Eli Lilly and Company (LLY) Earnings Call Transcript & Summary
February 24, 2021
Earnings Call Speaker Segments
Geoffrey Porges
analystGood afternoon. Welcome, everybody, to the afternoon session of our global healthcare conference this year. I'm delighted to welcome Lilly to our presentation and virtual -- on a virtual basis. Lilly is represented by Ilya Yuffa, who's President of Lilly Bio-Medicines, And Ilya is responsible for all the Phase III immunology, pain and related programs as well as for the commercial responsibility for this very broad portfolio. So Ilya, thank you for joining us today.
Ilya Yuffa
executiveGreat to be here with you, Geoff. Thank you very much.
Geoffrey Porges
analystSo this is a pretty big portfolio, and there's a lot going on. Obviously, your COVID antibody has been a nice contributor in 2020 and presumably also in 2021. Could you talk a little bit about the underlying growth for the whole portfolio, net of the COVID antibody and what you think the sustainable growth rate is of what's really a very large business now?
Ilya Yuffa
executiveSure, Geoff. Thank you. I think, overall, we had a healthy growth in 2020 across all of our therapeutic areas. I'm quite pleased at the end of last year, I came into this role at Lilly Bio-Medicines, and we've had significant progress in pain and migraine, obviously, Emgality being at the front and center and the foundation of growth within our pain franchise and really setting us up well to be a leader in migraine. And then, of course, in immunology, although we're a relatively new player, this is an important year for us. We've had some tremendous success with Taltz and Olumiant outside of the U.S. We continue to grow in both dermatology and rheumatology for Taltz, and we're coming into the year with a great access, probably the best commercial access we've had on Taltz. And so we're quite excited about our prospects at growing both Taltz and Olumiant. And then, obviously, we have a number of readouts throughout the year. And so the prospects of growth going forward, we feel very good about being a formidable player in immunology. We have a number of NILEX opportunities for Olumiant, obviously atopic dermatitis being a significant growth opportunity overall with significant unmet need and where Olumiant can play a role. We've already launched outside of the U.S., and we're hopeful to have approval in the U.S. in the first half of the year. We'll also have readouts in alopecia areata for Olumiant, and we're -- we should have a readout in mirikizumab ulcerative colitis program in the coming months. In the back half of the year, we'll have the maintenance data for ulcerative colitis from mirikizumab, the atopic derm data for lebrikizumab and also a readout for lupus for Olumiant. So we have a busy year, a pretty aggressive agenda to drive not only growth this year with Taltz and Olumiant but also sustainable growth for the immunology portfolio in the coming years.
Geoffrey Porges
analystThat's great. Thank you for that overview. So let's focus on Taltz for a moment. So it's growing very nicely despite the arrival of competitors. But could you explain to us why we -- there was a view in some circles that, particularly the IL-23, as now they're gaining momentum, that they're going to cannibalize the market for the IL-17s. So could you explain to us why you think that won't be the case?
Ilya Yuffa
executiveSure. Listen, Geoff, I think the important element for us to consider for Taltz and why we believe and so confident in not only the -- what it can do for patient outcomes, but also our commercial success, one, the clinical profile for Taltz, given the number of head-to-head data that we've shown across different MOAs, the pretty significant efficacy, both rapid and response in skin, and also the sustainable efficacy that we see over 5 years that's durable effect. And what I think has challenged us in the past has been access. And so although we feel very convicted in the clinical profile, we've been making improvements in our commercial access over the last 1.5 years. We've made some success in 2020. We created some momentum at the beginning of last year coming into COVID. And obviously, there's been some impact of COVID related to new therapy starts. And we start 2021 with the best commercial access we've ever had. In fact, if you take a look at the latest trends, Taltz has been able to garner additional, over 5% share of market within NBRx and is now the leading, not only in IL-17, but versus Skyrizi as well in dermatology. And we start off with a lower base in rheumatology, but we also have great efficacy in joint and structural endpoints. And so we feel very convicted in not only the clinical profile and now commercial access. We believe with great commercial execution, we can really have tremendous growth with Taltz, and there's significant opportunity in both dermatology and rheumatology.
Geoffrey Porges
analystOkay. Thank you for explaining that. So in terms of your access, are you finding that -- particularly with the imminent arrival of -- biosimilars already available and more coming, should we expect that the IL-17s and Taltz, in particular, remain second line? Or do you have an opportunity to displace TNFs in first line in psoriasis and psoriatic arthritis?
Ilya Yuffa
executiveYes. I guess the way I see, from an access standpoint, in derm, you have about 40% penetration of TNFs still; and in rheumatology, 70%. And so I think those markets will maybe behave a little bit differently. At the same time, we're just now getting access within IL-17. I mean so our first priority is to win within IL-17, and obviously, expand beyond that. We've demonstrated that in dermatology more so, but we still have significant growth there. And we need to continue to work on that in rheumatology. We're already seeing some impact of new indications. Obviously, we have, not only psoriatic arthritis, but also axSpA and non-rad axSpA. And so we feel -- we're confident in the ability to grow within IL-17 and also expand IL-17 as a class within both derm and rheumatology. So I think we have opportunity in both cases.
Geoffrey Porges
analystOkay. And you mentioned 5% share of NBRxs. But what share are you getting of the actual switches and starts because NBRx is a little bit -- a distortion compared to the actual new starts and switches?
Ilya Yuffa
executiveSure. In dermatology, we've seen an increase -- a comparable increase in new therapy starts as well. And part of that, we believe, is the confidence in Taltz as a profile and efficacy. And so we have seen an improvement of about 5 share points in new therapy starts as well, close to 18%. And in rheumatology, we have a lower -- we're starting from a lower base. So we've increased about a share, but this is literally within weeks of getting improved access. And so over time, we believe we can grow that further.
Geoffrey Porges
analystOkay. And as you look at the market opportunity, do you -- is it your expectation that still the majority of the revenue opportunity is in derm? Or do you see it ultimately being sort of more like 50-50 between derm and rheum once you -- with the -- given a couple of indications you have in rheum?
Ilya Yuffa
executiveYes. I guess I would say that near term, the absolute growth is probably more in derm because we have a higher base and we continue to grow both within the class and overall market. Dermatology -- I mean, in rheumatology, we're starting from a lower base. And so as a percentage, we would expect to see a higher level of growth in rheumatology, but we're starting from a much lower base. And so it will take time for us to achieve the same absolute growth there, but we believe we can win in both places.
Geoffrey Porges
analystOkay. So maybe we could pivot a little bit and talk about mirikizumab. You're jumping into the IL-23 category yourself, but it looks as though, for the time being, you're just focused on inflammatory bowel disease. Do you -- are you going just after UC? Or do you also have trials in Crohn's disease? And how do you see the magnitude of the opportunity there given all the competitive dynamics, of course?
Ilya Yuffa
executiveSure. Yes. Listen, we know we're going into -- across immunology. It's very competitive across each indication, partially because there's significant unmet need. And we see in IBD, in both ulcerative colitis and in Crohn's, the current threshold of outcomes and what's available is probably not meeting the needs of patients suffering from IBD diseases. And so we do believe mirikizumab, based off of Phase II, has the potential to be very competitive and provide a great relief, both in terms of remission and also symptomatic response. The one area where we feel that mirikizumab has the propensity to differentiate is around bowel urgency. We know that, that is a symptom of significance and importance to patients suffering from IBD. And based off of gene expression data, we know that mirikizumab has downregulation in mucosal inflammation and upregulation in mucosal healing. And so we do think that that's an area where we may be able to differentiate. Of course, we're awaiting our Phase III data, which should come pretty soon. But based off of Phase II, if we're able to replicate that, we feel very good about our competitive chances to really make a difference for patients and be competitive in the marketplace.
Geoffrey Porges
analystOkay. And you will, no doubt, have seen your competitors' data with the JAK and ulcerative colitis this week and then also late last year. So is that efficacy hurdle what you need to get to for mirikizumab? Is -- I think it's probably 30% or 40% placebo-adjusted difference in terms of remission. So is that what your expectation is for mirikizumab?
Ilya Yuffa
executiveYes. The way I would categorize what we're expecting in mirikizumab is to replicate some of the data we saw in Phase II, which is pretty comparable to some of the data we've recently seen. Obviously, I think what's important to note is the full clinical profile. We do -- we've seen that in other diseases is that you need to see the entire data set to understand the full picture, both in efficacy, safety, tolerability and also some of the secondary endpoints that matter for patients. And that's where, if you take a look at the totality of data that we hope to provide in our Phase III, including bowel urgency, I think it's the complete picture where we feel like -- needs to be competitive, and we'll see. We'll have that data pretty soon, and we can comment a little bit more once we see our efficacy data.
Geoffrey Porges
analystGot it. And do you have any interest in taking mirikizumab into psoriasis or psoriatic arthritis?
Ilya Yuffa
executiveI think our priority now where we see the greatest unmet need and where there's still room for differentiation is in IBD. So that's been our priority. So we'll, of course, look at the data once we have ulcerative colitis data and -- later in the year or next year into Crohn's, and then make the judgment calls on what else we pursue, but we're mostly prioritizing IBD for mirikizumab.
Geoffrey Porges
analystOkay. And of course, your competitor has given long-term revenue guidance for their IL-23 of $7 billion or something, which I think caught some people by surprise initially. Is that the sort of magnitude of expectations that you have for mirikizumab?
Ilya Yuffa
executiveI don't think we've provided the exact figures by -- we don't give guidance on any one brand. I do think it highlights the significant unmet need. And within that space, we feel like we can be competitive. So we do believe it has significant potential, but I won't comment on the exact revenue that we have in our targets.
Geoffrey Porges
analystOkay. So maybe we can pivot and talk a little bit about Olumiant. My first question is, of course, that there continue to be concerns about the safety of the JAK inhibitors. We saw the data for your competitor with the post-marketing study and the imbalance there in both malignancy and CV events. Is it your expectation that the labeling will be updated for Xeljanz? And is that likely to lead to a change in your labeling as well? Or do you have no indication that labeling might change?
Ilya Yuffa
executiveYes. So we obviously follow this very closely. I think with Xeljanz, tofacitinib, their latest data, they did already have a label update, and I'm sure they're having discussions. It's hard for me to comment on what exactly will occur with Xeljanz. What I can say is it's important to have the full aspect of data related to safety, and we've taken safety quite seriously and looking at the broad set of data that we have in post marketing of Olumiant. We've published quite a bit of data at the end of last year and related to all the data we have in RA for Olumiant over 8 years of data, and we don't see any new safety signals. So we feel confident and optimistic about our benefit-risk profile for Olumiant. We're obviously in discussions with the FDA as we look at new indications, and so we do have conversations with the FDA, but we haven't had any discussions in anything to be modified as a direct result of what tofacitinib just released. And so I think we'll continue to evaluate all the data we have around safety and continue to be transparent about it, but we haven't seen any new safety signals for Olumiant to date.
Geoffrey Porges
analystOkay. And with respect to Olumiant, you have the ongoing study in atopic dermatitis, and I believe that requires a higher dose. So do you think it's -- first of all, is there a commercial opportunity for Olumiant in atopic dermatitis if you can't go forward with a higher dose? And secondly, again, do you think that your current labeling will be a liability in that indication?
Ilya Yuffa
executiveSo yes. So Geoff, for the -- for Olumiant in atopic dermatitis, we already have approval in Europe and in Japan, and we feel very good about the label and profile of -- well, obviously, you have both the 2 and the 4 milligram approved there for atopic dermatitis. And the anecdotal feedback has been really positive, both from a patient as well as health care providers, early in launch. It's a little early. It's -- we're just in process. For the U.S., we're -- the data supports efficacy in the 2 milligram. And we believe, based on the totality of the data, both the efficacy and the long-term history we have in data around the safety profile for Olumiant, we believe we can carve out a space for atopic dermatitis and can be competitive in both efficacy and safety as a whole in the space. And so we're -- we think that will be the next catalyst of growth. We obviously have not had that growth in RA in the U.S., but we feel like that may be different for atopic dermatitis in the U.S.
Geoffrey Porges
analystOkay. All right. And you also have lebri for atopic dermatitis. Can you give us an update on when you -- what the timing is for trials and for potential approval for lebri and then how you expect it to be positioned against DUPIXENT?
Ilya Yuffa
executiveSure. Yes. So we're quite excited about lebrikizumab. We -- just over a little over a year ago, we announced the acquisition of Dermira and integration of lebrikizumab and advancing the Phase III program, which we will have the first data in our induction of atopic derm for lebrikizumab monotherapy at the back half of the year. And so we'll have our first data Phase III then. And then in terms of timing, I think the timing of disclose is around 2023 as the timing. But in terms of competitive profile versus DUPIXENT, we feel that lebrikizumab has the potential to have not only great efficacy in skin, but also one of the symptoms that's quite important from a patient outcome within atopic dermatitis is itch. And we feel that lebrikizumab has a specific differentiator within itch, and so the broad profile across both efficacy and skin and also what we're able to do on itch will be an important element in differentiating and also carving a space for lebrikizumab as being a preferred treatment in atopic dermatitis. So we're quite excited about the program and looking forward to seeing the data at the back half of the year.
Geoffrey Porges
analystOkay. So my last question on immunology is you sort of have this -- what's probably a pretty broad portfolio: IL-17, IL-23, JAK, potential IL-13 as well. And to be fair, they're not necessarily coming to market first. And while they have some differentiation potentially to the incumbents, they're certainly coming into markets where things are pretty established. Do you -- is there the possibility of the sum being greater in terms of its participation in the market than the individual parts? And if that's the case, how does that actually work? Does it work by contracting? Does it work by sales force? Are there other ways in which you can get a greater share of the market than you would with the individual products?
Ilya Yuffa
executiveYes. So it's a great question, Geoff. And the way I think about immunology, probably 3 components. The first is to start with a differentiated clinical profile that can provide not only differentiation on what's available but also meet -- address an unmet need. And so we feel like our portfolio and indications we're pursuing, that's the case. The second, which you talked a little bit about, contracting, access plays an important role. We've seen that play out in Taltz. We've had those challenges. We've addressed it. And -- but access alone also doesn't solve for commercial success. The third is just disciplined commercial execution. And having all 3, combined, gives you the scale and the ability to leverage the entire portfolio. So as an example, in dermatology, having success with Taltz and dermatology and then adding on to that with an entry in atopic dermatitis with Olumiant and then offering another modality with lebrikizumab provides the strength in specialty and also leverages the scale that we would have within that area. And that's how I think about immunology as a whole. We'll continue to invest, not only in these 4 assets across over 10 different indications, but also the next wave of innovation that we're kind of putting through into Phase I and Phase II that will ultimately leverage what we're building in terms of our experience across dermatology, rheumatology and GI. So I think it is a sum of the parts are greater than each individual, but each individual needs to succeed and carve out its commercial success, and all of that comes together. So we do see that as a leverage point, and we're uniquely positioned to have multiple MOAs to tackle immunology and be a relevant player.
Geoffrey Porges
analystOkay. And maybe we can move away from immunology and talk about the pain portfolio briefly. So Emgality has been pretty remarkably successful, at least on a competitive basis. Could you talk about where you are, both in your market share of starts but also in the penetration of the overall market? It is a market that hasn't necessarily materialized as quickly as we might have hoped.
Ilya Yuffa
executiveYes. Geoff, it's a good question related to kind of overall market growth. We are pleased with the -- even though we were third to market, being able to become a leader speaks to the profile of Emgality and really differentiated profile with having the ability to even have 100% relief of migraine in terms of migraine-free days. And so that's an important element. And so we're in a leadership position. The question is how to grow the market. There are 2 things that need to happen. One, I think, was related to COVID, and I think it's been disproportionately impacted in terms of migraine -- patients seeking out treatment and also physicians treating migraine, and so that's been one aspect that needs to improve. And I'm optimistic that with cases -- COVID-19 cases coming down and vaccination rates going up, I'm optimistic that there is light at the end of the tunnel for that to improve. The second is that migraine really needs to be, for the market to grow, and for patients, if you think about the number of patients that are out there that have more than 8 migraine days in a month, it's close to 6 million people in the U.S., and it's only a fraction that are being treated right now. And the only way to tackle that is for primary care to really play a significant role. And so that's an element that we need to tackle is not only invest in consumer awareness through our direct-to-consumer investments but also getting primary care physicians to treat. And we need to get more trial and adoption in primary care. That's a priority.
Geoffrey Porges
analystAnd if you execute on that, what sort of continued growth do you see in the overall market then? Is it -- can we still see the market increase by several fold? Or is it just going to be sort of steadily incremental?
Ilya Yuffa
executiveYes. I think in the near term, it takes time. I think I've seen this in diabetes as well. Primary care, it's difficult to change habits quickly. I think the challenge in migraine is that -- whereas in diabetes, they typically treat diabetes that's changing their habits on how they treat it. For migraine, it's -- they don't necessarily treat migraine. So getting them to treat it and then to use CGRP, that will take a little bit of time. The overall market, long term, is probably several fold, but it will time -- it will take time to get there. And we -- there needs to be some patients but also some great execution in getting primary care education out there and creating pathways for them to treat.
Geoffrey Porges
analystOkay. So quickly on tanezumab, we still don't have the pivotal trial result announced, but we've certainly have seen a bit of a check in history with the NGFs. Is -- do you think that this is going to be a niche product because of that? Or do you think there's still an opportunity for this to be a really substantial franchise?
Ilya Yuffa
executiveYes. I think it's a -- for tanezumab, what we're waiting for is we have plenty -- a lot of data. I think the question is -- we have an AdCom coming up at the end of March, where we'll have the ability to -- with Pfizer to state our case. We believe that there's a good benefit-risk profile for tanezumab, and there's a significant unmet need. So if you think about OA pain and what's currently out there in the opioid crisis, it's important to have a non-opioid innovation into the market. And so from that perspective, we believe it will be a significant opportunity. At the same time, we also recognize that, if approved, we'll have REMS type of program. And so that will also determine kind of the scale of the opportunity. I think we'll know more after the AdCom to understand what the profile and label would look like in terms of the overall commercial scale for tanezumab, but it's an important step in innovation for non-opioid pain medications.
Geoffrey Porges
analystOkay. Well, maybe I did say that I would talk a little bit about the Alzheimer's program. So could you summarize for us what your path forward is now in this ever-elusive but massive unmet need category?
Ilya Yuffa
executiveSure. We're -- first, I think, as a company, we probably, again, I think, for 3 decades now have been working on Alzheimer's and only to fail each time but take those iterative steps and learning and moving forward innovation. And I think that's what we've done here. We're excited about the results from the first trial of donanemab and not only the 32% reduction in the iADRS but also the consistency that we see on the overall data that we will review coming up in a few weeks now, on March 13. I think the important part is that we have a -- we feel pretty confident in the profile of donanemab and also the significant plaque clearance that you get pretty quickly with donanemab. And so then it's a matter of having the right discussions with the FDA, with the regulators in understanding the pathway to market. And we've also communicated that we're -- we will, regardless of our discussions with the FDA, continue on confirming the study with our TRAILBLAZER-2, which we already started, and we'll continue on that path.
Geoffrey Porges
analystSo should we expect that sometime this year, you'll define your pivotal trial strategy and endpoints and that sort of thing? And would that be -- is that something we -- should be disclosed this year?
Ilya Yuffa
executiveI don't know what will be disclosed just yet. But I'm assuming that once we have the right regulatory discussions, we'll be transparent in the path forward and the -- and what timing we would expect. But for now, I think we're -- based off of the history and what is traditionally being asked for, for being approvable in Alzheimer's that we would need a second study. That's -- but we need to continue to have those discussions. But in the end, this is an important advancement in Alzheimer's that -- not only the advance of donanemab but also how we conducted the trial and the diagnostics ecosystem that we need to build out that we have both Amyvid and Tauvid and also a blood-based biomarker that will help solve the go-to-market in Alzheimer's. So we're pretty excited about the opportunity to bring donanemab to market.
Geoffrey Porges
analystOkay. Last question then. I know it's not necessarily fully in your purview, but it's interesting that you've built a portfolio of different molecules with different targets in the immunology area and in that situation also increasingly in the pain area. Do you have -- or do you expect to have a portfolio of different shots on goal in the Alzheimer's indication? Or are you still pretty focused on amyloid?
Ilya Yuffa
executiveYes. So we're -- we have a number of mechanisms within Alzheimer's. We actually have a tau antibody that will have results at the end of this year. And so we do have multiple mechanisms that we are testing, and we'll continue to pursue beyond amyloid.
Geoffrey Porges
analystRight. Okay. We've reached the end of the time, so I want to thank you, Ilya, very much for participating today. Wish you good luck with all of that data, tremendous data readout coming. We hope for positive results of all those trials.
Ilya Yuffa
executiveGreat. Thank you very much. Great to be with you.
Geoffrey Porges
analystAll right. Thank you very much. We can end the call now.
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