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

Okay. Good morning. Welcome to the second day of BofA Virtual Vegas Conference. My name is Geoff Meacham, I'm the senior biopharma analyst here at BofA. I have Alec Stranahan as well from my team. And we're really excited to have Lilly present. Speaking on behalf of Lilly, we have Patrik Jonsson, who is President of Lilly Bio-Medicines. Patrik, you there?

Yes, I am here. And good morning, Geoff.

All right, perfect. Good morning. Yes, so the format for today is I'll ask Patrik a number of questions about mostly the I&I franchise as well as the neuro franchise. And then if interested, there is an ability to ask a question via the webcast on the Webex technology. So we can ask those to the extent that folks have them.

So Patrik, let me just hand over to you just to start off with the I&I franchise. Give us a sense for where you think Lilly is kind of year-to-date and maybe a scorecard for last year, especially for Taltz, given, obviously, a pretty highly competitive environment in dermatology.

Thank you very much. We were actually quite pleased with 2019, particularly the second half of the year when we started to regain momentum with Taltz, and I think it was driven by a couple of factors: First of all, in the space of dermatology, we again presented the third head-to-head trial and the Tremfya data, where we actually were able to show superiority as well in terms of onset of action and clearance early on. That was the third time after Enbrel and Stelara. And in the rheumatology space, we also, for the first time, got parity with Cosentyx in terms of a label when we got ankylosing spondylitis approved during the second half of last year. But not only because we also there presented the first superiority data versus Humira in the treatment of psoriatic arthritis. And that was not only driven by skin efficacy but also by joint efficacy. So with that momentum starting during the second half of 2019, we had a really good start to 2020. And if we look at both the dermatology and rheumatology space, of course, we had a strong performance in Q1, and we actually are competing for the #1 leading biologics in the space of psoriasis among not just IL-17, but also IL-23. And we have seen a significant growth from a low base, though, in rheumatology, but very strong growth in rheumatology. And we closed last year with a market share of TRx around 0.9% while we have seen new-to-brand above 4% in the first quarter. So we are very pleased with the performance. Of course, there is an impact of COVID-19. But most important is that we were being selected as the chosen treatment in both psoriasis and psoriatic arthritis most recently than ever before.

Yes. And just a follow-up on that, Patrik. When you think about the competition between yourself and Cosentyx as well as looking to other franchises in -- and I&I such as Olumiant, give us maybe an update about where you are with respect to your payer and maybe formulary status. I know that sometimes in I&I can be a big driver of a share adoption. And is there additional progress to be made as we look over the course of this year?

Yes. And I think, Jeff, we have been very open with the fact that access, particularly in immunology, and particularly to Taltz, has been a challenge in the U.S., and it actually continues to be a challenge. But we -- last year, we gained OptumRx, but we lost United. But I think it's important to have in mind that with United we were a third-line choice and only in psoriasis, while with OptumRx we gained approximately a coverage of 14 million patients, but we became the #1 IL-17, both in psoriasis and psoriatic arthritis. And I think we have been able to very successfully pull through that gain in -- with OptumRx. And of course, we are confident that we will continue to build upon the success with OptumRx, and we are looking for additional opportunities. But access in the U.S. has been a challenge from the beginning. And I will say that still today, we are disadvantaged versus Cosentyx in that regards. But we continue to do very well with the formularies that we have, and access at the patient level has never been an issue because we have been able to gain the access for patients to Taltz.

And do you feel like, Patrik, access will continue to improve as the -- not just as the indications expand for Taltz and Olumiant, but also though adding mirikizumab, lebrikizumab, adding maybe more breadth to your I&I business, is that something that, down the road, could really be a driver?

Absolutely. And I think that's what we have seen with other players in this space as well, but we are moving from being a newcomer to immunology to, by the middle of this decade, becoming a very relevant player in the space of immunology. As you referred to, it's not just with the current assets we thought and all the new indications coming with Olumiant, but also mirikizumab that we hopefully will see in the market in just a few years from now and the recent acquisition of Dermira enabling us, hopefully, to bring lebrikizumab to the market latest in 2023. So I think with a very rich immunology portfolio, we should even be stronger from an access perspective.

And I wanted to ask you, too, just on the -- on both Olumiant and on Taltz. Just -- you mentioned at the onset, the COVID impact and -- maybe give us a sense for the lessons learned from the first quarter. Is there may be an acceleration in telemedicine? Is there sort of best practices that you guys have seen that could be rolled out over the course of the year when it comes to providing access and also to see consistency in new start momentums for both Taltz and for Olumiant.

Yes, definitely. Well, starting with Taltz, I think, overall, as I shared earlier, we started 2020 very well and we've a good growth. However, if we look upon the IQVIA reporting over the last -- well, since after COVID, we are seeing a decrease in new therapy starts at the magnitude of approximately 30% were slightly below with Taltz. So there is truly an impact in terms of new therapy starts. But we have been amazed with how rapidly specialists have been embracing new technology and particularly rheumatologists. We saw based upon market research data that actually more than 70% of the rheumatologists are utilizing telemedicine to manage that patient flow. And they are managing more than 60% of the previous patient flow through telehealth efforts. And of course, we see the same pattern in dermatology. We actually expected to see more of that in dermatology than in rheumatology. But in dermatology, we see that approximately -- well, close to 60% of the dermatologists are utilizing telehealth to manage that patient flow. And they are managing slightly above 50% of their current patient flow through utilization of technology. On our side, we have, of course, done the same. First of all, we were among the first companies to withdraw our sales reps from the field, first and foremost to make sure that we are not exposing patients and clinics, and secondly for the sake of the health of our employees as well. But we used the first weeks to really train them on utilizing the digital channels to a much higher extent and to do it also consistent with our very high integrity requirements. So today we have a sales force that is reaching out to the customer base, utilizing e-mail to a much higher extent, but also utilizing Skype and Teams and other channels to have a virtual face-to-face with our customers and providing the same kind of support as they used to do in the past. But the medical function as well is stepping up. And whenever there is a request from a medical liaison, we do those now virtually, and we have a lot of third-party medical education sessions going on with a huge interest, and particularly to better understand how we are utilizing our medicines in the light of the COVID-19 situation. So a lot of progress is being made. And I actually think that's probably one of the positive side effects of COVID-19. I think that we are embracing technology to a much higher extent, both among health care providers as well as on the industry side. Olumiant for us, particularly in the U.S., is a very small product today, and particularly since we are only approved for the BIO-IR space. So we haven't seen much of an impact on Olumiant when it comes to the utilization for the treatment of rheumatoid arthritis in the U.S.

Got you. That's helpful, Patrik. Let me turn it over to Alec from the team. He also had some questions on the I&I franchise. Alec?

Yes, great. Thanks, Geoff, and thanks, Patrik, for joining us today. So that was actually a nice segue into my question on Olumiant. So what are your sort of launch plans in the U.S.? Obviously, OUS has been the better performer for you historically. And do you think the availability of RINVOQ changes sort of your strategy for Olumiant in the U.S.?

Well, I think if we look upon the U.S. opportunity, as I shared earlier today, we are not pleased with our performance in the U.S., and we are not pleased with the label either, because being niche for the BIO-IR segment with 2 milligram only is probably not where Olumiant is playing to its strength. But we are still very optimistic in terms of the outlook for Olumiant in the U.S., but not driven by the rheumatoid arthritis indication. We had filed earlier this year both in Europe and Japan for atopic dermatitis, and we expect to file for atopic dermatitis in the U.S. as well this year. And we know that, that is a field with significant unmet medical need. Currently, we have approximately 18 million people suffering from atopic dermatitis and 9 million of those are moderately to severely ill. And of course, we have DUPIXENT, but the biologic penetration is very low. And we see a need here for an oral treatment and also that can address the itch issue. So that is the first opportunity for us in the U.S. But moving beyond that, we got the breakthrough designation for our alopecia areata indication, which was announced earlier this year. And in alopecia, we have the opportunity to be first-in-disease. So that is another opportunity, particularly for the U.S. that we are counting on. And lastly, SLE. SLE or lupus is known to be one of the biggest graveyards of the pharmaceutical industry, but we were extremely encouraged with our Phase II data on lupus. So if we are able to replicate the Phase II data in Phase III, we really believe that also lupus is a big opportunity for us globally, but also in the U.S. So that's why we believe that Olumiant will play a significant role in the U.S. marketplace as well over the coming years, but not necessarily driven by rheumatoid arthritis, but with the 3 indications that I referred to being prepared for -- to -- in development and being launched over the coming years.

Okay. Thanks for delineating your thoughts about the expanded indications for Olumiant. There's one that I did want to ask on and it is being studied for sort of symptom management in severe and critical COVID-19 patients. Could you just sort of touch around how you're approaching Olumiant for treating COVID-19 and sort of would this maybe contribute to Olumiant sales at some point? What's sort of the commercial opportunity?

Thank you very much, Alec. Well, we've been extremely engaged more or less since the publication in Lancet back in February by the BenevolentAI group, the U.K.-based artificial intelligence group. When they announced that they actually believe that Olumiant could play a significant role in COVID-19, since then we have done some preclinical studies, and we have got a lot of reports from investigators across the globe driving investigator-initiated trials. And that resulted in the cooperation that is announced now with the National Institute of Allergy and Infectious Diseases and the second wave of the Adaptive COVID-19 Trial. We enrolled the first patient on Olumiant last week, and we're talking about 2 arms; one arm where remdesivir then would be defined as standard of care, and the second arm with Olumiant combined with remdesivir, and studying the time to recovery defined as being the time to be discharged from hospital. We expect the results of this study some time during the summer of 2020. And of course, would the results be positive, we expect to enter into discussions with regulatory bodies across the globe rapidly, and we saw that, that went very fast with Gilead and the remdesivir. We would probably assume positive results, a similar scenario. And if so, we need to make sure that we can guarantee supply across the globe, first and foremost, for the indications and the patients that are currently being treated for rheumatoid arthritis, which is a huge business for us, particularly outside of U.S., but also guaranteeing supply for COVID-19, and we feel very confident that we would be able to do that. Overall, we don't believe that the COVID-19 is going to be the major business driver for Olumiant would trial come out successful. But we believe that we would be rapidly able to supply the need for COVID-19 as well on top of our regular business at the global level immediately after a possible approval.

Patrik, it's Geoff again. Yes, I just wanted to ask you on just rounding out the I&I portfolio. Just on mirikizumab, are you guys thinking about the priorities to round out the profile of the drug? When do you think we could see data from OASIS-1? And then when you look at the head-to-head study, is that more important from a commercial, from a positioning standpoint? Or is it -- I guess, the answer would be all of the above are kind of important to ramp up the profile of the drug?

Well, thank you very much. And we announced the headline results of OASIS-1 at the earnings call a few weeks ago. And as we shared, we met the co-primary and most of the secondary endpoints very much along with our expectations. It's just that what we have learned with Taltz is that we need to set the bar very high for psoriasis. And as we have shared, we know it's a matter of the time to onset, it's the level of clearance, it's the sustainability of the results as well. That's why we're waiting for OASIS-2 to really make an informed decision on how we are going to progress with the psoriasis indication. So our strategy will, to a large extent, be informed by OASIS-2. And OASIS-1 results, I think we are planning to share them later on during the second half of this year, we will share the detailed results as well. The major driver for us, Geoff, when it comes to mirikizumab is not psoriasis. I think we see the big opportunity here in the IBD space and particularly with ulcerative colitis and Crohn's disease, and we were so encouraged by the Phase II data. So would we be able to replicate that in Phase III? We believe that the space there is more appealing. We're talking about almost 1 million people in the U.S., both on ulcerative colitis and Crohn's disease. And the biologic penetration is very, very low in both those diseases. So that's an area where we believe we could play a significant role and where we're probably most excited for mirikizumab and where we see it contributing the most in the future.

And then the last question on I&I, just on the Dermira deal. Maybe just help us with how the integration has gone for their commercial business, but also plans for lebrikizumab and the Phase III plans. Obviously, you have to manage that in the clinical plans amidst the COVID uncertainty, but it does seem like lebrikizumab could also have an opportunity to have some -- a differentiated profile in a pretty exciting market.

Yes. Thank you. Well, the integration with Dermira is going extremely well. Of course, if we look upon the commercial part, that was not a driver of the acquisition. But the QBREXZA organization is up running, and we are managing that separately as a separate sales force, and we have not been integrating it -- we're integrating it with Lilly Immunology sales force. But we maintain that as a separate group, and we actually believe that's the best for the time being. When it comes to the development efforts, we have seen a very nice integration of Dermira team into the Lilly Immunology team. And I would say that we are moving forward as decided. The Phase III programs were initiated during the second half of last year, and they are progressing according to plan. Of course, there is a hold in terms of enrollment driven by COVID-19, but we have already started to open up some countries outside the U.S. So we are quite confident that we will be able to deliver on the original time lines that we shared, which would mean a data readout in 2021 of the Phase III trial, and hopefully a launch in atopic dermatitis in 2023. We are extremely encouraged by the Phase IIb data. And as you alluded to, this could really be a strong competitor to DUPIXENT, and we see several opportunities for a differentiation here, not just on itch, but also potentially on dosing, where we know DUPIXENT is dosed every second week. We see an opportunity for both, biweekly as well as once monthly. We also see an opportunity to differentiate on the overall patient experience where we know from other indications and other assets, but also devices and patient support programs can make a huge difference. We continue to be very excited about lebri and how it very nicely fits into our overall immunology strategy and helps us becoming a very relevant partner and player in the space of immunology.

Okay. That's helpful. Let's switch gears to the neuro franchise. And maybe I'll just start with your view of the uncertainty and maybe the 1Q disruption as it relates to COVID for Emgality. And then maybe some of the challenges with launching more broadly Reyvow amidst this uncertainty. Clearly, both drugs have a unique profile, and Emgality has a leadership position in the migraine space. So I wasn't sure, though, the kind of the patient dynamics there as it relates to how you roll out, maybe more telemedicine and what the pace of new starts could be?

Absolutely. But as you mentioned, Emgality, we had a strong launch, and we launched as a number three injectable CGRP back in 2018, but we took a leadership position in new-to-brand already mid-2019, and we maintained that through Q1 this year. The opportunity here to speak, so if we just look upon the U.S. preventive market opportunity, we're talking about 6 million people, and 4 million of those are eligible for ingestible CGRPs. And I think year-to-date, approximately 700,000 have been treated. So there is a huge, huge opportunity still. And we also know that 85% of those people are consulting with a primary care physician. That's why we, late last year, decided to invest more in the primary care field and also in patient activation. And we actually saw that generating results. Very early on in Q1, we saw a significant growth of new therapy starts even versus Q4 last year. So we saw a growth of approximately 8% in terms of new therapy starts for Emgality, and we were extremely encouraged with that. Of course, COVID-19 is having an impact. And we have seen a decrease in new therapy starts at a magnitude of approximately 20% for Emgality, and of course, a decline in new therapy starts always means more for brands that are very early on in the life cycle. But what encourages us, though, is that even neurologists have embraced telehealth to a higher extent than we assumed actually. And if we look upon the key health care centers, more than 70% of those are embracing telehealth for treating the patients, and we are also looking into both solutions for Emgality and hope that we soon will be able to move forward in that space as well. So overall with Emgality, we believe we are extremely well positioned. We believe both with the differentiation in the label in terms of efficacy at 50%, 75% and 100% level a device that is extremely friendly for self-injection, which is very important as well during the time of COVID-19. And also being recognized as being a very good device coming from the same platform as Trulicity and a best-in-class access. We're talking about more than 95% access to Emgality across the U.S. We believe that whenever times are returning to more of a new normal, that we will be very well positioned to continue to grow Emgality, and the opportunity particularly in primary care is significant. You asked about Reyvow as well. In Reyvow, we only got a few weeks in the marketplace before we were hit with COVID-19. And as you know, a very competitive marketplace where competition is present with some significant resources even today. We strongly believe that we need to reach out to our health care providers to an even higher extent. We have started, the feedback has been positive. We have been having requests for more than 6,000 samples. The sign-up to peer-to-peer meetings has been significant. And the feedback from the trial list has been very positive, particularly when it comes to the efficacy of Reyvow. Well, they are talking about the complete elimination of pain and the complete elimination of bothersome symptoms for truly being a differentiating factor of Reyvow versus other treatments. But we really believe that whenever there is an opportunity for a second push, we need to meet with the health care providers face-to-face and we have an obligation, particularly with the safety profile and with 8 hours driving limitation. We need to make sure that our health care providers are very comfortable and knowledgeable about the medicine and particularly to be able to capitalize on unique feature of a complete elimination of pain and bothersome symptoms already within 2 hours and with 1 single dose. So there's more work to do, and we hope that whenever we are getting through this worst part of the COVID-19 that we will be able to reaccelerate those efforts also for Reyvow and playing a similar role in the acute treatment of migraine as we do in the preventive treatment of migraine.

And Patrik, just as a follow-up, I mean, you mentioned, obviously, the sheer size of the market. Just wanted to get your sense in terms of how the paradigm could evolve with some of the new acute treatments, the UBRELVY and the Nurtec assets?

But -- I think it's obvious particularly with UBRELVY, but it's a good uptick, and they launched first, and there was probably pent-up need in the marketplace as well. I think, first and foremost, there's been no new treatments in the space of acute migraine for more than 2 decades. So UBRELVY was the first one out, and we know that 35% to 40% of the patients today in need of acute treatment, they actually don't respond to the triptans. So I think there is a significant space for both the oral CGRPs and lasmiditan. I think for us, what is unique is the different mechanism of action, and particularly the rapid onset in -- or the rapid elimination of both the pain and the most bothersome symptoms. I think that's where we will differentiate ourselves. So when you really are in need of elimination of pain and most bothersome symptoms quickly, we believe that that's where Reyvow can win. But taking into account how the market looks like right now, I don't think we will get a fair and a good picture until earliest towards the end of 2020.

Okay. And just to follow-up just on the neuro franchise. Just give us a sense for tanezumab and how you're thinking about that opportunity. Obviously, we had final data last year. And there, you guys filed and looking like, obviously, we have a year-end PDUFA, but maybe prelaunch prep? And how you're thinking about this opportunity just given the risk-benefit context?

Yes. Well, the FDA is progressing with review of the application of tanezumab. And in our partnership with Pfizer particularly for the U.S. market, we believe that there is a need. OA pain is -- and particularly severe and moderate OA pain is impacting more than 10 million Americans, I think it's 11 million. And 80% of those are not appropriately responding to the current treatment. That's a huge group. And of course, the impact of tanezumab in the marketplace will, to a large extent, depend on the REMS. But based upon our assumptions to date, we believe that tanezumab in the U.S. can make a difference for those patients and play a significant role in both ours and Pfizer's pain portfolio moving forward. And we are currently, of course, heavily engaged with our partner in order to prep for the launch and assuming REMS at a manageable level. But under those conditions, we believe that tanezumab will be a nice complement for patients suffering from OA pain. And particularly in the U.S., again, with the opioid crisis, I think that opportunity looks very different compared to other places around the globe.

Okay. And just to wrap up, I know you guys have a lot of launches going on, a lot of younger products. But just on the RET inhibitor, on 292 just approved, want to get maybe just the initial feedback on launch preps for that drug? And how you see the early part of the market kind of evolving there?

Thank you. I will ask Mike maybe to add a couple of comments here, but we are extremely excited about this launch. We are very pleased with the label, and we believe we can make a huge difference. And in the space of oncology, we have probably been most advanced in terms of utilizing technology to reach out and connect with the health care providers and the different stakeholders since oncology is probably the field in the U.S. where access has been the most cumbersome, not just during COVID but for several years right now. So we believe that we are extremely well positioned to launch this medicine virtually, and we are having very robust plans in place to reach out to health care providers, payers and many other stakeholders, and the team is extremely excited. So I think we're looking forward to making that difference for patients across the U.S.

Okay. Well, with that, we're running up on time. So thank you very much, Patrik. Really, really helpful conversation on both I&I, neuro and then oncology. So appreciate the time, and have a great day.

Likewise, thank you very much, Jeff and Alec. Take good care, and stay safe as well.

Okay. Thank you. Bye.