On December 15, 2021 Eli Lilly and Company (NYSE: LLY) reported that extensive updates across its research and development (R&D) programs to highlight the company’s strong pipeline and potential for future growth (Press release, Eli Lilly, DEC 15, 2021, View Source [SID1234597192]). At an investment community meeting today, the company is sharing key information across its four therapeutic areas – including pipeline updates and future R&D investments – along with 2022 financial guidance and updated 2021 guidance.
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The company is on track to meet its goal of launching 20 new medicines over the 10-year period from 2014 to 2023. Over the last eight years, Lilly has delivered 16 new medicines and plans to launch five more medicines over the next two years, if approved, including tirzepatide, donanemab, pirtobrutinib, lebrikizumab and mirikizumab. These potential launches contribute to the company’s expectations for top-tier, volume-driven growth over the next decade, as the number of people that can benefit from Lilly’s innovative new medicines continues to increase.
"Lilly’s accomplishments in recent years are impressive, but it’s where we are going that most excites us. We’ve driven results over the last four years, successfully launched new medicines, and invested in high-impact R&D that has set us up for a truly exciting new era," said David A. Ricks, Lilly’s chairman and CEO. "Bringing new practice-changing medicines to patients is our top priority. We have a remarkable opportunity ahead of us to make life better for millions more people around the world."
The company is providing details on its diabetes and obesity, immunology, oncology and neuroscience R&D programs, sharing a number of new pipeline updates and previously undisclosed data. Lilly also will provide insight into its ongoing R&D investments that reflect the company’s conviction around key emerging trends in biopharma innovation.
"I’m very optimistic about the future for Lilly and the patients we serve. In addition to our promising late-stage pipeline, our labs are making new discoveries to bring life-changing medicines to patients who need them," said Daniel Skovronsky, M.D., Ph.D., Lilly’s chief scientific and medical officer, and president of Lilly Research Laboratories. "Lilly has significantly improved our development speed and clinical success rates and will continue to apply this focus as we work to maximize the impact of our existing medicines and create new ones.
"Genetic medicines, including modalities such as RNA therapeutics and viral-delivered gene therapies, are poised to contribute to the next generation of breakthrough treatments for a wide array of diseases," Skovronsky continued. "Today, Lilly will share more about our new capabilities and increased investment in this space, along with new preclinical and clinical data for genetic medicines in our neuroscience and cardiovascular disease research portfolios."
Diabetes and Obesity
Building on its historic foundation of helping people with diabetes, Lilly is expanding its strategic focus to breakthrough medications that disrupt the disease cascade caused by obesity and type 2 diabetes progression, highlighted by tirzepatide and supported by several early-phase incretin assets.
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The U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) have accepted Lilly’s New Drug Application and Marketing Authorization Application, respectively, for tirzepatide for the treatment of adults with type 2 diabetes. Lilly also submitted tirzepatide to the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan and in six additional markets. Lilly plans to initiate additional tirzepatide studies that include phase 3 studies in obesity related outcomes and obstructive sleep apnea, as well as a phase 2 mechanism of action study in kidney disease.
Lilly is disclosing new data from several assets in its robust early-phase incretin platform focused on obesity. The company’s incretin platform is focused on delivering therapeutics with bariatric surgery-like weight loss with related metabolic benefits and developing convenient, easy-to-use oral incretins.
As it has for nearly 100 years, Lilly continues to work to transform diabetes care through insulin innovation. Lilly’s novel weekly insulin is on track to progress to phase 3 studies in 2022, and the company is advancing a new generation of insulin medicines with its pre-clinical efforts in glucose-sensing insulin.
Immunology
Over the last decade, Lilly has established a presence in immunology, with Taltz and Olumiant addressing patient needs across dermatology and rheumatology. Positive late-stage readouts in 2021 for mirikizumab in moderate-to-severely active ulcerative colitis and lebrikizumab in moderate-to-severe atopic dermatitis provide the potential to help even more patients suffering from disease.
In addition, Lilly has built a deep early-and mid-stage portfolio of novel immunology opportunities that represent potential first-in-class or best-in-class assets from both internal and external innovation. Lilly is sharing new data from several of these molecules, including proof of concept phase 1b atopic dermatitis data for its IL-2 conjugate, in collaboration with Nektar Therapeutics, and is announcing plans to move into additional phase 2 studies.
Oncology
Propelled by the acquisition of Loxo Oncology, Lilly has established a renewed presence in oncology, with a portfolio focused on high-conviction assets. The company’s oncology portfolio, including Verzenio, Retevmo and pirtobrutinib, has the potential to deliver meaningful growth over the course of the decade.
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Lilly initiated a rolling submission to the FDA for pirtobrutinib, seeking accelerated approval in mantle cell lymphoma, with expectations to complete the submission in 2022 and regulatory action anticipated in early 2023. Lilly continues to invest to maximize the potential of Verzenio for patients, and intends to initiate a phase 3 study to evaluate earlier treatment of prostate cancer in mid-2022.
The company also is providing an overview of several promising early-phase and pre-clinical programs that are expected to deliver new data and potential new trials starting in 2022.
Neuroscience
Lilly is an established leader in neuroscience with a more than 30-year commitment to advancing Alzheimer’s disease research. The company is focused on its work to slow, then halt and eventually prevent age-related neurodegeneration in the decades ahead.
Lilly is providing new biomarker data from donanemab from the phase 2 TRAILBLAZER-ALZ study. Lilly initiated a rolling submission for donanemab to the FDA for accelerated approval in early Alzheimer’s disease, which it expects to complete in the coming months, likely by the end of the first quarter.
The company is also sharing phase 1 data from its next-generation amyloid-lowering antibody, N3PG-IV, noting plans to move this antibody into pivotal trials in 2022. The company has a number of early phase and pre-clinical programs for Alzheimer’s and other neurodegenerative diseases with novel targets and new modalities and is highlighting the significant growth in its early pain pipeline.
Strong Financial Outlook Fueled by New Innovative Medicines
"We believe the continued uptake of our key growth products – which we expect will account for more than two-thirds of core business revenue in 2022 – coupled with our anticipated upcoming launches will allow Lilly to deliver top-tier, volume-driven revenue growth through at least 2030," said Anat Ashkenazi, Lilly senior vice president and chief financial officer. "Lilly remains committed to prioritizing long-term growth, as we maintain significant investment in our exciting pipeline, fund new launches to ensure we can reach more patients in the coming years and continue to expand operating margin."
Updated 2021 Financial Guidance
The company has updated certain elements of its 2021 financial guidance on both a reported and non-GAAP basis. Earnings per share for 2021 are now expected to be in the range of $6.18 to $6.23 on a reported basis and $8.15 to $8.20 on a non-GAAP basis. The company’s 2021 financial guidance reflects adjustments shown in the reconciliation table below.
Numbers may not add due to rounding
(a)includes costs related to business development transactions with Foghorn Therapeutics Inc., Rigel Pharmaceuticals, Inc., Precision Biosciences, Inc., Protomer Technologies Inc., Kumquat Biosciences Inc., Merus N.V., Lycia Therapeutics Inc., Regor Therapeutics Group, ProQR Therapeutics N.V., MiNA Therapeutics Limited, and Asahi Kasei Pharma Corporation.
(b)updated to include additional asset impairment primarily related to a contract-based intangible asset recognized as a result of our acquisition of Loxo Oncology. This impairment is a result of a decision by Bayer to discontinue the development of a phase 1 molecule related to our contact-based intangible asset.
Revenue for 2021 is now expected to be in the range of $28.0 billion to $28.3 billion, reflecting additional revenue from COVID-19 antibodies associated with the recent purchase agreement with the U.S. Government and the channel impact of the updated 2022 NRDL formulary in China. Estimated revenue from COVID-19 antibodies is now expected to be approximately $2.1 billion.
Gross margin as a percent of revenue is still expected to be approximately 75 percent on a reported basis and is now expected to be approximately 78 percent on a non-GAAP basis.
Marketing, selling and administrative expenses are still expected to be in the range of $6.2 billion to $6.4 billion. Research and development expenses are still expected to be in the range of $6.9 billion to $7.1 billion.
Operating margin, defined as operating income as a percent of revenue, is now expected to be approximately 23 percent on a reported basis and still expected to be approximately 30 percent on a non-GAAP basis.
Other income (expense) is still expected to be expense in the range of $250 million to $150 million on a reported basis and is still expected to be expense in the range of $100 million to $0 on a non-GAAP basis. The estimate on a reported basis does not reflect fourth quarter mark-to-market activity for equity investments.
The 2021 effective tax rate is still expected to be approximately 11 percent on a reported basis and approximately 13 percent on a non-GAAP basis.
The following table summarizes the company’s updated 2021 financial guidance.
2022 Financial Guidance
Earnings per share for 2022 are expected to be in the range of $8.00 to $8.15 on a reported basis and $8.50 to $8.65 on a non-GAAP basis.
The company anticipates 2022 revenue between $27.8 billion and $28.3 billion. Revenue growth is expected to be driven by volume growth from key products including Trulicity, Verzenio, Taltz, Jardiance, Cyramza, Emgality, Tyvyt, Retevmo and Olumiant. This growth is expected to be partially offset by lower revenue for Alimta due to its loss of patent exclusivity, and significantly lower anticipated COVID-19 antibody revenue.
Gross margin as a percent of revenue is expected to be approximately 78 percent on a reported basis and 80 percent on a non-GAAP basis.
Marketing, selling and administrative expenses are expected to be in the range of $6.4 billion to $6.6 billion. Research and development expenses are expected to be in the range of $7.0 billion to $7.2 billion.
Operating margin for 2022 is expected to be approximately 30 percent on a reported basis and approximately 32 percent on a non-GAAP basis.
Other income (expense) is expected to be expense between $100 million and $0 on both a reported basis and on a non-GAAP basis.
The 2022 effective tax rate is expected to be approximately 13 to 14 percent on both a reported basis and non-GAAP basis, assuming no significant changes to U.S. tax policy.
Webcast of Conference Call and Investor Materials
As previously announced, investors and the general public can access a live webcast of the Investment Community Meeting, including a presentation of the company’s 2022 and updated 2021 guidance, through a link on Lilly’s website at www.lilly.com. The conference call will begin at 9 a.m. Eastern time today and will be available for replay via the website.