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

Good morning, everyone. Thanks for joining us at Eli Lilly and Company's 2021 Investment Community Meeting. I'm Kevin Hern, the Vice President of Investor Relations. I'd like to welcome individuals from the sell-side firms, institutional investors, rating agencies and media who are in the audience today here at the New York Stock Exchange. We're delighted you joined us, and we're excited to be here with you today. I'd like to also welcome those of you who are joining us by watching this event through the videocast on our website. Lilly's purpose is to create new medicines that make life better for millions of people around the world. Today, we'll be highlighting the exciting opportunity we have to continue to fulfill that purpose for more patients as our newer medicines and potential upcoming launches drive further growth through the decade as well as showcase the next generation of assets across our 4 therapeutic areas that we believe will enable us to sustain the flow of innovation to patients and augment our future growth prospects. Joining me today are Dave Ricks, Lilly's Chairman and CEO; Anat Ashkenazi, Chief Financial Officer; Dan Skovronsky, Chief Scientific and Medical Officer; and a number of our commercial and R&D leaders who I will introduce as we move throughout the day. We're also joined by Lauren Zierke, Kento Ueha and Sara Smith of the Investor Relations team. And I'm sure you all came here today to hear me read the safe harbor provision. So the good news is you don't have to wait long. Here it is. During this meeting, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on Slide 2. Additional information concerning factors that could cause actual results to differ materially is contained in our latest forms 10-K and subsequent forms 10-Q and 8-K filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions. Turning now to our agenda. Dave will kick off the meeting before turning it over to Anat to share our 2022 guidance. We'll have a guidance Q&A session with Dave, Anat and Ilya Yuffa, President of Lilly International. After that, we'll turn it over to Dan and our R&D leaders for the balance of the day. Dan's R&D presentation will provide a broad overview of our progress, our pipeline as well as our outlook for R&D before we move into separate sessions for each of our 4 therapeutic areas. We'll have Q&A sessions after each R&D presentation with commercial leaders joining their respective therapeutic area panel. So we'd ask that you please hold your asset-specific R&D questions for those therapeutic area Q&A sessions. We're excited about our progress and our outlook and the opportunity moving forward, and we look forward to sharing that more with you today. And now I'll do that by turning the meeting over to Dave to kick us off with some opening remarks.

Stuck the landing on the safe harbor. Well done. It's a pleasure to join you today. And for those of you watching online, thank you for taking the time. We are asking for a fair amount of time today, but there's a lot to talk about. I want to just start by also thanking our team. Kevin, you and your team, #1 ranked institutional investor IR team, congratulations and well earned. Today, they really earned it as well. A huge amount of preparation goes into the program. And particularly, I want to thank our scientific leaders who have taken the time to join us today, and it's just really an honor to work with them and to see their work. And I hope you feel the same way at 4:00. Three years ago, we gave an update in this building on the prospects for the company. And I guess to say a lot has happened would be a massive understatement. That's, of course, true in the world, mostly for the worst, I would opine. But in the company, almost all for the better. And that's really the discussion we want to have with you today. Our purpose, which is to create new medicines that make life better for people around the world has probably never been more clear and more important, if we reflect on the last 3 years. Our ability to fulfill it actually is better than ever. If we look at the substance of our pipeline, we feel we're in a stronger place than ever before with enormous opportunities ahead to arrest some of mankind's worst conditions. And our people, I think, have never been proven to be more resilient and now more energized for the decade ahead. We believe we're truly in a special position. And we hope to lay that out for you today, but then more importantly, execute on that over the course of the coming decade. So if you'll bear with me, I'd like to just take a little bit of a -- get rid of that slide, lap about where we've been, talk about where the company is today, setting up Anat's discussion on our financial guidance for '22, but then a little bit of look into the future more in the mid- to long term. Of course, over the last 5 years, Lilly has been -- had a remarkable success in launching new products and new indications for important established products we've brought to the market in the last half decade. This is really driving the growth of the company. Those products are here and has been an enormous success as we came out of the 2010s into the 2020s as one of the fastest-growing companies in our sector. One way to measure that beyond revenue, though, is also how many patients we reach, and we're incredibly proud of the incredible growth in the number of patients we can impact each and every year. Last year, 47 million around the world and closer to 50 million is what we project this year. And this growth has been balanced over the last half decade. We focus a lot on the U.S. market, rightly so. It's a significant part of our revenue. But we've also enjoyed great success in growing back our European business after a difficult period the last decade. Japan continues to grow despite headwinds on LOEs, which are really more significant than any other geography we're in. China has experienced extraordinary growth. And having spent some time in my career there, I'm very proud to see China now crash through the $1 billion revenue target and headed for the next billion here soon. And rest of world, really the emerging markets, despite a lot of turbulence, have continued to grow nicely for us, again, all based on the newest products. And this profile of our revenue, of course, which is the game in our industry, is to outgrow your patent expiries and the deterioration of your older products. And we've been remarkably successful in doing that based on those new medicines I showed earlier. You'll hear today, we expect nearly 70% of next year's revenue to come from our newest cohort of products, giving us a relatively long period with our in-market revenues until the next patent expiry toward the end of this decade. And maybe something we haven't talked so much about is the repositioning of our infrastructure. Early in my tenure, we took a shot at reducing our fixed infrastructure to really free up resources to invest in our future, both in the R&D line but also in go-to-market around those launches. And we've essentially flipped this equation by 6 full percentage points during this period of time. And this is core to our investment strategies, to maintain a fixed cost infrastructure that doesn't burden our ability to make choices about both scientific investments and commercial investments, and I think this is an advantage for the company. And of course, this also shows up in our margin expansion story, which in 2016, we were about a little over 20% operating margin. Now over 30%, and we'll talk more about next year here in a minute. But we see continued opportunity to leverage that fixed infrastructure across more and more of a revenue base. And we use that flexibility in operating margin, not just to return capital to our shareholders, which is an important priority, but our top priority is investing organically in our future. If you look at the last 5 years, we've done just that, combining both R&D and business development, which is all about investing in science for our future. It's by far the dominant use of capital in the company. This will remain the case. I think this recipe is working for us. And we also make some investments to support volume growth and CapEx. You'll see that in the future as well. But our priority is really to invest in future growth, 70% here of our use. Also, maintaining our dividend and growing it as we did this week, another 15% bump in the dividend, and using repo as a technique to modulate when we don't have business development opportunities to return additional capital to shareholders. And just to note, this slide does not include the Elanco spin, which produced a significant repurchase event earlier in this period as well. And speaking of business development, we're proud of our process here, and we're proud of the results. We've been on a series of bolt-on deals to the company that I think have been incredibly successful. Of course, the spin of Elanco allowed us to focus the firm. And then if we look at some of the larger transactions, whether it be Loxo Oncology in early 2019, now really core to our -- a pivot on oncology toward a more predictable way to develop important drugs for cancer patients; Dermira in early 2020, now with great Phase III results on lebrikizumab, looking better every day there; and Prevail, the most recent one, our step into gene therapy, and we'll talk more about our growth ideas in using nucleic acids to create important new medicines. Prevail is an important part of that string of pearls as well. All told, and you guys know this chart as well as I do, we've enjoyed a tremendous run of success in generating returns for our shareholders, up 270% during the period, leading the sector and well above the S&P 500. We're proud of this, but even more proud of the medicines we've created and the opportunities we have ahead. So if we look at where we are right now, we're on the cusp of even more, really driven by our ability to begin to tackle some additional serious conditions. Heart failure, if we look at both the Jardiance data and some new discussion we'll have today on tirzepatide, which still remains the leading cause of hospitalization in the developed world, is a key opportunity for the company. Of course, obesity is the iceberg below the surface that drives a huge amount of cost and suffering in western societies. We have a tremendous opportunity in front of us there. Neurodegeneration. Of course, early Alzheimer's will be a key topic today. But we see ourselves as well positioned to take advantage of emerging science in this area and really begin to arrest the -- really the plight of patients who have age-related neurodegeneration. Cancer, many new opportunities. Of course, early breast cancer with Verzenio is before us now, launching as we speak. Prostate, beyond that and new information today on the submission for pirtobrutinib for lymphomas and leukemias. And of course, in immunology, a strong lineup here with 4 new major disease indications coming in the next few years. These are driven by these 5 new molecules, each of which, I think, has a significant potential for growth and is building on top of the success we've already enjoyed over the last 5 years. We all know about the first 2, tirzepatide and donanemab make up a big part of the discussion with investors. But pirtobrutinib, mirikizumab and lebrikizumab, we are also extremely excited about and you'll hear more about today. If we look at our priorities for next year, as my team gets together, we really see this as an execution year, perhaps like no other. Of course, that begins with advancing our early-stage pipeline and looking at continued business development to strengthen our position in core therapy areas. But maybe a little more unique is we have a number of submissions under review are about to go into global regulators. Execution around that opportunity is key to maximize labeling and keep those launches on time. We are bolstering our supply chain, both the capacity and the resiliency. You'll hear announcements about that over the next year or so to position ourselves for this period of growth ahead as volume kicks up markedly. And I think we all reflect a little bit on the fragility in supply chains around the world. We certainly don't want to [ miss a sale, ] and we didn't do that during the pandemic. But I think we learned a thing or 2, and you'll see us investing there. And then, of course, commercial teams are very focused on the launches ahead, those 5 molecules in particular that I just mentioned. And of course, underlying all of this is exceptional talent on our team. And that is not a onetime event. We need to continue to invest in the people we have, but also attracting key leadership and scientific talent to what has got to be one of the most exciting stories in our sector at Eli Lilly. This is the team we have now. You know them. And I want to acknowledge also in the Board we have a great Board of Directors, and there are several Board members with us today. Thank you for joining us for this event. But we've got a great lineup here and we -- as it says here, we're excited to execute, deliver and grow. I just want to say there's no sense of complacency amongst these people. We've had a good run, but we also realize there's so much more we can do. So if we look out over the next decade, a few qualitative comments here. First, how do we think about the business? This really isn't changing, but a bit of a reminder. When we spun out Elanco, we had a point of view that innovative human pharmaceutical company is what we needed to be, what we had a chance to be the best at, and a business we could run successfully if it was more focused. And I think that's proven to be true. We also want to focus in our therapeutic areas. We've defined those as the 4 key areas you know us well for. That doesn't mean we won't add one or maybe delete one from time to time based on the underlying science. But right now, I think we can say neuroscience, oncology, immunology and diabetes and obesity are really our key areas to focus the firm where we have clinical expertise but also deep biologic understanding. We couple that with outstanding molecule-making capabilities, of course, medicinal chemistry, protein therapeutics and antibodies. Dan will talk with Andrew Adams today about our new thrust into nucleic acid-based therapeutics, adding to world-class molecule-making capabilities against those therapeutic targets. Our capital allocation strategy. I just described our history. Expect no change going forward. Fundamentally, it's an organic investment strategy in R&D, and we do expect to grow the R&D line of the company, not based on a budget point, but rather based on the tremendous opportunities that we see within our own laboratories and complement that with smart business development. We believe in running an integrated company. We're not in the business of outsourcing, manufacturing or development or other things. When we control it, we can execute differentially, and that is our core strategy as well. And of course, we want to also run an integrated go-to-market apparatus around the world, complemented by key partners in some geographies. But certainly, more than 80% of the opportunity we want to cover ourselves because launch execution is key to value capture in this sector. Underlying all this, though, is something maybe we don't talk much about with investors, which I think is a differentiated culture at Lilly, a culture that solves for the success of the company above the parts and is really driven by strong cross-functional execution, which allows us to get to market faster and execute in market better. And that spreads across all these functions. You'll hear from many of the leaders in these groups today. And that's something we don't take for granted, we invest in but is differentiating, I believe, from our competitors. So what's ahead? We see a decade here ahead that could be quite unique in our history, really, what we call top tier, meaning amongst the best, volume-driven revenue growth in our industry, really driven by the newest medicines we make. Second, that we do see the opportunity for continued operating margin expansion. We're not -- you're not going to hear us guide to a number today at the end of the decade. But of course, as we create leverage in the P&L by further density in the therapeutic areas we're in, there's a natural expansion that will occur. Some of that we'll reinvest in R&D as those prospects emerge, but we do expect continued efficiency in the business as we go forward. And finally, that ability to invest in innovation, in science that drives progress in core therapy areas will be a key part of the decade ahead. And as important as the medicines we're going to talk about today are, we believe there's more important ones, even more coming over the next 10 years. This is not an ESG presentation. We had a special day for that in May. But just to comment, I love this quote from the grandson of our founder and probably the best CEO in our history, Mr. Eli Lilly. He wrote this more than 75 years ago, which is the broad policy of the company is to create the greatest good for the greatest number of people for the longest period of time. I think this really captures what Lilly is about, which is, yes, looking after our employees and our communities and certainly our customers, but also investing for the future for the long term. You'll hear about that today as well. And maybe to kick that off, I'll introduce Anat Ashkenazi, our Chief Financial Officer.

Thanks, Dave, and it's a pleasure to see everyone this morning, and thank you for those joining us online as well. This is the first time I'm doing this in my role as a CFO, so it's exciting to be able to share what I'm about to share with you this morning. Certainly, we have an exciting picture in front of us. But before I go into the details of the 2022 guidance, I would like to provide an update on our mid- to long-term outlook given just where we are today. You may recall, 2 years ago, we shared thoughts on revenue growth and margin expansion potential for the first half of the decade. And since that, we have a -- we had a number of exciting data readouts, we've executed well on our commercial portfolio, resulting in an increased level of confidence in the outlook for the firm while also highlighting the importance of investing appropriately in R&D when we see promising pipeline opportunities. From a revenue perspective, we are laser-focused on executing our next cohort of 5 launches while also continuing to scale key marketed products. We believe the meaningful revenue expansion expected to be delivered by these potential launches, coupled with the limited patent expiries we have over the next 5 years, will result in top-tier revenue growth profile. We continue to see mid-single-digit annual net price declines as the overall trend for the coming years and recognize that this view could change or be impacted by the outcome of the potential U.S. drug pricing policy reform as part of the infrastructure reconciliation bill. In addition, we believe we have the potential to deliver top-tier volume-driven growth through at least 2030 despite the patent expiries of Trulicity and Jardiance later in the decade, extending a very prolonged period of growth since 2015. We'll spend much of today's meeting reviewing the assets and platforms, which we believe could enable us to sustain that growth into the next decade. Now as we move down the P&L, the strong top line growth and exciting cohort of next launches will further -- will provide further expansion of our -- will require further expansion of our manufacturing footprint to ensure we have sufficient supply of medicine. And despite these infrastructure investment, the continued pricing headwinds and the increase of mix of biologics, we expect our aggressive manufacturing productivity agenda to allow us to sustain roughly 80% gross margin. Moving to operating expenses. In the near term, we're investing to enable successful launches of both tirzepatide and donanemab. We'll also invest in key growth products. As these products scale, we expect SG&A to be the primary lever for operating margin expansion over time. Investment in innovation as the primary way to create value is core to our strategy, and that commitment to innovation has driven our success to this point and will drive our success moving forward. We will invest to ensure we can deliver a steady stream of innovation to sustain top line growth. And as a result, we don't expect R&D expenses to drive meaningful margin expansion in the future. Our spend over the next few years will be a function of the investment we make to maximize our current late-stage products as well as advance exciting early-stage opportunities into late-stage development. Dave highlighted the impressive margin expansion over the past 5 years, and we continue to see opportunity for further operating margin expansion, with the upper bound influenced by our innovation-based strategy to invest in R&D to drive sustainable long-term growth. From a capital allocation perspective, our priorities remain unchanged, funding the pipeline, executing new launches and augmenting future growth by leveraging external innovation. We expect annual dividend increases in line with strong earnings growth and intend to return excess cash to shareholders via share repurchases. A meaningful part of our growth outlook this decade is the continued scaling of newer medicine outside the U.S. While a decade ago, approval for new medicine in China and Japan often lag the U.S. Today, our key growth products already represent approximately half of our revenue outside the U.S. and are projected to grow to over 60% of OUS revenue in 2022. And on this slide here, I'll share how we're thinking about some of the challenges and opportunities in some of our key geographies. In Europe, we're pleased to see the solid volume-driven growth we've experienced in our core business despite the Alimta patent expiry this year. We expect that to continue as our key growth products, led by Trulicity, Taltz, Verzenio, Olumiant and Jardiance, continue to grow through the decade and drive double-digit volume growth, partially offset by mid-single-digit net price declines. We have limited patent exposure in Europe for key growth products until the end of the decade. Moving to Japan. Solid uptick for our key growth products, including Cyramza, Verzenio, Olumiant and Emgality as well as sustained growth from Jardiance is expected to continue to drive robust volume-driven growth. Pricing remains a challenge with the Japanese government considering increasing frequency of price reductions. In the near term, headwinds from patent expiries are impacting Japan's growth. Our latest product there, Cymbalta -- our largest product there, Cymbalta, is now off patent, which represents significant headwind on top of the recent Alimta patent expiry. These near term headwinds will impact our key growth products and total Japan revenue in 2022, but we expect to return to growth in 2023. Moving to China. Our business has delivered annual growth of over 20% the last several years, and we expect to continue to see that strength moving forward, led by key products such as Trulicity, Tyvyt, Taltz and Verzenio, for which we have secured expanded NRDL access. However, the effect of the policies in China lead to deflationary pricing and more acute impact from local competition. Given the current pricing scheme, there could be years with significant double-digit price decline, more than compensated by larger volume growth, which we expect to see in 2022. Now moving to 2022 and the key events. Next year, as Dave said, is all about execution for Lilly, which is a natural progression after several years rich with positive pipeline readouts. We're pleased to note that tirzepatide submission has been accepted in the U.S. and Europe. And on the next slide, I'll highlight a few potential regulatory action for tirzepatide by midyear and donanemab later in the year following the finalization of its rolling submission in the coming months, with the target completion date by the end of the first quarter. We're also looking forward to potential submission for mirikizumab, lebrikizumab and pirtobrutinib. We're eagerly anticipating the pipeline readout for SURMOUNT-1, the first study to read out from the tirzepatide Phase III obesity program by the middle of 2022. We look forward to the top line readout of TRAILBLAZER-ALZ 4, the donanemab's head-to-head study with aducanumab for plaque clearance in people with early Alzheimer's disease in the second half of 2022, and for empagliflozin in chronic kidney disease in combination with Boehringer Ingelheim. We have a number of potential Phase III initiation, which we will be hearing more about throughout the day from our R&D leaders, and we'll keep you updated on progress on these key events. Moving to the next slide, you can see a number of factors which will impact our 2022 financial results. In terms of headwinds, we expect roughly $1.7 billion of headwind from the decreased COVID-19 antibody revenue. We're proud of the role we've played over the past 18 years to address the COVID-19 pandemic. Our 2022 guidance includes only the remaining shipment expected in Q1 from the U.S. purchase agreement announced last month. Alimta patent expiry will be another significant headwind in 2022. We are already experiencing the impact of the Alimta patent expiry in Europe and Japan and expect a steep revenue decline in the U.S. when generics are launched. Moving to pricing. We expect a mid-single-digit net price decline in 2022 for the U.S., Europe and Japan. For the U.S., this outlook includes a 1% to 2% point headwind on U.S. net price from changes we recently announced to a 340B distribution program. We are expanding our distribution program to permit covered entities to purchase, distribute 340B medicine through an unlimited number of contract pharmacies, provided that these covered entities supply claim data associated with these purchases. While there is a significant discussion in Washington regarding price and reform connected with the infrastructure and reconciliation bill, we're not factoring any additional health care reform into our 2022 guidance and plan to provide updates on a quarterly -- on the quarterly earning calls for any fundamental or meaningful changes. In China, we expect double-digit price decline to be more than offset by volume gains. This is primarily driven by the participation of Tyvyt, and to a lesser extent, Verzenio and Taltz in the 2022 NRDL as well as the impact of the VBP program on our insulins. The impact in China will move our total company net price decline to high single digits for 2022. We also intend to make meaningful SG&A investments to ensure we're investing appropriately in the potential launches of tirzepatide and donanemab, 2 of the most exciting near-term launches in the industry. Finally, we expect to see increased R&D expenses for our core business as we increase investments in donanemab, pirtobrutinib and Verzenio as well as increased investment in our research and early phase portfolio to support sustained long-term growth. In terms of potential tailwinds, we expect to deliver significant revenue growth from our key growth products, including Trulicity, Verzenio, Taltz, Jardiance, Cyramza, Emgality, Tyvyt, Retevmo and Olumiant. Several of these products will benefit from recent or upcoming launches of new indication and should serve as a catalyst for growth in 2022. Trulicity and Jardiance are market share leaders in their classes and have experienced growth that has accelerated to over 25% in recent months. Verzenio is closing the year with excellent momentum with recent U.S. new-to-brand prescription growth moving into the mid-30s, reflecting some -- to some extent, the impact of the recent early breast cancer approval. For Taltz, we're pleased with the strong access and volume growth and we're encouraged by the reacceleration of script growth for biologics in psoriasis, and we look forward to continuing to execute in both dermatology and rheumatology. We're pleased to have maintained or improved access in the U.S. across all of our key growth products and expect that this group of products will represent over 2/3 of 2022 core business revenue, which exclude the potential revenue from the COVID-19 therapies. We're also looking forward to one of our most anticipated launches in recent history with the potential approval of tirzepatide in the U.S. by the middle of 2022. We're eager to bring this transformative products to patient and are excited for the potential it can play in providing early glycemic and weight control for people with type 2 diabetes. 2022 will also see the sunset of our significant investments in COVID-19 therapies, repurposing of that investment capacity to our research and early-stage portfolio. This will enable us to invest further in our research in early-stage portfolio to sustain a growing enterprise while minimizing the year-over-year growth in R&D investment. And finally, we expect continued productivity gains as we realize efficiencies for both the utilization of our existing commercial footprint to scale currently marketed portfolio where possible as well as from acceleration of digital capabilities and other learnings from navigating the pandemic. We believe this prudent expense management will enable us to expand operating margin while ensuring we're investing appropriately ahead of potential launches of both tirzepatide and donanemab. On the next slide, you'll see a high-level summary of our 2022 guidance, utilizing our strategic deliverable framework. Putting these headwinds and tailwinds together, we expect relatively flat year-on-year revenue growth in 2022. This translates to mid-single-digit revenue growth when excluding the COVID-19 antibody revenue and double-digit revenue growth when excluding both the COVID-19 antibody revenue and the impact of the Alimta patent expiry. Our non-GAAP operating margin should roughly expand by 200 basis point to approximately 32% in 2022 primarily driven by improved gross margin due to significantly lower COVID-19 antibody revenue. I already highlight some of the exciting potential events we have this year. We expect general -- to generate cash flow in 2022, which we'll continue to deploy thoughtfully to fund our existing marketed products, new launches, life cycle opportunities and replenish our pipeline. We will continue to leverage bolt-on acquisitions and licensing opportunities to augment our future growth prospects with external innovation. We will also increase the dividend by 15% for the fourth consecutive year, reflecting our conviction on our earnings growth outlook in the years ahead. The dividend increase still leaves ample capacity for business development opportunities. We expect to continue to return excess cash to shareholders via share repurchase while maintaining strong investment-grade rating. In summary, we expect 2022 to be another exciting year for Lilly with solid top line growth for the core business, meaningful margin expansion and potential launches for 2 of the most highly anticipated pipeline assets in the industry. With that background, we'll provide an updated view for 2021 guidance to reflect the impact from the $1.29 billion of order from the U.S. government for the purchase of COVID-19 antibodies and price impact from the outcome of the China 2022 NRDL on inventory already in the channel. We have increased and narrowed the revenue range to $28 billion to $28.3 billion, which primarily reflects roughly $850 million of increased COVID-19 antibody sales expected this quarter from the recent U.S. government purchase agreement. And altogether, we expect roughly $2.1 billion in COVID-19 antibody revenue for this year. It also reflects the impact of the NRDL pricing effective January 1 that has a retroactive impact on inventory already in the channel. We're pleased with the outcome of the NRDL, where we achieved listing for all our key products in China, and we look forward to the growth this could drive in 2022. Moving down the income statement. We expect significant increases in COVID-19 antibody sales to further dilute our non-GAAP gross margin percent and now expect our non-GAAP gross margin to be approximately 78%, a decrease of roughly 100 basis points. While there is no change to our ranges for marketing and selling or R&D, we expect that these will be near the top end of our guidance range. And I would remind you that roughly 30% of non-GAAP operating margin translates to about 31% for our core business when excluding the COVID-19 impact. Based on these changes, we have raised and narrowed our EPS range to $8.15 to $8.20 for non-GAAP. On a reported basis, we estimate an updated EPS range of $6.18 to $6.23, which also reflects the charges for acquired IPR&D as well with the strategic collaboration we've announced with Foghorn Therapeutics and an asset impairment, primarily related to Bayer's decision to discontinue the development of LOXO-195. On this slide, you can see our first 2022 guidance. Stepping through the various line items, revenue is expected to be between $27.8 billion and $28.3 billion. This range includes sales for tirzepatide assuming a potential launch in mid-2022, very modest sales for donanemab after its potential approval later in the year and roughly $425 million of COVID antibody revenue based on shipments in early 2022 to fulfill the current U.S. purchase agreement we announced last month. We expect gross margin as a percent of revenue to be around 80% on a non-GAAP basis, representing approximately 200 basis points of improvement from 2021, primarily driven by reduced COVID-19 antibody revenue. On a reported basis, we expect gross margin as a percent of revenue to be approximately 78% with incremental increases driven by amortization of intangibles in 2022. Marketing, selling and administrative expenses is expected to be in the range of $6.4 billion to $6.6 billion, with the modest increase driven in -- by investment in the potential launches of both tirzepatide and donanemab as well as to support Verzenio's launch in early breast cancer, partially offset by efficiencies within our commercial footprint and tight expense management. Research and development expenses is expected to be in the range of $7 billion to $7.2 billion. Net of roughly $400 million of COVID-19 investments in 2021, we expect a mid-single-digit percent increase in R&D expense for our core business, driven by increased investments in research and early phase portfolio as well as investments in donanemab, pirtobrutinib and Verzenio. Our 2022 guidance implies an increase of approximately 200 basis points in non-GAAP operating margin to approximately 32%, driven primarily by the improvement in gross margin percent. On a reported and non-GAAP basis, other income and expense is expected to be between $0 and $100 million of expense. As a reminder, on a reported basis, this range assumes equity investment gains and losses net to 0. Now turning to taxes. We expect our GAAP and non-GAAP effective tax rate to be in the range of roughly 13% to 14%. This does assume the current U.S. structure is in place in 2022. And we will continue to monitor the tax reform discussion in Washington, and we'll update guidance for any material changes. Earnings per share is expected to be in the range of $8.50 to $8.65 on a non-GAAP basis, which represents mid-single-digit growth at midpoint for 2021 and 2022 ranges. Our GAAP EPS is expected to be in the range of $8 to $8.15. Now for your modeling purposes, we're currently estimating diluted weighted average shares for 2022 to be approximately 908 million, a slight reduction from the approximately 911 million shares for 2021. And this number could change as a function of the amount of capital we deploy to external innovation versus share repurchase. Now a few comments as you think about movement throughout next year. For Alimta, the top line, the top of continued erosion -- on top of continued erosion for Europe and Japan, we expect the first quarter will see a limited launch of one generic in the U.S. We believe the impact will accelerate in the second quarter with the full generic launches in the U.S. For COVID-19 therapies, we expect the first quarter to include all of the roughly $425 million of COVID-19 antibody revenue included in our 2022 guidance, but this will represent a headwind for revenue growth given the $810 million we had in Q1 of 2021 as well as the dilutive impact on gross margin percent for the quarter. We believe the headwind will be less in Q2 and Q3. Given the revenue we expect from COVID-19 antibodies in Q4 2021, we believe this will be a significant headwind for Q4 2022. Finally, we expect the first quarter to be our low watermark from an operating expense standpoint as we ramp up our launch support and R&D investment as we move throughout the year. This slide shows the impact of amortization of intangibles to arrive at our 2022 non-GAAP guidance. And then moving to my final slide, let's sum up the outlook for 2022. As key growth products continue to scale, we expect to deliver double-digit revenue growth net of COVID-19 therapies and the impact of the Alimta patent expiry. Longer term, we believe we have the potential to deliver top-tier volume-driven growth through the balance of the decade. We'll continue to expand margin with non-GAAP operating margin projected to improve in 2022 by roughly 200 basis point, and we expect to drive further non-GAAP operating margin expansion over time. We believe our innovation-based strategy will continue to deliver results. 2022 will be a busy year with potential submission and launches for key pipeline molecules, and we look forward for the first readout of the tirzepatide Phase III obesity program. We are focused on delivering a steady stream of innovation to sustain top line growth and look forward to sharing more with you in our therapeutic area R&D reviews. Another strong dividend year reinforces our confidence in our outlook during this remarkable sustained period of productivity and growth. We enter 2022 focused on execution across our business and excited with the opportunity ahead of us to continue to deliver innovative medicine to address the unmet needs of patients. Now I'll turn over the call -- the conversation to Ken -- to Kevin, who's going to moderate the Q&A.

Thanks, Anat. Dave and Ilya have joined you up here. So we will open up -- we have mic runners. So we want to make sure that folks watching on the videocast can hear the question. So Phil, if you want to hand the question, and Steve, first question.

Steve Scala from Cowen and Company. Dave, you made one statement which really struck me and that is that the next decade could be unique in Lilly's history. I mean that's quite a statement because Lilly's had a lot of good decades in its 150 years. So I'm wondering specifically what you're referring to. Are you referring to innovation in what you must be talking about substantial advances and/or cures in major diseases? Are you talking about revenue growth because I'm sure there's been a decade where Lilly's grown revenue double digit? And -- or are you talking about earnings growth because I think Lilly has grown earnings 20% plus in some decades? So what specifically were you referring to when you made that statement?

Yes. Thanks, Steve, for the question and for being here. I think revenue, earnings, financial productivity flows from a healthy business. What I'm mostly talking about is a healthy business, which in our industry, of course, the great issue is always outgrowing your own patent cycles, right? And I think we're in a position now for the decade ahead to do that. That's probably not a unique view from all of you on the sell side that we position ourself. But what I'm excited about is what you're going to hear about later today, our Phase I, Phase II portfolio, which could allow us to do that again. And I think there aren't too many stories in our industry where people don't run into that problem of scale, being the enemy at some stage and being unable to outgrow your own blockbusters. I think we're in a position to do that. A lot to do to make that happen. But that's what we're, I think, most excited about looking at the decade ahead. And of course, from that, we'll -- should be strong financial performance.

[Operator Instructions] Seamus?

Seamus Fernandez from Guggenheim Securities. So Anat, I was just interested to talk a little bit about the guidance. It looks like if we're kind of thinking about the underlying growth that's implied by the guidance when you kind of take out the COVID antibody contribution as well as the contribution beyond that, the growth is looking like it's kind of coming from roughly an underlying growth, about 17% this year to maybe sort of 12% to 14%, 15% next year. As you think about kind of the real incremental drivers there that sort of sustain that robust level of double-digit growth, is it coming more from new product -- or contribution from new product launches that's meaningful? Or is it really more sort of a recovery from COVID and the sort of execution dynamics that we're seeing this year?

Yes. So you're right in the sense that the growth we're seeing for next year, top line, when you exclude the COVID-19 revenue, which we've always been very transparent about how to look at that, and the impact of the Alimta patent expiry is double-digit growth. We haven't provided the specific number of what it is. But if you look at what we've communicated to date on the growth of the key growth drivers, the products we've been launching -- we've launched since 2014, they're rapidly growing, right? They've had significant growth in the third quarter, and we're expecting that growth to continue. Now it's on a larger base. So percent-wise, it may not be the exact same percent, but these products are accelerating growth as there are new indications launched for some of these products. We've also built in the revenue growth associated with the launch of tirzepatide. It's a partial year. It's midyear, but this is an area we know well. So we do expect to see revenue for that product. Donanemab, you've asked about new launches, more modest number included in that just given the time horizon we have next year, which is shorter in terms of a partial year, but also given the fact that we will have the Phase III data readout in 2023. So yes, continued robust growth for these key growth products.

Thanks, Anat. Chris?

Chris Schott at JPMorgan. Just thinking about the margin ramp over time. I know you're not giving decade-end targets, but I'll try to ask anyways, I guess. So first of all, it seems like SG&A is the primary leverage point in the P&L. Should I think about that as R&D is going to kind of hold in line with sales growth? So I guess is there enough to invest in this pipeline as we'll hear about the rest of the day to sustain that growth? And then second, on that longer-term target, I think you previously said, if I remember, mid- to high 30s kind of mid-decade. Does that still hold? And as I think about sustained growth, is it realistic to think about Lilly's margins in the 40s? Or do we hit some kind of threshold with the investments you're making where that isn't the level we should kind of consider it as we look at a longer-term model?

Yes. So -- you want to start?

You start. I'll...

Yes. I'll start. So I would separate it into 2 things. One is when you have products that scale on the top line, more revenue for a single product, obviously, you have more leverage in the income -- middle of the income statement, especially when it's on an existing infrastructure, think about tirzepatide in diabetes, additional launches. So we do see opportunity for leverage in SG&A as these products scale but also as we drive efficiency in how we run our business. On R&D, it's really a function of our strategy. So it may not be flat from a dollar perspective. It may not be the exact percent. We've hovered around 25% of revenue for a number of years. It doesn't mean that it's going to be 25% every year. It could be 24%, can be 26%, but it's going to be focused on ensuring we invest sufficient in our R&D organization to sustain growth, as Dave said, not just through 2030, but beyond that. Now you say we -- we actually do look beyond the next year, beyond the next 2 years for both revenue outlook, margin expansion, investments in R&D. So we do plan out to 2030, and we have at this point, even greater confidence than where we were maybe a year ago in terms of our ability to deliver margin expansion. We talked about mid- to high 30s. And it's really that higher bound -- it's influenced by our decision of how much we want to invest in R&D. And we've been incredibly successful with our R&D investment. You've seen it's generated what has been launching since 2014 on this really great cadence of launches every year. And now we have further 5 launches in the next 2 years, which is really impressive. That strategy should continue, and we'll continue that by continuing to invest in R&D.

Yes. And maybe just an observation of the industry and how we think about this. We don't really see a company operating in the 40s on operating margin that has a high-growth future. I think that's a challenging setup. Either you're very stacked against one product that may be new in life cycle and doing well, but you have to recreate that. And here, I'm talking as well about cash -- on a cash basis because the accounting of IPR&D and so forth, which kind of skews those more business development-focused innovators versus organic innovators, and we're probably more on the organic side. So we're running more through our income statement. But if you do an apples to apples, it's just hard to see that without some technology breakthrough in R&D or something being a way to grow through time. And of course, revenue growth is the secret to this whole industry. It's all about creating more medicines that you can grow year-on-year. So I don't see the 40s as a desirable spot to land. That said, I think the R&D line will float not based on a budget point but based on ideas. So if we have a broad base of ideas and we're investing in those, I think that's great. If R&D is either nominally or in percentage terms shrinking, that's probably a warning sign. So that's our thought process on it anyway.

Thanks for your question, Chris. I'm going to go to an e-mail question online from Louise Chen of Cantor Fitzgerald to Anat, and Dave, I welcome you to weigh in as well. Do you still anticipate bolt-ons to be the focus of your M&A strategy? When would you consider larger deals? Or what type of larger deals would make sense to you?

Do you want me to address it?

Yes.

The short answer is yes, that's still our strategy. It doesn't mean we're not going to engage in additional acquisitions like we did with Loxo, but those are going to be fewer. It's just -- it's more challenging to find these larger opportunities that are attractive, that fit within our therapeutic areas and where we can add value. So if we think about our strategy and where our focus is, we want to bring in innovation, real opportunity for breakthrough medicine in one of our core therapeutic areas or new modalities that you'll hear Dan talk about and describe in more details in a little bit. If we find innovation in that space and we feel that we will be able to add value as we bring these opportunities in, then we will bring them in, and it may be a small in-licensing acquisition, it maybe a larger transaction. But if you think about the last 20 years, we've had 2 large transaction -- large for Lilly, it may not be large for the industry. So they don't happen often. It doesn't mean we're not going to do one. If we see the science and we see the opportunity, we will pursue it. We have sufficient cash, as I've described, certainly in the coming years. So we can allocate that appropriately as we see these opportunities come through.

Thanks. We'll go to Evan.

Evan Seigerman from BMO. So I want to drill down a little bit on SG&A as a lever for your operating margin potential expansion. With a lot of launches coming up over the next couple of years, are you looking more towards cost savings, particularly in your sales and marketing or, as you said, just revenue growth and better operating leverage from that? How do you think through those kind of pushes and pulls?

So we think about both. We've been on a journey for a number of years now to drive productivity improvement through our entire organization. You've seen the tremendous results from our manufacturing organization, the impact on gross margin. The fact that we have -- we expect to see 80% gross margin next year despite pricing headwinds, despite a shift to biologics, which are more expensive to produce, it's really based on that productivity efforts we've had in place for years. We have the same thing in SG&A and the same thing in R&D. So this is across the business and how we run the organization. There are a lot of learnings we've gained from the last 18 months in terms of how we run the business, and we're going to follow these learnings that we've had during COVID into how we run our selling and marketing organization as well. So savings do allow us to funnel some of these resources elsewhere. However, as Dave said, top line growth for products -- same products, right? So think about -- Trulicity provides a lot of leverage in the middle of the income [ spend. ] When you have $4 billion, $5 billion, $6 billion products, they do provide a lot of leverage. You don't increase the investments associated with these products at the same rate you see revenue increases. So that should provide leverage. The more we launch in therapeutic areas where we already have infrastructure, think about tirzepatide, it's launching on an existing infrastructure in diabetes. It's a very robust infrastructure. Mike will talk later on, but this is an area we're incredibly successful in. That is easier for us to then balance across the portfolio. We have a large portfolio, and allows us to do that. When we launch in a new area, donanemab is the one, we didn't have a commercial footprint in donanemab, we're building this, then we would look to move resources into that area. And we always -- I mean, what you will see today and what you've heard from Dave about next year being a year of execution, this firm does an outstanding job at disciplined execution. We've -- that's how we got to where we are today. That's what's going to take us into next year. So we always look at how we balance investments across but also invest appropriately to successfully launch these products.

Maybe just -- I don't know if you were implying, are we going to see a decrease in SG&A-related operating expense? No. But growth slower than revenue just as a kind of a baseline assumption.

Geoff?

Geoff Meacham, Bank of America. Just I think donanemab is -- obviously could be one of the higher impact assets over the kind of the intermediate to longer term. To what degree do you -- are you -- how long do you think the kind of the build, the reimbursement access, things like that -- there are lessons to be learned from Biogen, but it would make sense for you guys to invest pretty heavily in that now and for the next 12 to 18 months. I know that's reflected to some degree in guidance, but how much sort of a lever do you think that could be for this year?

Yes. Not much of a lever this year, if that's the question. But I do agree with you. It's a big driver long term. Obviously, one of the greatest unmet needs in mankind is Alzheimer's disease. But the current market isn't really functioning in a way, as might be obvious to everyone at this point, that would -- that is going to adopt these therapies automatically. And that's quite different from, say, tirzepatide where it's a little more of a drop-in to care practices and our commercial engine. So we need to work with providers to change how care is delivered. A key piece of that, I think Mark Mintun will talk about this today, is the diagnostics strategy. Today, the way we treat Alzheimer's, we hope and we wait. And what we're going to need to do for a class of drugs where it's highly likely the impact on the disease will be greater if we intervene aggressively and early, that we need to change that fundamental piece. And fortunately, we have a number of diagnostic tools that can -- we can sort of subsidize in a way to drive that, that's maybe differential versus our competitors. I think you have a couple of other factors at work here. One is this is not a disease where the indication statements that we're expecting will allow you to address the whole prevalence population on day 0. It's more of an incidence kind of play. Ultimately, it's the same number, but that's -- there are often differences in uptake based on that factor. And then finally, in Ilya's world, we're basically doing global simultaneous launches. So within the same calendar year, almost everything launches in all the major markets. That is not going to be the case with donanemab. I think the setup we're portraying here is we expect in the back half of next year, U.S. approval under accelerated access. We expect a TRAILBLAZER-2 readout in Q2 of '23, but the ex U.S. submissions won't begin until later in '23, setting up a '24 launch. So that is like a natural spreading out. But post '25, I think we would expect to have significant adoption.

Thank you. I'm going to go to another e-mail question here from Kerry Holford of Berenberg. Ilya, which of your drugs move on to the China NRDL next year? And which will be the most heavily impacted by a price cut?

Sure. Well, actually, we are in a pretty milestone moment for China. We've doubled our size of the China business over the last 4 years. Part of that is -- a lot of that has to do with our innovation strategy. So we had 2 of our growth assets, Trulicity as well as Olumiant enter NRDL in 2021. And now at the start of 2022, we'll have an expansion of Tyvyt for 3 additional indications. We'll have Verzenio for MBC as well as Taltz for psoriasis enter NRDL. And so we're well positioned for pretty much all of our growth products to have access for -- at the beginning of '22, which sets us up for significant double-digit volume growth in China, continued growth beyond the 20% that we've achieved thus far. And in terms of pricing impact, I'll just give kind of the average of the NRDL access for about the 67 products that entered NRDL for the start of '22. The average price concession was 62%. So it gives you a sense of the significant price concession required to get access for innovation. In China, at the same time, it does provide an opportunity for substantial growth beyond the price concession. So we're excited about our growth in China.

It might be worth mentioning, Tyvyt is the key driver of the price impact, which because it's established and expanded indications.

Great. Thanks, Ilya. Ronny?

If you don't mind, I'll try to sneak 2 in. One of them, you haven't talked about Omicron and the ability if your COVID antibody can neutralize it. Obviously, only assuming one quarter worth of revenue, but that will change if you've got an effective product against the next wave. If you can tell us where you stand on that. And second, I am sure, Anat, that you have played a scenario game in terms of the impact of the BBB on your long-term revenue. Is the long-term picture you've drawn for us today going to materially change if the BBB passes? Or 1% -- 1%, it doesn't matter, but is the kind of mid-single-digit growth rate long term that you're discussing here still holds even if the BBB, either the Senate or the House version, [ passes? ]

Sure.

Yes. Maybe on the first -- just hold the question for -- I think Dan will address that in some of his remarks on Omicron. Of course, it's not in our guide because we've sort of given up on trying to guide to these waves, et cetera, but Dan will have an R&D update on the antibody program. Do you want to manage the Build Back Better? Or...

Yes. So on the pricing piece, and I'll give you kind of a behind the scene kind of look here, right, we look at a variety of scenarios when we do long-range plan. We look through 2030 at least, and then we layer in a set of potential pricing changes, not knowing exactly what pricing reform will come through, but then we look at an envelope of dollar impact. And the importance of doing that is not to get the precise reform right, but rather to make sure that we run the business in a way that can withstand different changes. So we look at quite a significant impact. We feel comfortable -- what we saw -- and I can go into what's in the bill right now. Given what we're seeing right now, I feel still -- I still feel confident with this top-tier revenue growth for the firm and margin expansion through the balance of the decade. What's been -- what's in the bill right now is in a couple of categories, and they're going to be implemented in, based on what we know today, 2023, 2024 and 2025. So there is a kind of a stage implementation of these changes. The first one around the list price increases, more closely tied to inflation rate. If you've seen what we've done in recent years, we haven't taken a price increase on insulin since 2017. On the rest of the portfolio, we tend to take lower single-digit price increases, the highest ones are Trulicity and Verzenio this past year, just above 5%. So at this point, we're well within the inflation rates. And so -- and I think what this will actually do is hopefully drive more responsible behavior from companies that may have had increases that were in the 20%, 30%. We've never had that. The second set of changes around the Part D reform actually hold patients, which is area where I've always been supportive of in terms of limiting the expense at the pharmacy counter and managing coverage gap now moving to our coverage in the pre-catastrophic initial phase and then the catastrophic phase. I think there will be an interesting dynamic that if that were to come enacted, with probably better adherence to medication and better health outcomes in general, so potentially greater volumes, there will be a financial impact for sure. The later piece that's going to be impacting 2025 around negotiation, we'll have to see how -- what the specific language is on that. Obviously, it's a subset of products, 9 years for small molecules, 13 years for biologics. So we'll have to see what that impact is there. But we're confident in our outlook for the decade.

And maybe as importantly, I don't think it changes our strategy going forward. So there might be some modest headwind. We've planned for that, though.

Thanks, Ronny. Mohit?

This is Mohit Bansal from Wells Fargo, and I have a 5-part question.

Just one question.

So my question is on obesity. Are you including any obesity SG&A bill in your guidance? And to what extent your current infrastructure can support obesity expansion in the future?

Yes. So we don't provide details on how much SG&A we have to support an individual indication or a product. We typically invest ahead of a launch. So we don't prepare the day before or the months before. We start preparing 1 year to 1.5 years prior to launch to make sure we have the right things in place, right strategy, right infrastructure to make sure we are ready day 1 to launch very effectively. So it's progressive. We'll see the first data readout mid next year, which should be an exciting period for all of us as we see this data come through. We will look then across the business of whether or not we're increasing investments, specifically to support that obesity indication or if we can repurpose spend across the portfolio. It's easier when you have a broad portfolio like the Lilly portfolio, right? We can truly look across geographies, assets and therapeutic area. And as Dave said, I think one of the key things we're doing and we do well is we don't maximize a unit. We maximize the Lilly organization.

And maybe just qualitatively, diabetes by definition, and we have a pretty expansive organization as a primary care organization, that's fundamentally the call point for obesity. There might be some incremental non-endocrinology, weight loss targets, et cetera, but that's not going to change the Lilly number in a significant way. So largely, it's going to ride on what we've got today. That said, of course, the variable marketing spend may be quite different in the launch year. And we note this year, we have pretty modest growth expectations in op margin in large part because we plan to spend a lot on the variable side as we introduce new brands or even Verzenio's expansion in EBC, et cetera. So that's a little more transient but an important part, yes.

Thanks, Mohit. Vamil?

Vamil Divan from Mizuho Securities. So I wanted to ask about capital allocation. And I guess one question and then one maybe follow-up to Louise's earlier question. Just around the dividend growth, you mentioned the 15% growth earlier this week. Looking beyond kind of the next few years, should we expect dividend growth to sort of be in line with where earnings growth is roughly speaking year-over-year? Any sort of longer-term comments there would be helpful. And then back on the discussion around bolt-on acquisitions. Just obviously, we've seen a lot of pressure on a lot of SMID-cap biotech companies this year. So I'm just -- it sounds like that's still your strategy. I'm wondering if there's any sort of sense that this might be an opportunistic time to get more aggressive with bolt-on acquisitions or really no change really in terms of your sort of urgency to do deals there.

Let me start with the latter and then follow up with the dividend. On our business development strategy, that strategy has not changed, and I will tell you, we already operate at -- with a high level of intensity looking at every opportunity out there. And we look at that consistently. Dan and his group always look at what options are outside of our walls to bring truly breakthrough innovation in. We're in a fortunate position where we have the ability to make those investments should we see them. So that's not impacted by any of these other dynamic. On the dividend growth, we are raising 15% this year, the fourth consecutive year of 15%. And as we look into the future, we do see a growing enterprise and further expansion. And as those -- as earnings grow, we do see an opportunity to grow the dividend as well. When I say we'll be generally in line with earnings growth, it doesn't mean it's exactly the same number, but generally in that direction, yes.

Maybe just to jump in a little color on the BD side because I think we get this question a lot, and that makes me kind of wonder if we've been effective at communicating what we're doing. But it's not like we're trying to look at like a cash flow-based thing on marketed products and say, okay, at some point, that becomes efficient for us to purchase. I think a history of buying revenue is not a very good one in this industry, in part because eventually all revenue expire. So it's sort of hard to make a difference there and add value. That said, I think in SMID-cap or in small acquisitions, we often find ourselves doing a workup, getting to a price point of x, and maybe the market clearing price for an acquisition might be x plus 50. So we're on the sidelines. If that falls, then, yes, often, we activate and try to get into that. But a final comment here is, I think, although there's been a lot of drop-off, maybe February was the peak in the biotech index of 2021, I think investors still have a little bit of a sticky memory about that price point, and you see premiums, I think, actually rising as the value -- as the traded price drops. So the effective clearing price is really not as different as the stock prices. So we're in a lot of these conversations. I can confidently say within our 4 therapeutic areas, there isn't really a single publicly traded company we haven't looked at. But there are things that make it harder than it appears. And fundamentally, we're trying to buy technology we can add value to, and that sort of puts us into the clinical stage, not -- or preclinical even, not commercial.

Thanks, Vamil. We'll go to Alice for the next question.

This is Alice from Tim Anderson's team at Wolfe. So long-term margin guidance has been mid- to high 30s before you had visibility on donanemab. So our question is if confidence is higher in that asset now, why wouldn't margins actually pass the 40% mark, presumably you assumed lower odds of success with that product prior to 2021?

Yes. So I'd go back to some of the -- my previous comments just to emphasize really our strategy in terms of how we manage investments in both SG&A and R&D. So there is a mathematical equation you can look at, and you would say revenue go up, margins should increase. But it's an opportunity for us as we generate more cash flow to funnel more back into our business, including our internal R&D engine. And the more successful our set of products are in late-stage development, we have greater opportunity for further expansion, additional indication, investment in those opportunities, but also accelerate and advance in our early-stage pipeline, which you'll hear much about today. So don't just think about it as an outcome of just revenue growing substantially, but also how do we funnel our cash flow back into the business to ensure that we don't just have visibility into top line growth through 2030, but well into the decade after that.

Yes. I mean as a simple -- I'm a simple guy. But if you think about your cost of goods, SG&A and R&D, which one of those is going to be less than 20% to get to 40% op margin? It doesn't really make sense to me. So I don't think that's how the industry structure works sustainably today, whether you have donanemab or not. I think part of the answer, too, is we found new ideas to spend the donanemab money on later this decade. So we're -- the idea is we make good choices there that have high return and lead to more revenue growth later and don't play the time duration game and kind of optimize the near term and lose the long.

Thank you. Last question for this panel go to Jeff Holford.

The one question I have within the long-term margin outlook is actually on the gross margin because you say you're going to offset pricing pressure with efficiencies. And then you're saying that the other reasons for keeping it flat over the mid to long term, increased mix of biologics. Well, I don't tend to think a lot of your -- you do have some small molecule launches in oncology. Verzenio is growing nicely, Jardiance too, those are all high-margin assets. They kind of have an uplift effect. I don't tend to think of your new biologic launches like tirzepatide and donanemab being sub-80% or around 80% gross margin products. So I guess the other piece in there that maybe I don't understand or others don't understand as well is the footprint part. I'm just wondering how much of a drag on gross margin is the footprint expansion that's within that construct that you have? And is there a potential to surprise to the upside on that 80% midterm guide?

Yes. So when we -- by the way, when you say biologic mix, it's not necessarily just new products. It's also the continued expansion of existing products as volume increase as well. As we think about the manufacturing footprint expansion, it's both to support the growing existing portfolio, but also new launches. So we're looking and we're going to be making announcements probably in the coming year of expansion in both our API capacity, in device capacity. In new modalities, you'll hear about that from Dan and Andrew here shortly. But we're looking across the board for these additional investments. Those are not small investments necessarily, and they will come through. We can't share what those numbers will be. We'll share more about those when we announce the sites. But certainly, that is part of our gross margin story. But if you think about the 80%, I will say the things that drive gross margin the most are the price of the medicine, the -- obviously, the cost of the drug, but also the royalties that sit on top of it. So the more partnered products, the more we shift to products that are partnered with someone else, think about COVID-19, where we have margin share and revenue we're -- or no, royalties we're paying to our supply chain partners. That is impact, that's another headwind on gross margin because it all sits in the gross margin line, and we're offsetting all that with productivity efforts across our manufacturing organization.

And just -- you said something which confused -- maybe you misspoke or not. But the biologics piece is a headwind on the gross margin story, not a tailwind. So small molecules will be better, biologics worse, the productivity is offsetting a part of that as well.

I guess the specific point on the biologics was would we think of new launches like tirzepatide and donanemab, would they be 80% or sub-80% gross margin products? Because I would tend to think that would be -- they would actually be positive on mix, but maybe I don't understand something on this.

Probably not, yes. I think -- because the parenteral side for retail products is a huge part of the cost equation. Single-use auto injectors and prefilled syringes, that's both technically challenging but also very expensive. On the API side, it's more about the fixed base, like your -- the cost of the plants, not the raws or labor drives it. So if you can scale that, there is a real payoff in terms of spreading our costs over more units. Less true on the parenteral single-use injectors, that's more variable cost.

Thanks, Jeff, and thanks to our panel. We'll move on to the next presentation here. And I'll invite -- clicker is not working. Oh, there it is. It's working now. So this next presentation, I'll invite Dan up. Oh, good grief. Sorry. Well, there's -- we're having some clicker issues. Sorry, Dan. Yes, I'm almost done. We can go straight to Q&A. So the clicker got -- yes. So Dan, and then he'll be joined by Dr. Andrew Adams for our VP of Lilly Genetic Medicine.

Great. Thank you very much, Kevin. And thanks, everyone, for being here. It's great to be together here again in person. Certainly, the events of the last 2 years have taught us a lot. They've also reminded us that our purpose at Lilly has never been more vital. The idea, the dream that we could take difficult science and turn it into cures for some of the most challenging human diseases has never shone more brightly, and that's exactly what Lilly is doing. And I think the future for Lilly and for the patients we served -- we serve has never been more clear or more bright than it became this year. Lilly certainly invests and has had success across all of our therapeutic areas. But I highlight here several major trends in the biopharmaceutical industry in which Lilly has the potential to become a leader. Let me start with obesity. We think that when we look back at the 2020s and 2030s, we'll see this as a time where we started to understand that obesity can be reversed, that this can be treated like a disease. And when we eliminate obesity, we can prevent a huge burden of morbidity and mortality from type 2 diabetes, from cardiovascular disease, from liver disease and other ailments. This is going to be a major change in public health, and Lilly is positioned to be a leader in this space. The other major advance of the coming decade and the one to follow, we believe, will be in the field of age-related neurodegeneration. We've shown already that we can slow progression of these diseases. I think we'll come to learn that we can stop or perhaps even prevent age-related neurodegeneration through early detection and early intervention. Again, a major trend for the years to come in an area where Lilly endeavors to be a true leader. Finally, the third trend that became obvious to all of us in 2021 was the rise of nucleic acids as important therapeutic interventions. Surely, this has been growing for quite some time now over the last 3 or 4 years. Lilly has entered the space. And today, we'll be showing you for the first time an update of our progress here, particularly in targeting nucleic acids to specific organs like the brain. These are 3 big trends. We're poised for success in each of them, hopefully, on behalf of patients. But even behind them, Lilly is a story of a very diversified portfolio that right now is firing on all cylinders. We'll highlight our leadership in targeted oncology with pirtobrutinib and a flow of great molecules coming behind that as well as immunology with 2 successful Phase IIIs this year for different molecules and a number of Phase II and even Phase I readouts. Last time we were here together 3 years ago in New York for an Investor Day, I highlighted that Lilly was on a transformation journey, that we recognized we had to get better at our drug discovery. We had to get faster at drug development, improve our success rates and create more value for shareholders and, more importantly, for patients. We've made tremendous progress in that journey. Of course, we'll never be complete. We'll always strive to work harder on behalf of patients. But first, I'll show you some results from that journey, and then I'll show you a bit of how we've done it. So each of our therapeutic areas has benefited from our improved productivity in R&D. And you can see on this slide how we've transformed really the potential in oncology, immunology, neuroscience and diabetes just over the last 3 years. So in 2018, in oncology, we were talking about bets in trying to find the next wave of IO molecules. We believed Verzenio is differentiated. We said that, but we didn't yet have the clinical data to prove it. Here we are 3 years later, we've completely rebooted our oncology engine with the Loxo Oncology acquisition. You'll see the great molecules coming out of there. And we've demonstrated through clinical experimentation the differentiated potential of Verzenio for patients. In immunology, we're proud of Taltz and Olumiant, but we really had virtually nothing else in the pipeline behind those. It was 2 molecules only. We've grown those 2 molecules since then. Even last night, though we announced top line data for another positive Phase III for mirikizumab, lebrikizumab has had positive Phase IIIs as well. So 2 more immunology molecules coming in, in the pipeline behind that. Three years ago, we were excited about Alzheimer's. We believed we had differentiated molecules, and we believed we had a differentiated approach to clinical trials. Today, we have data that shows that's true and a path to market. In diabetes, that was certainly our strongest area in 2018. We are proud of tirzepatide Phase II data, but there were a lot of questions. Would this tolerability be improved with our titration regimen in Phase III with the efficacy holdup in larger trials and more difficult populations? At the same time, as there were questions about tirzepatide, there were new competitive threats to Trulicity, which was so important to Lilly's future. We resolved to gain additional data to hold off those competitive threats. So part of Lilly's strategy, of course, is that we'll try and launch a steady stream of new medicines every year, as you see on this slide and Anat mentioned. But we also know that it's hard to tell -- until you have extensive human data, hard to tell which of these molecules will have the greatest impact for patients, which will be the really differentiated game changers on behalf of patients and which will not be. Shown in green here is an analyst view of that molecules where analysts see outsized revenue potential, which often translates to outsized benefit for patients. When we see molecules that have those kinds of differentiated benefits for patients, our strategy is to double down on investment, to go back to those molecules, expand their indications, expand their reach to help additional patients. I'll show you how we've done that already for a few molecules and how we're planning to do that now for tirzepatide, donanemab and pirtobrutinib. Let me start then with Trulicity. Since we last were here together in 2018, we unveiled the REWIND results where we had the broadest population for cardiovascular outcomes and a positive benefit there. That led to guidelines updates, which were very favorable and important for market growth. We also created, tested, submitted and launched higher doses of Trulicity in just a couple of years. Those higher doses now represent 1/5 of weekly prescriptions. So incredible success there. As a result of these efforts behind Trulicity, we've continued to maintain our market leadership with 48% TRx share of market, and the class growth continues to be strong. You can see our TRx over the last 3 years on the right side of the slide, more than doubling since 2018. A similar story of investment and growth behind Jardiance. When we saw together with our partner, Boehringer Ingelheim, the EMPA-REG OUTCOME data, we knew we had a highly differentiated medicine, and we committed to investing more behind it. We started trials in both types of heart failure: HFrEF, heart failure with reduced ejection fraction; and HFpEF, with preserved ejection fraction. HFrEF, successful trial, drug approved and launched now around the world. HFpEF, first ever to show statistically significant improvement in this difficult-to-treat disease, now were submitted around the world and look forward to bringing that to patients soon. Ongoing investment in CKD for this molecule as well. As a result of these investments and the great data we've generated with Jardiance and expanded indications, Jardiance has driven class growth here, expanded market leadership, moving from 40% to 60% share of market, and grown about 2.5 fold since we were last together in 2018. What about Taltz, another molecule where when we got the Phase III data, we understood we had a differentiated best-in-class opportunity here for patients that led us to go back, invest more in Taltz. We ran a number of head-to-head trials designed for superiority. All of them were successful. No one has beaten Taltz here. And we went back and expanded indications for Taltz as well, both radiographic axSpA and we were the first to pursue and find success in nonradiographic axSpA, so we can help more patients in the field of rheumatology. With great data for Taltz in hand, we went and were able to improve access for patients. And you can see our TRx growth here, also more than doubling since our last investor meeting. The Taltz story isn't over yet. We see lots of continued opportunity for growth with Taltz because anti-TNFs are so widely used. Most patients still don't get the benefit of the tremendous efficacy that Taltz can deliver. Verzenio. I mentioned we had a belief that this was a differentiated molecule based on preclinical data, and that belief turned into reality as we got more and more clinical data for this molecule, starting with the MONARCH 2, overall survival data that was positive and incorporated into our label for metastatic breast cancer. And then last year, with the positive Phase III data in early breast cancer, an adjuvant setting through the monarchE trial, first and only molecule of its kind to have that data, leading to the approval this year in the high Ki-67 population in the U.S. and looking forward to approvals around the world soon. We also had a positive Phase II readout in prostate cancer. We remain blinded to that data, but that triggered an expansion of that trial to become a Phase III trial for castration-resistant prostate cancer. As a result of great data, you can see that Verzenio has tripled its TRx since 2018, and lots more opportunity for growth here as well. Well, what about the new molecules? We take the same strategy. When we see differentiated data, we doubled down for investment. Here's tirzepatide. Of course, the question on tolerability now resolved. And you can see across our SURPASS program a tolerability profile for this dual GLP-1/GIP 1 (sic) [ GLP-1/GIP ] agonist that is similar to the well-established GLP-1 agonist class. So we were very pleased to see that but even more excited to see this efficacy data. And here, you can see that while we have tolerability data for the dual agonist that's similar to monoagonism of GLP-1, we have efficacy that is highly differentiated from the GLP-1 class, both in terms of hemoglobin A1c in absolute numbers as well as these landmark analyses showing really a 40% to 50% or more of patients achieving totally normal A1c at the highest dose in the clinical trial, something that no one thought was possible before the tirzepatide data. We are pleased later this year to receive the durability data. This is now for the first time that we had a 2-year data on tirzepatide. And you can see the very great stability here of A1c results. Durability is such an important challenge in type 2 diabetes. The solid lines plateaued there with a very strong A1c control, the dotted lines showing insulin comparator here, which is unable to maintain HbA1c control. So we were pleased with the tolerability data. It met our expectations. I would say the hemoglobin A1c and glucose control data modestly exceeded expectations. But what we were most excited to see was the weight loss data from tirzepatide. It quickly became apparent that this is a tremendously powerful drug for decreasing body weight in type 2 diabetes. You can see the data here. And again, a landmark analysis showing how many patients achieved 5% or 10% or 15% weight loss. And you can see across these trials, including SURPASS-2, about 2/3 of the patients with type 2 diabetes achieving more than 10% body weight loss and in some of these trials, 30% to 40% of patients achieving 15% body weight loss. In fact, in some of those trials, the average body weight loss was 13% or 14%, which is tremendously important because we know that in obesity trials, drugs like this typically will show even greater weight loss than they've shown in type 2 diabetes. So this was important. And here, you can see the stability of weight loss, the durability of this effect in type 2 diabetes over 2 years, again, contrasted to insulin glargine, which, of course, causes some modest weight gain, which unfortunately is also durable. So with data like that, you can bet we're investing heavily in tirzepatide. You're going to hear from Jeff and Ruth about new investments that we're announcing today and tirzepatide to continue to expand the potential here for patients, particularly patients with obesity, where we believe we can fundamentally change the trajectory of disease and greatly improve morbidity and mortality from a number of complications of obesity. Donanemab, of course, was another major event for the year and another of these game-changing molecules where we're going to invest heavily behind it. This data shows the consistency of the results from the TRAILBLAZER-ALZ study across different statistical methods, across different end points, across different time points. It's data like these that give us confidence in the reproducibility of the results and really great anticipation of seeing that Phase III data in the middle of 2023. This isn't just a case where you see cognitive measures and you don't really understand how it works. We have a clear understanding of the mechanism of action. We can follow this through biomarkers starting with the amyloid plaque reduction, which is quite dramatic, and you can see on the left, most patients achieving complete clearance of amyloid plaque. And on the right, that reduction and elimination of amyloid plaque translates into slowing of spread of tau. Mark Mintun will show new biomarker data that further expands our understanding of how removal of plaque and slowing of tau spread translates to the cognitive benefits that we've seen. So as a result of those data, we initiated the rolling submission to the FDA. As you heard, we anticipate finishing that submission with the last bits of safety data in Q1 of next year. We're also pleased that we've completed enrollment in our large Phase III study. That study overenrolled, and 18 months later, we'll read out. We're investing here in both preclinical stage of disease in another Phase III trial for donanemab in a head-to-head study against aducanumab and then the next generation subcutaneous form of treatment for Alzheimer's disease that Mark will talk about shortly. The next game changer in our portfolio that's not yet launched is pirtobrutinib. And this is exquisitely selective BTK inhibitor designed to combat the C481S mutation in BTK. But as you can see on this slide, also extremely potent, of course, against wild-type BTK. When you have such a selective inhibitor that is not -- that can be fully dosed to fully engage the target, you can get efficacy data like this, which was recently shared at ASH. Jake -- and David will tell us more about pirtobrutinib. But surely, when you get results like this in CLL and like this in MCL, this is a molecule that we're going to invest fully behind, maximize the potential of pirtobrutinib on behalf of patients, and we'll be talking more about our submission that we're initiating in MCL to the FDA. A robust program of Phase III trial's here, of course, to establish its position in patients with relapsed disease, but ultimately also to test this for superiority in the first-line head-to-head setting against ibrutinib and we look forward to that opportunity as well. We also brought in a BCL-2 inhibitor knowing that combination is going to be important in this space and certainly advantageous to ownership of both of those molecules. So we talked about donanemab and tirzepatide and pirtobrutinib. We also have 2 great Phase III molecules in immunology. If we didn't spend so much time on Alzheimer's and obesity and leukemia and lymphoma, we could do a whole investor meeting on these 2 immunology molecules: mirikizumab with positive Phase III data now for ulcerative colitis, a big unmet medical need, first-in-class, first IL-23p19 inhibitor for this indication, and we look forward to submitting this to regulatory bodies for approval next year and bringing that to market; and then lebrikizumab, which we acquired about 18 months ago. We completed the Phase III trials. We've read out the induction data for atopic derm. That was a highly successful study. Here, again, we look forward to a submission next year and a launch in the subsequent year. Atopic derm still has large unmet medical needs, and we think lebrikizumab is going to be a very important option for patients. So excited about what's happening in immunology. I know there's interest in COVID-19. We probably don't spend much time talking about what we've already accomplished with bamlanivimab and etesevimab against COVID-19, except to say that we're proud that we could come and help the country and the world in a time of need in a way that we could with our medicines. Interest in Omicron, and I know Ronny asked a question. You may know that we have a next-generation antibody called bebtelovimab, and we had developed bebtelovimab early this year in the anticipation that there could be a variant like Omicron, a variant with lots of mutations that would be highly resistant to existing therapies. So this is a broadly neutralizing antibody. We took it through clinical trials in combination with bam and ete and it's been tested in several hundred patients. We just recently obtained the preclinical viral neutralization data and in our pseudo neutralization assays. This shows a preserved potency against Omicron, in fact, a slightly even better potency against Omicron. And to our knowledge, this is the most potent antibody against the Omicron variant that has yet been characterized. We're excited about that. We've made several hundred thousand doses, and we're ready if the U.S. or other countries around the world need this antibody, we can move it forward to patients. Of course, our hope has been that other therapies will become available, such as oral antivirals, which hold great promise. But if antibodies are further needed, of course, Lilly will do its part. So I started by saying we've been on this transformation journey, which continues. You've seen the results of that success and progress in all of our therapeutic areas. But here, I show you some of the ways in which we quantify that transformation and mark our progress along this journey. So one thing we've worked on is preclinical development times getting faster from we first have an idea to work on a target to when we have a molecule ready to test in human trials. And you can see on this slide the progress we've made in that area. We know from industry benchmarking surveys that Lilly is now the fastest company in this space. We're proud of that. And you can see some of the specific examples on this slide. We've also been on this long journey to get faster in clinical development time lines. And you can see, over the last decade or so, Lilly has gone from being really one of the slowest in the industry to now very nearly the fastest in the industry in clinical development. This has been a huge effort from everyone at the company to get faster and more efficient at clinical development. And you could see the impact that's had with molecules like tirzepatide and pirtobrutinib, which have moved exceptionally fast; and then, of course, our efforts against COVID-19 which surely are a record for the entire pharmaceutical industry. We don't expect to always be able to develop new drugs in that time line. But on the other hand, there are lessons we learned from our fight against COVID that we now apply across the entire portfolio and aim to get even faster at clinical development in each of our therapeutic areas. Because we've been able to go faster, we've been able to move more molecules through our portfolio, and you can see that on this slide, we've grown the overall size of R&D and its output at Eli Lilly and Company. And you could see, as you move from left to right on the slide, the percentage increases get bigger and bigger. The reason for that is because not only have we improved speed and not only we improved substrate going into Phase I, but we've improved our success rates at each stage of development. You can see this graph, which shows our success rates over time. We've more than doubled here as well over the last several years, and we're excited about where we are. Our success rates reflect a thoughtful balance of risk here, knowing that we're working on some of the hardest problems and largest unmet medical needs. We want to take risk on behalf of patients, but we also need to find success at a reasonable rate, and we're excited about where we are today. So a result of faster speed, of more throughput, more molecules coming through our pipeline, higher success rates and working on really difficult problems is ultimately value creation for patients and for shareholders. This slide on the x-axis just shows Lilly and all of our peers. Our peers are shown as blue dots here arranged by how much they've spent on R&D, both internal and external over the time period highlighted on this slide. Lilly invests about the middle of the pack in R&D. The y-axis shows the value that's been created from that R&D investment, both the molecules in the pipeline as well as molecules that have been launched, and this is according to consensus -- estimates from EvaluatePharma. You can see Lilly stands ahead of the pack, having generated more value from R&D than anyone else in the industry. We're really proud of this. This is a result of our transformation journey, a result of the decisions we've made and the hard work we've put into our portfolio. You can see, of course, donanemab and tirzepatide, two of the most important and highly valued molecules in the entire industry. We're proud to have both of those. Even if you remove donanemab and tirzepatide, Lilly has generated outsized value per dollar of R&D invested. And we certainly don't think donanemab and tirzepatide are a reflection of luck. Rather, they reflect in themselves decades of R&D investment. So we are proud of the journey we've been on and the results we've generated for patients, but we don't rest on our laurels. There's more work to do and the burden of human suffering is immense. The potential to help patients is equally immense. And so we work harder to do even better here at Lilly. We think that starts with a strong foundation of scientific understanding, deep disease knowledge. We focus in our therapeutic areas, and sometimes it takes decades to make scientific breakthroughs. At the same time, we've invested heavily in our molecule-making capabilities, both in small molecules and large molecules. And as you'll hear in a moment from Andrew, on new modalities, including nucleic acid therapies. That's an important part of our capability as well. We've learned a lot about differentiated clinical execution. You saw our progress even before COVID. We're reenergized by the COVID experience. We think that decentralized capabilities, moving trials to where the patients are is another leg of growth for speed. It's going to help us enroll patients faster. It's going to help us enroll more diverse patients into our clinical trials as well, which we see as a key priority. And then finally, I comment on external innovation, which is another important leg of growth for Lilly. We're proud of all the deals we've done recently, whether those are bringing in new modalities, new ways of making drugs, new targets for us to work on very often new molecules that we can bring to patients and add value to, but probably especially proud of when we're able to do deals that bring in freestanding units within Lilly that continue to exist, that bring in new talent, new facilities and access to new geographic locations, new ways of working as well as new molecules. And I think that's a difficult capability and one that Lilly is strong at and we hope to continue. So with that, let me turn it over to Andrew, who'll make some comments about novel modalities, and then I'll wrap up and we'll go to Q&A. Andrew?

Thanks, Dan. I'm really excited today to speak to you on behalf of some of the teams that we have working in our labs at Lilly and with our partners around the world to bring the new medicines in novel modalities to patients with speed. At Lilly, we have a long history of making incredible medicines from amino acids and from atoms in our small molecule and large molecule efforts. But today, I want to talk to you a little bit about a new frame that we've been thinking about as a company, targeting DNA and RNA, and moving upstream to make medicines from nucleic acids themselves. We feel that this new frame allows Lilly a new way to bring undruggable targets into our portfolio and progress them quickly towards the clinic. You saw on one of Dan's earlier slides some of the fastest molecules have been able to progress from idea to clinic have come from our siRNA programs, and we expect with the power of the platforms that we're bringing to bear on the Lilly portfolio that this trend of speed will continue in future. It's been an interesting few years already in the novel modality space here at Lilly. We've made a lot of progress quickly, and we're very proud of the work that we've done. You're going to hear in multiple talks today about the impact that our medicines are making across the Lilly portfolio, both in diabetes from Ruth and in neuroscience from Mark. I'm really excited about the speed to which we've been able to apply these technologies across Lilly's pipeline, and you'll see that moving forward today. This is mostly a story of our people, like it always is at Lilly, bringing our incredibly talented scientists to bear on important problems. We've done that effectively here, moving talent from some of our other areas like our small molecule chemists and bringing their insights to these new types of medicines as well as bringing in exciting new talent from outside of the company. We've also used external innovation heavily in this space to bring in exciting ideas from leaders in the field and you'll see that on the next slide, as well as pursuing challenging problems. At Lilly, we both seek to expand value from existing platforms in places like the liver, but we also want to do hard things. We want to pursue the CNS even though it's going to be difficult. We've made progress already. We're very proud of what we've done, but we know there's a long way to go. You'll see a little bit of that data today that we're going to be sharing for the first time. And I know our teams are very excited to share that with the world and the external scientific community over the coming months and years. You can see the power of platforms if you look at the deals that we've done over the past few years in the generic medicine space here at Lilly. We've coupled that with building internal capabilities, moving talented people, building new skills, and leveraging the deep scientific expertise we have in our therapeutic areas. The reason that we're successful in some of these places is due to a long-standing commitment in places like cardiovascular disease and neurodegenerative disease. And you'll see the output of those kinds of projects later today. We're very proud to have that capability and to be able to couple that now with what we believe is the most comprehensive and thoughtfully constructed portfolio of molecule-making capabilities in our industry. That started with our siRNA investments. That was an internal build of dedicated subject matter experts as well as working with key partners externally like Dicerna and it's expanded now to include the acquisition of Prevail Therapeutics, and they're experts in gene therapy. We're really excited to see what our gene therapy pipeline is going to bring to patients over the next few years, and I'm sure you're going to be hearing more about that over the coming months as well. We've definitely made a lot of progress, and I want to actually share a couple of specific examples with you. I'm going to go quickly into diabetes and cardiovascular disease first. This is an example of a hepatic program with our partner, Dicerna. Dicerna are excellent partners in the hepatic space, significant expertise in GalNAc-based siRNAs, and that's allowed us to make some very interesting liver-centric medicines. On this slide, you can see the Lp(a) program that we've been focusing on in cardiovascular disease. This is a nonhuman primate experiment, which is the gold standard in the space of RNA. And you can see after a single low dose of our Lp(a) siRNA, we're able to knock down protein Lp(a) levels almost completely for a period of 3 months. We believe that this could translate to a really convenient and easy-to-use treatment paradigm for patients where perhaps even up to once or twice a year, they're able to be dosed with their siRNA, and then not have to think about their Lp(a) until they go back to see their doctor again. We really think this can be game changing for patients, especially those who have a significant pill burden already. Taking that off their mind, I think, is something that we're very excited about. And we feel like molecules like this might allow us to do that with speed. Before I get into this slide, which is probably my favorite slide that I've generated in my time at Lilly, I want to frame a little bit for you the challenge that we came into here as a field. We were all very excited with SPINRAZA initially and the promise of antisense oligonucleotides to address disorders of the central nervous system. Some of that promise has panned out, but there have also been challenges over the years. No one today has successfully delivered an siRNA to the brain. And Lilly chose early on for that to be one of the challenges we wanted to tackle. We have a significant commitment in areas like Alzheimer's disease and Parkinson's disease. We have targets that we would like to access, but we needed to develop a technology that would allow us to get there. That technology has 3 parts. There is the oligonucleotide itself. You can see on this slide that's listed as siRNA. There is the linker that connects it to our delivery vehicle, which is listed here as the delivery moiety. You have to have all of these parts working in unison. You have to deliver them and then you have to reach the entire neuroaxis if you'd like to treat a disease like Alzheimer's. This slide today is a result of hundreds of different ideas from all of our chemists here at Lilly, putting together all of their different expertise in new ways that haven't been tried in the field before, and we feel have come up with a very compelling product. You can see here on the slide that after a single dose in nonhuman primate intrathecally, so directly into the spine, we were able to knock down genes in the brain throughout the front to the back of the brain and through your spine for 28 days after a single dose. This is actually early data, and we assume and predict that this actually will be significantly longer in terms of the effect after a single dose in these nonhuman primates. And we're very excited to see what this will look like when we start applying it to some of the targets that we've long wanted to address as a company here at Lilly. So this is a teaser. You'll hear more over the next couple of years of the progress, I'm sure, given our excitement of applying these technologies. And I'll hand back over now to Dan, and then we'll take questions.

Thanks, Andrew. That was great exciting data, and thanks also for your leadership of this new capability at Lilly. We have an exciting day -- rest of the day for you here. Of course, you'll hear more details on our next 5 launches on tirzepatide, donanemab, pirtobrutinib, mirikizumab, lebrikizumab. Those hopefully will be available to patients in the coming year or so. But also, we're going to spend some time today on, what you see on this slide, the next generation of launches from Lilly. This is our answer to the question what's next. Every molecule you see on this slide, we'll show you some data on or update you on its progress. So lots of new stuff to come. And Andrew and I will now take sort of general Q&A on R&D, and we'll have specific therapeutic Q&A later in the day. Thank you.

Seamus Fernandez from Guggenheim Partners. Dan, I think you've obviously had the opportunity to see Lilly really transform over a number of years. You came from biotech. Just from your perspective, how different is the company today from when you joined in terms of not just the research capabilities, but the focus that you're bringing to the different key areas? And really, I think what I'd love to get at is tirzepatide was one really good example of where focus kind of brought the thought process forward, but is far away from your original reach in Alzheimer's disease. So I wanted to just say, what really drove you to push tirzepatide as aggressively as you did despite some of the tolerability issues that we saw in Phase II?

Yes. Thanks for the question, Seamus. And the implication there, of course, is a positive one. Thank you for that also. Lilly has a proud history, and we're super proud of what this company has done over 145 years. I would say the decade before this most recent one, though, was a period of decreased productivity, particularly for Lilly Research Labs. And I think you saw us come into Lilly with a feeling of we were hungry to prove ourselves and Lilly felt like the underdogs, and we worked hard then to revitalize R&D at Lilly, me and previous leaders as well, and found success. A lot of that, though, did come from focus. And I remember difficult decisions we took in the field of diabetes to narrow our focus. In fact, at a period where we had not enough productivity, we took the counterintuitive decision and said, instead of having a broad array of molecules, let's focus on what we really know best and where we think we can have the biggest impact for patients. That was incretins and insulins. And today, we're harvesting the fruits from those decisions to focus with a renaissance in biology, in incretins and in insulins, as we'll talk today about our weekly insulin as well as our glucose-sensing insulin. So at one level, strategic decisions to focus where you're good and where the science is playing out. That's important. And then comes the next decision, which is when you start to see that early clinical data, where do you really invest. And there's no substitute for seeing that human data and probably -- most of us at Lilly, and Ruth and Jeff will remember when we saw the first Phase I data from tirzepatide, and that was all we needed to know that we're going to make a bet here. We didn't know how great it would be, but we knew it would be differentiated. Some of us had confidence even with preclinical data. And 2 investor meetings ago, we went out on a limb and showed you mouse data on tirzepatide even before it had been in the first patient. So sometimes the biology translates that well. And we've seen that continue to flourish in incretin field. And Ruth will talk about next-generation molecules, GGG and oxyntomodulin and others that again are showing that same pattern of translation from mouse to monkey to early human studies, and we'll be betting big on those as well.

Thanks, Seamus. We'll go to Ronny next.

I just wanted to follow up on the COVID disclosure. So I think you've talked about the new cocktail, and it kind of raised 2 questions. First of all, is the current version, which is now commercially available, going to be effective against Omicron given that, I guess, the ramp-up is actually in the next couple of months that we expect. And second, we know that the FDA has said some things about shortening the process for nucleic acids, next-generation product in terms of vaccination. I guess the question is, is there a similar thinking? Is there a similar expectation now around antibodies that neutralize the virus as well? Or will this require kind of like a more complete clinical programs to get approval?

Yes, sure. I'll make a quick comment about Omicron and maybe Andrew will help me out. Since, in addition to leading genetic medicine, he has led the discovery efforts around these antibodies as well. And then I'll come back for the FDA question. So my understanding is that the mutations in Omicron virus would be predicted to make it not susceptible to neutralization by currently available antibody cocktails. I think that applies to all of the combination therapies, including Lilly's bamlanivimab plus etesevimab. I don't know if you want to comment more on preclinical data?

Sure. Yes, absolutely. I mean you've probably seen the same studies that we have publicly looking across the class of antibodies. It looks like, for sure, there will be reduced susceptibility to bamlanivimab and etesevimab, likely as well for the Regeneron cocktail as well as potentially reductions in efficacy for the AstraZeneca molecules too. Sotrovimab, I think this is also early data, that it looks still viable. So I think at least we have something there. With -- as Dan mentioned earlier, bebtelovimab, we feel we have the most potent antibody that's left standing at this moment that has any clinical data. So that's something that maybe on the FDA portion, you could talk, Dan.

Yes. And look, I mean, this is not -- we don't see this as a commercial opportunity. We've never been in this COVID antibody business to make money. We just want to help if we can. And so that's why we actually, at the beginning of the year, advanced bebtelovimab, even though the Delta wave was sufficiently neutralized by bam, ete. So I don't know that the FDA has documented pathways that go even faster or whatnot, but we certainly will be in discussions with them. And if this is what the country wants, then we'll do our best to comply.

Yes. I mean the only thing I would add potentially in the end of that is, this is the cycle that we predicted we would be in, and this is why we brought etesevimab forward initially. And sort of didn't predict exactly the Delta wave, but assumed that something was coming and assumed it would come with speed, Delta did. If you look at the latest data from the CDC on Omicron, it appears to be coming with similar speed that Delta did in the early days. And so you could expect that to be the pattern that we'll see moving forward into the future. And thus, if we can't move faster as an industry and as a regulatory body, it's going to be tough to keep up with the virus at this point.

Thanks, Ronny. I'm going to go to an e-mail question from Kerry Holford of Berenberg. "Dan and Andrew, just with the acquisition of Dicerna, just curious if Lilly considered pursuing Dicerna and how does this impact, if at all, the collaboration moving forward?"

Great. Thank you. Andrew, do you want to take that?

Sure, absolutely. We're always looking at business development opportunities and the way to best build our business in generic medicines. In terms of the impact on Lilly of the acquisition of Dicerna by Novo Nordisk, we're very happy that we were one of the first large partner that Dicerna had. We carefully curated the targets that we picked in the hepatic space. We've worked together with them to innovate in the CNS space, and we're excited to continue to move that forward. They really are an expert in development of hepatic siRNAs. And I can certainly see why Novo Nordisk would be interested in that capability. From our perspective, as I showed you this morning, we're very excited about our internal science in the spaces that we are most passionate about like the CNS as well as the work that we have ongoing with Dicerna. And we look to see in the coming years, hopefully, the clinical translation of that work. But overall, I think the path forward is bright for Lilly and hopefully for Dicerna too.

Thanks. We'll go to Vamil for the next one.

Vamil Divan from Mizuho. So just following up on your comments around COVID and you made a comment saying lot of lessons you've learned from the last couple of years here. Maybe you could just expand on that a little bit in terms of specific things that you've learned over these 2 years and how you're going to implement them going forward.

Yes. Thanks, Vamil. Something we think about a lot and maybe I'll just start with one of the hardest lessons that we've all learned, which is disparities in health care across different segments of our population, particularly minority groups. That's been painful to see. They've always been there. But COVID made them more obvious to all of us. So I think pharma is not the answer. We're part of the answer. We'll do our part. So enhancing diversity of clinical trials and of health care delivery has got to be a top priority for every pharmaceutical company and Lilly aspires to be a leader in that. The more positive lessons we learned were just about how fast we could go when different stakeholders worked closely together. So we worked and continue to work with other biotech companies and pharma companies. In our industry, Amgen, of course, an important partner in manufacturing, AbCellera, Junshi in origination of antibodies. Those kinds of partnerships can happen very quickly when the parties are aligned, that we're doing this for the benefit of health. Of course, all business development is for the benefit of health. And so we have to take that lens more often. I think the notion of decentralized trials was something that was sort of forced upon us really with COVID. Patients couldn't easily come to the academic towers to get their health care. And instead, we had to deliver the health care, the diagnostic testing, the infusions, et cetera, to the patients where they were, in their communities. That led us to come up with all sorts of clever ways including outfitting recreational vehicles as mobile clinical trial labs and setting up testing facilities in church parking lots. That's not just for COVID. I think for every clinical trial, we have to meet patients where they are. They won't always be able to come to top institutions to participate in clinical trials. And when they do, that will often take longer and also bias us towards less diverse population. So going into the community to do clinical trials is another important lesson. And the final one, of course, is just the cooperation between government and industry, working with NIH -- work which NIH was a co-inventor with us on these antibodies, working with FDA for expedited review paths. A lot of progress there. And COVID, which can't be lost for other therapeutic areas. Alzheimer's takes more lives than COVID. Well, next year, I'm confident cardiovascular disease even more. And yet we don't fully see those kinds of expedited development plans and regulatory paths fully available in more prevalent diseases yet. So that's yet to come.

Thanks, Vamil. Meacham?

Dan, I wanted to follow up on that. The success of tirzepatide, I suspect can introduce you to indications that maybe you're not fully built out in cardio or even liver disease. And I suspect across the portfolio, you probably are running into various orphan indications as well. So how do you think about those sort of frontier indications for Lilly? And how do you prioritize that versus kind of the core therapeutic franchises?

Yes, that's an important question. It's something we think about a lot. So thank you for raising it. Maybe I start with the orphan diseases. Lilly is one of the biggest pharmaceutical companies in the world. Accordingly, we're one of the biggest investors in R&D to improve human health in the world. I want to make sure that we use that privilege of investing those dollars to help as many patients as we can. So that often means that we're going to need to work on bigger diseases even though orphan diseases can -- our heart goes out to those individuals, we want to help them and when we can, we will. But we can't divert too many dollars towards very small populations when there's very large populations with very important unmet medical needs. If we don't help them, who will? Sometimes though, when we have a new technology, either new biology or a new modality or something that's really difficult to do, smaller diseases, including orphan diseases, give you a cleaner way of understanding the hypothesis and testing it. Often those diseases are monogenic or very well-defined pathology. So we'll go into those diseases. We want to help those patients. That will be an important outcome, but then that can also be a way to step the science forward and help even more patients in the future. So that's some of our thinking about orphan diseases. With respect to disease adjacencies like tirzepatide, which now takes us in other directions, that's exciting. I think we follow the science and develop drugs for patients, not for commercial infrastructure. That's for sure. On the other hand, we recognize that the therapeutic areas that we already work in, diabetes and its complication, immunology, oncology and neuroscience, that covers half of all human suffering from disease already. So we're not out there searching for new places to work. But let's try our best to make progress in these areas first. Tirzepatide, obesity is a great example of how that might work. By going earlier in the same disease cascade, we can actually hope to prevent diabetes and prevent many of the complications of diabetes. So that's an obvious next move and proud to be doing that.

Thanks for your question, Geoff. We'll go to Steve next.

Steve Scala from Cowen and Company. This is more of a clarification, but you identified obesity as a trend. But when you're referring to tirzepatide in obesity, it's typically in the context of obesity-related outcomes and, frequently, they're even in the same sentence. So do you plan to pursue registration of tirzepatide in obesity in the absence of other pathologies or only when there is established pathology such as cardiovascular disease? And if the latter, why is that?

Yes. You'll hear more about that in the diabetes section for sure, and Jeff and Ruth have some slides about that. But it's the former. Of course, we pursue this for obesity. But why treat obesity? Of course, like any disease, we want to treat it to remove the adverse health outcomes. So you'll see Lilly assemble data on all of these outcomes related to obesity not because we think that we want to treat NASH and we want to treat heart failure and we want to treat sleep apnea or whatever, in the context of obesity, it's because the sum of those parts proves that lowering obesity improves health outcomes. So that's the kind of evidence we want to generate that can really have a public health impact than on treating obesity in the absence of comorbidities and therefore, prevent those comorbidities from happening.

Thanks, Steve. Last question in this session will go to Evan.

Evan from BMO. So I want to ask one on the atopic derm space. Since your acquisition of Dermira, we've seen safety concerns over JAKs. Other companies are looking at BTK inhibitors. Pfizer just acquired Arena yesterday with -- in the S1P space. So how have your expectations in the atopic dermatitis space changed over the past, say, 1.5 years? And how does Lilly position itself going forward?

Yes. Thank you for that question. Lotus and Ajay will have time to go in depth on immunology. I'll start the answer, and I'm sure they'll give you more detail. Atopic derm is a disease where there's still great unmet medical need. Of course, dupilumab's been an important therapy there. But if you look at the kinds of efficacy that we're getting in atopic derm with a drug like that, it's nothing near what's been accomplished in psoriasis with drugs like Taltz. So there's a lot of opportunity still in atopic derm, important unmet medical needs. One might have predicted, and probably Lilly was among those predicting it several years ago, that small molecules, particularly JAK inhibitors like [indiscernible] baricitinib could be an important way to -- well, it could be maybe the most important way to meet that unmet medical need in atopic derm. Yet, now we see that class held back by safety concerns likely positioned behind biologics. So that emphasizes the need for more and better biologics. So excited to have lebrikizumab, and I think that will be an important option for patients. But still more to come in atopic derm and Ajay will show some of our thinking on next-generation biologics that could be helpful in this disease.

Thanks for your questions, Dan and Andrew. Thanks for the panel, and we'll move next to diabetes. And I will invite up our colleagues, Dr. Ruth Gimeno, who's the Vice President of Diabetes Research and Clinical Investigation; and Dr. Jeff Emmick, Vice President of Diabetes Product Development. Thanks, Jeff and Ruth.

Thanks, Kevin. I hope I might get to read the safe harbor provision again, Kevin, that would probably have been the easiest part of the presentation. But hey, it's great to be here live to talk about our diabetes and obesity portfolio today after 2 years and a number of interactions with many of you on the phone. So thank you for coming. I'm going to begin by speaking a bit about our evolving strategy and providing some updates on our plans for tirzepatide moving forward. And then I'm going to turn over to my Lilly Research Laboratories colleague, Ruth Gimeno, to talk about the rest of our emerging portfolio and what might be coming next. As we think about unmet needs in metabolic disease, we are really increasingly focused on obesity. We know it's a significant precursor in the majority of patients with type 2 diabetes and a growing epidemic worldwide. And the numbers are staggering, as you can see on this slide. Just in the U.S. alone, over 100 million people have obesity and actually an even greater number have overweight, so greater than 27 in terms of the BMI. And yet, less than 3% of people historically or in more recent data have been pharmacologically treated for obesity, largely because of a lack of really effective therapies in this space that were also safe. And the economic impact is staggering at $1 trillion because of the number of the outcomes that Dan has alluded to in his earlier discussions. And then despite all the advances in the treatment of diabetes, still only 1 out of 2 people with diabetes meet their treatment goals in terms of A1c, and that's what today's treatment goals, not to even think of what treatment goals might be moving forward. And one person dies from diabetes or its complications every 8 seconds, and obesity is a cause for death in nearly 20% of adult patients. So there's really a great opportunity as we think about pharmacologic treatments that could really significantly impact weight reduction. Lilly's been a leader in the fight against diabetes for almost a century, and we're coming up on that hallmark of Banting and Best, and Lilly's partnership to bring the first insulin to market. And we've developed best-in-class medicines to treat diabetes, particularly impressive what we've been able to do over the past decade. But historically, our focus has been on glucose control. And it was a requirement to do cardiovascular outcome studies in some of the foresight that led us to actually power those outcome studies to show potential cardiovascular benefit with medicines. And in this way, really, it's been a story of first, and Dan alluded to this. With EMPA-REG OUTCOME, Jardiance became the first diabetes therapy to demonstrate a cardiovascular benefit. That was followed closely by Trulicity in the REWIND study in patients both with and without established cardiovascular disease, which was a first. And we've really followed the science as well because within EMPA-REG OUTCOME, we looked at secondary end points that led us to engage in heart failure trials, the EMPEROR program and also EMPA-KIDNEY. And yet another first this year with EMPEROR-Preserved being the first study in patients with heart failure with preserved ejection fraction and to show an outcome benefit. So it's really been an active decade. And yet, we are expanding our focus and really at the cusp of a paradigm shift. And we believe the next decade will actually define efforts to improve outcomes in patients with both diabetes and obesity, and we intend to fully be a leader in that effort. So why is obesity such a critical part of our strategy. We know it's often the first manifestation of a patient with metabolic disease. And for many patients, it's progressive. In fact, for the majority, it's progressive and leads to other metabolic diseases such as prediabetes, dyslipidemia, which in turn are often the precursor for more serious outcomes such as atherosclerotic cardiovascular disease, sleep apnea, CKD, NASH, and ultimately death, premature death in many, many patients. And our goal moving forward is going to be to disrupt that disease progression. And we believe tirzepatide provides us with the potential to demonstrate the benefits of more significant weight loss and what that could do in patients from an outcomes perspective. I think all of you are familiar with our ongoing tirzepatide development programs that have included our SURPASS program, including SURPASS-CVOT in type 2 diabetes. Our SURMOUNT program in chronic weight management, our SYNERGY-NASH study and the SUMMIT study in patients with obesity and heart failure with preserved ejection fraction. And as Dan covered earlier, as we often say, tirzepatide really did surpass our expectations in type 2 diabetes, both in terms of hemoglobin A1c reductions, but also in terms of weight loss. And based on the weight loss we observed in the type 2 program, up to 14%, as Dan covered, and our expectations for what we could see in SURMOUNT, we've said we've continued to assess other opportunities for tirzepatide. And many of you have asked what's next? Are you going to do some kind of outcome studies in obesity? And so I'm very pleased, and I know it's already been alluded to in some of the earlier presentations, to announce 3 additional programs that we plan to initiate with tirzepatide next year in patients who are overweight or who have overweight or obesity. First of all, a Phase II mechanism of action study in chronic kidney disease known as the TREASURE-CKD study; a study in obstructive sleep apnea known as SURMOUNT-OSA, which will be, again, in patients with -- who have obesity and obstructive sleep apnea; and then a study that we are calling SURMOUNT-MMO, which stands for morbidity and mortality in obesity. So as we think about morbidity and mortality in obesity, I'd like to start by talking a few minutes about obstructive sleep apnea. Many people think of this as nuisance snoring. And as many of you know, it's much more than that. And the vast majority, up to 90% of patients with sleep apnea have overweight or obesity. And yet it's largely undiagnosed. It is a modifiable cardiovascular disease risk factor. And for those who have overweight or obesity, the first line of treatment is actually weight loss. CPAP or positive airway pressure certainly relieves some of the symptoms and the daytime sleepiness for patients that can tolerate it, but it's not easy to use in many cases, and it has not consistently been shown to improve outcomes in patients. And most of the pharmacotherapies that are available are really targeted at the daytime sleepiness, not at the underlying condition. And as shown on the left panel, through a series of studies on bariatric surgery, it's well established that weight loss improves the apneic-hypopneic episodes. That's what the AHI or apneic-hypopneic index represents. And when you get into the range of 20-plus percent, you're seeing a significant reduction in those episodes in patients. And so we believe bringing forward a medicine like tirzepatide that could significantly reduce body weight, but also even potentially reduce the upper airway ectopic fat deposition could really improve the outcomes in patients with obstructive sleep apnea. And similarly, it's very well established that substantial weight loss can significantly reduce a host of serious outcomes in patients. The table at the left side of this slide is data from a number of different bariatric surgery studies that demonstrate the reductions that are observed for a number of serious outcomes for patients who have overweight or obesity. And if we look at the right side, it's estimated, in 2015, that 4 million deaths that occurred in 2015 were related to high BMI. And if you look at the individual causes of those deaths, cardiovascular disease accounted for fully 68% of the deaths. And that includes ischemic heart disease, it includes heart failure, which there's a significantly elevated risk in this patient population, and it includes strokes. Chronic kidney disease represent another 8% of the deaths, so also elevated in this patient population, and cancer another 10% of the deaths, and that's across a whole host of cancers. So again, we believe that bringing a drug forward that could significantly impact the morbidity and mortality associated with obesity such as tirzepatide could really revolutionize the impact on outcomes in patients with this devastating problem. And then as I mentioned, we are also planning to add a mechanistic study in chronic kidney disease to our already ongoing tirzepatide mechanism of action program, which many of you have heard about, and Ruth will talk a little bit more about in the next few minutes, to really better understand how our next-generation incretin might improve kidney outcomes in patients with CKD. And with that, I'm going to turn it over to Ruth to talk a few minutes about the rest of our tirzepatide mechanism of action program and the remainder of the portfolio.

Well, thank you, Jeff. It's really a pleasure to discuss the mechanism of action of tirzepatide. We've learned a lot over the past few years. So just to remind you, tirzepatide is a dual GIP and GLP-1 receptor agonist. And we believe that the GIP component is an important contributor to its efficacy. Our preclinical and clinical data point to 5 mechanisms that distinguish tirzepatide from a selective GLP-1 receptor agonist such as semaglutide. And for each of these mechanisms, we have at least some data that suggest an important contribution of the GIP component. So first, tirzepatide is a potent insulin sensitizer. In our first clinical mechanism of action study, we found a large increase in whole-body insulin sensitivity, and our Phase II study also showed insulin sensitization. What's interesting is that a significant component of tirzepatide's insulin sensitization is independent of weight loss, which is different from what has been reported for semaglutide. Now preclinical data suggest the possible reason for this. We found that GIP alone has insulin-sensitizing action. And in preclinical models, we can actually attribute the weight independent-insulin sensitization of tirzepatide to that GIP component. Second, tirzepatide has profound effects on body weight that go well beyond what is seen with a selective GLP-1 receptor agonist. The predominant effect seems to be inhibition of food intake, but energy expenditure may also play a role. Now preclinical studies have shown that GIP can act directly on neurons in appetite regulatory centers of the brain to both potentiate the inhibition of food intake that is induced by GLP-1, but also to counteract GLP-1 induced nausea. Third, GIP is an incretin, a gut-derived hormone that increases insulin secretion in response to a meal. We now know that GIP is an equally important incretin as GLP-1 and that the 2 of them act together in an additive manner. Now tirzepatide mimics this biology. In our clinical mechanism of action study, we saw a large increase in insulin secretion with tirzepatide that was almost double of what we saw with semaglutide. We attribute these effects as well as the potent glucose-lowering activity of tirzepatide to this dual incretin action. Adipose tissue is an important target organ for GIP. We know that GIP infusion in healthy volunteers increases fatty acid and glucose uptake into adipose tissue. In our preclinical studies, we find that the GIP component of tirzepatide acts directly on adipocytes to improve metabolic flexibility, lipid partitioning and glucose disposal. And we think that might actually be one of the reasons that underlies the insulin sensitizing actions of tirzepatide. Finally, with tirzepatide, we observed significant improvements in biomarkers of vascular inflammation and lipoprotein biomarkers that make us excited about the potential for cardiovascular benefits of tirzepatide. Again, the changes we see with tirzepatide with these biomarkers are much more profound than what is seen with a selective GLP-1 receptor agonist, and we believe reflect the GIP component of tirzepatide. In addition, recent genetic analysis suggest the beneficial role for GIP and cardiovascular biology, which would be consistent with the biomarker changes that we've seen so far. We are conducting 4 dedicated clinical mechanism of action studies with tirzepatide. The first of these studies has completed. And I thought it would be worthwhile to review these results with you here since they're really very impressive. So in this study, we compared tirzepatide directly to semaglutide 1 milligram over a period of 26 weeks in patients with type 2 diabetes. We saw market improvements in the 2 key pathologies of diabetes, insulin secretion and insulin sensitivity when compared to placebo, but more importantly, when compared to semaglutide. In fact, both of these measurements were close to normal at the end of the study. The primary endpoint in the study was an improvement in disposition index, which is an integrated marker of beta cell function and an important predictor of durability of glucose control. So we were excited to see an almost twofold improvement in this important marker when we compared tirzepatide with semaglutide. Let me move on to our early phase pipeline. Dan and Jeff already highlighted the importance of addressing obesity as a foundational therapy to prevent type 2 diabetes and a broad spectrum of metabolic disorders. We are excited about the weight loss that tirzepatide can offer. In fact, we believe that tirzepatide will surpass all other incretins with respect to weight loss. However, there will be individuals for whom tirzepatide will not be enough. Individuals with severe obesity may require 30%, 35% or even more weight loss to achieve a normal body weight. And we know from bariatric surgery, the striking outcomes benefits that can be achieved if you normalize body weight in this patient population. On the other end of the spectrum, you have individuals with moderate obesity, but they have comorbidities such as diabetes, impaired liver health and cardiovascular disease. And these individuals would benefit greatly from weight loss but may be hesitant to use an injectable. For these individuals, a simple-to-use oral option for weight loss will be important, particularly if it also can provide a metabolic benefit. So our pipeline is well positioned to address both of these unmet needs. Beyond the immediate opportunity with tirzepatide, we have 4 molecules in clinical development and a deep preclinical pipeline, which includes 2 molecules targeting amylin biology: a selective, long-acting amylin receptor agonist, LAARA; and a dual amylin calcitonin receptor agonist, DACRA, which we are progressing with our partner, KeyBioscience. Our GGG tri-agonist, oxyntomodulin and GLP NPA for molecule are stand-alone projects. But for PYY, LAARA and DACRA, we plan to combine these molecules with our leading next-generation incretin molecules to achieve differentiated weight loss and even better outcomes. Let me show you some recent data from our GGG tri-agonist program. This molecule adds glucagon pharmacology to the GIP and GLP-1 components that are also present in tirzepatide. In a 12-week POC study in patients with type 2 diabetes, we saw almost 9-kilogram of weight loss, significantly more than what we saw with tirzepatide in a similar length study in this particular patient population. Glucose lowering was robust and similar to tirzepatide. And safety and tolerability in this study was typical of what we see in a GLP-1 receptor agonist over tirzepatide. This molecule is currently in Phase II studies for obesity and type 2 diabetes. We are particularly interested in seeing the results of the obesity study since, as Dan alluded to before, we know that weight loss is generally more pronounced than an obese nondiabetic population. In this patient population, it will be interesting to see whether the GGG tri-agonist can approach the efficacy of bariatric surgery. In parallel, we're also progressing oxyntomodulin, which is a dual glucagon and GLP-1 receptor agonist. We recently completed a 16-week proof-of-concept study in patients with type 2 diabetes. Over a period of 12 weeks, we saw 8 kilograms of weight loss with this molecule, but less than what we saw with GGG tri-agonist. And after 16 weeks, patients had lost an average of 11 kilograms. Importantly, this was accompanied by robust glucose lowering as well. We are excited about this result, particularly since we could potentially combine this molecule with one of our long-acting GIP molecules that we are currently studying in Phase I to add even more weight loss and glucose control as well as to add the additional metabolic benefits of GIP that we discussed just earlier. We will progress oxyntomodulin in parallel with GGG tri-agonist with the goal of selecting the best molecule for patients. A second key goal is to bring the efficacy of incretins into the oral space. We believe that a convenient, easy-to-use oral incretin will be important to unlock the benefits of incretin therapy for patients, and we anticipate that this small molecule approach will offer important advantages over orally delivered peptides. Specifically, we would expect a small molecule GLP-1 receptor agonist to be simpler and easier to use than Rybelsus while at the same time achieving an efficacy that is similar to or maybe even better than an injectable GLP-1 receptor agonist. Our leading asset in this space is GLP NPA that we licensed from Chugai in 2018. This molecule is a selective, partial and biased agonist of the GLP-1 receptor. Interacting with this receptor are quite similar to the way tirzepatide interacts with it. Our data so far are encouraging. And we believe that we can achieve better bioavailability, a better cost structure and easier administration with no requirement for a fast when compared to orally delivered peptides. Let me show you some data with this molecule. In a 12-week POC study in patients with type 2 diabetes, we saw roughly 5 kilograms, placebo-adjusted weight loss and roughly 1.4% placebo-adjusted lowering of A1c. This degree of weight loss and glucose lowering is obviously more -- quite a bit more than what can be achieved with Rybelsus, and it compares favorably to the most potent injectable GLP-1 receptor agonists available today. Importantly, our molecule can be dosed once a day and does not require food or water restrictions. Safety and tolerability were consistent with the GLP-1 receptor class. Based on these results, we initiated Phase II studies for both obesity and type 2 diabetes earlier this year. Switching to insulins. We are committed to insulin innovation. And our novel weekly basal insulin Fc, or BIF, exemplifies this commitment. We believe that an insulin then can be dosed once weekly with a simple titration scheme, will result in early adoption of insulin therapy, better adherence and compliance and, ultimately, better outcomes. In fact, such an insulin could change how patients experience insulin therapy and we believe will become the primary basal insulin for patients with type 2 diabetes. We believe that BIF is the best-in-class weekly insulin. And the reason for this is the very flat PK profile of BIF. Over the course of 1 week, BIF serum levels vary by only 10%, while insulin glargine or insulin icodec shows roughly 80% variation in insulin levels between doses. We expect that this very flat PK profile will result in less glucose variability and, ultimately, potentially a lower risk of hypoglycemia. We just completed a comprehensive Phase II program in which we compared BIF to insulin degludec in patients with both type 2 but also type 1 diabetes. I want to highlight the choice of insulin degludec as an active comparator. Degludec has the flattest PK profile and the lowest hypoglycemia rates of any daily basal insulin, significantly better than insulin glargine. So by comparing BIF to degludec, we set a high bar for ourselves, and we were very pleased to learn that BIF was able to meet this bar. Shown on the left are data from our insulin-naive type 2 study where we initiated insulin therapy using either BIF or degludec. This is the patient population that we think will benefit the most from BIF. Using the same treatment targets, we achieved excellent glucose control with BIF, very similar to daily degludec with no difference in hypoglycemia rates. We previously reported the results from our insulin switch study where we administered BIF to patients with type 2 diabetes previously treated with a daily insulin. In this study, BIF achieved non-inferior glycemic control compared to insulin degludec but with lower rates of hypoglycemia. We also just completed a Phase II trial in patients with type 1 diabetes, which is the first time that a weekly insulin was evaluated in this patient population in a Phase II study. Again, we found similar glycemic control with no significant difference in hypoglycemia rate. These results are outstanding for any insulin, but they are particularly impressive for a weekly insulin, and particularly so given that degludec was used as an active comparator. And with this, I'd like to hand it over to my colleague, Jeff Emmick, who will tell you about our future plans for this molecule.

Yes. Thanks, Ruth. I'm sitting here thinking of a number of assets you've given my team to take to Phase III in the last 6 or 7 years. It's truly impressive in my career, and I have to thank you again for bringing us yet another Phase III molecule. And with this, I'm very excited to announce our decision to advance BIF into Phase III next year with the QWINT program. So QWINT stands for once-weekly insulin therapy. I commented earlier on nearly a century of our legacy in diabetes. And it's actually been almost exactly 100 years since Leonard Thompson became the first patient to receive Banting and Best's pancreatic extract. And there's certainly been a whole host of improvements in insulin therapy over that time. And despite all of that, there remain significant shortcomings in insulin therapy. There's significant clinical inertia against initiating or intensifying insulin therapy that leads to suboptimal outcomes. And so as Ruth alluded to, we really believe an insulin that is simple to use, dosed weekly, could represent a major advance in insulin therapy, particularly for patients naive to insulin therapy. Our global registration trial's proposed to include 5 Phase III trials that span both the patient population with type 1 and type 2 diabetes. We will study patients who are naive to insulin therapy. We will also study patients who are on daily basal insulin and we'll study patients on multiple daily injections. And our focus here would be on patients who are naive to insulin therapy because we believe, particularly as we hopefully see more and more patients move to incretins being the first injectable, that those patients, if and when they reach that point where they need insulin, that is the perfect population to start a weekly insulin therapy that has the very low peak to trough and the long half-life that we see with BIF. And -- but this isn't the end of our work on insulins. And so I'm going to turn it back over to Ruth to talk about our next frontiers in insulin therapy.

Thank you, Jeff. So with BIF, we do have the opportunity to bring game-changing innovation to the insulin space once again, and we plan to build on that with our efforts in glucose-sensing insulin. We know that the complexity of insulin therapy and the fear of hypoglycemia is a powerful deterrent that prevents many individuals with type 2 diabetes from using insulin in the first place and if they use it from optimizing their insulin therapy. In fact, less than 50% of patients treated with insulin today reach their treatment goal. So on insulin that senses glucose and adjusts its activity accordingly could reduce or eliminate the risk of hypoglycemia and greatly simplify insulin therapy, thus unlocking the therapeutic potential of this important class. Earlier this year, we announced the acquisition of Protomer Technologies, a company that has developed a range of glucose-sensing insulin molecules with very promising in vitro and in vivo data. One example is shown on the left. You can see that there's an almost tenfold increase in insulin activity with this molecule in the presence of high glucose compared to low glucose. I'm pleased to report that the acquisition is going very well, and Lilly and Protomer colleagues are working closely together with the goal to advance Protomer's molecules into the clinic as quickly as possible. Our acquisition of Protomer is just one more example of how we work with external partners to bring new platforms into Lilly with the goal of helping patients. Now let me move to complications of diabetes and obesity. Cardiovascular disease is the most prevalent complication of diabetes and obesity, and it is the leading cause of death in the U.S. With our existing portfolio, we have established a presence in cardiovascular disease, and we are building on this with our pipeline assets. Our focus in cardiovascular disease is on 2 areas that are closely linked to diabetes and obesity, atherosclerotic cardiovascular disease, or ASCVD, and heart failure. So let me discuss ASCVD first. As you all know, LDL cholesterol lowering agents have made a dramatic impact on cardiovascular morbidity and mortality over the past 25 years. And more recently, GLP-1 receptor agonist such as Trulicity have shown significant outcomes benefits in ASCVD. And we believe that this CV benefit will be even more pronounced for a dual GIP and GLP-1 receptor agonist such as tirzepatide. However, despite these advances, there is significant remaining unmet need. And we aim to address this need by focusing on 2 key risk factors, remnant lipoprotein [ particle ] risk, which is exemplified by triglyceride-rich lipoproteins and is closely linked to diabetes and obesity; and Lp(a), which is a genetically determined risk factor that is an important cause of cardiovascular events and death, particularly in the middle age population. There's no available therapies to date, even though there's a number of molecules in development. Heart failure is a condition that's very high morbidity and mortality, particularly in patients with type 2 diabetes. As we discussed, Jardiance is the first medication to demonstrate a benefit in heart failure with preserved ejection fraction. And this is an important medical advance because until then, every medication that had been tested in this patient population had failed their primary end point. Of course, Jardiance also shows a benefit in heart failure with reduced ejection fraction, making it quite unique as a medication with benefits across a broad spectrum of heart failure phenotypes. Tirzepatide could be an important additional advancements in HFpEF, particularly in obese individuals, and we are studying this population in our Phase III SUMMIT study. Our focus in heart failure is on new therapies that complement our emerging strength in HFpEF, and we will also explore select targets in HFrEF where we see an opportunity to achieve true breakthrough efficacy or disease modification. We have a promising cardiovascular pipeline, which includes the first 2 molecules derived from our Dicerna alliance and siRNA targeting ANGPTL3 and an siRNA targeting Lp(a). We've seen the preclinical data on our Lp(a) siRNA molecule earlier in Andrew's presentation, and I will discuss clinical data on Our ANGPTL3 siRNA in just one moment. We are also testing a very unique small molecule disruptor for Lp(a) in Phase I. This would be the first oral therapy to address Lp(a) risk. We are close to completing our Phase I study and plan to disclose the results from the study at a medical meeting in 2022. Our heart failure pipeline includes a neuregulin analog that could provide breakthrough efficacy in patients with reduced ejection fraction with the added benefits of cardiac repair and a long-acting relaxin molecule that we believe will provide unique cardiorenal benefits to patients with heart failure. So let me close with a piece of top line data from our first clinical stage siRNA molecule. This molecule is directed against ANGPTL3, which is a key regulator of triglyceride-rich lipoproteins and has been linked to cardiovascular outcomes using human genetics. In our first in man study, a single injection of this molecule resulted in significant triglyceride lowering that lasted for at least 3 months. We believe that this molecule could be dosed at least quarterly, but potentially as infrequently as twice a year. We're excited about this result, and we are getting ready for a larger Phase II study to further understand the benefit that this molecule can bring. So as you have seen, we have a broad and exciting pipeline in diabetes and obesity and an emerging strength in complications, particularly cardiovascular disease. So I look forward to updating you on these projects in the future as they mature. To summarize, we are expanding our reach beyond diabetes to obesity and broader metabolic outcomes. Our goal is to disrupt the devastating consequences of obesity and to halt or reverse diabetes disease progression. Tirzepatide leads the way. And today, we announced ambitious new Phase II and III studies for tirzepatide, including obesity outcomes, sleep apnea and chronic kidney disease. Our next-generation incretins provide exciting opportunities beyond tirzepatide. We've made significant progress toward our 2 key goals: bariatric surgery like weight loss with associated metabolic benefits with GGG tri-agonist and oxyntomodulin showed very promising data. And a simple easy to use oral incretin, the GLP NPA has recently progressed into Phase II. We see a renewed opportunity for game-changing innovation in insulins with our best-in-class weekly insulin BIF as the first wave. And glucose sensing insulin is the next frontier that could result in transformational therapies in patients with either type 1 or type 2 diabetes. Finally, we have a deep Phase I pipeline in that cardiovascular complications that includes our first 2 siRNAs as well as novel molecules for heart failure and Lp(a). We are planning to progress ANGPTL3 [ siRNA ] to Phase II and are at the cusp of several Phase I readouts that could result in additional Phase II initiations in 2022. We started 100 years ago in diabetes with the goal of transforming patients' lives by making insulin commercially available. Today with tirzepatide, we are poised to introduce yet another transformational therapy for diabetes. And with BIF, we are entering the next chapter of insulin innovation. We have an exciting early-stage pipeline covering diabetes, obesity and key complications that we hope to realize over the next few years with the goal of making lives better for patients. With this, I'd like to invite Dan and Mike up here for the Q&A.

Thanks, Dan. And I'd like to introduce Mike Mason, the President of Lilly Diabetes, who's also joining the rest of the panel. We'll go to Mohit for the first question.

Great. This is Mohit Bansal from Wells. So -- sorry, thinking about the obesity and the expansion indications you talked about sleep apnea and some of the kidney diseases. Do you think this is an umbrella indication for obesity and it will only help you expand into obesity? Or do you see these as separate indications that could -- that may have separate revenue stream in addition to what you have in obesity?

All right. Yes, I'll be happy to take that question. I think the answer is both. I mean, first of all, there's big unmet needs in sleep apnea, obviously, in cardiovascular and chronic kidney disease. And so I think there is a real value proposition that tirzepatide can offer for those patients. Also, when you take a look at kind of the broader obesity market, of the 111 million adult Americans that live with obesity, only about 25 million of those have access. And so as we talk about -- talk to payers and we talk to clinicians, I think what's important is we've got a tremendous molecule there that can provide higher weight loss than what's on the market today. And I think we owe it to clinicians and owe it to payers to show, okay, what are those subpopulations within the broader obesity population where the value proposition is high. And so our goal overall is to make sure that we provide segments that tirzepatide can offer greater value for, and increase that overall percent of people that have access for obesity [ ages ] (sic) [ ranges ] from 25 million to much higher than that so that we can, as we say earlier, is really disrupt this progressive disease and really improve outcomes.

And I just might add, from a regulatory perspective, I know this question came up earlier. So yes, we will -- we were seeking with the base SURMOUNT program, the chronic weight management indication. And we see these as new indications and line extensions that ladder under that primary indication, much like the CV risk reduction line extension is for diabetes. But I think Mike makes the point that showing the outcomes is really critical for it.

Yes, you look at sleep apnea, for example. That -- about 50 million Americans live with obesity and sleep apnea. When you look at those that have moderate to severe, that's about 20 million Americans. And of those, about 8 million are diagnosed. Sleep apnea is a well-recognized treatment by payers, including Medicaid and Medicare and commercial, and so it has better access than the general chronic weight management. So it gives us the opportunity to, again, help people living with sleep apnea as well as increase access for those that have obesity overall and sleep apnea.

Thanks. We'll go to Carter next.

Great. Carter Gould, Barclays. Just wanted to follow up on some of the next-generation incretins you mentioned. So tirzepatide is a successor to Trulicity was pretty straightforward and easy to understand. But as we think about these next-generation assets, it raises some portfolio questions. So should we think about sort of like a portfolio approach where you're going to be picking winners across that group? Or is there really like an underlying view that there's going to be greater personalization of therapy based on patient characteristics?

Ruth?

Maybe -- yes, maybe I'll start. So if you think about the next-generation incretins, I think, for example, Glucagon pharmacology, we know bring something unique, probably brings an increase in energy expenditure, potentially greater durability of weight loss. Glucagon itself has unique actions on the liver, that it really could translate into a broader NASH benefit. So we view the obesity population as sort of a very heterogeneous population and there may be space for multiple medications that are really sort of tailored to the unique like comorbidities or complications in this patient population.

Maybe, Ruth, I add, and you correct me if I'm wrong here. But of course, tirzepatide is easy to understand in hindsight. But at the time, I think it was a horse race with 3 molecules. Is that right? We also had a DACRA and a first generation oxyntomodulin.

Yes.

Tirzepatide was the winner there. So it's not always every molecule we test will be successful. So it's good to have...

I'd also say this. As markets are immature, that customer segmentation doesn't get high, patient segmentation doesn't get high. You're just trying to get something there to the marketplace that works. But as markets become more mature, that's when you start getting a much segmented approach. And you could see segments approaching the -- some that prefer oral versus injectables and others that maybe need more weight than what tirzepatide can offer. So I think what you'll see over time, as [ any more target ] matures, you'll get definite segments in there, and we'll have a good portfolio to meet, I think, many segment needs.

Yes. And maybe just one more comment. There's definitely a need for additional weight loss beyond where tirzepatide can play so.

Thanks, everyone. Chris?

So just a quick question on development time lines. Is there an opportunity to accelerate development of some of these programs? So as an example, an asset like GGG, if that was that you move forward to? Can we think about there being faster pathways than what, for instance, we're seeing with tirzepatide as, I guess obesity gets better understood, et cetera? Or is these are just big programs, they're going to take time, there's not a whole lot you can do about it? And just a follow-up on maybe time lines. With GGG and oxyntomodulin, is it an either/or decision? So I mean, do we have to wait until that second asset is through Phase II before you move into Phase III? Or we'll just kind of keep pushing forward and make a decision later on the development program?

Maybe I'll address the either/or. I think it's a little bit too early to tell how oxyntomodulin versus GGG will play out. And certainly, if we have great data with one of them, we wouldn't wait for the other one. I think that's not the right thing to do for patients. And I think maybe -- I don't know if you want to comment on regulatory perspective.

We're always looking to shorten development time lines wherever possible. I think you saw that with tirzepatide. We did not do a Phase II program. We went directly to Phase III and gained alignment from the agency to do that despite the fact that we had not studied that population. But we also need to understand the dose response and titration, if it's a compound that requires titration, and that's a place where having Phase II data is extremely helpful. It's not something you want to do in Phase III. And then we're always looking to cut the obvious places. Enrollment -- the enrollment in our diabetes program, and I can actually tell you that our SURMOUNT 2 through 4 studies are now fully enrolled, all of them, despite COVID, enrolled well ahead of our projected time lines. So I think the other piece is if you've got an exciting asset and investigators are excited, you can really move with speed, and we've seen that with tirzepatide. And then we moved very quickly from when you -- if you look at when we announced SURPASS-4, which was one of our last studies to complete to submission this year, that was very quick. So we're always looking to shave time off there, but we do look for innovative ways to structure our programs, whether it's a Phase II, Phase III Adaptive program, whether it's going directly to Phase III, as we've done. Again now we're going to do that with sleep apnea. So we look across multiple spectrums and the challenge is always to move faster. Dave gives us a challenge frequently.

And you'll also see an increased conviction on obesity. I think that should be coming clear today. And so you'll see that as a primary indication -- as one of the first indications of the launch and not the 2-year delay potentially that you see between diabetes and obesity with tirzepatide.

Thanks. Mike?

Mike DiFiore from Evercore ISI. A question on your glucose sensing insulin, actually intriguing technology very early days, but perhaps you could offer some comments on the safety in terms of how it could cause weight gain, hypoglycemia as well as the dosing frequency. And finally, how your technology platform may differ from any competitors who have the same type of asset in their pipeline.

No, I think it's still early days. Obviously, I think the Holy Grail is, we'd like to have an insulin that is so exclusive in terms of glucose control that we could dose it just independent of any considerations in terms of insulin, we could dose it potentially once weekly. I think there's going to be multiple steps to get there. At this point, it's technologically -- or technically, it's a very difficult challenge. So I think we actually need to bring these molecules in the clinic. We need to see what they can do, and then we can sort of see how they're best going to be utilized. I think it's definitely going to be simpler for patients. They won't have to worry about exactly predicting how much they eat, when they eat. I think I could -- we could see there is a prandial insulin, we could see there is a basal insulin. There's multiple ways to move forward in that space.

Thank you. I'm going to go to a couple of e-mail questions first. So from Andrew Baum of Citi. Mike, could you quantify the positive impact of the anticipated imposition of an out-of-pocket cap under the Build Back Better plan and the reconciliation bill to increase volumes and potentially increase profitability of your current and future incretin portfolio Medicare Part D?

Okay. Well, thanks for the question. Good question. Theoretically, the out-of-pocket cap is there, it could help with abandonment for those in Part D. There's other provisions in the Build Back Better bill that could be a negative. So at this point, I think we need to see, first of all, does it get approved; and what's the final language before we estimate what the impact could be, whether that be positive or negative.

Thanks. The next one, Mike, will come back to you from Louise Chen of Cantor Fitzgerald online. Do you expect obesity or diabetes to be the larger indication for tirzepatide? And why?

That's a good question. I think, obviously, if you look at the patient need, we're here and focused on really stopping the progression of both of these diseases, and they are very linked. I mean obesity causes diabetes. And we need to make sure that the progression of diabetes is halted by getting weight under control. Diabetes, there's a more established treatment area today. We still have work to do in order to kind of build the momentum in obesity with access and physician prescriptions. I think you'll see over the short run that diabetes will dominate the forecast and the revenue. But long term, I think we have a strong conviction that it's just really important for society for us to get obesity and the progression of obesity under control. So we are very committed to make that happen.

Thanks, Mike. We'll go to Seamus for the next question.

All right. Great. So my main question is really on glucagon and the application of glucagon and what you guys are seeing in that context. A couple other programs are out there, so just wanted to get a better understanding of how you guys are thinking about the benefits of agonizing glucagon and then the risks that could be associated with it. Are there concerns around safety that we need to really think about carefully? But then also what could the potential benefits, particularly on adipose actually and direct adipose benefits be?

Maybe I'll take this one. So I think glucagon is one example where, as Dan mentioned, we actually initially saw really nice weight loss with glucagon plus GLP-1, even better weight loss with GGG, and this actually seems to be playing out in our clinical data so far. So we're excited from an efficacy perspective. In terms of safety with any glucagon-containing molecule, it's really important to get the ratio between a glucagon and a GLP-1, correct? If you have too little GLP-1 activity, you will have like basically an increasing glucose that is mediated by glucagon. Glucagon is a catabolic hormone. If you don't counteract it, you could end up with catabolic actions. So getting the safety -- that ratio right is important. We -- one of the reasons we actually tested our glucagon-containing molecules in type 2 diabetes, it tells you whether we have too little or too much glucagon activity. Molecules such as cotadutide probably has too little glucagon activity. It's not as efficacious. Other molecules may have too much glucagon activity, and those you wouldn't expect to see a lot of glucose lowering in type 2 diabetes. So we feel pretty good about our molecules, but it's obviously something we need to watch as we move forward.

Thanks. Vamil?

Yes. Vamil Divan from Mizuho. So maybe just a quick question on the top line data you shared for 1774. Can you just comment at all on the safety that you saw in that trial? I know there's been some questions that are on liver safety.

Yes. So this was the ANGPTL3 molecule. We do not have any data on liver safety. We are monitoring transaminases in our Phase I program. We've seen small increases. In some patients, there is no dose relationship. The data actually look very similar to what you see with the siRNA platform in general not that different from inclisiran. We do see -- I think it's important to keep in mind, if you think about the Pfizer data, this is a different platform. Pfizer uses antisense oligonucleotides. We use siRNA. We actually have quite a bit better efficacy. And I was a little bit surprised that Pfizer did see increases in hepatic fat. This is not something we would have predicted from either the human genetics or from preclinically knockout animals. So we don't know whether it's a platform effect. But certainly, as we move into Phase II, we will be looking at hepatic fat and liver safety.

Thank you. Ronny?

So I've got a question of comparison between the strategy you're taking mid-stage of the pipeline versus the other powerhouse Novo metabolics. I mean they think it's their lead -- say next generation molecule, the Amylin combination with GLP-1, you pick the GGG, I kind of strongly suggest you synthesize their molecules and compare them to yours in a bunch of preclinical models. I'm sure you will not share all of it with us. But can you just share with us a little bit about how you think about the pharmacological property as their choice of next wave product versus yours? And I know you have a preclinical program in that direction as well.

Yes. It's very different biology. So we think that glucagon basically brings a different type of pharmacology to it. Any time you have all the components of a molecule in one molecular entity, it greatly simplifies your development paradigm. So this is one of the attractions of GGG. I think it's actually been quite challenging to make good Amylin-targeted molecules. Amylin is a molecule protein that likes to fibrillate. You see some of these challenges still in Novo's molecule. They have injection site reactions in 5%, 6% of patients. They have very high level of antidrug antibodies, and they obviously have challenges about coformulating with semaglutide, which leads them into a dual-chamber device. So as we looked at this, we carefully designed our molecules. Our preclinical molecules actually are acylated peptides intended for once-weekly delivery. We were very careful to really try to make them as low immunogenicity as possible. The molecules are in principle combinable with our next-generation incretins. One of the things that Novo's calls a molecule and Amylin has some calcitonin activity in their molecule, what we decided to do is really look at 2 molecules that are either a very selective Amylin molecule. So this allows us to maximize Amylin pharmacology. And then the DACRA is interesting because it brings calcitonin. I think we have some more calcitonin activity compared to Novo. And we think this actually brings some additional interest in pharmacology. From a preclinical perspective, we see insulin sensitization. Obviously, calcitonin has beneficial effects on bones. So it will be interesting to see what these molecules look like. We've taken a different path from Novo and I think that's good for patients. We don't go over to do the same thing.

Thanks, Ruth. Steve?

Steve Scala from Cowen and Company. Slide 13 suggests Lilly thinks that tirzepatide will beat Wegovy by twofolds in terms of weight loss. Is that a correct interpretation of that schematic? And if that's the case, and given the strong data so far with tirzepatide in diabetes, has Lilly reconsidered not filing tirzepatide in obesity just on SURMOUNT-1? Kind of makes no sense to me that you wouldn't at least try.

Maybe I'll take the science question first, and I'll refer to Mike and Jeff for the like submission question. You have to be a little bit careful and actually we went back and forth about different studies about which data we pick because you actually have to titrate tirzepatide up to its maximum efficacy and also we are titrating, obviously, our incretins in those studies. So I wouldn't infer from this particular comparison that this is going to end up at a twofold difference. I think we're quite confident it's going to be more potent than tirzepatide. And I think we're very confident that tirzepatide will -- you'll see more weight loss in an obese population than in a diabetes population, but I wouldn't want to put a number on it at this point in time.

Yes. We don't put a specific number. I think I've referenced this before. And Dan, you might have as well though. But if we look at incretins, other incretins in patients with and without diabetes and some of our own modeling, you see 1.4- to 1.6-fold increase in weight loss when you get into the patients who don't have type 2 diabetes. So ultimately, that's why we're looking forward to SURMOUNT-1. That will answer the story for dual-agonist, but we do expect robust weight loss. And Mike, I don't know if you want to touch on the strategy from a regulatory perspective.

Yes, obviously, we're excited about SURMOUNT-1 data. I think we're all looking forward to that. We agreed to the FDA on our SURMOUNT-4 study clinical trials that would be required for submissions. I think our best estimate is going to take all 4 trials in order to get the indication.

Thanks. Well, thank you for your questions. Thanks to the panel. We've had a great morning. We want to get some food into our sell-side colleagues so their engines are fired up for a great afternoon. We'll start with immunology. We have immunology, oncology and Alzheimer's in the afternoon session. So we'll break. And for those who are watching through the video cast, we will come back at 12:45 Eastern Time. Thank you all very much. [Break]

Thanks, everyone, and welcome back to the afternoon session. We have 3 more therapeutic areas to present to you with Q&A sessions after each, and we're delighted to do so. Immunology is next, and I'd like to invite Dr. Ajay Nirula, who is Vice President of Immunology for Lilly Research Laboratories, and he'll share a little bit more about his background. He has a great presentation lined up for you. Thank you. Ajay?

Well, thank you, Kevin. It's a real pleasure to be here this afternoon. So my name is Ajay Nirula. I am the therapeutic area head for immunology for Lilly Research Labs. I'm also the site head at our West Coast Lilly Biotechnology Center in San Diego, California, and I'm a rheumatologist and immunologist by background. We're really looking forward to today's presentation sharing with you some of what's going on with immunology at Lilly, and we're going to have a particular focus on our early- and mid-stage pipeline and some of the new scientific directions we're going into. We're going to be sharing some new pieces of data that we feel validate some of the scientific approaches we've been taking in the pipeline. Before we move into the presentation, it's really worth discussing the unmet need in immunology. Immunologic diseases affect millions of people worldwide. These are often chronic lifelong diseases with significant morbidity and mortality. In the U.S. alone, about 12 million people have diagnosed autoimmune disease, but only about 20% are treated with a biologic or a novel oral medicine. As is depicted on the left part of the slide, we look at the prevalence of some of the most common diseases that Lilly is working in shown in the light blue. And in dark blue, just a relatively small percentage, who really received a cutting-edge medicine. We believe that Lilly's immunology pipeline has the potential to impact a broad range of autoimmune diseases and satisfy a lot of this unmet need over time. And we have built a pipeline largely with internal research, but also with some key external partnerships, which include our acquisition of Dermira recently and then some earlier-phase partnerships with Nektar Therapeutics and Rigel Pharmaceuticals, which I'll talk about later in the presentation. Now before I move into the core part of the presentation, which is the early- and mid-stage pipeline, I do want to highlight a couple of aspects of our late-stage pipeline, Dan touched on some of this already. We're joined today by Lotus Mallbris, our Vice President of late-stage immunology and she'll be joining us for the Q&A later. But we have a great foundational asset in Taltz, an IL-17 antibody that's revolutionized the care of psoriatic disease and ankylosing spondylitis. As we look at the other later-stage assets on this slide, mirikizumab is our anti-IL-23p19 monoclonal antibody, and it's well poised to be the first anti-IL-23p19 in ulcerative colitis. And we've recently announced readouts of our Phase III study in ulcerative colitis, both induction and maintenance phase where primary endpoints and all key secondary endpoints were met. And so global submissions are planned for UC in the first half of 2022. We also have an ongoing Phase III study in Crohn's disease, which includes a head-to-head arm versus Stelara. Lebrikizumab was, of course, the key asset in our acquisition of Dermira. This is the best-in-class IL-13 monoclonal antibody. And we're really happy with the Phase III results that we've seen thus far, and this include the fact that more than half the patients in the trial have achieved 75% skin clearance as measured by the EASI scale. And we have a number of upcoming Phase III readouts, which include combination studies with topical steroids and maintenance data in the first half of 2022. Olumiant is our globally -- our JAK inhibitor globally approved for rheumatoid arthritis. We have very exciting alopecia areata data, where this is the first JAK inhibitor to demonstrate hair regrowth. And this has been submitted to regulatory authorities in the U.S., Europe and Japan. We have ongoing Phase III studies in systemic lupus, and we expect these to read out before the end of the year. And then with regard to atopic dermatitis, Olumiant is approved in the EU and Japan, and we're expecting a U.S. regulatory action in early 2022. These assets really provide a solid foundation and make us well positioned to become a leader in immunology with growing presence in dermatology and rheumatology and our emerging presence in gastroenterology. What I'd like to do now is move on to a part of the pipeline you may not know as much about and which is our early- and mid-stage pipeline. Before I go into some of the specific assets we're in the process of evaluating, I want to talk a little bit about our scientific and development strategy in the areas of science we're trying to focus on. Now if you look at the left part of the slide, it focuses on the adaptive immune system. And of course, many of the great breakthroughs in immunology in the last couple of decades have come through molecules that target aspects of the adaptive immune system, areas like T-cell biology, B-cell biology, targeting key inflammatory cytokine. Targeting the adaptive arm of the immune system offers the opportunity to treat a broad range of diseases. This is where most of the industry attention has been focused thus far and actually still is. And of course, Lilly entered the field of immunology with best-in-class assets in this area, and we continue to work in this area as epitomized by our recent collaboration with Rigel on a RIP kinase inhibitor. There will be a significant focus today on the central pillar of our strategy, which we call our immune resolution pipeline, and this captures areas of science where we're really trying to treat immunologic diseases in a different way to replicate the physiologic ways that our own immune system resolves inflammation. So this involves going into areas of biology like the science of checkpoint receptors, which obviously have been transformative in immuno-oncology, the science of T regulatory cells, and there are newer areas we're going into like immunometabolism. Now this is a key area of clinical focus for Lilly, and we believe we have an industry-leading pipeline with the assets that you see at the bottom of the slide, and we'll talk about all of these today. We believe that this part of the pipeline has the possibility to treat immune diseases in a different way and maybe achieve long-lasting remission and potentially a different benefit/risk profile. And lastly, on the right, the innate immune pillar of our strategy. It's an emerging area of focus for Lilly. The types of cells that we're targeting with our innate immune pipeline include myeloid cells, including cells like neutrophils, and these are often drivers of very severe autoimmune diseases. And we actually really learned over the last 20 months how severe a disease -- this part of the immune system can induce if you look at the inflammation induced by COVID, for example. So this is an emerging part of our pipeline, and we will talk about one of our Phase II assets, an antibody targeting neutrophil trafficking. So I'd like to move into our work on checkpoint receptors in immunology. And obviously, these are a highly validated set of targets based on the work in oncology. But we've developed a portfolio of agonist antibodies that are actually designed to tune down the immune system and promote a state of resolution. We have 3 of these in the clinic and -- in Phase II or approaching Phase II, so we believe we've taken the lead in the industry and really targeting checkpoint receptors for immunology. Now if you look on the left part of the slide, it shows a diagram of an immune response, a normal immune response we might have if we have an infection. There's a pro-inflammatory stage of the immune response, characterized by the cells shown, but also certain pro-inflammatory molecules, and most of the drug development in immunology over the last couple of decades has involved targeting molecules in the pro-inflammatory phase of the immune response. Now when we normally have an infection, there is a resolution phase, where certain key molecules or cell types are responsible for resolving the inflammation. And so with our checkpoint receptor strategy, we're trying to go after those -- some of the key receptors that dampen down inflammation and do it in maybe a more physiologic way. Now if you look at the right part of the slide, an analogy we like to use is that a lot of the targets in immunology thus far represent the gas of the immune system. So you're sort of trying to take the foot off the gas a little bit in terms of the normal processes. But by developing this portfolio of agonistic antibodies against inhibitory receptors, we think we can actually push on the brakes of the immune system a little bit and maybe bring disease processes to a complete stop. And of course, the excitement here is that this approach is validated in immuno-oncology in terms of the targets. We know that immuno-oncology therapies are associated with significant autoimmune side effects, which gives us a lot of clues, which directions we can go in immunology. Another interesting aspect is some of these inhibitory receptors are selectively upregulated on activated cells. So it may give you an opportunity to selectively target those cells and not hit the naive cells, which may be very critical for fighting infections. And these are hypotheses we hope to understand more about as we move into clinical development. So let me tell you a little bit about this portfolio of molecules, and I'm going to start with our CD200R agonist, which has the most advanced clinical data of any of the molecules. And this is -- the CD200R is an inhibitory receptor expressed on immune cells that are very critical for driving allergic diseases and dermatologic diseases. So they're expressed on TH2 types of T cells, mast cells. And again, the principle of our therapy, which is you see the antibody shown in green here, is our agonistic antibody, which was very cleverly designed by our technology group, will bind to the CD200R receptor and induce inhibitory signaling in the relevant cell types. And we generated some very interesting preclinical data that not only showed the potential for efficacy but also showed the potential for durability. And so basically, we did a contact dermatitis model where we treated the mice with an irritant. The punchline about the experiment is when you're treated with either a JAK inhibitor or the CD200R agonist, you got efficacy a day after the contact -- the irritant was administered. But what's very interesting was when you looked 28 or 75 days later, even though the drug was given quite a while ago and the JAK inhibitors -- or neither of the JAK inhibitor or the CD200R agonist are in the system, you saw persistent efficacy from the CD200R agonist. So this gave some early preclinical evidence of the potential for durability. And we did, of course, want to follow up now with clinical work to start to validate some of this. And I'm going to show you some new data here, which is our first clinical proof of concept for the CD200R antibody and for any of the molecules in our portfolio, but what we also believe is the first true clinical proof of concept for checkpoint agonism and immunology drug development across the industry. And what we did was an experiment in atopic dermatitis. It was a 24-week experiment, where patients got treated for 12 weeks, either with drug or placebo. And then were followed for another 12 weeks, so from week 12 to 24. And you can see the curve of EASI scores, for drug in blue and placebo in green, you can see very clear separation from placebo early on and out to week 12. A relatively robust level of efficacy was seen at week 12, which was comparable to some of the standard of care when actually evaluated at week 16. So this is a small early proof-of-concept experiment but really showed very clear-cut efficacy. What was interesting is we stopped the drug at week 12 and followed for another 12 weeks and the skin scores remained quite low in the active group. So this is obviously just an early piece of data that we need to follow up on. But this really has set the stage for doing more clinical work on this asset, and it really raises the possibility that this could be an atopic derm therapy that could be dosed much less frequently. There is another interesting aspect to checkpoint agonist therapy, which is there could be a customized approach. I'll talk about it a little more in the context of the next molecule in the pipeline. I'll move now to the second checkpoint agonist molecule in our pipeline. This is our BTLA agonist. This is a novel first-in-class checkpoint agonist that we're going to be taking into a lupus -- Phase II lupus study soon. And BTLA is an inhibitory receptor, mainly expressed on B and T cells. So you could think of it as a dual B and T cell therapy. And again, the schematic of the mechanism of action is shown on the left. The agonistic antibody will bind BTLA and induce inhibitory signaling in the relevant cell types. Now there is a potential for some personalized approach with some of these checkpoint agonists. Now these inhibitors receptors, their normal inhibitory signal physiologically is delivered by a ligand. And in the case of BTLA, it's a molecule called HVEM. And there is a hypothesis that autoimmunity can arise when there's a deficiency of the endogenous inhibitory signaling, so maybe a deficiency of the endogenous ligand creates a state of autoimmunity. And we have some early translational evidence of this. When you look at lupus patients compared to healthy controls and look at BTLA expression, it's relatively similar between the 2. But when you look at the HVEM expression, it's lower in the lupus patients. So you could think of -- this is a hypothesis at this point, but there is a situation where endogenous BTLA signal may be deficient, the ligand may be deficient, and you could think about the agonist therapy as a replacement therapy for the normal inhibitory signal that should be taking place. Now our BTLA molecule is, as I mentioned, moving into a Phase II study in lupus. We have some Phase I data from a multiple ascending dose study that looked quite promising where we took the patients in the study with higher levels of lupus skin disease, as measured by the CLASI scale. And what we saw was at a number of the doses of the antibody, we actually saw a reduction of skin scores after 10 weeks of therapy compared to baseline and also compared to placebo. When we followed the patients out another several weeks, you saw the skin scores staying quite low, somewhat reminiscent of what I showed you on the previous slide for CD200R. So again, this is early data that needs to be validated with larger studies, but it gives us some promise for lupus for BTLA. Now the third molecule and our checkpoint agonist portfolio that's in the clinic is the best known target, of course, from the work in immuno-oncology. It's our PD-1 agonist antibody. And we believe we have a first-in-class PD-1 agonist antibody against a validated target. Again, PD-1 is largely expressed on T cells. And again, our agonist antibody, as shown on the left part of the slide, will bind to the PD-1 receptor and induce inhibitory signaling. This is not a trivial thing again to design antibodies that can do this -- achieve this kind of effect, but our protein engineers have done a great job of developing our portfolio here. And so we -- it's well known that PD-1 inhibition in oncology is broadly associated with autoimmune side effects, including colitis, autoimmune diabetes, inflammatory arthritis. This gives us some clues as to which clinical directions we can use in immunology, and we've picked rheumatoid arthritis to do our first proof-of-concept study. And so we have an ongoing Phase II POC in RA with evaluating 2 doses of the drug compared to placebo with a 12-week primary endpoint. And I will say that the rationale for rheumatoid arthritis was not just based on the fact that in oncology patients, you do see inflammatory arthritis with the PD-1 inhibitors. There is a strong body of translational literature on T cells in rheumatoid arthritis joints that show disruption of the PD-1 access. So we're very excited to see the results of this study, and we think there's great potential across a number of diseases. I'd like to move now from the checkpoint agonist portfolio to a different area of research, which is our work on T regulatory cells. Now just as checkpoint receptors could be some of the key molecules to physiologically tune down the immune system, T regulatory cells may well be the most important cell type that our body uses to keep our immune system in check. And we entered into a partnership a few years ago with Nektar Therapeutics on a molecule that they very cleverly designed, which was very specifically designed to upregulate Tregs. And essentially, the molecule was custom-designed to bind a high affinity receptor on Tregs and achieve upregulation of Tregs but not to impact T effector cells so you wouldn't get any adverse events from there -- that, and I'll show you some of the biomarker data that speaks to that shortly. But you could think about this conceptually the following way, that autoimmunity may be an imbalance with an excess of T-effector cells and a deficiency of Tregs, and the NKTR-358 molecule that we partnered with Nektar on is designed to increase the number of Tregs selectively and reachieve homeostasis in the immune system. So in Phase I, we saw some biomarker data that validated that the molecule was doing exactly what we hoped it was doing, which was, again, looking specifically at the impact on Tregs relative to T-effector cells, and we did our multiple ascending dose study in lupus patients. And when we looked at a specific subpopulation at Tregs, which may be the most important active forms of Tregs, what we call CD25bright Tregs, we saw an up to 20-fold induction of Tregs at the high dose. When we looked at T-effector cells, I'm showing you CD8s here, but we have similar data for CD4 T cells, we didn't see any appreciable effect on T-effector cells. And hand-in-hand with this biomarker data, which is what we hope to see, the clinical safety was really quite acceptable. We didn't see any evidence of adverse events that were suggestive of upregulation of T-effector cells. So what I'd like to show you now is some new data, which we consider to be the first true proof of concept for this IL-2 conjugate, NKTR-358. And again, we did this experiment in atopic dermatitis. Obviously, there's a lot of unmet need in atopic dermatitis, and we're looking to develop new therapies there. But atopic dermatitis is a very efficient disease with its endpoints to evaluate early efficacy of immunologic molecules. And so this experiment was 12 weeks of therapy of 2 doses of NKTR-358 compared to placebo, and what we also did was follow the patients quite a while after the last dose of the therapy. So within 12 weeks, you saw really robust efficacy of the high dose of NKTR-358 shown in the blue, very clear separation from placebo. And again, efficacy that's on the order of the current standard of care was seen by week 12 when you compare it to some of the week 16 data for the existing standard of care. The lower dose was less efficacious, which is what we expected from some of the biomarker data. But maybe the most fascinating aspect of this study was following these patients out quite a while longer, 36 weeks after the key readout at week 12 on efficacy. We still see skin scores remaining very low. And again -- so this has us very excited about the potential for durability with this type of therapy. This is obviously a very small proof-of-concept study and more clinical work is needed to validate this. But this was always a hypothesis around modulating Tregs that you might have a durable clinical signal, and the early data is promising. Now this small proof of concept in atopic dermatitis is just one small part of a very large clinical program ongoing for NKTR-358. We are in a large Phase II dose-ranging study in lupus, and we saw some encouraging Phase I data in lupus looking at skin scores that's been shared previously. We're in a Phase II study in ulcerative colitis. And then based on this atopic dermatitis positive proof of concept, we do plan to initiate a Phase II clinical study in 2022. I'm now going to move on to a couple of other molecules in the portfolio. In the innate immune pillar of our portfolio, we have a very novel neutrophil targeted monoclonal antibody that we are currently studying in hidradenitis suppurativa. Now this was a very cleverly designed antibody by our biotechnology group. They designed an antibody that will actually recognize 7 different chemokines as a common epitope around these chemokines. And these are the key chemokines that bind the CXCR1/2 receptor system, which is really relevant for trafficking of neutrophils in the setting of inflammation. Trafficking of neutrophils in response to infectious signals like bacterial peptides won't be affected. And so this antibody was designed. And we did some Phase I work in hidradenitis suppurativa, very small experiments, but we saw some very promising signals with a couple of the doses of the CXCR1/2 antibody. And so we are in a Phase II study in hidradenitis suppurativa, and we expect data in the first half of next year, and we're also considering other neutrophil-driven autoimmune diseases that are shown on the slide. At last, I'd like to talk about our RIP kinase inhibitor. And this is a partnership we entered into with Rigel Pharmaceuticals earlier this year, and we're very excited about the potential of this molecule as an oral therapy. And part of it relates to the mechanism of action. If you look at the mechanism of action on the right part of the slide, the RIP kinase 1 is a critical molecule in the downstream signaling from the TNF receptor, in fact in multiple signaling arms downstream of the TNF receptor. So this opens up the possibility that this oral molecule could have efficacy across a broad range of diseases where we've seen efficacy with TNF inhibitors. Now we believe this molecule that we partnered with Rigel on could be the best-in-class RIP kinase 1 molecule that's in development right now. And this is based on Phase I data we've seen so far, which really show an excellent pharmacokinetic profile and evidence of really good drug levels and high target engagement. So we're very excited about entering this molecule into Phase II studies next year. So I'll quickly highlight the immunology assets as they fit into the broader pipeline. We obviously have talked about the great foundation established by the late-stage assets, including mirikizumab and lebrikizumab. Now you see the assets on the left part of the slide reflect some of the pipeline I've talked about, and we think there's the potential for some of these molecules to achieve higher levels of efficacy, to treat immunologic disease in a more physiologic fashion and to have a different dosing paradigm so you could have more durability and much less frequently-dosed therapies. We're very excited about developing new oral therapies, and I've mentioned the RIP kinase inhibitor. We, until recently, have had an IL-17 oral inhibitor in development, but we have a very high standard for the benefit/risk that we expect from our oral molecules. We recently made a decision to stop development of that molecule, but we have seen things from that program that encourages that this could be a good approach for the future. So in summary, our marketed products and our late-stage pipeline with the assets shown on the slide really do support the potential for growth in immunology moving forward. And they lay a great foundation for our early- and mid-stage pipeline, where we have several first-in-class and some best-in-class assets that address some of the aspects I've talked about. We're looking for more efficacy, durability, and we continue to depend both on our internal innovation and external partnerships to grow our pipeline. And we're very proud that we think we've taken the lead in some key areas of science, so targeting checkpoint receptors for immunology, Treg biology and really now is starting to deliver some early phase data that seems to validate these approaches. So thank you for your attention. And with that, I'm going to invite Lotus Mallbris, Dan Skovronsky and Patrik Jonsson to join me on the stage.

Thanks, Ajay, for that presentation. And I'd like to introduce Patrik Jonsson, who's the President of Lilly Immunology in Lilly USA as well as our Chief Customer Officer; and Dr. Lotus Mallbris, who's the Vice President of Immunology Development and Medical Affairs joining Ajay and Dan on the stage. So the first question we'll go to is from Kerry Holford of Berenberg. This is for Lotus. Lotus, when and where can we expect you to publish the full Phase III data for mirikizumab in ulcerative colitis and lebrikizumab in atopic dermatitis?

Thank you for the questions. Of course, we are very excited, both for mirikizumab data that we disclosed a press release just last night showing a high efficacy and a meaningful efficacy. We reached out not only the statistical significant but a meaningful significant across a broad range of our endpoints. This includes clinical endoscopy and histopathology and histology and also some of the endpoints that are innovative and very patient-centricity. We are planning to disclose that in full detail in next year, 2022, in our congresses -- related congresses. For lebrikizumab, we have an excitement that in press release, we had a snip of the data that showed more than 50% of the patients have reached at least 75% reduction in their disease activity compared to the baseline, and this profile gives a very competitive profile for -- versus the standard of care and meaningful items that, that bring. Also, what it shows that in the end, that only inhibition of IL-13 is the key of the disease, and so you can go to the root disease by only having one inhibition of IL-13. And for that, we're still waiting for our maintenance data that will come next year. But the induction data, we look forward to disclose in early 2022 and the maintenance data later in 2022 or potentially '23 depending on their congresses.

Maybe I'll just add to that. We are planning for regulatory submission of mirikizumab in 2022, first half and assuming positive outcome in the maintenance study of lebrikizumab as well during the second half of 2022.

Thank you. We'll go to Ronny for the next question.

If you don't mind, I'll try to give you 2, but kind of broad ones. The first one is you've got us all been involved in price competition in IL-17. And when we look at the immunology space, there seems to be an abundance of mechanism being tested. So as you think about your investment in this field, how do you risk adjust? I mean this is very different from Alzheimer's we're attacking and essentially open space. Here, there seems to be a lot of commercial risk even when you're done with developing a molecule successfully. So can you talk a little bit about how you use different standards here in terms of deciding what to take forward versus in other fields? And second, specifically around atopic dermatitis, there seem to be multiple efforts to develop mechanisms here when you talk about using immuno-oncology targeting and essentially the reverse of oncology, and -- how do you make sure that those molecules when used chronically will not be pro-cancer for oncology?

Patrik, do you want to start with...

Maybe I'll start with the first one on Taltz. And it is correct, psoriasis is a very competitive field, and it differs across the different disease areas in immunology. We made a huge pattern access in 2021. And I think as we stated very clearly upfront, we expected some pricing headwind during the first half of 2021, but we also forecasted that it would be more than compensated for by a significant volume growth. And I think what we have delivered in 2021 is just along those lines. We have had a very robust volume growth of Taltz, and we are now the #1 in dermatology among the IL-17. And we have more than increased -- we have increased our TRx with more than 50% in rheumatology as well. So we strongly believe that, that bet on access being the #1 in access and dermatology and doubling our access in rheumatology was the right move. And I think we are confident that we will continue to see strong volume growth, particularly in rheumatology, but also in dermatology. In terms of the portfolio bet, maybe...

I can take.

Yes.

Yes. So the second part of the question, Ronny, was how do you prioritize different mechanisms, knowing how competitive immunology is, and probably what I say is true in each of our therapeutic areas, but even more so when it's a very competitive area like immunology or many parts of oncology, which is that we hold a high bar. I think at Lilly, we're lucky to have a wealth of pipeline opportunities, and so we can afford to be choosy. We're looking for molecules that are going to be differentiated versus the competition. Oftentimes, that means we're going to be first-in-class as we are in miri UC or seek to be best in class on some measure of efficacy or safety or patient tolerability. So that's where we set it. I think just to come in and be another alternative in a crowded space is not what we're looking for. Accordingly, you've seen us prioritize our efforts on IL-23 in the IBD space rather than the derm space. That's where we think we tend to have the biggest difference.

I'll take your -- the second question, which is about the potential for some of these checkpoint receptors have a pro oncologic effect. And it's a very logical question, obviously, with the fact that these molecules -- inhibitors of these receptors have been developed as immuno-oncology therapies. The way we look at it is these receptors are really there, normally to tune down the immune system. And they have been exploited as therapeutics for cancer. But we do think that the physiologic basis of how they're working in cancer could be quite different than in autoimmunity. So in the setting of a tumor where there's an active immune response, what you're achieving with an inhibitor, it could be quite a different biologic or physiologic setting than in autoimmunity. And there are certainly precedents of targets which have served as the basis for a successful immuno-oncology therapy, CTLA-4 and also as the basis for successful immunology therapy. Having said that, of course, it's a relevant question and concern, and we have very vigorous -- we'll have very vigorous pharmacovigilance around any oncology signal that might emerge. But we think, again, these receptors are there normally to tune down the immune system, and we're trying to capitalize on that normal physiology.

Great. Thanks. Going to an e-mail question from Andrew Baum of Citi to Ajay. Given the plethora of novel mechanisms in your pipeline, are you planning to use Adaptive trial programs to expedite Phase II to accelerate development and optimize treatment benefit across indications. And I'll invite Lotus to weigh in as well.

Yes. Yes, thanks for the great question. We certainly are thinking about creative clinical trial paradigms to quickly evaluate efficacy. So I mean you saw a little bit of it today where we've used small, efficient experiments to quickly get proof of concept and now we can move into larger studies, and we'll continue to do that. One of the challenges of these novel mechanism of action is it's not always intuitive which disease to go after. So we're trying to tap into translational data where these pathways are disruptive, but we will certainly be using a number of creative clinical trial designs, including adaptive designs to do our drug development. I don't know if...

Yes. And beyond the design, what is important, we have a very patient centricity in our clinical design. This is evidence of our recent disclosure of mirikizumab. So beyond the classical endpoints, what the team has done, put -- innovate, very patient interest end point of reduction in [ ball ] urgency. That means a lot for the patients and for the doctors, and it's something that we are leading the field. So we are trying to have an innovative design, innovation of the endpoints and bringing innovative medicine to the patients.

Thanks. Vamil?

Yes. Vamil Divan, Mizuho Securities. I think my question were build on the last couple of points here, just around the sort of plethora of competitors, plethora of mechanisms. Can you talk a little bit just about sort of again maybe with your view in terms of differentiation, kind of how you think about biomarkers and maybe more personalized approaches to kind of figure out which patients within these indications are best for the different mechanisms? Is there maybe more of a need for head-to-head trials against active drugs in order to get acceptance? And I guess it sort of builds on to sort of the payer dynamics and how you're thinking about, and how do you really show the payers the benefit here when there's only different options?

Yes. So I can take the first part and maybe turn it to Lotus to talk about the head-to-head approaches. But as I touched on briefly, and thank you for the question, yes, we definitely are thinking carefully about how to differentiate some of these therapies. I mean we think fundamentally, some of these mechanisms of action are very differentiated unto themselves. It's a very different way of treating autoimmunity than traditional therapies where you take out one specific cytokine or one specific kinase, especially for some of the molecules in the immune resolution pipeline. But within that, we will look to see are there specific subsets of patients who preferentially respond, and I touched on one aspect of this with checkpoint receptors. We may be able to identify biomarkers that pinpoint individual patients who have deficiencies in certain signaling pathways that may give us clue. So within the midst of that atopic dermatitis data, I showed you there could be a subset of patients who have very high responses, and we could potentially use ligand expression to evaluate that. Within the Treg field, I think understanding the correlation of Treg induction to efficacy will be an important biomarker. Certainly, those are approaches we're thinking about in terms of really achieving differentiation. And then I can turn over to Lotus to discuss how we might compare with the standard of care.

Yes, it's -- one of the items that is important. For instance, if you take the atopic dermatitis, if you compare it to psoriasis, psoriasis has at least [ 13 ] different medicine in their hands. And doctors, they want to match the right patients with the right medicine. And in dermatology, especially for atopic dermatitis, we are in the beginning of bringing several medications to their hands. And as Dan says, we are having a very high bar. And for that high bar, what we bring to patients are competitive, differentiated and best-in-class or first-in-class medication. Of course, across our platform, we make a prioritization and sometimes we go for the extension of the disease. Sometimes we put a Phase IV and sometimes we go for the second indication depending on what is the best value to our patients and to our health providers. So we are doing the prioritization. And right now, we have not disclosed anything. But as we saw for Taltz, we have done several head-to-head studies, both in dermatology with psoriasis that we have made the superiority. I think that one of the colleagues said, I think it was Dan, that we have not been beaten as of yet. And also in psoriatic arthritis that we are the only IL-17 having a superiority versus the standard of care of TNF-alpha that is Humira.

Yes. Thanks, Lotus. And Vamil, it's a very thoughtful question because I don't think there'll be that many immunologic diseases like psoriasis, where single cytokine like IL-17 can have a profound effect on nearly every patient. Probably for diseases like IBD or lupus that are more heterogeneous, we're going to have to identify subsets of patients that respond to certain mechanisms. Right now, it's mostly empiric. And so probably in IBD, we'll see patients cycle through drugs until they find one that is a very durable effect, and so maybe IL-23 could be a subset of patients. We can't identify our priority yet, but you know it when they're on the drug because they have a durable remission. So that could be the near-term future until we get the biomarkers.

Thanks, Vamil. We're going to go to Alice next.

Alice from Tim Anderson's team at Wolfe. So on lebrikizumab, you top lined the first set of Phase III results and await longer-term efficacy results. The Street has also been very dismissive. What is Lilly's confidence that the full Phase III data will be at least as competitive as DUPIXENT on both safety and efficacy?

Well, I think we were very encouraged by the induction data of lebri. And as we have referred into the presentations, we had more than 50% of the patients achieving EASI-75 and also if we look upon the key secondary endpoints, and we also saw a very rapid onset of skin clearance and also rapid onset when it comes to itching and positive impact on sleep and quality of life. So of course, we need to see the entire data set, and that's going to be in the first half of 2022, but we really believe that we have an asset here that is very competitive with the market leader.

Yes. To be clear, our goal here is to have the best biologic for patients with atopic derm. Let's see the data.

Thanks, Alice. Seamus?

Great. Seamus Fernandez, Guggenheim Securities. Just as I think about some of the approaches here, I'm seeing predominantly biologics in your treatment approach. Just wanted to get a better sense of how your team is interacting with the kinase experts that you brought in from Loxo and the kind of learnings that you can bring from that perspective. Obviously, RIPK is maybe one asset where some of those learnings have come in. But there are a number of other targets, and you guys also have allosteric biology. We know about the allosteric targets in this space that appear to be quite successful. Love to just know how you're approaching those. And then the second question is I found it interesting that diseases like Sjogren's are absent from the discussion today. What are you guys doing to get after that particular disease state because it seems like one of the biggest upside opportunities in all of immunology?

Okay. So I'm going to take the second part first, and then I'll start with the answer on Loxo, and maybe turn it over to Dan to help there. But Sjogren's disease is a disease we're very interested in for the future. We understand this is a disease with profound morbidity and mortality. I myself have treated many patients in my life with it, so -- and it leaves a very enduring impression. At this point, obviously, one of the major challenges with Sjogren's disease is the lack of very good clinical endpoints. There has been some good work on that in recent years. We're also interested in novel methods of evaluating efficacy in Sjogren's in proof-of-concept, including imaging techniques. The way we're thinking about it is we are starting with diseases like lupus, where there's a better understood endpoints and regulatory path with a significant overlap in the biology, let's say, between lupus and Sjogren's in terms of the role of both B cells and T cells. And we do view Sjogren's as an area we would want to move into once we've established biological activity, and we certainly recognize the unmet need. Some of these novel therapeutics, including the BTLA agonist antibody, the IL-2 molecule, they have a great theoretical potential for disease like Sjogren's. It's a matter, I think, of timing in terms of when is the right time to move into clinical studies. With regard to Loxo being at Lilly, this, of course, is a great thing for us in immunology to really tap into the great kinase expertise of the Loxo scientists. And they were very robust and fruitful discussions on an ongoing basis, not only about the molecules we've chatted about today, but also about other things in our discovery pipeline. So this is actually, I think, a really helpful aspect of Loxo having come to Lilly, and we think it's going to drive more small molecules in our portfolio. I maybe turn it over to Dan if there's anything else...

Yes. I would say that's true across all our therapeutic areas. In fact, there's triggered a bit of a renaissance here at Lilly in small molecule chemistry setting our ambitions a bit higher in terms of what might be druggable and how exquisitely selective we can make drugs. I alluded to that with some of the Loxo programs, and it's true also in immunology. So it's likely the case that if we can make cleaner kinase inhibitors, we could have differentiated efficacy in immunology. So wait and see. And obviously, the clear overlap doesn't escape us.

Yes. And I just want to add to that within immunology, we have a Janus kinase inhibitor that is Olumiant, and it has been launched in more than 40 countries. And we're very excited for submitting the alopecia areata, both in United States, in Europe and Japan. This has a potential to be the first-in-disease approval and medicine for these patient categories, they don't have anything. So when it makes sense and the science drives, we take small molecules and bring it as an innovative medicine to patients.

Thanks, Seamus. Last question for this panel. We'll go to Mohit.

Mohit Bansal from Wells Fargo. So one question on IL-2 conjugate. So Dan, you mentioned earlier that compared to psoriasis, we are nowhere close to clearing the skin in atopic dermatitis. Does IL-2 conjugate so far the data you have seen does get -- does it get there? And number two, could there be a dosing mechanism where you have induction plus maintenance kind of mechanism here because the effect is quite lasting here.

I can start with that. Yes. So I mean, I think what we showed you today was a small proof of concept for the IL-2 conjugate in atopic dermatitis that demonstrated clear efficacy through 12 weeks. Efficacy that already at 12 weeks is comparable to the level of efficacy we've seen with existing standard of care therapies when looked at, at a week 16 registrational endpoint. What we don't know is, again, if we treated longer, what level of efficacy can you get to, right? Could you push the efficacy even higher? Plus it should be said, this was a small experiment. There's -- obviously, we need a bigger study to really have greater precision on the level of efficacy. But I think you captured an important point. I think what we're seeing about the durability is very intriguing. So we will have to see how -- what future clinical studies tell us, but there's a couple of paths forward for this molecule, which could include differentiated efficacy upfront during induction but also could include this being a really great maintenance drug in terms of very infrequent dosing.

Yes. Agreed. I mean, IL-2 just -- it has such a high level of biologic validity. We expected it to work. It has clear biomarker response that's linked to efficacy response. So I think we have something that's likely to play out, but I can't sort of take the bait and say that this is going to be a cure for atopic derm in most patients. This is a small trial that was like as good as you could hope for in a small trial, but we need to see bigger trials.

Thanks. Thank you to our panel, and we'll transition now to our oncology session. And 2 speakers, so Jake Van Naarden is the CEO of Loxo Oncology at Lilly and President of Lilly Oncology. And even more importantly, the father again, second child just born recently. So congratulations, Jake. And thanks for being here today. Not too -- you're looking much more lively than I was after my second was born. And then he'll be joined by Dr. David Hyman, who is our Chief Medical Officer for Lilly Oncology. So Jake, thank you very much.

Thanks, Kevin. And very nice to be here. Looking forward to sharing with you our renewed strategy in oncology and walking through some portfolio highlights. So let me take a moment and just talk about the kind of medicines we want to create here within oncology, and it really all starts with biologic conviction. So what is a target and a target product profile for which we believe if we build the right medicine with the right profile, it will shrink tumors in patients and ultimately improve outcomes. And ultimately, that conviction leads to a shorter list, not a longer list and a list that's more intensely resourced as a result and ultimately, also in our discovery work, leads to a set of ideas that tend to be more challenging to build. But if we build them, we know preclinically or at least we believe with a high degree of confidence that the work in the intended population clinically as we expect. That allows for a certain amount of predictability in our clinical work by really focusing on biologic conviction. Now business development is, of course, a key part of our overall strategy. It's not a sister trial. It's a member of the strategy sitting at the table, and we really don't have a preference, so to speak, as to where a good medicine comes from. In oncology, in particular, there's an entire ecosystem of small companies working in the space and a lot of really smart people. So when we think about working on a new project, one of the first things we do is not only work it up internally but look externally to see if there's some way of forward integrating or derisking the project by working with others. And I think you've seen us do a handful of deals, even one very recently. You'll hear about a few later today. From a modality perspective, we tend to be focused right now on small molecules and engineered biologics. We've got a pretty full plate as it relates to those 2 modalities, and we have a team that's well equipped to do that. There's plenty of cancer biology that can be well exploited by those 2 modalities, and we'll think about others in the future. We're, of course, monitoring what others are doing, but we're excited about the work to be done in those 2 domains. So let's walk through a few different molecules in the portfolio. I'll start, and then I'll hand it over to my colleague, Dave Hyman. Leading off with Verzenio, abemaciclib, obviously, the most important growth brand in our commercial portfolio. I'd like to start by talking about some of the data from monarchE that were recently published in Annals of Oncology and presented at ESMO virtual plenary a little bit ago. This is the adjuvant setting of breast cancer, endocrine positive breast cancer also called early breast cancer. I should note before I walk through these data that this trial recently led to the approval of the drug in early breast cancer, admittedly a narrower population than the population studied in the overall trial, which is what I'm showing here. But nonetheless, let me walk you through the enrolled population, and then I'll get to the indicated population in a second. Here, you can see the primary endpoint of the study was invasive disease-free survival, where Verzenio, abemaciclib, given for 2 years on top of endocrine therapy, reduced the risk of cancer recurrence by 30%, which is not only statistically significant but very clinically meaningful, and now represents really the first advance in the adjuvant setting of endocrine therapy other than endocrine therapy optimization itself in close to 2 decades. So this is a really important opportunity for patients. We published these data previously but important to note that with increased follow-up, the data have actually only gotten better. The curves have continued to widen, and we've seen the treatment effect extend beyond the 2-year treatment period of abemaciclib, which is another thing that many physicians and patients were looking for. Turning to the key secondary endpoint of distant relapse-free survival, again, Verzenio reduced the risk of distant metastases by 31%, very similar effect size as we observed on the primary endpoint of IDFS. This is an important endpoint to monitor because we're really here talking about preventing incurable metastatic disease, which is not only important for patients, but I think as we talk about the initial indicated population and the trend in overall survival and monitoring for overall survival trends over time, it's really the impact on this endpoint that best predicts how we think overall survival will trend over time. And so seeing the consistency between the primary endpoint and the secondary endpoint as well as the magnitude of effect size, again, gives us that confidence. Now turning to Ki-67. As many of you know, the initial indication for Verzenio in early breast cancer is in the Ki-67 high subpopulation of the monarchE study. MonarchE was a high-risk population to begin with. The Ki-67 subpopulation is an even more high-risk subpopulation of the otherwise high-risk population we enrolled. What we observed in the study was not terribly different from what we suspected in as much as Ki-67 is, in fact, a prognostic marker of a bad outcome for patients, and you can see that in these data, but it's not predictive of abemaciclib benefit as best seen by the confidence intervals on the right-hand part of this slide that are largely overlapping in these 2 populations. That having been said, because it is a poor prognostic outcome, overall survival in this population has matured more than in the overall population, and we observed a trend favoring abemaciclib in this subpopulation first. We expect that we'll see that over time in the overall population, but we're not there yet. And those data are public as well published in Annals of Oncology. So this is an important indication for us to launch that we're launching literally right now and will be an important part of the growth story for next year. But it's not just breast cancer. This is the next big part of the Verzenio story, prostate cancer, which is really a biologic learning from the breast cancer experience, the idea that adding CDK4/6 inhibition on top of hormonal therapy can improve outcomes for patients. In the case of prostate cancer, we're talking about the androgen receptor. In the case of breast cancer, we're talking about the estrogen receptor. Earlier this year, we were informed of a blinded outcome of an interim analysis of a study called CYCLONE 2, which had a prespecified hazard ratio for radiologic progression-free survival in prostate cancer. That we surpassed the prespecified hazard ratio, allowing it to expand to a Phase III study. While we haven't seen any data from this study, we know what that prespecified hazard ratio was. It was very aggressive. And so while we're continuing to enroll the rest of the study, we feel incredibly confident this study will be successful based simply on the statistics of what we're able to project. And we look forward to seeing the data themselves in 2024. That having been said, in light of receiving this information, we've taken the step forward to greenlight the next study for prostate cancer called CYCLONE 3, which will be starting next year, which is the same biologic idea of CYCLONE 2, in other words, abiraterone, prednisone plus or minus Verzenio, one line earlier in therapy. We think we have an even bigger impact for patients in this setting, and the duration of therapy will be significantly longer as well. Turning to Retevmo, selpercatinib, a drug, a medicine that is near and dear to my heart, coming from the Loxo acquisition. This is a medicine that when we saw the clinical data package, we felt like between the response rate, the duration of response, safety, intracranial activity, that had the potential to be a best-in-class medicine for these patients. I think now that we've been on the market for a little while and we've seen the financial performance of the medicine, I think it goes without saying that, that has been validated by physicians use with the truly dominant share we're observing in this setting. And so really going forward, the key for this medicine is patient identification and continued investment in the diagnostic infrastructure to ensure that more patients are tested. We're also looking forward to the readout of the randomized first-line study, which we expect to have data in early 2023. This is not a question of whether or not the drug works. Of course, we know that based on the existing data. But it's always important for a medicine with single-arm data to then eventually have randomized data, especially to allay the concerns of skeptics that may be out there or -- and frankly also to increase the utilization of diagnostics when you have randomized data. We'll, of course, also be expanding the indication in Europe as well and converting the accelerated approval to full approval in the United States for lung cancer. Pirtobrutinib. Pirtobrutinib is a selective -- highly selective and reversible BTK inhibitor that we think has the potential to make an incredibly meaningful difference for patients with CLL and mantle cell lymphoma. Initially, we believe for patients who have been previously treated with one of the existing covalent BTK inhibitors, which is an increasing population as those drugs are more and more utilized, over time, we expect the drug to have a role potentially in earlier lines of therapy as well. We've initiated an incredibly robust randomized Phase III trial program around this medicine in both CLL and mantle cell lymphoma with really a couple of different aims. The first aim is to make sure we get the labeled indications that we need in order to allow physicians to use the drug, how they want to use it. And so that means first line and second line, that means monotherapy dosed continuously until progression as well as time-limited therapy with venetoclax for patients, physicians and geographies that may prefer that. The second important goal is to run ambitious head-to-head studies. And so we're doing that in both CLL and in mantle cell lymphoma. There'll be long studies. They're going to take a while, but we think it's important. We think the drug has the potential to beat out the other -- the covalent inhibitors, and we're looking forward to eventually reading these studies out. The decision to initiate a program of this size was on the basis of the single arm brewing data, which Dan alluded to and showed a little bit earlier. These data were just recently updated, I should say, at the ASH meeting a few weeks ago. Here, we're looking at pirtobrutinib in CLL. I think it's important to note just the unusual nature of the enrolled population of this study. We enrolled a true, real-world relapsing CLL population, which is unique. These are patients who have been treated with covalent BTK inhibitors, oftentimes more than one; BCL2 inhibitors, largely venetoclax; PI3 kinase; chemoimmunotherapy; cellular therapy. This is a population of patients most of the sort of peer trials out there deliberately exclude because they're afraid of generating clinical data in a patient population that's just heavily pretreated. And despite that, this is what we're observing, a near 70% response rate by criteria. But you can see on the waterfall plot, nearly every patient actually responds and responds durably. So we're incredibly excited about these data. We think it's a huge advance for patients with CLL. In mantle cell lymphoma, we again observed a very consistent signal. When we first started this program, we were observing around a 50% response rate in BTK pretreated mantle cell lymphoma. We've increased the sample size now 3 years in a row considerably, and that signal has held up incredibly well. If this is a population, in particular, BTK pretreated mantle cell with unbelievably poor outcomes, Overall survival, which isn't terribly long. Our signal here with pirtobrutinib is a little different than in CLL. Here, we've observed since the beginning, somewhat of a bimodal distribution. About half of patients respond and respond very well. Half do not seem to respond. We don't fully understand the biologic basis of that yet. That we're doing work in that regard. That having been said, a 50% durable response in mantle cell in this setting, as I mentioned, is incredibly important for patients. And I'm excited to be announcing today that just this past week, we initiated the rolling submission of an NDA to FDA for this population under accelerated approval. We'll complete the submission next year, setting up for a priority action date in early January or early -- yes, January of 2023. So it's -- this is -- it's exciting to finally have a path to potentially accelerate the path to market for this agent. We're continuing conversations around CLL to the extent that there's a single-arm accelerated approval pathway in that disease, and we'll update folks to the extent we have more information in that respect. Turning to imlunestrant, the generic name for our oral SERD. This is a drug that -- medicine we developed really to build on the experience that we've had in breast cancer as a potentially better version of the intramuscular injection, fulvestrant. It's a medicine that has done really everything it was expected to do so far in its clinical study. We showed some PK data here. We've observed great target coverage based on PK and some of the preliminary pharmacodynamic measures we've had. We've observed a safety profile that, again, is as we expected it to be, and we've observed the requisite single-agent activity that we expected from a drug in this class of medicine. We accelerated the late-stage portion of this drug's development. We initiated a Phase III study called EMBER-3, shown on the right, which is imlunestrant monotherapy as one arm. Another arm is imlunestrant plus abemaciclib compared to the investigator's choice of endocrine therapy, really exemestane or fulvestrant. This is a study that we expect to read out in 2023. But I should note that given the results that we just observed from a competitor molecule at the San Antonio Breast Cancer Conference, we have a high degree of confidence this study will be successful in light of those data. The ultimate home for an oral SERD, the reason why many of these medicines were created to begin with is really to treat patients in the adjuvant setting of breast cancer. That's -- as you saw from the monarchE study, that's a large long investment decision to make. So we're refining our plans there about what the right study to run is, and we plan to disclose those plans next year. So now I'm going to hand it over to my colleague, Dave Hyman to walk through some of the earlier portions of the portfolio.

Thanks, Jake. So I'm going to spend some time talking to you about some of our early clinical assets as well as some of our preclinical assets that we've announced, and we'll be going into the clinic next year. The first of these is our IDH1 and 2 inhibitor. And with each of these programs, I think it's important to take a moment to kind of talk about what the populations are and what the differentiation thesis for these individual molecules are. IDH1 and 2 mutations primarily affect 2 populations of cancer patients, about 20% of patients with acute leukemias and a similar proportion of patients with cholangiocarcinomas. We've seen the development of reversible IDH1 or IDH2 inhibitors. What really got us interested in this molecule was 2 aspects of differentiation. One is that unlike the reversible inhibitors that have been introduced in the clinic to date, this drug is actually a dual inhibitor of both IDH1 and IDH2, and I'll talk about why that's important besides the epidemiology in a moment. The other thing that was really interesting to us about this molecule was its binding mode in site. Unlike the reversible, this is a covalent inhibitor, and it binds at a unique site. And that's important not only for its ability to inhibit the target, but the ability to maintain potency in the setting of acquired resistance mutations that we see with both the IDH1 and the IDH2 inhibitors that are currently approved and in use in the clinic. When you look holistically at how patients develop on-target resistance to the existing medicines, they really do 1 of 2 ways. Either the cancer switches from an IDH1 or 2 mutation or 2 to 1, and that's what we -- a phenomenon we refer to as isoform switching; or they develop one of these secondary resistance mutations, which I mentioned. So really, what we see in this molecule is the potential to address both known on-target resistance mechanisms to the current generation of IDH inhibitors and do so in a broader patient population. We don't know of any drug in the clinic or preclinically with this profile. We're testing it now. We're going to be presenting data next year on our progress. Now I wanted to turn to our KRAS inhibitor program. Obviously, this is a target that's well known to the community. It affects about 15% of lung cancer patients. We obviously saw the first approval of a drug in this space this year, which is a great advance for patients. Again, I want to spend a moment talking about the differentiation thesis for this molecule. And really, it's about the ability to trap the target at potentially higher rates than the existing clinical molecules. And really, this is based on a couple of features. One is, as Dan and Jacob alluded to, we really believe that potent selectivity can matter in different target spaces and translate to differentiate clinical efficacy. You can see that we have a very potent compound, but I also want to direct your attention to what we call the kinact rate, and this is the efficiency with which the molecule actually creates this covalent and irreversible bond that permanently inactivates the target when it binds, and we're several more than an order of magnitude higher in that metric. That's a key metric for covalent inhibitors. When you translate this into predictions based on PK and PD models, we believe this gives us the opportunity to actually trap in excess of 90% of the mutant G12C in the inactive form, whereas the current molecules are topping out, we project at around 60%. And really, I think the first question that we look to test with this program clinically is whether this hypothesis turns out to be true and importantly results in differentiated efficacy in the form of a higher response rate or greater durability. I think the other critical importance to really make these G12C inhibitors very or maximally important products for patients. They're going to need to be combined with existing standards of care to really augment their efficacy, move them up in the disease setting. We know that's how we have the biggest impact for patients. We're starting to see evidence that this existing crop of medicines are having trouble combining at full doses or can potentially at all with some of these existing standards of care. And so we're looking at whether this increased potency, the ability to therefore administer lower absolute doses potentially with less off-target covalent binding will result in a differentiated safety profile in these combinations. These are really the 2 hypotheses we'll be exploring with this program. And again, we hope to share our progress with you next year. I wanted to turn now to discuss 2 preclinical programs that will be entering the clinic next year. We're really excited about both of these. We think that these programs exemplify the type of medicines that we are excited about developing. We think both are highly differentiated from existing inhibitors. And the first is we refer to as LOXO-783 This is a mouthful, but I'll take a moment to describe it. This is a potent, highly mutant selective and brain penetrant allosteric inhibitor of PI3-kinase alpha and specifically in individual mutation in PI3-kinase alpha H1047R. This particular mutation impacts about 15% of women and men with breast cancer. We know that PI3 kinase mutations as a class are a clinically validated target in breast cancer. There's an approved agent in this space, alpelisib, and there is another agent in late phase development, inavolisib. Importantly, those 2 drugs inhibit both wild-type PI3-kinase alpha and mutant at approximately equal potency. And wild-type PI3-kinase alpha is actually critical to normal cell function, and therefore, results in a fair amount of toxicity for patients, mainly hyperglycemia, GI and cutaneous toxicity. And it's not just a toxicity story. What you see is that as a consequence of these off-target, for the purposes of antitumor activity toxicities, these drugs really are IC50 drugs against the target. And we've seen repeatedly as a matter of basic pattern recognition oncology, when you unlock greater target inhibition, you have the potential to unlock greater efficacy and more durable efficacy. So we created really an entirely different medicine. This medicine is allosteric inhibitor. It has a different binding site, and it is really highly selective for this specific mutation. You can see multiple measures of selectivity, either by ELISA assays or proliferation. On proliferation assays, this is really infinitely selective. We can't -- we really have almost no inhibitory effect against cell lines that don't bear this mutation. And importantly, we also saw an opportunity with this drug to build in CNS penetrants as a key part of this profile. We believe that will be a safe feature as well because of that mutant selectivity. So we're really excited about this overall package, which we think is highly differentiated, and we'll be advancing this next year. And I wanted to take a moment to show you some of the exciting preclinical data that we've shared. This is an in vivo model of a PI3 kinase HN47R mutant ER-positive breast cancer. It's very uncommon in these models to ever see more than tumor growth inhibition. And in fact, alpelisib dosed at 50 mg per kg, which achieves exposures, about twice that of the label dose of alpelisib for patients is about 100% tumor growth arrest drug. Whereas we see dose proportional tumor regressions with LOXO-783, which was really quite significant for us. Importantly, when you -- at these same doses, we see absolutely no evidence of c-peptide or insulin increases, again speaking to the exquisite wild-type selectivity of this compound. And finally, I want to talk to you about our FGFR3 isoform selective inhibitor, we call LOXO-435. And I want to take a moment to talk a little bit about the therapeutic landscape. There are several tumor types that bear activating alterations in FGFR2 or FGFR3. We have a number of approved agents in these spaces. Of note, all of these small molecule inhibitors, erdafitinib, pemigatinib, and infigratinib, are pan FGFR inhibitors. They inhibit 1, 2 and 3. And when you look at their collective safety profile, in addition looking at FGFR2 monoclonal antibody, which you see on the right, what you really see is there are constitution of acute and chronic toxicities that lead to intolerance and limit dosing of these agents. Obviously, the hyperphosphatemia is FGFR1-mediated. This is well understood. This is the dose-limiting toxicity. It prevents further escalation of these inhibitors. But equally importantly, inhibition of FGFR2 leads to chronic toxicities in the skin. Patients can lose their nails entirely. They have ocular toxicities and other constitutional toxicities. And it's really that combination of limiting escalation of dosing and then chronic intolerance, which again leads to limited target coverage. We saw the opportunity to develop a FGFR3 selective agent. I should say FGFR1, 2 and 3 are extremely homologous proteins. They bear about 90% homology. This was an incredibly challenging chemical engineering task. It took over 5 years of a highly-resourced discovery team to develop this chemical series and ultimately this molecule. We're really proud of what we achieved. We achieved a molecule that has between thirty- and sixtyfold selectivity for the mutant form of FGFR3, and that's important. It's the mutant form, not wild type over these FGFR1 and FGFR2 anti targets. And we think this really unlocks the opportunity for differentiated efficacy and safety in the 15% to 20% of advanced bladder cancers that bear these activating mutations. I should also say we incorporated into this program a little bit of pattern recognition from previous efforts, where although the existing chemical matter, existing approved agents rarely drive what we call gatekeeper on-target resistance mechanisms. Again, we think this is due to their limited target coverage, we think a more selective agent would drive that resistance. And so we made that a core part of the target product profile for this agent, kind of knowing that if we don't address the lowest genomic barriers to resistance that we expect a drug like this to drive, that we would again potentially see that in shorter durability than we want for patients. So this, again, has been a multiyear effort to develop this type of molecules. We think it exemplifies the patients and high standards we have for the drugs that we advance, and this will be going into the clinic next year as well. This is some of the in vitro data -- sorry, in vivo data, again, showing efficacy on par with the pan-FGFR inhibitor, erdafitinib, but without the FGFR1-mediated hyperphosphatemia you see with that agent. I just want to end before I turn it back over to Jake to spend a moment talking about business development, which is always part of our oncology -- a conversation related to oncology. And I wanted to highlight 3 deals as kind of exemplars of how we think about business development opportunities in oncology. The first was an acquisition we made of Petra Pharma. This was a small biotech company that had developed the lead optimization chemical matter that unlocked the PI3-kinase mutant profile that I shared with you just a couple of moments ago. I'm really proud of this acquisition. We really, I think, accelerated the development but really integrated that discovery team into the Loxo discovery team. We've had incredibly high retention of that team. I think they're really engaged by the work they're doing and continue to do. The second was a deal we announced earlier with Merus. We really -- we saw at ASH, again, confirmation of bispecific T cell redirecting antibodies as an emerging important therapeutic class in oncology. We have surveyed the field. We knew this would happen. We had surveyed the field looking for really who had the best platforms to offer kind of the best efficacy and widest therapeutic index for this modality. We really like the platform that Merus had developed and struck a multi-target deal with them. That work continues to go really well, and I look forward to future meetings like this, where I can share some of the fruits of that labor. And most recently, on Monday, you saw our deal announced with Foghorn Therapeutics. This is an incredibly science-focused company who's doing really hard work to unlock previously undruggable targets with very strict target product profile. This is really exemplified in their selective BRM program, which we're really excited about. And again, speaks to the taste we have in oncology drug development. This deal also included another undisclosed program as well as optionality for 3 additional discovery programs. We think this is a great company. And really, this type of deal offers the ability to extend our discovery efforts to a broader team. So I'm going to turn this over back to my colleague, Jake, and look forward to questions.

Thanks, Dave. Here you can see the oncology portfolio against the background of the larger company. And I'll just close by saying we have opportunities across the development spectrum ahead of us. Obviously, on the later end of the spectrum, we have value really anchored by Verzenio, Retevmo, pirtobrutinib with potential for meaningful growth in the near term, particularly with Verzenio as a marketed product already. We have a mid-stage portfolio that Dave highlighted that really is cusping. And I think over the course of next year, we'll have a sense for both proof-of-concept potential as well as differentiation potential of those agents and path forward to take them. And then we talked a little bit about 2 really exciting new INDs on the very early part of the portfolio going into clinic next year that I think we're highlighting not only because we're incredibly excited about them but because, in many ways, they exemplify what I started off this talk about, which is biologic conviction, meeting incredibly difficult and ambitious product profiles. And both of them, the PI3 kinase alpha program as well as the FGFR3 program, fit that bill. These are the kind of medicines that we aspire to make, and they're hard, and they require a lot of researching and many years of work. But ultimately, when you deliver them for patients, they make a big difference, and that's what we aim to do here. So thank you very much, and I think we'll take some questions.

Thanks, Jake and David, for that presentation, and Dan joining them on the panel. We'll go to Chris Schott for the first question.

Okay. Great. Just 2 questions or a 2-part question on pirtobrutinib. CLL filing pathway, can you just elaborate a little bit more here? I see you're filing in mantle cell just with the data you presented. Is there going to be an ability to file this off of the single-arm study? Or are we going to have to wait for the Phase III? I know you're still in discussion, but I mean the data seems pretty striking. And then maybe the follow-up to that is I think about the ability to gain share in this setting, especially earlier lines, and you've noted the head-to-head study is going to take a very long period of time. How meaningful of an opportunity is there do you think to gain share in frontline as we look out a couple of years when you maybe have first-line data, but not true head-to-head first-line data?

Yes. So on the first part, accelerated approval potential based on single-arm data in CLL, short answer is I don't know. So those conversations with the agency are ongoing. They've been ongoing for a long time. We focused deliberately on mantle cell to begin with because the natural history of that disease post BTK inhibitor is so unbelievably poor that we felt like against that natural history we had a very compelling story. We think that's true in CLL as well. But I think that there are more available therapies for patients with CLL, and that's the nature of the conversation. So despite the incredibly compelling data that we've generated with the agent in CLL. So we'll come back when we have an update there. I think as it relates to taking share, I would say 2 things. Number one, I think we've talked about this at a prior investor meeting, the acalabrutinib, Calquence, story has been illustrative, I think, as it relates to this question in as much as you don't have to generate in this space definitive data. Now one version of definitive data would be head-to-head data, but there's a lot of other ways to do it. You don't have to generate definitive data to take share if physicians start to believe you have a different profile. And in that case, it's largely around safety, but mostly on the back of single-arm Phase I data actually and then the initial physician utilization of the drug. And so now you're looking at acalabrutinib taking, what, 40% of new prescription starts in CLL. They've never really proven, so to speak, the safety benefit. So I think there's an opportunity for a very similar story here so long as we ultimately get the labeled indications that allow physicians to write for the drug on label, allow to be paid for. If physicians believe the drug to have a certain differentiation profile to it and those that we speak to believe that, I think we'll see utilization where we see it. That all having been said, I think there's maybe perhaps too much of a myopia on the first-line setting from a value perspective. This is not a -- CLL is not a common disease. The reason that these drugs are big products is because of duration of therapy. And based on what we've observed so far, we think we have the opportunity for pretty significant duration of therapy in the relapse setting also. So -- in the very, very near term, that is where the greater unmet need exists, and we think there's plenty of room to make this a meaningful product there to start with.

Just to add one point to that. I think you can see there -- in the space of 2 years, we've accrued over 260 patients with BTK pretreated CLL to the program. I think that really speaks to the population being out there that need these alternative therapeutic options. We haven't had to boil the ocean to find these patients. There's a lot of them out there, and there's a lot of demand.

We have to keep up with enrollment demand, actually, it's quite the opposite.

Yes.

Thanks, Chris. We'll go to Evan for the next question.

Evan from BMO. So on your KRAS, while you have some preclinical data suggesting differentiation, what types of clinical data do you believe would be necessary to be differentiated from sotorasib and adagrasib? And why go after G12C? Why not D or a pan-KRAS?

I can take that. Yes, so I think we've obviously spent a lot of time thinking about this. I think there are 2 ways to think about it. One is a monotherapy efficacy package that looks meaningfully differentiated on the basis of a higher response rate or clearly more durable responses. I think that's one component. I think the other important component would be the ability to safely combine with other standards of care like PD-1 or anti-PD-1 at full doses. I think those are 2 ways that we think about potential for differentiation. Obviously, these are active, approved drugs that we're comparing ourselves to, at least directionally. And so we have to keep a high bar to really prove to ourselves that these are differentiated molecules. The other one was about the different alleles. Obviously, we're aware there are other KRAS mutations. This drug inhibits KRAS G12C, and that's what we're focused on now, but we can talk more in the future about other opportunities.

Thanks. We'll go to Carter for the next question.

Great. Carter Gould, Barclays. I wanted to ask you around sort of how you're thinking about that broader hem/onc franchise right now on the back of pirtobrutinib being further derisked and time lines potentially moving forward there. You mentioned IDH1 and 2, I'm not ignoring that. But when you think about the companies that have been dominant within hem/onc, they have broader franchises now. I think ibrutinib experiences an illustrative one without really a broader hem/onc franchise. But to what extent does that maybe accelerate your plans? And do you view pirtobrutinib more of an anchor to build around or really just sort of a distinct opportunity?

I think it's an -- it could be either or both. In other words, pirtobrutinib can exist on its own. At the same time, to the extent that we encounter business development opportunities that are exclusively focused in hem/onc that would allow us either to forward integrate or bulk up in that. It's sort of -- it's another thing to put on the pro list of why to do a transaction of that nature, but it's not a cart before the horse. So I wouldn't do something I wouldn't have otherwise done just because it happens to be in the hematologic malignancy.

Thank you. I'm going to go to e-mail for the next 2 questions on Verzenio. The first one is from Andrew Baum at Citi. Given the recent ASCO recommendation for Verzenio use in the broad monarchE ITT population, do you anticipate broad U.S. adoption and reimbursement even if you are only able to promote it for the Ki-67 high population?

We are aware of the ASCO guidelines of the ITT population. I think despite FDA's decision, physicians obviously can vote with their feet and the ASCO committee decided to do that. Those types of guidelines do tend to lead to more favorable reimbursement decisions from payers. But we'll see how that plays out. We're not promoting to that. That's not the labeled indication. We need to monitor the overall survival data to expand the label over time.

Thanks, Jake. And then another one from Louise Chen on Verzenio. If competing adjuvant trials for breast do not read out positively in 2022, like Kisqali's NATALEE, how do you think this enhances your market opportunity for Verzenio in both the adjuvant and metastatic settings?

We don't tend to focus that much on the NATALEE trial. I think that if the study reads out negatively, it only furthers our view that abemaciclib is a differentiated agent by virtue of not just the adjuvant data, but also the data we've generated in the metastatic setting and even the single agent data dating back to the initial first-in-human study. If the study reads out positively, I think that's interesting, but it's a 3-year regimen that I don't think physicians and patients have a lot of interest in, candidly. So it's just not -- we're focused on the path ahead of us. We think we have a great opportunity here with the package that we have and the indication that we have. And you can even see over the past couple of weeks an uptick in script data that in the weeks following the approval. So we're focused on what we have. We're not that focused on the NATALEE results.

Thanks, Jake. We'll go to Seamus next.

So just 2 quick questions. First, the differentiation of your profile of your PI3K alpha relative to Relay's approach, is it a particularly similar kind of approach in comparison? Or how is it differentiated from your perspective? And then there's the second question, your oral SERD, we saw some data at ASCO -- or at SABCS, it really looks like the activity, you could either say it's modest, showing some benefit, but it looks like it's predominantly in the ESR1 mutant patient population. Just love to know your thoughts on those data. Is it commercial viability? You guys are moving into this sort of second line patient population. I think previously, you'd said really want to go earlier in disease aggressively, but it sounds like that's kind of shifted a little bit. So I'd just love to know a little bit of those.

Why don't you take PI3 kinase? Thanks.

Sure. So I -- speaking, obviously, we're aware of the Relay program. We've looked very carefully at the 2 different times they've disclosed data related to that compound. We think we have a pretty different product profile. We see in their drug is a drug that has activity against a broad range of mutants, but importantly, at best has about a tenfold selectivity for wild type in biochemical assays. Generally speaking, when we try to advance selective matter, we would not consider that full difference to be the kind that we'd be comfortable bringing to patients and being confident that it would be maintained. So I think we'll have to see how that story plays out. Obviously, we're all looking at the same data, but I think that the question there is really how that modest selectivity window will hold up in patients. And generally, there isn't a lot of precedence for that window on a biochemical assay translating to selectivity in patients. So I think that's really what we need to see. The other thing I would just say, they themselves have a follow-on compound that they have mentioned that is H1047R selective. And I just -- I guess I'm a little bit, question why if they feel that they have a pan-mutant highly selective inhibitor, they would have a second-generation effort that narrowed the indication to just the same H1047R mutation if they were comfortable with that selectivity window.

Yes. I'll turn to SERD in a second. I'll just say that alpelisib is a pan-mutant PI3 kinase drug with no meaningful selectivity over wild type. So selectivity over wild type is the key feature of this class of medicines that we optimize for. And I think that's the differentiation quotient. Turning to SERD, a few things about the data that we saw at San Antonio, and I don't want to comment too much on other people's data, but I think they're important only in as much as they do help us make decisions about our future thinking. Clearly, the effect size was more pronounced in the ESR1 mutants than in the wild type. I don't think that's surprising. That having been said, if you do the back calculation of what was observed in the wild type, it's not -- nothing. It's -- there is an effect size there, albeit one that's modest. Now that study enriched deliberately for ESR1 mutants. But if you enroll a study like ours, you'll enroll a natural prevalence of the ESR1 mutants, probably that's appreciable. It's not going to be 50%, but it's going to be appreciable, and so that's part of the reason why the results we just saw give us increased confidence in the study that we're running. Now as you noted about the clinical meaningfulness, et cetera, the effect size is very real. I think the challenge is that patients in that setting post CDK4/6 just do not have great PFS outcomes. And so you can have a robust hazard ratio and you're just not improving in an absolute sense, the number, that much. Our study allows patients who are CDK4/6 naive. So I think we will have a slightly different patient population than they did, but the clinical meaningfulness is a hard thing to talk about when your control arm is just so poorly performing. It's hard to criticize the active drug when that's the situation. As it relates to going earlier lines, I don't think our messaging there really has changed. We started with this second line study because it was the quickest way to get the drug approved. That remains the case today and in part because we wanted to see some of these competitive data before we greenlit a long and expensive adjuvant study. So I don't think our messaging there has changed, and like I said, we're refining what that adjuvant study ought to look like, and we'll come back next year once we have those plans solidified. Obviously, the elephant in the room perhaps is we're not talking about first-line metastatic. I think that is a much more challenging place to study these drugs in light of the PARSIFAL data from last year.

Thanks, Seamus. Steve?

Steve Scala from Cowen and Company. First, an observation in your response to Seamus' question, and then I have a question. But 6 months ago, you were quite pessimistic about the SERD. And then prior to San Antonio, Lilly started a number of studies. So there was something more than just San Antonio that I think must have sparked your interest. Maybe I'm wrong. Maybe you can correct me if I'm wrong. But it seems that your view of your SERD changed prior to the San Antonio data, I'm just wondering what changed. And then my question.

Yes. Let me start with that one. The view hasn't changed. I think you're alluding to like healthy volunteer clinical pharmacology studies, which you have to do on a Gantt chart in order to enable an approval of any drug. So those were just to support the Ember-3 Phase III that you already knew about.

Okay. The question is, what is your level of confidence in a positive outcome of the Tyvyt FDA AdCom? What questions do you think will be posed? And what's Plan B if it doesn't go your way?

Our level of confidence has decreased over time. I think we're reading the same tea leaves that others have read. The commentary from agency officials and elected officials has changed on the approvability of Chinese data sets in the United States. So I don't know how to prognosticate with the number, but our confidence has decreased certainly versus, say, a year ago. There was an advisory committee upcoming in February ahead of a March PDUFA date. The advisory committee, I expect, to be focused on this question. We don't know that to be true because we haven't received any questions. You'll hear about the questions when we do when they become available publicly. If it goes south on us, sort of depends on the nature of what the recommendation from the agency is and whether or not we think that's worthwhile in this context. As you know, we brought in sintilimab as an opportunistic idea to disrupt the marketplace that had yet to be disrupted despite a lot of competitors. And we were going to do that with a deliberate low WACC strategy for practices that -- for whom that would be financially interesting. We thought that was a way of bringing innovation to the space. And again, the randomized Phase III data, which were of incredibly high quality, were already generated. So -- hence, the opportunistic nature of this, we already had a relationship with Innovent and those data could be more or less superimposed on top of Merck's KEYNOTE-189. So that's how we got here. This is not the kind of innovation that is the bulk of what we do, as you saw today. So depending on what onus is put on us from the agency following this, if that's where this goes, we'll have to reevaluate our plans.

Thanks, Steve. Mohit next.

Mohit Bansal from Wells. Question on Verzenio. So in our KOL calls, the KOL and his colleagues, they are of the opinion based on PENELOPE-B data that there is a theoretical possibility that DFS curves could actually merge at year 4 or year 5. And they are concerned about that so they want to look at more data from monarchE trial before using the drug and they are looking at role of extended endocrine therapy. So is this a common view? Or what is your opinion about that?

It was definitely a -- it was a theme we were hearing more, I would say, prior to the most recent data update that I walked through today that were published in annals and presented at ESMO earlier in the fall. We're not hearing as much of this chatter anymore. I think with every subsequent cut, we further and further dispelled this idea. The curves have only widened over time. We continue -- we're observing the similar effect size, if not more robust effect size in the piece-wise analysis after the 2-year treatment period. So on one hand, it doesn't surprise me, there are still skeptics out there. There are always going to be those in -- regardless of what data set you generate. I think the proportion of physicians who feel that way today has diminished. But obviously, we have to get out there and educate on the data we have and have those conversations.

And I'll just add to that. I think it's important to recognize, and this is just a fact, a lot has been made about the kind of early visual separation of the curves of the PENELOPE-B dataset. They never observed an effect size in their dataset. Even if you had done the analysis at the same point in time that we presented the monarchE data, that comes anywhere close to the effect size that we've seen in monarchE. So my point is, although there was a little bit of visual separation of those curves, statistically, what we've observed to date is entirely different and continues to be entirely different in the story of that clinical trial.

Thanks. I'm going to go to an e-mail question from Kerry Holford at Berenberg on Verzenio again. Could you just update us on when kind of the next cuts of OS data are and the final cut? And then how convinced are you that you'll achieve approval in the broader high-risk early breast cancer group? And is OS data really critical for that?

I'll start reverse. The OS data are critical for that again. I think as you can see in what we published in the annals of Oncology, the kind of trend we're talking about. In other words, you can look at the trend that we've observed thus far in the Ki-67 high population that led to FDA's action in that population. I can't speculate as to what the trend "needs to be" in the overall population, but we know what led to their approval decision for the population that is approved. And we know that getting to some level of OS trend favoring Verzenio in the broader population is necessary. The next look will be next year. And it's not the final look, but it's the next look, and we'll see if that's the look that turns this our direction.

And I'd just add, the FDA actually hosted a session at San Antonio about their approval of the 2 adjuvant different indications this past year, and they themselves indicated an openness to interest in reviewing the indication as the OS data matures and update. So obviously, we need to generate those data and bring it to them, but I think there's an open-mindedness on their part as that data evolves.

Great. Thank you. We'll go to Vamil for the next question.

Great. Vamil Divan from Mizuho. Thanks for the candid discussion, been helpful. Just maybe one more on Verzenio from me. Obviously, the prostate cancer opportunity looks interesting. Can you just update is there any other work in other solid tumors going on beyond prostate at this point?

You'll take that?

Yes. I think we've really chose to -- again, this gets to the broader theme of kind of focusing your efforts, and we think that prostate is the most analogous biologic situation to breast cancer. We've seen a lot of work across CDK4/6 inhibitor space in other disease areas, none of that has really panned out. So we think it's appropriate to kind of prioritize our strategy here and really make sure that we're delivering the most value to patients we think we can help the most, which are those with prostate cancer.

Maybe I'd just add, David. This is a pretty unusual situation. You won't see Lilly often go into Phase III trials without Phase II data. But in this case, we felt in the interest of time that this kind of design could be appropriate with a high bar for progression, and that's a key point. We don't want to get caught doing a Phase III trial without the support of data. So although we haven't seen the data, we're confident it's there. And the biologic plausibility learning of the similarities biologically of prostate and breast cancer.

Thanks. We'll go to Ronny Gal.

A follow-on question on sintilimab. Can you talk a little bit about what kind of share this entire idea of low cost PD-1 can have in Europe, Japan, Canada, essentially outside of the U.S. and developed markets? Is there something you are pursuing? And kind of like how attractive this opportunity versus the U.S. And similarly, if the U.S. asks for a post-approval study of sintilimab in non-Asian population, is this acceptable? Or is this the point where the economics of this idea begins to fall apart?

Yes. On the first part, we're focused initially -- well, obviously, we're focused on the commercial strategy in China, which is going very well. Outside of China, we're focused initially on the United States. We haven't talked a lot about our plans in Europe or other geographies. I think it's a little premature to go there. As it relates to the regulatory situation, that's -- it's very speculative. Until we see what they have to say, I don't know how to comment on that.

Great. Thank you. We're going to break there. And if you look at the agenda, we will come back at 2:50 Eastern Time for our final presentation with neuroscience with Dr. Mark Mintun, and so we'll see you then. Thank you very much. [Break]

Great. Thanks, everyone, and welcome back. We have our final session of neuroscience. And I'd like to invite Dr. Mark Mintun up, who is the President of Neuroscience Research and Development at Lilly and the President of Avid Radiopharmaceuticals. Thanks, Mark.

Thanks, Kevin, and good afternoon. So I understand I'm the last one of the day. So thank you for staying. And so a little over 20 years ago, I started working in Alzheimer's disease at Washington University. I was a professor there. Little over 10 years ago, I came to Lilly and continued my work in Alzheimer's disease. And I stand here today, though, incredibly grateful that I am part of a company that shares my passion for helping patients and families that are facing Alzheimer's disease today. So -- and given that Lilly has been actually working in this area for 30 years, essentially uninterrupted, I know they have the same commitment I do. So why am I talking about passion and commitment? Well, it's because Alzheimer's disease is such a massive and still growing unmet need. This slide gives some statistics and just I want to point out that having another person develop Alzheimer's disease every 65 seconds, so that adds up to almost 0.5 million new patients a year. And then if you look a little further down, there's this economics of almost over $230 billion cost from Alzheimer's and dementia. But a huge number like that actually doesn't even begin to portray the amount of suffering that Alzheimer's patients endure with this unrelenting fatal disease. First, they lose their memory, they lose their dignity. They typically lose their financial security and ultimately, their life. And then I put over on the right that there are other dementia -- there are other neurodegenerative diseases that cause dementia and that they also have no disease-modifying drugs. True, none of these are as large as Alzheimer's disease, but they do affect millions of lives. And an interesting component is that many of them are caused by misfolded proteins, similar to that in Alzheimer's disease, and we're hoping that as we develop new technologies and apply them to Alzheimer's disease, we will also be able to apply them to these diseases as well. So our neurodegeneration part of this will have 4 themes, the first of which is diagnostics. So starting with Amyvid, I note that it was 9 years ago, that we established the importance of verifying amyloid pathology in Alzheimer's disease clinical trials. And that small step actually transformed the field. And I think it enabled the current generation of anti-plaque antibodies. With Tauvid, in our recent TRAILBLAZER-ALZ trial, we demonstrated the power of stratifying patients by their tau pathology and then using tau imaging to monitor the disease progression. And today, we're going to spend a little time talking about a plasma biomarker, phospho-tau217, which we believe could transform the field yet again. This slide reminds us that amyloid pathology starts -- in Alzheimer's starts years, probably a decade before symptoms. We believe that finding patients -- finding people actually at that point with evidence of amyloid, but no symptoms of Alzheimer's gives us a window that we could intervene. And we could remove the amyloid, turn back the clock on the pathological processes. And in this way, we could dramatically slow or perhaps even stop the progression of the disease into its symptomatic form. We're going to be talking about that trial in a few minutes. Now going very early in the disease with donanemab may indeed ultimately give us transformative efficacy. But for patients who already have symptoms, we believe that we need to augment the current benefits with something beyond anti-amyloid therapies. And in that regard, we are evaluating making progress on multiple different targets, but our #1 priority is tau. And that's because it's close association with neuronal degeneration under the microscope. And in the clinic, it's close association with clinical progression. So our update there is going to be talking about our anti-tau aggregation with small molecule and our anti-tau siRNA program. Lilly's genetic medicines program is headlined by the Prevail Therapeutics team, which brought 2 gene therapy programs that were already in the clinic and an active preclinical pipeline in that acquisition. And as you heard from Andrew a little earlier, we have a growing siRNA program. But that means that our vigorous internal neuroscience programs in both DNA and RNA medicines have resulted -- that we see a big need in being able to find new ways of getting these medicines into the central and peripheral nervous system. So the slide shows many innovative companies that we're already partnering with to increase our technology, but we're actually actively working to find additional delivery technologies that will make genetic medicines even more effective. So let's turn to donanemab. And I know that Dan has already relayed the excitement of the clinical data from TRAILBLAZER-ALZ. But I actually want to focus the fact that we're going to be taking on several challenges that successes in this area have brought about. So looking down in the lower left, the establishment of amyloid plaque lowering as a surrogate marker reasonably likely to predict slowing of clinical progression, I sort of read out that whole surrogate thing, exists, but it leaves many with questions on exactly what this mechanism is. And we believe our donanemab trial data can advance the science and help connect the dots between amyloid lowering and clinical efficacy. So we're going to be going over some new data in just a minute. In the middle, I want to talk about diagnosis. Currently, patients with Alzheimer's disease get diagnosed late, if they get diagnosed at all. And often, there is a high rate of misdiagnosis. With our approved diagnostic PET tracers often used as actually the gold standard for the presence of amyloid and tau pathology in clinical trials, and our new P-tau217 assay, we will work to establish a new diagnostic paradigm and expand the diagnostic infrastructure of patients -- for patients suspected of Alzheimer's disease. And finally, on the right, we understand that there's uncertainty, and I guess, in some cases, just outright confusion on how you measure the benefits of anti-amyloid therapy. So for donanemab, as you know, we're planning to confirm and extend our current findings with a Phase III trial that is already ongoing and already fully enrolled. But we're also taking an active role in reviewing our clinical and biomarker data with key stakeholders such as the Coverage and Analysis Group at Medicare. And then we're also working on piloting innovative models for demonstrating real-world long-term benefits of anti-amyloid therapy with donanemab. Now I mentioned the value and one of the aspects of that is the benefit risk profile. And in that regard, we still remain confident in the benefit risk for donanemab. We do note though that many people in the field are asking questions about the risk of ARIA with anti-amyloid drugs. And of course, there is data showing that apoE4 carriers have a higher rate of ARIA than noncarriers. But people are asking, are there other indicators that would identify a high-risk population. And what are the best ways to monitor for the onset of ARIA? Similar to how we're approaching the gaps in our knowledge with surrogate endpoint and connecting amyloid lowering with clinical efficacy, we see the questions about ARIA is actually very important, and we're working closely with stakeholders in this field to develop answers that are optimized for clinical practice. Now let's turn to some data. So right here, we've already -- just sort of a reminder to me, we already began advancing the science with presentations at AAIC. This data was presented at AAIC in July, in which we -- but we also presented other data in how amyloid removal and these changes in P-tau217 actually were related to the slowing of clinical progression in patients in our trials. In this slide, however, I want to highlight how the highly significant P-tau217 reductions in patients treated with donanemab. That's the green line in the right graph, parallels the reduction in amyloid on the left. So many scientists in the field feel that P-tau217 is a biomarker of brain tau pathology and is specifically sort of like a leading indicator of the onset of tau tangle pathology. Indeed, a recent publication actually concluded that P-tau217 mediates the way that amyloid pathology accelerates tau tangle pathology. So the results of this P-tau217 assay adds to our slowing of tau in our PET and demonstrates that we have complementary types of evidence suggesting reduction of tau pathology in patients receiving donanemab. But now let's look at this. This is new. The graphs are formatted just like we saw in the last slide, but now the donanemab green line represents only those patients that had complete amyloid clearance by 6 months and therefore, went off donanemab. And you can see the vertical red dotted line is the point of 6 months or actually 24 weeks when they stopped taking donanemab. But since they continued in the trial, it was a completely blinded situation. They continued in the trial throughout. We actually were able to follow them for another year after stopping donanemab. On the left, you can see that the amyloid levels went down and in -- particularly in this graph, went down and just stayed down. Sure. There's a theoretical risk of reaccumulation over the years, but this data shows no evidence of any rebound of amyloid pathology in these patients. Now on the right, the P-tau level, P-tau217, went down by 6 months and they stayed down with a very high statistical significance for the remainder of the trial. In fact, maybe if you look at it, maybe they even continue to go down just a little bit more. So we see this data is demonstrating that the change in this key downstream tau pathology biomarker is not dependent on continuing donanemab treatment, but rather is tied to the reduction of amyloid plaques. And the conclusion is that this is even more evidence for support of a limited dosing paradigm in our sort of treat to target type of approach. So tau tangles and amyloid plaques are the defining pathologies of Alzheimer's disease, but it's often pointed out that these pathologies occur in the setting of neuroinflammation. And that neuroinflammation actually serves as a critical accelerant in some people's minds of both of these pathologies. So what happens to neuroinflammation with donanemab treatment? Well, one of the key markers of chronic neuroinflammation, such as seen as Alzheimer's, and it's not specific for Alzheimer's, but it does occur in Alzheimer's as a reactive gliosis or astrogliosis. And one of the things that's upregulated in these reactive glial cells is the cytoskeletal protein glial fibrillary acidic protein, G-F-A-P, GFAP for short. Now GFAP shares many features of another protein people like to talk about, which is neurofilament light or NfL. But neurofilament light is found in neurons and leaks out after a lot of damage to the neuron has occurred. GFAP is highly specific to the brain glial cells. So plasma levels of GFAP have been shown to be elevated in many different diseases, including Alzheimer's. So -- but what I'm showing here is actually new. The graph shows that the patients treated with donanemab have over a 20% reduction in plasma GFAP compared to the placebo at 76 weeks. And this separation from placebo, as you can tell by all the little stars down there, occurs early in the trial and occurs with high statistical significance. So this finding continues to strengthen the evidence that treatment with donanemab broadly reduces the underlying pathology of Alzheimer's disease. So now we're seeing it reduce the amyloid plaque. We see it slow tau tangle formation. We see it lowering pathological P-tau217, and we now see the biomarker evidence for lowering neuroinflammation. So of course, I'm talking a lot about P-tau217 in our -- as a biomarker in our trials, but what about its use as a diagnostic. In this slide, I'm showing some data that's been published before in our -- from our P-tau217 assay in a research trial setting. And the graph on the left shows the ROC curve for how plasma P-tau217 performs, that's the purple line, in predicting an elevated tau signal on tau PET, so a positive tau scan. The area under the curve or AUC, that's a form of agreement between the 2 measures, is very high at 93%. Of course, given the likely role that I just explained, a P-tau217 pathology and enabling tau tangle pathology, that's probably not very surprising. But how specific is P-tau217 to Alzheimer's disease. On the right, the investigators examined whether elevated P-tau217 was specific for Alzheimer's disease by putting in to the trial a lot of other neurodegenerative diseases. They had PSP, progressive supranuclear palsy. They had frontal temporal degeneration. They had Parkinson's disease, dementia. So how did it perform? And it demonstrates here that it had an AUC of 96 (sic) [ 0.96 ] demonstrating that P-tau217 is actually highly specific for Alzheimer's disease. So together, these demonstrate that the plasma P-tau217 assay has a very high potential for predicting both the clinical diagnosis of Alzheimer's disease as well as the underlying tau pathology of Alzheimer's disease. So with that combination, it's not surprising that the P-tau217 also demonstrates a close correspondence with a positive amyloid scan, those things have a tendency to track together, and the AUC for that is shown at the bottom of the slide. So of course, that's P-tau217 assay in a research setting. And our team has been working hard to translate and scale that assay in the CLIA lab at Lilly. We also have been working to design and begin to execute the appropriate pivotal tests for determining the final cut points of a clinical assay. So what's a positive result, what's a negative result and what is indeterminate. And in that last regard, I'd just point out that we have a really unique advantage over a typical diagnostic company. We have generated, through our therapeutic trials, literally thousands of blood samples that are paired to PET scans from patients suspected of having Alzheimer's disease. That will make those trial -- that will make those tests incredibly convincing. So we believe then that launching a clinical blood test with the type of performance we just saw on the research assay has the potential of transforming the way patients are evaluated and diagnosed. A plasma P-tau217 test should be less invasive, it should be less expensive, and it should be simply much more available than other tests like CSF assays and PET scans. Thus, we see the barriers in getting diagnosed with Alzheimer's disease is falling dramatically. And hopefully, patients will be diagnosed earlier. Now to back up. Lilly is not a diagnostic company. And we think about taking this assay into the clinic and needing to focus on the assay itself and generating an accurate and informative report. Other critical aspects such as interacting with the physicians, getting the order, delivering back the results, we see that is something we will rely on established partners in the area. So moving on. Speaking of early diagnosis, let's talk about the TRAILBLAZER-ALZ 3 study. As I mentioned before, the point here is to intervene much earlier in the disease process. Now we have experience in this area. I remind you that we're already testing solanezumab in the A4 trial with our partners. And in this TRAILBLAZER-ALZ 3 trial, we're enrolling subjects, I should say, with evidence for amyloid pathology but still cognitively unimpaired. In that way, it's similar to A4. What's different is that then we will then test 9 doses -- of whether 9 doses of donanemab can reduce or potentially stop the subjects from progressing into the cognitive and functional impairment of Alzheimer's disease. Now each time a patient progresses, that will be equivalent to an event. And this will be an event-driven trial, stopping when we have enough events to evaluate properly our primary objective. Now an interesting aspect of this trial is that to more easily find and recruit the subjects, we'll be using our plasma P-tau217 assay, we believe giving us a lot of flexibility and speed. Another interesting design element is that it will be decentralized, using central services. And the combination of a decentralized trial and a screening plasma assay means we could have mobile units. Dan talked about those a little earlier with mobile units for the COVID trials. We could have mobile units going to community where patients live, greatly expanding the ability to move quickly and recruit patients from a diverse population. Now at the same time, we'll be able to maintain the same or even better levels of safety monitoring in this trial compared to such a -- a brick-and-mortar trial. We will have such routine components as prescheduled MRIs looking for ARIA and others. And so this trial is already enrolling, and we hope to complete enrollment of TRAILBLAZER-ALZ 3 by the end of 2022. Well, we can spend a minute on this trial. It's a most recent trial we've announced, TRAILBLAZER-ALZ 4. It's a much smaller trial, but it is the first head-to-head trial of disease-modifying agents in Alzheimer's disease. It will assess the superiority of amyloid plaque clearance in an early symptomatic Alzheimer's disease population. Enrollment for this trial has already begun, and we expect it to be completed in the first quarter of 2022. That allows us to see a readout in the second half of 2022 for our 6-month endpoint. So before we leave the anti-amyloid drugs, I thought it would be useful to just give a quick update of our second N3pG monoclonal antibody that's in the clinic. All right. So maybe this is more of a teaser, but my point is that the evidence we're collecting shows that N3pG4 can completely clear amyloid from Alzheimer's patients. This efficacy in plaque clearance, combined with other properties of the molecules, are reasons that we expect N3pG4 to be a next-generation anti-amyloid drug with giving us options for flexible dosing regimens, including subcutaneous dosing to meet the different needs of Alzheimer's patients and their family. To that end, we are hoping to start pivotal trials on N3pG4 by the end of 2022. So leaving amyloid, I mentioned that we're looking beyond amyloid and that tau is our #1 priority. So what I'm showing here are the expected steps between the formation of the expression of tau inside the cell and the ultimate propagation and aggregation of tangles. Below in red are where we're hoping to intervene with our programs. Now however, on a previous earnings call, we did announce that our Phase II trial testing zagotenemab to sequester tau aggregates and reduce tau spreading was not successful, and we will not be pursuing that molecule any further. We are, however, excited about our work on methods for reducing tau expression and slowing tau aggregation. So let's turn to that. So this is an update on our O-GlcNAcase inhibitor, easier said, I think, is OGA inhibitor. It's -- this molecule is now in Phase II. The trial is active and the trial is enrolling. The OGA inhibitor -- this OGA inhibitor is -- showed good preclinical data, as shown there on the left and some really robust Phase I data. And as you can see with the PET scans, they showed a very high reduction of signal that persisted from 2 hours all the way up to 24 hours with a single 1-milligram dose. So we have started the Phase II. The design is on the right, and it will test our OGA inhibitor in early symptomatic Alzheimer's disease that show -- that have tau on tau PET. And yes, we will be using the P-tau217 assay for improving the efficiency of enrollment. Going from our small molecule program to our siRNA program, you've heard that siRNAs can selectively reduce the expression of a targeted protein. In this case, our goal is to inhibit and reduce the expression of the MAPT gene, M-A-P-T gene, which is what codes for tau protein. A dramatic reduction of the tau protein in the cell should reduce the amount of tau available for aggregation and slow the formation and spread of tau pathology. And on the right, you see a couple of pictures. Now the key aspect of this picture is that these were taken from nonhuman primates, one that was the control animal and one that was injected with an siRNA targeting the tau protein. Each white dot here on the pictures represents mRNA that has the tau genetic code and would naturally be turning into a tau protein. So when you compare the control with lots of white dots to the treated animal, you can see the profound reduction in the mRNA that is resulting from administration of this siRNA. So we believe that this is a very, very exciting indication that we will be able to lower tau expression using an siRNA medicine. Now siRNA represents a type of genetic medicine typically used to lower the levels of a protein. But what about diseases in which the problem is an inability to make a functioning enzyme or protein. Well, that's exactly the type of problem that's being tackled by our pioneering colleagues at Prevail Therapeutics. The next 2 slides are a snapshot of the trials that are being conducted to test medicines for patients with mutations. First, in the GBA1 gene that codes for glucocerebrosidase or GCase, that's in the left and the middle panel. And for patients with mutations in the gene coding for progranulin, that's in the right panel. So you can see the PROPEL trial is enrolling adult patients with Parkinson's disease that is caused by GBA1 mutation. The PROVIDE trial is enrolling infants with much more severe GBA1 mutations that cause type 2 Gaucher disease, a rapidly progressing and fatal illness with severe neurodegeneration. And then the PROCLAIM trial is enrolling adult patients with frontal temporal degeneration, FTD, caused by progranulin -- mutations that cause progranulin deficiency. So going on to some early data. We have a snapshot here of the preliminary biomarker data. Now the Y-axis here represent the levels of the functioning enzyme or the protein in the CSF. So these all come from sampling CSF in these patients. So as you can see on the left side, the Parkinson's patient that had no detectable levels of GCase activity in the CSF at baseline or BL down there, but after treatment with the viral capsid containing the DNA code to produce GCase, the CSF levels of GCase are now moved up into the normal range. So in the middle panel, the baby with Gaucher disease also came into the study at baseline with abnormally low levels of GCase enzyme activity in the CSF, which then normalized after treatment. And then finally the patient on the right, with frontal temporal degeneration, had reduced progranulin levels consistent with having a mutation being able to make progranulin. And after treatment, these levels in the CSF also moved into the normal range. So really exciting but clearly early, and biomarker data is not the same as clinical efficacy. But I hope you can see why we are really, really excited about having Prevail Therapeutics as an integral part of our neuroscience program at Lilly. Data such as this give us hope that we can make a real difference in these -- the lives of these patients that are affected by these severe mutations, and also learn something about how we can apply these same technologies to broader populations. So that completes the update on neurodegeneration. And now I'd like to spend a few minutes just giving a quick update on the pain program. So just a slide to remind how much chronic pain continues to be a tremendous unmet need in this society. It is the largest reason that patients come and get schedule a visit to the doctor. And a very large percentage of chronic pain patients report that they are unsatisfied with their treatment, and many of them are continuing to look for alternative therapy. With that in mind, 3 years ago, we took stock of our situation where we are, in particular, our pipeline deficiencies with no early phase programs in pain. We considered exiting the area as many of our fellow pharmaceutical companies were doing. But given the unmet need and the expertise that we had in neuroscience, we decided to lean in and rebuild. So our program now is really based on 4 tenants. First, animal models could not be really used to guide which pain condition you want to test with a given molecule to a given target. Now that means second, we would need to find an efficient way of testing new drugs, and we came up with the concept of a Pain Master Protocol that as drugs enter it, you could test it in multiple different pain conditions simultaneously and get well-powered POC results. Then third, we recognized that we would build a neuronal health platform that would address some of the new evolving science around the neuropathic pain conditions. And then finally, given this increased capacity for testing drugs at the POC level, we would seek out external partners to bring in novel molecules intended to help patients with chronic pain to augment our internal drug discovery. So as you can see now on the right, in the last 3 years, we now have created a very vigorous pain development program, maybe the largest in the industry, and we look forward to updating you on the many different POC readouts that will be coming out in the next year or 2. Now before I close, I just wanted to put up the entire neuroscience pipeline that's there in purple. Lots of progress here. I didn't talk about all of the molecules, but I'm happy during the question and answer to take any questions about the ones that we did talk about or others as well. So in summary, we're proud of our past successes in neuroscience and our commitment to advancing Alzheimer's disease research. We have previously transformed the way Alzheimer's clinical trials are conducted. And we would not be surprised if the current innovations in diagnosis, in biomarkers and trial designs will transform the field once again. In regards to donanemab, we have used our expertise to differentiate donanemab in terms of limited duration dosing, designing deep and rapid amyloid clearance and then multiple pathology-related biomarkers that we believe connect how amyloid clearance can result in clinical efficacy. And as we look past our anti-amyloid programs, we are moving forward across multiple technologies and multiple platforms to provide the next generation of medicines that will, we believe, give hope for patients with Alzheimer's disease, for patients with other neurodegenerative diseases and for patients with chronic pain. And that concludes my presentation, and I invite Anne and Dan to come up on the stage for Q&A.

Thanks, Mark, for that presentation. And I'd like to welcome in addition to Dan, Anne White, the President of Lilly Neuroscience. And we'll go to Ronny for the first question -- or Mike, sorry. Go ahead, Mike.

I'm Mike DiFiore from Evercore ISI. Just a question on the tau217 levels remaining the same once patients came off donanemab. But do you have any data on plasma AB42/40 ratio and how that played out?

So we don't have that data yet. We believe that the A-beta 40/42 ratio is a very, very difficult assay because it is incredibly sensitive to the way you collect those data samples. And we're working on that. We think that's an interesting component, but we do note that the reduction of the pathology is pretty stable over that period of time. So I would say that the PET scan is sort of the gold standard there.

Thanks. We'll go to Vamil next.

Vamil Divan from Mizuho. So on donanemab, maybe just sort of 2 questions. One, on the timing of completing the rolling submission, I think you were saying sort of end of first quarter now is the timing, sorry to get too nitpicky, but we just get a lot of questions on this. Can you just clarify exactly what it is that's sort of the gating step. I think it was supposed to maybe a little bit earlier. I know it's not maybe a major deal from a long-term perspective, though. So just kind of clarify that. And then the other question on donanemab that we get a lot is just all the numbers heading in the right direction are consistent results, but the clinical meaningfulness of the data and how impactful this would really be for patients. So obviously, it's still pretty small trial we're commenting on. But just if you get this sort of response again in Phase III, can you maybe just sort of talk about the clinical meaningfulness of what this might mean.

Sure. I'll start with the timing. And then Mark, do you want to do meaningfulness?

Yes.

Okay, great. So yes, we were saying Q1 is when we intend to complete the submission. The last piece of the submission here will be the safety data. So in discussions with the FDA, we understand what's needed here, and it's just a question of locking, cleaning, analyzing and submitting the data. I think, of course, we feel a sense of urgency here on behalf of patients. On the other hand, as I said before, we have modest expectations for the period between accelerated approval and full data readout. So that sort of takes some of the pressure off.

Yes, the question on clinical meaningfulness is really important. And I'm sure there will be many, many conversations about this. But one of the things that -- I think an important way to look at this is that in almost all the markers, what we have is the placebo patients progressed at 1 level, the donanemab patients progressed at another level. And if you look at the X-axis, you see that -- excuse me, the Y-axis, you see that 32% slowing. And that's the part that people get thrown. They're not sure what that means. But another way to look at it is look at the X-axis where essentially the patients with donanemab are 6 months behind in progression. This is a relentlessly progressive disease when you look at it over a population. And basically, the average patient progressed 6 months less in their disease. And so that's giving them 6 months more of life at whatever level they had before. One of the things that I think that's important is that if that was all we had, that would still be important, 6 months is not trivial. But we have all these biomarkers that demonstrate that we have taken the disease and put it in a different place. And that change in pathology means that as you go forward with that, we expect to continue to accrue more and more time saved for those patients. We don't have the data for that. That's obviously something really important for us and the whole field to attack. But I think looking at this as giving time to patients is probably going to be the most important thing to inject into the conversation going forward. And I think our Phase III trial will be -- have additional powering and additional ways of analyzing the data that way.

Thanks, Vamil. Ronny?

Mark, I kind of watched a video that -- of you debating this donanemab data with one of -- with a couple of professors on I think it was Stat or some other outlet. And one of the things that was discussed there was a criticism by a physician that the effect size of donanemab is not very large. Essentially, it's about 3 points on the iADRS. And if you look at the curves that you presented, they look pretty parallel. And if you look at the old data from [ donepezil ] and so forth, they kind of had the same effect, right? There was a onetime inference, and the lines kept on going down parallel. Can you talk a little bit about the effect size, what it will do for patients? And should we expect that in the long term, the lines will begin to diverge more just I guess they should if you are slowing the impact of the disease or not?

Yes, yes. No. I mean it is important, and that was a great discussion on the Stat news. But it is important to have these discussions of what a medicine means for an individual patient. And I think we started going down that with the previous question a little bit, which is how do you interpret the fact. And as I pointed out, these scales go all the way from complete normal of a 20-year-old to unable to respond in a nursing home in any possible way, unable to get up. So the scale is really big and 3 points, who in the world knows what that means. I agree that's problematic in our field. But the concept of giving people back time, I think, is very real. The difficulty comes on a Phase II trial where you're trying to interpret whether the lines are coming together or going apart or look parallel. If you look at the different clinical measures we have in there, if we had picked ADAS-Cog, it might be going apart. We pick -- in other words, the different measures have slightly different tendencies because it's a small number of subjects. I think we'll have a much more power to talk about how they're -- how it's diverging or not diverging as we get to a larger trial. And in the interim, while we wait for the Phase III data to come out, we have this concept of knowing that the tau PET is already -- multiple papers have been published showing that the more tau you have in your brain, the faster you go downhill. That's just been shown in multiple different papers, and we have data for that as well. And in our own data, we've shown that the amount of tau you have in your frontal lobe is one of the best predictors of going down. So the fact that we slowed the tau in the frontal lobe, we believe, means that we -- it's maybe the most obvious component of how we think that we will have -- this will have additional benefits that will accrue over time.

We'll go to Alice next.

So this is another question from Tim Anderson. On the pending NCD, our understanding is that it's probably going to get coverage, but potentially with lots of restrictions that could substantially limit the size of the reimbursable market. So we're wondering what is Lilly's latest thinking about this, specifically on the restrictions. And also how and when will CMS likely address the need for reimbursement of relevant diagnostics whether imaging or serum sampling?

Yes, I'll take this one. So we're preparing for all the various outcomes here, and we'll certainly be ready for all of those. And so we look forward to seeing the draft decision in January and then continuing to work with CMS on the final decision, which will come in April. So the good news is that we'll have clarity on this before we launch donanemab. Now we've been, in the meantime, though, as others have been as well, I'm sure, we've been meeting with CMS to share the donanemab data. Much of the data that Mark has shared here today and in the past, to make sure that they truly understand this data because we do believe that there are differences in this data. So we've made sure to make sure that they understand not just the rapid and deep clearance and the clinical benefit that we think that, that brings but also the limited duration dosing. And as we know the payers, this is incredibly important to them to have some predictability on the cost. So we know that this is important to CMS as well. And then we've also shared the fact that we'll have confirmatory data in mid-'23. So we'll have real clarity on this medicine very, very soon from a confirmatory standpoint that we believe will bolster the really robust data that we've already seen. So we spent quite a bit of time with them to make sure that they understand that data and the value that it brings. And so we hope that they'll certainly take that into account as they make that decision. And so we look forward to it to coming soon and having that clarity. We've also been talking to them for some time, actually for over a year on amyloid PETs and the need for clarity there, not just in diagnosis, where it's one of the gold standards but also in the very real situation that we want to use it to monitor plaque clearance because as Mark shared very eloquently, we believe that you should only dose to target clearance, and here that's plaque clearance. And so Amyvid is the best way to do that as well. So we've made sure in our conversations, they also understand that. And we really hope there's -- I mean, there's obviously a huge push here, not just from us, but everyone across the field that CMS will reconsider that decision. So we certainly hope that they'll also do that this year. We saw a good progress on Tauvid recently. So in the non-oncologic PET NCD, they did remove that restriction. So let's hope that's a sign of things to come that we'll see movement in the rest of the space. So we look forward to seeing that next year.

Maybe I -- just had one thought here along those lines, which is that I also expect certain restrictions from CMS. I think it would be reasonable to restrict it, for example, to biomarker-positive patients, so it require them to have evidence of amyloid pathology, which then requires a diagnostic reimbursement. But I think on a high level, CMS is in a very difficult position right now because they're sort of decided to make a decision knowing that data are coming, that there are going to be 3 different drugs with 4 different trials reading out. And so difficult to be too restrictive and then get positive data or to open and get negative data. So a tough situation.

Thanks, Alice. We'll go to Chris next.

And maybe just building on this kind of dynamic around the launch here. So you've obviously laid out very limited sales potential in this window between approval and TRAILBLAZER-2. Can you just talk a little bit assuming successful TRAILBLAZER-2 data. Is this a drug we should expect to ramp very quickly? I'm starting to think if maybe you just address the reimbursement angle. But I guess how much work can you do in terms of getting physicians ready in terms of patient identification, how the paradigm is going to work, role of PET scans, diagnostics, et cetera? Or are we going to have to have a lot of that occur post TRAILBLAZER-2 in terms of sense of like is this really like a multiyear post TRAILBLAZER-2 before we really see the commercial potential? Or is this kind of like a hockey stick, assuming that, that data is positive?

Yes. Let me start and certainly, Dan and Mark can chime in. So -- we -- as we've said, with the TRAILBLAZER-ALZ data and the launch under accelerated approval, we do believe that initially, there'll be modest uptake. And what that period of accelerated approval to the confirmatory data, that time period really gives us an opportunity to work out some of the challenges in the system, and that's certainly been acknowledged by our competitors as well as the challenges to get patients treated, the appropriate patients treated. And so what I can guarantee you is that we're already thinking through how we're going to maximize that time to make sure that the health care system is really ready once we have that confirmatory data. And so certainly, as you can pick up from this talk, focusing on diagnostics and not just PET tracers, but also having a P-tau assay that really helps drive accessibility and availability for screening for patients. So that's a big focus for us as well. Then also its infusion capacity, referral to infusion centers, ensuring that physicians get adequate reimbursement for those services and get paid for what they deserve to get -- to administer these infusions. And then third is certainly, as we talked about access and reimbursement and not just through what CMS is doing, but also our long history of value-based concepts and partnerships and making sure we put some of that work into play here as well. So those are the 3 prongs that we're going to focus on. So that at the time of the confirmatory data, we'll have worked out a lot of these challenges. And then you'll see, we believe, a much faster movement in this space so -- as patients get diagnosed. But this is not a simple space to launch into. So that's what we've talked about in past conversations is that we've got a lot to do -- a lot of work to do to make sure that this all works and we get the patients treated. So more to come as we work some of those out.

Thanks, Chris. We'll go to Evan next.

Evan Seigerman at BMO. So on duration of treatment, how do you think about duration of treatment in the real world? Is it 6 months? Is it beyond that? And at what point would you potentially have to put a patient back on therapy?

Yes. So I'll take that. I mean you put out a couple of examples out there, but we see a situation where duration of treatment will very likely be greater than 6 months, but we're willing to be open. People will -- we see a world where people will get another amyloid PET scan after a reasonable time. It could be that the amount of amyloid you have at the beginning might predict how quick that is. If you are in the lower levels, we presented data at -- in July that basically said that people who start off with a lower level of amyloid actually reach negativity, if you want to look at it that way, much faster than the people who don't. So it may be that there is a situation that will be very straightforward. You have a certain amount of amyloid at the beginning. You get another PET scan at 9 months and you understand how close you are. You understand that you're there, so you just stop. But those types of regimens, I think will be pretty straightforward to work out. But we do see a requirement of having another PET scan to check whether the person has indeed removed their amyloid down to a negative level. So I don't think that's a particularly difficult thing because what it [ nets ] you is a -- without doing that, you continue dosing. But I think what -- getting that PET scan has amazing freedom of being able to go off the medication knowing that you've removed the amyloid in your deck and in the negative range. Yes, sooner or later, amyloid will probably reaccumulate. We don't know how fast that is. We know how fast amyloid occurs in the very beginning because that's been well characterized, and I can go over all sorts of graphs on that. If it's the same as that, we're talking probably 5 years before there would be much that you could treat and 10 years or 20 years before you -- between 10 and 20 years before you're back into the range you were at the beginning. So I do see a situation as we move earlier and maybe in younger patients that there may be a situation where they require new treatment. But in other situations, we -- it may not ever need to be required for a second treatment.

Great. Thank you. We'll go to Steve for the next one.

Steve Scala from Cowen & Company. How does Lilly win if gantenerumab is successful in Phase III when it reports out in the third quarter of next year? And the reverse question, how does Lilly win if gantenerumab or BAN2401 fail in Phase III despite clearing plaque?

You will take that or...

Yes, certainly. We're fighting over the question.

I'll start. I've got a previous discussion. So look, I think the way we win in any scenario is the same as we have great data. And we don't have that yet, but let's see our Phase III data. If it replicates our Phase II data, I think we're going to be in good shape to win. There are other product attributes that matter here, and we talked about the fixed duration of data -- fixed duration of therapy. But in the end, patients desire efficacy and safety. So why do I think we're going to have better efficacy or differentiated in that domain. If you ask me, the 2 most important things that predict efficacy of amyloid-lowering drugs, number 1 is amyloid lowering, how much do you lower it, how quickly. And number 2 is getting the right patient population, which is the early disease population. I think we're accomplishing the first by virtue of the qualities of the drug, the second by virtue of the tau screening we're doing. I know everyone is now like excited that all the trials will be positive. That's definitely not the history in Alzheimer's disease. The most likely scenario is we're going to see mixed results across the different drugs. I think we should sort of prepare ourselves for that and the implications there, which should sort of be a look at the class and then how certain molecules differentiate across that class, which I expect to be based on those 2 factors, I said. There is another scenario that maybe you're getting at, which is like if these first 2 drugs are dead negative, there's no signal, I think that's a more difficult situation. In that case, you could ramp down my modest expectations from the 6 or 12 months or whatever that we have accelerated approval, ramp that down from modest to extremely modest. But still, it doesn't matter when we get the Phase III data, that's what seals the deal.

Thank you very much. We'll go to Jeff Holford next.

So there's been a lot of focus on size of efficacy here, but drugs are judged on their benefits and their risks. So I wonder if we can explore the risk side a little bit because one of the differentiators of your drug is a faster removal of the plaque. And there are other of your competitors, the touting the drugs like lecanemab which might have a slower removal might have a lower ARIA rate. Now as you're accruing more and more safety data from increased dosing and as you get to look a little bit more sort of ARIA incidents in your trials versus others, how confident are you that your more rapid removal of plaque isn't going to result in a slightly offsetting risk profile against the benefits that you have? And just I asked the question partly because on your slide on your next-generation product, you talk about dosing flexibility with focus on safety. And I just wonder if you're sort of inferring anything there like maybe a slower removal of the plaque and links to safety.

So I'll go ahead and take that. I do want to go back to the very beginning premise there. So -- which is if you -- which might have been -- let me correct the premise there, the concept that if you look across different drugs that the drugs that have more amyloid removal are the ones with more ARIA is not really necessarily true. And I think we know that from the fact that some of the -- the early drugs had very, very little amyloid removal and lots of ARIA. We have -- and I think the right way to say this is that there is a very specific drug situation that within that same drug, faster removal of amyloid may well be causing more amyloid, but it's within that same drug. It doesn't move over to another drug. So I think we're going to have to wait for the Phase IIIs to report out to get a really good idea of how this works. Our data was perfectly consistent with our Phase I data, our Phase II data can reinforce that. We're not seeing anything that makes us doubt the benefit/risk equation. And indeed, we will have a lot of flexibility with [indiscernible] The word safety on there is on there because of the fact that we will have to keep in mind that if we -- that, that is a brand new drug that will have to be evaluated on its premise, and we'll have to do that benefit. We could pick a dose with a high amyloid removal and find out that it had no evidence of symptomatic ARIA, not a problem. But -- so it's still a drug-by-drug basis. The next situation, though, is that we feel comfortable. We feel confident going forward. But I think you're right, people will look very, very carefully at not only what's the risk of ARIA on a trial, but all the other things that I mentioned during the talk, which is can we learn more about how to predict which patient will have it. Is that going to be useful to the field? I think that'd be massively useful. Can we do a better job of saying, here's a practical way to detect ARIA before it becomes something worrisome. And so we believe that, that's a great area to contribute to the science and contribute to helping. So I think we will have -- I hope we will have a very comprehensive way of discussing and talking about the benefit risk equation with donanemab.

But just as if I can squeeze it out, I have one last point. As you've accrued a lot more dosing data now in anticipation of completing your role in filing, are you confident that you've got an acceptable or consistent rate of symptomatic ARIA as you saw in Phase II?

So we have not seen anything that would make us worry that we don't have an acceptable rate. Obviously, and I've heard Dan say this, is that, tomorrow something could happen. But -- so we can't make any promises about data we haven't seen. But the bottom line is that we've not seen anything that makes us worry about this.

Thanks. Jeff. We'll go to Mohit next.

Mohit Bansal from Wells Fargo. Maybe just -- could you just walk us through some of the scenarios when the NCD comes out, what kind of restrictions there could be that you think could be favorable or unfavorable in terms of potential uptake eventually?

Yes. Well, there's obviously all sorts of options from no coverage to full coverage without any limitations. And so we, like you, look with interest to see what they'll say in the first draft in January. I think that our belief is that it's very unlikely that there'll be a no-coverage situation. If you're an optimist, maybe you'd look at the recent Medicare announcement and say the fact that we were -- that your proposing increasing premiums might indicate that there's going to be some level of coverage. Now that's a theory and not to bolster by anything that we know but just that's an interesting fact there. So there's a range of possibilities. What I can tell you is we certainly have thought through each one and how we'd respond to those and how we work with CMS in the event that it's a more challenging one to convince them. And as I said, they've been very interested in the data that we've shared with them around, particularly things like limited duration dosing. Very interested, I think Dan alluded to on diagnostics and how can you identify the right patients. And that's been our philosophy from the very beginning in our clinical trials is that you need to make sure it's the right patients that get these medicines, that we confirm that they have evidence of Alzheimer's pathology. So I think it's pretty likely that, that will be part of the recommendation. But again, we don't know, we'll see what we see in January. So -- but we'll be ready, and we'll be ready to support that moving forward. I don't know if my colleagues want to add anything.

I can speculate on what I would do if I were Medicare. I think I would try to like have a kind of restrictive coverage now, but link it to accelerated approval. So to say for drugs under accelerated approval, here's the restricted coverage when you have full data or full approval, why wouldn't this be covered just like any other drug.

Thanks, Dan. We're going to go to an e-mail question from Louise Chen at Cantor. Why not wait until your Phase III trial readout for donanemab in 2023 before launching, especially since there will be important headlines in 2022 with competitive data readouts, national coverage determination and you're head-to-head with Aduhelm.

I'll start. So as I mentioned, I think one of our great opportunities with the accelerated approval is to further solve some of the health care challenges that we have in this space and their significance. And so the chance to get out there and results from these issues is incredibly important to us. But I think the other thing that we have to keep in mind is that there needs to be -- and I think Dave talked about this, this morning, a sense of urgency in this space that we don't have today. I came from the cancer space, you get a diagnosis of cancer, and there is a sense of urgency to resolve that. We should have that same sense of urgency here in Alzheimer's because if patients progress beyond early Alzheimer's, our opportunity to help them goes down to 0, or really not as strong as it is in the early Alzheimer's space. And we believe it's even greater if you go earlier, which is why we started ALZ-3. So I think everyone should feel the same passion and speed and desire to move quickly as we do in the oncology space, so we can help these patients before they progress, before their tau pathology progresses to a point that we can't help them anymore. So that's our position on why we should make these medicines available to patients quickly and why we should make sure we get out there and solve these problems so that we can get to help as many patients as possible with this disease.

Yes. And I'll just add one more component and I touched on it there, and you touched on it as well, which is that time where we can launch with accelerated approval and then we have the data from our -- and launch with our full package with TRAILBLAZER-2 data is a really critical time for understanding the diagnostic ecosystem. We will be sitting here perhaps next year with a P-tau217 assay. And so many people have talked to me about how they think a diagnostic algorithm should work. And we don't want to be in a situation of everyone having their own diagnostic algorithm and nobody from payers to patients to doctors understanding why one -- one does one thing first and another thing first. So there needs to be time for this field to incorporate these really dramatic changes, hopefully, with Medicare paying for things like Amyvid and Tauvid and for things like P-tau217 as an assay, working those up. When do you screen with a blood test, when do you get a PET scan, when do you need to get a tau PET scan versus an amyloid PET scan, I think those are really important questions that the field will work out, but we need to get going on them and launch them. And I think that launching donanemab will be one of the ways that triggers and pushes that forward and gets us ready for a traditional approval and a traditional launch.

Thanks Mark. And we'll close with the last question from Seamus.

Seamus Fernandez, Guggenheim. So Dan, a couple of questions. As we think about the TRAILBLAZER-ALZ 2 study, you made some changes to kind of expand the tau patient population. Can you talk about how you see the trial evolving relative to the tau pathology that -- in the patients that you're recruiting and sort of the expanded trial design versus what was originally planned? And then the second question is sort of similar to the immuno space. There's a lot of white space in CNS diseases. You guys touched on Parkinson's, but a very challenging target at least from some other drugs that have gone after the space. What about Huntington's? What about your siRNA approach, which you're bringing forward with tau? Can you talk a little bit about that and if you're going after Huntington's and how you're approaching it?

Yes, sure. I'll let Mark take that second question if you want because those are all exciting targets and important disease that we do want to work on. I think the first question though is about the confirmatory Phase III study. The primary analysis cohort, the efficacy cohort in that trial that's set up for primary endpoint is the same as TRAILBLAZER-1. So it is the same tau strata with the same tau points. But in the TRAILBLAZER-ALZ 2 Phase III study, we also led in another group of patients who have higher tau. And so first, we'll analyze the patients who look like TRAILBLAZER-1, the low intermediate tau, and then we'll take a look at the high tau and see if we have a consistency of effect in the whole population. So the primary end point we have to hit is really on the exact same patients, but there's an opportunity to go to a broader group if they have similar efficacy or to exclude them from the final approval if they have different efficacy or if they don't have any efficacy. So we have a hypothesis, I would predict those high tau patients will have significantly less efficacy. I don't think there will be no efficacy in that group. I think there'll be a signal, and we'll see if the benefit/risk in those patients warrants including them in the overall approval. Let's see if that's a speculation now.

Exactly. So yes, we're looking forward to that. But the -- we recognize that the technologies that we're building with siRNA and you noticed Andrew's excitement when he said he saw -- that was a housekeeper -- that was a housekeeping gene as we call it in the field. But the ability to knock down a targeted protein across the brain is really exciting. And then you realize that as you develop that technology and start putting it in and testing safety of that platform, you have the potential of being able to swap it in a different series of nucleic acid to tackle different targets. It's like it's almost something that you go back to the in silico people who are sitting there at their computer and say, yes, if you change targets, here's some possibilities for swapping in a different sequence in nucleic acids and then creating a brand-new drug. So we feel that our highest priority is tau, it's the largest unmet need and it's a very compelling target for Alzheimer's disease. But that said, we really want to be able to apply that same platform technology to these other diseases. Alpha-synuclein in Parkinson's disease is sort of obvious. Huntington in Huntington's disease is obvious, and there are multiple ones. We will, of course, internally rank order those and appropriately prioritize them in the many different experiments and testing going on. But we're not missing that fact, and it's obviously a key part, as you can tell from my and Andrew's presentation of how we're thinking.

Yes. The scalability of that platform just drives huge efficiency, making drugs against different diseases. So we're looking forward to getting there.

Great. Thank you. So Seamus, thanks for your question. And as you depart, before Dave comes up, I'd be remiss probably if I didn't just say thank you to the folks in the room, great dialogue today. And so it's rich content. But I also want to say thank you to the IR team, my IR team, a lot of work. But really a day like this, it's hundreds of folks that help pull this together across all of the leaders you've seen here and really telling the story of substrate of thousands of people across Team Lilly. My extended family has been touched by every one of the therapeutic areas, and it's probably not too dissimilar for years. So I'm really appreciative of all of our R&D leaders and really Lilly's relentless pursuit of breakthrough innovation. So thanks for joining us. And with that, I'll bring Dave up to close.

Great. Thank you, Kevin, and thank you all also for sticking with us, 7 hours is a big ask. It had been 3 years, and we felt the need to really just rebaseline where we are, and of course, draw attention to some assets that are earlier in development. But as you can tell from our team, we're super excited about. Overall, I think our feeling is -- it's amplified for me after watching today is what an amazing time to be at Eli Lilly. And since this is an investor conference, I can't resist what amazing time to own Eli Lilly. Of course, that credit goes to 34,000 people around the world, and we thank them for their incredible work that puts us in this position but none more so than the scientists you heard from today. So I want to especially call them out and thank them for not only preparing for today's meeting, but more importantly, producing the data and the insights to create these amazing medicines -- potential medicines that we're looking at. Our purpose for us, we think, has never been more relevant, which is to create life-changing medicines for some of the most serious conditions mankind faces, neurodegenerative conditions like Alzheimer's we just heard about, obesity, cancer, autoimmunity. And my personal feeling is we've never been closer to fulfilling that purpose in its most full way. As I spoke about at the beginning and in the Q&A, what sounds mundane in other industries, which is to create a continuous business that can grow through time and create value for its customers, be a great place to work and create value for shareholders, sounds audacious in the pharmaceutical sector because it's been so rare that a company could invent new products, manufacture them, scale them, deliver them to patients and then do it again and again, faster and faster, so you can escape your own generic cycle. But that is what we challenge ourselves to do at Lilly. That is the flywheel we seek to spin. And I think today, I hope you have an insight that we're not only doing that again here with these next 5 launches, but hope to do that again and again over the course of time. We're challenged to reach for that goal, but we think we can achieve it if we're at our best. I want to thank all of our shareholders for your trust in us and your capital to allow us to innovate and take risk. Without you, that could not happen on the behalf of patients. And we feel like we've done well for our shareholders, but we aim to do even better. Thanks for being with us today. Enjoy the holidays. I would have said see you at JPMorgan, but I guess it got canceled during today's event. Sorry, Chris Schott, for that. But I'll see you at some future conference to be named later. Take care, and have a great holiday.