On April 30, 2024 Eli Lilly and Company (NYSE: LLY) reported its financial results for the first quarter of 2024 (Press release, Eli Lilly, APR 30, 2024, View Source [SID1234642459]).
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"Lilly’s first quarter performance reflects solid year-over-year revenue growth with strong sales of Mounjaro and Zepbound," said David A. Ricks, Lilly’s chair and CEO. "Our progress in addressing some of the world’s most significant health care challenges has resulted in increased demand for our medicines. As we continue to make pipeline investments that position us for future growth, we are rapidly expanding manufacturing capacity to make our incretin medicines available to more patients."
Lilly shared numerous updates recently on key regulatory, clinical, business development and other events, including:
The announcement of positive topline results of the SURMOUNT-OSA Phase 3 clinical trials that showed tirzepatide significantly reduced the apnea-hypopnea index compared to placebo in adults with moderate-to-severe obstructive sleep apnea and obesity;
Submission of mirikizumab for the treatment of adults with moderately to severely active Crohn’s disease in the U.S. and EU;
Resubmission of lebrikizumab for adult and adolescent patients with moderate-to-severe atopic dermatitis in the U.S. with expected regulatory action in the second half of 2024;
Initiation of lepodisiran in a Phase 3 study evaluating the efficacy in reducing cardiovascular risk in participants with high lipoprotein(a) who have cardiovascular disease or are at risk of a heart attack or stroke;
The U.S. Food and Drug Administration’s plan to convene an Advisory Committee meeting to discuss the Phase 3 TRAILBLAZER-ALZ 2 trial, which evaluated the efficacy and safety of donanemab in early symptomatic Alzheimer’s disease;
The announcement that the multi-dose Kwikpen delivery device for Mounjaro was approved in the EU, adding to the UK approval earlier in 2024, for both the type 2 diabetes and chronic weight management indications;
Results from a Phase 3 study of lebrikizumab, specifically designed for people with skin of color and moderate-to-severe atopic dermatitis, showed improvement in skin clearance and itch relief;
The announcement that the EMPACT-MI Phase 3 clinical trial showed a 10% relative risk reduction in time to first hospitalization due to heart failure or all-cause mortality for Jardiance versus placebo, which did not reach statistical significance;
The decision to terminate the Phase 3 CYCLONE-3 trial evaluating Verzenio in metastatic hormone-sensitive prostate cancer for futility following an interim analysis;
The announcement of an agreement for Lilly to acquire a new injectable medicine manufacturing facility from Nexus Pharmaceuticals, LLC, which, upon completion of the transaction, will expand Lilly’s growing U.S. capacity to produce medicines; and
The company broke ground at the previously announced $2.5 billion parenteral manufacturing site in Germany.
For information on important public announcements, visit the news section of Lilly’s website.
Financial Results
$ in millions, except
per share data
First Quarter
2024
2023
% Change
Revenue
$ 8,768.0
$ 6,960.0
26 %
Net income – Reported
2,242.9
1,344.9
67 %
Earnings per share – Reported
2.48
1.49
66 %
Net income – Non-GAAP
2,335.3
1,463.9
60 %
Earnings per share – Non-GAAP
2.58
1.62
59 %
A discussion of the non-GAAP financial measures is included below under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)."
First-Quarter Reported Results
In Q1 2024, worldwide revenue was $8.77 billion, an increase of 26% compared with Q1 2023, driven by increases of 16% in volume and 10% due to higher realized prices. The volume increase was primarily driven by growth from Mounjaro, Zepbound, Verzenio and Jardiance, partially offset by declines in Trulicity. Strong demand for the company’s incretin medicines outpaced supply increases. The company continues to expand manufacturing capacity, with the most significant production increases in 2024 expected in the second half of the year. Higher realized prices were driven by Mounjaro in the U.S. as Mounjaro saw net price positively impacted by savings card dynamics compared with Q1 2023. In the second half of 2024, these savings card dynamics should cease to have a notable effect on realized price comparisons to base periods, as the $25 non-covered benefit expired June 30, 2023. New Products(i) revenue grew by $1.79 billion to $2.39 billion in Q1 2024, led by Mounjaro and Zepbound. Growth Products(ii) revenue increased 2% to $4.66 billion in Q1 2024 as growth led by Verzenio, Jardiance, Taltz and Emgality was largely offset by lower Trulicity sales.
(i) Lilly defines New Products as select products launched since 2022, which currently consist of Ebglyss, Jaypirca, Mounjaro, Omvoh and Zepbound.
(ii) Lilly defines Growth Products as select products launched prior to 2022, which currently consist of Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio
Revenue in the U.S. increased 28% to $5.69 billion, driven by a 16% increase in realized prices and a 12% increase in volume. The higher realized prices in the U.S. were driven by Mounjaro. The increase in U.S. volume was driven by Zepbound, Mounjaro and Verzenio, partially offset by a decrease in Trulicity. Exceptionally strong demand for the company’s incretin medicines led to wholesaler backorders for these products at quarter end. The company expects tight supply to continue as growing production volume is outpaced by demand. In the short to mid-term, Lilly expects sales growth for incretin medicines to primarily be a function of the quantity the company can produce and ship.
Revenue outside the U.S. increased 22% to $3.07 billion, driven by a 23% increase in volume, partially offset by a 1% decrease due to lower realized prices. The increase in volume outside the U.S. was primarily driven by Mounjaro, Verzenio, Jardiance and Tyvyt.
Gross margin increased 33% to $7.09 billion in Q1 2024. Gross margin as a percent of revenue was 80.9%, an increase of 4.3 percentage points. The increase in gross margin percent was primarily driven by higher realized prices, favorable product mix, and, to a lesser extent, improvements in the cost of production.
In Q1 2024, research and development expenses increased 27% to $2.52 billion, or 29% of revenue, driven by higher development expenses for late-stage assets and additional investments in early-stage research, as well as a charge of approximately $75 million in Q1 2024 associated with the termination of the Verzenio prostate cancer program.
Marketing, selling and administrative expenses increased 12% to $1.95 billion in Q1 2024, primarily driven by promotional efforts associated with ongoing and future launches, as well as increased compensation and benefit costs.
In Q1 2024, the company recognized acquired in-process research and development (IPR&D) charges of $110.5 million compared with $105.0 million in Q1 2023.
The effective tax rate was 11.6% in Q1 2024 compared with 12.1% in Q1 2023, driven by a larger net discrete tax benefit reflected in Q1 2024 compared with the same period in 2023.
In Q1 2024, net income and earnings per share (EPS) were $2.24 billion and $2.48, respectively, compared with net income of $1.34 billion and EPS of $1.49 in Q1 2023. EPS in both periods included $0.10 of acquired IPR&D charges.
First-Quarter Non-GAAP Measures
On a non-GAAP basis, Q1 2024 gross margin increased 33% to $7.23 billion. Gross margin as a percent of revenue was 82.5%, an increase of 4.1 percentage points. The increase in gross margin percent was primarily driven by higher realized prices, favorable product mix, and, to a lesser extent, improvements in the cost of production.
The effective tax rate on a non-GAAP basis was 11.9% in Q1 2024 compared with 12.8% in Q1 2023, driven by a larger net discrete tax benefit reflected in Q1 2024 compared with the same period in 2023.
On a non-GAAP basis, Q1 2024 net income and EPS were $2.34 billion and $2.58, respectively, compared with net income of $1.46 billion and EPS of $1.62 in Q1 2023. Non-GAAP EPS in both periods included $0.10 of acquired IPR&D charges.
For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release.
First Quarter
2024
2023
% Change
Earnings per share (reported)
$ 2.48
$ 1.49
66 %
Amortization of intangible assets
.12
.11
Net (gains) losses on investments in equity
securities
(.02)
.02
Earnings per share (non-GAAP)
$ 2.58
$ 1.62
59 %
Numbers may not add due to rounding.
Acquired IPR&D
.10
.10
0 %
Selected Revenue Highlights
(Dollars in millions)
First Quarter
Selected Products
2024
2023
% Change
Mounjaro
$ 1,806.5
$ 568.5
NM
Trulicity
1,456.3
1,977.1
(26) %
Verzenio
1,050.3
750.9
40 %
Jardiance(a)
686.5
577.5
19 %
Taltz
604.1
527.0
15 %
Humalog(b)
538.7
460.9
17 %
Zepbound
517.4
—
NM
Total Revenue
8,768.0
6,960.0
26 %
(a) Jardiance includes Glyxambi, Synjardy and Trijardy XR
(b) Humalog includes Insulin Lispro
NM – not meaningful
Mounjaro
For Q1 2024, worldwide Mounjaro revenue was $1.81 billion compared with $568.5 million in Q1 2023. U.S. revenue was $1.52 billion compared with $536.4 million in Q1 2023, reflecting higher realized prices due to decreased utilization of savings card programs as access continued to expand, as well as increased demand. In the second half of 2024, these savings card dynamics should cease to have a notable effect on realized price comparisons to base periods, as the $25 non-covered benefit expired June 30, 2023. Revenue outside the U.S. increased to $286.2 million compared with $32.0 million in Q1 2023, driven by volume. Worldwide volume growth was linked to available supply.
Trulicity
For Q1 2024, worldwide Trulicity revenue decreased 26% compared with Q1 2023 to $1.46 billion. U.S. revenue decreased 30% to $1.08 billion, driven by decreased sales volume primarily due to supply constraints and competitive dynamics. Revenue outside the U.S. decreased 13% to $374.4 million, driven by decreased volume and, to a lesser extent, lower realized prices. In addition to the factors affecting U.S. volume, international markets continue to be impacted by actions Lilly has taken to manage demand amid tight supply, including measures to minimize impact to existing patients.
Verzenio
For Q1 2024, worldwide Verzenio revenue increased 40% compared with Q1 2023 to $1.05 billion. U.S. revenue was $638.2 million, an increase of 38%, primarily driven by increased demand. Revenue outside the U.S. was $412.1 million, an increase of 42%, primarily driven by increased demand.
Jardiance
For Q1 2024, the company’s worldwide Jardiance revenue increased 19% compared with Q1 2023 to $686.5 million. U.S. revenue was $368.2 million, an increase of 12%, driven by increased demand. Revenue outside the U.S. was $318.3 million, an increase of 28%, driven by increased volume.
Jardiance is part of the company’s alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance.
Taltz
For Q1 2024, worldwide Taltz revenue increased 15% compared with Q1 2023 to $604.1 million. U.S. revenue increased 11% to $347.1 million, driven by increased demand and higher realized prices. Revenue outside the U.S. increased 20% to $257.0 million, driven by increased demand.
Humalog
For Q1 2024, worldwide Humalog revenue increased 17% compared with Q1 2023 to $538.7 million. U.S. revenue was $338.3 million, an increase of 25%, driven by higher realized prices primarily due to changes to estimates for rebates and discounts, partially offset by decreased demand. Revenue outside the U.S. was $200.4 million, an increase of 6%, driven by increased volume.
Zepbound
For Q1 2024, U.S. Zepbound revenue was $517.4 million. Similar to other Lilly incretin medicines, volume growth was linked to available supply. Zepbound launched in the U.S. for the treatment of adult patients with obesity or overweight with weight-related comorbidities in November 2023.
2024 Financial Guidance
2024 full-year revenue guidance increased by $2.0 billion to the range of $42.4 billion to $43.6 billion, primarily driven by the strong performance of Mounjaro and Zepbound and greater visibility into the company’s production expansion for the remainder of the year.
The ratio of (Gross Margin – OPEX) / Revenue, where OPEX is defined as the sum of research and development expenses and marketing, selling and administrative expenses, is now expected to be in the range of 32% to 34% on a reported basis and 33% to 35% on a non-GAAP basis. Both ratios reflect the $2.0 billion increase in revenue guidance.
Other income (expense) guidance remains unchanged at a range of ($500) to ($400) million of expense on both a reported and non-GAAP basis. The reported guidance reflects net gains in Q1 2024 on investments in equity securities.
Tax rate guidance also remains unchanged at approximately 14% on both a reported and non-GAAP basis.
Based on these changes, EPS guidance increased to the range of $13.05 to $13.55 on a reported basis and $13.50 to $14.00 on a non-GAAP basis. The company’s 2024 financial guidance reflects adjustments shown in the reconciliation table below.
2024
Guidance
Earnings per share (reported)
$13.05 to $13.55
Amortization of intangible assets
.48
Net gains on investments in equity securities
(.02)
Earnings per share (non-GAAP)
$13.50 to $14.00
Numbers may not add due to rounding
The following table summarizes the company’s 2024 financial guidance:
2024 Guidance(1)
Prior
Updated(3)
Revenue
$40.4 to $41.6 billion
$42.4 to $43.6 billion
(Gross Margin – OPEX(2)) / Revenue:
(reported)
30% to 32%
32% to 34%
(non-GAAP)
31% to 33%
33% to 35%
Other Income/(Expense)
($500) to ($400) million
Unchanged
Tax Rate
Approx. 14%
Unchanged
Earnings per Share (reported)
$11.80 to $12.30
$13.05 to $13.55
Earnings per Share (non-GAAP)
$12.20 to $12.70
$13.50 to $14.00
(1) Non-GAAP guidance reflects adjustments presented in the earnings per share reconciliation table above.
(2) OPEX is defined as the sum of research and development expenses and marketing, selling and administrative expenses.
(3) Guidance does not include Acquired IPR&D either incurred, or expected to be incurred, after Q1 2024.
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the Q1 2024 financial results conference call through a link on Lilly’s website at investor.lilly.com/webcasts-and-presentations. The conference call will begin at 10 a.m. Eastern time today and will be available for replay via the website.