Earnings Call Transcript - LLY Q1 2026

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q1 2026 Earnings Conference Call. I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Mike Czapar, Senior Vice President, Investor Relations

Good morning. Thank you for joining us for Eli Lilly and Company's Q1 2026 Earnings Call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO; Lucas Montarce, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific and Product Officer; Adriane Brown, President of Lilly Immunology; Dr. Carol Ho, President of Lilly Neuroscience; Livia Yuffa, President of Lilly USA and Global Customer Capabilities; Jake Van Naarden, President of Lilly Oncology and Head of Business Development; Patrik Jonsson, President of Lilly International; and Kenneth Custer, President of Lilly CardioMetabolic Health. We're also joined by the Investor Relations team: Jim Greffet, Susan Hegland, Mark Kimon and West Tal. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to various factors, including those listed on Slide 4. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community and is not intended to be promotional or to influence prescribing decisions. As we transition to our prepared remarks, please note our commentary will focus on non-GAAP financial measures. Now I'll turn the call over to Dave.

David Ricks, Chair and CEO

Thanks, Mike. 2026 is off to a strong start. During the quarter, we delivered robust revenue growth, advanced our pipeline across all four therapeutic areas, announced multiple business development transactions and invested to drive our future growth. Earlier this month, we achieved an important milestone as orforglipron was approved by the U.S. FDA under the trade name Foundayo. Foundayo has been proven highly effective for weight management, offering the benefits of GLP-1 therapy in a pill form and can be taken at any time of day without food or water restrictions. Foundayo is a new molecule, a new modality for agonizing GLP-1, and it is a new brand. This is the first time a new incretin medicine has been launched with obesity as its indication first. While the Foundayo launch has just begun, we're encouraged by momentum against our 2026 launch priorities. These are broad digital and traditional distribution availability, high levels of awareness with consumers of this new option for weight management, educating a broad group of HCPs, helping them start new patients and get comfortable with a new GLP-1 molecule, and of course building broad access in commercial, Medicare via the bridge program, and later Medicaid access for patients. And while the U.S. approval is an important first step, there are over 1 billion people around the world with obesity and related conditions that could be helped by taking an oral option like Foundayo. Recall that a key advantage of Foundayo is scalability and that oral GLP-1s for obesity have not yet been introduced outside the U.S. Regulatory reviews are ongoing in over 40 countries for obesity and type 2 diabetes. We plan to submit Foundayo in the U.S. for type 2 diabetes later this quarter. Included in the U.S. type 2 diabetes submission will be the results from the ACHIEVE I trial, which we shared a few weeks ago. In the seventh positive Phase III registration trial, Foundayo showed cardiovascular safety and a lower risk of all-cause death in adults with type 2 diabetes and obesity without increased cardiovascular risk. In addition to the obesity and diabetes programs, we're actively studying Foundayo in six Phase III programs in other diseases, and we will continue to generate new data for this important new medicine in the quarters and years to come. On Slide 5, we list the Q1 financial metrics and the highlights of our progress related to the strategic deliverables of Lilly. Revenue grew 56% compared to Q1 2025. Our key products currently defined as Zepbound, Jardiance, Taltz, Mounjaro, Olumiant and other core medicines grew by more than $7 billion. Within key products, our immunology, oncology and neuroscience medicines collectively grew by 160% compared to the same quarter last year as we continue to invest to drive growth across all of our therapeutic areas. In addition to the progress on Foundayo, we achieved several key pipeline milestones since our last earnings call, including positive Phase III data for pertibrutinib in combination with a time-limited regimen in adults with previously treated CLL, positive Phase III data for egis (ixekizumab) in pediatric atopic dermatitis, positive Phase III data for Taltz plus tirzepatide in adults with psoriasis and obesity, positive Phase III data for retatrutide in adults with type 2 diabetes and the initiation of new Phase III programs for eloralintide, sofetobartin, mypatecan and brenepatide. Consistent with our capital allocation strategy to expand investments in business development, we announced agreements to acquire multiple companies with clinical-stage programs: Orna Therapeutics, a company with an in vivo CAR T pipeline to treat autoimmune diseases; Syntessa Pharmaceuticals, a company developing a new class of medicines for the treatment of excessive daytime sleepiness and other neurologic conditions; Colonia Therapeutics, a company developing an in vivo platform to treat multiple myeloma and other cancers; and Ajax Therapeutics, a company developing next-generation JAK inhibitors for people with blood cancers. We expect to remain active in business development to complement our internal portfolio, while maintaining the discipline to create shareholder value. We also distributed $1.5 billion in dividends in the first quarter and executed $2.4 billion in share repurchases. Two important updates occurred this quarter to expand access to obesity medications. First, we launched Lilly Employer Connect. This is a platform introduced as a new way for employers to offer obesity management medicines to their employees. While it's still very early for this innovative model, we're encouraged by the level of employer interest. Second, CMS announced the extension of the Medicare GLP-1 bridge program, which provides access to obesity medicines to people with Medicare. The program will begin no later than July 1, 2026, and run through December 2027. This program has the potential to help improve the health of millions of seniors while capping their out-of-pocket costs at $50 per month. Now I'll turn the call over to Lucas to review our Q1 financial results.

Lucas Montarce, Chief Financial Officer

Thanks, Dave. As shown on Slide 6, Q1 was another strong quarter of financial performance. Revenue grew 56% compared to Q1 2025, driven by Zepbound and Mounjaro and solid momentum across all therapeutic areas and geographies. Gross margin as a percentage of revenue was 82.6% in Q1, a decrease of approximately one percentage point versus the same quarter last year. The change was driven primarily by lower net prices. Marketing, selling and administrative expenses increased 19% as we continue to invest in promotional activities to support ongoing and planned new product launches. R&D expenses increased 28%, driven by continued investments in our pipeline, including 42 active Phase III programs. Our non-GAAP performance margin was 50%, an increase of approximately seven percentage points from Q1 2025, driven by revenue growth. Non-GAAP earnings per share was $8.55 including acquired R&D charges of $0.52. This compares to non-GAAP earnings per share of $3.34 in Q1 2025, inclusive of $1.72 of acquired in-process R&D charges. On Slide 7, we quantify the effect of price, rate and volume on revenue growth. U.S. revenue increased 43% in Q1, primarily driven by volume growth from Zepbound and Mounjaro as well as contributions from our immunology, oncology and neuroscience portfolio. U.S. price declined by 7%, including the impact of the previously announced direct-to-patient prices for some products. U.S. price was positively impacted by a one-time adjustment to estimates for rebates and discounts, primarily impacting Zepbound and Mounjaro. Excluding this impact, U.S. price would have declined 10%. Europe revenue grew 37% in constant currency, driven by sustained strong volume growth of Mounjaro. In Japan, revenue grew 42% in constant currency driven by Mounjaro for type 2 diabetes. In China, revenue growth accelerated with the inclusion of Mounjaro on the national reimbursement drug list for type 2 diabetes. And in Rest of World, revenue more than doubled in constant currency as Mounjaro achieved rapid share gains in Latin America and Asia. On Slide 8, we provide an update on the performance of our key products. Within immunology, we continue to increase our presence in atopic dermatitis with Atlas. U.S. new patient starts increased by 90% compared to Q1 2025 and we steadily gained share within the specialty dermatology market. We continue to focus on patient activation and expanding HCP engagement to drive additional share of market. In oncology, pertibrutinib posted a strong quarter of growth, gathering additional momentum in the U.S. from the expanded post-BTK indication in CLL. Worldwide sales grew 79% compared to Q1 2025, and we continue to hear positive feedback from physicians globally. We believe pertibrutinib has the potential to be a foundational therapy across multiple settings and regimens within CLL. Although it's still early, Lurio performance in the U.S. was encouraging during its first full quarter launch, achieving over 35% share of new patient starts in metastatic risk cancer in Q1. For the rare market growth also increased, largely driven by the launch of Enurio. In neuroscience, KisiAnla continues to be the U.S. leader in amyloid-targeting therapies. The market continues to steadily increase as diagnostic capabilities for Alzheimer's disease expand. We expect European launches to begin contributing to growth throughout 2026. Finally, in cardiometabolic, Mounjaro and Zepbound global revenue was $12.8 billion combined, contributing $6.7 billion of growth compared to Q1 2025. As seen on Slide 9, the U.S. incretin analog market continued robust growth in Q1. The recent approval of all GLP-1s expanded the market, enabling more people to benefit from GLP-1s. Within the U.S. incretin analog obesity market, total prescriptions grew by over 80% in Q1. And Zepbound prescriptions grew at an even faster rate. Zepbound performance was driven by continued strong uptick in the self-pay channel as well as steady growth in the commercial segment. However, the loss of Medicaid access in certain states had a negative impact on Q1 prescription growth in the high single digits. We recently launched Zepbound in the U.S. in a new injection device that includes a full month supply of medicine in one pen. The self-pay channel continues to be an important segment for Zepbound and accounted for approximately 45% of total Zepbound prescriptions in Q1 and 55% of new prescriptions. In the U.S. type 2 diabetes incretin analog market, total prescriptions grew 11% and Mounjaro gained another 3 percentage points of market share compared to the end of 2025. Outside the U.S., Mounjaro continues its steady progress within the incretin analog market. Slide 10 shows aggregate trends in the international incretin analog market. The total international market has increased by 77% since the same period last year, as measured by IQVIA gross sales. In Q4 last year, Lilly became the market leader outside the U.S., and the strong growth of Mounjaro in Brazil, the U.K., Korea and China, among others, has resulted in additional share gains in Q1 2026. We expect continued strong performance outside the U.S., but with share leadership already established, increased patient activation will be key to drive sustainable growth. Lastly, on Slide 11 is an update of the Foundayo launch. Early feedback from payers, physicians and patients is encouraging. Foundayo was broadly available in pharmacies on April 9 and is available on more than 12 major telehealth platforms. Discussions with payers have been productive and commercial access has been confirmed at two of the three largest U.S. pharmacy benefit managers, effective mid-May. In addition, the GLP-1 bridge program will start no later than July 1, which brings new access to anti-obesity medicines for people with insurance through Medicare. While HCP awareness campaigns went live shortly after approval, we began in-person promotion to HCPs on April 17. We expect to drive brand awareness and differentiation through full-scale consumer promotion, including direct-to-consumer TV advertising beginning in Q3. We are focused on commercial execution to drive long-term growth. On Slide 12, we provide an update on capital allocation. Moving to Slide 13, we share updated expectations for 2026 financial guidance. We have increased the top and the bottom end of the revenue range by $2 billion and now expect full year revenue to be between $82 billion and $85 billion. This reflects a strong underlying performance of Mounjaro and Zepbound in Q1. The midpoint of the new revenue range represents 28% growth compared to 2025. We still expect price to be a headwind in the low to mid-teens for the full year. We expect our non-GAAP performance margin to be between 47% and 48.5% driven by higher revenue. Our tax rate remains unchanged, and we now expect non-GAAP earnings per share of $35.50 to $37, an increase of $2 to both the top and bottom of the non-GAAP earnings per share. We are pleased with our Q1 results and confident in our ability to deliver another year of industry-leading growth. Now, I will turn the call over to Dan to highlight our progress on R&D.

Daniel Skovronsky, Chief Scientific and Product Officer

Thanks, Lucas. Since our last earnings call, we've been busy with portfolio progression and significant business development in each of our major therapeutic areas. I'll share updates by area, beginning with cardiometabolic health. In addition to the U.S. approval of Foundayo for obesity, we also announced positive topline results from ACHIEVE I, the seventh and final Phase III trial in our global registration programs for type 2 diabetes and obesity. This trial evaluated the time to first occurrence of MACE events for Foundayo compared to insulin glargine in adults with type 2 diabetes and obesity or overweight with increased cardiovascular risk. As shown on Slide 14, Foundayo met the primary endpoint of non-inferiority with a 16% lower risk of MACE-4 events. And Foundayo met the secondary endpoint with a 23% lower risk in these events. Additionally, at a preplanned analysis not controlled for multiplicity, the survival advantage for patients on Foundayo was 57% compared to insulin glargine. These data add a new dimension to Foundayo's well-characterized effects on reducing A1c and weight as demonstrated in multiple previous Phase III trials. Now with the results from ACHIEVE I, cardiovascular safety and a lower risk of all-cause death are added to the clinical profile. Adverse events were generally consistent with other incretin-based therapies and no hepatic safety signals observed in ACHIEVE I, nor across the seven positive Foundayo Phase III registrational trials. ACHIEVE I is also the last trial required for the U.S. type 2 diabetes core registration package. We plan to complete the U.S. submission for type 2 diabetes in late Q2 and anticipate regulatory action before the end of this year. Moving to retatrutide, our GLP-1 and glucagon triple agonist — we announced positive topline results from TRANSCEND P2D-1, the first Phase III trial of retatrutide in people with type 2 diabetes. Given the potential counterregulatory impacts of glucagon activity on blood sugar control, we were excited to see profound improvements in hemoglobin A1c, as shown on Slide 15. Compared to placebo, retatrutide lowered A1c by an average of 1.7 to 2.0 percentage points across doses. Importantly, we saw that participants lost an average of 11.1 to 16.6 kilograms, or 25 to 37 pounds. While cross-trial comparisons have limitations, these data suggest retatrutide can deliver glycemic control in line with the most widely prescribed dual-agonist therapy for type 2 diabetes, tirzepatide, while delivering additional weight loss. This is critically important given the difficulties people living with type 2 diabetes face when trying to lose weight and the significant need for better weight-loss medicines for this population. Adverse events seen with retatrutide were generally consistent with what had been observed in clinical trials of incretin-based therapies and discontinuation rates due to adverse events were 5% or less across all arms. We look forward to presenting detailed TRANSCEND P2D-1 results at the American Diabetes Association scientific sessions in June. Together with the positive TRANSCEND obesity results, we are beginning to establish a favorable clinical profile for retatrutide, consistent with our goals for this molecule. The next retatrutide trial to read out is an 80-week study in people with obesity. We look forward to sharing topline results later this quarter. Also in cardiometabolic health, we initiated three additional Phase III programs for eloralintide. In addition to the ongoing Phase III obesity programs, we initiated Phase III programs in osteoarthritis pain, obstructive sleep apnea and as an add-on therapy for lipid control. As a selective amylin receptor agonist, or SARA, eloralintide has shown a unique profile in Phase II trials with GLP-1-like weight loss and improved tolerability. We're eager to explore additional indications for this promising molecule in what we expect to be a very robust Phase III program across a number of potential indications. We also recently completed our acquisition of Ventix Biosciences, which brings a pipeline of small molecule therapeutics, including NLRP3 inhibitors designed to treat inflammation across a broad range of diseases. Both NLRP3 inhibitors are now shown in the Lilly pipeline. We also announced a licensing agreement with CSL for clazakizumab for certain indications, and that molecule will be reflected in our pipeline chart once Lilly trials have begun. Moving to immunology. We reported two important data sets for our IL-13 program. First, in the ADO Phase IIIb open-label extension study, the IL-13 inhibitor delivered durable disease control for up to four years with one-month dosing. Nearly all patients achieved meaningful skin improvements, 75% achieved near complete skin clearance and 80% maintained their results without the need for topical corticosteroids. For people living with chronic relapsing diseases like atopic dermatitis sustained control delivered with less frequent dosing is a major goal. We're pleased that our once-every-eight-weeks maintenance regimen is currently under FDA review, and we expect regulatory action later this year. If approved, less frequent dosing may be a more convenient option to improve the patient experience and further differentiate us from competitors. The second readout was the Phase III pediatric trial. The IL-13 inhibitor delivered positive outcomes for children as young as six months old with moderate to severe atopic dermatitis. As shown on Slide 16, 63% of children treated achieved significant skin improvement as measured by EASI-75. In addition, 44% achieved clear or almost clear skin as measured by IGA 0/1. This makes our IL-13 inhibitor the first and only selective IL-13 inhibitor with positive Phase III data in this age group where there are fewer approved medicines than in adolescents and adults. We plan to submit these data to regulators later this year for potential labels. Also in immunology, we reported positive topline results from TOGETHER PSO, the Phase IIIb study of ixekizumab plus tirzepatide in adults with psoriasis and obesity. In TOGETHER PSO, 27% of participants on tirzepatide plus ixekizumab achieved the co-primary endpoint of total skin clearance and 10% or more weight loss compared to less than 6% of patients on ixekizumab alone. These results are the second successful trial highlighting the benefits of treating psoriatic disease and obesity with concomitant ixekizumab and tirzepatide therapy. This result provides further evidence that incretins may have a broader role in treating immunological diseases. We have additional ongoing Phase IIb combination trials in immunology studying mirikizumab plus tirzepatide in Crohn's disease and ulcerative colitis. We continue to assess other immunology settings where incretins may provide additional benefits. We also announced business development in immunology with our agreement to acquire Orna Therapeutics. Orna's in vivo CAR T pipeline includes potential best-in-class programs to reset the immune system and address B-cell-driven autoimmune diseases. We look forward to exploring the full potential of Orna's platform together with the Orna team. Turning to oncology. We announced positive topline results from a Phase III pertibrutinib trial in CLL. This ambitious study evaluated pertibrutinib in addition to a fixed-duration regimen of venetoclax and rituximab in patients with previously treated CLL or SLL. Pertibrutinib significantly extended progression-free survival compared to the fixed-duration regimen and was the first medicine to outperform a venetoclax-containing control arm in a Phase III in the history of CLL drug development. As shown on Slide 17, pertibrutinib has now been successful in four Phase III studies in CLL, each with compelling efficacy and tolerability. Pertibrutinib has been studied across early and later line settings of CLL, demonstrated efficacy as a monotherapy and in combination and showed efficacy head-to-head against chemoimmunotherapy, a covalent BTK inhibitor and now a venetoclax-based regimen. The breadth of evidence suggests pertibrutinib has potential to become a foundational therapy in CLL. Submissions for CLL-313 and CLL-14 are currently under review by regulators for potential label expansion into the first-line setting. We plan to submit the results of BRUIN CLL-322 to regulators later this year. Building on the Breakthrough Therapy Designation received for platinum-resistant ovarian cancer, we initiated a second Phase III trial for our folate receptor alpha antibody-drug conjugate in platinum-sensitive ovarian cancer. We also announced the acquisition of Colonia Therapeutics; Colonia's lentiviral in vivo CAR T platform showed very promising early clinical results in people with multiple myeloma, and we look forward to rapidly advancing the lead program with the Colonia team as well as building future medicines using this technology platform. Earlier this week, we announced the acquisition of Ajax Therapeutics; the lead program, a Phase I JAK2 inhibitor for myelofibrosis and polycythemia vera, builds on Lilly's established capabilities in blood cancers. Moving on to neuroscience. We initiated a Phase III program for brenepatide, a GIP/GLP-1 dual agonist, in major depressive disorder. This trial will assess if brenepatide can delay time to relapse — psychiatry continues to have significant unmet need where relapse rates remain high despite available therapies. We've also begun Phase II trials of brenepatide in opioid use disorder and schizophrenia and initiated Phase II trials for two pain assets: a sodium channel inhibitor and an AT2 receptor antagonist. Lastly, we announced an agreement to acquire Contessa Pharmaceuticals, which will expand our neuroscience portfolio and capabilities into treating sleep-wake disorders. Contessa, a leader in orexin receptor science, is advancing a pipeline of orexin receptor 2 agonists targeted to the neurobiological system governing the sleep-wake cycle. The lead candidate, emnarexant, has demonstrated a potential best-in-class profile. We look forward to welcoming the Contessa team to Lilly later this year and continuing the development of these important molecules. Slide 18 shows pipeline movements since our last earnings call and Slide 19 is the full list of key events expected in 2026. I'll now turn the call back to Dave.

David Ricks, Chair and CEO

Thanks, Dan. We're pleased with the progress to start this year. We executed well both in driving business results and bringing new medicines to patients. We posted another quarter of impressive revenue and earnings growth. We reported top-line results from five positive Phase III trials, announced four acquisitions, initiated six new Phase III programs and launched an important new Lilly medicine. Productive quarter and yet a lot more to come in 2026. Let me turn the call over now to Mike for the Q&A session.

Christopher Schott, Moderator / Analyst

Thank you, Dave. We'd like to take as many questions as possible. So consistent with prior quarters, please limit yourself to a single one-part question. Paul, please provide the instructions for how to join the queue and then we're ready for the first caller.

Operator, Operator

First question today is coming from Jeff Meacham from Citi.

Jeff Meacham, Analyst, Citi

Maybe this one is for Dave. Investors seem to be acutely focused on pricing and incretins with not a lot of emphasis on volume. I know you don't want to get too specific, but can you talk about, at a high level, the margins under a wide range of price scenarios for Lilly? How do you see the investments you've already made in, say, manufacturing? And how does that add to the dynamic and what that means in terms of the competitive note?

Mike Czapar, Senior Vice President, Investor Relations

Great. Thanks, Jeff. Dave, do you want to take us through pricing and market dynamics?

David Ricks, Chair and CEO

Sure. Thanks for the question, Jeff. Maybe a couple of things to point out: now that we're five or six quarters deep into the sort of post-shortage world, we can really pursue expansion on volume in an aggressive way. I think you can see something a little different about the obesity and weight loss category from what we think about in other pharmaceuticals, where the barrier is typically more informational rather than price sensitivity. But here, clearly, because of the out-of-pocket nature, a meaningful portion of ex-U.S. business for Mounjaro was out of pocket, and the U.S. is a meaningful portion as well. We see quite expansionary volume, perhaps nonlinear to price reductions. Of course, there's a floor on that, and we have sensitivity on our cost structures, et cetera. But pretty much every time we reduce pricing, we see a pretty large expansion. You also see built into this that the primary pricing effect in Q1 was actually negotiated outcomes with governments — both the MFN package we negotiated and other reimbursement actions. If you cut out-of-pocket cost, you see strong growth. For example, Lilly's ex-U.S. business really had quite a strong quarter in Q1 with slightly lower prices. And then in China, we negotiated for diabetes access at a meaningful price reduction, but you can see the volume far outstripping the price concession. So it's kind of a different dynamic. And I think if investors can think about this category, perhaps unlike other pharmaceutical categories in the past. In terms of margin sensitivity, it remains true that for this category for us at least, the unit economics are really driven by fixed costs that are either sunk in the past or unmovable depending on the volume in the present. As a result, both covering the amortized R&D costs as well as CapEx is a concern from an accounting perspective, but at the margin we do have latitude. That said, we want to invest in future medicines. And I think that's probably the biggest, as we've said before, as we think about long-term operating margin for the company, the X-factor. If we have good projects, we won't hesitate to invest in them, whether it be existing medicines — I think you see kind of a record load of Phase III at Lilly right now — or for new medicines. And we've got a very full Phase II and Phase I pipeline that we are deploying capital against. So we've got a lot of latitude here, Jeff, and I think this market works a little differently, and we're all sort of just getting used to that. But I think it's good news for Lilly and our incumbent position.

Operator, Operator

The next question will be from Chris Schott from JPMorgan.

Christopher Schott, Analyst, JPMorgan

Great. Congrats on the progress. I just wanted to dig a little bit more into international Mounjaro. Can you just share some of the learnings from — I think it's been a much better-than-expected launch than we all had anticipated — as we think about the ramp going forward and the longer-term opportunity? And maybe as part of that, should we expect any impact to the ramp from the entry of generic semaglutide in select markets? Or is this such an early stage of penetration where that's less relevant?

Mike Czapar, Senior Vice President, Investor Relations

Great. Thanks, Chris. For the question about international Mounjaro and the potential impact of generic semaglutide, we'll go to Patrik.

Patrik Jonsson, President, Lilly International

Thank you very much, Chris. When we look at the first quarter, it's truly strong growth of all our prioritized products across international, but of course particularly in Mounjaro. We have fully launched in more than 55 countries and we have seen a very strong speed of uptake and also rapid market share gain. In the markets we launched in the second half of 2025, referring to Brazil and Korea, we currently have an estimated market share of around 60% in those markets. And of course also the China type 2 NRDL reimbursement has been a strong driver. When we look at generics, we only have a few weeks of data from India, but it seems like it's really stimulating the growth in the overall obesity market, and that includes our product. Mounjaro has actually been holding market share quite nicely. When we look at recent Mounjaro prescriptions, they are about 10% higher in recent weeks compared to the period prior to generic semaglutide. So I think it just underscores that dual agonists outperform single agonists. Moving forward, I think we should expect very strong continued year-on-year growth and some sequential growth. We saw in the slide earlier that we have a market share above 53% outside the U.S., and that's an average. In many international markets, we have a market share along the lines of what we see in the U.S. with semaglutide. When you get to that level of share, incremental share gain is getting harder. Of course, we will focus our efforts on patient activation, driving increased penetration in the chronic-care managed market and end-market growth. Secondly, what we have seen during the second half of the year has been some seasonality, mainly driven by the holiday season in Europe, where patients tend to take a holiday drug break or actually delay the initiation of new therapy starts. But overall, strong growth across regions. It seems like generic semaglutide is stimulating market growth, and we continue to do well. We expect continued strong year-on-year growth and some sequential growth driven by patient activation.

Operator, Operator

Next question will be from Seamus Fernandez from Guggenheim.

Seamus Fernandez, Analyst, Guggenheim

Great. We just wanted to get a better understanding of how the market as you see it is starting to segment and could segment going forward? More as you look forward to the potential introduction of retatrutide amidst the Foundayo launch as well as then the follow-on to that being the eloralintide — where do you see the market really opening up with each of these potential assets reaching the market?

Mike Czapar, Senior Vice President, Investor Relations

Great. Thanks, Seamus. For that question, we'll go to Ken to talk a bit about the cardiometabolic portfolio and how we see the market segmenting.

Kenneth Custer, President, Lilly CardioMetabolic Health

Yes, sure. Thanks for the question, Seamus. I think it's reasonable to expect in this large and growing market opportunity in obesity that many patients around the world will want different types of medicines that are tailored to their individual needs and preferences. We're in the early innings in that regard. We've seen single GLP-1 agonists, then dual agonists, and now oral medicines, but we see many other plausible opportunities to tailor medicines to different groups. As you noted, retatrutide is one of those ideas, which very obviously could play to individuals who are seeking greater weight loss, although I will say we see opportunities for retatrutide elsewhere and across the spectrum of obesity. Eloralintide can be positioned a few ways based on the Phase II data we've seen — the first of which is that this could be a great medicine for patients seeking a non-GLP-1-based mechanism, perhaps due to prior tolerability issues or an intolerance. It may also be a good drug that could be added on top of existing incretin therapies to provide incremental weight lowering. But there's many other ideas out there; Lilly is investing in medicines that may be dosed even less frequently, perhaps deliver additional metabolic benefits and maybe some that are ultra-long-acting using genetic medicine approaches. We see all of these as compelling ideas, and we also feel we're in a leading position in most, if not all, of those spaces. In terms of how the market will ultimately shake out in terms of percent use across those different approaches, it's hard to prognosticate, but many of these ideas are tied to common manufacturing platforms and we're making the investments to support any of them should they prove to be the most favorable option for managing obesity.

Operator, Operator

The next question will be from Alex Hammond from Wolfe Research.

Alex Hammond, Analyst, Wolfe Research

On Medicare Access, can you walk us through your strategy to activate these patients — and when do you see this playing out in terms of either a 4Q dynamic or more of a 2027 play as these patients pull through? And with the attractive price point, how do you think about persistence in this population?

Mike Czapar, Senior Vice President, Investor Relations

Thanks, Alex. For comments on Medicare access and staging over time, we'll go to Livia.

Livia Yuffa, President, Lilly USA & Global Customer Capabilities

Yes, great. Thank you for the question. We're excited about having Part D access starting to activate for obesity medicines beginning in July. The path with the bridge program starting in July through 2027 is an important aspect. Obviously, that will take time to build. We need to have education across physician offices, pharmacies as well as the consumer base to understand the range of different medicines available for treating obesity. So that will be a gradual path in 2026 as it starts and then continued growth in 2027. The $50 per month co-pay is an important element of affordability for seniors. We've already seen for Zepbound as well as Mounjaro persistent adherence overall relative to other chronic conditions, and we continue to see that. Obviously, the $50 co-pay and affordability will only add to that in addition to all of the health benefits and experiences that people will have over time. So we're excited about expanding access very soon.

Operator, Operator

Next question will be from Evan Seigerman from BMO Capital.

Evan Seigerman, Analyst, BMO Capital Markets

Bigger picture, strategically, as you think about the next levers of growth for the business, what do you need to see from either immunology, neuroscience or oncology franchises to kind of match the scale of the obesity metabolic businesses or particular assets? Is it BD or something else?

Mike Czapar, Senior Vice President, Investor Relations

Great. Thanks, Evan. We'll go to Dan to talk about some of the important programs he's focused on to drive growth in the future.

Daniel Skovronsky, Chief Scientific and Product Officer

Yes. Thanks, Evan, that's an important question. Even without the obesity and metabolic business, Lilly would be one of the fastest-growing pharmaceutical companies in the industry. So we're proud of what we're doing in immunology, neuroscience and oncology. Each of these areas has very significant unmet medical needs that we can scale into as our medicines are successful. We like the direction we're going. Of course, in each of those areas, we also see opportunities to get a lot bigger, and we've highlighted some of the themes already in our R&D pipeline. You'll also see us address some of that through business development. For example, the Contessa acquisition allows us to play in a new area in sleep-wake medicines. The Orna acquisition allows us to play in new areas of immune reset, for example. We will continue to use a mix of internal R&D and selective business development to expand the scale of these franchises.

Operator, Operator

The next question will be from Asad Haider from Goldman Sachs.

Asad Haider, Analyst, Goldman Sachs

Congrats on the continued strong execution. Maybe just going back to Foundayo. Appreciate all the color on early launch dynamics, which is sort of playing out along the lines of your messaging that the initial launch trajectory is going to live below that of injectable GLP-1s, but then there's going to be an acceleration as we move into the back half of the year. With a few weeks of launch under your belt and you said 20,000 patients have started taking the drug already, what's your level of confidence on that launch curve framing in the context of the early experience? And related on the guidance range are you able to provide any high-level commentary on what type of contribution was factored in for Foundayo recognizing that you said the revised range reflects mainly the strong underlying performance of Mounjaro and Zepbound?

Mike Czapar, Senior Vice President, Investor Relations

Great. Thanks, Asad. Livia, do you want to talk about some of the early launch metrics you're tracking and the feedback you're hearing? And then maybe a short comment from Lucas on guidance?

Livia Yuffa, President, Lilly USA & Global Customer Capabilities

Sure. It is early days, but we're pleased with the trajectory and encouraging first start to launch. We just started active sales force promotion a little over a week ago, and we had broad availability in the supply channel about two weeks ago. We're encouraged by the initial leading indicators. There are three key factors and catalysts of growth: one, growing familiarity among health care providers on the clinical profile of Foundayo; two, building out access; and three, growing awareness of Foundayo with consumers. We're making progress on all three fronts. On HCPs, we now have over 8,000 prescribers of Foundayo, one-third of whom have not previously written an oral GLP-1. The current sentiment so far that we're hearing is really positive on the overall efficacy and the convenience profile of a daily oral GLP-1. We'll continue execution related to HCPs around sampling, continued promotions through our sales force, educational seminars and other activities. On access, we've confirmed commercial access at two of the large PBMs as of mid-May, and Medicare access will start at the beginning of July. Those are continued catalysts of growth upcoming in the next couple of months. On the consumer front, we now have just over 20,000 patients treated to date. An important element is that 80% of those Foundayo prescriptions are new-to-class. So this is expanding the number of people being treated for overweight or obesity. We've done a number of activities already around direct-to-consumer digital, social media and other channels, but we'll continue those efforts and plan a full-scale consumer TV launch in Q3. Importantly, we want prescribers to have familiarity with the profile of Foundayo before we scale the consumer campaign. Bottom line, we're pleased with the progress. Early indicators are positive and moving in the right direction. The trajectory will build over time; this is a new brand and a new medicine we're bringing to market, so we're pleased with the initial performance.

Lucas Montarce, Chief Financial Officer

On the guidance, Asad, the increase in our guidance was driven by the strength of the entire portfolio that we discussed during the call, starting, of course, with strong performance in the U.S. and internationally for our core franchises. Regarding Foundayo, as Livia said, it is very early days and we have three weeks of data at this time. The launch is tracking to our expectations, and we will continue to monitor progress over the year. We feel confident about the trajectory we've seen so far, but most of the guidance uplift reflects strong performance of Mounjaro and Zepbound in Q1 rather than a material Foundayo contribution at this early stage.

Operator, Operator

The next question will be from James Shin from Deutsche Bank.

James Shin, Analyst, Deutsche Bank

This one for Dave. With the bridge program extending into 2027, Dave, what's next for broader Medicare access? Is Lilly working with stakeholders on revisions to secure longer-term Medicare access?

Mike Czapar, Senior Vice President, Investor Relations

Thanks, James. Dave, do you want to share a few comments about the bridge program dynamics?

David Ricks, Chair and CEO

Sure. When we signed the agreement with the administration, we all knew bridge was going to be put in place because it was a midyear launch. We understood at the time that there was a commitment to 2027, as a contingency if Part D plans did not choose to opt in at a certain rate. They did not opt in at that rate. Part D plans operate on their own economics and there have been other market events that have influenced their decisions. The government is doing what they said and they're extending the bridge program. For manufacturers, there are trade-offs, but the fact that there will be access to consumers at $50 a month is a very compelling proposition. As Livia highlighted, that will drive persistence. In an 18-month window, I think we will start to see population-level health improvements if these therapies are used at scale. That will then set up the 2028 discussion. I would expect the government to lean into getting Part D plan participation in 2028 and normalizing obesity care as a standard preventive treatment and as part of managing comorbidities in the senior population. We may have the evidence to support that as we exit 2027; it may need a little more time, but I think policymakers will push to make that happen. We'll continue to work with the government closely through that period and of course try to work with them to activate patients and make sure they can find success on our medicines. Stay tuned; probably more news as we exit 2026 on the actual 2028 plans.

Operator, Operator

The next question is coming from Mohit Bansal from Wells Fargo.

Mohit Bansal, Analyst, Wells Fargo

Congrats on the progress. I just want to touch upon the Employer Connect program that you're embarking upon. Would love to understand what are the steps to convince employers to buy into the Employer Connect program and the mechanics of it?

Mike Czapar, Senior Vice President, Investor Relations

Thanks, Mohit. Livia, do you want to make a few comments about Employer Connect and the progress and focus?

Livia Yuffa, President, Lilly USA & Global Customer Capabilities

Sure. Thanks, Mohit. Yes. As you mentioned, overall commercial access has been relatively steady around 50% in the U.S. One of the key aspects we're excited about with Employer Connect is working with third parties to go out and talk to employers about the value of covering obesity care. Employer Connect provides a transparent price that is known to employers and flexibility around plan design and employer/employee contributions toward obesity coverage. We think this transparency and flexibility will increase employer opt-in. Obviously, the selling cycle timeline for making decisions for 2026 has already passed, so while we are currently having positive conversations and receiving positive feedback from employers, the most likely impact will be gradual in the back half of 2026 with incremental opt-ins for 2027. As more real-world evidence and outcomes data come out demonstrating benefits to employee health and productivity, that will reinforce employers' decisions to provide coverage for obesity care.

Operator, Operator

The next question will be from Terence Flynn from Morgan Stanley.

Terence Flynn, Analyst, Morgan Stanley

Congrats on all the progress. As you think about the evolution of the direct-to-consumer channel, what are some of the things you're considering to leverage Lilly's scale in that channel, and anything that you think will help from the commercial side to drive additional coverage and scale across the portfolio?

David Ricks, Chair and CEO

Thanks for the question, Terence. Consumers want to take charge of their own health and are using digital platforms to manage weight and obesity. This is here to stay and it's a big part of our business now. We're investing to continuously improve the consumer experience in the U.S. and expand our offerings over time. As we move into medicines that could be more preventive or have broader indications, these platforms could reach more people. We also need to work within regulations and laws, but there's a lot of room for improvement for consumers and it's a great outlet for us. Livia and Patrik may add comments on LillyDirect and international efforts.

Livia Yuffa, President, Lilly USA & Global Customer Capabilities

Just a few components on LillyDirect: with Zepbound, around 55% of new patient starts are coming through self-pay, most of which is coming through direct or telehealth players, which reduces friction. Early in our Foundayo launch, with limited promotion, about 45% of our volume is coming through LillyDirect. We'll continue to improve the experience for providers and consumers and it will remain an important channel for obesity care in the U.S.

Patrik Jonsson, President, Lilly International

Similarly outside the U.S., we're at a very high market share in many markets and patient activation is going to drive most of the coming growth. Markets are responding to patient activation efforts, and while it's a slower ramp compared to the U.S., patient activation will be key given the low penetration outside the U.S.

Operator, Operator

Next question will be from Umer Raffat from Evercore.

Umer Raffat, Analyst, Evercore ISI

I wanted to spend a quick second on Zepbound's commercial dynamics in the U.S. For example, 1Q 7 million prescriptions and $4.1 billion sales for Zepbound in the U.S. implies about $580 per prescription. Even adjusting for some one-time adjustments, it is still approximately $550 per prescription whereas cash-pay prices are around $450. What explains that delta? Is IMS missing some online channels?

Lucas Montarce, Chief Financial Officer

Umer, your math is pretty spot on. Even normalizing for one-time adjustments, several factors explain the delta. First, we have maintained price discipline in several channels and have seen stable pricing quarter-on-quarter in many payer agreements. Second, LillyDirect prices were adjusted down starting in December and have been stable since. The remainder of the difference is driven by the mix of business — commercial business net prices and medical channel usage, where some uses are billed in a medical setting at close to undiscounted prices. That channel mix — plus some timing and channel measurement differences in syndicated data — explains much of the apparent gap between average price per prescription and advertised cash-pay price.

David Ricks, Chair and CEO

Maybe to add one thing: there's a reasonable amount of medical channel usage and medical exceptions that move across channels at close to an undiscounted price. That's probably the piece of the math to consider.

Operator, Operator

The next question will be from Courtney Breen from Bernstein.

Courtney Breen, Analyst, Bernstein

There's been a huge amount of focus on the first few weeks of Foundayo and the launch strategy. Ken, could you talk through how this compares to a traditional primary care launch — what things are you accelerating and what things are you holding back, particularly given that you have significant inventory prepared for the launch?

Livia Yuffa, President, Lilly USA & Global Customer Capabilities

Again, the three elements I discussed earlier are probably the same for primary care launches: grow the prescriber base and understanding of the medicine, build out access, and develop consumer awareness. We're gaining access early in launch — two of the three major PBMs are activated in mid-May and Medicare access starts in July, which is a faster ramp on access in some respects. We activated limited DTC from day one — digital, social media and out-of-home advertising — but it takes time to build consumer understanding. The brand profile for Foundayo is resonating on efficacy and convenience. Full-scale DTC, including TV, is planned for Q3; we want to ensure physicians understand Foundayo before we go fully broad. Overall, this is following an accelerated path in primary care. We've launched many primary care brands successfully and feel good about our actions and pace.

David Ricks, Chair and CEO

Just to reiterate: for the three major products used in obesity care in the U.S., these are brand extensions and the molecule in some cases was on the market before. Consumer awareness of the molecule and the brand starts from a lower baseline for Foundayo relative to some injectables, so we have to build that. We're confident we can build it; we've launched many primary care drugs successfully. Regarding inventory, that speaks to our international rollout — regulatory reviews in about 40 countries are ongoing and we expect an accelerated cadence of launches outside the U.S. as we exit this year and into next year. There's a huge opportunity for Foundayo around the world.

Operator, Operator

Final question today will be from Dave Risinger from Leerink.

Dave Risinger, Analyst, Leerink

Dave, can you frame your vision for employer coverage in the U.S.? I'm trying to get my head around what you think will happen with regular employer insurance coverage in coming years versus coverage that involves greater cost sharing by participants that engage with LillyDirect, where consumers might pay more out of pocket than under regular employer coverage.

David Ricks, Chair and CEO

Thanks, Dave. We believe obesity and overweight medications should be broadly covered. A big step is Medicare Part D access starting July 1; there's often spillover into the commercial market. The likely path to what will ultimately resemble other chronic medication markets like diabetes and hypertension will not be a straight line. There's a very large eligible population — 70% of adults have overweight or obesity — and it's the last area where coverage is being normalized despite high potential value. Employer Direct is about creating new options for employers and alternate pathways to coverage. We'll continue to publish data demonstrating health and economic benefits, which will support adoption. As new indications and comorbidity-based labels emerge, those will also unlock broader coverage. Progress will be incremental quarter-on-quarter, and we'll update the Street as we issue guidance. I appreciate everyone dialing in today. Please join us later this year at a Lilly Investor Community Update Day on Monday, December 7. Details on location and timing will follow. Please follow up with the IR team if you have any questions we didn't address today. Hope you have a great day. Thanks.

Operator, Operator

Thank you. This does conclude our conference for today. This conference will be made available for replay beginning at 1 p.m. today through June 4 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 662964. International dialers can call (973) 528-0005. Again, those numbers are (800) 332-6854 and (973) 528-0005 with the access code 662964. Thank you for your participation. You may now disconnect your lines.