Eli Lilly and Company (LLY) Earnings Call Transcript & Summary

All right. Thanks, everybody. I'm Seamus Fernandez, the large pharma analyst here at Guggenheim Securities. This is our second annual Oncology Day, and I'm really pleased to be joined by Eli Lilly. We have a number of members of the team here and in the audience. Up on stage here with us on the far left are -- is Dr. Maura Dickler. Dr. Dickler is Vice President of the Late-Phase Oncology Development Opportunities. We also have Eric Dozier, who's the Vice President of Oncology, North America. And beside him, I think many of you know Jake Van Naarden, who is the Chief Operating Officer of Loxo Oncology and joined Lilly, I think, a little over a year ago with the acquisition of Loxo Oncology. So with that, thank you all for joining us.

There's a lot going on at Lilly Oncology. I guess for starters, maybe if Maura you could just address some of the late-stage opportunities that we could see this year that you're particularly excited about?

Yes. So I'd actually like to start with Verzenio, which is our CDK4/6 inhibitor, where we had really strong data in the metastatic setting in that Verzenio improved overall survival in combination with fulvestrant. So we're very excited about that data, particularly because it was effective in the harder-to-treat patients, and those are the patients that -- the high-risk patients that we're looking at in the adjuvant setting. So when I look forward in terms of our portfolio, we're very excited about the early breast cancer play that we're making with Verzenio. We've recruited a trial of more than 4,500 women with high risk to early-stage breast cancer. And although we don't anticipate that in 2020, we anticipate that sometime in 2021, and that's something that we're very excited about for that agent.

And maybe you can talk a little bit about just differentiation between and among the different products. We saw, actually, what feels like a bit of a reacceleration in the class in the fourth quarter, but love to just know how the adjuvant study that you're conducting is differentiated from some of the other competitors. And we've seen some delays in the other programs just in terms of the timing of expectation of completion. How's everything sort of progressing in terms of time lines for your Verzenio adjuvant study?

Well, I think the uptick that you saw is because of the strong overall survival data that we saw in the metastatic setting. And we do believe Verzenio is differentiated. It's the only CDK4/6 inhibitor that you can dose continuously as it has less myelosuppression. And it's also the only one that has single-agent activity. So we think that that really positions us well for our high-risk population, and we chose a more Stage 3 population, where women either had 4 or more positive lymph nodes, had larger tumors. If they had 1 to 3 positive nodes, they have a tumor that was at least 5 centimeters. And also we're looking at higher-grade tumors. So we're really moving forward, the fact that we had activity in the harder-to-treat patients in the metastatic setting and moving that forward in earlier-stage disease. And these women are at the highest risk for recurrence. And to add a second agent on the backbone of endocrine therapy, we think that that's the right population to choose.

And just to add a comment, again, you mentioned differentiation. We believe strongly in the overall data package that Verzinio's bringing into the market is beginning to separate itself relative to what we're seeing from the competition. And then the fact we can get the broadest indications in the metastatic setting and then really focusing on that target patient, the one that's likely to be worse, and we look at our share uptake there, we feel confident about that moving forward. And then to replicate that in a prospective way within the adjuvant setting, really excited about that.

Great. We have another potential launch coming this year as well, selpercatinib. Maybe just in terms of launch preparations, you could give us a little bit of an understanding in that regard. And we just hosted a lung cancer panel. I think one of the things that is a continuing challenge is expanding into the community and getting the kind of testing for fusions out into the community. What's Lilly doing to kind of reach into the market and prepare the market for that type of expansion?

Yes. Let me maybe start to comment on the commercial piece and then ask Jake more to comment around the data that's been disclosed so far. First and foremost, we believe we've got a best-in-class asset. Loxo has done a phenomenal job in bringing that package to the marketplace. And -- but more importantly, it's first-in-class. And so as you think about the indicational plan, both in the thoracic marketplace as well as with the [ bariatric ] marketplace, it's important that you've got a targeted asset. That -- RET, it's about 2% of the overall population, but about 2,000 to 3,000 patients and then a little bit smaller in thyroid, but we are seeing testing rates there beginning to increase. That's a key component as you think about launch preparation kind of moving forward. And more importantly, as there's more targeted therapies in this space, certainly with next-generation testing, we'll see that begin to accelerate kind of moving forward. Specifically, though, we are engaged now within the marketplace. We have a team of diagnostic specialists that are out in the field today, partnering with pathologists, partnering with medical oncologists, reinforce the importance of broad testing. It's not specific to a mutation but really reinforcing that. And we have it at scale. So we're confident in terms of how we can continue to support the overall testing rates. Maybe Maura and Jake can comment further around just the overall kind of data package, but I think it's really more important to really accelerate the growth as well.

Yes, just to start with the data. I think that the efficacy and safety data of the drug in the 3 RET-altered populations really speak for themselves, stand on their own. We presented data in the fall at World Lung at ESMO in RET-fusion lung cancer, RET-mutant medullary thyroid cancer and RET-fusion thyroid cancer, a different component of thyroid cancer, and those 3 data sets are being reviewed by FDA and global regulators right now. I think when you look at the response rate, the duration of response and the CNS activity and the safety profile, we feel incredibly confident that we have a best-in-class profile and really have yet to see a data set that challenges that really at all. And certainly, we're first, obviously, as Eric mentioned. You asked about diagnostics and patient identification. So I think we should separate that question into the lung cancer versus thyroid cancer. I think the question is slightly different. In lung cancer, it's a rare biomarker where, candidly, there was no reason to test for it prior to the commercial availability of a drug like selpercatinib. And so testing rates being low, it's not that surprising right now. That being said, we're not big proponents of telling the community they should quote tests for RET. It's a 2% event. It's -- that implies a rare event. And the reality is that there's another 10 events that are also worth testing for in lung cancer, and increasingly, physicians are choosing to test a single biopsy with a single assay that can cover at least all of these, call it, 10 to 15 markers all at once, where RET essentially comes along for the ride. And all of these have approved agents now associated with them, whether it's EGFR, ALK, ROS 1, RET. I'm sure there will be one or more c-MET inhibitors approved soon in lung cancer and more to come, maybe KRAS and others. And so what are we doing to that effect? One of the trends that we think is important is actually having more and more of these next-generation sequencing tests FDA-approved and therefore, subject or allowed under the Medicare national coverage decision. And so we're working both with Thermo Fisher and Illumina, the 2 main next-generation sequencing providers, to get their kitted NGS solutions, FDA-approved, with claims for RET fusion and RET-mutation detection that can lead to selpercatinib prescriptions. And other sponsors are working with them too the idea being to democratize the availability and accessibility of those tests. In thyroid cancer, it's different. The native frequency of activating RET mutations in advanced thyroid cancers is 50% to 80%. So there's a ton of impetus for patients and physicians to test even just for RET in that setting. And it's a rarer tumor type, but I think that's one where testing will be much less of a sort of barrier to the extent that it's a barrier at all in lung cancer today.

Got it. Great. And then as we just sort of think about the separation of the market opportunity, thyroid, obviously, lung being quite a bit more frequent -- or sorry, lung cancer being much more frequent, but this being a minority event. Can you just sort of maybe scale the market opportunity for us in thyroid versus lung ultimately?

If you strip that out to the overall patient population, right, I said, kind of in lung instance, 2%, you're looking at roughly 2,500, 3,000 patients. If you look at it in thyroid whether it's medullary or papillary in total, around about 1,500 patients or so. So that gives you a sense of the overall scale. But I think it's also important to mention, Jake said this earlier, just the enduring response. So as you're thinking about market forecast moving forward, these patients, we would hope will be on therapy really a long period of time. And so that certainly presents an opportunity as well.

Yes. I think you can look at ALK and EGFR as interesting analogs to that point, where those markets have grown in part because more patients have been identified and more prescriptions have been written, but the drugs have gotten better and better so the patients are just on them longer. So good evidence of that from other sort of analog classes.

And to be clear, that was a -- and like those are U.S. figures I was giving you, by the way. So it wasn't the worldwide numbers.

Right. Maybe just one final question on this particular topic. But we've seen where targeted therapy has these kind of durable responses, the agencies historically has been a little bit reluctant to kind of jump ahead and give the broad label, which would include maybe any RET mutation. However, I think the agency lately seems a little bit more focused on the science. And I think the science would imply that -- and your early data, maybe you could talk a little bit about that as you go into earlier lines of therapy, how that might correlate to -- alongside the science.

So I think there's 2 ideas embedded in the question that are slightly different. So I think one idea is the idea of tissue-agnostic, biomarker-driven labeling. I think in our case, both in terms of the patient opportunity that's out there as well as the data we have, our data are largely limited to lung cancers and thyroid cancers. And that happens to be where activating RET alterations largely occur anyway. It's not because we chose that. That's just where -- when we open our study, that's just where patients arrive, so to speak. There are RET fusions that occur outside of lung and thyroid cancers. We believe they are likely activating in those tumor types. They're exceptionally rare. We have anecdotal positive data in that setting. But I don't think we have a data package that justifies labeling in that setting. And when we developed larotrectinib Vitrakvi as a counter example in TRK fusion cancers, we had data across many, many, many tumor types that I think allowed for a regulatory review that was the most substantive. So I think, at least for now, for RET, we're talking about lung and thyroid cancer. Could we accrue a database over time that substantiates RET fusions outside of lung and thyroid? Maybe, in which case, obviously, if those data warrants it having that conversation with regulators, we would do it. The second part of your question, I think, is about line of therapy. It's a different idea. And we've presented data on both previously treated and treatment naïve patients with RET fusion lung cancer and RET-mutant medullary thyroid cancer, and the data in the first-line settings of those diseases are fairly compelling. That having been said, there are "available" therapies in those settings. And it's really a review decision by FDA as to whether or not how they want to think about labeling in the context of single-arm data in a first-line setting. So they have those data. They were part of our NDA, and it's really an FDA decision.

Great.