, Dan. We're really pleased with all the progress in Q2 across our strategic agenda. We've had another quarter of strong financial results. We continued the build out of our manufacturing footprint and advanced our pipeline, as Dan just highlighted, with external and internal R and D projects. We have good momentum as we enter the 2025, and we're focused on execution with our currently marketed products, and we're investing in the next wave of medicines that we expect will drive growth in the near and more distant future.

[David Ricks, Chair and CEO at Eli Lilly]

So now let me turn the call over to Mike to moderate a Q and A session.

[Michael Czapar, SVP - IR at Eli Lilly]

Thanks, Dave. We would like to take questions from as many callers as possible. So consistent with prior quarters, we will respond to one question per caller, and we'll end the call promptly at 09:30. Please provide the instructions for the Q and A session and then we are ready for the first caller.

[Operator]

Certainly. At this time, we will be conducting a question and answer session. If you have any questions, please press star one on your phone at this time. We ask that participants limit themselves to one question on today's call. And the first question today is coming from Chris Schott from JPMorgan. Chris, your line is live.

[Chris Schott, Managing Director at JP Morgan]

Great. Thanks so much for the question. Just wanted to kick off with orfrogliptron. There's obviously a bit of a debate out there this morning on the weight loss profile you're showing for the product, which clearly looks efficacious, but maybe a touch below Wegovy. Can you just help put the data into context and just in general your thinking of where Orpho fits into the treatment landscape versus Zepbound and Wegovy now that you have these results in hand? Thanks so much.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Chris. We'll go to Ken to answer the question about the orfaglutron profile.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

Yeah, thanks Chris for the question about orfaglutron. We're really pleased with the data we've disclosed this morning. Really the idea that you can get 27 pounds of weight loss from a single pill, and also get really encouraging effects on other important biomarkers, things like blood pressure, lipids, inflammatory biomarkers and fasting glucose. Those are a lot of the things that HCPs are really managing when they think about preventative care. Now you're getting that all from a single oral pill, but we can manufacture at scale.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

We also know that simplicity matters in this space and the instructions for use here are going to be pretty simple. Take it once a day without regard to food and water. Of course, the data we're showing today are in patients with overweight and obesity, but we are evaluating orfaglutidem in a lot of other settings that includes other disease areas like diabetes and obstructive sleep apnea and OA knee pain. We're also evaluating in other contexts for the treatment of obesity. Right now we have the Attain and Maintain study ongoing, which is also testing orfagliptin as a potential maintenance therapy for patients who have lost weight on drugs like Zepbound to see whether they can keep that weight off.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

So we really see a wide ranging opportunity for orfaglipron and couldn't be more pleased with the totality of the profile we disclosed this morning.

[Michael Czapar, SVP - IR at Eli Lilly]

Excellent. Thanks, Chris. Next question, please.

[Operator]

The next question will be from Seamus Fernandez from Guggenheim. Seamus, your line is live.

[Seamus Fernandez, Senior MD & Equity Research Analyst at Guggenheim Partners]

Oh, great. Thanks so much for the question. Mine's actually on pricing and the pricing environment going forward. I was just hoping, Dave, you could discuss a little bit more your views on the path for price with orfagliptron and the growing number of assets coming to market. I think that's been probably the number one overhang, especially as it relates to the continued availability of compounding.

[Seamus Fernandez, Senior MD & Equity Research Analyst at Guggenheim Partners]

So, you know, just trying to get a better understanding of of where you see price going and maybe if you can provide some thoughts on compounding in that context and how you maintain tirzepatide compounding off market when it's being ignored with semaglutide. Thanks so much.

[Michael Czapar, SVP - IR at Eli Lilly]

Thanks, Seamus. Dave, we'll go to you talk about the broader pricing environment and potentially weaving in some compounding commentary.

[David Ricks, Chair and CEO at Eli Lilly]

Okay. Yeah, thanks, Seamus. You know, as it relates to compounding, let me just deal with that first. You know, we've always been concerned about this because of the patient safety, risk that exists. Every day we get calls from patients concerned that they are getting ill on a medicine they think is ours and it's not.

[David Ricks, Chair and CEO at Eli Lilly]

This, of course was allowed during drug shortage, there's no drug shortage. And we really think that regulators and law enforcement officers in The US need to step up their game, to really eliminate this. That's why we have an FDA and a structured regulatory process in The US. And so we want to see that end mostly because people are being harmed. We see robust growth in the marketplace in The US, 42% total incretin growth over last year, good sequential growth.

[David Ricks, Chair and CEO at Eli Lilly]

And of course, Lilly's growth is more than double that. So the business is fine, but, people shouldn't be harmed. That said, I think on pricing, we've always had a philosophy across all medicines, including with incretins to price to value. And given the profile we present, to consider offsetting other healthcare costs including medicines, the value to the patient, the value in the economy as well. And here with GLP-one and incretin mechanisms we're seeing profound value, frankly.

[David Ricks, Chair and CEO at Eli Lilly]

So, we're noticing a difference in, when we offer consumer level pricing outside of insurance. But inside of the healthcare system, which is most of the business, we think that we'll expect single digit erosion like we do other chronic medications in net pricing while maintaining, a value point on lists that makes good sense. That's not considering any new policy environment, but that's our philosophy going forward. So as we have a suite of products with some with, perhaps more value in patients with more complicated, obesity, or those that, maybe have less complicated obesity but medicines like oforglipron that could reach the masses, of course we'll consider those factors in price setting at the list level, and then the net will find its level, in negotiations. And you can continue to expect Lilly to offer consumer level pricing as long as we have such a large hole in coverage, in our country for important chronic disease like obesity that should be covered. Those are our views on pricing.

[Michael Czapar, SVP - IR at Eli Lilly]

Thank you, Dave. Next question, please.

[Operator]

The next question will be from Geoff Meacham from Citibank. Geoff, your line is live.

[Geoff Meacham, Managing Director at Citi]

Great. Morning, guys. Thanks for the question. Dan, on Orfagliptron, looking at discontinuation rates, looks competitive for ATTAIN and ACHieve. But can you talk about how the GI adverse event rates change over the course of the studies?

[Geoff Meacham, Managing Director at Citi]

And were there common futures among those with the highest adverse event rates? Obviously thinking how this could play out from a commercial context. Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Thanks, Jeff. Dan, we'll go to you to talk about some of the ORFO GI profile over time.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Yeah, thanks, Jeff. No surprises in there. The GI profile was as expected for a GLP-one agonist, which is to say that most of the side effects occur early in the treatment course or with dose escalations, and then they go down over time. In terms of any specific patient characteristics that predicted, I don't believe we saw that in the study, nor have we seen that in prior studies with GLP-one. But really, no differences here that we thought were noteworthy versus monotherapy GLP-one injectables. Great.

[Michael Czapar, SVP - IR at Eli Lilly]

Thank you, Dan. Next question, please.

[Operator]

The next question will be from Tim Anderson from Bank of America. Tim, your line is live.

[Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America]

Thank you. I wanted to ask kind of a compounding question in a way, I guess. Canadian generics for Novo's semaglutide, they're likely to launch in early 'twenty six. I think everyone can agree that tirzepatide is a better product. Won't this still cause a lot of trouble in the market there's a big cash pay channel and where we already know that patients are proving themselves to be price sensitive and willing to use a lesser product like a knockoff semaglutide?

[Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America]

Seems to me Canadian generics are just a replacement for that compounding channel, and they'll keep that headwind alive even if compounders get shut down. And we're talking about a product here that will have gone through a regulatory review cycle, not by FDA, but by another regulator. So with that launch six months away, is that a headwind that we should expect may continue? Thanks.

[Michael Czapar, SVP - IR at Eli Lilly]

Okay. Thanks, Tim, for the question on the Canadian generics impact. We'll go to Ilya to answer that one.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

Yeah. Thanks for the question. Maybe I'll touch on what we're currently seeing in The US market. And if you assume looking at the self pay market that what we're seeing in vial performance and overall market is continuing to grow at rapid pace. We're seeing that our offering with the vial with setbound and the profile that we have with setbound is meeting a need for patients, even in the context of noise, whether you have compounded or semi in market.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

You take a look at just the growth that we've seen in Q2, we've generated over 1,000,000 TRX in vial in Q2. And we recently launched last week, the highest doses of vial available for Zepbound. And we're continuing to see health in that market. Roughly 20% of all of our TRx is coming from the cash pay market and continue to see strength overall, both in self pay and covered. We're seeing around 65% share market in new therapy starts for ZBound overall.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

So we see health in the market and where ZBound provides a greater value.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Ilya. We'll go to the next question, please.

[Operator]

The next question will be from Dave Risinger from Leerink Partners. Dave, your line is live.

[David Risinger, Senior Managing Director, Biopharma at Leerink Partners]

Yes, thanks very much. So I was hoping to better understand the evolution of US employer coverage for anti obesity medicines and the prospects. So my understanding is that coverage has been pretty flat on a net basis over the last eighteen months, let's say since January '4, meaning the net covered lives has been flattish. If you can confirm that that's correct. And then can you talk about the outlook for the net change in U.

[David Risinger, Senior Managing Director, Biopharma at Leerink Partners]

S. Employer coverage for anti obesity medicines over the next six months or so for January '6? Thanks very much.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Dave, the question. We'll go to Ilya to talk about the progress in the debt bound employer coverage, Optin.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

Sure. Thanks for the question, Dave. You know, as we take a look at employer coverage, it's important for us to grow coverage over time. What we've seen in different offerings across the different plans, some are more complex than others, and we've seen an increase overall but it has been steady around 50% to 55% employer opt in coverage. At the same time, we are seeing new benefit designs like for instance, EverNorth's a cap on out of pocket for employees that make the prior authorization or simplified and that may grow employer opt ins over time.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

That's something that we're working through. Our outlook is that as evidence grows and we find new ways and also different plan designs are available to different employers that that will continue to do.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thank you, Ilya. We'll go to next question, please.

[Operator]

The next question will be from Terence Flynn from Morgan Stanley. Terence, line is live.

[Terence Flynn, Equity Research Analyst at Morgan Stanley]

Great. Thanks for taking the questions. Congrats on all the progress. Just wondering on orfagliptron in light of the ATTAIN-one data, if you can just frame expectations for us, Dan, for the upcoming ATTAIN-two Phase III data? And then any early insights into the potential CMMI obesity Medicare Medicaid pilot that I think we saw some press reports about?

[Terence Flynn, Equity Research Analyst at Morgan Stanley]

Thank you. Okay. For that we'll go to Ken to answer the question on expectations for ATTAIN-two.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

Yeah, thanks, Terrence, for the question on ATTAIN-two. You know, we're very pleased with what we disclosed this morning in ATTAIN-one, which is our first phase three study in obesity without diabetes. And of course, we had a great result with Achieve one in patients with diabetes. So as we look ahead to ATTAIN-two, we expect similarly encouraging results. The exciting thing about ATTAIN-two is that be our third phase III study and it sets us up to submit in obesity by the end of this year.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

So really no change in expectations here. The team is full speed ahead preparing for submission by year end and a potential approval next year. Great.

[Michael Czapar, SVP - IR at Eli Lilly]

And if you want to hop back in the queue, Terrence, we'll see if there's time for your second one. Next question, please.

[Operator]

The next question will be from Courtney Breen from Bernstein. Courtney, your line is live.

[Courtney Breen, Senior Research Analyst at Bernstein]

Hello, thanks so much for taking the question today. Just coming back to another question on ortho, as we looked at kind of comparing the data between ATTAIN-one and Achieve-one, we do see that kind of nausea, vomiting, constipation all appear a bit higher in this Achieve one study. Can you talk a little bit about the differences in those data points that we're seeing between those two studies and what that might mean for adherence in the real world? Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Courtney, thanks for the question on comparing achieve versus attain. I think, Dan, maybe a couple of quick comments.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Yeah, sure. Thanks, Courtney. I think the side effect profile in both of these trials was consistent with past experience for GLP-one monotherapy in these populations, which are different, as you're pointing out, that side effect profiles can be different in people with type two diabetes versus people without type two diabetes and with obesity. So I think we feel quite confident overall about the profile here. Of course, I think I'd just emphasize once again that this is a GLP-one monotherapy.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

We know that dual agonism with GLP-one and GIP-one can offer superior results. We have that as an injectable as tirzepatide. But I think actually this is as good as it gets for GLP-one monotherapy here in a once a day small molecule oral. So we're pretty excited with the profile.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Dan. Next question, please.

[Operator]

The next question will be from Mohit Bansal from Wells Fargo. Mohit, your line is live.

[Mohit Bansal, Managing Director at Wells Fargo Securities]

Great. Thank you very much for taking my question. Dan, if you could comment on the gender split in the ofligipron study, if there was any difference versus any other trials for GLP-one that you would want to highlight here? Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Sure.

[Michael Czapar, SVP - IR at Eli Lilly]

Mohit, for the detailed question. We'll go to Ken to talk about the gender split. Is there anything to flag?

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

Yeah, thanks, Mohit. Gender split baseline population at TAME one was about 64% across the board, well balanced across 64% female across all arms, balanced nothing really to remark on here.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks. Thanks, Ken. Next question, please.

[Operator]

The next question will be from Asad Haider from Goldman Sachs. Asad, your line is live.

[Asad Haider, Healthcare Analyst at Goldman Sachs]

Great. Thanks for taking the question and congrats on the quarter. Just going back to channel dynamics. On the Lilly direct channel, clearly, Zepbound growth has been getting a lot of momentum with the new to brand prescriptions. Where do you think this could stabilize?

[Asad Haider, Healthcare Analyst at Goldman Sachs]

And how is that segment changing the landscape on pricing? And then related, I think, Lucas, you previously framed this DTC offering for Zepbound as a hedge or a bridge solution as you continue to grow access in the reimbursed channel. So any evolution in your thinking on that front, given DTC offerings are now getting framed as one way to satisfy the administration's demands on drug pricing? Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Okay. Thanks for the question, Assad. Lucas, you want give some commentary on the Blue Direct revolution and outlook from here?

[Lucas Montarce, EVP & CFO at Eli Lilly]

Yes, sure. Thank you, Assad, for your question. First of all, I just wanted to highlight the great products that we see in Lilly Direct. I think Eli alluded about the total TRS prescription that we see in the second quarter, one point one million TRx, fantastic growth, and now we are adding the twelve point five and fifteen milligrams launch as well. So, great progress that we are seeing, you see that data as well that you have access aside in terms of the number of total DRx as a percentage of the total SEP BAN business.

[Lucas Montarce, EVP & CFO at Eli Lilly]

So, progressing very nicely, very pleased with that. You mentioned about, again, the hedge, yes, I shared that with you a time ago, and that's the way that we think about it, going back to the previous questions about employer, as we see that progressing, we always thought that it would be a gradual progression on the employer access. We see the Leading Direct as an option to bridge that, right, as a hedge strategy to bridge that. So, we still see it the same way, but it's progressing very nicely and it's growing very is actually contributing to our performance this quarter and for the rest of the year as well. So that's more of the commentary and the color that we can provide today on that.

[Michael Czapar, SVP - IR at Eli Lilly]

Thank you, Lucas. Next question, please.

[Operator]

The next question will be from Umer Raffat from Evercore. Umer, your line is live.

[Umer Raffat, Senior Managing Director at Evercore ISI]

Morning, guys. I'm just still trying to get my head around the ofligipron data. On the one side, I see your efficacy estimate at eleven point five percent placebo adjusted being very consistent with what Novo showed with their oral SEMA data in OASIS IV. But on the more important ITT like treatment estimate, Orfo's tracking at nine percent placebo adjusted. Oral SEMA is almost fourteen percent placebo adjusted.

[Umer Raffat, Senior Managing Director at Evercore ISI]

And I'm just trying to understand what explains that delta, and does it prompt the need for a forty five milligram cohort, considering how the safety is tracking?

[Michael Czapar, SVP - IR at Eli Lilly]

Okay. Thanks, Umer. We'll go to Dan to provide maybe some final commentary on TANE.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

Yeah. Thanks, Umer. I'm not sure I tracked exactly with your numbers. But look, I think overall, the profile here landed pretty much where you could expect GLP-one monotherapy to land. It's tough to compare different trials done at different time periods in different populations.

[Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology at Eli Lilly]

But I think overall, given the patients we enrolled and the trial we ran, this is what GLP-one agonism can give you. I don't see this as any issue at all in the real world or for patients or doctors. I know Wall Street has kind of focused on the exact numbers here and making cross trial comparisons, but I don't think that carries over to the real world at all. Great.

[Michael Czapar, SVP - IR at Eli Lilly]

Thank you, Dan. Next question, please.

[Operator]

Next question will be from Steve Scala from TD Cowen. Steve, your

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

line Oh, thank you.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

Thank you so much. With what is widely viewed as disappointing orfagliptron data, it seems injectables are where it's at for the foreseeable future. On the Q1 call, Lilly said the likely impact of the Novo deal with CVS would be modest. But today, you are saying there could be an impact in Q3. And for Lilly to call it out in the prepared remarks, it must be pretty meaningful.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

So, can you tell us what changed in the marketplace for the injectables? Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Great, Steve. Thanks for the question. Maybe to give some commentary on CVS, we'll go to Ilya.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

Sure. Thanks, Steve, for the question. You know, as we take a look at Q2 performance and the health of both the market and where Zepfone has gained share, and we added around 1,700,000 TRx in Q2. The overall impact, I think what we discussed prior is a couple 100,000 TRx volume that may vary. It's still early in the transition to CVS and obviously that creates frustration for employers, for providers, for patients.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

And we don't agree and disappointed with CVS decision. At the same time, in terms of impact, you'll have some medical exceptions and overall in the context of growing 1,700,000 TRx, we view and you look at July TRx as a proxy where it's on average, it's back to around May average TRx. We see continued growth and very good performance across all segments for Zepbound both in covered as well as our cash pay market. And so we expect continued growth. I think the commentary is more about the rate of growth.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

So obviously, some new patient starts related to CVS template only may have some impact on growth, but overall the growth is healthy across all other segments.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thank you, Ilya. Next question, please.

[Operator]

The next question will be from Alex Hammond from Wolfe Research. Alex, your line is live.

[Alexandria Hammond, Director - Head of Therapeutics at Wolfe Research LLC]

Another one on orfaglipirone. So I noticed you included the total discontinuation rates in the PR when you normally don't. Does that suggest that you think there was an underlying driver of these unusually elevated dropout rates across all arms? And could they have impacted efficacy?

[Michael Czapar, SVP - IR at Eli Lilly]

Thanks, Alex. We'll go to Ken to talk about the inclusion of the overall discontinuation rates and how that may have been

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

in some other press releases as well. Yeah, thanks, Alex, for the question on discontinuation rates. What we disclosed, of course, with the rate of discontinuation at ATTAIN-one for placebo of 29.9% and then for orfaglifron ranging from twenty two to twenty four percent. We don't think there's anything remarkable there. And we've disclosed these information on previous Lilly programs.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

I think on Surmount one we did. Maybe to put this in a little bit of context, if you look at analogous studies in obesity, really placebo rates are in the 20s. If you take maybe step one, twenty two percent placebo rate for discontinuation and about five points lower for active comparator. That's exactly what we see here on a delta. So really nothing remarkable here.

[Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly]

The more important thing to look at, know, course patients can discontinue a study for a whole host of reasons. They can just withdraw their consent because it doesn't fit with their life. They're not getting the efficacy they need and that's why we typically see lower rates in the active drugs, which is what we see here, or an adverse event. Now the rates for adverse events, as Dan noted, range between five and ten percent for glucapon, that's exactly where we'd expect to be for an oral GLP-one single agonist. So really nothing remarkable here.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thank you, Ken. We'll go to the next question please.

[Operator]

The next question will be from Akash Tewari from Jefferies. Akash, your line is live.

[Akash Tewari, Global Head - Biopharmaceutical Research at Jefferies]

Hey, thanks so much. What's Lilly's appetite to committing to launching new products at net parity pricing between The US and Europe given a significant amount of your newly launched products in Europe are actually not getting reimbursed anyway? And more broadly, it sounds like we're in an impasse between the administration and the industry. What's your confidence we'd be able to get kind of a bespoke solution with the administration absent new legislation? Thank you.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thank you, Akash. We'll go to Dave to talk on the engagement with the administration and new product launch strategy.

[David Ricks, Chair and CEO at Eli Lilly]

Sure. Yeah. I mean, just on the discrete question you're asking, I think we believe long term, we should rebalance pricing between US and Europe in terms of who's bearing the cost for really the amortized R and D and the risk we took. That's a rational thing. And it's, in my career, gotten more and more out of whack.

[David Ricks, Chair and CEO at Eli Lilly]

So I think here the president's right to call that out. The question is really how? And as you know, the European governments don't exactly, they're not signing up to pay more for drugs. So we need trade tools to rebalance that equation. We've been very clear on that advocacy with both European and US governments.

[David Ricks, Chair and CEO at Eli Lilly]

And in The US, we need to deflate the gross to net bubble, because there's this huge artificial thing that needs to get deflated. The problem with doing that suddenly is all those cash flows into hospitals and premium support for seniors and Part D, etcetera. You can't collapse it all at once, it'd be very difficult, I think. So the idea of new products gives it sort of a ramp. But we need these other structural changes on The US side and the gross to net environment in Europe in terms of the total reimbursement setup to get there.

[David Ricks, Chair and CEO at Eli Lilly]

But we'd be excited to enter that world. And actually, I'll point out in a few cases, we are narrowing the gap substantially on new products. And, some of that's for the reason you point out that, some countries that reimbursement is just a tough equation. So what's the point of lowering that? So watch that space.

[David Ricks, Chair and CEO at Eli Lilly]

I think this is an area there could be progress under the President's agenda. I think you'd see most, pharma companies interested in moving in that direction. The question is how do you step into it?

[Michael Czapar, SVP - IR at Eli Lilly]

Great, thank you, Dave. We've got time for probably two more quick questions. The next question, please.

[Operator]

The next question will be from Kerry Hallford from Berenberg. Kerry, your line is live.

[Kerry Holford, Head - Global Pharma Equity Research at Barenberg]

Thank you. Question from me please on the cash channel. So yesterday, Novo stated it would make Ozempic available via its cash pay channel later this year. Are you planning to do the same for Mount Jaro? And if not, why not?

[Kerry Holford, Head - Global Pharma Equity Research at Barenberg]

And I'm not sure if you mentioned this earlier, but can you confirm whether you intend to use the cash channel for orfagliptron once that comes to market?

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Kerry, for the question. We'll go to Ilya to comment on our thoughts on the cash channel.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

Sure. Well, first, I think we're learning a lot in the cash channel, movie direct. And a lot of that has to do with the consumer journey and it's varied across different segments of where you have significant coverage versus not and with Mounjaro we have significant coverage, so over 90% coverage in both commercial as well as Part D. And so I'm not sure if that necessarily provides additional avenue. With that bound, we see significant growth because we do have coverage gaps in commercial and obviously, we also have coverage gaps without having the ability to cover anti obesity medications in Part D.

[Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities at Eli Lilly]

So we see this as an opportunity for us to meet that need. Of course, we'll evaluate other brands that we put through Direct. We have a number of avenues to come to Lily Direct on different brands to make sure that people can access the healthcare system in a better way. And so that's something will evolve over time.

[Michael Czapar, SVP - IR at Eli Lilly]

Great. Thanks, Ilya. And last question, please.

[Operator]

And final question today will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live.

[Evan Seigerman, MD & Senior Research Analyst at BMO Capital Markets]

Hi, guys. Thank you so much for taking my question. A follow-up on the MSN conversation. I appreciate you're not going to share the details of your interaction with the administration, but can you provide some practical examples of what you and the industry can do to help achieve the goals of getting price parity globally. Thank you so much.

[Michael Czapar, SVP - IR at Eli Lilly]

Thanks, Evan. We'll go to Dave to answer the question and then to provide closing remarks.

[David Ricks, Chair and CEO at Eli Lilly]

Yeah, sure. I don't have a lot to add to what I said to the prior question. I think long term, it makes sense to rebalance this. Having an on ramp makes sense to me because a sudden change in either environment would be difficult to sustain or justify. The idea of new products is a reasonable proposition, provided that the reimbursement rates in Europe can rise really based on cost for quality analysis and other things. And The US gross to net situation can change And easing into it seems to be a rational thing to do.

[David Ricks, Chair and CEO at Eli Lilly]

The other piece which the DTC channel being suggested by the administration and for the prior question, in addition to offering an outlet for people who don't have coverage, it does provide a kind of real price transparency to consumers, employers and others, and that's a good thing. So we support that, as well. We'll have to see how this plays out. As I said, we're constructively engaging. Hopefully, some progress can be made.

[David Ricks, Chair and CEO at Eli Lilly]

And I think it's in the industry's long term interest to kind of pull these things closer together and, we'll work hard to try to do that. Thanks for being with us today everyone, and for as many questions as we got to. I know there's always some we did not. So as in prior quarters, if you have unresolved questions, please contact our IR team. And, we appreciate your interest in the company as always and look forward to future interactions. Have a great day.

[Operator]

Thank you, and ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at one p. M. Today, running through September 11 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 639732.

[Operator]

International callers can call (973) 528-0005. Again, numbers are (800) 332-6854 and (973) 528-0005 with the access code 639732. Thank you for your participation. You may now disconnect your lines.

Participants

Executives

• David Ricks, Chair and CEO
• Daniel Skovronsky, EVP, Chief Scientific Officer, President - Lilly Research Laboratories & President - Immunology
• Ilya Yuffa, EVP & President - Lilly USA and Global Customer Capabilities

Analysts

• Michael Czapar, SVP - IR at Eli Lilly
• Lucas Montarce, EVP & CFO at Eli Lilly
• Chris Schott, Managing Director at JP Morgan
• Kenneth Custer, EVP & President - Lilly Cardiometabolic Health, Eli Lilly and Company at Eli Lilly
• Seamus Fernandez, Senior MD & Equity Research Analyst at Guggenheim Partners
• Geoff Meacham, Managing Director at Citi
• Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America
• David Risinger, Senior Managing Director, Biopharma at Leerink Partners
• Terence Flynn, Equity Research Analyst at Morgan Stanley
• Courtney Breen, Senior Research Analyst at Bernstein
• Mohit Bansal, Managing Director at Wells Fargo Securities
• Asad Haider, Healthcare Analyst at Goldman Sachs
• Umer Raffat, Senior Managing Director at Evercore ISI
• Steve Scala, Pharmaceutical Analyst at TD Cowen
• Alexandria Hammond, Director - Head of Therapeutics at Wolfe Research LLC
• Akash Tewari, Global Head - Biopharmaceutical Research at Jefferies
• Kerry Holford, Head - Global Pharma Equity Research at Barenberg
• Evan Seigerman, MD & Senior Research Analyst at BMO Capital Markets