LLY Earnings Call Transcriptbeta

Operator : Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q1 2026 Earnings Conference Call. I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Mike Czapar : Good morning. Thank you for joining us for Eli Lilly and Company's Q1 2026 Earnings Call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO; Lucas Montarce, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific and Product Officer; Adrienne Brown, President of Lilly Immunology, Dr. Carole Ho, President of Lilly Neuroscience; Ilya Yuffa, President of Lilly U.S.A. and Global Customer capabilities; Jake Van Naarden, President of Lilly Oncology and Head of Business Development; Patrik Jonsson, President of Lilly International; and Ken Custer, President of Lilly Cardiometabolic Health. We're also joined by the Investor Relations team, Jim Greffet, Susan Hedglin, Marc Kemen, and Wes Taul. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to various factors, including those listed on Slide 4. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community, and it's not intended to be promotional or otherwise influencing prescribing decisions. As we transition to our prepared remarks, please note, our commentary will focus on non-GAAP financial measures. Now I'll turn the call over to Dave.

David Ricks : Thanks, Mike. 2026 is off to a strong start. During the quarter, we delivered robust revenue growth, advanced our pipeline across all 4 therapeutic areas, announced multiple business development transactions, and invested to drive our future growth. Earlier this month, we achieved an important milestone as orforglipron was approved by the U.S. FDA under the trade name Foundayo. Foundayo has been proven highly effective for weight management, offering the benefits of GLP-1 therapy in a pill form and can be taken at any time of day without food or water restrictions. Foundayo is a new molecule, a new modality for agonizing GLP-1, and it's a new brand. This is the first time a new incretin medicine has been launched with obesity as its indication first. While the Foundayo launch has just begun, we're encouraged by momentum against our 2026 launch priorities. These are: broad digital and traditional distribution availability; high levels of awareness with consumers of this new option for weight management; educating a broad group of HCPs, helping them start new patients and get comfortable with a new GLP-1 molecule; and of course, building broad access in commercial, Medicare via the Bridge program and later Medicaid access for patients. And while the U.S. approval is an important first step, there are over 1 billion people around the world with obesity and related conditions that can be helped by taking an incretin like Foundayo. Recall that a key advantage of Foundayo is scalability and that oral GLP-1s for obesity have not yet been introduced outside the U.S. Regulatory reviews are ongoing in over 40 countries for obesity and type 2 diabetes, and we plan to submit Foundayo in the U.S. for type 2 diabetes later this quarter. Included in the U.S. type 2 diabetes submission will be the results from the ACHIEVE-4 trial, which we shared a few weeks ago. In the seventh positive Phase III registration trial, Foundayo showed cardiovascular safety and a lower risk of all-cause death in adults with type 2 diabetes and obesity without increased cardiovascular risk. In addition to the obesity and diabetes programs, we're actively studying Foundayo in 6 Phase III programs in other diseases, and we will continue to generate new data for this important new medicine in the quarters and years to come. On Slide 5, we list the Q1 financial metrics and the highlights of our progress related to the strategic deliverables of Lilly. Revenue grew 56% compared to Q1 2025. Our key products currently defined as Ebglyss, Inluriyo, Jaypirca, Kisunla, Mounjaro, Omvoh, and Zepbound grew by more than $7 billion. Within key products, our Immunology, Oncology and Neuroscience medicines collectively grew by 160% compared to the same quarter last year as we continue to invest to drive growth across all of our therapeutic areas. In addition to the progress on Foundayo, we achieved several key pipeline milestones since our last earnings call, including positive Phase III data for Jaypirca in combination with a time-limited regimen in adults with previously treated CLL, positive Phase III data for Ebglyss in pediatric atopic dermatitis, positive Phase III data for Taltz plus Zepbound in adults with psoriasis and obesity, positive Phase III data for retatrutide in adults with type 2 diabetes, and the initiation of a new Phase III program for eloralintide, sofetabart mipitecan, and brenipatide. Consistent with our capital allocation strategy to expand investments in business development, we announced agreements to acquire multiple companies with clinical stage programs: Orna Therapeutics, a company with an in vivo CAR-T pipeline to treat autoimmune diseases; Centessa Pharmaceuticals, a company developing a new class of medicines for the treatment of excessive daytime sleepiness and other neurologic conditions; Kelonia Therapeutics, a company developing an in vivo platform to treat multiple myeloma and other cancers; and Ajax Therapeutics, a company developing next-generation JAK inhibitors for people with blood cancers. We expect to remain active in business development to complement our internal portfolio while maintaining the discipline to create shareholder value. We also distributed $1.5 billion in dividends in the first quarter and executed $2.4 billion in share repurchases. Two important updates occurred this quarter to expand access to obesity medications. First, we launched Lilly Employer Connect. This is a platform introduced as a new way for employers to offer obesity management medicines to their employees. While it's still very early for this innovative model, we're encouraged by the level of employer interest. Second, CMS announced the extension of the Medicare GLP-1 Bridge program, which provides access to obesity medicines to people with Medicare. The program will begin no later than July 1, 2026, and run through December 2027. This program has the potential to help improve the health of millions of seniors while capping their out-of-pocket costs at $50 per month. Now I'll turn the call over to Lucas to review our Q1 financial results.

Lucas Montarce : Thanks, Dave. As shown on Slide 6, Q1 was another strong quarter of financial performance. Revenue grew 56% compared to Q1 2025, driven by Zepbound and Mounjaro, and solid momentum across all therapeutic areas and geographies. Gross margin as a percentage of revenue was 82.6% in Q1, a decrease of approximately 1 percentage point versus the same quarter last year. The change was driven primarily by low [ ICE ] prices. Marketing, selling and administrative expenses increased 19% as we continue to invest in promotional activities to support ongoing and planned new product launches. R&D expenses increased 28%, driven by continued investments in our pipeline, including 42 active Phase III programs. Our non-GAAP performance margin was 50%, an increase of approximately 7 percentage points from Q1 2025, driven by revenue growth. Non-GAAP earnings per share was $8.55, including acquired R&D charges of $0.52. This compares to non-GAAP earnings per share of $3.34 in Q1 2025, inclusive of $1.72 of acquired IPR&D charges. On Slide 7, we quantified the effect of price, rate, and volume on revenue growth. U.S. revenue increased 43% in Q1, primarily driven by volume growth from Zepbound and Mounjaro as well as contributions from our Immunology, Oncology, and Neuroscience portfolio. U.S. price declined by 7%, including the impact of the previously announced direct-to-patient prices for Zepbound. U.S. price was positively impacted by a onetime adjustment to estimates for rebates and discounts, primarily impacting Zepbound and Mounjaro. Excluding this impact, U.S. price will have declined 10%. Europe revenue grew 37% in constant currency, driven by sustained strong volume growth of Mounjaro. In Japan, revenue grew 42% in constant currency, driven by Mounjaro for type 2 diabetes. In China, revenue growth accelerated with the inclusion of Mounjaro on the national reimbursement drug list for type 2 diabetes. And in rest of the world, revenue more than doubled in constant currency as Mounjaro achieved rapid share gains in Latin America and Asia. On Slide 8, we provide an update on the performance of our key products. Within Immunology, we continue to increase our presence in atopic dermatitis with Ebglyss. U.S. new patient starts increased by 90% compared to Q1 2025, and we steadily gained share within the specialty dermatology market. We continue to focus on patient activation and expanded HCP engagement to drive additional gains in share of market. In Oncology, Jaypirca posted a strong quarter of growth, gathering additional momentum in the U.S. from the expanded post-BTK indication in CLL. Worldwide sales grew 79% compared to Q1 2025, and we continue to hear positive feedback from physicians globally. We believe Jaypirca has the potential to be a foundational therapy across multiple settings and regimens within CLL. Although still early, Inluriyo performance in the U.S. was encouraging during its first full quarter launch, achieving over 35% share of oral SERD new patient starts in metastatic breast cancer in Q1. For the SERD market growth also increased, largely driven by the launch of Inluriyo. In Neuroscience, Kisunla continues to be the U.S. leader in amyloid targeting therapies. The market continues to steadily increase as diagnostic capabilities for Alzheimer's disease expand. We expect European launches to begin contributing to growth throughout 2026. Finally, in Cardiometabolic Health, Mounjaro and Zepbound global revenue was $12.8 billion combined, contributing $6.7 billion of growth compared to Q1 2025. As seen on Slide 9, the U.S. incretin analog market continued robust growth in Q1. The recent approval of oral GLP-1s expanded the market, enabling more people to benefit from the GLP-1s. Within the U.S. incretin analog obesity market, total prescriptions grew by over 80% in Q1, and Zepbound prescriptions grew at even faster rate. Zepbound performance was driven by continued strong uptake in self-pay channel as well as steady growth in the commercial segment. However, the loss of Medicaid access in certain states had a negative impact on Q1 prescription growth in the high single digits. We recently launched Zepbound in the U.S. in a new KwikPen device that includes a full month of supply of medicine in one pen. Self-pay continues to be an important segment for Zepbound and accounted for approximately 45% of total Zepbound prescriptions in Q1, and 55% of new prescriptions. In the U.S. type 2 diabetes incretin analog market, total prescriptions grew 11%, and Mounjaro gained another 3 percentage points of market share compared to the end of 2025. Outside the U.S., Mounjaro continues steady progress within the incretin analog market. Slide 10 shows aggregate trends in the international incretin analog market. The total international market has increased by 77% since the same period last year as measured by IQVIA gross sales. In Q4 last year, Lilly became the market leader outside the U.S. and the strong growth of Mounjaro in Brazil, U.K., Korea, and China, among others, has resulted in additional share of market gains in Q1 2026. We expect continued strong performance outside the U.S., but with share of market leadership already established, increased patient activations will be key to drive sustainable growth. Lastly, on Slide 11 is an update of the Foundayo launch. Early feedback from payers, physicians, and patients is encouraging. Foundayo was broadly available in pharmacies on April 9 and is available on more than 12 major telehealth platforms. Discussions with payers have been productive and commercial access has been confirmed at 2 of the 3 largest U.S. pharmacy benefit managers, effectively mid-May. In addition, the GLP-1 Bridge program will start no later than July 1, which brings new access to anti-obesity medicines for people with insurance through Medicare. While HCP digital awareness campaigns went live shortly after approval, we began in-person promotion to HCPs on April 17. We expect to drive brand awareness and differentiation through full-scale consumer promotion, including direct-to-consumer TV advertising beginning in Q3. We are focused on commercial execution to drive long-term growth. On Slide 12, we provide an update on capital allocation. Moving to Slide 13, we share updated expectations for 2026 financial guidance. We have increased the top and the bottom end of the revenue range by $2 billion and now expect full year revenue to be between $82 billion and $85 billion. This reflects the strong underlying performance of Mounjaro and Zepbound in Q1. The midpoint of the new revenue range represents 28% growth compared to 2025. We still expect price to be a headwind in the low to mid-teens for the full year. We expect our non-GAAP performance margin to be between 47% and 48.5%, driven by higher revenue. Our tax rate remains unchanged, and we now expect non-GAAP earnings per share of $35.50 to $37, an increase of $2 to the top and bottom of the non-GAAP earnings per share. We are pleased with our Q1 results and confident in our ability to deliver another year of industry-leading growth. Now I will turn the call over to Dan to highlight our progress on R&D.

Daniel Skovronsky : Thanks, Lucas. Since our last earnings call, we've been busy with portfolio progression and significant business development in each of our major therapeutic areas. I'll share updates by area, beginning with Cardiometabolic Health. In addition to the U.S. approval of Foundayo for obesity, we also announced positive top line results from ACHIEVE-4, the seventh and final Phase III trial in our global registration programs for type 2 diabetes and obesity. This trial evaluated the time to first occurrence of MACE events for Foundayo compared to insulin glargine in adults with type 2 diabetes and obesity who are overweight who are at increased cardiovascular risk. As shown on Slide 14, Foundayo met the primary endpoint of noninferiority with a 16% lower risk of MACE-4 events. And Foundayo met the secondary endpoint with a 23% lower risk of MACE-3 events. Additionally, in a preplanned analysis not controlled for multiplicity, the survival advantage for patients on Foundayo was 57% compared to insulin glargine. These data add a new dimension to Foundayo's well-characterized effects on reducing A1c and weight as demonstrated in multiple previous Phase III trials. Now with results from ACHIEVE -4, cardiovascular safety and a lower risk of all-cause death are added to the clinical profile. Adverse events were generally consistent with other incretin-based therapies and no hepatic safety signal was observed in ACHIEVE-4 nor across the 7 positive Foundayo Phase III registrational trials. ACHIEVE-4 is also the last trial required for the U.S. Type 2 Diabetes Core Registration Package. We plan to complete the U.S. submission for type 2 diabetes in late Q2 and anticipate regulatory action before the end of this year. Moving to retatrutide, our GIP, GLP-1, and glucagon triple agonist, we announced positive top line results from TRANSCEND-T2D-1, the first Phase III trial of retatrutide in people with type 2 diabetes. Given the potential counterregulatory impacts of glucagon activity on blood sugar control, we were excited to see profound improvements in hemoglobin A1c, as shown on Slide 15. Compared to placebo, retatrutide lowered A1c by an average of 1.7 to 2.0 percentage points across doses. Importantly, we saw that participants lost an average of 11.1 to 16.6 kilograms or 25 to 37 pounds. While cross-trial comparisons have limitations, these data suggest retatrutide can deliver glycemic control in line with the most widely prescribed incretin therapy for type 2 diabetes, tirzepatide, while delivering additional weight loss. This is critically important given the difficulties people living with type 2 diabetes face with trying to lose weight and a significant need for better weight loss medications for this population. With these data in hand, we're optimistic that retatrutide can meet this need. Adverse events seen with retatrutide were generally consistent with what had been observed in clinical trials of incretin-based therapies and discontinuation rates due to adverse events were 5% or less across all arms. We look forward to presenting detailed TRANSCEND-T2D-1 results at the American Diabetes Association Scientific Sessions in June. Together with the positive TRIUMPH-4 results in obesity and knee osteoarthritis, we are beginning to establish a favorable clinical profile for retatrutide, consistent with our goals for this molecule. The next retatrutide trial to read out is TRIUMPH-1, an 80-week study in people with obesity. We look forward to sharing top line results later this quarter. Also in Cardiometabolic Health, we initiated 3 additional Phase III programs for eloralintide. In addition to the ongoing Phase III obesity programs, we initiated Phase III programs in OA knee pain, obstructive sleep apnea, and as an add-on therapy for obesity. As a selective amylin receptor agonist, or SARA, eloralintide has shown a unique profile in Phase II trials with GLP-1-like weight loss and improved tolerability. We're eager to explore additional indications for this promising molecule in what we expect to be a very robust Phase III program across a number of potential indications. We also recently completed our acquisition of Ventyx Biosciences, which brings a pipeline of small molecule therapeutics, including NLRP3 inhibitors designed to treat inflammation across a broad range of diseases. Both NLRP3 inhibitors are now shown in the Lilly pipeline. We also announced a licensing agreement with CSL for clazakizumab for certain indications, and that molecule will be reflected in our pipeline chart once Lilly trials have begun. Moving to Immunology. We reported 2 important data sets for Ebglyss in atopic dermatitis. First, in the ADlong Phase IIIb open-label extension study, Ebglyss delivered durable disease control for up to 4 years with once-monthly maintenance dosing. Nearly all patients achieved meaningful skin improvements, 75% achieved near complete skin clearance, and 80% maintained their results without the need for topical corticosteroids. For people living with chronic relapsing diseases like atopic dermatitis, sustained control delivered with convenience is the ultimate goal. We're pleased that our once every 8 weeks maintenance regimen is currently under FDA review, and we expect regulatory action later this year. If approved, less frequent dosing may be a more convenient option to improve the patient experience and further differentiate Ebglyss from competitors. The second readout was the Phase III ADorable-1 trial. Ebglyss delivered positive outcomes for children as young as 6 months old with moderate to severe atopic dermatitis. As shown on Slide 16, 63% of children treated with Ebglyss achieved significant skin improvement as measured by EASI-75. In addition, 44% achieved clear or almost clear skin as measured by IGA 0/1 score. This makes Ebglyss the first and only selective IL-13 inhibitor with positive Phase III data in this age group, where there are fewer approved medicines than in adolescents and adults. We plan to submit these data to regulators later this year for potential label expansion. Also in Immunology, reported positive top line results from TOGETHER-PsO, a Phase IIIb study of ixekizumab plus tirzepatide in adults with psoriasis and obesity. In TOGETHER-PsO, 27% of participants on tirzepatide plus ixekizumab achieved the co-primary endpoint of total skin clearance and 10% or more weight loss compared to less than 6% of patients on ixekizumab alone. These results are the second successful trial, highlighting the benefits of treating psoriatic disease and obesity with concomitant ixekizumab and tirzepatide therapy. This result provides further evidence that incretins may have a broader role in treating immunological diseases. We have additional ongoing Phase IIIb combination trials in immunology studying mirikizumab plus tirzepatide in Crohn's disease and ulcerative colitis. We continue to assess other immunology settings where incretins may provide additional benefits. We also announced business development in immunology with our agreement to acquire Orna Therapeutics. Orna's in vivo CAR-T pipeline includes potential best-in-class programs to reset the immune system and address B-cell-driven autoimmune diseases. We look forward to exploring the full potential of Orna's platform together with the Orna team. Turning to Oncology. We announced positive top line results from a Phase III pirtobrutinib trial, BRUIN CLL-322. This ambitious study evaluated pirtobrutinib in addition to a fixed duration regimen of venetoclax and rituximab in patients with previously treated CLL or SLL. Pirtobrutinib significantly extended progression-free survival compared to the fixed duration regimen and was the first medicine to utilize and outperform a venetoclax containing control arm in a Phase III trial in the history of CLL drug development. As shown on Slide 17, pirtobrutinib has now been successful in 4 Phase III studies in CLL, each with compelling efficacy and tolerability. Pirtobrutinib has been studied across early and later line settings of CLL, demonstrated efficacy as a monotherapy and in combination, and shown efficacy head-to-head against chemo immunotherapy, a covalent BTK inhibitor and now a venetoclax-based regimen. The breadth of evidence suggests pirtobrutinib has potential to become a foundational therapy in CLL. Data from BRUIN CLL-313 and BRUIN CLL-314 are currently under review by regulators for potential label expansion into the first-line setting. We plan to submit the results of BRUIN CLL-322 to regulators later this year. Building on the breakthrough therapy designation received in January for platinum-resistant ovarian cancer, we initiated a second Phase III trial of sofetabart mipitecan, our folate receptor alpha antibody drug conjugate in platinum-sensitive ovarian cancer. We also announced the acquisition of Kelonia Therapeutics. Kelonia's lentiviral in vivo CAR-T platform has shown very promising early clinical results in people with multiple myeloma, and we look forward to rapidly advancing the lead program with Kelonia team as well as building future medicines using this technology platform. Earlier this week, we announced the acquisition of Ajax Therapeutics. The lead program, the Phase I JAK2 inhibitor for myelofibrosis and polycythemia vera builds on Lilly's established capabilities in blood cancer. Moving on to Neuroscience. We initiated a Phase III program for brenipatide, our GIP/GLP-1 dual agonist in major depressive disorder. This trial will assess if brenipatide can delay time to relapse with significant unmet need in psychiatry where rates remain high despite available treatments. We've also begun Phase II trials of brenipatide in opioid use disorder and schizophrenia and initiated Phase II trials for 2 pain assets, a NaV1.8 inhibitor and an AT2 receptor antagonist. Lastly, we announced an agreement to acquire Centessa Pharmaceuticals, which will expand our neuroscience portfolio and capabilities into treating sleep disorders. Centessa, a leader in orexin science is advancing a pipeline of orexin receptor 2 agonists that target the neurobiological system governing the sleep-wake cycle. The lead candidate, cleminorexton, has demonstrated a potential best-in-class profile. We look forward to welcoming the Centessa team to Lilly later this year and continuing the development of these important molecules. Slide 18 shows pipeline movements since our last earnings call and Slide 19 shows a full list of key events expected in 2026. I'll now turn the call back to Dave for closing.

David Ricks : Thanks, Dan. We're pleased with the progress to start this year. We executed well, both in driving business results and bringing new medicines to patients. We posted another quarter of impressive revenue and earnings growth, shared top line results from 5 positive Phase III trials, announced 4 acquisitions, initiated 6 new Phase III programs, and launched an important new Lilly medicine. Productive quarter and yet a lot more to come in 2026. Let me turn the call over now to Mike for the Q&A session.

Mike Czapar : Great. Thank you, Dave. Paul, please provide the instructions for how to queue and then we're ready for the first caller.

Operator : The first question today is coming from Geoff Meacham from Citi.

Geoffrey Meacham : Congrats on the quarter. Maybe this one is for Dave. Investors seem to be acutely focused on pricing in incretins with not a lot of emphasis on volume. I know you don't want to get too specific, but can you talk about at a high level, the margins under a wide range of price scenarios for Lilly? How do you see the investments you've already made in, say, manufacturing? And how does that add to the dynamic and what that means in terms of the competitive moat?

Mike Czapar : Thanks, Geoff. Dave, do you want to talk about pricing in incretins?

David Ricks : Sure. Thanks for the question, Geoff. Maybe a couple of things to point out now that we're 5 or 6 quarters deep into the sort of postshortage world, and we can really pursue expansion on volume in an aggressive way. I think you can see something is a little different about the obesity and weight loss category from what we think about in other pharmaceuticals where the barrier is typically more informational, not price sensitivity. But here, clearly, because of the out-of-pocket nature, 75% of ex U.S. business for Mounjaro is out of pocket. U.S. is a meaningful portion as well, that we see quite expansionary volume, perhaps nonlinear to price reductions. Of course, there's a floor on that, and we have sensitivity on our cost structures, et cetera. But pretty much every time we reduce pricing, we see a pretty large expansion. You also see built into this, the primary pricing effect in Q1 are actually negotiated outcomes with governments, both the MFN package we negotiated with the Trump administration, you cut out-of-pocket costs, you see strong growth like Lilly's Zepbound vials really had quite a strong quarter in Q1 with -- at slightly lower prices. And then in China, we negotiated for diabetes access at a meaningful price reduction, but you can see the volume far outstripping the price concession. So kind of a different dynamic. And I think if investors can think about this category, perhaps unlike other pharmaceutical categories in the past. In terms of margin sensitivity, it remains true that for this category for us, at least, the unit economics are really driven by fixed costs that are either sunk in the past or unmovable depending on the volume in the present. And as a result, both covering the amortized R&D costs as well as CapEx is a concern from an accounting perspective. But at the margin, we do have latitude. That said, we want to invest in future medicines. And I think that's probably the biggest, as we've said before, as we think about long-term operating margin for the company, the X factor. If we have good projects, we won't hesitate to invest in them, whether they be existing medicines. I think you see kind of a record load of Phase III NILEX at Lilly right now or for new medicines. And we've got a very full Phase II and Phase I pipeline that we are deploying capital against. So we've got a lot of latitude here, Geoff. And I think this market works a little differently, and we're all sort of just getting used to that. But I think good news for Lilly and our incumbent position.

Operator : The next question will be from Chris Schott from JPMorgan.

Christopher Schott : Congrats on the progress. I just wanted to dig a little bit more into international Mounjaro. And can you just share some of the learnings from -- I think it has been a much better expected launch than we all had anticipated here as we think about the ramp going forward and longer-term opportunity. And maybe as part of that, can you just -- should we expect any impact to the ramp from the entry of generic sema in select markets? Or is this such an early stage of penetration where that's less relevant?

Mike Czapar : Great. Thanks, Chris. For the question about international Mounjaro and the potential impact of generic sema, we'll go to Patrik.

Patrik Jonsson : Thank you very much, Chris. When we look at the first quarter, it's truly a strong growth of all our prioritized products across international, but of course, particularly Mounjaro. And now we have fully launched in more than 55 countries, and we have seen a very strong speed of uptake and also a rapid market share gain. Also in the market, we launched the second half of 2025, referring to Brazil and Korea, where we currently have an estimated market share of 60%. And of course, also the China type 2 NRDL reimbursement. When we look at the generics, we only have a few weeks of data from India, but it seems like it's really stimulating the growth in the overall obesity market, and that includes our product. And the Mounjaro has actually been holding market share quite nicely. When we look at the Mounjaro prescriptions, they are about 10% higher in recent weeks compared to the period prior to generics entered. So I think it just underscores that dual agonist trumps single agonist. Moving forward, I think we should expect a very strong continued year-on-year growth and some sequential growth. We saw in the slide earlier that we have a market share above 53% OUS, and that's an average. And in many international markets, we have a market share along the lines of what we see in the U.S. with Zepbound. And when you get to that level of share, incremental share gain is getting harder. And of course, we will focus our efforts on patient activation, driving increased penetration in the chronic weight management market and market growth. And also secondly, what we have seen during the second half of the year has been some seasonality, mainly driven by the holiday season in Europe, where patients tend to take a holiday -- drug holiday break or actually delay the initiation of the new therapy start. But overall, strong growth across regions. It seems like generic semaglutide is stimulating market growth, and we continue to do well. We expect a continued strong year-on-year growth, sequential growth driven by patient activation.

Operator : The next question will be from Seamus Fernandez from Guggenheim.

Seamus Fernandez : So really, we just wanted to get a better understanding of how the market as you see it is starting to segment and could segment going forward more as you look forward to the potential introduction of retatrutide amidst the Foundayo launch as well as then the follow-on to that being the eloralintide, where do you see the market really opening up with each of these potential assets reaching forward?

Mike Czapar : Great. Thanks, Seamus. For that question, we'll go to Ken to talk a bit about the broader Lilly portfolio and how we see the market segmenting.

Kenneth Custer : Yes, sure. Thanks for the question, Seamus. I think it's reasonable to expect in this large and growing market and opportunity in obesity that with the number of patients around the world living with overweight obesity numbering perhaps in the billions that many of them are going to want different types of medicines that are tailored to their individual needs and preferences. We're in early innings in that regard. We're now sort of bringing the third segment, I guess, and we've had GLP-1 single agonists and then dual agonists and now oral medicines, but we see many other, sort of, plausible opportunities to tailor medicines to different groups. As you noted, retatrutide is one of those ideas, which very obviously could play to individuals who are seeking greater weight loss, although I will say we see opportunities for retatrutide elsewhere and across the spectrum of obesity. Eloralintide, we can position that a few ways based on the Phase II data that we've seen. The first of which is that this could be a great medicine for patients seeking a non-GLP-1-based mechanism, perhaps due to tolerability they've experienced or tolerability that they're fearful of. It may also be a good drug that could be added on top of existing incretin therapies to provide incremental weight lowering. But there's many other ideas out there Lilly is investing in. That includes medicines that could be dosed even less frequently, perhaps those that dial in additional metabolic benefits and maybe some that are, sort of, ultra-long-acting using genetic medicine approaches. We see all of these as compelling ideas, and we also feel we're in a leading position in most, if not all of those spaces. In terms of how the market will ultimately shake out in terms of percentage of use across those different ideas, it's hard to prognosticate that. But many of these ideas are tied to common manufacturing platforms, and we're making the investments to support any of them should they prove to be really the most favorable option for managing overweight and obesity.

Operator : The next question will be from Alex Hammond from Wolfe Research.

Alexandria Hammond : On Medicare access, can you walk us through your strategy to activate these patients? And when do you kind of see this playing out in terms of either maybe a 4Q dynamic or more of a 2027 as these patients pull through? And I guess, as well, with the attractive price point, how do you think about persistence in this population?

Mike Czapar : Thanks, Alex, for the question about Medicare access and, sort of, staging over time. We'll go to Ilya.

Ilya Yuffa : Yes. Great. Thank you for the question. Obviously, we're excited about having Part D access starting to activate for obesity medicines starting in July. And the way that we think about it, there are millions of Part D beneficiaries that are eligible. And so the path to that with having a long trajectory with the Bridge program of not only starting in July through 2027 is an important aspect. Obviously, that will take time to build. We need to have the education across physician base, pharmacies as well as consumer base to understand the full path of different medicines that we have and are available for treating obesity. And so that will be a gradual path in '26 as it starts and then continued growth in '27. And obviously, the $50 a month co-pay is an important element of affordability for seniors. We've already seen for Zepbound as well as Mounjaro that they've had great persistency overall relative to other chronic conditions, and we continue to see that. Obviously, the $50 co-pay and affordability will only just add to that in addition to all of the health benefits and experiences that people will have over time. So we're excited about expanding access very soon.

Operator : The next question or question will be from Evan Seigerman from BMO Capital.

Evan Seigerman : Bigger picture, strategically, as you think about the next levers of growth for the business, what do you need to see from either the I&I, neuroscience or oncology franchises to kind of match the scale of the obesity and metabolic businesses or particular assets? Is it BD or something else?

Mike Czapar : Great. Thanks, Evan. We'll go to Dan to talk about some of the important programs that he's focused on to drive growth in the future.

Daniel Skovronsky : Yes. Thanks, Evan, for that question, and it's an important one to us. So as far as -- you're asking about scale, but I point out in growth rate, those businesses are growing extremely fast even without the obesity and metabolic business, Lilly would be the fastest or certainly one of the fastest-growing pharmaceutical companies in the industry. So we're proud of what we're doing in those 3 areas. And I think each of them has very significant unmet medical needs that we can scale into as our medicines are successful. So we like what we've got. We like the direction we're going. Of course, in each of those areas, we also see opportunities to get a lot bigger, and we've highlighted some of the themes already in those areas. You'll also see us address some of that through business development. So for example, the Centessa acquisition allows us to play in a new area here in sleep-wake medicines. The Orna acquisition allows us to play in new areas of immune reset, for example.

Operator : The next question will be from Asad Haider from Goldman Sachs.

Asad Haider : Congrats on the continued strong execution. Maybe just going back to Foundayo. I appreciate all the color on early launch dynamics, which is, sort of, playing out along the lines of your messaging that the initial launch trajectory is going to live below that of oral Wegovy, but then there's going to be an acceleration as we move into the back half of the year. So just now with a few weeks of launch under your belt, I think you said 15,000 patients have started taking the drug already. What's your level of confidence on that launch curve framing in the context of the early experience? And then related on the guidance range, are you able to provide any high-level commentary on what type of contribution was factored in for Foundayo, recognizing that you said that the revised range reflects mainly the strong underlying performance of Mounjaro and Zepbound?

Mike Czapar : Great. Thanks for the question, Asad. Ilya, do you want to talk about some of the early launch metrics that you're tracking and the feedback you're hearing? And then maybe just a short comment from Lucas about the guide.

Ilya Yuffa : Sure. Well, first, it is early days, but we're pretty pleased with the trajectory and encouraging first start to launch. Obviously, we just started active sales force promotion just over a week ago, having broad availability in the supply channel just 2 weeks ago. Really, we're encouraged by the initial leading indicators. And the way that we think about it, there are probably 3 key factors and catalysts of growth. And those 3 are: one, growing the familiarity among health care providers on the clinical profile of Foundayo, building out the access, and growing the awareness of Foundayo with consumers, and we're making progress on all 3 fronts. And so on HCPs, if you take out the early indicators, we now have over 8,000 prescribers of Foundayo, 1/3 of which who have not previously written an oral GLP-1. And so this is expansive. And the current sentiment so far, what we're hearing is really positive on the overall efficacy and kind of the no hassle factor on a daily oral GLP-1. And so that's an important aspect. We'll continue on the execution related to HCPs around sampling, continued promotion through our sales force as well as educational seminars and we're fully in the field with our promotional efforts with HCPs. So good progress there. On access, we've confirmed commercial access at 2 of the large PBMs by middle of May, so just in a couple of weeks. And to the earlier question on Medicare, Medicare access will start at the beginning of July. And so those are continued catalysts of growth upcoming in the next couple of months. And so we see that as an important unlock and expansion as well. And then on the third piece on consumer front, we now have just over 20,000 patients treated to date. And one important element, there is that -- 80% of those Foundayo prescriptions are new to class. This is expansive and bringing new people into being treated for overweight or obesity. We've done a number of aspects already around the direct-to-consumer on digital, on social media, and others. But obviously, we will continue those efforts on a full-scale direct-to-consumer and TV launch in Q3. Important there is just to ensure that prescribers have familiarity around the profile of Foundayo before we do that. So bottom line, I think we're pleased with the progress. Early indicators are positive and moving in the right direction. And the trajectory will build over time. This is a new brand, new medicine that we're bringing to the market. So we're pleased and ready to go.

Lucas Montarce : Maybe on the second part, going to the guidance, just to highlight a couple of things. Of course, again, the increase on our guide is driven by the strength of the entire portfolio that we mentioned during the call, starting, of course, with the incretin portfolio, both in the U.S. and OUS. In terms of Foundayo per se, you've heard already from Ilya about how we continue to see progress and very encouraging feedback that we hear from payers, physicians, and patients as well. We set up the plan at the beginning of the year, and it's very early days. We have 3 weeks of data at this time. So it's tracking to our expectations, and we will continue to see how this progress over the year, but we feel very confident on the trajectory that we've seen so far.

Operator : The next question will be from James Shin from Deutsche Bank.

James Shin : This one is for Dave. With Bridge extending into 2027, Dave, what's next for BALANCE? Is Lilly working with stakeholders on revisions to secure longer-term Medicare access?

Mike Czapar : Thanks, James. Dave, do you want to share a few comments about the Bridge/BALANCE dynamics?

David Ricks : Sure. Yes. Look, when we signed the agreement with the administration, we all knew Bridge was going to be put in place because it was a midyear launch. And we had understood at the time that there was a commitment to '27 if as a contingency, the Part D plans did not choose to opt in at a certain rate. Of course, we now know they didn't. And maybe that's not so surprising. They operate on margins. There's been other disturbances and market events in the Part D program, for instance, the IPAY products, et cetera, that have changed their economics. And unfortunately, I guess, not being a party of those discussions, but they couldn't cross with the major players for calendar '27. So the government is doing what they said and they're extending Bridge. I think for manufacturers, there's some puts and takes in that. But the fact that there'll be access to the consumers at $50 a month, I think, is a very compelling proposition, as Ilya highlighted before, will drive great persistency. And in an 18-month window, I think we will start to see population level health improvements if these are used at scale. That will then set up the '28 discussion. I would expect the government to lean hard into getting Part D plan participation in '28 and normalizing obesity care as a standard preventative treatment and something that should be used to treat comorbidities of obesity within the senior population. We may have the evidence to support that as we exit '27. It may need a little more time, but I think they're going to push to help make that happen. And I think that normalization is overdue in the commercial market. So it will be a good leading indicator for us across the U.S. business. We'll continue to work with the government closely through that period and, of course, try to work with them to activate patients and make sure they can find success on our medicines. So stay tuned, probably more news as we exit '26 on the actual '28 plans.

Operator : The next question is coming from Mohit Bansal from Wells Fargo.

Mohit Bansal : Congrats on the progress. I just want to touch upon the Employer Connect program that you are embarking upon. So it seems like the insurance or commercial insurance has been relatively stable-ish year-over-year. So this seems to be the way to grow it and employers are worried about their costs long term and everything. So I would love to understand what are the steps to convince employers to buy in into the Employer Connect program and the mechanics of it?

Mike Czapar : Thanks, Mohit. Ilya, do you want to make a few comments about Employer Connect and the progress and focus?

Ilya Yuffa : Sure. Thanks, Mohit. Yes, listen, as you mentioned, the overall commercial access has been pretty steady around 50%. And one of the key aspects that we're excited about is having an Employer Connect platform where we work with a number of third parties to actually go out and talk to different employers about the value of covering obesity care. But there are several things that are a little bit different with our Employer Connect program. One is a transparent price that is known to all of the employers and providing the flexibility and design around the employer-employee contribution towards obesity coverage. And so we do think that this is a positive element to increase the number of employers to opting in. Obviously, the selling cycle and the time line for making decisions for '26 is already passed. So while we are currently having positive conversations and positive feedback from employers around this new platform, that will most likely have a gradual impact in the back half of '26 and most likely incremental opt-ins for '27. And then as part of that, obviously, there's going to be more data on real-world evidence and also components of where employers do cover what are the benefits to their employees overall, both in their health and productivity over time. And as that data comes out, that will only reinforce the positive decision to provide coverage for obesity care.

Operator : The next question will be from Terence Flynn from Morgan Stanley.

Terence Flynn : Congrats on all the progress. I had a question broadly. You talked to the portfolio that you're going to be -- you currently have, but you're also rolling out across the incretin area. And so as you think about the evolution, I guess, of the DTC channel, what are some of the things you're considering to kind of leverage Lilly's scale in that channel? And then also anything that you think will help there from a commercial side in terms of driving additional coverage in terms of having scale across the portfolio?

Mike Czapar : Thanks for the question, Terence. We'll go to Dave to talk a bit about the portfolio strategy and leveraging DTC.

David Ricks : Sure. And Ilya and Patrik can jump in here. I think you're pointing out something that has evolved in the developing part of the story here for our growth, which is consumers wanting to take charge of their own health and activate via digital platforms to control weight and obesity. I think this is here to stay, and it's a big part of our business now and probably something we need to continue to invest in. We're doing just that. So you should expect continuous improvement in that experience for consumers in the U.S. and then expansion nationally with the current offerings. I'd also say this notion as we move into other kinds of medicines that could be more preventative could be quite a useful platform to reach more people. We all know that the financing of the current health care system is a struggle everywhere. And with all the noise around PAs and other barriers to care people need, people want to take it in their own hands. And I think, of course, we need to do that within the confines of the regulations and law, but there's a lot of room for improvement for consumers, and it's a great outlet potentially for us. So let me ask Ilya or Patrik to add to that if they have anything to add on LillyDirect and our offerings.

Ilya Yuffa : Yes, sure. Just maybe a few key components of what we've seen on LillyDirect, even with Zepbound, you've seen that currently around 55% of new patient starts are coming through self-pay for -- most of which is coming through LillyDirect or telehealth players, which is a component of reducing some of the frictions in place and even early in our launch of Foundayo with limited promotion. We're seeing that, that reduced friction level and understanding direct to the consumer is an important lever. About 45% of our volume for Foundayo early on is coming through LillyDirect. And so we continue to look at ways to improve on the experience for both providers and for consumers in the way they get their health and enter their journey for disease. And obviously, it plays a significant role for obesity currently.

Patrik Jonsson : Similarly, outside of the U.S., I referred earlier to us being at a very high market share in most of the markets already and patient activation is going to drive most of the coming growth. And we have seen that the markets are responding to patient activation efforts, although it's a slower ramp, but that's going to be key, taking into account the low penetration of incretins outside of the U.S.

Operator : The next question will be from Umer Raffat from Evercore.

Umer Raffat : I thought I'll spend a quick second on Zepbound's commercial dynamics in the U.S. And really, what I'm trying to understand is, for example, 1Q, 7 million TRx and $4.1 billion sales for Zepbound in U.S., meaning it's about $580 per prescription. And even if you adjust for some of the onetime adjustments, it's still about $550 per Rx, whereas we understand the cash pay prices to be about $450 or so, I mean, that price is too. I guess what explains that delta? Or maybe IMS is just not capturing some of your online channels?

Mike Czapar : Great. Thanks, Umer. I'll let Lucas to talk a bit about pricing dynamics in the U.S.

Lucas Montarce : Yes, Umer, thank you for your question. And quick math, your math is pretty spot on, by the way. So just to highlight, yes, and even normalizing by these prior-period adjustments. First of all, again, going back to the initial question on pricing, if you carve out what we agreed on MFN side as well back in November and then the NRDL access, prices have been relatively stable quarter-on-quarter. I think it's going back to what we discussed last time about maintaining that price discipline, we continue to see that happening while we continue to grow significantly on the volume side as well. And yes, again, going back to your analysis on the pricing, yes, you have the LillyDirect prices that, as you know, we have adjusted down starting in December. And those prices have been very stable on that front as well. And then the rest, basically by difference, you get into the commercial business, mainly that's the different portion that gets to that net $550 that you highlighted.

David Ricks : And maybe just one to add. I think what isn't widely appreciated is that there is a reasonable amount of medical exception and OSA usage that moves across channels at close to an undiscounted price. So I think that's probably the piece of your math, Umer, that you might want to take a look at.

Mike Czapar : We'll try to get through a couple more if we can.

Operator : The next question will be from Courtney Breen from Bernstein.

Courtney Breen : I know there's been a huge amount of focus on kind of the first few weeks of Foundayo and specifically kind of the launch strategy and activation of the different channels. Perhaps, Ken, it would be helpful if you could talk through how does this compare to kind of a traditional primary care launch? What things are you accelerating? What things are you holding back and for what reasons, particularly in the context of the fact that you've got extreme amounts of inventory preprepared for the launch of this product?

Mike Czapar : Okay. Thanks, Courtney. Ilya, do you want to make a few more comments about the Foundayo launch vis-a-vis primary care?

Ilya Yuffa : Sure. Yes, maybe just -- probably the 3 elements I discussed earlier are probably the same for all of our primary care launches, where you need to grow the prescriber base and understanding of the profile of the medicine, and that's what we're doing here with Foundayo, building out access. And quite frankly, this is actually gaining access very early in launch, both on the commercial side, having 2 of the 3 being activated in the next couple of weeks and getting Part D, which usually lags in July is a faster ramp on access. And so we're excited about that aspect. The piece that is probably on the primary care side, an important element that many have noted is around DTC. And we activated from day 1 in the first week, a number of both digital, social media and out-of-home advertising on the brand itself. But it does take time to build out consumer understanding and awareness of the brand. The current sentiment, if you follow the total number of impressions and what consumers are saying about the profile of Foundayo is resonating. So both in the efficacy as well as the overall profile on not having food or water restrictions. And so that element is positive. Now obviously, having full DTC launch, we're still activating that probably earlier than normal because there is familiarity around a GLP-1. But we do want to take a moment and have be disciplined in the approach of making sure that physicians actually understand what Foundayo is before activating fully. But overall, this is following an accelerated path in primary care. And if I compare, we've had the opportunity to launch many brands within primary care with Trulicity, with Mounjaro, Zepbound, Jardiance, all of which have gone towards leadership in those categories in a competitive space. So we feel pretty good about all of the actions we're taking, the 3 key factors and the pace at which we are activating all 3 components.

David Ricks : Let me just reiterate one thing which we said earlier, but just so it's not lost is the 3 major products that are used in obesity in the United States are all line extensions. So the molecule was on the market before and in some cases, the brand name was used before. So consumer awareness, which is the brand name and the molecule itself, which is the physician part, we're starting from a much lower baseline. We've got to build that, but we're hugely confident we'll be able to build it. We've launched many, many primary care drugs that are new successfully. And then the final thing I'll say is related to your inventory. I mean, that really speaks to the international rollout. That's why we keep mentioning there's 40 different countries under review, and we expect that to happen also in one of the most accelerated cadences perhaps in the history of the industry. So expect launches as we exit this year into next year in quite scaled markets. And we know from what we're seeing on this call with Mounjaro and international, there's a huge opportunity for Foundayo around the world.

Mike Czapar : Great. Thanks, everybody. One last quick question and then we'll go to close.

Operator : Final question today will be from Dave Risinger from Leerink.

David Risinger : So Dave, I was hoping that you could just frame your vision for employer coverage in the United States. So in the U.S. pharmaceutical business, employer coverage is most important for drugs, particularly drugs that treat various medical conditions beyond cosmetic. And so I understand that you have the Employer Direct initiative, but I'm just trying to get my head around what you think will happen with regular employer insurance coverage in coming years versus coverage that will involve greater cost sharing by participants that engage with LillyDirect for consumers to pay more out of pocket than they are paying today under regular employer coverage?

David Ricks : Okay. Thanks, Dave, for the question. Obviously, an important factor. And we do think just as a policy matter that obesity and overweight medications should be broadly covered. I think a big step in this journey is actually the July 1 Medicare. There's often spillover benefits into commercial from there. And I think setting a standard that people in America should expect if they've paid into their insurance program or their employer has that will cover their health needs. That said, I think the likely path from here to what I think will ultimately begin to look like other chronic medication markets like diabetes and hypertension, I think we will get there with this category. But it won't be a straight line. It won't be kind of everything we want on day 1. Why? Because the economics you're mentioning, it's a very broad disease. 70% of adults have overweight or obesity and are potential candidates for these medications. And it's the last thing in. And we know that despite the fact that it could be one of the most valuable health care interventions available, it's the last one we see, so it's easier to say no to. But we do see progress there. As Ilya said, Employer Direct is all about creating new options to get to [ yes ] with employers, alternate pathways. We'll continue to publish data, as I'm sure Novo Nordisk will, that demonstrate that pretty much all of these drugs in this category have had profound effects and are probably cost effective at their current prices. And of course, prices have been trending down. So we'll continue to make progress. I should also say we have a number of new indications coming. And per Umer's question earlier, that actually is a pretty good unlock for us when we get in directly indicated populations with acute comorbid disease. So all those things will pull together. And in some future year, we'll look back and say, we got there. But it's going to be more incremental progress quarter-on-quarter, and we'll keep updating the Street with what to expect as we issue our guidance. Thanks a lot.

Mike Czapar : Dave, do you want to few comments to close?

David Ricks : I will. So again, I appreciate everyone dialing in today on our call and your interest in Eli Lilly and Company. We hope you'll join us later this year. We're announcing a Lilly Investment Community Update Day. This will be on Monday, December 7, and details on location and exact timing are to follow. Please follow up with the IR team if you have any questions that we didn't address today, and hope you have a great day. Thanks.

Operator : And ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1:00 p.m. today running through June 4 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 662964. International dialers can call (973) 528-0005. Again, those numbers are (800) 332-6854 and (973) 528-0005 with the access code 662964. Thank you for your participation. You may now disconnect your lines.