ELI LILLY & Co Q1 FY2022 Earnings Call

Ladies and gentlemen, thank you for standing by. And welcome to the Lilly Q1 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. Operator instructions were given. And as a reminder, your conference is being recorded. I would now like to turn the conference over to your host, Kevin Hern. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly and Company’s Q1 2022 earnings call. I am Kevin Hern, Vice President of Investor Relations. Joining me on today’s call are Dave Ricks, Lilly’s Chair and CEO; Anat Ashkenazi, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific and Medical Officer; Anne White, President of Lilly Neuroscience; Ilya Yuffa, President of Lilly International; Jake Van Naarden, CEO of Loxo Oncology at Lilly and President of Lilly Oncology; Mike Mason, President of Lilly Diabetes; and Patrik Jonsson, President of Lilly Immunology and Lilly USA. We are also joined by Sara Smith, Kento Ueha, and Lauren Zierke of the Investor Relations team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to several factors including those listed on slide three. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent Forms 10-Q and 8-K filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures. Now I will turn the call over to Dave.

Thanks, Kevin. 2022 is off to a strong start with solid volume-driven revenue growth led by our key products and the new tirzepatide obesity data we announced this morning. We are focused on driving adoption of our newer medicines, preparing for key product launches, delivering several global submissions for potential new medicines, all the while advancing our pipeline to power the next wave of growth. We are pleased with the progress we saw in the first quarter. Before I get to our results, I’d like to take a moment to address the tragic loss of life and the hardships we are seeing in Ukraine. Our Ukraine office is currently closed and operations are suspended. The safety of our employees and their families continues to be our top priority. We are working through logistical challenges in order to ensure supply of our medicines to those in need in Ukraine. Earlier this month, an initial shipment of medicines donated by Lilly including insulin arrived in Ukraine. Thanks to the tremendous efforts of our partners, Project HOPE and Direct Relief. Few of our clinical trial participants are in Ukraine. So while we are doing everything we can to ensure continuity of their medical care, there is minimal impact to our global trials. With regard to Russia, we have suspended investments, our promotional activities and new clinical trials there. Our Russian operations are now only focused on ensuring people suffering from diseases like cancer and diabetes continue to get the Lilly medicines they need. Should we generate any profits from our sales in Russia, we will donate them to organizations dedicated to humanitarian relief. Our revenue in Russia and Ukraine accounted for less than 1% of our total company sales in 2021. Moving to our results. You can see on slide four the progress we have made on our strategic deliverables so far this year. Q1 revenue grew 15% or 17% on a constant currency basis and was driven by volume growth of 20%. When excluding revenue from COVID-19 antibodies and Alimta due to loss of exclusivity, revenue grew 10% for the quarter. This volume-driven performance in Q1 is attributable to our key growth products, which grew 24% and now account for 61% of our core business. With long IP runways for many of these products and less than 10% of our 2022 revenue exposed to patent expiry in the next five years, along with the potential launch of five new medicines over the next 18 months, the durability of our growth outlook is quite strong. Our non-GAAP gross margin was 76.1% in Q1, an increase of approximately 70 basis points. Excluding revenue from COVID antibodies, gross margin was approximately 80% for the quarter. Our non-GAAP operating margin was 33.4%, an increase of roughly 1,000 basis points, primarily driven by both higher gross margin and lower R&D expenses for COVID antibodies. In our pipeline, we have several important updates since our Q4 earnings call, including the U.S. and EU approval for Jardiance in heart failure with preserved ejection fraction, as well as a recommendation from the Independent Data Monitoring Committee for an early start to the Phase III trial studying Jardiance for chronic kidney disease due to clear positive efficacy. The U.S. Emergency Use Authorization for bebtelovimab for the treatment of mild to moderate COVID-19. The recent U.S. submission of mirikizumab for the treatment of adults with moderately to severely active ulcerative colitis and a positive Phase III topline readout for SURMOUNT-1, the first of four global studies to evaluate tirzepatide for adults living with obesity or overweight. Dan will talk in more detail later, but we are very excited with the results of the Phase III SURMOUNT-1 topline readout. We believe there is significant potential for tirzepatide to build off the impressive results we saw from our clinical program in Type 2 diabetes and help people with obesity, a disease impacting over 110 million people in United States and approximately 650 million people worldwide. Obesity is a chronic and progressive disease that causes over 2.8 million deaths globally each year. The economic impact associated with obesity is more than $1 trillion in the U.S. alone. We believe addressing obesity could make a difference in millions of people’s lives, have a significant impact on public health and reduce healthcare costs. We are hopeful that we are entering a new era of obesity care, where people have medicines that can help treat their obesity and this is our first proof point on that journey. We continue to rapidly advance nucleic acid innovation at Lilly, building on our growing portfolio with the launch of the Lilly Institute for Genetic Medicines, a $700 million facility in Boston. We will develop novel RNA and DNA-based medicines, as well as push the boundaries of delivery technology to unlock difficult to treat targets in key strategic areas for us like neurodegeneration, diabetes and obesity. Finally, we distributed nearly $900 million in dividends in the quarter and completed $1.5 billion in share repurchases. On slide five and six, you will see a list of key events since our Q4 earnings call, including several important regulatory, clinical and COVID-19 antibody updates we are discussing today. Now, I will turn the call over to Anat to review the Q1 results.

Thanks, Dave. Before I review the financial results for Q1, it is important to note that beginning this quarter, following directions from the SEC, presentation of non-GAAP measures will not include upfront charges and development milestones related to acquired in-process R&D and development. While this has no bearing on how we conduct our business, it will have an impact on how we present our non-GAAP measures. This change in presentation of financial results will have the effect of pulling into non-GAAP measures certain charges that were previously reported only in our GAAP financial results. We expect this change will increase non-GAAP operating expenses and decrease non-GAAP operating margins and earnings per share. To help with year-on-year comparison of our non-GAAP measures, you can find a revised workbook on our Investor website, reflecting the updated presentation of our 2020 and 2021 results. Slide seven summarizes financial performance in the first quarter of 2022. I will focus my comments on non-GAAP performance. In Q1, revenue grew 15%; excluding revenue from COVID-19 antibodies and Alimta, revenue increased 10%, highlighting solid momentum for our core business. Gross margin as a percent of revenue increased 70 basis points to 76.1% in Q1 2022. The increase in gross margin percent was primarily driven by the unfavorable effects of foreign exchange rates on international inventories sold in Q1 2021, partially offset by increased sales of COVID antibodies, which have lower gross margin profile than the rest of our portfolio and to a lesser extent, lower realized prices. Increase in manufacturing costs and logistics due to inflation had a modest impact on gross margin in Q1. Total operating expenses decreased 6% this quarter, which as a reminder, is now inclusive of acquired IPR&D and development milestone charges. Marketing, selling and administrative expenses decreased 1%, while R&D expenses decreased 4%, driven by lower development expenses for COVID-19 antibodies, partially offset by higher development expenses for late-stage assets. This quarter, we recognized acquired IPR&D and development milestone charges of $166 million or $0.15 of EPS, primarily related to purchase of the Priority Review Voucher. In Q1 2021, acquired IPR&D and development milestone charges were $312 million or $0.27 of EPS. Operating income increased 66% in Q1, driven by higher revenue, primarily due to higher sales of COVID antibodies, lower R&D expenses for COVID antibodies, and to a lesser extent, lower acquired IPR&D and development milestone charges. Operating income as a percent of revenue was 33.4% for the quarter and reflects the benefit from COVID-19 antibodies revenue, as well as the negative impact of approximately 210 basis points attributed to acquired IPR&D and development milestone charges. Other income and expense was income of approximately $38 million this quarter, compared with income of $35 million in Q1 2021. Our Q1 effective tax rate was 10.3%, an increase of 140 basis points compared to the same period in 2021. This increase was driven by a lower net discrete tax benefit this quarter, partially offset by decreased tax expenses related to the implementation of the provision in the 2017 Tax Act required to capitalize research and development expenses. As the bottom line, we delivered strong earnings per share growth of 63% in Q1, inclusive of approximately 1500 basis points related to lower acquired IPR&D and development milestone charges. On slide eight, we quantify the effect of price, rate and volume on revenue growth. This quarter, U.S. revenue grew 31% and when excluding revenue from COVID-19 antibodies and Alimta, revenue grew 14% in the U.S. This growth was driven by volume, led by Trulicity, Verzenio, Jardiance, Olumiant, and Taltz. We experienced a net price decline of 1% for the quarter and continue to expect a mid single-digit price decline in the U.S. for the full year. As a reminder, a single competitor to Alimta launched in the U.S. in February and we expect broad generic entry in May to result in a significant erosion of U.S. Alimta revenue. Moving to Europe, revenue in Q1 declined 13% in constant currency and when excluding revenue from COVID-19 antibodies and Alimta, revenue grew 14% in constant currency, driven primarily by volume growth for Trulicity, Taltz, Jardiance, Verzenio and Olumiant. We expect continued growth in Europe excluding Alimta. For Japan, Q1 revenue decreased 21% in constant currency, as our business there continues to be negatively affected by significant declines in off-patent products, primarily Cymbalta and Alimta. Key growth products now represent 65% of total revenue in Japan and we expect to return to growth in Japan beginning in 2023. In China, revenue grew 10% in constant currency. The NRDL access has driven significant volume growth for newer products like Tyvyt, Trulicity, Verzenio and Taltz, and has been partially offset by related price decreases. We expect this improved access to continue to drive future volume growth, more than offsetting the price decline. The recent COVID-19 outbreak in China and the subsequent protective measures that are currently being put in place to control the spread of the virus highlight the potential for commercial impact in China in the near-term, particularly for infused products, like Tyvyt. Revenue in the rest of the world increased 29% in constant currency this quarter, driven primarily by $95 million in revenue from the sales of rights to Cialis in Taiwan and Saudi Arabia, as well as by increased sales of key growth products. We continue to expect a mid single-digit net price decline in 2022 for the U.S., Europe and Japan, with the worldwide net price decline in the high single-digit driven by the expanded NRDL access for our products in China. As shown on slide nine, our key growth products continue to drive robust worldwide volume growth. These products drove nearly 15 percentage points of volume growth this quarter and continue to bolster overall performance and outlook. Slide 10 further highlights the contributions of our key growth products. This quarter these brands generated $3.9 billion in revenue and made up 61% of our core business revenue, growing 24%. We are pleased with the continued market growth of both the GLP-1 and SGLT2 classes where Trulicity and Jardiance are market leaders, as well as with the strong Taltz prescription growth. We are also encouraged by the significant uptake of Verzenio in Q1, driven by the approval and launch of the adjuvant indication, which has led to an inflection in both new and total prescriptions. On slide 11, we provide an update on capital allocation. In Q1 2022, we invested $2.4 billion to drive our future growth through a combination of R&D expenditures, business development outlays and capital investments. In addition, we returned approximately $900 million to shareholders in dividends and repurchased $1.5 billion in stock. Our capital allocation priorities remain unchanged, as we continue to fund our key market products and expect the new launches, invest in our pipeline, pursue opportunities for external innovation to augment our future growth prospects and return excess capital to shareholders. Slide 12 is the updated 2022 financial guidance. As I previously noted, our presentation of non-GAAP financial measures will now include IPR&D and development milestone charges. For guidance, we will include charges that have been incurred or realized as of the date of the earnings release and will not include any impact from potential or pending business development. We are providing information that should make this change as easy as possible to understand, as well as incorporate into modeling. As always, please let us know if there’s anything else we can do to be of assistance as you navigate through this transition. I do want to reiterate that margin expansion continues to be a priority for our team. Consistent with prior communication, excluding IPR&D development milestone charges, we expect to drive further non-GAAP operating margin expansion over time. Getting into the numbers underlying our updated guidance, there are several items of benefit in first quarter results, which are not expected to recur. These include approximately $1.45 billion of COVID antibody sales, U.S. Alimta revenue of approximately $250 million that will be impacted by multi-source generic entrants in Q2 and beyond, a favorable effective tax rate and a one-time benefit related to the resolution of cefaclor patent litigation in Canada. I would also remind you that as we look ahead to the second quarter, the Q2 2021 revenue benefited from the sale of Cialis rights in China, which will provide roughly 2.5 percentage points of headwind to our topline growth in Q2. Starting with revenue, we are increasing the guidance range by $1 billion to now be in the range of $28.8 billion to $29.3 billion, reflecting the additional revenue for bebtelovimab sales in Q1. While we project an unfavorable impact from foreign exchange rate, we are expecting to offset it with stronger core business performance. We anticipate that any additional revenue from sales of COVID-19 antibodies will be limited beginning in Q2 2022; while the U.S. Government has an option to purchase an additional 500,000 doses of bebtelovimab no later than July 31st of this year, it is uncertain whether this option will be exercised, and therefore, it is not included in our guidance. Moving down the income statement, GAAP gross margin percent is now expected to be approximately 76%, while non-GAAP gross margin is now expected to be approximately 78%. The majority of this 200 basis point reduction is due to the impact of Q1 bebtelovimab sales, which have lower gross margin and to a lesser extent an increase of approximately $100 million in logistics and manufacturing costs due to inflation. The range for R&D expenses has been increased by $100 million to be $7.1 billion to $7.3 billion, driven by investment in our late-stage pipeline, primarily Alzheimer’s clinical development and investment to advance the diagnostics ecosystem. Our guidance includes acquired IPR&D and development milestone charges of approximately $521 million, reflecting Q1 charges of $166 million, with the remainder primarily related to a charge associated with the buyout of future obligations that were contingent upon development, regulatory and commercial success of our selective PI3K inhibitor. This guidance does not include any impact from potential or pending business development transactions. GAAP and non-GAAP operating margin decreased 200 basis points to approximately 28% and 30%, respectively, primarily due to the negative impact associated with the acquired IPR&D and development milestone charges to date. Given the accounting change for acquired IPR&D and development milestone charges, and the inherent variability associated with such charges, our non-GAAP operating margin figure will not measure efficiency in the same way it has done historically. However, you can construct our operating margin in the way you deem appropriate, knowing that we aim to expand operating margin over time, excluding acquired IPR&D and development milestone charges. Our Q1 2022 tax rate and EPS include a favorable impact from the provision in the 2017 Tax Act that requires capitalization of research and development expenses for tax purposes. Our financial guidance for the full year is unchanged and assumed that this provision will be deferred or repealed by Congress, effective for 2022. If this provision is not deferred or repealed effective this year then we would expect the reported and non-GAAP tax rate to be approximately 10% to 11%. It is notable that while this provision favorably impacts certain tax items, which decreased our effective tax rate, we expect it will increase our 2022 cash payments of income taxes by approximately $1.5 billion. Based on these changes, we have lowered our reported EPS guidance by $0.70 to now be in the range of $7.30 per share to $7.45 per share and lower our non-GAAP EPS guidance to be in the range of $8.30 to $8.50. That $0.35 reduction in our non-GAAP EPS range includes the impact due to the year-to-date acquired IPR&D and development milestone charges, partially offset by improved business performance of $0.20 attributable to the net benefit of Q1 bebtelovimab sales and increased investments in R&D. Now I will turn the call over to Dan to highlight our progress in R&D.

Thanks, Anat. Let me start with today’s exciting announcement. The positive topline results from the tirzepatide SURMOUNT-1 Phase III study. Participants without Type 2 diabetes who have obesity or overweight with at least one co-morbidity achieved up to 22.5% weight loss at 72 weeks, which translates to a mean weight loss of 52 pounds. Tirzepatide is the first investigational medicine to deliver more than 20% weight loss on average in a Phase III study. Indeed most people on 10 milligrams or 15 milligrams of tirzepatide in this trial achieved 20% or greater weight loss and up to 63% of patients on 15 milligrams achieved this level of weight reduction. Obesity is a chronic disease that needs more effective treatment options for patients. We are working hard at Lilly to create potentially innovative medicines, with the aim to modernize how this disease is approached. We hope that tirzepatide can be Lilly’s first such medicine and the SURMOUNT program has been designed to test just that. I will cover the SURMOUNT-1 results in more detail, but first let me quickly provide an overview of the SURMOUNT Phase III program. The SURMOUNT program has enrolled more than 5,000 people with obesity or overweight across six studies, four of which are global registration studies. On slide 13, you can see key trial design elements for those four global registration studies. All four studies compared the efficacy and safety of tirzepatide to placebo as an adjunct to a reduced calorie diet and increased physical activity. SURMOUNT-1 was designed to evaluate treatment with tirzepatide compared to placebo to provide weight reduction and safety data for people without Type 2 diabetes with obesity or overweight with at least one co-morbidity. SURMOUNT-2 will provide weight reduction and safety data for people with obesity or overweight with Type 2 diabetes. SURMOUNT-3 will provide data on maximizing weight loss following an intensive lifestyle program. And SURMOUNT-4 evaluates maintaining weight loss. We expect the remaining three global studies to read out in the middle of 2023. Note that dose escalation in the SURMOUNT program is consistent with that of the SURPASS program for the treatment of Type 2 diabetes with tirzepatide. Patients start with 2.5 milligrams of tirzepatide and move up every four weeks in 2.5 milligram increments to reach their target dose. In SURMOUNT-3 and -4, study participants who escalate go into the maximum-tolerated dose of either 10 milligrams or 15 milligrams; patients escalating to the maximum-tolerated dose provides opportunity to evaluate the full potential for weight reduction. Studies vary in duration from 72 weeks to 88 weeks and SURMOUNT-1 will continue through 176 weeks to evaluate whether tirzepatide can actually slow the time to onset of Type 2 diabetes in participants who had pre-diabetes at the time of entering the clinical trial. We believe this will be important additional information for patients and physicians. SURMOUNT-1, a large trial which enrolled over 2,500 participants met its co-primary study endpoints and also hit on all pre-specified key secondary endpoints. On slide 14, you can see the first co-primary endpoint in the SURMOUNT-1 study, where tirzepatide delivered up to 22.5% mean body weight reduction in adults with obesity or overweight. With a mean baseline weight across the study of 231 pounds, this translates into a mean body weight reduction of 52 pounds on the 15 milligram treatment arm of the study. Along with the impressive results from the 10 milligram dose, which showed 21.4% mean body weight reduction, we were also very pleased to see how well the 5 milligram performed with a 16% mean body weight reduction also at 72 weeks for the efficacy estimate. Moving to slide 15. Tirzepatide obviously achieved the second co-primary endpoint of driving at least 5% weight reduction; clearly the vast majority of subjects, including greater than 96% of participants in the 10-milligram and 15-milligram arms achieved this level of weight reduction. We are really excited that a key secondary endpoint in SURMOUNT-1 showed up to 60% of patients achieved at least 20% body weight reduction at 72 weeks, again using the efficacy estimate. This is compared to only 1% for participants who achieved greater than 20% weight loss on placebo as an adjunct to diet and exercise. Moving to slide 16. You can see the safety profile from the SURMOUNT-1 study. Tirzepatide was well-tolerated in study participants with the overall safety and tolerability profile similar to incretin-based therapies approved for the treatment of obesity. As in the SURPASS program, the most commonly reported adverse events were GI-related, generally mild to moderate in severity and usually occurred during dose escalation. Treatment discontinuation rates due to adverse events were between 4.3% and 7.1% for tirzepatide treatment arms, compared to 2.6% for placebo. The overall treatment discontinuation rates ranged from roughly 14% to 16% in the tirzepatide arms compared to over 26% for placebo. The minimal weight loss seen in the placebo treatment group combined with the observed placebo discontinuation rate of 26% demonstrates the limited efficacy of diet and exercise alone and highlights the significant unmet medical need for people with this disease. We will continue to evaluate the SURMOUNT-1 study data and are planning to present findings at a medical meeting in the second half of this year. Of course, we plan to submit our manuscript to a top tier peer-reviewed journal. As Dave mentioned earlier, obesity is a chronic disease impacting over 110 million Americans and there is great need for more effective treatment options. While our current alignment with the FDA is to complete the four SURMOUNT global registrational studies prior to submission, we believe the impressive results from SURMOUNT-1 warrant further discussion. Based on our existing robust dataset, we are looking forward to reviewing the data with the FDA and discussing the potential for an expedited path forward for this indication. Moving to the rest of the portfolio. Slide 17 shows select pipeline opportunities as of April 27th and slide 18 shows potential key events for the year. There have been several other important developments since our last earnings call and I will cover these by therapeutic area. In diabetes, along with our partner Boehringer Ingelheim, we are proud of the expanded indication for Jardiance as a treatment for heart failure with preserved ejection fraction, which has been classified as the single largest unmet need in cardiovascular medicine. Jardiance is now the first and only heart failure therapy to demonstrate statistically significant risk reduction in cardiovascular death or hospitalization for heart failure regardless of ejection fraction. We also announced the Phase III trial studying Jardiance for chronic kidney disease will stop early due to clear positive efficacy. The recommendation was made by an independent data monitoring committee and while we have not yet seen results from this interim analysis, we are excited about the potential for this new indication and expect to share detailed results from the upcoming primary analysis at a medical meeting in the second half of this year. Last month, we began dosing patients in the first of five Phase III trials for investigational weekly basal insulin BIF. The trial compares weekly BIF to insulin degludec where patients are currently treated with basal insulin. We intend to start the other four Phase III trials later this year. You also see we have advanced our long-acting Amylin receptor agonist to Phase I development in obesity. Shifting to immunology, we presented mirikizumab induction data from LUCENT-1 at the European Crohn’s and Colitis Virtual Congress, demonstrating superiority over placebo for the primary and all key secondary endpoints. These data show patients with moderately to severely active ulcerative colitis achieved statistically superior rates of clinical remission compared to patients taking placebo, with nearly two-thirds of patients responding to mirikizumab. The results indicated improved symptom relief, including decreased bowel urgency and resolution or near resolution of inflammation. Building upon the positive outcomes from LUCENT-1, we look forward to sharing maintenance data from LUCENT-2 later in Q2. We are also excited to announce that we have submitted to the FDA and expect submissions in Europe and Japan in Q2. Mirikizumab has the potential to be the first-in-class IL-23p19 inhibitor treatment for people with ulcerative colitis. Last month at the American Academy of Dermatology Annual Meeting, we shared lebrikizumab monotherapy data showing more than 50% of patients with moderate to severe atopic dermatitis experienced at least 75% reduction in disease severity at 16 weeks. Additionally, at the Revolutionizing Atopic Dermatitis conference, we shared data showing 70% of patients receiving lebrikizumab combined with topical corticosteroids achieved at least 75% improvement in overall disease severity. We believe these data could help establish a competitive profile for lebrikizumab and we are looking forward to further data from our maintenance studies in the first half of this year to provide insight into the durability of efficacy. Global submissions are expected by year end. Moving to baricitinib. The FDA review for alopecia areata is underway and we are pleased to note that the FDA has granted priority review designation. As expected, we also received a complete response letter from the FDA for baricitinib atopic dermatitis indication, as we were not in alignment with the agency on the indicated population. Finally, in immunology, we have discontinued the Phase II study for IL-2 in ulcerative colitis due to a lack of efficacy based on interim analysis. The safety was consistent with that observed in previous studies and this decision does not impact the ongoing or planned studies for IL-2 in SLE or atopic dermatitis, as each disease state evaluates a different clinical hypothesis. Moving on to neuroscience. In the National Coverage Determination issued earlier this month for monoclonal antibodies directed against amyloid, we share the disappointment of patients and their caregivers with this NCD, and we know more generally that innovation in new medical areas really always starts with data that are less proven and more debated, and may proceed initially through regulatory mechanisms such as accelerated approval. We believe that CMS’s decision to CED in such circumstances is in conflict with FDA’s and Congress’s intent of expedited regulatory pathways and is likely to have a stifling effect on innovation for new medical areas, causing harm to patients that are waiting and in need of new medicines. That said, we are continuing with our rolling submission to the FDA under the accelerated approval pathway. We intend to complete our initial submission yet in Q2, enabling a potential regulatory decision in early 2023. We believe it would be beneficial for donanemab to obtain accelerated approval proximal to the TRAILBLAZER-ALZ 2 Phase III readout in mid-2023, which would enable parallel discussions with CMS regarding outright coverage and expedited review time for full FDA approval. We believe that given the thoughtful and robust design of TRAILBLAZER-ALZ 2, if the study is positive, it should meet the high level of evidence criteria set forth by CMS in the NCD decision. At that time, we will advocate for CMS to reconsider outright coverage of donanemab. As we have stated previously, it’s inconceivable to us that once substantial evidence of clinical benefit has been established for any Alzheimer’s medicine, people with the disease won’t have access to it. Our view of the mid- and long-term opportunity to help patients with donanemab remains unchanged. Shifting now to oncology with pirtobrutinib. We are also working on a rolling submission here under the accelerated approval pathway, in this case for mantle cell lymphoma. Here, we also expect to complete our initial submission in Q2. We received a complete response letter from the FDA regarding the submission for sintilimab, which was in line with our expectation after the Oncologic Drugs Advisory Committee meeting earlier this year. Along with Innovent, we are assessing next steps for sintilimab in the U.S. Further in the oncology pipeline, we started two additional Phase III studies. The first is an additional study evaluating Verzenio in HR-positive, HER2-negative advanced or metastatic breast cancer in combination with fulvestrant following progression on a CDK4/6 inhibitor and endocrine therapy. The second is CYCLONE-3, evaluating Verzenio in earlier lines of prostate cancer. We have also advanced our next-generation RET inhibitor to Phase I development and we have discontinued our Aurora A kinase inhibitor as we did not see sufficient monotherapy activity to warrant further development. Similarly, in our pain therapeutic area, we have decided to discontinue development of EPIREG and TGF-alpha because they did not meet criteria for proceeding. Finally, as Dave mentioned earlier, the FDA authorized bebtelovimab for emergency use for certain non-hospitalized patients with mild to moderate COVID-19. Bebtelovimab neutralizes OMICRON including the BA.2 sub-lineage as demonstrated by pseudovirus and authentic virus neutralization assays. As you can see, Q1 was another busy, but successful quarter for pipeline advancement at Lilly. Now I will turn the call back to Dave for some closing remarks.

Thanks, Dan. Before we go to Q&A, let me briefly sum up the progress we have made this year. We delivered solid sales growth, driven largely by volume from our key growth products, which represent 61% of our core business. We continue to see opportunity for meaningful operating margin expansion over time, excluding the impact of acquired IPR&D and development milestone charges. We made significant progress developing new medicines with exciting advances, including for Jardiance and HFpEF, the EUA Authorization for bebtelovimab, the submission of mirikizumab in ulcerative colitis, as well as positive Phase III results for tirzepatide in obesity and Jardiance in chronic kidney disease. Finally, we returned $2.4 billion to shareholders via the dividend and share repurchase. We are committed to invest for the long term to advance promising R&D opportunities and support launches to bring groundbreaking therapies to patients diagnosed with some of the most challenging diseases facing humankind, like diabetes, obesity, Alzheimer’s, cancer and autoimmune disorders. With the progress we have seen to-date, we remain extremely confident in our long-term growth prospects. Now, I will turn the call over to Kevin to moderate our Q&A session.

Thanks, Dave. We would like to take questions from as many callers as possible, so we ask that you limit your questions to two per caller. Luis, please provide the instructions for the Q&A session and then we are ready for the first caller.

Thank you. Operator instructions were given. And our first question is from the line of Louise Chen. Please go ahead and she is from Cantor.

Hi. Congratulations on the SURMOUNT data and thanks for taking my questions here. So I do want to ask you more about tirzepatide and SURMOUNT. How do you see the market landscape for obesity changing in light of your positive SURMOUNT data today? Is there an opportunity to file for that indication with the data and what’s the larger opportunity for you here, is it Type 2 diabetes or obesity? Thank you.

Thanks, Louise. We will go to Mike Mason for those.

All right. Louise, thanks for the compliment upfront. We appreciate that. I think the market opportunity remains what we thought before; we see it as a sizable opportunity and when we look at just the massive numbers of people who live with obesity—over 100 million people in the U.S., 650 million people globally—this contributes a burden of over $1 trillion globally. We do think it’s a huge opportunity. It should be perceived as and treated as a chronic illness. It not only has health implications, but if you live with obesity, it’s a very visible disease that really brings with it some unfortunate stigma into society that hurts individuals both physically and emotionally. And so there is a need to treat this disease. The market is not going to develop overnight. We have to increase awareness that this is a chronic disease that needs to be treated. We do need to establish and grow access for it. So we are looking long-term to this. I think it’s important for us to be able to build the foundation, build the knowledge that this is a chronic disease, get that appreciated by healthcare professionals and payers and then grow the market. So we are going to look long-term. We are investing obviously not only in tirzepatide but many early assets, because we do think this is a need in the marketplace that we need to focus on, and obviously, we are quite delighted by SURMOUNT-1, not only the high dose. I mean, obviously, when we saw the 52 pounds of weight loss at the high dose on average, we were wowed by that, but I am also as excited about the 16% weight loss at the 5 milligram, because everyone—we look at the averages, but there are no averages out there. Every individual is different and we need to have a medication that at different doses offers different weight loss and so I am very pleased about the dose profile and the weight loss profile across all the doses. As Dan said, we originally aligned with the FDA on four trials for the SURMOUNT-1, -2, -3 and -4 program. But given the huge market need and given this data, we do think it warrants a discussion with the FDA about whether we can find a path to accelerate it to the marketplace to meet this need. The SURMOUNT-1 data is great. We also have over 4,000 patients in the SURPASS global diabetes studies that provide a lot of good information on the safety and efficacy of tirzepatide in the diabetes population to go along with SURMOUNT-1. So we look forward to that conversation. I think when we—when you look at—if your last question was, are we more excited about diabetes or obesity, I think we are equally excited about both of them. Obviously, we will focus our attention on diabetes first; still a huge unmet need. Unfortunately, only about half of people who live with Type 2 diabetes are in good control. So we will focus on that and then we will focus long term on obesity as I have said earlier. So thanks for the question. Thanks for the compliments. Appreciate it.

Thanks, Mike. Louise, thanks for your questions. Next caller, please.

The next caller is Terence Flynn from Morgan Stanley. Please go ahead.

Great. Let me offer my congratulations as well on the SURMOUNT-1 data. I have two questions. The first is just based on the timing of the acceptance of the tirzepatide BLA for diabetes, it seems like we are past the window for the FDA to convene an AdCom panel. So just wondering if you agree or if the door is still open there? And then I was just wondering, probably a question for Mike, if you could share your latest perspective on commercial positioning of tirzepatide. Is this going to be a single brand or two separate brands and then how are you thinking early on, just high-level thoughts about pricing here—will pricing be based on dose level or fixed as is with Trulicity? Thank you.

Thanks, Terence. We will go to Mike for both those questions.

Okay. Thanks for the question. I will answer your second question first on our commercial positioning. Obviously, for competitive reasons, we will keep specific commercial strategy details to ourselves at this time, but know that we will focus on maximizing the opportunity long-term in diabetes and obesity and we will make the right moves whether that’s one or two brands. We will have dialogues with the FDA on the one versus two brands and it’s too early to talk about that at this point. With regards to the AdCom, we don’t anticipate an AdCom for tirzepatide.

Thanks, Mike. Terence, thanks for your questions. Next caller, please.

The next caller is Geoff Meacham from Bank of America. Please go ahead.

Hi, guys. Thanks so much for the question. Also want to offer my congrats on the data. Just had a few on the obesity opportunity. Dan, a question for you: the market gating factor still looks to be reimbursement and access and I think prevailing wisdom is that an outcomes study will be needed. So, first, do you agree with that, and second, if you do, how are you guys thinking about the size and scope of an obesity outcomes study? I wasn’t sure if there is a benefit size or a point estimate of benefit that you think could help drive reimbursement or for example bariatric surgery was a reasonable reference point? Thank you.

Thanks. We will go to Dan and then Mike to weigh in on outcomes studies.

Thanks. Of course, we believe and there is quite a bit of evidence that weight loss will lead to strong benefits in outcomes across a variety of diseases. Cardiovascular disease is near the top of the list, but many others as well. We know a lot from bariatric surgery, which has shown that it can reverse Type 2 diabetes or prevent the onset of diabetes. It can reduce cardiovascular risk. It can decrease even mortality when you get weight loss in the range of what we saw in this trial. So we are excited about the potential to change those outcomes. Of course, as you point out, we have to demonstrate that. We will do that over time. But given where we are in our understanding of this disease process and given the depth of unmet medical need in obesity, I don’t see that outcomes data as a gating factor for broader reimbursement of the drug. Maybe Mike can offer more details on that.

Yeah. Thanks, Dan. Thanks for the compliments on the data. I wouldn’t look at the fact that obesity agents to this point really haven’t secured broad access at smaller weight loss levels as a permanent verdict. At 5% to 7% weight loss, most prior agents did not produce outcomes benefits that were compelling to payers. But if you are looking at a product like tirzepatide that can deliver up to 22.5% weight loss, we do believe—and there’s supporting data—that this degree of weight loss is likely to drive meaningful health outcomes. We have to produce that data over time and we will. But I don’t think that will limit us from gaining access in the meantime. We see a large eligible population—tens of millions of people in the U.S. who could benefit—and we expect access to grow. There was a real win recently with the Federal Employees Health Program gaining access for obesity agents. We are committed to conducting trials to demonstrate outcomes, including for sleep apnea and HFpEF, as well as cardiovascular outcome studies, and those are indications that already have channels for coverage. So we expect to be able to build access while we generate outcomes evidence and then expand it further as outcomes are demonstrated.

Thanks, Dan and Mike. Geoff, thanks for your questions. Next caller, please.

The next caller is Chris Schott from JPMorgan. Please go ahead.

Great. Thanks. Thanks for taking my questions and congrats on the data as well. I have a couple of questions on tirzepatide. First, do you see weight loss plateauing in the study, and if so, when did it plateau? Do you expect patients will stay on the drug once they have lost weight? I am trying to get a sense of how you are thinking about duration of tirzepatide in obesity. Second, any clarity on an accelerated filing in obesity—when might we get more details on that? And third, on the pre-diabetic progression to diabetes endpoint from SURMOUNT-1, could diabetes prevention become a labeled indication or is this more likely to be supportive data? Thanks so much.

Thanks, Chris. We will go to Mike for those questions.

Okay. I think that may have been more than two, but I will go through these quickly. First, on weight loss plateauing: we will reserve some of the detailed time-course data for upcoming medical meetings, but broadly, we believe obesity is a chronic illness that requires chronic treatment, and we do believe patients will need to stay on the drug long-term to maintain benefit. Regarding an accelerated filing, as Dan commented earlier, our base alignment has been to complete the four registrational studies, but given the strength of SURMOUNT-1, we think it warrants discussion with the FDA about potential acceleration. On pre-diabetes and diabetes prevention, that’s an important population and could provide valuable data, but whether that becomes a labeled indication will depend on the data and regulatory discussions. It may more likely be supportive evidence for broader labeling and payer discussions.

Thanks, Mike. Next caller, please.

The next caller is Andrew Baum from Citi. Please go ahead.

Yeah. Thank you. Couple of questions, please. On long-term commercial potential, aided by co-morbidities, could you comment on the near-term trajectory? You referenced coverage that Novo has attained, but obviously they had an expensive bridge program during that period, which makes it difficult to extrapolate real reimbursement demand. We are hearing PBMs are pushing back patients that converted from bridge to reimbursement. Any comments? Second, two late-stage failures have been announced by competitors related to oral SERDs. Given you have a SERD in Phase III, how are you thinking about the impact of these failures on your development program?

Thanks, Andrew. Mike on the first and Jake on the SERD question.

Thanks. I would say access will evolve. We expect the obesity market to grow over time. Bridge programs can help demonstrate real-world value at launch and support early adherence. We will support patients at launch with appropriate programs. Over time, we expect new starts and switches to grow and payer coverage to expand as outcomes and real-world evidence accumulate.

Thanks for the question about SERDs. Our view of our program in the landscape hasn’t changed materially in light of recent competitor announcements. We have yet to see the full data from those companies, and in at least one case the management commentary suggested underpowered Phase II studies showing trends but not definitive results. Our registrational second-line randomized trial is a fully powered Phase III study that we are recruiting now and we are confident in its design. That may be the first path to market for the agent and impactful for patients in the later-line setting, but our ultimate focus is on the adjuvant setting where we believe the medicine could be most impactful; we are working on trial designs for that and will provide more detail later this year.

Thanks, Jake. Andrew, thanks for your questions. Next caller, please.

The next caller is Seamus Fernandez from Guggenheim. Please go ahead.

Great. Thanks for the questions and congrats on the data. Dan, this is a very large Phase III program that you are conducting for obesity, and you noted that you will be pursuing a potential faster path to market with regulatory authorities on the basis of SURMOUNT-1 data. How do you see the likelihood of success and is the real separation there the 20% threshold—do you think that is the potential game changer or is it something else in the data that we have yet to see that you think is unique and compelling? Separately, on Alzheimer’s, how are you feeling relative to competitor programs coming later this year? Any compare and contrast on the Lilly program versus those? Thanks.

We will go to Dan for both those questions.

Seamus, let me start with tirzepatide and regulatory path. The FDA has clear guidance on what’s required to get an indication for anti-obesity drugs and those guidance documents formed the basis of our previous discussions with the agency. Our base case remains that a submission will require the full package of Phase III data from this program. On the other hand, SURMOUNT-1 exceeded many expectations for magnitude of efficacy and tolerability. A few elements encourage further discussion with FDA: first, the unprecedented efficacy—more than 20% mean weight loss—is a major step-change; second, the safety and tolerability profile was very favorable, with relatively low adverse event discontinuations and an overall tolerability that supports chronic use; third, this data does not stand alone—it builds on a deep and positive Type 2 diabetes program demonstrating safety and efficacy in patients with diabetes and obesity. Those elements combined make it appropriate to discuss potential expedited options with regulators; if an opportunity exists, we will pursue it and will be forthcoming with investors. On Alzheimer’s, TRAILBLAZER-ALZ 2 incorporates several design elements we believe may be important: selection of patients with intermediate tau levels to enrich for those most likely to respond, a drug that lowers amyloid faster and to a greater extent, and a statistical analysis plan focusing on the AD Composite Score (ADRS) which can be more sensitive and less noisy than some other endpoints like CDR-SB. Even if some competitor trials are negative, we think the totality of evidence across studies will be informative, and our trial is designed to be highly rigorous. We remain optimistic about a mid-2023 readout for TRAILBLAZER-ALZ 2.

Thanks, Dan. Seamus, thanks for your questions. Next caller, please.

The next caller is Tim Anderson from Wolfe Research. Please go ahead.

Hi. Thanks for taking my questions and congrats on the data. This is Alice Nettleton on for Tim Anderson. On tirzepatide, past obesity drugs had a sizable fraction of patients who did not achieve at least 5% weight reduction. Is there any mechanistic rationale or predictability for those who don’t respond, and do you have any insight into identified resistance mechanisms? Thank you.

We will go to Dan for this question.

Thanks for the question. You are right that prior obesity medications have had substantial non-responder fractions. That was not the case with tirzepatide. In SURMOUNT-1, at the 10 milligram and 15 milligram doses, more than 96% of patients achieved at least 5% weight loss. So the drug is working in the vast majority of patients in this trial. Nearly two-thirds of patients at the highest dose got 20% weight loss, which is life-changing. We believe the GIP and GLP-1 combination mechanism in tirzepatide is particularly powerful and overcomes resistance mechanisms that limited response to prior agents.

Thanks, Dan. Alice, thanks for your question. Next caller, please.

The next caller is Umer Raffat from Evercore. Please go ahead.

Hi, guys. Thanks for taking my question, and by the way, congrats on the data. How has the FDA engagement progressed—have you finalized the statistical analysis plan with the FDA for TRAILBLAZER? And given your confidence in donanemab, why would it not make sense to include CDR-SB as a primary endpoint in TRAILBLAZER-ALZ 2 for head-to-head comparisons? Separately, you mentioned IL-2 in ulcerative colitis was discontinued—was that for lack of efficacy based on interim analysis? Thanks.

We will go to Dan for these questions.

Umer, on TRAILBLAZER statistical plans, our primary endpoint in TRAILBLAZER-ALZ 2 is the AD Composite Score (ADRS) because it captures both cognition and function and performs well statistically relative to some other measures. CDR-SB has been noisy in prior trials and can move inconsistently across sister studies. ADRS combines ADAS-Cog and ADCS-ADL components that are more reliable and consistent across trials. That said, CDR-SB is included as an important secondary endpoint and would be part of our overall evidence package. Regarding IL-2 in ulcerative colitis, yes, that Phase II study was discontinued for futility based on an interim analysis. Safety was consistent with prior studies, and the decision was limited to that indication; IL-2 studies in SLE and atopic dermatitis continue as they test different hypotheses.

Thanks, Dan. Umer, thanks for your questions. Next caller, please.

Next caller is Steve Scala from Cowen. Please go ahead.

Thank you. A couple of questions. The SURMOUNT-1 data was very impressive, but was that level of efficacy a likely scenario internally? Has the FDA or any regulatory body encouraged Lilly to file early based on SURMOUNT-1 results? Second, were there any inventory movements or other unusual commercial movements in the quarter that would affect product comparisons? Thanks.

We will go to Dan for the regulatory part and Anat for the inventory dynamics.

Steve, we are delighted with the SURMOUNT-1 results; the magnitude of efficacy and tolerability exceeded many expectations. Regarding regulatory interactions, our prior alignment with FDA was to submit when the full package of Phase III data is complete. Given the strong results, we will have discussions with the FDA about whether any alternative paths are available. We typically do not disclose detailed back-and-forths with regulators, but we will pursue any reasonable expedited options.

On Q1 dynamics, we typically see an inventory build at the end of each calendar year in December followed by inventory burn in the first quarter. We saw the same dynamic this year, which had some impact on Trulicity and a number of other products when doing year-on-year comparisons. For Taltz, year-over-year we saw a reduction in script size; last year we had certain loading dose dynamics associated with a new contract and devices each patient started on, so this quarter reflects normalization from that comparison.

Thanks, Anat. Steve, thanks for your questions. Next caller, please.

The next caller is Vamil Divan from Mizuho. Please go ahead.

Great. Thanks. A couple more on obesity. You mentioned an Amylin receptor agonist moved to Phase I. Is that intended as an insurance policy against competitors, or do you expect Amylin could provide additional efficacy, perhaps to be stacked with tirzepatide? Second, can you remind us how duration of therapy typically looks for Trulicity in diabetes and how that might inform expectations for duration in obesity, given tirzepatide’s profile? Thanks.

We will go to Dan for the Amylin question and Mike for the treatment-duration and Trulicity comparisons.

We have been exploring incretin and incretin-like biology for many years. Amylin is one pathway of interest. We have advanced a pure Amylin agonist to Phase I. We do not expect these mechanisms alone to match the 22.5% weight loss we observed with tirzepatide, but they could be complementary and potentially stacked with tirzepatide for patients who need additional weight reduction. With tirzepatide raising the efficacy bar, any new mechanism will need to demonstrate differentiating benefit, possibly as an add-on.

Good question on duration. Diabetes and obesity are different disease processes. Trulicity and other GLP-1s in diabetes address glycemic control where beta-cell function progressively declines over time, which impacts treatment durability. Obesity is a different biology—weight loss benefits are generally durable with ongoing treatment and patients are highly motivated to maintain weight loss. We expect patients will stay on tirzepatide long-term to maintain benefit. We will study duration and reasons for discontinuation and work to support persistence in real-world use.

Thanks, Dan and Mike. Vamil, thanks for your questions. Next caller, please.

The next caller is Carter Gould from Barclays. Please go ahead.

Hi. This is Justin on for Carter. Thanks for taking the questions and congrats on all these exciting updates today. First, looking at read-through to heart failure, the magnitude of weight loss is a predictor of outcomes there. Does the magnitude of weight loss in SURMOUNT-1 increase your confidence in the outcomes of the SUMMIT study and are there any interim analyses we should be watching for? Thank you.

We will go to Mike for that question.

Good question. The strength of SURMOUNT-1 does increase our confidence in the tirzepatide program overall, including HFpEF. Weight loss is hypothesized to benefit HFpEF and these data are supportive. Regarding interim analyses, we do not generally disclose planned interims for ongoing outcome studies because of the importance of preserving trial integrity. If there are any formal interim readouts we will communicate appropriately.

Thanks, Mike. Justin, thanks for the question. Next caller, please.

The next caller is Kerry Holford from Berenberg. Please go ahead.

Hi. Thanks for taking questions. Two quick ones. First, does the SURMOUNT-1 data enable an earlier filing in obesity and could you pursue an expedited review? Also, can you confirm the exact PDUFA date for the diabetes filing? Second, Anat, on IPR&D and guidance, these costs could evolve with further acquisitions; can we expect Lilly to provide visibility at the start of each year on the level of milestones or IPR&D charges you expect in the year ahead? Thank you.

Dan will address the regulatory filing question and Anat will address IPR&D visibility.

Kerry, to be clear, we have not announced plans for an early filing. We said the data warrant further discussion with regulators. We do hold a priority review voucher that provides some regulatory flexibility for certain submissions, and we will consider all options—including how best to use available regulatory pathways—based on the totality of data and unmet need.

Kerry, on IPR&D charges: these are highly variable and essentially unpredictable because they depend on business development activity, which can range from very small to very large transactions. Historically we have seen large swings quarter-to-quarter. We will report any charges we incur as they occur each quarter and provide details in the press release and financial disclosures. Providing a firm forecast of IPR&D charges at the start of the year is not practical because we cannot predict the timing or size of potential acquisitions or milestone payments.

Thanks, Anat. We do not provide PDUFA dates; we announce submissions at the time they are made. Thanks, Kerry. Next caller, please.

The next caller is Evan Seigerman from BMO. Please go ahead.

Hi, guys. Thank you so much for taking my questions. Any additional color on why we saw a higher discontinuation rate in the mid-dose in the tirzepatide data? And more broadly, how do you see Trulicity and tirzepatide coexisting assuming tirzepatide is approved—do you expect switches or a mix of new starts and switches? Thank you so much.

Dan will speak to discontinuation rates and Mike will address positioning with Trulicity.

In SURMOUNT-1, tolerability of the 10 milligram and 15 milligram doses were pretty similar. Treatment discontinuation rates due to adverse events were low overall—mid single-digits—so we view these as favorable results. The slight differences across doses reflect the balance of tolerability and efficacy; the higher efficacy on 15 mg likely supports persistence.

On commercial positioning with Trulicity and tirzepatide: our priority is to grow the incretin class and maximize the opportunity across our portfolio. We expect a mix of new patient starts and some switching from other GLP-1s, but we will focus on winning new patients entering the class. Our commercial strategy will be designed to grow the category as well as Lilly’s share of that growth.

Thanks, Evan. Next caller, please.

The next caller is Chris Shibutani from Goldman Sachs. Please go ahead.

Thank you. Two questions on tirzepatide and read-throughs to competitor outcome data. Can you frame expectations for what would be clinically meaningful in outcomes and whether Novo’s outcome(s) are likely to be informative for the category? Second, regarding the CMS NCD for amyloid-directed therapies, does the final NCD language give clarity that your current program will meet CMS requirements for full reimbursement if TRAILBLAZER-ALZ 2 is positive? Thank you.

Mike on outcomes and Anne on the CMS/NCD question for donanemab.

On outcomes: we expect that substantial weight loss is likely to translate into meaningful clinical benefits. We anticipate competitor outcome data could be informative for payer attitudes and coverage decisions. We remain committed to conducting our own outcomes trials to show benefits in conditions such as sleep apnea, HFpEF, and cardiovascular outcomes.

On the NCD, our priority will be to advocate for reconsideration once TRAILBLAZER-ALZ 2 data are available. We believe that two positive pivotal trials should meet the high level of evidence criteria described by CMS. We have engaged with CMS throughout the process and will continue to do so. If TRAILBLAZER-ALZ 2 is positive, we expect to seek reconsideration for national coverage and believe the program’s design and data should be sufficient, but we will need to work with CMS to gain their agreement.

Thanks, Anne. Chris, thanks for your questions. Next caller, please.

The next caller is Robyn Karnauskas from Truist Securities. Please go ahead.

Hi. Thanks for taking my question. Continuing on tirzepatide: have you discussed with payers whether, once patients achieve certain improvements or their co-morbidities are resolved, they would maintain reimbursement to continue therapy? Second, now that you have robust in-house obesity data, what new trials or indications might you consider initiating—such as obesity without comorbidities or other indications—to fully capitalize on this profile? Thanks.

We will go to Mike for both questions.

Great questions. Regarding payers, they want to ensure patients who have benefited remain on therapy and payers are open to working on mechanisms that support persistent use in patients who derive clinical benefit. We expect to partner with payers to maintain access for patients who have achieved clinically meaningful benefit. On additional trials and indications, we are reviewing the SURMOUNT-1 data and thinking broadly about additional studies that could provide insights and support access. We will be thoughtful and aggressive; if certain additional trials would provide important evidence for payers and clinicians, we will pursue them.

Thanks, Mike. Robyn, thanks for your questions. The queue is now exhausted. We will go to Dave for the close.

Okay. Great. Well, thanks for joining today’s earnings and tirzepatide call, and your interest in the company. It is an exciting moment for all of us. 2022 started in a similar fashion to how we ended 2021, with strong momentum across the business. We remain focused on executing our innovation-based strategy, which is to bring new medicines to patients and create value for all our stakeholders. With strong commercial execution complemented by a pipeline of industry-leading opportunities, we believe Lilly continues to be a compelling investment. So thanks for dialing in today and please follow up with the IR team if you have questions we have not addressed on the call and have a great day. Thanks.

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