Eli Lilly and Company Stock

All right. Thanks so much, everyone. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

This afternoon, I'm very pleased to be hosting Eli Lilly. Joining us today from the company is Ilya Yuffa, who is the company's Executive Vice President and President of Lilly USA and Global Customer Capabilities. But I appreciate the time this afternoon.

Yes. Great to be here.

We're really looking forward to the discussion.

Yes. I appreciate it. Thank you.

So I figured we'd start with obesity, not a surprise. But the company has one of the broadest portfolios in the industry here. And so I think a question we get a lot is just how to think about segmentation of the market? Because, again, you guys have a broad portfolio, but there are a lot of different subcategories within this disease. And so maybe talk to us about the long-term vision in terms of how you're positioning the portfolio based on the current portfolio, but also some of the new medications in development as well.

Sure. Well, listen, we're equally excited about what we do in obesity. Obviously, as we think about long-term portfolio, we think about how do we ensure that we cover different needs from different populations. Obviously, it's easy to say anyone who lives with overweight and obesity, you can solve all problems with one medicine. I think the reality that we're seeing is that there are a lot of different needs, whether it's around how people enter their journey of health, whether how they maintain or different aspects, whether it's different health benefits in different indications within this space. We're looking at different mechanisms.

And so the idea for us to have a broad set of medicines and portfolio to answer those different needs is an important element. Whether or not someone enters the journey on an oral therapy like Foundayo or intensifies and needs a different mechanism or multiple mechanisms to solve their needs, we believe that having those options are critical to meet patients where they are. Obviously, tirzepatide and Zepbound is foundational. It's setting the standard of care and preference for most physicians and people that are in the current journey. But we have to be honest that the current utilization of obesity treatments is still low. We're still in the single-digit utilization of people that could benefit from these medicines.

So it's important that we have the broad set. So Foundayo, we have Zepbound. Obviously, there's a lot of interest on our side for retatrutide. Then we're also exploring eloralintide and other components that could improve on different aspects of whether it's tolerability, frequency. And so that's our vision is to have a broad set of portfolio. And I'm sure we'll cover this a little bit later, but we also believe that in this space, in particular, is very consumer-oriented and having a broad portfolio that people can have a relationship with the company and the experience that they have as a consumer is an important element beyond just the portfolio.

Yes. Okay. Great. I know we'll unpack a lot of this in the subsequent questions. But I think it's important, as you mentioned, to have -- unless someone can -- has coverage, they're not going to be able to benefit from the medication. So that's obviously been a big focus. Where do we stand in terms of the commercial coverage? And how do we think about some of these wrapper services that we're hearing about? And where does that fit in the strategy as we go from this year into 2027?

Yes. I think on the commercial side, we've been relatively stagnant on 50%. We've seen some employers recently remove coverage. We're also in discussions with many employers on adding coverage. And while I don't see kind of a step change coming into '27 on either direction, there's a lot of movement that we need to still have within this space. Probably the single largest driver of increased access is Bridge in Medicare. We're seeing obviously good initial uptake in people taking advantage of the Bridge program. We also see some states on the Medicaid side starting to add coverage.

And on the employer side, we have our Employer Connect and conversations with a lot of employers about the different options, whether it's PBM or Employer Connect program to add coverage and flexibility in the employee cost sharing as part of that. I do anticipate that, that will move and as the body of evidence on the direct health economics of utilizing these treatments will show a benefit of employers investing in this space. We just published a study around Zepbound cost of care. I believe more and more evidence will point in that direction and will increase over time.

Before we get to the cost effectiveness study, just one follow-up on the wrapper services. Are you seeing anyone leaning in yet aggressively there? Or where does it stand in terms of like is this just preliminary conversations or actually seeing employers embrace that program?

No, I mean we have a network of more than 20 third-party providers that are actively having conversations with employers. We are -- our team is also having active conversations. And I believe we'll have a number of employers opt in or maintain coverage through this program. So...

For '27?

For '27. Yes, because this is the cycle for typically you make your benefits decisions around this time frame, usually before October to announce what you're covering in the next year. So we anticipate a number of companies will enter through this space.

Yes. Okay. Okay. Stay tuned. You mentioned the cost-effectiveness study. Again, maybe just walk us through kind of the key takeaways because I think that has been partly what you hear is just, well, we don't really want to pay for the upfront cost because we don't know what the downstream savings is. But now it seems like there's some data that's starting to kind of bolster this argument. And so what did you guys find in the study?

Yes. I think one of the important aspects that I've seen improve over time is that the conversations with employers and payers, there's now a good conversation understanding of the health benefits of obesity treatments. And the greatest challenge has been around anyone's P&L, around, okay, what is it in the direct cost? They may agree that there could be some indirect benefit, good on the health benefit, but what does it mean to the near-term bottom line? And what we looked at is around direct medical cost for people utilizing Zepbound.

Now this particular study had 55 and over. And what we saw is that you get savings as early as 6 months. So you start seeing savings in 6 months. And then once you get to the 12 months, you can get upwards to $600 per month per person of benefit, which more than offsets the cost of the medicine. And so we believe that, that accumulation of evidence will start to increase, which should convince many employers and payers. And obviously, Bridge, you'll see a significant amount of savings by investing in the space. So listen, it will take time and more than just one study to change the complete calculus for many employers, but it does catch people's attention, and it should.

Okay. You mentioned the Bridge, Medicare Bridge program. So as you think about the rollout there, any points of friction that you're seeing at this point in the rollout or anything you'd point us to?

I think one aspect that's important, not everyone understands like the friction in the health care system is real when it comes to obesity treatment in most plans that you see on the commercial side, you have variability on criteria. And so every plan has their own set of prior authorization and what's allowed, what's not allowed, the different comorbidities, the different BMI. And one unique aspect of the Bridge program is that it's a unified set of criteria on people that -- different BMI, different comorbidities, but it's standard across the entire Medicare eligibility criteria. That is an important element as we see what's being implemented.

The other piece is that just the mechanism and the logistics of Bridge, having a program at large scale work in the first few days, while there were some minor hiccups here and there, overall, it's working really well. So what we're doing is educating physicians, pharmacists, consumers on the eligibility criteria. The process itself to go through the PA and the PA denial through Part D to make sure that the aspects that are excluded are -- they go through Part D. And the ones that are included in eligibility criteria then get reapplied and it's an automatic process. And we're seeing pretty significant uptake of number of people actually coming through Bridge. I think Dr. Oz quoted close to 600,000 people leveraging access to medications within Bridge. So really positive just from a logistics standpoint, an important piece $50 standard out of pocket for people with Medicare that are eligible is a terrific program.

How does that 600,000 compare to what you would have got if you said 6 months ago, like there's going to be this many people on it in the first 2 months or something?

Listen, as always, in this space, we have lots of different scenarios. And we know that having one forecast, every forecast is going to be wrong in some direction. I think one of the things that we were really positive about is the criteria. We're really positive about the $50 out of pocket, which is standard. And so we predicted that there would be reasonable uptake. I think what we're seeing now is that -- and we also knew that there were a number of people in self-pay in the LillyDirect program that were Medicare eligible. And what we're seeing is predominantly new patients coming in, so 60% to 70% being new. And the other probably not surprising for us is that when you have a standard of $50 out of pocket, there's been a preference towards injectable and a preference towards Zepbound in overall Bridge program. And so that part, I think we expected, and we're pleased with kind of how the whole process has been working.

Okay. Great. And I think just to remind people, I think you said, what, 18 million to 20 million eligible people potentially?

Yes, around 20 million eligible based off of the criteria that we estimate. And then again, what we're seeing is pretty around 600,000. And you're seeing, obviously, for Zepbound, when you look at our trend, it's KwikPen that is available through Bridge. It's also available for self-pay. So all of the growth there. We're also seeing good uptake of Foundayo as part of the Bridge program as well.

And what do you -- I know it's not really in your hands, but like what do you think happens at the end of '27 with the Bridge program?

Yes. I think with the significant uptake and also even our own cost of study -- Zepbound cost of care and knowing that there's significant savings, that will be a program that if there's anything that continues, it's how do you ensure that we continue this program because of the health benefit, reduction in hospitalization, savings to overall Medicare program. I think this will be a net positive towards finding a solution past '27.

Okay. The other thing you mentioned is, again, the consumer orientation of this market, which has been kind of N of 1 or maybe N of 2. There's maybe one other case study you look at like aesthetics, for example. So as you think about that, it's become, I think, what, 40%, 45% of the business in the U.S. What -- how do you think about leveraging that, leaning into that on the forward? And is this something like a subscription service? We see what Apple has done with their ecosystem, for example. So is that a possibility given the breadth of portfolio and the success you've had around Zepbound? Or is there -- are there other iterations of this?

Yes. I think when we first entered with LillyDirect, it was an experiment solving part of the problem is ensuring that the transparency of our pricing actually gets to patients. And I think what we found in launching this in obesity that it's more than that. You reduce some of the frictions that exist in the health care system, especially in a disease area where there's a lot of stigma and there's a lot of variability in how you actually get access. And so breaking down some of those barriers are real. I think we're -- you should expect to see more experimentation, whether it's around pricing or around looking at our portfolio or looking at how do you do wraparound and embed that into the consumer experience, what other components on how you start therapy, are there other elements within our -- beyond obesity that are important for consumers that enter their journey through obesity. All of that is something that we're interested, and we believe adds a lot of value.

Now to your direct question around subscription, we've had a Journey program, which is a similar concept in kind of e-commerce related to if someone fills a prescription within a certain number of days, they continue on a discounted price. And so looking at ways on people entering therapy, on reducing friction, on how do you stay adherent to therapy and get the most of what you're trying to achieve in terms of your goals. These are all elements that we're embedding and one, starting to experiment and enhance our LillyDirect experience with obesity. And then I do see components of other disease areas that we're either currently in or in the future that we'll be in that could have some aspects of the consumer that will play a larger role.

Okay. Great. Maybe I want to pivot to Foundayo launch. And so again, as you look out now through the end of the year, maybe just give us an update on kind of the latest metrics and then how to think about those tracking through the end of '26. And let's focus first on the U.S., and then we'll go to ex U.S. second.

Sure. Sounds good. Well, first, there are a few different components that I look at just from a discipline around execution and how we launch any brand. There is a component around consumer awareness that's important as you build out a new brand, that's something that we've put a lot of attention to. The second is...

I did see a new commercials around the U.S. Open.

Yes. Glad. The second is around do HCPs and physicians understand the profile of Foundayo and have they actually tried it with patients entering the journey so that they could experience and understand the real-world efficacy and tolerability of Foundayo. And then I look at some other parameters around kind of our field execution. So maybe on the consumer awareness piece, we've amped up our consumer advertising and awareness at Foundayo. We just recently launched an ad with Martha Stewart. We're hoping that, that will build out some level of greater consumer awareness and consumer interest.

The other piece is around the trial. I think we shared during our Q2 results that we've increased the number of trialists to over 36,000. That's continuing to increase. So we see progression around trialists. And then the other encouraging indicator is that for the people, the physicians that have tried to use Foundayo, their patients, have they moved to adoption? And we're starting to see that also move in the right direction. Obviously, from our field execution, ensuring that physicians have samples readily available if they need to start a patient. We've improved on our access and coverage for Foundayo. We're doing a number of peer-to-peer programs so that physicians can talk to other physicians around the profile of Foundayo. So a lot of our leading indicators are moving in the right direction.

And the outcome, of course, you guys and I look at the outcomes of that. We're starting to see movement in our share. So we now have more than 30% share in new starts within oral GLP-1. So we're starting to see some progress. And that's a marked improvement just in the last 2 months of the new starts. So we're heading in the right direction. It will be a gradual move, and we're moving in all segments on the covered space on the commercial. We're moving in Bridge, and we're moving in the self-pay. Obviously, with self-pay, you've got a -- you have to look at the mix around most of the starts are in self-pay currently that will shift over time. And those are at lower price points initially until people get through to higher doses.

Do you guys think you can get to over 50% steady-state share in the oral side as you think about the profile of the medicine and what you've seen now over the last couple of months or so?

I challenge my team to get leading share in pretty much any market. So if you ask me this question in pretty much every space, I'd probably answer yes. I challenge my team to get leading share. We've done that with elora. We've done that with Zepbound. We've done that with Jardiance, we promoted it. We've done that with Mounjaro, and we'll continue to challenge our teams to do that with Foundayo.

Do you think you can get there by December, end of December?

I won't commit to a time where we get there, but we're continuing to make progress. So I think we have to continue to drive new trial. I'm convinced that the experience itself should play out in a positive way. And of course, ambitious in what we achieve. In the end, my hope is that more people are able to enter their journey, and this is expansive, and that's been our focus. I'd rather get there in a quality way and focus on the right patient population that can benefit, and that we expand the number of people that get treated. That's probably more important to me than any other.

Okay. Maybe we'll pivot to OUS. You guys have launched in a few countries, as you said on the second quarter call. I think the ambition is to launch in over 40 markets, I think, by '27, which would be a very broad offering. And I think one of the key advantages, I guess, of Foundayo is it's a true small molecule scalable oral. So as you think about kind of maybe the second half of '26, how should we think about the pace of that rollout? And then we'll talk about '27 after.

Sure. Well, first, I think we've now launched in the UAE and the U.K., where we have approvals. And the early indication is that it's been positive and that it's been expansive. So new patients are getting treated as a result of us introducing Foundayo, and there's interest in the oral segment for treating overweight and obesity. We just got approval in Saudi and also in Mexico. So we plan to launch there. And then as we -- it's submitted in over 40 markets. So as soon as we get approvals, our plan is to launch. We have supply readily available.

Our commercial teams are ready. And so it's just a matter of the timing of those approvals. Those will be gradual over time, and we'll enter those markets, obviously, predominantly for Mounjaro outside the U.S., it's a self-pay market. We have some markets that reimburse for type 2 diabetes. We have some -- we just got approval for reimbursement in obesity in France. But it's still around 75% of the market outside the U.S. is self-pay. And as we get approvals, we'll continue to launch Foundayo outside the U.S. as well.

Yes. And in those early launch markets, are you seeing that -- it sounds like you are, but expansive to Mounjaro, meaning it hasn't really cannibalized Mounjaro. It's basically added new to GLP patients.

Correct. These are -- we see the total market growing and Lilly in terms of overall share is also growing, both in Mounjaro because it's still early in our launch cycle for Mounjaro, and we're seeing new patients coming in with the introduction of Foundayo. So we see it expansive.

Okay. One more before we go to kind of the next topic is just on Foundayo is just how to think about adherence, persistence relative to injectables. I think that's another longer-term debate in the market, not just for obesity medications, but just for oral specifically.

Yes. Maybe I'll provide some context to it as well. First of all, it's early days for Foundayo, and I think the kind of the first indicator is second fill and the second fill data is very good. So we see it being consistent with other oral medications and also not that far off from what we see on the injectable space. Context-wise, though, if you look at most therapies in the space, diabetes or obesity, probably the gold standard from -- on adherence has been Trulicity, and we compare Trulicity to many oral therapies in diabetes space and Trulicity as a once-a-week injectable therapy has always actually had greatest adherence overall, approaching that like 16-month average adherence. We're seeing that in -- for Mounjaro and Zepbound to be in that same realm. So adherence being much greater than what we typically see in chronic therapy. And most chronic therapies have persistence that's less than 8 months. And so that's something to contextualize.

Now this space is a little bit different in that many chronic diseases, a person taking a medicine doesn't always know or feel whether or not there's been a benefit until they go to their physician and get their blood work done to know whether or not it's been beneficial. Whereas in obesity, there is a component where someone sees and feels the benefit by staying on therapy. And so I do anticipate that we'll have probably better adherence than typical chronic disease. Will it be the same as injectable? We'll see. I think that's the gold standard in adherence. But just to have context into chronic disease, you typically don't see as great of adherence as we've seen in the past with Trulicity and now Zepbound and Mounjaro.

Okay. Great. The other thing that we and I think investors are watching is the rollout of generic semaglutide in some of these OUS markets. India, Canada, I think Brazil is coming soon. As you think about, is there an analog for how this could play out in the U.S.? And I think the question is more around just not so much Mounjaro, I think you're already seeing a lot of differentiation. People are voting with their wallets. They're effectively choosing it even though in some cases, there is a pricing differential or branded sema, but more so for the Foundayo piece. So as you think about like a GLP to GLP, not a GLP to 2 mechanism, but GLP to GLP, like what does this mean for Foundayo as you see a generic rollout of sema in some of these OUS markets?

Yes. I think maybe the first part is what are we seeing currently in those markets. And by the way, this is not so different than what we've seen in the ED market in the past. When a generic enters, what you typically see is an expansion of the number of people that actually get treated. So that's what we currently see in both India and Canada is that the market is expanding. What we're also seeing, although like share naturally when the market expands significantly through generic share declines, but the overall volume, absolute volume is continuing to grow for Mounjaro in those markets.

Now, the moral of the story is, but there's both an innovation and profile of the medicine does matter where there's differentiation where people do vote on what they feel could give them greatest benefit. And there's a brand loyalty component from a consumerized market that also plays a role. How much does one play versus the other? Hard to predict, but we've seen that in the ED space as well, where there is actually very little differentiation in some of the space. So now read-through for Foundayo, maybe I'll go back to your earlier question related to what is our ambition and vision of our portfolio. And having a full portfolio of different options in a consumer-oriented market is important when you enter and you stay in the ecosystem as a consumer. And so I think that's an important aspect that we believe will play out. And we do think Foundayo as a true small molecule also has some advantages on being able to be a truly once-a-day anytime pill.

Yes. And is there any of those markets that you think is more similar or different to the U.S. of the ex U.S. markets, if you had to pick like one that would be like a "proxy"? I know it's not -- there's not an identical one, but...

Difficult. I've spent 4 years running international. And what I can tell you is that there's -- the similarity is that the there's health care friction in all markets. That's similar. This hybrid, you typically in outside the U.S., you see predominantly kind of single-payer decisions on coverage. And then you see like in markets, there's no coverage, it's entirely self-pay. So there's really nothing in between where the U.S. is kind of in between where you're -- obviously, you need to grow access and affordability. But there's no like single market that plays exactly the same as the U.S., but there are components that are similar.

Okay. Maybe let's move on to some of the newer up-and-coming products in the pipeline. You mentioned retatrutide, elora. Maybe we'll start first on retatrutide. I think the question is just positioning in the market relative to tirzepatide. Again, I mean, phenomenal drugs, the standard of care on type 2 and obesity. And so how do you plan to position this new injectable product relative to tirzepatide?

Yes. We're really excited about retatrutide. I think there's a component which we knew as we studied in Phase II on the higher end of efficacy and getting bariatric-like efficacy. And if you take a look at from our Phase II results on the proportion of people actually moving from obesity to no longer being in the category -- weight category in BMI of obesity is pretty phenomenal. And so I think it will play a role for those people living with obesity that may not have enough efficacy in the current therapies that exist, where retatrutide can play a significant role, both for gaining access in that population because you typically have even more comorbidities in that population.

But also, I think that the great kind of surprise was in the lower end of the entry of retatrutide, you see tirzepatide-like efficacy with only one step, and you have very good tolerability. And so I do believe it will play a role on both ends of the spectrum on people entering their journey and finding that the lower doses of retatrutide can play a significant role. Now still the standard of care has been tirzepatide and Zepbound. And so I continue to see tirzepatide being a great standard of care, and you see that on any of the results comparing against tirzepatide. It is a great standard of care and preferential treatment. It will take time to build retatrutide in that space, but it's good to have those multiple options, both in the higher end of efficacy as well as people just entering their journey.

Okay. And similar question, I guess, on Aurora. I think the thing that struck me from ADA was Ruth made a comment this will be the largest development program in Lilly's history in terms of a Phase III program. So obviously, the company is very excited about this asset. Where does this fit in terms of the commercial opportunity and segmentation of the market?

Yes. If you look at our Phase II results, pretty encouraging on just efficacy in the monotherapy space and the tolerability. And even in the lower doses of eloralintide, the starting point, you get placebo-like tolerability with a 13% efficacy, you can get up to like 20% efficacy as monotherapy. And then we're also studying it with tirzepatide as well. And so could you see an add-on or amplification of efficacy without compromising on tolerability profile? And so we believe there could be some significant benefit for people that currently do make that trade-off. And so having those multiple options is a positive for building out the portfolio, and that's why the tolerability profile and how much efficacy you get as part of that can be a great both monotherapy as well as add-on for the future. So we're encouraged by that program in addition to retatrutide.

Okay. And then maybe one last one on obesity before we leave a couple of minutes for Alzheimer's is just...

It's about right.

Long-acting, just I heard you guys have talked about opportunity in the maintenance setting. So just maybe what's the market feedback there in terms of where potential long-actings could fit from a segmentation perspective?

Yes. To me, I think it's less about long-acting. It's more about solving what is the actual consumer need and what are physicians looking for. And that's how do people maintain or adhere to therapy. And there are different aspects to that. We talked about tolerability as being one, frequency or administration being another. Can a less frequent than weekly be beneficial? Yes, we believe that could be beneficial. We're exploring options in that space. But we're looking at it as less about just a single asset or use case, but we're looking at all use cases on how do you answer the maintenance piece. We have ATTAIN-MAINTAIN, we have SURMOUNT maintain that play a role in answering to some extent, what you could do once you get to your goal, how do you maintain and that serves one need to answer that question. And then we believe the rest of our portfolio can help answer the others.

Okay. So I'll just -- so we hosted Biogen earlier today. They obviously got approval of LEQEMBI subcu for induction. You guys -- your message has been focused on you got an IV monthly versus their every other week. So as you think about the near-term dynamics, do you think that new subcu is going to change those share dynamics at all? Or you guys feel pretty confident in kind of the profile you have from a dosing data perspective?

Yes. I think, first, it's good to see innovation in this space because it's needed for a patient unmet need. We feel good about our profile. We have leading share now, but the profile of having once monthly, but more importantly, kind of the treat to like a fixed duration until you meet the hurdle of removing plaque is an important one. The most important thing we do in this space is less about share and probably how do you improve the ecosystem. The time that it takes to get diagnosed and treated in Alzheimer's is like if anyone here has anyone in their family or in their close network battling and trying to get diagnosed, it's a messy process and takes too long.

So the introduction of blood-based biomarkers is an important element of innovation. How do you scale that as a standard for confirmatory and make the process from once you get diagnosed to treatment, we've made progress there. We've doubled the number of people that are being -- that are treating, but there's a lot more to do here. And I think both companies should spend more time in establishing an improved ecosystem for the benefit of people living with this awful disease.

Great. Well, Ilya, we're out of time, but thank you so much.

Thank you. Appreciate it.

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q2 2026 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly and Company's Q2 2026 Earnings Call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, who is Chair and CEO and Lucas Montarce, Chief Financial Officer; Dr. Dan Skovronsky, Chief Scientific and Product Officer; Adrienne Brown, President of Lilly Immunology; Dr. Karoo, President of Lilly Neuroscience; Dr. Yuffa, President of Lilly USA; and Global Customer capabilities; Jake Van Naarden, President of Lilly Oncology and Head of Business Development; Patrick Jonsson, President of Lilly International; and Ken Kuster, President of Lilly cardiometabolic health.

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. We -- 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. It is not intended to be promotional or otherwise influence prescribing decisions. Our commentary today will focus on our non-GAAP financial measures.

Now I'll turn the call over to Dave.

Thanks, Mike. Q2 Continued Lilly's strong momentum. We delivered robust revenue across all key products and major geographies. We raised our full year annual guidance. We advanced our pipeline across each of our therapeutic areas. -- and expanded our pipeline through business development. On Slide 5, we list key Q2 financial metrics and highlight progress related to our strategic deliverables. Revenue grew 48% compared to Q2 of 2025, and our key products increased by almost $6.8 billion.

Within key products, our oncology, immunology and neuroscience medicines collectively grew 121% compared to the same quarter last year. As we continue to expand our presence across the portfolio. The number of people taking Incretins Group, and Lilly's portfolio of medicines extended its leadership position. The U.S. Fade launch continued to build momentum. -- after educating physicians and securing commercial access across all 3 major PBMs in June, we began broad direct-to-consumer marketing to raise consumer awareness.

We completed the U.S. submission of FONA for type 2 diabetes and expect regulatory action later this year. We launched Foundayo for obesity in the UAE, and we recently received approval in Saudi Arabia for obesity and in Mexico for obesity and type 2 diabetes, early uptake in the UAE has been encouraging, demonstrating the pent-up demand for Foundayo to treat obesity outside the U.S. Vanda's under regulatory review in over 40 additional countries and we look forward to additional approvals later this year.

We're also achieving -- we also achieved several key pipeline and regulatory milestones since our last call, including the U.S. FDA approval of Elis for maintenance dosing once every 8 weeks in atopic dermatitis, the EU approval for J. Perka in CLL across all lines of therapy, a positive CHMP opinion in the EU for insulin [ Fatura ] alpha for type 2 diabetes under the trade name Boswick and positive top line results in 3 Phase III reditrutide trials in obesity.

We added to our strong internal pipeline through business development. announcing agreements to acquire multiple companies to expand our presence in emerging therapeutic areas, including Kurbo, LimmaTech Biologics and the vaccine company. building a platform of potential new medicines to prevent infectious disease and their downstream complications.

And we acquired a Beckley a company developing novel treatments for treatment-resistant depression and other mental conditions. We continued our manufacturing build-out and opened our first dedicated genetic medicine manufacturing facility in Lebanon, Indiana -- we also produced the first batch of commercial material at our new manufacturing site in Limerick, Ireland.

We distributed $1.5 billion in dividends in the second quarter and executed $1.6 billion in share repurchases. We Lastly, in partnership with the U.S. government, we reached an important milestone to improve Medicare access to anti-obesity medicines.

As shown on Slide 6, the Medicare GLP-1 bridge program launched on July 1. We granting 20 million eligible Americans insurance coverage for GLP-1s for obesity at the low out-of-pocket price of $50 per month. With this expansion, 35% more people now have coverage for our obesity medicines in the United States.

While still early, feedback from patients and physicians has been quite positive. We'll soon be publishing our annual sustainability report at sustainability.lilly.com, showing the progress we made in 2025 on our sustainability priorities.

Notably, we reached approximately 40 million people in Resource Limited settings, exceeding our original goal of reaching billion by 2030. We are now developing a new commitment to address the growing burden of diabetes and obesity in resource-limited settings worldwide, and we'll share more details about this plan later this year.

Now I'll turn the call over to Lucas to review our Q2 results.

Thanks, Dave. As shown on Slide 7, Q2 was another strong quarter of financial performance. Revenue grew 48% compared to Q2 2025, driven by [ Sean and Monaro ] with strong momentum across all 3 areas and geographies. Gross margin as a percentage of revenue was 86.3% in Q2, an increase of approximately 1.3 percentage versus the same quarter last year.

The change was driven primarily by favorable product mix and improved cost of production. Marketing, selling and administrative expenses increased 25% as we invested in promotional activities to support current and planned product launches. R&D expenses increased 14%, driven by continued investment in our pipeline, including more than 40 active Phase III programs. Our non-GAAP performance margin was 54.8%, an increase of 9 percentage points from Q 2025 driven by revenue growth.

Non-GAAP earnings per share were $8.38, including acquired IPR&D charges of $3.3, this compares to earnings per share of $6.31 in Q2 2025, inclusive of $0.14 of acquired IP R&D charges.

On Slide 8, we quantify the effect of price, rate and volume on revenue growth. U.S. revenue increased 33% in Q2, primarily driven by volume growth set by Mounjaro as well as contributions from our immunology, oncology and neuroscience portfolio. U.S. price declined by 3%, driven by Saban and Monaro. In Q2, U.S. price benefited from a change to estimates for EBITs and discounts.

Excluding these adjustments, U.S. price declined by 9%. The Europe revenue grew 55% in constant currency, driven by sustained strong volume growth of Mounjaro. Europe revenue also benefited from a $250 million charge and milestone payment.

In Japan, revenue grew 30% in constant currency, driven by Mounjaro and Kisunla. In China, revenue grew by 93% in constant currency, driven by the uptick of Monaro. And in the rest of the world, revenue grew 136% in constant currency, driven by Mounjaro, primarily in Latin America and Asia.

On Slide 9, we provide an update on the performance of our key products. Within immunology, athletes worldwide sales more than doubled compared to Q2 2025. In the U.S., Apples continued to gain share of new prescriptions increasing by approximately 4 percentage points in the specialty dermatology market since last year.

In oncology, Jaypirca had another strong quarter of growth. and worldwide sales increased 56% compared to Q2 2025. As we continue to generate positive clinical trial data and expand the label, we believe Jaypirca has the potential to be a foundational therapy across multiple settings and regimens within CLL.

In Lulia continued strong uptake in the metastatic breast cancer oral serve market. after only 2 full quarters in Lurio in the U.S. is a leader in new prescriptions with more than 50% share. We look forward to the readout of #4 in the adjuvant setting to see if [ FINLUrIo ] can help even more people with breast cancer.

In neuroscience, Guisonda posted strong revenue growth expanding its leadership position in the U.S. and the amyloid target therapy market. Diagnostic testing momentum also continued to build and the number of P-tau217 blood test more than doubled compared to Q2 2025. This is translating to more people being diagnosed with Alzheimer's disease and accessing treatment.

Outside the U.S., solid performance in China and Japan contributed to growth as well. Finally, in cardiometabolic at, Mounjaro and SERD had another strong quarter, combining for $14.9 billion of revenue. and contributing $6.3 billion of growth compared to Q2 2025.

As seen on Slide 10, total prescriptions in the U.S. in creating analog market grew 31% compared to Q2 2025. The early uptick of all GLP-1s has been encouraging, expanding the market of people who are taking incretin therapy. Additionally, injectable incretins continue to be an important growth driver and account for 3 out of 4 new patient starts.

Within the U.S., including analog obesity market, total prescriptions grew by 78% in Q2 and the Lilly anti-obesity portfolio continues to lead. In Q2, approximately 6 out of 10 total prescription and approximately 7 out of 10 injectable prescriptions were for all Lilly medicine.

Self-pay continued to be an important segment within obesity and accounted for approximately 45% of total Sepon prescriptions in Q2 and approximately 55% of new prescriptions. In the U.S., Type 2 diabetes incretin analog market, total prescriptions grew 9% compared to Q2 2025, reflecting a more mature market compared to obesity.

The Lilly portfolio continues to lead here as well as more than 6 out of 10 prescriptions for an incretin were for all medicine. Outside the U.S., Lilly's portfolio is also performing well in the incretin analog market.

Slide 11 shows aggregate trends in the international incretin analog market, which has increased by 74% since the same period last year as measured by IQVIA gross sales. Lilly is the global market leader and we strengthened that position, gaining almost 2 percentage points of share compared to Q1 2026, reaching approximately 55%.

Mounjaro Q2 revenue growth was robust, driven by China, Korea, Germany, the U.K. and Mexico. We expect continued strong performance outside the U.S. but with market share leadership already established, market expansion will be key to driving sustainable growth.

We also saw incremental progress on securing reimbursement, reimbursed access as Mounjaro is now reimbursed for both type 2 diabetes and obesity in France.

Slide 12 provides an update on the Foundayo launch and the cadence of anticipated upcoming catalysts. The U.S. launch is progressing well. Total prescription share of new patients continue to grow as we are increasing our investment to turn brand awareness among physicians and consumers.

The recent launch of the Medicare GLP-1 bridge program is an opportunity to expand the oral market unlocking access for eligible seniors with a low out-of-pocket cost. We are pleased to receive the first international approval for obesity in UAE and Saudi Arabia and in Mexico for obesity and type 2 diabetes.

We look forward to potential approvals in additional markets this year. With more than 40 markets currently under regulatory review, we expect our global rollout in all major markets in 2027. We also expect readouts of many additional clinical trials.

The first readout in our strategy sleep apnea will come later this year, and we have an additional 5 ongoing Phase III programs staying Foundayo. As a small molecule that can be produced at scale, Foundayo has the potential to have millions of people improve their cardio metabolic cost.

Moving to Slide 14. We provide an updated 2026 financial guide. We have increased the low end of our revenue range by $3 billion and the high end by $2 billion, reflecting a strong underlying performance of our key products in the first half of 2026. We now expect full year revenue to be between $85 million and $87 billion. Based on higher revenue, we now expect our non-GAAP performance margin to be between 49% and 5.5% an increase of 2 percentage points at the low and the high end of the performance margin range.

We now expect non-GAAP earnings per share of $35.50 to $36.50, an increase of $2.78 per share at the midpoint of our range before updating our guide for the $3.03 impact of Q2 acquired IP R&D charges. We are pleased with our Q2 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.

Thanks, Lucas. Since our last earnings call, we've made significant progress across R&D with advances in each major therapeutic area. I'll begin with cardiometabolic health. Starting with retatrutide, we announced positive results from 3 Phase III trials. Triumph 1 in people with a visit overweight, Triumph 2 in people with type 2 diabetes and obesity or overweight and Triumph 3 in people with severe obesity and established cardiovascular disease with or without type 2 diabetes.

Across the Triumph program, we've seen profound levels of weight loss and improvements in A1c, cardiovascular risk factors, osteoarthritis pain and sleep apnea. With the recent completion of TrinT2and TRIM 3 trials, -- we now have the clinical data package to support global registrations in obesity, obstructive sleep apnea and knee osteoarthritis pay. Slide 15 shows impressive and consistent weight loss across the Trinuregistrational program. In TIMP1, we saw weight loss approaching bariatric surgery levels at the highest doses and clinically meaningful efficacy at low doses with only 1 titration step.

In patients with diabetes and obesity, who typically struggle to lose weight. Reditrutyde delivered a magnitude of weight loss not previously seen with incrogen therapy. We look forward to working with regulators as they evaluate this important new medicine and plan to submit in the U.S. in quarter 1, 2027 under the BLA pathway.

Turning to Orphaglipron. We have completed our U.S. submission in type 2 diabetes supported by the ACHIEVE Phase III program. In June, we presented detailed results from 3 of those trials, ACHIEVE 2, ACHIEVE 3 and ACHIEVE 5 at the American Diabetes Association Scientific Sessions. ACHIEVE I was the first head-to-head comparison of 2 oral GLP ones. -- and orphaglipron delivered superior glycemic control and weight reduction against 7 milligrams and 14 milligrams oral semaglutide in patients with type 2 diabetes for the many people with type 2 diabetes who prefer an oral option and have deep reaching their glycemic targets, we believe or for Glipron has the potential to be a foundational daily oral treatment.

Also in cardiometabolic health, the CHMP adopted a positive opinion, recommending EU approval of insulin [ epcotora ] alpha for patients with type 2 diabetes. The opinion was based on the Phase III program were once weekly insulin epatoralpha achieved reductions in A1C comparable to those of once-daily basal insulin.

For people with type 2 diabetes who require insulin a single weekly injection can simplify treatment and ease the burden of daily dosing. We look forward to European approval in the coming months. We also shared clinical results from VERVE 102. Our gene editing program in cardiovascular disease, designed to inactivate the PCSK9 gene resulting in lowered LDL cholesterol.

In the Phase Ib study, the single infusion reduced PCSK9 by 88% in LDL cholesterol by 62% at the highest dose. These early data are encouraging and suggest that we may be able to have a medicine delivered once fasting cardiovascular benefit. Moving to neuroscience. We announced an agreement to acquire Time Beckley, which is advancing a pipeline of rapid-acting neuropathogens for treatment-resistant depression and other mental health conditions. The lead asset, BPL 003 has shown encouraging Phase IIb results.

This remains 1 of the most significant unmet needs in psychiatry. -- and we're encouraged by the potential of a rapid-acting therapy designed to deliver durable relief. We look forward to welcoming the Itai Beckley team to Lilly. With the SYNTEtA acquisition now complete, we added Clemen Orexin to the pipeline in Phase II. Clemenarextan is the potential best-in-class Orexin-receptor 2 agonist being studied in a Phase II/III trial in central hypersomnias.

Orexin biology plays an important role in regulating the sleep-wake cycle and sleep disorders are associated with many neurological, neurodegenerative and neuropsychiatric conditions. We believe with this Cites pipeline we may have the potential to treat a broad range of diseases.

Turning to oncology. We recently presented detailed Phase III results from brewing CLL 322 at the 2026 EHA meeting, which added partibrutinib to a time-limited venetoclax and rituximab regimen in previously treated CLL.

As shown on Slide 16, in the overall study population, adding partibrutinib reduced the risk of disease progression or death by 45% compared to the fixed duration regimen. Additionally, in patients whose disease progressed after treatment with 1 prior covalent BTK inhibitor, adding partibritinib to the fixed duration regimen led to a 68% reduction in the risk of progression or death.

These results are the first to outperform a venetoclax containing control arm in a CLL Phase III trial. We believe this study has the potential to establish a new standard of care in this population, and we submitted these data to global regulatory authorities.

Also in oncology, we shared impressive new data from the LIBRETTO 432 Phase III trial of selpetatinib in adjuvant RET fusion-positive non-small cell lung cancer. These results were presented during the plenary session at the 2026 ASCO meeting and showed that selpercatinib reduced the risk of disease recurrence or death by 83% versus placebo.

This striking effect size highlights the efficacy that can be achieved by targeted therapies and underscores the importance of comprehensive biomarker test across all stages of disease.

We are also excited by the encouraging data presented at medical meetings from 2 recently acquired hematology programs, AG111095, a type 2 JAK inhibitor from Ajax Therapeutics and KLN 1010 in in vivo CAR T therapy from Colonia Therapeutics.

Both programs demonstrated compelling early efficacy and safety, and we look forward to progressing both through clinical development alongside the teams from Ajax and Colonial.

Moving to immunology. The FDA approved a new maintenance dosing regimen option for lebrikizumab, giving patients with atopic dermatitis and the option to manage their condition with as few as 6 maintenance injections per year.

The potential to deliver sustained disease control with greater convenience has been well received by physicians and patients. reinforcing the strong and durable effect of lebrikizumab. With our partner, Almirall, we're exploring even less frequent dosing once 12 weeks.

These data are expected in 2027. We're also working to bring lebrikizumab to more patients. Based on the positive Phase III results in children 6 months to 18 years old in the adorable trial program, we submitted for a pediatric atopic dermatitis indication in the U.S. and plan to submit to other global regulators later this year.

We also continue to expand our study of incretin biology into new settings and initiated 2 Phase II trials of benepatide our GIP/GLP-1 dual agonist in irritable bowel syndrome. Irritable bowel syndrome is a disorder of gut brain interaction defined by heightened visceral pain sensitivity and disordered intestinal mentality.

Incretin pathway signaling has been shown to reduce visceral pain sensitivity, modulate gut motility and help restore the intestinal barrier. We also began a Phase II trial of our FXR agonist in combination with miratizumab in Crohn's disease and a Phase II trial of our XCL12 antibody in Vitiligo of global morbidity.

New medicines could be important to prevent acute disease and the downstream long-term consequences. We believe that combining these companies' platforms and teams with Lilly's global scale, could position Lilly to address significant population-level health problems. The acquisitions include Curbo, adding is in a potential next-generation verazelezostervirus vaccine for the prevention of shingles. In Phase II head-to-head study against the current standard of care, MISO's showed a comparable immune response with meaningfully improved tolerability.

With growing evidence linking shingles to elevated stroke risk and shingles vaccination to reduce dementia risk a better tolerated vaccine could reach of shingles prevention and reduce long-term risks of dementia and stroke.

Next, LIMITX Biologics is developing vaccines to prevent serious bacterial infections. Its platform focuses on bacteria by targeting the toxins and super antigens that drive disease. The most advanced program is in Phase I for the prevention of the leading bacterial cause of surgical site infections. -- where no vaccine exists today.

Vaccines to prevent bacterial infection could play an important role as antimicrobial resistance grows globally. And finally, vaccine company. which is a lead program against Epstein bar virus, an infection with no vaccine today. Beyond acute mononucleosis, epti Bar is linked to chronic oncological and neurological sequelae, including multiple sclerosis.

A vaccine could prevent not just the infection, but the serious diseases that follow it. As highlighted by all the new molecules we added to our pipeline through acquisitions, business development is an important component of our R&D strategy.

In the first half of 2026, we made strong progress and announced deals to acquire potential new medicines across established and emerging areas at Lilly. We've been increasingly active in business development over the last several years. The pace and average deal size have also continued to increase, reflecting our strategy to grow within our core therapeutic areas and create new opportunities through emerging science.

Lilly is uniquely positioned to pursue diseases where there is significant unmet need, exciting early science and the need for Lilly's development, regulatory and manufacturing scale to create value. We expect to remain active in business development while maintaining discipline to create value.

Finally, Slides 18 and 19 show the pipeline movements since our last earnings call and the full list of potential key events expected in 2026. We -- it was another productive quarter at Lilly R&D, and we have an ambitious agenda for the second half of the year.

I'll now turn the call back to Dave for closing.

Thanks, Dan. We made excellent progress this quarter. We delivered strong business results, received regulatory approval for new indications, shared positive Phase III trial results added new medicines to our pipeline and expanded access to medicines for patients. While we're pleased with the progress this year so far, we're not satisfied. We remain focused on executing the 3 components of our strategy to deliver sustained long-term growth to broaden our impact on cardiometabolic health, expand our presence in other therapeutic areas and invest to drive future growth.

Now I'll turn the call over to Mike to moderate the Q&A session.

Thanks, Dave. As a reminder, we would like to address as many questions as possible, but consistent with the prior quarters, please limit yourself to a single one-part question. Paul, please provide the instructions for how to join the queue, and we're ready for the first caller.

[Operator Instructions]. The first question today is coming from Seamus Fernandez from Guggenheim.

So I really wanted to ask on just sort of the increasingly deep position that Lilly is driving with consumers and how you envision expanding that treatment opportunity going forward? There's a number of different approaches that 1 could see Lilly taking across a more aesthetic driven approach. But where do you see this consumer market evolving -- and if you could just maybe give us a sense of how unique or similar, the U.S. versus the international self-pay market is at this point in time as you see it?

Great. Thanks, Seamus. Maybe some context on the consumer expansion. We'll first go to Ilya to talk about the U.S., and then Patrick can add some commentary about what we see outside the U.S.

Sure. Thanks, Seamus. And then, I think the overall market, if you think about just obesity in general, in the U.S. and globally, we're still have single -- mid-single digit in terms of utilization or treatment of obesity. And so there's still a significant opportunity ahead of us after more patients in terms of access, you see a meaningful improvement in access with Bridge as well as some state Medicaid access going live or committing to next year.

We continue to see significant growth even in Q2 and overall TRx coming in to treatment of obesity on 3 million TRx. And a lot of that is driven by both injectable and oral on new patients coming in. And of course, we're seeing about 55% of overall prescriptions for dep bound being in self-pay. And so we continue to look for ways to increase access and affordability increase the consumer awareness. And so we're putting a lot of efforts on consumer awareness and building out the need and urgency to treat obesity, and we continue to look for ways to expand our Lilly direct offering and make it easy for people to get access to care. Patrick?

Thank you. When we look at the obesity business outside U.S., it's still mainly out of pocket. So I think the consumer activation here is playing a significant role. -- and we have rapidly been replicating some of the practices from the U.S. outside the U.S. as well. And we have launched portions of Lilydirect outside of the U.S. However, it's important to take into account that regulations OUS differ and so will the different models that we will apply, but we will move quickly in this space.

And I think they have 1 thing in common, and that is to make sure that patients are being reached by state and authentic early medicines, and we'll continue to lean in on those ports.

The next question will be from Asad Heider from Goldman Sachs.

Great. Congrats on the continued strong performance and execution. Maybe just on the Fondeo launch, -- in the U.S., the launch curve has been somewhat slower than anticipated. Just curious as to what you think the contributing factors that are there and when do you think we could expect an inflection -- and then on OUS, just curious to hear any updated thoughts on how you're thinking about competitive dynamics and the loan trajectory Novo is now also scaling launches for their oral pill in several key ex U.S. countries? Are you such as the U.K. and Germany.

And in the UAE, I know you said you were encouraged by the early demand. But any learnings in terms of share dynamics now that Novo is in that market, too, and they said this morning that they got 50% share within 3 weeks of launch?

Great. Thanks, Asad. We'll stick with the same dual here. Ilya , do you want to start with talking about progress in the U.S. Dondelaunch, and then Patrick, you can add some color on ex-U.S.

Thanks, Asad. So listen, for Fund, we're making pretty meaningful progress on the fund performance and building out the brand. As we said from the start, we're focusing on 3 key areas. One is making sure we educate physicians on the TUNE profile and building out that experience.

The second is really achieving greater access and affordability for Foundayo n and the third is building out the consumer awareness. And we're making progress on all 3 fronts. So we're seeing the leading indicators being pretty positive overall. We're seeing week-to-week growth in overall prescriptions and uptake for Foundayo.

And with building out just if you take a look at the last 30 days, we've increased access with CVS, adding found Ao in June. We've obviously -- you've seen the launch of Bridge happening July 1, and we started the launch of our full DTC promotion campaign Foundayo to build out consumer and physician awareness.

And what we've seen in terms of overall growth and inflection is that the last week of July, we're seeing inflections. So the -- we're doubling the volume that we had just a month ago. And we're starting to see new starts coming in nearly around 1 out of 4 starting on Foundayo. So we're starting to see an inflection point on day on and with continued access growth and overall kind of HCP adoption, we believe that we'll continue to see growth in Foundayo over the coming quarters.

And when we looked at the first launch, we launched in UAE of Alumni and we actually had a strong start and with early signals showing that orals are expanding the market. And similarly to the U.S., we see that 2 patients are actually naive to treatment with incretin. And patients are rating up steadily.

And when we look at the Lilis combined incretins tell steady even if we had a second order entering the market.

When we look ahead, we have the approval in Mexico and Saudi and those are the markets where we will launch next and most of the launches will come in 2027. But I think we are extremely well positioned here in terms of supplies. So there will be no gating of launches it -- just in general, we need to have in mind that this is very early data, and there is a lot of noise in the data set. So I think when things are being referred to, it's very often sell-in data, and that takes into account all of the dynamics with inventory bill. But on our side, very pleased with the start of the launch of Pondeoutside the U.S.

The next question will be from Courtney Breen from Bernstein.

I did just want to probe on the related regulatory pathway. Dan, I noticed you mentioned kind of the BLA pathway. And I know that you've been negotiating perhaps challenging the FDA over the last couple of years in terms of that determination as to whether reditrutideis meets the criteria for a BLA.

Can you just help us understand the requirements and milestones ahead in ensuring that this is accepted as a lay and anything that kind of will help us understand whether this is going to be unique to retitrutide or whether they are going to be subsequent, but incretins that are going to be able to get classified as a BLA going forward.

Thanks, Courtney. We'll go to Dave to talk about the Reno-type filing pathway.

Yes. Thanks, Courtney. As you mentioned, we've been pursuing this for a little while because we believe retrade is a biologic application both in terms of amino acid count rule as well as analogous to a protein. So that's our position. there was a mixed decision in the first decision in the court. It's obviously it's active litigation, but we would hope to come to a conclusion with the FDA to support a BLA application -- as you may know, we have announced at the end of our clinical program that we have all the clinical data we need to submit, but we do need to gather a little bit more on the CMC side.

While that's going on, you can bet we're in communication with the agency, and we'll give an update to investors as there's any progress on the filing status for resitutide. But super exciting data package. I think we're seeing really unprecedented efficacy with this triple acting GLP-1.

We have a pretty large lead over any competitors with a triple acting medicine. And we pursued a very interesting, I think, package of comorbidities in both the initial package and now and subsequent data will read out over the coming years.

So very excited about the program and look forward to the submission by Q1 next year.

The next question will be from Chris Schott from JPMorgan.

Great. Congrats on all the progress. I know it's early, but can you just elaborate a bit more on the Medicare obesity rollout and any learnings and surprises there thus far? Maybe as part of that, can you just touch on maybe the ramp curve we've seen initially, what you're seeing in orals versus injectables et cetera, a string a sense of like what your -- how you're feeling this is going so far?

Great. Thanks, Chris. We'll go to talk about the Medicare GLP-1 bridge rollout and any context on orals versus injectables?

Thanks, Chris. We're really excited about, one, expanding access for seniors in the U.S. As David mentioned in the early part of the call, that it's increasing access to about 35% more Americans being able to access obesity therapy. If you think about the start, it's still early days.

At the same time, we're seeing a pretty significant inflection point. We're mostly on -- we're seeing CMS on educating physicians and different stakeholders, pharmacies, on the criteria process. That process is working pretty well in terms of the prior authorization and approvals of people that qualify. And so the criteria are clear. We're continuing to do pretty extensive education across consumers physicians and pharmacies to understand the criteria so that they know whether or not they can benefit. And we've also enabled the Le Direct to fulfill on the bridge process.

And in terms of momentum, you can see an inflection point for both of our medicines, Zeon and FDA over the last few weeks. Part of that is bridge. The approximate -- we're seeing a significant preference towards injectable, probably around 80% of people that are getting treatment are injectable, but we're seeing new patients for both.

And we have approximately around 60% to 70% being new people that are coming in that have not had access before. So it's still early days, but we're encouraged by the inflection point over the last few weeks, and we'll continue to work on educating consumers and stakeholders on the benefit of the Bridge program.

The next question will be from Geoff Meacham from Citibank.

I also wanted to say congrats on the quarter. had 2 related ones on retatrutide. The first 1 is, do you need a commercial strategy to protect against whatever it is that's apparently available today? Or will that solve itself with formal approval -- and then related, you guys have expanded the indication base for tirzepatide well beyond diabesity with the higher efficacy of redatrutide, are there additional indications that you can now address that otherwise perhaps you couldn't.

Great. Thanks, Geoff. We'll go to Ken to talk about the development strategy on Rett side and then any comments about commercial strategy as well.

Yes. Thanks for the question, Jeff. First of all, I think people are eagerly awaiting authentic redotrutides to be available in the market, and we fully expect that when we get this to medicine to market, people will go with their feet and embrace the really guaranteed product.

In terms of development strategy, while we do have a broad based with tirzepatide of indications with RED we're seeing in terms of really transformative weight loss at the high dose. And it does open up additional opportunities. You've seen that with the data we've shared on osteoarthritis knee pain, both from TRIUMPH 4 and Triumph 1, where you're effectively reducing pain by unprecedented amount 75%.

I think that's exemplary of the the sorts of opportunities we have ahead with this molecule. We're also advancing it in a study in MASH or MALD, which is ongoing and then which we think the glucagon mechanism of action there offers some potential unique opportunities. But we're also evaluating several additional indication opportunities here internally and may have more to say in the future on that last I'll circle back to pain.

We also have a chronic lower back pain study ongoing with REA, which will read out sometime next year. So overall, a very exciting medicine that we think can do a lot of work in the treatment of obesity, both on the high end with bariatric surgery linkway loss. And on the low end with just the simplicity of a single titration step. We'll look to expand the indication set and really maximize this opportunity.

The next question will be from Mohit Bansal from Wells Fargo.

Congrats on the progress. I'll ask a nonincreasing question for extra credit. So breast cancer would love to understand what -- how you are thinking about the post Fesenio strategy in breast cancer at this point? You have are you also have PIK. So is there an all-oral combo on the table as well?

Great. Thanks, Mohit, and extra credit duly noted.

Jake will go do you talk about the breast cancer strategy after Verzenio?

Yes. Thanks, Mohit, for the question. We're really excited about the presence that we have in breast cancer historically and going forward. I think the 3 most important targets in breast and for the estrogen receptor CDK4/6 and PI3 kinase alpha. We think we have the best medicines for every single 1 of those targets, and we have plans to combine them all. You know about what we're doing with inlinestrant currently an approved product as ENLIRIO with Ember 4 slated to read out next year, the pediment trial, that is a major moment for that medicine.

And we're on the precipice of beginning the Phase III program for terselisib, the Pi3-kinase inhibitor, which will be initially combined with existing endocrine therapies. But over time, we envision absolutely combining with in LaRio. And even in the existing study, we'll be combined with investigators' choice of CDK4/6, a lot part of which I think will be for Xenio.

So we're really excited about the potential for that all-oral combination in a variety of settings down the road.

The next question will be from Akash Tewari from Jefferies.

It seems like your guidance is almost implying a deceleration in reps versus Q2 for the back half of the year. And that seems unlikely given the Medicare Bridge programs ramping up, along with Foundayo commercial access getting online. Is there anything we're missing here maybe on price? Or is your team generally trying to be conservative here.

Right. Thanks, Akash. We'll go to Lucas to talk about the moving parts and guidance.

Yes. Thank you, Akash, for the question. Maybe a few parks, very pleased, by the way, to continue to see the strong performance that we see not only in the first half of the year, but also upgrading the guide by $2.5 billion for the full year.

To your point about what are the kind of the ins and outs on the guide, I think it's worth to highlight in the last couple of quarters that there were a few one-offs that we call it out in the calls as well prior-period adjustments that we have on our estimates for rebates and discounts in the U.S., including this quarter, those, of course, we don't expect that will continue into the second part of the year.

So that's something that once you look at the model, it is important to factor that -- then you mentioned the comparison in terms of growth versus last year. What is important, if you look at the base period, the 2025 period, remember that in the second part of the year, basically, we had all the volumes of the launches of Mounjaro in our U.S. markets. that was basically adding a lot of, again, new countries and volume into the second part of the year.

When you look at actually the growth that we expect to see in dollars, not in percentage of growth, we expect to continue to drive significant growth in the second part of the year as well. Of course, again, that bolus of new countries, as all along I highlighted, has already happened, will not happen again.

And as Patrick alluded as well, the growth that we expect to see in the future is more driven by the penetration in the OUS market. So those are some of the factors that is important to highlight. Last but not least, again, I know that some of you are funds of the seasonality effects. And I think it's worth to highlight that as well, we always have the seasonality in Europe in Q3 with all the vacation holidays taking place and that's factored in our guide. And usually, we have some seasonality in type 2 diabetes in the U.S. in the fourth quarter.

So those are some of the one-offs that I think is worth to call out as part of -- that we have been factored in our guide.

The next question will be from Michael Yee from UBS.

Talking about the strong OUS launch, can you talk a little bit about which specific regions are seeing the most growth? And make a comment about India, where I know there's a lot of noise about generic launching I know there's some capacity constraints as Reddy had made some comments. So maybe just talk about what you're seeing specifically there as well, even with generics launching.

Okay. Great. I assume we're talking about Mounjaro. So Patrick, we to talk about the OUS launch major kind of pocket of strength and then any early observations of generic semaglutide in India or other markets.

Happy to do that. So when you look at the performance of Mounjaro U.S., we actually continue to perform that strongly more or less everywhere. And we have taken a market leadership position across many different markets. But among the key drivers, I would highlight that China in [indiscernible] where we obtained the category leadership already after 16 months. But beyond that, we see significant growth in Korea, the U.K. Mexico and Germany.

And in many markets, we have a market share today but is similar to the level of the U.S. or even above. In terms of learnings from the launch of generics and macrosite, if we look specifically at India and even Brazil, we continue to see TRx growth for Mounjaro even after the launch of generics and maglutide. And I think that's driven by the strong differentiation we have with superiority data. And I think that's the first line of defense. But we have also been pleasantly surprised with what we see in Canada. Where actually the tirzepatide TRx continue to grow with the same pace as a total market TRx. And we have also seen the generic companies actually having significant supply constraints.

So I think that's something that we need to monitor very closely. But in an essence, strong performance across the globe outside of the U.S. And so far, the differentiation of tirzepatide seems to be a strong line of defense. And most importantly, our overall product portfolio will position us very well in the future as well here.

Next question will be from Terence Flynn from Morgan Stanley.

Great. Just on Fundao, I was wondering if you could provide any insight on how extensive your sampling program is and if that's having any dampening effect on the IQVIA prescription data that we're all watching every Friday, -- and what are you seeing in the U.S. prescribing base here? Are you seeing some expansion? And can you quantify that for us?

Great. We'll go to Ilya talk about Foundayo Sampling and U.S. prescribers and Terence [indiscernible].

Yes. So on sampling and in general, like our full promotion, we've got pretty much every lever going on in terms of promotion. -- sampling, we're incorporating the sample, the first 30 days of the first dose, pretty much similar to what you would see for a typical oral small molecule in the retail market. So we have extensive sampling across the prescriber base.

And we continue to have full supply to enable to do that, to get that first experience and understand the benefits of -- and safety of Foundayo.

In terms of prescriber base, we've seen a pretty good uptick in continued growth in the number of prescribers. I think the last time we had talked on earnings, we talked about about 8,000 prescribers. We've now increased that to 36,000 prescribers. And so we continue to see week-on-week and continued progress on the adoption, awareness and the improved perception of Foundayo profile for people living with on obesity. So we feel pretty good about going forward inflection points with increased access and consumer warehouse.

The next question will be from Umer Raffat from Evercore.

I have a question on net pricing and obesity, if I may. So as you know, Zebbound's net price is about 580 per prescription, which is meaningfully higher than the cash pay price but also higher than with ovine price about $380 per prescription.

So Dave, last quarter, you mentioned there's a lot of medical exception that might be driving some of this delta. And my question is, how sustainable is that, especially given CVS is back on formulary? And is this what drives the favorable rebate adjustments quarter after quarter?

We'll go to Lucas to talk a bit about net pricing at Mounjaro or is that bound in any of the net exception dynamics.

Yes, Umer, thank you for the question. Maybe just to anchor this back on the prices on Sean, different to many other molecules. By the way, there is a lot of transparency on all the different channels and you have all the access to CDA data, starting with Liddirect on direct-to-patient prices.

Again, you know that is starting at 299 all the way to $4.49. Now you have the bridge program at 245 as well. And of course, again, you have then the commercial price, again, that is again part of this equation. You mentioned medical exception. That's a driver. I think what you -- when you factor on your analysis as well, it's important to highlight again the the size of the scripts as well. That is another driver that is affecting the price component that in particular in that commercial segment is impacting, of course, again, the price, you can then try to extrapolate what is the price per pack that is significantly lower than that.

In terms of medical exception, yes, there are a few buckets. You mentioned one of them, for example, again, the template on CVS access that we are very happy that we accomplished now starting in Q4 will drive basically, as you know, since last year, when again CVS moved to 101, there were 3 options basically for the patients back then was -- one was to move to the competitor price product, basically, the other one was to go to the cash market and the third one was to go through the medical exception process going back to your point.

We are happy actually. And all along, our goal is to have access. The medical exception is maybe a short-term thing and our all along view is to have open access for all the patients -- so expect that price will actually go down for sure because of this, but it's very much embedded in our guide and it's basically reset on, again, our expectations. And of course, we are going to more than offset that with volume growth.

The next question will be from Jason Gerberry from Bank of America.

Mine is just on M&A. You guys surprised investors I think getting back into psychiatry with some vaccine deals. And so I'm wondering if you think these 2 areas like in vaccines are areas that really can scale and is this a high priority? Or do you see some of the assets as more one-off or you are just intrigued by the science. So just wondering if you can kind of characterize the strategy there.

Great. Thanks, Jason. We'll go to Jake to answer the question more broadly about the M&A strategy and the work we're doing there.

Yes, thanks for the question. I think with these 2 areas have in common is just the immense unmet need that still remains and that really is the through line of all of the work that we do, both internally and through business development.

So in this case, we saw an opportunity to acquire technology and medicines that we think have the potential to be really impactful and at prices that allow us to remain disciplined and create value long term for Lilly's shareholders. It's not actually that different frankly, the many other deals that we've done year-to-date and the internal projects that we continue to pro whether we continue to build more around infectious diseases and psychiatry specifically to your question, I don't want to for too much on that because we'll be opportunistic based on what we see it's available for acquisition and partnering, but very excited about those 2 areas and the specific things that we purchased there.

Great. I will try to squeeze a couple more in, if we could.

The next question will be from Louise Chen from Scotiabank. Louis.

I wanted to ask you about some of your other pipeline products outside of obesity. I know you've put a lot in there. Any specific assets, 1 or 2 that you're really excited about that you think -- the Street should be paying more attention to?

Great. Thanks for the question, Louise. We'll go to Dan to talk about other pipeline projects outside of obesity and any couple you want to highlight?

Yes. Thanks for the great question. We have a rich pipeline outside of obesity. Maybe I touch on some highlights by therapeutic area. Maybe starting in cardiovascular health. I mentioned the efforts we're doing in CBD with gene netting for PCSK9. We also have an oral and an injectable LPA lowering drugs. Those are huge opportunities.

We just commented on some of the new areas, Jake mention psychiatry and vaccines, also huge unmet areas. In neuroscience beyond the psyche expansion, we're excited about sleep wake disorders with Sytesa and then diseases like addiction major depressive disorder, which may be addressable with anchor ton science as well. So a lot of growth going on in neuroscience as well.

And then they come to oncology. I highlighted some of the exciting readouts. It's probably the richest period of oncology or readouts and molecule delivery that we've had as the way ever probably. Excited about a number of those molecules, including the 2 recent deals that we announced, the Colonia in vivo CAR T idea for multi myeloma, that's I think has a huge potential against a large unmet medical need as well as the AGCovel JAK inhibitor.

And then finally, in immunology, I commented on some of the progression that we're having. It's edges. It's still early days, I think. And watching what this drug can do, excited to see it grow in the marketplace and the new indications coming and new opportunities to continue to grow there and one of the largest segments of immunology right now.

And then behind that, a number of combination ideas coming in IBD as well as psoriatic diseases. So across our therapeutic areas, we have the strongest pipeline we've ever had. If you eliminated kind of the incretin stuff, this would be a really strong and large pipeline to be proud of.

Great. Thanks, Dan. Paul will do 1 last question, and then we'll close the call.

Final question today is coming from Dave Risinger from Leerink.

So congrats on the phenomenal results. I just wanted to ask about Fondeo ex U.S. So sales in the quarter in a single country, albeit a wealthy one, the UAE were $31 million which was close to half of the $67 million that Foundayo generated in the U.S. So although the pricing is probably relatively high in the UAE -- the results would seem to see explosive potential for Fundao once it's launched throughout the world. Could you comment on how you see its potential ex U.S. for obesity?

And then separately, how you see the opportunity for Fondeo to be paid for by ex U.S. governments for diabetes, do you think it will be better reimbursed than tirzepatide is simply because you can offer it much cheaper to governments for diabetes, then you offer tirzepatide? Any color would be helpful.

Great. We'll go to Patrick to talk about Foundayo obesity expectations ex U.S.? And then any color on thoughts on diabetes launch and reimbursement.

Thank you both. Just I shared earlier, we are encouraged to start in UAE, but also we need to consider that it's very early days, and there is a lot of noise in the data. And as always, when you launch a new medicine, there is an inventory build in the beginning as well, although there is a lot of demand created as well.

What we have learned so far is that there is a need for an oral in treating both obesity and type 2 diabetes. And I think we have seen that the majority of the patients are naive to incretin patients, 2 interesting treatments. So I think there is a significant opportunity.

The major rollout for us, OUS, will happen in the beginning of 2027 with major launches. Type 2 reimbursement.

Yes, I think we're probably slightly better positioned with an oral for Type 2 reimbursement. And the data we have seen so far for forging with 3 head-to-head trials, it's quite an appealing value proposition.

Nevertheless, we know that reimbursement OUS always takes time. So the focus at the time of launch will be on chronic weight management and building up on the experiences we have had so far in U.S. and UAE.

Great. Thanks, Patrick. Dave, your comment on close?

Yes. Thank you all for joining us. We always appreciate your participation in our earnings call and your interest in Eli Lilly. As usual, please follow up with the IR team if you have questions we didn't have a chance to get to you today, and have a great day. Thanks.

Thank you. 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 September 8 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 606589. International dialers can call (973)-528-0005 and again, those numbers are (800) 332-6854 and (973)-528-0005 with the access code 606 589. Thank you for your participation. You may now disconnect your lines.

All right. Let's get right into our next session. Very, very excited to have Eli Lilly here with us. Ken Custer, EVP. We were joking before someone who dominated ADA, he looks well. Mike Czapar, thank you again for being with us.

Ken, let's just get straight to the discussion, just to tee you up high level, and we're going to talk about your -- a lot of your programs and your products, but I want to start at sort of 10,000 feet so much happening in obesity, very dynamic field that Lilly is really trailblazing and at the leading edge of where this market is headed. Talk to us about what's been most surprising to you in terms of how this market is developing and what the landscape might look like in, call it, 5 years?

First, great to be here and great to see everyone. We're in a very privileged position right now to have been a part of the earliest innings of this vibrant and growing obesity category. But the reality is, is despite the fact that we have millions of people on these medicines in the United States, maybe tens of millions more outside the United States, there are plausibly billion that could benefit from these medicines. So we're like in the infancy of this space.

And so the thing that has surprised me so much is the scale of both what we have to accomplish, but also the legacy we could create as an industry in terms of transforming human health for the better. And so the biggest thing that I've really been focused on and I think our ADA message was centered around this is that as we look ahead, what do we need to do in order to unlock this bigger opportunity and help more people and go from 3% total penetration, something much larger than that. We do a number of things. We need to drive cultural change, recognizing obesity as a chronic disease where they warrant treatment. We need to facilitate access and reimbursement. We need to educate the primary care community on how to manage because they're going to bear the brunt of managing such a large population.

We need to invest in manufacturing as you've heard Lilly talk about a lot in the past. And the thing we got to at, ADA we also need to give people options because it's completely unreasonable to think that a population measured in the hundreds of millions or even billions will be satisfied with one thing. This is not going to be a one-size-fits-all category, in the future. Lilly was very proud to become a 2-product company in obesity in April and at ADA. We also share data on what we expect will be our third medicine and the treatment obesity that's retatrutide, our investigational triple receptor agonist, do we share data on how that medicine works in diabetes obesity as well as other complications, including osteoarthritis knee pain and obstructive sleep apnea.

And of course, we shared a lot more new data on Foundayo. So we are really trying to bring forward the broadest suite of solutions for people with overweight and obesity and other cardiometabolic conditions for the future.

So that's a great starting point, Ken. Let's start with [indiscernible] obviously, great data at ADA, and we certainly don't have to go through all of it again. I'm not going to put you through that, but highlight -- give us some of the key takeaways that you'd like to double click on.

Well, we shared data on 2 Phase III studies for retatrutide, actually have 3 positive Phase III studies after the TRIUMPH-4 results that we disclosed last December. The studies that we shared at ADA this year the TRANSCEND-T2D-1 study of type 2 diabetes, that's in monotherapy setting. And in that study, we showed up to 2% Hb1c lowering, very competitive with the existing, best-in-class agents in the treatment of diabetes. And importantly, we also showed a 17% body weight reduction at the highest dose, which I think moves the goalpost on weight loss in diabetes, particularly in such a short study.

Likewise, we also shared data from the TRIUMPH-1 study that was in patients with overweight obesity. It included -- it was a basket design that included substudies for osteoarthritis knee pain and obstructive sleep apnea in this trial, we saw across the broader population up to 28.3% weight loss after 80 weeks and for patients who continued on to 104 weeks on therapy, they lost up to 30.3% of their body weight while also delivering impressive reductions in osteoarthritis knee pain of about a 73% reduction as well as relief from obstructive sleep apnea with more than a 60% reduction in events.

So this is a very powerful medicine. And with the highest doses, this is unlocking levels of weight loss. We've historically only seen with bariatric surgery. But also, there was something else exciting in the data, which is that there's a 4-milligram dose of retatrutide to be included. And then on that dose, patients lost 19% of their body weight, which is not bad, competitive with our other dual agonists and they got there with just a single dose titration step. And importantly, they discontinued due to adverse events on that dose at a rate that was nominally lower than placebo.

So I think in totality, what these data say about retatrutide, which could be Lilly's third approved obesity medicine that not only could it deliver the most powerful efficacy that we've seen thus far from an agent. But also at the lower doses, it could be a real workhorse in the treatment of obesity offering really a lot of simplicity, near 20% weight loss, low discontinuation rate, simplicity with a single dose titration step. So I think reta can fill a lot of spaces in the treatment of overweight and obesity going forward, and we were delighted to share these results.

So let's stay with that. The 4-milligram dose certainly was one of the things that got a lot of attention, got a lot of our attention. And reta, the way I think about it, you've just got such a range, right, at the highest at the 12 milligram dose, you're getting weight loss that's approaching 30%, bariatric [indiscernible] like you said, Zepbound like efficacy of the 4-milligram dose were just one Zepbound.

So I guess in that context, one question that people are starting to ponder is just on the potential for broader use of reta beyond just the niche high -- highest BMI, morbidly obese bariatric surgery patient population, which is really how we've been modeling -- we've all been modeling this drug. So talk to us about with this range of data, how you see where reta is going to be positioned within the context of the overall portfolio.

So I think at the high end, when you're unlocking weight lowering approaching or even exceeding 30% at 104 weeks with really strong benefits on common comorbidities like osteoarthritis knee pain and obstructive sleep apnea, that's a new standard for efficacy. And I think it's pretty obvious how that part of the drug gets used. People have been waiting for something that for those patients who aren't even getting what they need from the state-of-the-art with Zepbound.

So like that story, I think, is well understood. I think introducing the idea that this could be a molecule that plays a much broader role, including earlier in disease that was a new part of the story. And given the size of the number of people that need help and need new options, we think it could play a pretty broad role. And it's -- I think up until now, we haven't always been able to match or predict which medicine is going to work best in which person. So the idea of having a medicine like Zepbound and a medicine like retatrutide, they can help those patients. That's a good thing.

But on that same point, can 1 question that as we think about the commercial opportunity, another emerging question in people's minds is whether reta will be cannibalistic to the franchise? Or will it be additive to the tirzepatide franchise? So help us thread that needle.

Yes. I mean if you go back to the idea that we're sort of serving like 3% of the total addressable market right now with these obesity medicines, probably fixating [indiscernible] probably not as productive as thinking about how we unlock the remaining 97%. But honestly, if a patient wants to move from 1 great Lilly medicine to another Lilly great medicine, I'll celebrate that and help them do it through the offerings that we have.

My goal is to bring forward a suite of solutions like Foundayo, like Zepbound and eventually retatrutide and even other investigational agents like eloralintide presented to people living with overweight obesity or other cardiometabolic health conditions wherever they are in their journey and help them start stay and switch between these agents through a common platform and maybe someday rather than worrying about whether they're taking retatrutide or Zepbound or Foundayo, they'll just be taking Lilly for overweight obesity.

So you think this is going to create an unlock on top of the franchise more than...

I do.

Similarly to how sort of when the -- emerged, is that sort of...

I really do. Yes, obviously, the orals emerging. That's clearly sort of a new segment in the market that's driving a lot of people who have previously not been using incretins, bringing them into the fold because they've clearly been waiting for something like this that fits with their individual preferences. But I do think that being a sort of weight loss partner with a broad suite of solutions will be the company that people want to work with.

And I think another thing with reta that certainly impressed us as I think it did a lot of people. It's just the cardiovascular benefits. I mean you've got LDL-C lowering and many other markers that you showed at the ADA presentation, Talk to us about how that impacts the positioning of the drug. So maybe on some that.

Certainly, we have results from 3 Phase III studies right now, and we've seen what we would expect from a powerful incretin, which is great weight lowering along with reductions in non-HDL cholesterol, reductions in C-reactive protein, blood pressure, all of the things that would be historically associated with cardiovascular risk reduction or moving in the right direction.

Of course, we won't have a read on cardiovascular safety until we see the TRIUMPH-3 data as they're coming later this year. But then more importantly, we have the TRIUMPH outcome study running, which is a more fulsome cardiovascular outcome study that includes cardiovascular and renal endpoints. But right now, nothing we see in the data suggests to us that it's not going to bring forward the benefits that you see in the single or dual agonist.

And now that the launch is planned as a 2027 event, what can you tell us in terms of just high-level sort of pricing strategy?

Yes. Obviously, too early to speculate on pricing here. We obviously price in accordance with value. And this looks like a pretty valuable medicine. But at the same time, we have broad aspirations to help a lot of people on this planet reach their individual health goals. And to do that, we're going to need to create access, and we'll do what we need to do to create that access.

And if this drug were to scale at the way you're describing, create this additional unlock, talk to us again about supply and capacity constraints. Is the manufacturing process fungible with tirzepatide?

Well, maybe let's start with -- we've been very focused on creating a highly scalable solution with Foundayo, which we can, I guess, talk about in a bit. But for patients who may be graduating from an oral agent to a medicine like Zepbound or retatrutide, we've been aggressively investing in production capacity to support them as well.

In fact, a little over $50 billion in manufacturing commitments announced since just 2020 and a significant portion of that is centered on our incretin medicines and our parenteral incretin medicines. So we're making those investments. It will be on a common platform, which means that we can support whatever sort of mix of tirzepatide, retatrutide and eventually eloralintide ultimately proves to be -- proves out in the market.

And I guess we've seen a lot of online awareness already about retatrutide. There haven't been a lot of investigational drugs. It's so much early consumer attention, a bit of a gray market as well, if you will. How does that impact how you think about the launch and the positioning of the product?

Well, certainly, it's probably the most extreme example we've seen that tells us there's a lot of experimentation in this category. And so while we don't condone the use of sort of gray market retatrutide, which frankly, you don't even know what it is or where it's coming from, and we haven't even finished running the pivotal program yet, it does remind us that there's a need for additional options. And so we're obviously optimistic about this molecule, and we look forward to bringing authentic Lilly branded retatrutide to people around the world as soon as we can. But like I said, a good reminder that people are looking for additional options.

Okay. I'm going to pause there and see if there are any questions on reta from the audience. Let's keep moving. Let's talk about eloralintide, another very exciting program that seems to be moving very fast. You mentioned it's potentially becoming one of the largest development programs in Lilly's history, which is a very intriguing comment, and it feels like this is starting to emerge as a long-term platform asset. So give us a high-level framing on what makes you so excited about elora, its differentiation versus other Amylin, its positioning, just high level first.

Yes. I'm tremendously excited about eloralintide. We have known about Amylin for a long time. In fact, the first Amylin analog and the GLP-1 analog were approved around the same time, pramlintide and exenatide, but it's taken us a little bit longer to get to a long-acting Amylin with the molecular properties that we think we need for it to be the right clinical profile.

Amylin is actually reasonably complicated biology. There's sort of calcitonin receptors and the 3 different flavors of amylin receptors. And I think it's becoming increasingly clear to us at Lilly that the different molecules are not all going to be the same. And there are things about these different efforts that Lilly and other sponsors in the industry are doing. They're not all going to be the same. And we like what we're seeing with eloralintide. We shared clinical data at Obesity Week last year, Phase II data showing that patients with overweight obesity lost about 17% of their body weight on our sort of titrated 3, 6 and 9-milligram dose. And yet despite losing 17% of their body weight, they had a vomiting rate of just like 2%, which suggests to us that this could be a new important medicine in the treatment of overweight obesity that becomes an option for those 5% to 10% of patients in our trials who just can't continue due to GI adverse events.

So to have a non-GLP-1-based mechanism out there feels really important, something that delivers incretin-like efficacy with placebo-like tolerability. That's the goal. So we see that eloralintide could be a foundational agent certainly for that 5% to 10% of people, which, by the way, 5% to 10% of the obesity market, a sizable group of individuals. But we're also developing it as a potential add-on therapy for patients currently on incretin therapies to help them get to goal through additional beneficial pharmacology. There's even some NILEX indications or new indication ideas with Amylin where it might work better than incretins. I'm not going to speak about those yet, but you can expect that we'll continue to add to our development program for eloralintide.

And maybe just as we think about this commercial strategy, and like you said, it's a little early to talk about that, but will you position it as an option for people who are not tolerant to GLP-1s, those plateau on incretins or the broader naive population. These are all very different patient segments.

Yes. I guess it gets to the broader question we're having about positioning with reta sort of as a powerful agent, but also a flexible agent, a simple agent. Here with elora, it could be for patients who don't tolerate GLP-1s or who aren't getting enough from GLP-1s and then some other ideas that they're working on. I think we're going to have to get comfortable with the idea that as we bring forward really innovative medicines in a category this big that we have to sort of position them for multiple different use cases and be really clear how to support all those different uses. So expect to do that.

And if the tolerability profile that you saw in Phase II holds in the Phase IIIs, what's the level of weight loss that you think would be enough to make it really differentiated versus the current medications and also other candidates in the pipeline.

Certainly as a monotherapy, I think if you can get into the high teens and have a clear differentiation on GI tolerability, that's a meaningful medicine. As you think about alternative use cases, combination with incretins, you're looking for slightly different things in that context.

Yes. And then I guess similar question to reta as it relates to manufacturing. Are there any fill finish constraints that could constrain supply as the product scales?

Again, so eloralintide, tirzepatide, retatrutide on common platforms. And so our goal is to forecast the aggregate injectable incretin market to make sure we build for the cost, but we can tolerate fluctuations between the molecules within that stack.

And you're also studying elora in combination with tirzepatide, that Phase IIb study, I believe, as a PCD primary completion date of sometime this month, June '26, right? And the study is going to be reading out later this year. What should we be looking for? What would constitute a positive outcome in your view?

Well, we've teased that -- we do expect to disclose data on that program later this year. As you noted, I guess if you take a step back and say, we have single agonist, dual agonist, triple agonist with retatrutide, why do we need another triple agonist? Well, one of the things in my mind is that GIP, GLP-1 and Amylin feel like 3 -- like maybe the -- ultimately the 3 best nutrient stimulated hormones to put together into a medicine. And the idea that maybe you can sort of lightly agonize 3 pathways rather than blasting one. I'm a biologist by training, and that appeals to me.

Biology is not super highways. It's -- I think this could potentially be a very physiological way to drive weight loss, both for the earlier patient, but obviously, by co-agonism of GIP, GLP-1 and Amylin 3 great pathways, we can probably also drive a lot of weight loss as well. So we'll look at the data and share them with the community, and there'll likely be a lot of ways we can think about these combination of continuous use in the future.

Okay. I'm going to take a pause there again and see if any audience questions on elora. All right. I'm going to keep going.

Let's pivot to long-acting. Again, monthlies obviously have become more of a theme, theme at ADA, Pfizer had some data. You're going to have MariTide, Amgen. More and more companies are starting to chase what seems to be a sliver of a commercial opening in the market. You guys haven't revealed a lot about your own long-acting strategy, although in your ADA slide deck, you did reference ultra-long-acting. I'm looking at you, Mike, a couple of times, suggesting that there is a program underway. And about a year ago, you did this deal, if I remember exactly a year ago with a Swedish company called Camurus, really focused on the development of long-acting incretin therapies using that technology.

So what's the strategy there, right? Like what's in your view, like where are these long-acting therapies going to fit in the market? How meaningful do you think that differentiation is going to be when you go from weekly to monthly or even longer?

Maybe start by saying we do see a place for less frequent dosing. If you sort of think of all of the plausible segments you can envision in a very large future obesity market, we do think less frequent injections is something that people want. We know people stretch their doses of their existing medicines already and are doing their own experimentation. So I'd love to be able to give them something that was monthly or quarterly that delivered the full sort of profile with just longer time -- full spectrum of benefits with longer time action.

There's different ways to get to a potential medicine like that. I do strongly believe that molecular properties matter, and I'm not keen to take a weekly drug and overdose it in a way that I might get some partial coverage at the end of a month. So probably doesn't -- probably means we're not going to overdose tirzepatide to get there. What we're going to do is bring a more purpose-built effort forward. And that could be an excipient-based or [indiscernible] types of collaborations that we do possibly using different time extension strategies that could get you out into those levels.

When are we -- when can we expect to start hearing more about those...

You might have seen that Lilly sometimes takes the strategy of baking off multiple have competing efforts and pro probably -- though we might be doing something similar here. But there's many other things we're doing in the early portfolio. We don't often share a ton on those things. Part of that is because like I fully expect to terminate some of those things and pick the best one, and I don't like to make too big a news story out of the things that we stopped doing because they just weren't as good. But the other one is like we do keep our cards a little bit close to our chest on some of these things.

Maybe we can start talking about Foundayo a little bit. Mike, I'm going to start with you because I think the sort of mind share on that is really more commercial at this point, although I do want to get into some of the clinical programs. So what can you share with us about the Foundayo launch? You guys put out some really helpful metrics in the first quarter that made IQVIA data very sort of irrelevant, if you will, because it wasn't capturing a lot of the channels. Just any high-level framing on how things are progressing would be very useful.

Sure. I'll start and Ken to if you to round it out. Just to remind everybody, Foundayo approved in April. We then began promoting with the reps in the field in April. In May, began sampling to really focus on give physicians, education and awareness and then give them some initial experiences with new starts. As you kind of wind the tape forward as we continue to work with the HCP and the physician, we're then wanting to activate the consumer. And so if you -- if anyone watched the NBA basketball game last night, the first Foundayo ad was actually released there. So we're starting to begin some consumer channels as well.

ACCESS is another piece that we're focused on. So beginning in June, we had coverage in all 3 of the pharmacy benefit managers. And then beginning in July 1, we actually have access as part of the Medicare GLP bridge program. So the launch is tracking, we're focused on the sequence, executing the play, and I feel really good about where we're headed.

Nothing to add than to say, like I said, it's -- 2 months ago, this medicine had 0 unaided or aided awareness because nobody knew what Foundayo was, we've been out really reaching the healthcare community, driving awareness of this medicine, reception has been very positive. And now we sort of start to turn on some of the other levers. You have to can't do those things right away. You have to make sure people know what the medicine is before you expect them to start writing.

And when you turn on those levers, the DTC campaign begins...

Yesterday.

It began -- oh, yes, yesterday.

I don't know if there's any investors in New York, but if people watch the New York Knicks, there was a...

We had a Knicks buddy here. Okay. Let's maybe then Ken talk a little bit more about the broad program to developing Foundayo beyond the ATTAIN and ACHIEVE trials, including potential combination strategies?

Sure. So we're investing quite a bit in this medicine, not only to establish it as an obesity medicine as a starting medicine, but also we've shared data on how Foundayo can be used as a maintenance therapy after losing weight on a drug like Wegovy or Zepbound. We shared those data a few weeks ago. We're developing it in type 2 diabetes. We shared those data yesterday at a symposium at ADA from 3 Phase III studies showing that in all 3 of those studies, Foundayo performed as comparator both HbA1c lowering and weight.

And then if you move to the more sort of nonstandard indication set for GLP-1, we are developing Foundayo for obstructive sleep apnea, for osteoarthritis knee pain, for peripheral artery disease for stress urinary incontinence and for hypertension right now. And there's more things coming. We also have a large global cardiovascular outcome study, which has been initiated, that's the ATTAIN outcome study. So a very robust development plan and expect more data to come.

And maybe just if I could pivot to another big picture question there for you. And as we are thinking about the oral class, obviously, the launch has been much stronger than expectations. I mean what do you think the volume split could look like over the next several years between injectables and orals?

First, I mean I'm hesitant to pick an exact split for you because we're still in early innings. But in the United States, you can clearly see that, I don't know, 3/4 or so of patients starting on the oral GLP-1s seem to be new to the incretin category. That's actually exciting in my mind because it validates our hypothesis that there were a lot of people waiting for something like this, and that seems to be playing out.

As you move this to international, does that go even higher? I think that's an interesting question. We know there are some markets in Asia, for example, where they're like very interested in orals. We get asked all the time, and there's a high degree of excitement for these medicines. So I do think that orals, there's a lot of interest in them and people will naturally graduate to them. But there's the additional piece of this, which is these molecules are highly, highly scalable. These small molecule non-peptide oral GLP-1s. Our production capacity is long term, like theoretically infinite on these molecules because they use the same technology as a statin or a blood pressure pill. You're using chemical synthesis and not only is Lilly making large investments in its own production capacity, but there's just a lot of third-party capacity you can tap into on an existing platform like this.

So this is the sort of molecule that starts to open up not just deep penetration into the United States and other developed markets, but starts to make developing nations also pretty -- like very reachable. In addition to being easy to produce, they're easy to store and distribute. You don't have concerns with refrigerated warehouse space or refrigerated trucks or refrigeration in pharmacy chain. So these are hyperscalable drugs. And as you think about trying to contemplate positively affecting the health of hundreds of millions or even 1 billion people with incretins, I think this is the only way you get there.

I want to talk, Ken, about one of your earlier-stage pipeline programs that hasn't been getting a lot of attention. Maybe you recently shared Phase I data from one of the [indiscernible] assets, it's PCSK9 editor. Just in the context of what we just talked about, what's the significance of those results? And what role do you see genetic medicines playing in the cardiometabolic space?

Yes. Well, as you've seen from Lilly, we have a strong belief in nucleic acid-based therapies and genetic medicines. And it's hard for us to imagine a future where ultra-long-acting or durable or even lifelong treatments aren't part of medicine, not just in specialty, but even in more prevalent conditions in the future. So we're fortunate, Lilly, to have a strong core business anchored by cardiometabolic health and obesity that allows us to invest in and incubate some of these I think, more provocative ideas for how we could transform health care in very different ways.

One of those ideas that you alluded to is our VERVE-102 program, which is focused on effectively turning a person who has high cholesterol into somebody who carries a naturally existing loss of function mutation in PCSK9 that's associated with lower cardiovascular events. So we're really just tuning somebody's allele to the beneficial allele in this case with a medicine that you would just infuse once. And in the trial, you can see patients are getting dramatic reductions in LDL. It may be that you only have to take this therapy once in your life and you have an LDL of 40 mg per deciliter or something like that. And that's a pretty exciting concept in the future.

Of course, maybe you start with patients who have some sort of familial hypercholesterolemia, but then maybe you work your way to secondary prevention where a patient had a myocardial infarction and you offer this as a way to sort of just reduce your LDL. So it's one thing -- less thing to worry about. And then maybe someday, you can go and get your PCSK9 inactivated and your LDL permanently reduced even for primary prevention.

It's going to be fascinating to watch that program develop. Mike, I want to bring you back in, in the last few minutes. We haven't talked much about OUS markets. We touched on them a little bit, but Mounjaro had a sizable beat again OUS. We recently at Coleman, we raised our OUS TAM forecast just based on the momentum that we're seeing in some of these markets.

What can you tell us about how things are going, level of impact from the generics? Any quantitative comments, and please don't scold me that you can share? Or any comments you can talk about in terms of just quarter-over-quarter progression and how -- what we should expect for the rest of the year?

ure. No, I mean, as Ken said, obesity really is a global issue. And so we've launched Mounjaro now everywhere in the world a lot of good momentum for 2025, places like China, Brazil, Mexico, even in different markets in Asia like Korea, we saw some really nice contributions to growth in Q1. I think what we're seeing and what we're encouraged by is a significant portion of Mounjaro outside the U.S. is actually cash pay. So about 3/4 of total international Mounjaro sales is cash pay.

What that is encouraging is that it's showing that there's a high willingness to pay, and there's a large unmet need that exists outside the U.S. Now with being fully launched, we've kind of rapidly gained share in a number of different markets. And so for the first time last quarter, we showed the kind of aggregate international Mounjaro share of market. And it was north of 50%. Actually, we lapped it late last year, but we're now kind of squarely above. And so there's still a lot of additional opportunity to increase penetration because a very low percentage of people who are eligible for these medicines are taking it. but we really have done the fast uptake with the share of market. And so the growth from here will really be driven by the market.

So a lot of good momentum, a lot of work to still be done. And we also expect next year to have Foundayo launched outside the U.S. as well, which will be another catalyst for international as well.

Are you launching in any countries this year? I think you've said there's a few UAE, except for maybe Foundayo?

Yes. So we've already launched UAE. In fact, we got the approval 24 hours after the U.S. approval. So great to see that sort of international regulatory acceleration. We submitted in about 45 -- more than 45 countries, I think, is what we signaled. The bulk of those happened in Q4 of last year, so you can sort of do the math and expect that we'll be coming up on some pretty significant launch activity towards the end of this year, beginning of next year.

And how should we be thinking about the sort of launch trajectory OUS? Is it similar to the U.S. in terms of what we saw early doors? Are the dynamics different that would support maybe even a quicker ramp?

Maybe start by saying that we're not gating these launches in any way. So we'll launch in all those countries as soon as we have regulatory approval. So that means in many markets, we expect to be the first to market oral GLP-1, which I think sets us up for a very strong story in IBU as well as what we're doing in the U.S.

Okay. Mike, back to you. Any high level just in the last minute or so.

No, absolutely. [indiscernible] I mean I think across all of our other therapeutic areas, so oncology, neuroscience as well as immunology and some of the new ones that we're adding with our reentry into infectious diseases where we've got a lot of investment right now and quite a bit of momentum. I'll maybe talk about oncology and then pass it back to Ken to maybe talk about some of the other spots as well.

But I think oncology right now, we've got a lot of momentum with Jaypirca. We keep adding indications, keep having positive trials that read out. Receptivity is really good and a lot of -- a big opportunity for that to be an important medicine. We've got olomorasib that's around the corner. We've got actually a lot of assets. If you count them all, there's probably 8 different opportunities or indication expansions that we've got some level of clinical validation on and look like they're a pretty good chance of being medicines. Oral SERDs discussed a lot of other companies. We actually have one that's on the market as well, and we've got an exciting readout with EMBER-4 that could move us into earlier line settings in adjuvant. And then we also just did some recent -- we've done quite a bit of business development in oncology as well.

So in vivo CAR-T, it's like a big market idea that if you could potentially have those medicines come to market, could be used quite a bit. So I mentioned BD and then maybe I'll pass it back to Ken to talk about like infectious disease or even like the Centessa acquisition because these are really interesting ideas that expand the focus of the company.

I think one of the things that's great about the position we're in is that we are benefiting from our participation in obesity through our core cardiometabolic health business that generates cash flows that we can then go back and reinvest into future avenues of growth. And that's why you see so much business development activity...

It will be very busy.

I believe we're doing a deal every 9 days, but that may be starting to maybe 8 days. So obviously, for any of you work in deal making, there's a lot of work goes on to make that happen. So kudos to Jake, but also all of our leaders that participated in that. In cardiometabolic health, we do a lot of technology accessing deals to make better obesity medicines and like. There's not a lot of like late-stage substrate in obesity that's transactable for us because we tend to have most of those things already, but we have been making some additions to our cardiovascular portfolio through business development.

And then as Mike noted, lots going on outside cardiometabolic health, outside oncology and neuroscience, that Centessa deal, bringing us into what we think to be a large area with sleep. And then as Mike also noted, 3 deals announced just a couple of weeks ago, bringing Lilly, I guess, officially back into the area of infectious disease where we have had a legacy over the course of our company. So it's great to see this continued diversification and identifying future growth drivers beyond obesity.

Congratulations on all the progress. Looking forward to seeing the momentum continue and really appreciate your time today, again, and hope you get some rest. Mike, thank you for joining us.

Great. Thank you.

Hi, everyone. Thank you so much for being with us today. It is my pleasure to be sharing the stage with Dan Skovronsky, Chief Scientific Officer as well as Chief Product Officer at Eli Lilly. We will be having hopefully an insightful conversation on the company and particularly given his role, kind of the approach to R&D at Lilly and how that continues to evolve.

While I have a long list of questions that I'm really excited to ask Dan, I also recognize that there's a bunch of people in this room that also have questions that might differ from mine. So we do have the Pigeonhole app. Please feel free to add any questions that you have of interest into that app, and I'll do my best to work them into the conversation. So please dive into that so that we get kind of the most robust conversation that we can today. So with that, I want to start with a little bit of scene setting perhaps.

Sure.

Eli Lilly is and has just had its 150th birthday, a relatively old company, and it's certainly been around for a while. It has become a relative household name though in recent times, kind of now with the GLP-1s and certainly even with a broader base of investors as its market cap is kind of headed towards the $1 trillion mark. That wasn't always the case though. Can you please start just by setting the scene for us on what makes Lilly unique relative to its peers and how we should think about this company?

Yes. Thank you, Courtney, for that question, and thanks for hosting us here today, and thanks, everyone, for joining and spending time listening to us. The 150th anniversary, Lilly was like a chance for a reflection on this very question, what makes this company durable and successful in a way that actually, to my knowledge, there is no other company that is both this old and this successful. At its core, it's just kind of a durable idea, which is that the best way to improve human health is by application of science and science can lead to great medicines and combined with the idea that improving human health is valuable. So that's what Lilly is built on, improving human health through science.

Probably a lot of pharmaceutical companies would say the same thing. I would argue we live it better than most. And in the last, say, 10 or 15 years, we've been much more successful than other pharmaceutical companies. At the core of it is probably what I see as a very differentiated approach to R&D. Maybe I'd just highlight a few of those elements, if I can, Courtney. First of all, we invest more in R&D, and we have invested more in R&D as a percent of our revenues than anyone else in this industry. We believe that's how we create value through research and development. But the way we do that is different. For one thing, we are -- we choose what to work on differently than our peers. We try and work on big medical problems that are at the intersection of unmet medical need and breaking science and we try and tune out the noise of the industry, which is look what's working today. Here's a fast-growing market. Why aren't you in it? I hear that sometimes from investors. I used to hear it a lot more. Now my peers hear it.

And of course, they all follow into obesity because that's working or Alzheimer's disease because that's working. But those are paths that we cleared. We used to hear it about immuno-oncology and most of our competitors followed the kind of lure of immuno-oncology and yet for most companies, it wasn't productive. So we pick our areas carefully. We try not to waver from them, and we persist in them. We've been working in diabetes and metabolic disease for 100 years. We've been working in oncology for 50 years, Alzheimer's for 30 years. And we just keep plugging away at hard problems because if a problem is worth solving a medicine, it's probably really hard, and you're not going to solve it at your first attempt. And tirzepatide, Mounjaro, Zepbound wasn't our first incretin. It was our third one to launch and probably our seventh or eighth one that we tested in humans. And our Alzheimer's drug that we launched was probably sixth one that we tested in humans.

So these things take time, and we just have that persistence and long-term outlook that competitors lack for various reasons. Second is because we stay in these areas, we try and go really fast, and that's relatively new. I would say when I came to Lilly, we're among the slowest in the industry at drug development. We get these statistics every day -- every year from third parties who can just look at when you start a Phase I, Phase II, Phase III launch and we decided about a decade ago that the #1 organizing principle for R&D was to try and be the fastest in every task we've optimized for speed, and we are now the fastest. For the last couple of years, we've been #1 in the industry. We're about 3, 3.5 years faster than the average company. That means our products get to patients faster. That's great.

But more importantly, it means we have faster learning cycles, which is important if you're going to stick in an area. You want to just keep learning and get better and better more quickly than anyone else, and we do that. The next thing I'd just highlight that's differentiated at Lilly and related to these other topics is our ability to invest in platforms, new ways of making medicines and new technologies. If you're focused on revenues in the next 2 or 3 years, it may not make sense to invest in a platform that's going to pay off 10 years from now or 15 years from now. We take the long-term outlook. We invest in these platforms.

The first ever biotechnology product, actually Lilly, a licensed technology from Genentech to make the first recombinant protein, which was human insulin. That's been a platform that's been extremely productive for us and others in the industry. And now we're building out other platforms like genetic medicines or cellular reprogramming. And then the last is we recognize we're part of an important ecosystem that is academia, it's biotechnology, it's other smaller pharma companies, it's governments. And if that ecosystem is healthy for innovation, we'll do well. And so we invest a lot.

We're one of the leading investors in capital for biotechnology companies. We give them space. We give them expertise. We make molecules. We share our artificial intelligence tools with the broader community to raise the tide of innovation. And as the biggest ship on that ocean, we think if that tide is improved, we'll do better, too. So those are kind of the core R&D philosophies at Lilly that I think each one is a bit different than competitors and kind of has led to where we are today.

Super, super useful context setting and kind of the dynamics that are really driving a lot of your decision-making. And I think we'll touch on a bunch of those throughout the conversation today. I do want to recognize that you're in a room of investors today. And in many ways, they're making similar portfolio decisions on equities that you're perhaps making on pipeline assets and drug discovery assets and opportunities to invest in either internal or through external through M&A.

As a portfolio manager of kind of the R&D spend of Lilly, how do you decide where that next R&D dollar goes, balancing between perhaps the therapeutic areas, doubling down in some versus going after others, those newer opportunities like neurodegeneration, genetic medicine, pain, are we beginning to see more and more prevalent in your portfolio?

Yes. It's probably -- these are the most important decisions we make. And I think the thing for investors to know is we have to make these decisions 10 years in advance. For us, it takes about, say, 6 years, 6.5 years maybe from first human dose to launch of a molecule. So before we have any sales. And before we can even start testing in humans, it's a couple of years of tinkering in the labs and with animals. So you're making decisions for 10 years away. If you make them by looking in the rearview mirror, you will always be a decade behind your competitors. A lot of our competitors are doing that today. So that's thought number one.

And thought number two is you also -- because you can get good in certain areas, there's a tendency in this industry for companies to launch a really good product and then just try and protect that one product even from their own innovation for as long as possible. We don't do that either. So a core kind of asset allocation idea is invest in your own next-generation innovation that will cannibalize or obsolete your current innovation. Tirzepatide has made Trulicity, which was our biggest selling drug ever before we launched tirzepatide has made more or less maybe it's not quite obsolete yet, but it's made it a lot less used prior to its patent expiry. And we now have 3 next-generation incretins, all in Phase III clinical trials that maybe will be better than tirzepatide. So I think that's one kind of asset allocation.

The other is to recognize that over time, diseases get solved. And I hope that a few more generations of innovation in obesity, and that will be a solved disease. And so we're already making asset allocation decisions to move more resources into other areas just as our competitors are doing the opposite, moving more into obesity to try and catch up to us. We see breaking science and huge opportunity in neuroscience, in oncology and immunology. And so we kind of have our thumb on the scale for those areas. If you took out incretins, Lilly would still be the fastest-growing pharmaceutical company. So we're outgrowing our competitors in those other areas, but they're still relatively small. And so our goal is to scale those areas up to be kind of a mega size like we're doing in incretins.

Fantastic. Super, super helpful. I have one more really big picture question before we dive into some of the pipeline and particular products you have today. We've spent a lot of this conference, and I think investors are spending almost all of their time thinking about AI, be it in health care or any other place. What is your overarching thesis on the role of AI in pharma? And can you help describe anything that looks different at Lilly today in terms of drug discovery or R&D on account of kind of AI investments you're choosing to make?

Yes. Everything is different. We use AI in just about every step of the process, and it makes things better, faster, cheaper. In sort of the same way that personal computers did, I imagine decades ago, just the work is easier and often less expensive. But the bulk of clinical development, the bulk of the 6 or 7 years it takes us to develop a drug is enrolling patients in clinical trials, finding the patients and asking them to participate and then waiting for the -- treating them and waiting for their disease to progress or not based on the treatment. You can't do a 3.5-year Alzheimer's prevention study in 3 weeks because you have AI, it still takes the same amount of time. You can't screen 60,000 patients in the real world with AI.

So I think the idea that AI is going to invent a drug and then tomorrow, we'll launch it, it probably won't work. It will make all these things work a little smoother, but it's not going to revolutionize them. It may change the economics and who gets paid for doing all these tasks. The place where it has the most potential in our business is on the drug discovery side. So drug discovery right now is really hard, highly trained chemists kind of using their intuition and all of their knowledge to design a molecule. And right now, already every chemist uses AI as a tool. So AI is learning alongside them and suggesting maybe make this structure instead of this one. And that's helpful.

It's an important tool for chemists to discover molecules or for protein engineers to engineer an antibody or a protein. So I see the greatest potential there. It's making that work more powerful. But of course, we're also reaching higher. So there are things that we would have said a few years ago were undruggable and then because of the improvements in technology, now we can drug them. And we have to because all the things that were easy to drug, we solved. So the new problems are almost by definition are harder than the old problems. We need better and better tools. AI is one of those tools.

But I know I'm going too long here, but just to finish the AI thought, the problem is that the AI models that we all have today were trained on language and on the Internet. There's not a lot of biological or chemical data available to train models, like even known to humanity, there's not a lot. And of what is known to humanity, most of it is sequestered behind the walls of a few big companies like Lilly. So I do see that data as a competitive advantage. We are increasing our own data that we have to train AI models for drug discovery extraordinarily quickly through our own experimentation, through partnerships with other companies that are providing us with their data in return to access to our models. And finally, through kind of custom-built data factories that we're working on with NVIDIA that just massively produce experimental data to train models.

Fantastic. Super, super helpful. And interestingly, we had gotten a question that came through asking about kind of is there a scenario where that proprietary data becomes table stakes and kind of where are some of the other competitive moats. But I think you're saying kind of this data is actually an incredibly important competitive moat.

I think so. What we found is that when we use models that haven't been trained on a lot of real data, they don't perform very well, and they don't perform differently than each other, by the way. But when they're trained on data, that's when they become really powerful tools.

Fantastic. And I think that perhaps even further emphasizes if you're willing to be persistent in a certain disease area or a certain category or modality, that training algorithm perhaps even...

That's right. Because the training is local. So it's like in that space that you're working, the training matters.

So perhaps diving into kind of, I guess, one of the most talked about topics at Lilly, which is the incretin franchise, perhaps sometimes the absence of anything else. Mounjaro and Zepbound have transformed what people expect for obesity care. For the non-scientists in the audience, you've always got a number of other assets in the pipeline that are going to continue to contribute to this portfolio. What could the future of obesity treatment look like as we think about pills, triple agonist, muscle preservation, combination, long-acting. What's the next frontier in your mind?

Yes. Well, I think maybe to start with what is the problem we're trying to solve. I think we want to eradicate obesity in the world and also alleviate the burden of metabolic disease, cardiovascular and other diseases that are caused diabetes -- that are caused by obesity. How are we doing on that goal? Not so well. Even here in the United States where utilization is the highest, utilization rates of incretins to treat obesity are less than 10%. So the most important thing we can do is solve the obstacles for broader utilization of these medicines, which are a combination of things. It's cost for sure and access, and we're working on that with the deals with the government and with payers, including some that are announced today. Good progress there.

It's -- people don't want an injection, not because they don't want -- because the needle is painful, it's actually not painful for most people. But because it seems like they're sick if they're taking an injection, that's a perception people and doctors have, too. So we probably need pills. We just launched one a couple of months ago, excited about that, that are easy to use and fit in people's lives. Some people have side effects from these drugs, so we need medicines with fewer side effects. We've got one of those in Phase III. We have a medicine in Phase III that in earlier clinical trial, the weight loss looked very similar to Zepbound, tirzepatide, but the tolerability looked very similar to placebo. If that reproduces in Phase III, we could have -- this is a lorlintide, our amylin agonist.

It's kind of unique in the industry and having these properties. That could be a game changer for people who find kind of the GI tolerability as a reason not to take these drugs. I think longer-acting drugs will have a role, too, and we're working on those. We'll eventually probably move in the maintenance setting from once a week to once a month or even longer duration. Our strategy here is not to guard our core franchise or core molecules. Our strategy is to have the best molecule in each of these applications, whether it's better tolerability, less frequent dosing, more weight loss, many people need more than the 20%, 25% we can offer today. And our latest drug offered 30% in clinical trials. There'll be people for whom that's important.

So each of these areas, we aim to, and I think we're on track to have the best next-generation molecule. So far, we've only launched 2, tirzepatide, Zepbound and orforglipron, which is Foundayo, the oral pill. But as I said before, 3 more in Phase III and then many more behind that in early clinical trials.

Fantastic. It's a very exciting time. Perhaps just on one of those three that's in the pipeline, what is the most exciting or underappreciated non-obesity indication that you're currently testing GLP-1s in? [ Brenipatide ] has a long list, obviously.

Yes. I probably give you 2 answers, and they're both categories rather than individual indications. But one thing which is really kind of neat is when we started on this journey, we thought about incretins as drugs that work in the pancreas. That's how they were discovered as hormones that cause the pancreas to make more insulin. But that's not actually the main pharmacology of these drugs. The main pharmacology is in the brain. There are brain receptors for GLP and GIP, amylin and glucagon. And the main pharmacology is through regulation of brain pathways involved in food and food craving. And so I'm really excited about other brain applications.

It turns out that when we evolved as human beings, craving food and having like a huge drive to get food and then store that as calories is an important survival advantage. It's not today, obviously. And so those pathways are really hardwired in our brain, and they're hijacked by drugs of addiction and they're hijacked by diseases. And so we think that by modulating those pathways with incretins, we could have a powerful impact on addiction, depression, schizophrenia. These are all underway. And so I'm excited to see that.

The second is that it turns out that metabolism and your immune system are closely linked. And it's been profound to see the anti-inflammatory effects of these medicines in patients. We can measure that in the blood. And we raised the hypothesis that if these drugs are decreasing inflammation, could they be used in autoimmune diseases. And so now we've tested it in Phase III trials for psoriasis and psoriatic arthritis. We have trials ongoing in inflammatory bowel disease and asthma. And in the first 2 trials that read out, it worked kind of profoundly well and quickly. In other words, people's immune diseases, autoimmune diseases improved before they lost weight on these medicines, again, suggesting there's an important anti-inflammatory effect.

So we have customized molecules that are tuned for the brain and other ideas for the immune system. But I think we're going to see incretin biology play out, not just for metabolic disease, but also for brain health and also for immune health.

[ How about the drugs? ]

Well, it does show the power of focusing on like a core physiologic pathway rather than a particular disease.

Absolutely. And with all of those profound kind of potential impacts as well, the launch of the oral is especially important because it has expand access gives you the volume kind of capability that perhaps is a little bit more challenging with injectables. You've obviously begun the launch inside the U.S. I'm sure you guys are getting a nonstop flurry of questions from people in this room about that nonstop. But you also have the upcoming launch ex U.S. as well. How do you think -- what do you think the role of Foundayo will be in the oral market? Will it be kind of the primary choice? Will that be exclusively ex U.S.? Or kind of in the U.S., do you think that this is going to be the foundational product?

I think it will be foundational globally. Maybe the name portrays our thinking, foundational daily oral, Foundayo for treatment of obesity. The reason I say that is because this was designed to be easy to use for patients. There's no food or water restrictions. You take it like any other medicine any time of day. And then in clinical trials, we showed benefits across all of the most important things that primary care doctors worry about. So when you go to see your primary care physician, check your blood sugar and your A1c? Yes, this is -- we have clinical data on type 2 diabetes, and we're going to get it approved for that in the future. Check your weight? Yes, of course, that's what it's approved for. Your blood pressure? Yes, we have trials ongoing that lowers your blood pressure and check your cholesterol? Yes, it lowers your triglycerides and your LDL.

So here, you have in a single easy-to-use pill, kind of an improvement in all of the main health parameters that we care about in the primary care setting. So I see this as a foundational medicine across all of those indications. We're not there yet. We have to get those approvals, but that's coming. And this is probably where most people will start their treatment journey. And for many people, it should be adequate because of those attributes here in the U.S. and around the world. And that's paired with kind of a manufacturing platform that it's just a normal small molecule, so we can make it at scale. It doesn't require refrigeration or biotechnology, and we have adequate supply to launch around the world. This is the medicine that we've actually, in our history, submitted for approvals globally, the fastest sort of parallel path in every country that we focus on. And those approvals will start rolling in later this year and early next year and look forward to seeing the uptake around the world.

Absolutely. Very exciting when access has been such a challenge for these products to date. I'm going to perhaps pivot a little bit back outside the GLP-1s and give everyone a break from that topic. This week, Lilly announced 3 new acquisitions. It's also been a very acquisitive year so far for you all, and so we'll continue this conversation more broadly as well. But these were 3 new acquisitions this week, which were the vaccines companies totaling just under $4 billion. This hasn't really, at least to the outside observer, hasn't been an area of focus necessarily for Lilly. Why is now the right time to enter this market? And why specifically these vaccines? What makes you excited about this particular opportunity?

Thanks. And you're highlighting a bigger trend here, which is we're quite active in BD. Last year, we were the most prolific deal maker in the industry and we've been on that trajectory for a couple of years. We just believe that there's great ideas outside our walls, and we should bring them in. But we also believe that we should bring them in early stages because we can add a lot of value that way. So we do more deals than anyone else, but we don't necessarily spend more money because other companies are buying kind of fully cooked late-stage things that are near commercial. It's not that we'll never do that, but our typical deal is earlier stage. These vaccine deals exemplify a few of those themes, large unmet medical need, technology platforms that we can invest in the long term.

Here, I think we're motivated by breaking science that shows that there are long-term sequelae of acute infection with certain viruses. So just in the last couple of years, like 2 of the most amazing discoveries in infectious disease were that EBV, Epstein-Barr Virus, the virus that causes infectious mononucleosis also causes multiple sclerosis. And if you don't have EBV infection, you probably won't have multiple sclerosis. And we all just tolerate EBV infection and a mono and shrug our shoulders and say there's nothing we can do, but there is. We can create a vaccine, and we want to do that. It doesn't seem like anyone else is on track to get that done. And so we're excited to harness breaking science to do that.

Similar observation with Varicella-Zoster Virus, VZV, which causes chickenpox in kids and shingles in adults when the virus comes back. There is a vaccine against that. We've learned that shingles is linked to stroke, and vaccination can protect against stroke and dementia. Just startling research that shows that vaccination in shingles protects against incidence of dementia many years, decades later. So this link between acute infection and chronic disease is powerful. We should all be vaccinated against these viruses to prevent those chronic diseases. But the shingles vaccine that we have today, it offers great protection, but a lot of people don't use it because there's pretty significant side effects of fever, chills, pain at the injection site. And then some people who get it only get one dose, which is no good. You don't get the protection unless you get the second dose.

So this company that we're acquiring developed a technology that allows in the head-to-head trial, they showed that their vaccine has the same kind of protection as the standard one, but has lower -- much lower rate of these side effects. So that sounds like a good idea to us. And I just imagine a future where vaccination will be much more common for these kinds of adult diseases that then cause chronic illness as we get older. That's 2 of them.

And then the third one is bacterial vaccines. Everyone reads about bacterial resistance to antibiotics. And one of the most common is Staph aureus, and that's the #1 cause of hospital infections after a patient has surgery that are often quite bad and sometimes antibiotic resistant. The theory here is we could immunize against them before people go for surgeries and then not worry about the post-op infections. So that's the third idea.

Fantastic. Lots of kind of long-term chronic longevity-oriented questions...

Yes, sort of linked to the rest of our business. And it's not that we have an ambition to compete with the vaccine companies today where they are, but we want to invest where they're not investing for the next generation of important pathogens.

Perhaps within your internal pipeline or the things you've brought in, outside of the GLP-1s, which pipeline assets are you most excited about and perhaps feel that they aren't getting enough attention from The Street or investors or other communities that should be paying attention.

I'd probably highlight 3 kind of near-term big ideas and then maybe 1 or 2 that are a bit longer term. Let me just start with Alzheimer's disease. We have a drug to treat Alzheimer's disease. It's doing well in the marketplace. Still early days, but it's a really important advance. But what we have ongoing now with that drug and another one, we have 2 drugs in Phase III clinical trials for prevention of Alzheimer's disease. These are people like all of us, hopefully, who don't have any cognitive impairments, but they are above the age of 50 or 55 and they've agreed to have a blood test. And if their blood test, we invented this blood test to do this trial, which took many years. If the blood test is positive for p-Tau217, it means they have Alzheimer's pathology happening in their brain. It just hasn't caused symptoms yet. And then we're treating them with a fixed duration treatment.

So they finish therapy, and we hope that they'll have a lower risk of getting Alzheimer's disease symptoms after that. These trials take many years of follow-up, as I was saying earlier, but they're ongoing now, and I can't wait to see that data. The first one reads out next year. I can envision a future where we're all screened like every year, just like we're screening for cholesterol or high blood sugar or hypertension. We're all also screened for Alzheimer's risk. And if it's positive, we have a treatment that can lower your risk. That's a huge opportunity. If they're risk adjusted, it may not work. But if it does work, I expect Lilly to be a leader there.

Another huge kind of society changing opportunity is in cardiovascular disease, and we're working here on Lp(a), which is probably the second most important risk factor for heart disease after LDL cholesterol. But unlike cholesterol, your diet doesn't matter, your exercise doesn't matter. You are born with either high risk of high levels of LP(a) or low levels of LP(a). 15% of people have high levels of LP(a) and they're at risk for heart attacks. I think we can change that. So we have 2 drugs in large Phase III trials there. And then we're working on other heart disease kind of ideas, including PCSK9 gene editing.

We recently shared data on that with a single dose of drug, we can give people a lifetime of protection from high cholesterol levels and probably a lifetime protection from heart attacks. It's early, but it looks like the science is going to work. It's our job to shape society to accept a once-in-a-lifetime drug and figure out how to pay for it and things like that, but the science looks good. So the cardiovascular prevention, I think it's just a way of keeping people healthier and living longer.

And then the third that I'll highlight is what we're doing in early breast cancer. This is in the adjuvant breast cancer setting. We already have one drug approved, which is our Verzenio CDK4/6 inhibitor. But now we're testing in the extended adjuvant setting after people are done with CDK4/6, our oral SERD. This is a pill that inhibits -- causes the estrogen receptor to be degraded and inhibits endocrine signaling in these tumors. And if that works in this setting, that's really a huge opportunity for long-duration treatment in one of the most important cancers in the world and certainly in women who have breast cancer. So excited about those. Those are all kind of near-term readouts in the next year or 2 that I think at any other company, any one of those would be the biggest opportunity that they're working on. We have all of them.

Fantastic. You've mentioned a couple of times through this conversation so far kind of platform orientation. You've also mentioned kind of some of the gene editing opportunities. It does look like Lilly has been kind of doubling down on genetic medicine. We've seen a number of kind of preclinical and early clinical acquisitions over the last kind of quite a few years actually. What is the rationale? Where do you see the greatest promise in the application here? And particularly if you're thinking about kind of the challenges that exist in deploying the science, both scientifically, but also commercially as you just raised, what gives you confidence that you can succeed here?

Yes. I think it's actually inevitable that genetic medicines will play a hugely important role in human health. Actually, for the first, say, 50 years of my company and the first thousands of years of medicine, really all medicines were things that we extracted from the natural world like we ground up plants or we extracted insulin from animals. That was how we got drugs. And then people started fiddling with chemistry and then that was how we got drugs. And all drugs actually became either natural products or chemicals. And then as I said earlier, Lilly was the first to make a biotechnology. We could reprogram cells to make drugs for us. And those drugs aren't made out of atoms. They're made out of amino acids and proteins. And that turned out to be a huge idea.

Now we realize we can make drugs out of nucleic acids, DNA and RNA. It is inevitable that this will be a huge part of how we treat disease. Other things don't necessarily go away, although natural products are kind of pretty small today. But it opens up a whole vast area of biology of targets that we just couldn't address any other way. It also gives us durability, drugs that could be given once a year or once a lifetime. And finally, the most amazing thing about genetic medicines is these are drugs that are programmable. So with synthetic chemistry, every molecule, it's like a work of art that chemists have to create. And because you made one great one, then we work on the next one, it's like starting from the beginning again.

But with these, you can take a drug for one disease and just change the genetic code of it and have a drug for another disease if you solved all of the other problems. And the other problems are how do you get it to the cell of interest? How do you make it safe? How do you manufacture it? And so we're sort of knocking out all those problems. And as we do, I think we'll have a platform that can scale across a large number of diseases. Yes, I can give you an example. We made a drug that restores hearing in kids who are born deaf. And it's amazing. It works. These kids are born without a certain gene in their ear. We can put it back in and solve that problem. That's a pretty small opportunity. Not for the people who are affected, it's life changing. But overall, that's rare.

But because we did it for one cause of hearing loss, it's now so much easier to do it for the next one. We solve how to get it in the ear, how to get it expressed, how to get -- all we produce change of DNA code, and we're solving a second and the third and the fourth cause of hearing loss. And then as we solve those problems, that technology platform continues to improve. And what we're really working on at the same time is what if we had a genetic medicine in the ear that can restore hearing in age-related hearing loss because probably half of us will eventually have loss of hearing as we get older. And to my knowledge, no one else is working on that. But that's how the technology platform could build as we reprogram these medicines.

Wonderful. It's super exciting to see kind of that immediate meaningful impact on kind of a patient that has such an acute challenge, but the potential being much, much larger.

Yes. That's kind of like the perfect win-win scenario. And it's how we think about these rare diseases. I don't think we're going to propel Lilly's growth by $1 million of drugs for rare diseases. We'll help these patients, but then we'll also learn better, better science that we can apply to common diseases, which is where we ought to spend most of our time.

Wonderful. I do want to jump back to M&A a little bit.

Sure.

You mentioned that Lilly has been one of the most prolific in this space. In some ways, you've been the most prolific, but you also haven't been spending as much as some of your peers said as well. And so can you talk a little bit about kind of what makes kind of the right type of acquisition for Lilly? How do you consider those parameters? Is there ever an instance where you would go large?

And another question that came in on this topic is kind of the consideration of China. There are obviously a lot of innovation research occurring now outside the U.S. and Europe. I think we're seeing early-stage number of clinical trials in China is outpacing many other regions now. As you look at assets in that space, do you change the type of diligence you're doing? Is there any extra scrutiny that you're bringing to those opportunities and evaluating and bringing them into Lilly?

Yes. Thanks. Those are all really excellent questions. Maybe starting with the first one, which is like how do we evaluate and what are we looking for business development? And then the second one was like would we consider really big things and the third is the China question. So starting with how we evaluate the business development, I think it's different than other companies actually. Most of my peers actually start with like a commercial forecast and an NPV and we do that. Of course, we have to do that. But that's actually pretty low in the priority list. The reason why -- and this is true of every company in our industry is if you look at forecasted sales versus actual sales, and you can do your forecast the day you launch it, and then actual sales 5 years later, there's no correlation. And none of us, analysts and internal companies are good at forecasting individual drugs in a way that correlates with reality. But we do get it right in bulk. If we're forecasting a group of 5 or 10, like there's not a bias to our forecast. There's just too much noise in there.

So we take -- we do those kinds of assessments, but we take that with a grain of salt. What we're really interested in is, is there unmet need? Are people suffering? Is there great science? And are there great people? Because if they're great people, they're not going to choose to spend their time working on bad science. And so that's like a quick test. Great people are going to gravitate to great ideas. So the team and the science are our first priority and then understanding how that will translate into helping people that are suffering from important unmet medical needs. We tend to like ideas that have multiple kind of asset potential, not just one asset that we buy and then dissolve the team. Sometimes we'll do those deals if the asset is compelling enough. But I prefer a team and a platform that can continue to boost our output over time and then kind of compound the returns on business development.

Again, that's a more patient approach that requires a company to have a longer-term outlook and probably more willingness to invest OpEx over time rather than just buy something that's fully done. Would we ever do a big deal? Sure. We're not constrained here by capital or access to capital. But most of the big deals are actually commercial stage assets. And then you have to believe either you're better at selling them than anyone else or you see a sales forecast that's higher than anyone else. It might happen to Lilly. There could be commercial stage assets that have that fit. But it's harder to imagine. You would have to have -- we would have to have a differentiated hypothesis why Lilly could make a better commercial case than anyone else on a particular asset. And I haven't seen those. So we don't -- haven't done those deals.

The China question is a really important one. As you point out, the innovation in China is rapidly progressing. You can see that year-over-year, just a huge change in what's possible in China. The speed of drug discovery and drug development is intense there. There's a lot of innovation coming. Some of it is me-too innovation or me-better, like a new version of a drug that is different in some way, but it's kind of an incremental change rather than like a whole new class of drugs. So we see a lot of that. But also that kind of innovation now because it's faster and cheaper, allows kind of an empiric innovation where you can make 5 different things and test them all in humans and see which one really works the best. Whereas in the U.S., we -- because development time and cost is higher, we would spend more time to find out what's the best one and only test that one in humans. So that empiric innovation that's possible in China seems to be important.

So we're spending more time looking at China innovation. Of course, we diligence it carefully. At the same time, though, it's spending more time thinking about what can we learn to make innovation here in the U.S. and other countries in the world better. I think the industry is best served if China gets better and the U.S. gets even better and China is better. And we can compete with each other, but the innovation ecosystem can be approved around the world. And this is a moment to do that here in the U.S. And I think there's good momentum behind that to make it easier to do drug discovery and drug development in the United States. But this is still where most of the best ideas come from, and we can continue to accelerate them.

One other question that's come through on -- from the audience is just diving into kind of some of your AI comments around that data moat especially, but also then tying it to M&A kind of you're getting in data rooms, you're looking at external innovation all of the time. Kind of are you using your own internal scientific knowledge and integrating that with or using that to assess the best assets? I mean there is a little bit of a joke out there that kind of every time there's a new category of GLP-1s, Lilly seems to be holding the best one. And so as you kind of look at this, kind of how is it that Lilly is able to do that? And how are you kind of integrating and perhaps building more knowledge?

Well, I would say on the GLP-1 story, it's not an AI answer there. It's just -- we've been at this a long time, and we've learned a lot of lessons, and we may not share them all broadly all the time. But when the time is right, we do have some of the best molecules because we've been working. We launched the first incretin in the world in the 1980s, I think. It's been a long time. And we've iterated many, many times and tested a lot of things in humans and in animals. We know a lot. So I don't know if we've really done any business development meaningful in this space because when we look at things on the outside, we're like, oh, yes, that's fine, but we have something better that we've been working on for a couple of years already.

So that's a story of just persistence and focus. But I do think it's kind of a generalizable theme that we feel best at business development when it's an area already of strength at Lilly because then we have internal scientists who have been working in the lab and like, "Oh, yes, that molecule is good. We've been trying to make something like that for the last 3 years." That is the best kind of diligence from our experts. We have to be the most cautious when we move into a new area like vaccines. Do we really -- are we expert enough to evaluate the technology outside and really know what's good and bad. And so sometimes in those areas, even a year or more before we do the BD, we'll start hiring a scientific team so that we can do the kind of evaluation that we need to do to make sure that we're smart and we have good taste in what we buy. It's hard.

That depth of knowledge can be incredibly important. Another angle just to pose a couple of questions on the market for health care is changing. We're seeing Lilly Direct become a larger and larger portion of the -- at least the incretin business today and kind of bringing Lilly closer and closer to the patients who use the products. Is this trend influencing how you think about R&D dollars, how you think about different therapeutic markets, how you think about opportunities? And what is it guiding you towards these days?

Yes. It's a trend we're betting on. I think it's real. I think it's generally good, Courtney. I mean we were part of creating the trend with our work on incretins and Lilly Direct. More than 1 million people use Lilly Direct to get their medicines. So that's kind of a shockingly big number for a consumer health platform. But I think even independent of that, there's a movement towards people taking more interest and more control and investing more in their own health, particularly in staying healthy. That's great actually as long as the people are getting reasonable information. That's not always the case. Sometimes people are misled by fraudulent actors on the Internet or whatever. But at the same time, there's better information that's available to patients than ever before, and AI is going to help -- is helping already accelerate people learn about that.

And so I'm excited about that trend. We've catalyzed it with incretins and with Lilly Direct. And I'm excited about seeing what else we can do to reach patients directly and maybe move a little bit away from a paternalistic?style of medicine, which is the doctor always knows best and just listen to what your doctor said, but let patients take some ownership of their health care decision. And that -- so when we see opportunities that could fit into that trend, we like them a little bit more.

But of course, I don't expect that the next best cancer drug is going to be sold direct to consumers through Lilly Direct. I think for serious diseases and complicated treatment paradigms, of course, we're going to need the best doctors in the world to manage patients. But there are other areas of health that are probably easier to manage that patients can take more control over.

Fantastic. We've got a couple of minutes left, and I want to make sure that we end kind of big picture and longer term. I know you and I were speaking earlier this morning about kind of these 3 big questions that investors tend to be asking about Lilly, kind of one is how big is that leadership position and how big is that TAM in the obesity space? The second is where does that next leg of growth come from? And then the third is kind of does the terminal value kind of inflect for this company as you think about drug discovery capabilities, AI embedding and kind of the focus and the way that you're deploying your R&D investments today?

I think that with pressures like kind of patent cliffs and other things on the horizon, it causes investors to kind of continue to ask these questions. And so I want to pose to you kind of what needs to go right for Lilly's revenue and earnings per share to grow through the 2030s? And particularly, which of the factors are most -- that are most within the company's control to ensure the success?

Yes. Thanks. So these are the right questions. I feel good about where we are in the incretin space. I think not worried about patent expiries. It's technical obsolescence because we'll have better and better molecules that matter here. So that's good. What has to go right, though, is we have to grow this space from 1 in 10 Americans and U.S. is like 10% of the obesity problem around the world. So it's like we're something like 1% of obesity penetration today. We need to change that. And that's a big lift to go from 1% penetration to 5%, 10%, 50% of obesity patients getting treated. I think it's possible. We've seen it in other chronic diseases. These are great medicines, and we have the potential, but there's work ahead to do that in the U.S. and around the world. So that has to go right.

Second is we can't fall into the traps that other large pharmaceutical companies have fallen into when they had mega blockbusters. And those traps are like protect that asset, don't try and cannibalize it, don't invest in anything else, keep investing in that one. We've already pushed all of our R&D funding beyond tirzepatide. Even though it's the biggest product ever in this industry, we're investing in the next-generation products and the next after that. So avoiding those mistakes, even though from a short-term kind of financial optimization standpoint, probably every incremental dollar spent on tirzepatide will have the best return in the next couple of years. But in the long term, that will be a fatal error, which we've seen others make.

The next, I think, is just to be open and investing in breaking science in other areas for the long term. This industry works, investing in science to solve medical problems works in the long term. But it doesn't work when everyone piles on in the short term on the same ideas in the rearview mirror, and we need to avoid that. And that's kind of the siren song that's always in the background. So I think if we can do those things and at the same time, kind of stay humble and have really hard-working motivated people in our company, which we're lucky to have today. I think we will have a sustained period of growth that hasn't been seen before in any company in this industry. That's our goal. We're focused on this problem, and we're committed to doing something that's never been achieved before.

Thank you, Dan. Have a wonderful evening.

Thank you, Courtney.

Thank you so much for joining us.

Thanks...

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q1 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

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 Montarse, Chief Financial Officer; Dr. Dan Scaranki, Chief Scientific and Product Officer; Adriane Brown, President of Lilly Immunology, Dr. Carol Ho, President of Lilly Neuroscience; Livia Yuffa, President of Lilly USA; and Global Customer capabilities; Jake Van Naarden, President of Lilly Oncology and Head of Business Development; Patrick Johnson, President of Lilly International; and Ken Kuster, President of Lilly CardioMetabolic Health.

We're also joined by the Investor Relations team, Jim Greffet, Susan Hegland, Mark Kimon and West Tal. 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, 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.

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 orforgopron 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 could be helped by taking an [indiscernible] ton 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 I trial, which we shared a few weeks ago. In the seventh positive Phase III registration trial, Foundayo showed cardiovascular safety and the 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 quarter in the quarters and years to come.

On Slide 5, you will -- 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 Elis in Luria, J. Perka, Kasamla, Monjaro, Umba and [indiscernible] 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 [indiscernible] in combination with a time-limited regimen in adults with previously treated CLL, positive Phase III data for Egis in pediatric atopic dermatitis. -- positive Phase III data for Taltz plus Zeon in adults with psoriasis and obesity. -- positive Phase III data for ratatretide in adults with type 2 diabetes and the initiation of a new Phase III programs for aloralentide, sofetobartin mypatecan and brinepatide.

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. Syntessa Pharmaceuticals, a company developing a new class of medicines for the treatment of excessive daytime sleepiness and other neurologic conditions.

Colonia Therapeutics, a company developing an in vivo platform to treat multiple myeloma in 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.

2 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.

Thanks, Dave. As shown on Slide 6, Q1 was another strong quarter of financial performance. Revenue grew 56% compared to Q1 2025, driven by Seman and Monjaro 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 [indiscernible] 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% and an increase of approximately 7 percentage points from Q1 2025, driven by revenue growth. Non-GAAP earnings per share was $8.55 including acquire 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 [indiscernible] charges.

On Slide 7, we quantify the effect of price, rate and volume on revenue growth. U.S. revenue increased 43% in Q1, primarily driven by volume growth from [indiscernible] and Monaro 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 [indiscernible]. U.S. price was positively impacted by a onetime adjustments to estimates for rebates and discounts, primarily impacting Suven and Mounjaro. Excluding this impact, U.S. price will have declined 10%. The 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 Atlas. 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 expanding HCP engagement to drive additional case each are of market. In oncology, [indiscernible] 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 [indiscernible] has the potential to be a foundational therapy across multiple settings and regimens within CLL. Although it's still early, in Lurio performance in the U.S. was encouraging during its first full quarter launch, achieving over 35% share of [indiscernible] new patient starts in metastatic risk cancer in Q1.

For the third market growth also increased, largely driven by the launch of Enurio. In neuroscience, Kisanla 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, Mounjaro and Suven 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 all GLP-1s expanded the market, enabling more people to benefit from the GLP-1s. Within the U.S. increasing analog obit market, total prescriptions grew by over 80% in Q1. And Suven prescriptions grew at even faster rate. Suven performance was driven by continued strong uptick 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 Suven in the U.S. in a new equipment device that includes a full month of supply of medicine in 1 pen. Sales pace continues to be an important segment for Sean and accounted for approximately 45% of total Suven 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 its 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 came the [indiscernible] 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 Michel leadership already established, increased patient activations will be key to drive sustainable growth. Lastly, on Slide 11 is an update of [indiscernible] 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 Chile awareness campaigns went live shortly after approval, we began in-person promotion to CPs 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 million and $85 billion. This reflects a strong underlying performance of Monjaro and SEB 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.

Thanks, Lucas. In 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 [indiscernible]. In addition to the U.S. approval of Foundayo for obesity, we also announced positive top line results from ACHIEVE I, 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 or overweight toward 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 in these 3 events. Additionally, at a preplanned analysis not controlled for multiplicity, the survival advantage for patients of 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 the results from ACHIEVE IV, cardiovascular safety and a lower risk of all-cause death are added to the clinical profile. Adverse events were generally consistent with other increases [indiscernible] therapies and no hepatic safety signals observed and ACHIEVE IV, nor across the 7 positive Foundayo Phase III registrational trials. ACHIEVE IV 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 GLP-1 and glucagon triple agonist -- we announced positive top line results from TRANSCEND P2D-1, the first Phase III trial of reditrutide 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. We -- to pay to placebo, reditrutide 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 were 25 to 37 pounds.

While cross-trial comparisons of limitations, these data suggest renotrutide can deliver [indiscernible] control in line with the most widely prescribed anchored 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. -- we're trying to lose with a significant need for better weight as medications for this population.

With these data in hand, we're optimistic that redatrutide can meet this need. Adverse events seen with redatutide were generally consistent with what had been observed in clinical trials of acreage-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 [indiscernible], 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 pain, obstructive sleep apnea and as an add-on therapy or lease. As a selective amylin receptor agonist, or SARA, Eloralintide has shown a unique profile of 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 Ventix 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 [indiscernible] genotypes. First, in the ADO Phase IIIb OBI-label extension study, [indiscernible] delivered durable disease control for up to 4 years with 1 month [indiscernible] dosing. Nearly all patients achieved meaningful skin improvements, 75% achieved near complete skin clearance and 80% maintaining their results without the need for topical for corticosteroids.

For people living with chronic relapsing diseases like atopic dermatitis sustained control delivered with [indiscernible] 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 uplift from competitors.

The second readout was the Phase III adorable line trial. [indiscernible] 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 [indiscernible] achieved significant skin improvement as measured by EASI-75.

In addition, 44% achieved clear or almost clear skin as endured by IGA 0 score. This makes edges 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 labels.

Also in immunology, reported positive top line results from together PSO the Phase IIIb study of ixekizumab plus tirzepatide in adults with psoriasis and obesity. And 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 [indiscernible] 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 they have a broader role in treating immunological diseases.

We have additional ongoing Phase IIb 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. One'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 Ormes platform together with the Orga team.

Turning to oncology. We announced positive top line results from a Phase III pertibrutinib trial, [indiscernible] this ambitious study evaluated pertibrutinib in addition to a fixed duration regimen of venetoclax and rituximab and in patients with previously treated CLL or SLL. Purtibrutinib significantly extended progression-free survival compared to the fixed duration regimen and was the first medicine to utilize and outperform a venetoclax control containing control arm in a Phase III in the history of CLL drug development. As shown on Slide 17, Petabit has now been successful in 4 Phase III studies in CLL, each with compelling efficacy and profitability. [indiscernible] has been studied across early and later line settings of CLL, demonstrated efficacy as a monotherapy and in combination and showed efficacy head-to-head against chemo immunotherapy, a covalent BTK inhibitor and now a venetoclax-based regimen.

The breadth of evidence suggests pertibritnib has potential to become a foundational therapy in CLL. SeafromBrewen CLL-313 and Brewin CLL14 and are currently under review by regulators for potential label expansion into the first-line setting. And we plan to submit the results of BRUIN CLL-322 to regulators later this year.

Building on the Breakthrough Therapy Designation received gene for platinum-resistant ovarian cancer, we initiated second Phase III trial, both [indiscernible] our fully receptor alpha in about drilling conjugate to platinum-sensitive ovarian cancer. We also announced the acquisition of Colonia Therapeutics, Colonial's lentiviral in vivo CAR T platform they show very promising early clinical results in people with multiple myeloma, and we look forward to rapidly advancing the lead program in the [indiscernible] 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 Neurosotis. We initiated a Phase III program for bernefatide, or GILTI dual agonist in major depressive disorder. This trial will assess it pranepatide can delay time to relapse -- with significant unmet need in psychiatry, where rates remain high despite available veins.

We've also begun Phase II trials of brenepatide in opioid use disorder and schizophrenia and initiated Phase II trials for 2 pain assets, a [indiscernible] inhibitor and an AT2 receptor attacks. Lastly, we announced an agreement to acquire Contessa Pharmaceuticals, which will expand our neuroscience portfolio and capabilities into treating fleet disorders. Sytesa, a leader in a Rex and science is advancing a pipeline of orexin receptor 2 agonists the targeted neurobiological system governed in the fleet way cycle.

The lead candidates, emanarexton, has demonstrated a potential best-in-class profile. We look forward to welcoming the Cintessa 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, which is the full list of key events expected in 2026. I'll now turn the call back to Dave.

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. Here top line results from 5 positive Phase III trials, announced 4 acquisitions, initiated 6 new Phase III programs and launched an important new Lilly Medison. -- 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.

Thank you, Dave. We'd like to take as many questions as possible. So consistent with prior quarters, please limit yourself to a single one-part question. Paul, please provide the instructions for how to join the queue and then we're ready for the first caller. .

[Operator Instructions] First question today is coming from Jeff Meacham from Citi.

Maybe this 1 is for Dave. Investors seem to be acutely focused on pricing and 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 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 note. .

Great. Thanks, Jeff. Dave, do you want to take us talk about pricing and anchor [indiscernible].

Sure. Thanks for the question, Jeff. Maybe a couple of things to point out, now that we're 5 or 6 quarters deep into the sort of post shortage 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 the out-of-pocket nature, 75% of ex U.S. business for Mounjaro was 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 cost, you see strong growth. Like Lilly's eons really had quite a strong quarter in Q1 and 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 pharmaceutic 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 it 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, Jeff, 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.

The next question will be from Chris Schott from JPMorgan.

Great. 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's 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.

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

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 in 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 more we launched the second half of 2025, referring to Brazil, in 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 generic center. 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 set bound. 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 rate managed market and end 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 starts. But overall, strong growth across regions. 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.

Next question will be from Seamus Fernandez from Guggenheim.

Great. 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 [indiscernible], -- where do you see the market really opening up with each of these potential assets reaching forward?

Great. Thanks, Seamus. For that question, we'll go to Ken talk a bit about the [indiscernible] portfolio and we see the market segment.

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 was the number of patients around the world living with over later of ECD numbering perhaps in the billions, but 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, in. We've had GLP-1 single agonist 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 1 of those ideas, which very obviously could play to individuals who are seeing 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 of experience or tolerability that they are 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 to a veto even less frequently, perhaps those that dial in addition -- excuse me, 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 [indiscernible].

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

On Medicare Access, can you walk us 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?

Okay. Thanks, Alex, for the question about Medicare access and sort of staging over time, we'll go to Ilya.

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 little or deep beneficiaries that are able -- so the path to that with having a long trajectory with the boot program of starting in July through 2027 is an important aspect. Obviously, that will take time to build. We need to have the education across physician-based pharmacies as well as consumer base to understand the whole half of different medicines that we have and 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 month co-pay is an important element of affordability for seniors. We've already seen for Zepbound as well as Mounjaro. We've had wind 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.

Next question will be from Evan Seigerman from BMO Capital.

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 metabolic businesses or particular assets? Is it BD or something else?

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. .

Yes. Thanks, Evan, for that question, and it's an important 1 to us. or 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 really 1 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 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 the areas -- you'll also see us address some of that through business development. So for example, the Sytesa acquisition allows us to play in a new area here in sleep wake medicines. The Warner acquisition allows us to play in new areas of immune reset for example.

The next question will be from Asad Heider from Goldman Sachs. .

Congrats on the continued strong execution. Maybe just going back to Foundayo. 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 [indiscernible], 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 [indiscernible].

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 gut .

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 think 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 house factor on a daily oral GLP-1. So that's an important aspect. We'll continue on the execution related to HCPs around sampling, continued promotions through our sales force, as well as educational seminars and we're fully in the field with our promotional offers with HCPs. So good progress there.

On access, we've confirmed commercial access at 2 of the large PBMs as by middle of May, so just in a couple of weeks. And to the earlier question on Medicare and Medicare Access will start at the beginning of July. And so those are continued catalyst 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 what important element there is that 80% of those found prescriptions are new to class. So this is expansive in 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, 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 we're bringing to the market. So we're pleased and really [indiscernible].

Maybe on the second part going to the guidance Asad just to highlight a couple of things. Of course, again, the increase on our guidance driven by the strength of the entire portfolio that we mentioned during the call, starting, of course, with the increase in portfolio, both in the U.S. and our U.S. In terms of orders, you've heard already from Eli 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 is tracking to our expectations, and we will continue to see how this progresses over the year. But we feel very confident on the trajectory that we've seen so far.

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

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

Thanks, James. Dave, do you want to share a few comments about the bridge balance dynamics?

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 -- 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 our margins. There's been other disturbances and market events in the Part D program, for instance, the iPad products, et cetera, that have changed their economics. And unfortunately, I guess, not being a part 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.

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

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 our commercial insurance has been relatively stable-ish year-over-year. So this seems to be the way to grow it and employees are worried about their cost long term and everything. So would love to understand what are the steps to convince employers to buy in into the [indiscernible] Connect program and the mechanics of it. .

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

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 consider 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 employee 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 time line for making decisions for '26 has 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 more data on real 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.

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

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 the commercial side in terms of driving additional coverage in terms of having scale across the portfolio. .

Thanks for the question, Terence. We're going to Dave to talk a bit about the portfolio strategy and leveraging DTC.

Sure. And Ilya and Patrik can jump in here. I think you're pointing out something that as you've all been developing part of the story here for our growth, which is consumers wanting to take charge of their own health and activate the 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 [indiscernible] with the current offerings. .

I would 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 has to struggle everywhere. And with all the noise around PAs and other barriers to care people need people want to take into their own hands. And I think, of course, we need to do that within the confines of the regulations in 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.

Yes. Sure. Just maybe a few key components of what we've seen on Lilly Direct, 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 the direct 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-consumer is an important number. 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 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.

Similarly outside of 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 the most of it coming growth and we have seen that the markets are responding to patient vaccination efforts, although it's a slower ramp, but that's going to be key, taking into account the low penetration of [indiscernible] outside of the U.S.

Next question will be from Umer Raffat from Evercore.

I thought I'll spend a quick second on Zepbound's commercial dynamics in U.S. And really, what I'm trying to understand is, for example, 1Q 7 million [indiscernible] 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 prices too. I guess what explains that delta or maybe IMS is just not capturing some of your online channels.

Lucas to talk a bit about the pricing dynamics in the U.S.

Yes, Umer, thank you for your question and quick math that your math is pretty spot on, by the way. So -- just to highlight, yes, and even normalizing by these [indiscernible] period adjustments. First of all, again, going back to the initial question on pricing, if you are out what we agreed on MFN side as well back in November and then the NRDL access prices has 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 Lilly Direct 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 that's the different portion that it gets to that net $550 that you highlighted.

Maybe just 1 add, I think it isn't widely appreciated is 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 meta you might want to take a look at.

The next question will be from Courtney Breen from Bernstein.

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 pre-prepared for the launch of this product.

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

Sure. Again, 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 is 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 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 follow the total number of impressions and what consumers are saying about the profile Foundayo is resonating. So both the efficacy as well as the overall profile on not having food and 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 GLP-1, but we do want to take a moment and have to be disciplined in the approach of making sure that physicians actually understand what Pandao 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.

[indiscernible] just to reiterate one thing, which we said earlier, but just so it's not lost the 3 major products that are used in BCD 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 that 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.

Great. One last quick question, and then we'll go to the close.

Final question today will be from Dave Risinger from Leerink.

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 Lilly Direct for consumers to pay more out of pocket than they are paying today under regular employer coverage.

Okay. Thanks, Dave, for the question. Obviously, an important factor in -- 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 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 overweighted obesity and potential candidates for these medications. And it's the last thing in. And we know that despite the fact that it could be 1 of the most valuable health care interventions available, it's the last 1 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 guests 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 in per Umer's question earlier, that actually is a pretty good unlock for us when we get indirectly indicated populations with acute comorbid disease. So all those things are pulled 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.

Dave, do you want to [indiscernible] comments to close?

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 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.

Thank you. And ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1 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.

Cowen's 46th Annual Healthcare Conference. And we are absolutely delighted to have Eli Lilly back at the conference again this year. Representing the company is Lucas Montarce, who is the CFO; as well as Mike Czapar, who is the Head of Investor Relations. So thank you so much for making the journey, and it's great to have you here.

So much to talk about at Lilly, so many dynamics to dig into, so many details to explore. So we'll dig right into it. But should you have questions anywhere along the line, please just raise your hand, and we'll do our best to get your question answered. So probably the number one thing on people's mind is orforglipron, and we're all just holding our breaths waiting for its approval and launch. So maybe you can give us an update on how the review is going? What stage you in? And what's your level of confidence that on April 10, we will get a letter of a positive nature?

Yes. Thank you for having us, Steve. Pleasure to be here. And yes, orforglipron is front and center. We are well on track for regulatory approval. We mentioned that the time line we are expecting that early Q2. Nothing has changed from that perspective. Of course, as you can imagine, we are prepared for a full commercial implementation and launch in the U.S. We talk about OUS markets that takes more time. Again, the regulatory process we will think about, again, most likely a 2027 type of broad market access outside the U.S. as well. So well on track in the U.S., expect to see potentially that product coming into the market as early as Q2.

Excuse, my naive question because I've never actually worked at a company. But how quickly can orforglipron be on trucks and leaving Lilly Docs and getting into the hands of patients?

After the FDA approvals, it depends on the dates and so on, but it takes within a week or so to see the product shipping to the patients -- to the customers and the patients and afterwards.

And so you must already be in conversations with payers and preparing the reimbursement landscape. Give us what should we expect the landscape to look like as we exit 2026? Is it going to be broad access to orforglipron? Or will it be more limited? What should be our expectation?

Yes. Well, I think given that all the information on incretins is broadly available and public at this time, I'm not planning to open it up anything that is not in the public domain. What you think about, again, the access for orfoglipron, of course, the product will be available once they get the regulatory approval on Lilly Direct.

We already actually announced as a result of the MFN deal, the starting dose price at $149, and that will scale again the price up to $3.99. That's what we have communicated already. Then we have now the Medicare access on anti-obesity medication that will start no later than July 1.

So orfoglipron will enjoy that access in Medicare for Medicare patients, potentially then in the future into Medicaid as well. So again, expect to see more broader access on the anti-obesity medication as a result of the Medicare deal. Last but not least, on commercial, we are in negotiation. By the way, we have our commercial leaders seated here with me, James. And we are in negotiations with all the PBMs as we speak to get also commercial access. So expect that to materialize. But again, those conversations are dynamic at this time.

I think there's a good number of investors who expect the launch of orforglipron to be at least Wegovy pill-like, if not even more impressive because of the obvious easier to tolerate administration profile. Would you walk that expectation back? Or is that an okay expectation that this is going to be Wegovy like squared or something like that?

Yes. Our expectations, thinking about the opportunity in the marketplace, bringing an oral option for patients that nowadays, as you know, we have a large patient population opportunity, not only in the U.S. but globally is significant. There is a significant number of patients that they are not willing to get treatment for injectables and they're waiting for an oral solution.

So we are very pleased with what we are seeing with Wegovy Pill as of the first 5 to 6 weeks after the launch. Thinking about the expectation for us is to continue to drive that market expansion, starting in the U.S. and going on U.S. as well. Then you have the dynamics when you got first to the market and second to the market.

If you reference back, I think you all agree that Saba nowadays is the market leader. We have almost 70% of share of market versus Wegovy. But you need to go all the way back 2 years ago that actually Wegovy was first to the market, and it took us a time to get that market leadership. So usually, the second to the market has some time to get that market leadership. How we think about this opportunity is more about to drive that market expansion, and we feel very strongly that orrfoglipron will drive that market expansion over time with the access as well in Medicare, bringing the product in Lilly Direct as well.

A frequent investor question is, is the really impressive Wegovy Pill rollout good or bad for orforglipron. But it seems that you're in the good camp that it's just exemplifying the patient population out there that want the oral tablet. Is that correct? Because you could also say that all the people who wanted the oral formulation are going to the competitor now, so they will not be patients for orforglipron.

Well, you have a bolus of patients that when you have a product launching into the market that will get and seek the treatment. At this time, for that oral, you have the competitor basically serving those patients. We are very excited about the opportunity with orforglipron that will bring. You talk about the profile. We feel very good about the profile and has this actually simplicity in my eyes or convenience, how you think about it on not having water or food restriction as well. Remember that this is a daily treatment. So simplicity and convenience is very important.

Glenn, do you had a question?

Yes. And you talked about the opportunity [indiscernible]

But could you also see a significant opportunity with orforglipron maintenance [indiscernible] taking drugs [indiscernible]. So people for convenience or for other reasons pricing [indiscernible] injectables, but now would like to switch [indiscernible] because you don't have the as Steve alluded to the convocations with [indiscernible].

The question is, can orforglipron fit very nicely in that maintenance setting for patients who have already lost weight on the injectable?

Yes. And the primary focus, as I mentioned, again, once we launch is to expand the market to those patients that they have a BMI on 30, 30-plus that they can get to their basically weight loss target that they have that they can achieve it with orfoglipron. That will be our initial focus. Of course, again, we are thinking about maintenance as well.

That's why we run the -- basically the study on ATTAIN-MAINTAIN. And that showcase basically, to your point, that patients that are switching either from semi-injectables or tirzepatide that they can maintain certain weight basically reduction over time as well, in particular, versus semi-injectable, both basically GLP-1s was pretty much maintaining the same weight loss when they were switching from high-dose sema 2.4 to basically orfoglipron as well. So there is a component that will educate and inform physicians on how they think about the maintenance treatment as well.

So this about $1.5 billion in prelaunch orforglipron inventory on the balance sheet for Lilly. What does that imply for -- or what does that tell us about expected or anticipated 2026 revenue?

I wouldn't correlate the prelaunch inventory with, again, an estimation of the forecast for 2026. The way that we think about it, in particular, given the learnings that we had 2 years ago with the situation that we have with supply challenges that we face, it was to have the ability to basically scale our supply to have a global launch.

I would correlate again the estimation of the inventory levels that we have nowadays with a 2026 revenue. As you know, the prelaunch inventory is a number basically based on several stages of where the product is in the process. So I wouldn't use that as a proxy. We feel really good about the projections of the revenue that we have for orforglipron in the U.S. We'll build over time. We'll expand the market, in particular, also thinking about OUS 2027. Again, there is a strong preference of orals in OUS markets as well that we can scale and provide that solution for patients around the globe.

So Lilly has 4 key assets at least in this domain. So Zepbound, Mounjaro, orforglipron and retatrutide eventually. What -- can you rank the peak sales potential of these products? What would be at the top and what might be closer to the midpoint and bottom?

Yes. Interesting question. Thinking about ranking them, I will think first, again, they are all Lilly assets and part of our portfolio that we can serve more patients. So I think most likely our manufacturing organization will be very interested on my answer because, again, it's not the same if you think about an oral versus an injectable.

We try to still build global platform, so we have the flexibility to adjust based on the market demand. I think it's early days. The way that I will think about it is tirzepatide is the foundation of our platform that we have, both for obesity and diabetes and will continue to be the case.

Thinking about orfoglipron will bring this oral opportunity to expand the market and serve more patients at scale globally. Retatrutide, given the initial study that read out in Q4 last year and in osteoarthritis in the knee, but provided significant weight reduction, actually up to 28%, 29% weight reduction.

And we have more data readouts both in obesity and type 2 diabetes that all will read out this year as well. Now everybody gets super excited about the level of efficacy of retatrutide. But the way that we think about it is -- the vast majority of the patients will be already served by tirzepatide. I think we always think about retatlutide as more this segment of patients that will have a BMI over 37, maybe over 40 that needs to be served for a drug to get to the weight level reduction that they expect to have. So it's a more targeted population. I see.

Maybe sticking with retatrutide. So the people in this room were all paid to worry. And so we're watching Lilly start new studies that are looking at different dosing titration schedules and doses of retatrutide. That kind of tells us that Lilly isn't quite where it needs to be relative to dosing of retatrutide. Is that incorrect?

I will say so. I think the dosing was very clear even when we started the TRIUMPH-1, 2, 3 and TRACEND-1, 2, 3. Again, we are running, if you look at not only for retraatutide, for orlfroglipron, for tirzepatide, what we call a wall of studies to educate basically clinician and the medical practice on a daily basis.

These studies that you referenced, I think you're referencing like TRIUMPH-8 and 9. There are other studies that will continue to educate. Now in this case, for example, TRIUMPH-8 will educate basically the efficacy and tolerability of retitutide low dose. TRIUMPH-9 will be actually the dose regimen if you start scaling at a lower pace through those doses over time. Will that change how we think about the dosing? No, it does not.

Okay. Questions from the audience? So another frequent question from investors is how will the market dissect between oral and injectables. And we have KOLs who come to conferences like this, and we'll be here on Wednesday who will say, this is really or should remain an injectable market. It's the way to treat patients. Injectables are easy to deal with and so forth. So they think the majority of the value will be in injectables. Does Lilly agree or disagree with that?

As I said, I think it's less so about agreeing or disagreeing is to provide a portfolio of products that will let the physicians, as you described, some of these physicians that feel more inclined to prescribe with injectable versus orals. I think there is also a strong preference of consumers or patients to decide in this equation as well, and we hear that a lot, that patients who go basically to the physicians with an idea already that either they see in social media and so on, that they are interested to get treatment with an oral and an injectable.

So educating the physicians, providing these options of portfolio opportunities across injectables or different platforms, different options, single-acting, dual-acting, triple-acting like ritraclutide will actually help us to have a breadth of our portfolio to serve all the patients at the global level.

Where is the larger market opportunity for obesity agents? Is it U.S. or ex U.S.?

Do you want to comment on that one?

I mean we can start with just sort of people. I mean, certainly, if you look at the globe, there's over 900 million people around the world outside the U.S. that could be a potential patient for an infant medicine. In the U.S., it's over 100 million. So just from a sheer volume standpoint, that's kind of how things shake out.

But I think that much like your question about oral injectable U.S., ex U.S., I mean, our benefit in our luxury is that we don't really have to pick and segment. It's only an issue if you only have a U.S. oral or an ex U.S. injectable. We just want to have a broad portfolio that we have, and we want to serve as many patients as possible. And so that's the goal, and that's the undertaking. And we're very early in that uptake. So in the U.S., there's very low penetration into this eligible population. Ex U.S. is even later because the launches were a little bit behind. And so there's a lot of room to run in the future.

Okay. One area where Lilly isn't present is in a monthly GLP-1. Is this -- are you talking with your feet that you just don't feel it's a real market? Or do you just not have the candidate? Or what should we read into that?

No, we do, by the way. It's in early stages, but we are going after, as you can imagine, a broad portfolio. And as I said, and we have single-acting, dual acting, triple acting. We are going between orals and injectables, frequency of dosing, tolerability, we didn't talk about tolerability, but we have eloralintide as well that is an amylin with low levels basically of side effects associated with this drug as well that we could have potentially similar efficacy on some of the drugs, including tirzepatide, but with lower side effects. So there is a breadth of that portfolio. I mentioned portfolio like 4 or 5 times because we truly believe that, again, thinking about the different combinations, and we are going to try to have all of them in the marketplace, including basically that dose frequency as well.

Okay. The next question has 7 parts, and there's no way I could answer this question, but I'm not the one who has to answer it. So which one -- can you rank these in terms of risk? Like what do you worry about 7 things? So -- and I'll put them in group. So U.S. pricing or foreign pricing, so that's two. compounding, that's three. Portfolio concentration. So Lilly's -- a lot of eggs at Lilly are in the obesity, diabetes basket, four. Challenges outside diabetes and obesity, so maybe in oncology or something else, or IP, just the overall global respect for IP. What do you worry about the most out of that list?

Yes. It's a good list. Pricing, I would say, both U.S. and OUS. is certainly one of those things that are basically a headwind to the industry as a whole. I don't think that is just individual for the incretin space, but it's to the entire pharma industry. The way that we are addressing that is through innovation and it's growing volume and offsetting that erosion of prices.

And if you look at the price erosion putting aside the 2026 that it was a reset year, we have been on that mid- to high single digit. I don't feel that, that will be anything different in the future, right? And how we continue to drive growth, and you see that in the growth trends that we've seen with Lilly performing again and growing and outpacing the price erosion over time, that's the best way to address that risk.

I don't think that it will get worse, it's just a continuation of the same risk that we continue to see nowadays. This year is more predominant in the U.S. because of MFN, different years could be OUS as well. You have, again, new changes on the regulatory system in many countries, and that could vary by year as well. But we know the system rules and we know how to operate on those schemes as well.

The second one, I think, is a reality. I think you call it more of the concentration on the obesity and diabetes. The reality is that we are in that space. And we are happy that we are in the space, and it's happening in the situation that the market is growing exponentially, in particular on the obesity side, and we are the market leader.

So we are not shying away of that, we are actually driving that and ensuring that not only that we maximize the opportunity, but actually we provide a portfolio of products. So we don't take, again, one risk on one single asset, but we have the breadth of the portfolio to continue to innovate in that space.

Then our role on that is to continue to reinvest into the rest of the therapeutic areas in oncology, neuroscience, immunology to basically continue to drive that growth in the other therapeutic areas that are very important for us. I know that, again, obesity is getting a lot of time and efforts, but we are all very much focused to driving growth, and we have actually a very impressive pipeline, in particular, in oncology to drive that growth into the future as well.

I'm sorry, did you mention compounding?

I did not.

Okay. And does that mean you're not worried about it or...

I think the compounding is -- I mentioned that last year that I was getting that question almost every day, is a reality. We continue to drive again our legal case and trying to enforce that FDA takes action on this case, but it's part of the reality of the business, I feel really good about the health of the business and where the business is heading showcase that basically the brand are being prioritized in the marketplace and driving consistent growth over time.

Okay. Questions from the audience? So let's lead the incretin space and look at some other products that Lilly has. So what non-incretin pipeline assets do you think have the most significant potential to impact Lilly revenues over time?

Yes. Thinking about, of course, again, we brought to the market several products over the last few years like Jypirica, Ebglyss, Omvoh, Kisunla, all those products, they are in a very nice trajectory of growth and we will continue to drive that growth over the next 10 years.

Thinking about the pipeline, very excited opportunities. We are getting into cardiovascular. Nobody noticed that, but that space, we used to call it diabetes. We extended to then chronic weight management and diabetes and now we are getting into cardiovascular. And we are actually having 2 assets that will potentially treat cardiovascular risk like LPA, and we have lepodisiran and muvalaplin.

This is a large space and could potentially have a large impact for our patients, in particular, getting into the next decade as well. We talk about Kisunla. I know that front and center is the data readout of TB3 or TRIALBLAZER-3. I'm glad that you didn't ask yet about it. But again, getting into preclinical for Alzheimer could be another unlocking of a large opportunity in terms of patients that could make -- many of them will not have symptoms nowaday that could more significantly reduce the cognitive decline and even the risk of ARIA could be lower as well. That could unlock a significant opportunity. It still will be gradual to growth, but it's a large patient population that is not being served nowadays. So those are 2 in my eyes that could drive significant growth in the future.

[ Throw ] 1 and 2 just to round out the TAs. I mean, oncology. So there's a lot of talk about oral SERDs amongst competitors. Lilly actually has an oral SERD that's approved on the market in the metastatic setting. We have a trial ongoing number four in the adjuvant setting. So that's projected to read out by 2027. As in oncology, all these trials are event-based, and so that dictates when they read out. But that's a big prevalent pool of patients that are currently on endocrine therapy, and that's a great opportunity where patients typically take these medicines for multiple years. So large prevalence pool times long duration of therapy equals big market opportunity.

We do have a breast cancer panel on Wednesday, and I'm sure SERDs will be a very hot topic on that panel. So let's go to Kisunla for a second. So we're -- again, as you said, we're awaiting the TRAILBLAZER-ALZ 3 readout, which I know is sometime in '27. But are you more or less confident than a year ago that it could read out early?

At this time, our position has not changed, Steve. We -- again, completion is 2027. As you know, it's event-driven. That could read out again any time. I don't have a view on this time when that will happen.

Okay. And is Lilly privy to the event accumulation across the study, not necessarily in each group?

Do you want to comment on that?

I mean, look, we don't get into lots of details here. I mean, obviously, you have blinded events that dictate when things read out. But it's a common question, and it wouldn't be a Steve Scala panel without multiple choice and true false. That's good.

And sticking with Alzheimer's disease, you have another very exciting drug in remternetug. And you're doing a study, which honestly seems kind of odd. So the TRAILBLAZER-ALZ 1 -- not TRAILBLAZER, TRAILERUNNER-ALZ. And it's kind of like can you -- is there a scenario where you can file the drug on this? And if not, why are you doing it?

Sure. I can take that. Yes. So TRAILRUNNER and TRAILBLAZER. We tried to make them as interchangeable to confuse people as possible. But remternetug is a program that's also in a Phase III trial that's assessing preclinical. It's ongoing right now. It's projected in the back part of this decade to read out. So that's where we see the medicine and where we think the biggest use case is. We also have a trial that was basically more like a dose-finding study. So TRAILRUNNER-ALZ 1, looked at subcu, IV, different dosing schedules. And so it really was meant to inform the Phase III design. So it's not fileable, but you'll see more data from that later this year.

Okay. Questions from the audience? So a couple of hot topics at conferences like this and other venues are both AI and China. So maybe you could talk about China first. So when I think about China and I think about the pharma industry, Lilly is not a name which kind of rises to the top, right? So I don't think your presence there is particularly large compared to other companies. And your kind of tentacles into the country to bring out innovation seem competitive but not kind of stand out. Tell me why those 2 statements might be completely incorrect if they are.

No. Again, comparing to other pharmas, again, the split of the business could be different depending on the therapeutic area that they stand. We have a long-standing commercial footprint in China, and we have been extending that into, for example, very recently, we opened a Lilly Gateway lab as well in Beijing. So we have been expanding and partnering as well in the Chinese business, and it's not new. You have, again, access to our filing, you can see that actually.

Last year, I think the size of the business was roughly $2 billion out of the $65 billion. So you can do the math about the representation of that business, but it's growing very nicely. I mentioned that, again, as of January 1, they got NRDL reimbursement for Mounjaro in type 2 diabetes that will provide an unlocking an opportunity to drive significant growth in the years to come.

I always get the question, well, but you will have generic of semaglutide in the future. But the way that the system works in China, they have 2 different basically path for the generics and the branded products. So we have a path for our business to be protected in the future as well. So we expect to see significant growth in the future. If you look at very exciting is the timing between the launches in the U.S. and the launches in China. Again, 5, 10 years ago, there was a significant lag, and you see that actually shrinking more and more.

So expect that to continue to happen in the future that we will have those launches, again, in a more subsequent basically launches that you see in the U.S. getting into the OUS, but in particular, China as well.

You brought up the semaglutide patent expiration. Does Lilly see its obesity and diabetes assets growing through the semaglutide patent expiration?

The answer is yes. Yes. And you see it nowadays even because already in many countries, we have a premium to semaglutide. And in some countries, it's up to 50% the premium that we have, and we have market leadership position. So there is already a premium differentiation of our brand versus even the original semaglutide. There are markets that are more generic driven that could potentially have an impact, but we feel very strongly about our position even to navigate growth through the generic entrance of semaglutide OUS.

Okay. Questions from the audience? So we only have a few -- yes.

What's your strategy in [indiscernible] associated effects from GLP-1 like turn off [indiscernible].

You want to comment? The strategy on basically adverse events associated with GLP-1s. Is that the question?

Yes. I can take that. So specific to like the muscle bone composition idea, I mean, we're looking at that. We have obviously a study in Phase II that read out last year at ADA bimagrumab that was in combination with semaglutide. I think it's TBD on exactly what the path forward for some of those medicines look like, what the regulatory path is as well as kind of what the need is looking to assess is.

I would broaden it a little bit more to say, what are we looking at is actually a lot of other effects that GLP-1s have that are positive. So outside of just obesity and some of the cardiometabolic diseases, we're looking in immunology, neuroscience, things like alcohol use disorder, tobacco cessation. We're looking at an asthma study. So there's really a wide aperture of different conditions that we're looking to treat that are, I think, can be positive.

So only a couple more minutes. When you look at your P&L, which line is most likely to benefit from AI?

Over time, all of them. Short term, I would say SG&A naturally so, starting with back office. Again, we are seeing that nowadays that we are growing significantly, and we are actually leveraging AI to close books and records to automate all our processes, forecasting. I think manufacturing maybe midterm is one of the one to follow, in particular, with all the new sites that we are putting in place.

We are leveraging automation and AI significantly to make the lines as efficient as possible. That will continue to drive significant value in my eyes. The third one, it takes as always more time, but of course, is R&D, starting from discovery all the way to clinical trials and late phase that could benefit from AI, but it will take more time to get there. We are investing heavily. You've seen some of the partnerships that we signed. the supercomputer that our Chief Technology Officer called out last week is already up and running in our offices. And then we have this new K innovation lab that we bring basically our best scientists with their best technical people to continue to drive that innovation.

Okay. So in our remaining minute, we tried to close every panel with the following question and that is, over the next decade, what do you think the biggest surprise or change will be at Lilly?

Okay. Well, interesting. I've been in with Lilly 25 years. And if I look back 10 years ago, our size of the business was roughly $20 billion. You look nowadays, again, our guide is $80 billion to $83 billion, right? So 10 years past, and we have almost quadrupled the size of the business in that time frame. So significant growth that we have seen, and we are not planning to stop here, as you can imagine, right? So you think about the 4 molecules that you described that will continue to drive significant growth.

So that's, I think, in my eyes, a big enabler of that part of the growth, thinking about mid, but also long term. And it's, again, new platforms, new modalities, tolerability as we discussed. Mike mentioned as well getting incretins into outside of the obesity and type 2 diabetes space as well, again, areas like immunology, areas like in neuroscience. Again, we see and we are running studies on that space.

So expect to see that in our leadership position and how we leverage that position to get into those spaces. Then continue to drive again and putting our capital to work. And we will leverage this time to continue to reinvest to drive that growth into the other therapeutic areas. Of course, we will remain our discipline on what we invest in, but expect again that we will continue to drive that growth and that penetration in the other therapeutic areas.

Great. Sounds exciting, exciting future, a lot to look forward to. So thank you so much for this great rundown.

Thank you for having us .

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q4 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly and Company's Q4 2025 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 USA and Global Customer Capabilities; Jake Van Naarden, President of 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 [ Mark Heman ], Susan Hedglin and Wes Taul of the Investor Relations team.

During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to several 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. It is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on our non-GAAP financial measures.

Now I'll turn the call over to Dave.

Thank you, Mike. 2025 was a strong year for Lilly. We delivered robust revenue growth, advanced our pipeline, expanded our manufacturing footprint and helped over 70 million people around the world. 2025 full year revenue grew 45% compared to 2024, driven by our key products. We launched new medicines like Inluriyo, secured new indications for Omvoh and Jaypirca and entered new markets as we completed the international rollouts of both Mounjaro and Kisunla. We generated positive clinical data in more than 25 Phase III trials, including registrational trials to support 2 new incretins, orforglipron and retatrutide. We submitted orforglipron for obesity in the U.S. and in more than 40 countries globally.

We started 14 new Phase III programs over the past few months, including eloralintide and brenipatide. And we have one of the largest clinical stage pipelines in our company's history. We executed 39 business development transactions across all our therapeutic areas and added multiple clinical stage assets through transactions, including Scorpion, Verve, SiteOne, Adverum and the upcoming acquisition of Ventyx. We continue investing in artificial intelligence to discover and develop new medicines. In addition to our new supercomputer, we recently announced a new collaboration with NVIDIA to open a co-innovation AI lab. This project will combine Lilly's scientific expertise with NVIDIA's leading technology to accelerate drug discovery. We progressed our manufacturing expansion efforts and announced plans to build multiple new manufacturing sites in the U.S. and Europe. We increased our manufacturing capacity and began making medicine at our new sites in Wisconsin and North Carolina.

We exceeded our goal to produce 1.8x the number of incretin doses in the second half of '25 compared to the second half of '24. Since 2020, we've committed over $55 billion, the largest manufacturing build-out in company history. We announced an agreement with the U.S. government to provide access to obesity medicines to millions of Americans with insurance through Medicare and Medicaid. We're proud of our ability to bring these important medicines to patients at a cost of only $50 per month out of pocket. The number of people engaging with our U.S. direct-to-patient platform, LillyDirect, increased to over 1 million patients in 2025. Our most popular offering, the Zepbound self-pay vials, now makes up 1/3 of new patient starts who start on any brand of obesity medication. Lastly, we distributed $1.3 billion in dividends and $1.5 billion in share repurchases. We also strengthened our leadership team with the addition of 2 new executives and I welcome both Carole Ho and Adrienne Brown to this call for the first time.

Now I'll turn it over to Lucas to review our Q4 results and share details on the 2026 guide.

Thanks, Dave. We delivered robust financial performance in 2025. Our full year revenue of $65.2 billion increased by 45% compared to 2024 and earnings per share grew by 86% to $24.21. Q4 financial performance was also strong, as shown on Slide 7. Revenue grew 43% compared to Q4 2024, driven by our key products. Gross margin as a percentage of revenue was 83.2%, consistent with Q4 2024. Favorable product mix and improved production costs were offset by lower realized prices. R&D expenses increased by 26%, driven by continued investments in our early and late-stage portfolio. Marketing, selling and administrative expenses increased 29%, driven by promotional efforts to support our ongoing and future launches. Our non-GAAP performance margin was 47.2%, an increase of 4.2 percentage points compared to Q4 2024. Our effective tax rate was 19.7% and earnings per share were $7.54, inclusive of $0.52 of acquired IPR&D charges. This compares to earnings per share of $5.32 in Q4 2024, which included $0.19 of acquired IPR&D charges.

On Slide 8, we quantify the effect of price, rate and volume on revenue. U.S. revenue increased 43% in Q4, driven by volume growth of Mounjaro and Zepbound, partially offset by a 7% decline in price. Revenue growth was strong outside the U.S. as well, driven by double-digit volume growth in Europe, Japan and China. In rest of the world, volume doubled, driven by the launch of Mounjaro in new markets. On Slide 9, we provide an update on the performance of our key products, which contributed over $13 billion to revenue this quarter and grew by 91% compared to Q4 2024. Beginning with neuroscience, Kisunla recently became the U.S. market leader in the amyloid targeting therapy space with more than 50% share of total prescriptions. Revenue was $109 million, driven by overall market growth, increased awareness and diagnosis of Alzheimer's disease as well as increased prescriber adoption based on Kisunla's clinical profile.

In immunology, EBGLYSS delivered solid performance in atopic dermatitis, where U.S. total prescriptions increased 25% compared to Q3 2025. Omvoh continued its uptake and global revenue increased 55% compared to the fourth quarter in 2024. Jaypirca posted another strong quarter of sales performance and global sales grew 30% compared to Q4 2024. We recently received an expanded U.S. indication to include people previously treated with a covalent BTK inhibitor, significantly increasing the number of people who can benefit from this medicine. Verzenio global sales increased 3%, driven by volume growth outside the U.S. Verzenio remains the market leader in its early breast cancer indication. However, overall market penetration has reached a plateau as reflected in U.S. trends. Finally, in cardiometabolic health, Zepbound and Mounjaro both delivered strong results. Outside the U.S., the positive uptake trends of Mounjaro continued, particularly in our newest launch countries in Latin America and Asia.

We have launched in all major markets and are now the incretin share market leader outside the U.S. as well. Moving to the U.S., as shown on Slide 10, the combined incretin analog market continued its robust growth trajectory with total prescriptions increasing by 33% compared to Q4 2024. As market penetration within the eligible population of people with obesity is only mid-single digits, we believe there is room for market expansion and sustained market growth in the quarters and years to come. U.S. Zepbound revenue more than doubled compared to Q4 2024. Zepbound continues to be the market leader in the branded obesity market with nearly 70% share of new prescriptions. U.S. total prescription growth for Zepbound was robust, both in auto-injectors and vials. We are encouraged to see sustained growth uptake of Zepbound vials, which represented approximately 1/3 of total Zepbound prescriptions and nearly 50% of new Zepbound prescriptions in Q4.

In the U.S., Mounjaro expanded market leadership in the type 2 diabetes incretin market, exiting the quarter with over 55% of new prescriptions. On Slide 11, we provide an update on capital allocation. Moving to Slide 12 and 13, we share our 2026 financial guidance and highlight key factors that will impact our financial outlook. We expect revenue to be between $80 billion and $83 billion. The midpoint of our revenue range is an increase of 25% compared to 2025. We expect to deliver industry-leading volume growth driven by our key products, partially offset by lower realized prices. Price is expected to be a drag on growth in the low to mid-teens. Three factors will impact U.S. price, the government access agreement for obesity medicines, updated direct-to-patient Zepbound pricing and lower Medicaid prices for later life cycle medicines. Pricing outside the U.S. will be impacted by Mounjaro's inclusion on China National Reimbursement Drug List for type 2 diabetes. We believe these price concessions will be more than offset by increased volume over time as we expand the number of people who can benefit from Lilly medicines.

As I shared earlier, we continue to see robust growth trends in the U.S. incretin analogs market and we expect a similar trajectory to continue in 2026. As seen with other new launches, we expect the launch of oral GLP-1s to expand the addressable market. We expect our orforglipron to launch for chronic weight management in the U.S. during the second quarter of 2026 and to launch in most international markets during 2027. We anticipate new Medicare access to obesity medicines will become effective no later than July 1, 2026. While we anticipate a reduction in Medicaid access in 2026 due to key states like California removing obesity coverage, we expect new states will add coverage for people with Medicaid in 2027.

Within revenue, we anticipate EBGLYSS, Jaypirca, Inluriyo, Kisunla and Omvoh, will all contribute to growth, whereas late life cycle products like Trulicity, Taltz and Verzenio are expected to be flat or decline. We expect our non-GAAP performance margin to be between 46% and 47.5%. Across the P&L, there are pushes and pulls that we anticipate will impact our performance margin expectations. We expect gross margin will be relatively stable to slightly down compared to Q4 2025 as favorable product mix and increased productivity are offset by price and new facilities coming online. Consistent with our strategy to invest in innovation, we expect R&D expenses will scale up in 2026. We have 36 active Phase III programs in our pipeline and plan to initiate even more new programs in 2026.

With one of the largest clinical stage pipeline in company history, we are investing to maximize the impact of these potential new medicines. Marketing, selling and administrative expenses are expected to grow as we invest to support new launches across therapeutic areas. As we launch new medicines, we will fully invest in variable expenses while controlling fixed cost by leveraging our existing commercial footprint. We expect earnings per share of between $33.50 and $35, setting us up for another year of strong top line and bottom line growth.

Now I will turn the call over to Dan to highlight our progress on R&D.

Thanks, Lucas. Since our last earnings call, we've made significant progress in R&D. I'll share updates by therapeutic area, including select data highlights from recent Phase III announcements, a final update on 2025 key events and the potential 2026 outcomes on which we are now focused.

Beginning with immunology. Just a few weeks ago, we released top line data from TOGETHER-PsA, a randomized controlled Phase IIIb trial evaluating ixekizumab plus tirzepatide as compared to ixekizumab alone in people with psoriatic arthritis and obesity. This first-of-its-kind study assessed whether a concomitant treatment with an incretin could deliver additional efficacy when added to an existing immunology treatment. As shown on Slide 14, the combination not only achieved its primary endpoint, at least 50% reduction in psoriatic arthritis activity plus 10% weight reduction but also showed a 64% relative increase in the proportion of patients achieving a 50% reduction in the psoriatic arthritis symptoms compared to ixekizumab alone. An important finding from the study was the potential effect of tirzepatide when added to ixekizumab on psoriatic arthritis symptoms via both weight-dependent and also weight independent mechanisms.

These results further support existing treatment guidelines for psoriatic arthritis that recommend treatment of comorbid obesity and shed further light on how incretins may have a positive effect on other diseases independent from weight loss. We look forward to publishing these data in more detail in a peer-reviewed journal and presenting them at an upcoming medical meeting. With this important result in hand, we are encouraged about our ongoing trial studying ixekizumab and tirzepatide in psoriasis and 2 separate studies of mirikizumab and tirzepatide in Crohn's disease and ulcerative colitis. We also advanced our new GIP/GLP-1 agonist, brenipatide into a Phase II study of asthma, another serious immunologic disease that we think may benefit from dual GIP/GLP-1 therapy.

Moving to oncology. The FDA granted full approval for pirtobrutinib, including the expanded indication for treatment of adults with relapsed or refractory CLL/SLL who have previously been treated with a covalent BTK inhibitor. This label update significantly increases the number of eligible patients and allows physicians to extend the use of BTK inhibitors to control disease longer. We also shared detailed data from 2 Phase III pirtobrutinib trials, BRUIN CLL-313 and BRUIN CLL-314. As shown on the left side of Slide 15, in BRUN-CLL-313, pirtobrutinib improved progression-free survival, reducing the risk of progression or death by 80% versus bendamustine plus rituximab in treatment-naive CLL/SLL patients. This risk reduction is among the most compelling ever observed for a single-agent BTK inhibitor in a frontline CLL study.

In the second study shown on the right side of Slide 15, BRUIN CLL-314, pirtobrutinib was compared to a covalent BTK inhibitor, [ ibrutinib ]

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in treatment-naive or BTK inhibitor-naive patients. The study met the primary endpoint of noninferiority of overall response rate. And while progression-free survival data were immature, they trended in favor of pirtobrutinib. Notably, in the early analysis of the treatment-naive subpopulation, as shown here, pirtobrutinib reduced the risk of progression or death by 76% compared to ibrutinib. Both datasets were presented at the American Society of Hematology Annual Meeting and were simultaneously published in the Journal of Clinical Oncology. We submitted these results to regulatory authorities to potentially enable the use of pirtobrutinib in earlier lines of therapy. Later this year, we expect results from an additional Phase III pirtobrutinib trial, BRUIN CLL-322. This trial evaluates pirtobrutinib in addition to a fixed duration regimen of venetoclax and rituximab in previously treated CLL/SLL patients.

If successful, this could form the basis for an additional regulatory submission later this year. We also presented updated combination data of imlunestrant with abemaciclib in metastatic breast cancer, which showed additional benefit compared to imlunestrant alone. We submitted these data to regulators and are seeking to expand the imlunestrant [indiscernible]. While we're encouraged by these new data for patients with metastatic breast cancer, we're even more excited about the opportunity for imlunestrant in adjuvant breast cancer. Our ongoing 8,000-patient adjuvant breast cancer trial, EMBER-4, is fully enrolled and it will be the next Phase III readout of an oral SERD for patients with early breast cancer. In other oncology updates, we advanced Sofetabart Mipitecan, our next-generation antibody drug conjugate targeting folate receptor alpha into Phase III testing for women with platinum-resistant ovarian cancer.

We believe this program has the potential to benefit a broad population of patients with ovarian cancer regardless of folate receptor alpha expression level and may also offer improved tolerability compared to currently available antibody drug conjugates. We plan to initiate a study in platinum-sensitive ovarian cancer later this year. We're excited that this medicine received breakthrough therapy designation from FDA earlier this year. We also expect to initiate new Phase III programs for 2 other oncology [ molecules ]. The first is tersolisib [indiscernible], our mutant selective PI3-kinase alpha inhibitor. We believe this program could represent the next generation of PI3-kinase alpha targeting agents by selectively targeting the pathway in cancerous but not in healthy cells, thus overcoming a key limitation of currently available medicines. This approach could potentially offer better disease control through deeper pathway inhibition as well as improved tolerability.

The second is vepugratinib, an FGFR3 inhibitor that we believe may improve on the tolerability profile of existing agents and enable combination therapy in first-line metastatic urothelial carcinoma. In neuroscience, we began several trials exploring the use of incretins to treat substance use disorders and psychiatric conditions. Last quarter, we announced plans to initiate a Phase III program of brenipatide in alcohol use disorder. Since then, we began dosing patients in this trial and we have also launched additional brenipatide Phase II trials in tobacco use disorder and bipolar disorder. We expect to initiate several more Phase II and Phase III trials in 2026, exploring how brenipatide may be able to treat other conditions, including a Phase III trial for major depressive disorder, testing if brenipatide can prevent relapse of disease. In Alzheimer's disease, we continue to look forward to the results from TRAILBLAZER-ALZ 3, our study of donanemab in people with normal cognition but a positive blood test for Alzheimer's disease.

This trial screened volunteers with a blood test for p-tau and randomized participants to a 9-month course of treatment with donanemab. By moving earlier in disease, even prior to individuals having any objective symptoms of Alzheimer's disease, the goal is to reduce the risks of them ever developing any impairment due to Alzheimer's. The primary completion is projected for 2027. However, the study will read out when the target number of progression events are accrued. Moving to cardiometabolic health. We had another busy quarter. We are excited to announce positive top line results from the ATTAIN-MAINTAIN trial, evaluating orforglipron for weight maintenance. This unique Phase III trial was designed to answer a common question from doctors and patients. Can people successfully maintain weight loss achieved on maximum tolerated dose of injectable incretins by switching to an oral GLP-1 therapy? Participants in ATTAIN-MAINTAIN were previously on injectable semaglutide or tirzepatide, then switched to orforglipron or placebo.

As shown on Slide 16, orforglipron helped people maintain weight loss that they had achieved on injectable therapies and the study met all primary and secondary endpoints. People who switched from semaglutide to orforglipron maintained their previously achieved weight loss with an average difference of just 0.9 kilograms. This suggests that as an oral GLP-1 therapy, orforglipron may provide similar weight loss maintenance as the maximum tolerated dose of the injectable GLP-1 therapy semaglutide.

As expected, those who switched from maximum tolerated doses of the GIP/GLP-1 agonist tirzepatide to oral GLP-1 monotherapy maintained much of their weight loss, although with a higher average difference of 5 kilograms. We expect to share detailed results later this year. Other orforglipron updates since our last call include submission of orforglipron to the FDA for treatment of obesity with approval expected in Q2 of this year, submission of orforglipron for obesity and for type 2 diabetes in a number of other countries around the world, initiation of orforglipron Phase III cardiovascular outcomes trial and initiation of orforglipron Phase III for treatment for peripheral artery disease.

We look forward to completing the U.S. regulatory submission of orforglipron for type 2 diabetes later this year after the ACHIEVE-4 trial is complete. We also announced new data for our GIP/GLP-1 glucagon triple agonist, retatrutide. In the first Phase III trial to complete, TRIUMPH-4, we evaluated retatrutide in adults with obesity and knee osteoarthritis. Participants taking retatrutide 12 milligrams lost an average of 29% of their body weight at 68 weeks. While many people will not need this level of weight loss, we see an important potential role for molecules such as retatrutide in helping people with higher baseline BMIs or with more severe obesity-related comorbidities. Accordingly, we are pleased to see that retatrutide reduced WOMAC pain scores by an average of 4.5 points, representing a 76% reduction in pain. And this was accompanied by significant improvement in physical function.

Impressively, more than 1 in 8 retatrutide-treated patients were completely free from knee pain at the end of this trial. The safety profile was generally consistent with other incretins with gastrointestinal events being most common. We observed higher discontinuation rates due to adverse events in people with lower baseline BMI, including participants who discontinued for perceived excessive weight loss. As shown on Slide 17, patients with a baseline BMI of 35 or higher, which represented 84% of the trial population had discontinuation rates due to adverse events consistent with those observed in clinical trials of other injectable incretins. We expect to read out 6 additional Phase III trials for retatrutide in 2026, including the remainder of the core registration package for both the TRIUMPH obesity program and the TRANSCEND type 2 diabetes program.

Also in Q4, we started a Phase III trial in high-risk metabolic dysfunction-associated steatotic liver disease, MASLD, studying retatrutide as well as tirzepatide for treatment of this disease. We're planning to submit the results of the core TRIUMPH program in 2026 to support applications for overweight and obesity, obstructive sleep apnea and osteoarthritis of the knee for retatrutide. Based on the data we've seen so far and pending these upcoming data readouts, we believe retatrutide may have the potential to become an important new treatment option for patients with significant weight loss and certain complications. Moving to tirzepatide. We're pleased that Zepbound was recently approved in the U.S. in a multi-use KwikPen device. This presentation of tirzepatide is already available in many countries around the world as a convenient offering that includes 4 doses in a single pen. We look forward to launching this new Zepbound offering in the U.S. within the next few weeks.

Slide 18 shows pipeline movements since our last earnings call and Slide 19 shows the full list of key events achieved in 2025. Notably, we achieved positive outcomes for nearly all R&D key events in 2025, a rare set of results in this industry. Slide 20 shows key events expected in 2026 with potential for data readouts and regulatory actions across our therapeutic areas. In addition to the substantial progress we're making in immunology, neuroscience and oncology, I want to take a moment to reflect on our growing incretin and obesity portfolio. Of course, there's been a lot of focus on tirzepatide and orforglipron, which I think is well warranted. Now, excitement is growing for retatrutide as well. I see each of these as an example of a leading model within its own class. Behind these 3 incretin innovations, we have a robust pipeline of further inventions with potential to address patient needs, including our selective amylin agonist, eloralintide, which is currently in Phase III as well as our next-generation GIP/GLP-1 dual agonist brenipatide, which is also now in Phase III trials.

Behind these, we have a number of earlier-stage molecules that could similarly lead within new mechanisms and new classes of therapeutics for treatment of obesity. We've built a substantial scientific lead in this field and we aim to widen the distance through our R&D efforts. This past year was busy and productive and we expect more of the same in 2026 as we continue to create meaningful medicines on behalf of the patients that need us. I'll now turn the call back to Dave for

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Okay. Thanks, Dan. We're pleased with all the progress in Q4 and throughout 2025. It was a year of strong execution for Lilly. We delivered exceptional business results, invested in our future and help millions of people around the world improve their health.

Now I'll turn the call over to Mike to moderate the Q&A session.

Thanks, Dave. We'd like to take questions from as many callers as possible. So consistent with prior quarters, we will respond to 1 question per caller and end the call promptly at 11. If you have more than 1 question, you can enter the queue and we will get to you question as time allows. Paul, please provide instructions for the Q&A and then we're ready for the first caller.

[Operator Instructions] And the first question today is coming from Evan Seigerman from BMO Capital Markets.

Congratulations. So a year from now on this call, I'd love for you to characterize what you would.

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Orforglipron launch. Specifically, what are some of the metrics that you're looking to meet? I know you're not going to give guidance but some qualitative kind of commentary would be most helpful.

Great. Thanks for the question, Evan. Kind of a little bit but I think you were just asking about, a year from now, what are some things we'll be tracking on for orforglipron. So I think for that question, maybe we'll go to Ken to maybe talk about some things that we'll be looking at.

Sure. Thanks for the question about orforglipron. We're really excited to have this medicine submitted not just in the U.S. but now 40 countries and looking forward to launches beginning this year. As I think about success factors for us going forward, maybe towards the end of the year, we'll be looking at a few things, first of which is [ just get ] expansion. We're very encouraged by what we're seeing with oral Wegovy as it validates our belief that there's a substantial number of people with overweight and obesity who've been sitting on the sidelines waiting for an oral option.

It looks like these are mostly new starts. That means it's expanding the market and that's good news for Lilly. We feel really good about the competitiveness of our profile. We've talked about that a lot on previous calls. I think we're at the point now where we're going to pivot to how do the real-world results play out. We think this is going to be about patient satisfaction. And our profile, which is simple with no restrictions on food and water intake, could make a big difference in the real world. So we're excited to get off to the races here, see this market expand and really look at overall patient satisfaction scores and real-world efficacy with these agents.

The next question will be from Courtney Breen from Bernstein.

Just building on the question around orfor, you mentioned that you have submitted in 40 countries. Traditionally, you tend to think about kind of a full year cycle for most approvals in many countries around the world. Can you just help us understand if you're anticipating any kind of accelerated pathways that you might be able to access in these ex U.S. countries that would enable launch in 2026 for orforglipron similar to some of the pathways that are available in the U.S. and you've been able to garner one of them.

Great. Thanks, Courtney. And so that's -- so the question is about how we're thinking about O.U.S regulatory approval time lines. We'll go to Patrik.

Thank you very much, Courtney. As I think we shared in the prepared remarks, outside of the U.S., it's mainly going to be a matter of launch in the first half of 2027. There will be a few markets late '26. And a few exceptions for countries like, for example, the UAE that might reference an FDA-approved orforglipron. So mainly late '26 [indiscernible] for international markets.

The next question will be from Chris Schott from JPMorgan.

Congrats on all the progress here. Can I just ask about international Mounjaro? This seemed like this is a very significant upside driver, at least relative to Street numbers in 2025. And I'm just interested in your thoughts on the ramp from here as we think about the $3.3 billion 4Q result you just reported. I know last year was about a lot of new market launches. Now you're just -- now you're in those markets. Like how do we think about kind of sequential growth from these levels?

Great. Thank you, Chris. For the question on O.U.S Mounjaro performance and the ramp from here, we'll go back to Patrik.

Thank you very much, Chris. Well, you are right, Q4 was a very strong quarter for Mounjaro also outside the U.S. And as Lucas referred to, we became the shadow market leader for total incretins also internationally. When you look at 2026, I would just reflect back on '25. We had major launches more or less in every quarter with the exception of Q4. So I would actually look forward as a base for the 2026 growth but also consider that there was a slight impact in Q4 driven by the NRDL listing in China effective 1/1/2026, which slightly impacts the purchasing pattern in China in December. So see Q4 as a base for 2025 -- 2026.

Moving forward, our business now O.U.S. [indiscernible] is 75% chronic weight management and that's pretty much out of pocket. 25% is reimbursed for type 2 diabetes. So the priorities for 2026 will pretty much be market expansion, driving more penetration through patient activation when it comes to chronic weight management. And for type 2, we are leaning in to gain reimbursement in more countries. We're currently reimbursed in 9 with the last one being China with the NRDL. And we will do that with a maintained discipline in terms of pricing. So I think overall, we are well positioned for a continued growth for Mounjaro outside the U.S. in 2026.

The next question will be from Seamus Fernandez from Guggenheim.

So I'm actually going to ask a non-obesity question. So while you can't take your eye off the ball on obesity, just wondering why you couldn't attack immunology broadly in the same way as you have obesity, investing earlier, faster and more aggressively given the substantial cash generation that we're starting to see from the overall portfolio. What are the issues that would prevent you from doing something like this, whether it be by your internal efforts or perhaps a more aggressive business development approach just because it seems like this is a sort of cash-driven opportunity where there's a lot of spend but a huge amount of upside opportunity with $170 billion of total market out there to access.

Great. Thanks, Seamus and extra credit for the non-obesity question. We'll go to Dan to talk about our approaches on attacking immunology early.

Yes. No. Thanks, Seamus. It's a great question. And actually, I'll come to immunology in a second but let me just first point out that across our non-obesity work, which is, of course, oncology, neuroscience and immunology, we have our thumb on the scale for investment decisions. We see lots of good opportunities in those areas and we're reinvesting some of the proceeds from the obesity opportunity to make sure we can further accelerate growth in those promising areas. Today, you heard me talk a lot about the oncology portfolio, which I think is really blossoming right now. I have high hopes for immunology behind it. I think there's really promising breaking science, including treating immunologic diseases earlier and our research labs are doing everything in our power to harness that science. Today, I talked a little bit about some trials that are ongoing for incretins in immunology, which I think is promising as are a number of other combination therapies that we now have in our late-stage clinical trials. So I'm excited, both early and late [indiscernible] immunology.

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

Great. Congrats on the quarter. I had a question on the guidance high level, Lucas. Just wondering if you can talk about what's embedded for Medicare volume ramp in the back half of the year and how that might drive the range we're seeing on the revenue side? And then if that's had any impact on employer opt-ins on the commercial side? I know you guys previously talked about how that might have some impact to get some of the other employers over the hurdle on coverage. So just wondering if you're starting to see that yet.

Great. Thanks, Terence, for the question on guidance and kind of Medicare ramp in the back half of the year as well as if there's any commercial opt-in. We'll go to Lucas.

Yes. Terence, thank you for the question. Maybe starting with Medicare, as highlighted in the call text, basically, we are expecting that access to be granted no later than July 1. And as I mentioned all along, this will take time to build over time but we feel very, very positive about the opportunity to bring anti-obesity medications to patients in Medicare. As I mentioned, again, the co-pay $50 for the patients will be a compelling value proposition as well. There is a bolus of patients that we have nowadays in LillyDirect business that we believe are also Medicare patients. So expect that bolus, I think, is between 10% to 20%, will actually move into the Medicare space. I think that will happen relatively fast and we will continue to build on top of that. So that's kind of the drivers to think about, again, the penetration. But we'll build over time, we think about, again, more about the size of the opportunity in Medicare thinking about 2027 as well.

The second part of your question was about the employer opt-in. I have Ilya right next to me here as well to talk about it. But as -- so [ along ] you said, of course, again, the practice on physicians prescribing this medicine will become more natural, more broader in the anti-obesity medications. And physicians will be, again, more broadly basically also thinking about prescribing this in commercial. How that will then impact the employer side? I think the message is clear, right? Again, there is a clear recognition of the class as a chronic disease. And basically, that will, in my eyes, will propel also employers also to think about, again, this class and also employees to look for this class of medicines as well to be covered as well. But I don't know if it's anything else that you would like to add, Ilya?

Yes. Maybe just some additional context, Terence, on commercial opt-in. Obviously, we start the year roughly on balance, relatively stable. There are some employers adding coverage, some removing some coverage. But we're putting additional focus in the employer space. We've stood up a team and also working with a number of third parties to actually provide alternative access channels to have some flexibility in design, transparency in the pricing and the initial conversations and feedback has been positive. Of course, a lot of those decisions are for the following year. We anticipate having some of those decisions and increased coverage over time in the employer space as we head into the back end of this year and mostly into 2027.

The next question will be from Geoff Meacham from Citi.

Congrats on the quarter. Dan, I had one for you. The TOGETHER results are really super interesting. How are you thinking about the potential for combo therapies with Zepbound in either I&I or oncology or neuro? I wasn't sure what drives the investment priorities, whether it's the drug or the indication and if there is a clear path to a labeling claim.

Yes. Thanks, Geoff. Again, another non-obesity question. So lots of extra credit on this call. We'll go to Adrienne to talk about some of the combination therapy approaches and some of the strategy there.

Sure. We see this as a significant opportunity. Obviously, more than 1 billion people worldwide have immune diseases like atopic dermatitis, psoriasis, IBD and asthma. But patients who have both immune diseases and obesity tend to have a higher disease burden. So we're really excited about the opportunity to find new ways to combat the underlying [ inflammation ] in these diseases and potentially unlock better longer-lasting results for these patients. So we have broad efforts underway to look at additional combinations. We have the TOGETHER-PsO trial evaluating the use of Taltz and Zepbound for adults with moderate to severe plaque psoriasis and obesity or overweight.

We expect those top line results in the first half of 2026. We're also looking at the TOGETHER-AMPLIFY-PsA and TOGETHER-AMPLIFY-PsO studies assessing the effectiveness of adding Zepbound after starting Taltz for adults with PsA and moderate to severe plaque psoriasis. We also have the Phase IIIb COMMIT studies in both ulcerative colitis as well as Crohn's disease, where we're looking at the concomitant use of Omvoh and Zepbound in addressing outcomes for those patients and then the Phase II study of brenipatide for people living with uncontrolled asthma. So we're excited to continue to pursue the applications of incretins and unlocking better outcomes for people with immune diseases.

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

Congrats on all the progress. Back to obesity, with apologies, Mike. Maybe just given the focus on pricing dynamics, can you just talk about what you're seeing in the contracting environment, broadly speaking, across the incretin portfolio? And also, what's your view on price elasticity in the cash channel as the year progresses?

Asad, thanks for the question. To go through kind of pricing in the U.S. and price elasticity, we'll go to Ilya.

Yes, sure. Thanks for the question. Maybe just for the first part in terms of the commercial access and contracting, obviously, we start the year with similar coverage as we ended 2025. We continue to have coverage for Zepbound in 2 of the 3 large PBMs. We continue the conversations around expanding access in those PBMs for, obviously, the introduction of orforglipron in Q2. So we're in active discussions there. From a pricing standpoint, we've been pretty transparent on pricing for 2026 as it relates to Part D as well as our direct-to-patient pricing, which we implemented at the end of December. And then we have ongoing conversations with improving and continuing access in the commercial segment.

In terms of price elasticity, we've seen over time, both in the U.S. and outside of the U.S. that affordability and opportunity on the entry as well as predictability of cost for patients matter. That's why the out-of-pocket in Part D of $50 is an affordable option as well as we've seen an increase in utilization of even Zepbound vial at the end of the year when we implemented improved entry price of $2.99 for Zepbound. So we continue to see that. And obviously, we're seeing significant and encouraging uptake in the oral market, which is expansive and bringing new patients to obesity treatment and we're excited to launch orforglipron soon with the entry price being similar to oral sema.

The next question will be from Mohit Bansal from Wells Fargo.

So a strategic one. So I would love to understand what is your latest thinking on the importance of getting obesity-related indications on the label because we kind of get the mixed -- little bit of mixed message when we talk to payers because they kind of think that these drugs are just for obesity for now with NASH, they are still covering for obesity with NASH. But do you think this could be an over long-term differentiator here now that you are going into indications like I&I as well at this point?

Thanks for the question, Mohit. So to kind of think about and address our strategy on obesity and expansion of indications more broadly, we'll go to Ilya to go and then, Ken, you can add if you have any other development thoughts.

Sure. Thanks, Mohit, for the question. What we've seen thus far, even with Zepbound and looking at Medicare population around sleep apnea, we're seeing an increase in utilization and thinking about obesity beyond weight and looking at outcomes related to obesity and in a lot of comorbidities, as Dan had mentioned even in our psoriatic arthritis trial with Taltz. When we talk to employers as well as payers, they think about the multiple aspects of obesity and what that means for coverage and cost long term. So we do see a growing body of evidence to support covering obesity medications for population and having a positive impact to public health beyond just weight.

And so thanks for the question on other potential avenues of [indiscernible] as it relates to complications and comorbidities. As our incretin portfolio and amylin portfolio expands, we're always facing the question of do we spend our resources replicating findings from previous incretins on comorbidities and complications where we know these drugs are efficacious or do we push into new areas and generate new evidence. You've probably seen with orforglipron, we're actually starting to explore new ideas like stress urinary incontinence, peripheral artery disease and hypertension.

We'll continue to look for [ newish ] incretins in addition to what we've talked about in the I&I space. But we do also understand that with new molecules and new mechanisms, it's important to generate some data to continue to give prescribers and patients confidence that these medicines preserve the benefits of the previous class of medicines. So we continue to do that, too but very pleased, I think, with our overall balance of investment across the incretin portfolio in both sort of established and emerging mechanisms in diseases of interest.

The next question will be from Umer Raffat from Evercore.

Cash pay, I feel like has been a very important driver of growth among other drivers. And I'm just trying to think out loud what the long-term implications of that could look like, especially with all the competition coming. On the one side, obviously, there's going to be tremendous brand loyalty, which is very important in cash pay. But on the other side, the traditional PBM contracts and rebate wall may not apply. So I'm just trying to think out loud how you're thinking about share retention in cash pay in the long run.

Okay. Thanks for the question, Umer. To discuss a bit about sort of the cash pay dynamics, I'll ask actually Ilya and Patrik to discuss how it plays out internationally and as well in the U.S. So maybe Patrik, you want to start first?

I think what we have been building over the last couple of years, learning a lot from the U.S. has really been the consumer centricity. And I think it's a matter of building platforms along the lines as we have done in the U.S. with LillyDirect, where we are providing the opportunity for patients both to seek, start [indiscernible]. So I think that's a muscle that we need to continue to develop.

Yes. Just to add on, I think we've learned quite a bit. There are frictions in the system for a number of diseases in the U.S. and globally. Obviously, we've seen that happen in obesity. What we've built within LillyDirect as a pretty significant scaled direct-to-consumer platform that helps address some of the frictions. Of course, we can continue to think about how we evolve that consumer experience and make this more seamless at the same time, growing access across the different segments. And so I think both will play an important role and we continue to look for ways for us to scale as well as improve on the experience over time.

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

One on eloralintide. So the weight loss results you guys presented last year look really strong. But given prescribers and patients seem more interested in more favorable tolerability, how should we think about the potential for lower doses of elora and lower dose combos of tirzepatide to potentially achieve a titration-free placebo-like tolerability with weight loss, let's say, comparable to monotherapy GLP-1s?

Thanks, Alex. We'll go to Ken to talk about the eloralintide development strategies and different ideas we're assessing.

Yes. Thanks for the question, Alex, on eloralintide and future avenues there. We're really excited about the data we shared at obesity last week where patients achieved up to 20.1% weight loss with eloralintide with excellent tolerability that was improved with titration. In fact, in the 3-, 6-, 9-milligram titration group, I think we only had one incidence of vomiting out of more than 50 patients. So that compares, we think, really favorable versus the existing incretin class. So we see a big opportunity for eloralintide in patients who maybe just can't tolerate an incretin. We know that 5% to 10% of patients in our trials tend to discontinue on the incretin class, suggesting a pretty big opening given the size of the obesity market.

Of course, we're also interested in thinking about eloralintide in combination with other mechanisms of action and what you alluded to with GIP plus GLP-1 plus amylin, is a very sort of physiological construct, 3 nutrient-stimulated hormones. And we've shared that we are exploring that idea in the clinic, nothing to share yet. But stay tuned maybe towards the end of this year. We're testing other possible combinations, including a GIP agonist macupatide with eloralintide as well. And so really just trying to understand the range of options. And like you said, is there really an optimal very simple permutation of mechanisms that could allow minimal or no titration with competitive efficacy.

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

One for David. For CMS' upcoming obesity demonstration, David, can you share any similarities or differences you foresee from what you went through previously during the Part D Senior Savings Model for insulin's $35 co-pay rollout?

Great. Thanks, James and I will welcome Dave to get in the box score for the Q&A. Can you share any similarities on the CMS obesity pilot versus the Part D senior savings?

Yes. I mean I think there are quite a number of analogies to draw. I mean, first, arriving at what would be perceived as a relatively low out-of-pocket is an important fact by itself. And while we know in this case, we're not moving from high out-of-pocket to low, only moving from covered plus low out-of-pocket. And I think patients who may be using GLP-1 and the data we have is that seniors are using these drugs at a lower rate than the general population, maybe because of income, in particular, will benefit from that lower cost every month of $50. I think that's very expansionary to the class and will draw a lot of interest from primary care prescribers who are concerned about the comorbidities of kind of lifetime overweight and obesity, which tend to manifest after 65 at a much higher rate.

The second thing is the consistent variance. And I think when we negotiated this with the government, we wanted to make sure that we weren't just building a program that went into the normal Part D math in terms of out-of-pocket costs but had kind of that consistency. Independent of the absolute amount people pay, they get very frustrated with different amounts month-to-month. So I think that's another important feature. Thirdly, like the insulin deal, it's open to all innovators. And I think that's an important concept that the doctor and the patient choose the best therapy, which could be one from us, one from our competitor. It could be oral, it could be injectable, could include future therapies from Lilly or others like retatrutide or eloralintide when they're approved. So I think that also has a parallel to what we did with insulin.

If you look back at that insulin pilot, utilization rates increased pretty dramatically in Part D and frustration levels with that issue basically disappeared. I think this program has a similar promise to be both enormously popular, drive a lot of new uptake. As I said, it's suppressed in the senior population who could probably benefit most, at least in the short term from GLP-1 therapy. And I believe and I know that CMS does as well, that within a few years, we'll demonstrate significant cost savings to the Medicare program. So that is different than the insulin part but that's associated with new products being added. So we're excited to get going. We expect this to be effective by July 1, working through the details with the administration now and you'll hear more maybe on our Q1 call.

The next question will be from Steve Scala from TD Cowen.

2026 revenue guidance is $15 billion to $20 billion higher than that delivered in 2025. Mounjaro and Zepbound are doing great but we can kind of see their trajectory. Are there scenarios where these incremental sales can be delivered without orforglipron being a $5 billion product in 2026? And does the guidance tell us that Lilly believes orals will grow the market and not cannibalize?

Great. Thanks, Steve, for the great questions, as always. We'll go to Lucas to talk a bit about the revenue guide and some of the moving parts that are contained within that.

Yes. Thank you for the question, Steve. Thinking about the guide, again, you can do the math on that perspective. But when we think about the process, maybe start from there, as always, we do a bottom-up approach on what we see in the marketplace and then across all the therapeutic areas and geographies as well. And we have, again, I'll point out, there a guidance as kind of what is our goal for the year to start with. There are many multiples, pushes and pull and I described that during the call text as well, talking about, again, the expansion in Medicare that Dave just cover, talking about the launch of orforglipron as well and a continuation of growth that we expect to see both in the U.S. and O.U.S markets. I think it's fair to go back as well about the -- basically the price component as well that is embedded into the guide as well.

That's another component that is going to be actually accelerated in 2026, that erosion versus 2025. And I call out basically low to mid-teens. That's a new component to basically some of the math that you were thinking about 2025 that you need to factor as -- when you're doing those forecasting and models that you described. In terms of your orforglipron question, I think it's important to highlight looking at even just the last 4 weeks of the data of the competitor launch, is mainly expansion of the market. So we are very, very encouraged from, again, the first month of seeing that data and it's very much consistent with our expectations and our guide. We will see how much, again, that class will continue to grow over the years and we will update our guide throughout the year depending on that.

The next question will be from Akash Tewari from Jefferies.

So Dave, you've mentioned that investors who really understand Lilly recognize it's a consumer stock. Can you talk about some consumer analogs you'd point investors towards when you're thinking about long-term penetration for both the U.S. and ex U.S. for your weight loss product? And then maybe just on the cannibalization point, is it fair to say your guide isn't expecting meaningful cannibalization of the oral and injectable obesity products versus what we've seen with Novo?

Definitely a 2-parter there, Akash. So we'll get Dave to talk about the consumer analogs.

Well, I think Lucas covered the cannibalization but it's not what we're seeing right now, nor is it what we really expect. In a way, though, just strategically, it doesn't really matter to us. I think we're interested in having people on the medicine that they think and their doctor think is best for them. And if it comes from Lilly, that's our goal. So we're not too concerned about that but I don't actually expect a ton of cannibalization, to be honest. In terms of the consumer analogs, it's a difficult question. We -- I'd be open to your feedback on this. We spent a lot of time modeling out the trajectory of the out-of-pocket business. Patrik and Ilya commented on that. I think at the JPMorgan conference, I spoke about this. I think it is a bit of a wildcard in our short and midterm outlook because I am hard-pressed to think of an analog where you have this many people paying out of pocket for a prescription medication.

People could look back at the [indiscernible] and the [ ED ] drugs, we were part of that. We've learned some things from that but it's not the same as this. You can look at cosmetics and aesthetics where it's quite common but that also has some overlap but not complete because here, you have really profound health benefits and noticeable results that really drives the success cycle for people in their lives. It's kind of different. So I think it's hard for us to think about that. What we can do is take learnings from other industries that were able to reduce consumer friction, unlock the power of first-party data and marketing, consider a platform and an interface with consumers that allows us to bring our really robust and deep pipeline that Ken has been talking about to market in a way that might be quite differentiated over time, play with pricing opportunities, subscription models, these kinds of things.

All that is in our future. And I think LillyDirect discussion, out-of-pocket business, all enables those things. It's pretty interesting strategically because I don't think there's a good analog in our industry and we're working through that and excited by the potential as we already see 1 million people in the U.S., hundreds of thousands more outside the U.S. choosing this way to buy a medicine like Zepbound and Mounjaro.

Great. Thanks, Dave. I will do one last question and then we'll have to close the call.

Final question today is coming from Michael Yee from UBS.

Just wanted a view of unit volume scripts vis-a-vis the tirzepatide launch and how you think either access or other channels are different here versus tirzepatide and how you think about the launch here versus tirzepatide for orfor?

Great. Thanks. Mike, we'll go to Ilya to talk a bit about the orfor launch.

Yes. Thanks for the question. Obviously, we're excited about launching orforglipron, assuming in Q2. As we think about the overall market and every launch in this space, you're launching in a larger market and more greater consumer and provider awareness. We recognize that and we look for learning from how we've launched previously. I think what's different here and people on the call have discussed this is that there is a -- typically in the cycle of launches, you start with access, build access over time and you see gradual uptake. What we've seen in this space in particular and obviously, we have a scaled direct-to-consumer platform as part of that. You also have a significant self-pay and consumer awareness in this category. And so our expectations are high in terms of what we expect for orforglipron in our launch. And we -- again, we expect this to be market expansive and bring new people to therapy for obesity. So that's our expectation for orforglipron over time.

Thanks, Ilya. Dave, over to you for the close.

Great. Well, as always, we appreciate your participation in today's earnings call and of course, your interest in Eli Lilly and Company. Please follow up with the IR team if you have any questions that we did not address today. And otherwise, have a great rest of your day. Take care.

Thank you. 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 March 10 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 31160. International dialers can call (973) 528-0005. Again, those numbers are (800) 332-6854, (973) 528-0005 with the access code 331160. Thank you for your participation. You may now disconnect your lines.

Good afternoon, everybody. I'm Chris Schott at JPMorgan, and it's my pleasure to be hosting this fireside discussion with Dave Ricks, Chairman and CEO of Eli Lilly. Always a highlight of the conference for me. Dave, Happy New Year. I know we're going to have some initial quick presentation, and we'll jump into the Q&A from there. So I'll turn it over to Dave.

Thank you, Chris. Great. Thank you, everyone, for being here to listen to us, and happy New Year to everyone. It's an important year for Lilly. It's our 150th year in existence, which I think makes us the most valuable old company in America.

Yes. So in addition to celebrating that, we have a lot to look forward to this year. I think last year at this conference, we were coming off a year where we really sort of had our first full year of obesity launch with tirzepatide, and there were lots of unknowns and lots of uncertainties. And I think we exit that year and enter '26 with a lot more known and a lot more certainty. From a portfolio perspective, of course, tirzepatide is an incredible molecule that's changing the lives of millions of people around the world.

But we've been working hard on follow-on pipeline products. And in the year, I think we saw Phase III data on the full program for orforglipron, our oral GLP-1, which I'm sure we'll talk about in the Q&A as well as the first set of data on retatrutide, our triple-acting incretin with really remarkable weight loss up to 29% in a certain population. We've got several more studies coming on retatrutide this year. Additionally, we started 2 more Phase III programs in this category, eloralintide, our highly selective amylin agonist as well as brenipatide, a follow-on GIP/GLP inhibitor, which we're tasking into certain special new and exciting indications in brain health and beyond.

Additionally, last year, it was all about supply execution, and we clearly saw in 2024 demand outpacing supply. As we entered the year, that was an uncertainty that became resolved. I think Lilly and our manufacturing team executed with excellence. We've invested a substantial amount of capital in new sites and capacity, actually, most of which is not yet online, but will be coming online in the coming years.

But I think it's safe to say with that execution plus the success of the orforglipron program, the days of supply shortages in this category are largely behind us. Additionally, access to medicines was out of reach for many, while there was growing commercial access, consumer channels weren't fully developed. And importantly, government channels were really limited. We collaborated closely with the Trump administration, and we're able to expand access in this category and very much looking forward to a big event this year, which is the opening up of the Part D benefit for patients who suffer from obesity and its consequences. And then in Medicaid programs rolling through the year.

We do expect commercial spillover of both those events. And the last point here of direct patient engagement, we also made a huge amount of progress. It's another form of access. It is giving people choice about where and how to buy our medicines. LillyDirect, our self-built, self-run platform now serves about 1 million people and is highly successful, maybe the most successful online pharmacy in the history of this country. So a lot of progress as we enter 2026 and a huge amount of momentum.

I mentioned the expanding portfolio, those 5 assets in Phase III or tirzepatide launched in certain indications in Phase III are shown here. But also to point out that we have 6 additional Phase I and Phase II programs in the clinic. And as of today, it might change tomorrow, 34 preclinical discovery programs seeking to serve and improve obesity care. We see this as a chance to help over 1 billion people on the planet with a whole variety of maladies that stem from obesity, really a keystone precondition for so many chronic diseases in adults.

You see them listed here. But maybe most important are the 2 new ones at the bottom, where -- which are less obvious, which is what are the effects of these medicines on brain disease, not just addiction, but also mental health and potentially pain and beyond as well as inflammatory processes. We had an interesting study readout in -- for retatrutide, I already mentioned, and another one with Taltz, our IL-17 agonist in PsA plus Zepbound, which showed a remarkable enhancement in inflammatory markers and inflammatory symptoms in PsA. So I think we're just at the beginning of seeing beyond metabolism, what these medicines can do.

And if that gets you excited about Lilly, let me talk to you about the other 75% of what we do. These are our manufacturing sites, but our pipeline is actually mostly not incretins and mostly not obesity, we are a diversified and broad pharmaceutical company. And we have many late-stage projects. I'd just highlight lepodisiran and its sister program in muvalaplin, which is our Lp(a) programs with oral and siRNA, really potentially serving millions and millions of people.

We have exciting programs emerging now in oncology, where I think for many, many years, we would have maybe a Phase III start every 5 or 6 years. Here, you see 4 new medicines in Phase III right now for Lilly in oncology. And then other recently launched programs. And of course, I would be remiss if I didn't mention Alzheimer's disease, including early and preventative Alzheimer's disease with remternetug and donanemab, I think some of the most anticipated studies in all of industry in the next couple of years.

So a busy year on pipeline, really a fantastic year for our Lilly scientists and a ton of momentum as we enter this year. Beyond the medicines themselves, we've done a lot of work to differentiate our innovation pipeline. If you think of Lilly as an enterprise that could potentially put a huge amount of capital to work on innovative medicines, on finding discoveries and cures to the most terrible diseases humans suffer, we want to have a capability that's highly differentiated.

One of the things we've worked on over the last decade extensively is speed. It's a simple concept, but it's hard to execute on. Lilly, currently, we would estimate has a very differentiated speed profile from our large-cap peers. We estimate today we're about 3.5 years faster from candidate selection to first introduction and in some fields of medicine even faster than that. And by our count, we've launched 24 new molecular entities in the last 10 years, and that would be leading in the industry as well as a proof point on that.

We've worked hard through BD and organic efforts to build out drug-making capabilities that we see as highly differentiated, whether it be ADCs, siRNAs as I mentioned already, a new effort in radioligand, so radiation directed by ligand-seeking combination, which is a very exciting field for tumor shrinkage in the future. And of course, our gen med efforts looking at both specialty care like rare hearing loss, but also quite common diseases, as an example, in our Verve acquisition.

And speaking of acquisitions, last year, we completed 39 transactions. I said 38 before the Christmas break. So we're doing a transaction about every 9 days at Lilly. Most of these are smaller, $4 billion of capital across all those. But we have time to add value. We have time to partner effectively with those leadership teams and entrepreneurs to bring amazing new medicines to the market. And I think 39 is by far the leader in the industry in 2025. Additionally, we're innovating beyond that core business.

I mentioned biotech engagement. And one of the most interesting things I think we're doing is a kind of loosely coupled idea of business development, what we call Catalyze360, creating a surface area that has large pharma aspects without large pharma overhead so that biotech entrepreneurs can plug in to services, to space, to expertise and now to our TuneLab, AI-driven drug discovery platform to enhance their projects, to speed up their work.

And we exchange value in different ways, but mostly, we get to know each other. And as of today, we have 180 biotechs involved in the Catalyze360 program and growing each and every day. Last time, we had an exciting announcement with Jensen Huang and the NVIDIA team, really after building the largest supercomputer in our sector, announcing really a robust team collaboration between NVIDIA and Lilly to take on the toughest problems that we face and using massive compute power at scale to make the next generation of medicines.

This may not work, but I think Lilly and NVIDIA should be the ones that try. We're going to put $1 billion to work over the next 5 years, team up our smartest people and see what can be done. We're going to build a co-working space here in the Bay Area to do this. And I think it's a super exciting initiative launched last night. And finally, as I mentioned earlier, we're reaching patients directly, 1 million served last year. We're doing about 1 million a month actually this year. And we're taking this global. We're taking this show on the road.

It's clear that consumers, particularly those with obesity, want a direct relationship with the manufacturer. They want to control that experience. They want to understand pricing more transparently and LillyDirect, which we launched really last year at this conference, has become a very important vehicle for reaching patients in the U.S., and we plan to expand that. It's already in the U.K. operating, expand that around the world. So Chris, I'll sit down with you now, and we can do a Q&A, but an exciting year for the company. And I want to end by just thanking my team what a successful performance in 2025. It's January, it's JPMorgan. Let's do it again.

Great. Well, maybe just -- we'll start the conversation on U.S. incretin dynamics. You mentioned 2025, obviously, a very successful year for the company. What were some of your biggest takeaways as we think about both market growth and then Lilly's position within the U.S. market?

Yes. Well, as I alluded to, I think we entered the year with a lot of uncertainties. What about access, what about supply? '24 was a very choppy, like unclean year to really understand this category. We had trouble forecasting as did many others. I won't pick on JPMorgan. But we -- it was tough to understand what was happening. There was a lot of demand and excitement, but boy, it was difficult. So I think we really stabilized all that.

It was a great year of execution for the company. I mean some of the proof points there are we brought a lot of capacity online and really solved the supply issues, which gave prescribers and consumers a lot of confidence in starting therapy because if you didn't know if you could continue, what was the point of starting. We scaled this direct platform to consumers, which has really been profound.

I know you want to touch on this later, but to think that basically 1 million people a month go online and buy directly from a drug manufacturer, I think 2 years ago, that would have sounded like a bit of a crazy idea. And that Lilly vials on LillyDirect are basically the second best-selling obesity drug next to Lilly Zepbound in an auto-injector. And that's a pretty profound kind of achievement in 1 year. I think new data came, and it's very exciting. I mentioned the Taltz TOGETHER study, which is kind of a new branch.

But we also read out from Mounjaro, the head-to-head against Trulicity, which showed that we were noninferior, but actually on many dimensions, you can see the advantages of more weight loss in people with diabetes. So that was a large study for us and many other things. So that was, I think, an important year to stabilize. And now we look forward with expanding access ahead of us, a portfolio going from 1 to 2 to eventually 3 here, probably as we enter '27 new medicines in this category, a market-leading position.

And then finally, international, I think, was a big story last year. Because we solved the supply problems, we could begin to introduce the product. We have now launched in over 30 major markets and pretty much all the important markets in the world, and we're gearing up to launch orforglipron much faster in all those markets. And what we've learned is that there's really quite a bit of demand, not just in the U.S. but everywhere. And it's self-pay demand, which is an interesting phenomenon.

So again, a big year for us. '26 sets up to be another important year, but probably more elements of like building on that execution success.

Yes. Can I come back to the cash pay demand piece of things. I mean that's been shocking, honestly, how quickly that's ramped. How has that changed your approach to either go-to-market strategy or patient engagement as you think about future drugs launching through the same platform?

Yes. Well, like a lot of things, that started as a series of kind of solutions to problems that actually no longer exist. But what we learned along the way has been profound, which is people with obesity, when they go to their physician, often they feel shameful. They feel shamed, they feel stigmatized. Frequently, primary care doctors will ask people to try a new diet. I think it's true the average patient in our first set of studies on tirzepatide had tried over 30 diet and exercise interventions in their adult life.

And to be told that one more time when they know there's a solution available is very disappointing. So patients doctor shop, including online for telehealth solutions, and we wanted to upgrade that experience. On LillyDirect, if you want a reference, you can get a certified expert in your community or you can go online and have a certified obesity expert.

I think that's an important thing we did. They also want to control the checkout experience and know when things are coming, harkening back to the supply issues. They want to know the exact price before they buy. And this is a major problem in health care. We could dive into that if you want. But most of what we purchase, we don't know the price of. But on LillyDirect, you do. It's listed on the website. That's what hits your credit card statement.

And then the renewal cycle is also in their control. They get a text message, it's time to renew, they can do that. So I think that sense of control and discretion has been an eye-opener. And it may not be unique to obesity. I think there may be many conditions. People want to take charge of their own health. They find the health care system disempowering and opaque. And something like a direct relationship with a company like Lilly could help.

So we have big designs this year to improve that experience. I'll be honest, it started with sort of a skunkworks kind of thing. And so we can improve the flow, the checkout, the tech behind it. And when we do that, we can expand to other medicines as well. I think it's going to be a big part of our future.

Yes. Interesting. orforglipron, I know it is a big area of focus for this year. Maybe just to start latest in terms of expected time lines here. When should we think about this drug coming to market?

Yes. Well, we control the submission time line that's been submitted. We've submitted under a new program, the Commissioner's Priority Review Voucher program. I think the commissioner will be here tomorrow, so we can ask him about that. They've laid out some guidelines, but other -- unlike other priority review voucher programs, there's not a statutory deadlines. But we do expect a rapid review.

And I will say qualitatively, the review is moving at pace. So that's consistent. So I think we've said sometime in Q2, we expect approval. And the important thing is that's in front of the Part D access expansion, and I expect it will be. So we like the data package. We think this is going to be an important drug, clean safety, predictable efficacy, really effective in diabetes as well as in obesity. So we're excited to get that approved early part of the year.

When we think kind of more broadly, how are you thinking about the role orals are going to play as we're thinking about patients having more choice than they had before? And do you think as we all look at this market, is the Street getting this right in terms of that balance of injectables versus orals?

Yes. I mean it's a good question. I think one thing we can -- as we look back at the obesity market, it's probably surprised us at every turn. So I'm reluctant to give out very specific numbers or anything like that. Our strategy, I'll get to your question, but it's actually just to work on targets and modalities and indications that we think could be meaningful. Now whether the consumer and the physicians find the meaningful, that's what the market tells us.

But our job is to serve those up. And I think, clearly, we think an oral modality is meaningful. It's a bit of a technical marvel. I have to say, hats off to our team as well as the team at Chugai. I mean it's not easy to drug this target with a chemical molecule that's highly scalable, and they've done that and safe. So I think there's 3 big use cases one can think about pro forma here, but we'll have to get in the market and really see.

The good news is, I think we'll have the broadest portfolio of anyone for some time. And those preferences, as long as it plays out where Lilly has a good solution for people, we're kind of agnostic to that. But the first one will be people who have an aversion to needles or maybe that hurdle of like the perception of escalating their health care intervention from diet and exercise to a medicine that's injected that maybe an interim step is more appealing.

So there's certainly people like that. When you do market research, we hear about that. And I suspect in different context, there'll be less needle phobia or more, but it's real. And so that's a real segment, and we expect most of the initial use to be in that category. I think it's helpful that the Part D benefit will kick in about our launch because I suspect actually a meaningful part of that is people with complicated polypharmacy regimens and this can just fit simply into their polypharmacy regimen, which is -- versus having a refrigerated injectable and then these 3 pills and other things to remember.

So that's a useful thing. The second use case is the international markets. So I think we've talked about manufacturing last year, although we've solved those problems in terms of developed markets, at -- either because of the price points we'll need to get to or the volume we'll need to get to in very populous middle-income countries with large absolute obesity populations like India, like China, Indonesia, Brazil, it's just not going to be possible to reach those people with parenterally manufactured injectables. That's not going to happen soon.

So here, orforglipron, I think, plays an outsized role internationally. And I'm pleased to say we've submitted this medicine in nearly all of those markets already. So we expect a rapid rollout late '26, early '27 as a single-acting GLP-1 choice where maybe there's no other choice because of those refrigeration constraints, the handling constraints, distribution constraints, et cetera.

The final one, which will play out later in time, but we had some good data in December is in the maintenance phase. So it's clear that a lot of people after 18, 24 months will reach a trough effect of Zepbound or the other products and maybe have reached their weight loss goals. And I think there is a natural feeling of, okay, what can I graduate to? We know cold turkey is not a great idea for most people. Some can manage that by changing their lifestyle pretty substantially, but others have trouble doing that and they regain weight.

Here, we took a study, we rerandomized to orforglipron after semaglutide or Zepbound and highest dose. And we saw some good results. In the blinded phase, people basically maintained -- actually lost a little bit more weight switching from sema to orfor. And they gained a little bit of weight switching from tirzepatide to orfor, but that's expected from a dual acting to a single. Certainly, both arms beat nothing by quite a bit. So having a maintenance option is key. And I think particularly as we get more and more people who have been stabilized on these drugs for a while, maybe think about that, hey, I want to move on to something that's more normal in my medicine cabinet, I think orfor could play a huge role there.

Excellent. Maybe one last one here. I think there's been some questions on statin use. With orfor coming out of the conference today, anything you'd like to comment on that front?

Yes, I heard that. I mean -- so in our protocol, I think it's impressive that Novo CEO reads our protocols. There was a prohibition on statin use and a few other drugs that have common drug-drug interactions. That's just a timing thing. We had not completed the DDI suite of studies. I would not -- there's no reason scientifically to expect anything in our label or commercially with that. So that's a nonissue.

Sounds good. Maybe pivoting over to the other maybe big access unlock this year with the obesity deal on Medicare. Just talk a little bit about how you're thinking about levels of penetration in that population and how that may look similar or different than what we see in the commercial market.

Well, I think it's actually better than the commercial market in 2 ways. One, the inclusion criteria are really science-based and hats off to the CMS team. I think they actually were here today, Dr. Oz and Chris Klomp, and we work closely with them because we knew the government plays an outsized role, not just in the population they treat, but as a statement in terms of validating -- so they took a very bottom-up science approach. They worked with both companies to review our studies and really look at the strength of evidence as well as in both indicated and non-indicated evidence I think in -- the population is pretty well defined. BMI 27 to 30, they're looking at people who have a prior history of really arterial cardiovascular disease and so PAD, MI or stroke history, but also prediabetes.

And I think that's a very large and important segment, also a very expensive condition once you move from prediabetes to outright diabetes and quite prevalent in elderly. So that was an important inclusion criteria. As you know, we have fantastic data in that setting, 93% reduction in conversion from prediabetes to diabetes. And they took that into account, and that's one of the criteria. BMIs 30 to 35, it's those things plus some additional biomarkers for cardiovascular risk and then BMI over 35 all comers.

So that's, on average, much better than commercial access. And then the other side of it is out-of-pocket costs. And of course, here, people on fixed income seniors were quite sensitive to making sure the out-of-pocket cost can be reasonable. That will be $50 in the program, which is, on average, better than commercial as well. So I think the Part D access is both higher quality and lower cost for seniors.

And that's, I think, bottom-up science-based. The government is convinced they'll save money by doing that, which is wise for our country and I think for the administration, it will be a good story about $50 GLP-1s. But hopefully, that spills over into commercial. Medicaid will be eligible for the same criteria and the same pricing. So we have maybe a dozen states or so with some expansion of obesity coverage. We hope to get to all 50 over the next 2 years with Medicaid.

Excellent. You mentioned commercial. Now that we've got this kind of Medicare coverage in place, what do you -- what can you do to further unlock the commercial piece of the business that -- you mentioned coverage seems very uneven in that...

Yes, it is very uneven. And I think if we look today, we could say probably somewhere a little less than 6 out of 10 people who have commercial insurance, employer-provided insurance have access to obesity drugs, but there's broad differences in the quality and the cost of that access. Many people might have broad eligibility but very high deductible plans.

So if your deductible is $5,000, effectively, you could buy a whole year's worth on LillyDirect and it's about the same. So that's not much coverage in that way. Others have good out-of-pocket costs, but very strict and prohibitive criteria, high BMI thresholds or preexisting conditions and comorbidities. So our goal is to move that down through time. I think these are, of course, individual employer decisions.

The first thing we want to make sure is they have access to the actual data. And I think here price transparency is an important effort we've been working on. LillyDirect itself provides some price transparency, but working with not just the traditional PBMs, but also some of the new, more transparent PBMs so employers have choice and they know what the cost of this pretty large part of their drug budget, let's be honest, is, but they should know the unrebate -- the post rebate cost itself.

The second thing is then choices about how to design a benefit to suit the needs of their business. Some businesses -- actually, of the 6 out of 10, a lot of those are people with high-income earners and the kind of the marginal cost of the benefit is pretty low relative to their other comp and band items. Those that don't cover are often populations with more transient workforce or lower wage workforce, and they have to sharpen their pencils a bit more. So we're just trying to provide more options.

We did go out to a number of third-party intermediaries that are nontraditional, who can provide a carved-out benefit or sit on top of the PBM benefit. We provide them with offers, and they can -- they'll be marketing that this year. So I expect more uptake in that sort of lower end of the commercial market with these nontraditional access offers in '26.

I think it will be, at some point, a bigger step function change? Or is this going to be kind of a gradual process...?

Probably commercial is more gradual. The step function that we all should pay attention to is the Part D, which is going to go from 0 to 50-plus million people in 1 day. Medicaid will be state by state. So that will be linear in a way. And I think the mounting evidence, both by the government endorsing the programs, the products in the way they have, plus just more and more general evidence of cardiovascular benefit and other health benefits, I think will -- it's hard to think in 2030, we'll be having this conversation at JPMorgan, but maybe we will. But our job is to provide choice and options and help people where they can get access, and when they can't have access to provide a direct solutions that is cost effective as they can be.

Maybe one last question on the U.S. side of the business, price dynamics. How should we be thinking about this in the next few years?

Well, I think for this year, the government deal was unique in that we were pretty transparent about what the net price will be to the government. And we are very transparent about actually future price of orforglipron and then our DTC adjustment, our direct-to-consumer adjustment for Zepbound. So what we said in early November in the Oval Office is kind of what we're planning on and what sell-side analysts and others should model, I think. What's less known is the volume. I think that's the thing in the government channels is how much uptake will there be, how quickly.

Of course, we're bullish on that, but we need to go communicate with physicians and patients and make people aware of the program and hopefully get good uptake. Commercial spillover is a question. To what degree do employers say, "Oh, I want that deal, too." And of course, our job will be to say fine, but you have to provide that level of access. And that's not many are willing or can do that, but that's the typical commercial wrangling we get.

We've guided to high single-digit deflation in that segment, which is pretty normal for broad-based categories like this. And then on the consumer side, it's a little more of a competitive thing, like so who's willing to do what to draw in more consumers? And where is that elasticity function? We're kind of discovering that as we go. So far, as we've reduced price, we did draw in a disproportionately larger volume pool. So orfor will test that because we've said we're going to go out at [ $149 ] in the base dose. And yes, we'll see.

Excellent. Maybe pivoting to ex U.S. And I think that was at least in my model one of the big sources of upside as we went through...

Q3, a big surprise.

Yes, upside surprise. Just reflect a little bit on that market opportunity. And from here, how should we be thinking about the ramp, the cash pay piece of it, just any observations you have from all the...?

Well, last year, 2 things were happening at once. Of course, we did see good uptake in demand. And you take like the U.K., which launched the year prior, and we saw, I mean, a surprising amount of self-pay demand in that market, for instance. And we certainly saw that post introduction in the other markets as well.

But you also then had the introductory step, which is some stocking and initial excitement in places like China, India and Brazil. As we've kind of worked through that early bolus, we're getting a better read on what that trajectory is. It's encouraging. I mean it does seem maybe because these medicines aren't just a chronic medicine that makes you healthier in the long term, certainly, they will do that. And the evidence is pretty clear.

But I think there's 2 other factors here. One is there absolutely is a kind of a more acute benefit people feel and notice. And you can look at things like the Taltz study I just mentioned or the retatrutide. People feel joint pain relief. They are able to move better, they sleep better. So I mean, there is this acute benefit, which must reinforce repurchase kind of demand. And then, of course, there's people look differently and they like that.

So I think we haven't really seen a chronic drug like this before. The question we have, a legitimate question is like how deep is that pool? There may be, I don't know, 100,000 people in a place like Brazil willing to do it, but are there 500,000? Are there 5 million? I think we have to find that out because there are no analogies here.

And is that something as we go through '26, '27, orforglipron coming to market, will that help...?

It will build confidence there. I think orfor, we'll price a bit lower, too, so it could have more reach. Mounjaro is in all these markets, but could be, yes, instructive as we sort of seek that out. Is the analogy other medicines? Certainly, there's been much more limited uptake of self-pay medicines in these markets. Or is the analogy, I don't know, iPhones, right? So there's a lot of uptake. So where are we there? I think we have to find that out. I don't think last year taught us a ton about that, but we're certainly enthusiastic about the trend.

And last question on this topic. Do you think there needs to be reimbursement for these drugs in some of the major markets? Or can this just be a cash pay market into perpetuity?

I think when we're competing with other therapies that have reimbursement, we should have reimbursement, right? So take OSA or congestive heart failure, diabetes, right? It seems like we're clearly discriminating people with the comorbid obesity if we have a treatment that's effective in a setting and yet we're not reimbursing it because it also helps you lose weight. That seems totally backwards here.

Now for just weight loss as a preventative, in some ways, it's like highly correlated to 2 things: the prevention orientation of that health system, and we know some health systems spend a lot more resources differentially on prevention. Those don't actually correlate with other things. They just believe in prevention. And so I would expect you'll get government decisions say, okay, yes, maybe for high BMI, people will start there. U.K. has done this, for instance. They believe in prevention. They have broad vaccination programs and cancer surveillance and other things. So that's, I think, a reasonable expectation.

The other is like the ROI here is probably pretty good if your health costs are high. So the higher your downstream health care costs, the more these make sense. And one thing the MFN idea has done for us, and we've launched this globally with a fair amount of price discipline. The price band between, say, the price in Bangalore and the price in San Francisco is pretty tight. And so -- but what that does is say, okay, well, in wealthy countries with high health care costs, the ROI is much higher. So I think health systems will make those decisions based on those 2 parameters.

Maybe last incretin question. It seems like every discussion we've had in this conference has been what's your obesity strategy, lots of players trying to find a space in the market. What role do you see for some of the later entrants in the space? And you've obviously highlighted a deep pipeline, you've been working at this for decades. How do you think about these newer competitors that will be coming over the next 2, 3, 5 years?

Welcome to the party. I mean, is it surprising? I don't think so. It's a little bit -- I said a few years ago, it seems like it would be malpractice if you weren't having that discussion at your Board. But it's -- the history of follow-on products in our industry isn't great. Like I think there's 3 viable generic strategies. One is make a better mousetrap, so have demonstrable difference in the profile. And some may be able to do that. But of course, we're working nonstop to be the one that has the better profile. And I think we've already done that once with tirzepatide. We'll see about retatrutide. We'll see about eloralintide. We'll see about brenipatide. I mean we have shots on goal coming. And there are new ideas entering the clinic, interesting new non-incretin targets.

We're on all those. So I think that's a race, and that makes the industry better. It provides new solutions for patients, but we'll try to use our scale and our expertise to win all those races. That's been our strategy all along is don't bet on one thing, bet on everything and let the data speak and create better medicines. The second strategy one can entertain is more of a niching one.

I think this could be successful, not unlike what you see like in I&I or some other cancer sometimes. If there's 200 chronic diseases that are downstream affected by obesity, surely, Novo and Lilly will have left 1 or 2 behind or you could leapfrog and get there. And I think some companies will choose to niche into one of those, try to get pricing power, kind of own a narrow but focused segment. That's viable.

And then finally, it would be price volume. I think in most therapeutic categories, that hasn't been very successful. Here, I think there's one big push and one big pull. I think the big challenge is manufacturing. So most of the follow-on products are parenteral and no one spent more on parenteral manufacturing sites than us. I think no one knows more about it than us. I think if you add up all the parenteral sites in the world, probably the 2 leading GLP-1 companies have like 80% of the capacity.

So to jump over that will take something, but someone could try that. I think if you have an oral solid, that's different, but you have other risks coming with that. I think the thing that makes that strategy maybe a little more viable is the consumer thing we just discussed. So clearly, consumers are going to be more price elastic than other players, and that could have success. We'll see. We're prepared for all those. Our base strategy is innovation. So that's where we'll seek to compete. And competition makes us better, we'll watch it carefully and work hard.

Right. Maybe just pivoting a little bit, TRAILBLAZER-3 with Kisunla. Is that something we should expect any major developments this year? And just what's your level of confidence in that program, just given there's another huge unmet need that Lilly has been working on for a long time here?

Yes. Well, the program is ongoing and the scheduled readout's in '27. So it's hard to comment on timing. It is an event-driven study. So if events accrue and we watch that carefully, then we'll stop the study, and we'll look at the results. On the second question, our confidence has never been higher, I'd say. I think if you look at all the data that continues to come out of both in-market use, but also the pivotal studies, not just for our program, but for the other one for LEQEMBI, I think you have to be encouraged about treating earlier.

In fact, I think for the treatment phase we're in now, which is treating people with diagnosed disease, this is something that really could improve uptake and improve patient outcomes now, which is within the labeled population, catch people earlier. A big problem is the health system itself is not really designed for that.

So we're working hard to change that. It's kind of system by system and systems that do have more effective screening, more effective use of diagnostics and other assessments early in disease, you see good uptake in usage. And it's very clear no matter how you cut our data, whether it be by tau status, by amyloid burden, by age, by symptomatic measurements, people do better when we start earlier.

So by extrapolation, it's logical that before MCI, mild cognitive impairment, you would be even better. That's the bet we're making. It seems like a reasonable bet. But yes, we're confident in the drugs. And I think the real-world safety story is not concerning. I think what we found in our studies was a representation, but maybe it's even a little better in real life. So that would -- for prevention, you need a cleaner profile, and I suspect we'll see one.

So that's an exciting program. And what can be more important? I mean you think about terrible diseases and think about like cancer, we've been trying to get in front of cancer development forever, and it's been very difficult. To think you could do that in Alzheimer's, it would be a major breakthrough. And how exciting would that be?

Absolutely. On 2026 guidance, kind of talk about the approach you're going to take there. It seems like you've got a lot of different factors here. We got Medicare. We got international. We got the orforglipron launch. Just help us lay the ground a little bit about what should we expect from Lilly as we approach guidance.

Yes. There clearly are more swings. And on top of that, the absolute numbers are bigger, fortunately. So as we approach the guide on February 4th, you can expect us to give probably a little more color about those swings. We could be thinking about guiding more broadly in a range than we had before. We're working through this now. The things I'd point listeners to is, as I mentioned, like people ask a lot of questions about the pricing.

But actually, we probably have less pricing uncertainty than most years going into the year. You should expect some commercial erosion, direct-to-patient, we've sort of announced what we're going to do. Government, we know we're going to do in the U.S. Ex U.S. pricing, we've launched everywhere. You can look at those prices. They tend not to modulate too much once we launch ex U.S. So what is unknown is the volume. And I think the 2 biggest pools of volume that could move the numbers are the Part D exit rate. So how many patients accrue in the Part D benefit to a Lilly medicine in obesity. And then ex U.S., how deep is that pool of self-pay.

I think you could think about a pretty broad range on both of those, and that would determine. If we knew those today, we could predict perfectly revenue next year. In the middle of the income statement, it's pretty well known. I don't expect a lot of excitement on gross margin. We'll continue to scale R&D at about the rate of sales growth. So that's going to be a big step-up in R&D, but we have a full Phase III pipeline right now. And I think at least a dozen important proof-of-concept readouts this year to convert to Phase III programs if the data is positive, some BD in there. SG&A growing slower than sales and then good EPS growth. So I think that will be predictable. We'll give more color on that on the 4th and the actual numbers when we get there.

Excellent. Well I think we're about out of time. Congrats on all the progress...

Thanks, Chris. Appreciate it.

Exciting couple of years here. Thank you.

Day 1. We're thrilled today to -- my name is Geoff Meacham. I'm the senior biopharma analyst, and my team is in the audience as well. So we're thrilled today to have Ilya Yuffa, who is EVP and President, Lilly USA and Global Customer Capabilities.

That's right.

So that's a bit of a mouthful.

Yes, I know.

Let's talk a little bit of maybe just your prior role at international, like kind of how that's evolved and then we get into some specific questions on incretins, I'm sure.

Sure. Well, good morning. Great to be here with everyone here. Obviously, last number of years, we've had a lot of progress across our portfolio. Last almost four years, I was Head of International, leading all the markets outside of the U.S. And our focus has been around -- I know lot of patience around the -- around supply and making sure that we can actually launch in so many markets. And we're seeing that success come through in many markets outside the U.S. over the last number of quarters, gaining traction, a lot of different -- a lot of new launches in many new markets. And that's been an important element. A good portion of that has come through for obesity and self-pay, and we've learned a lot on self-pay, both in the U.S. and outside the U.S. And around 6 months ago, I transitioned to be Head of the U.S. and still own a lot of our kind of customer consumer capabilities, think like LillyDirect as being one key component of that, and how do we expand LillyDirect beyond the current scope.

I guess, Ilya, the first, maybe a more topical question is you guys have had a recent agreement with the White House. We had Dave on the road a few weeks ago talking about the details of that. Orforglipron is a big component of that as you look forward to kind of next year. Talk a little bit about where -- how you would rank your priorities looking to 2026 from a commercial perspective.

Sure. Well, first, I think we've been in a -- in the last couple of years and obviously, this year, we've expanded the focus related to obesity being treated as a chronic disease. And we've made a lot of

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We anticipate that being sometime early Q2. And the third is continue to innovate related both in terms of our pipeline, but also in terms of our consumer offering and capabilities there. We've done quite a bit on LillyDirect and have had some great success, close to 45% of new starts are happening through LillyDirect or our vial single-dose vial option. We've announced recently a partnership with Walmart to have of another option for patients from a convenience standpoint on how to pick up their prescription. We've also announced components of direct-to-employer elements as well. So expanding and offering and being able to have more people gaining access to care and obesity is going to be a significant focus in 2026.

I guess in the question -- the follow-up question, Ilya, would be like how do you segment the tirzepatide kind of commercial in the U.S. with broader access to the orforglipron launch? How would you sort of view those two together.

Sure. I think in several different components. The first piece is that Zepbound already is becoming a standard of care and great preference towards Zepbound in the setting. Obviously, as you expand greater coverage through Medicare as well as over time through Medicaid as well as commercial, you'll see greater opportunity for Zepbound in many patients that prefer a dual agonist for efficacy and overall tolerability, where I saw orforglipron playing a significant role is that you see many patients that -- and providers that are looking for options for that initiation to their journey in obesity. And so having another option that may provide great efficacy that may not need the same level of efficacy as a dual agonist is a significant option so that entry and those that there -- we've seen many providers as well as many people not ready for an injectable therapy. And so we see an oral strong efficacious or option being a great entry point. And then obviously, we're still leading our results for sustained maintain, where you see a transition of people going on in being on injectable therapy, whether it's on a single agonist or dual agonist and then transitioning over to orforglipron and seeing whether or not they can maintain their goal. And that could be also a significant option to expand the overall number of people that can benefit from obesity treatment.

Let's focus on that for just a second. So if you look in the next few years at orforglipron, let's call it, in the U.S., would you expect most patients to be on as a maintenance therapy? Like how do you balance kind of the new starts that are more overweight not obese, that are sort of new to the category versus those in the maintenance setting? Like is it 50-50? Is it bias, not asking for guidance.

Yes, I think what's probably best to predict is that all of our forecasts are typically wrong, okay, meaning that we're still early in the obesity category overall and a number of people being treated currently. So the penetration rate is still in single digits. And so there's probably two components of significant opportunity. And I think that holds true for both orforglipron as well as for Zepbound is that as you expand coverage, you increase the number of people that would have access to care beyond the self-pay component. And so that is going to increase both injectable and opportunity for orforglipron or oral therapy. The other component is that you should see an increase in overall market and people entering treatment by having more options and having an oral option, a simple oral option is a great component, where you'll see an increased utilization of that entry point with oral. So I do see orals over time as you expand access, having a greater proportion of entry. And over time, I think what we've heard from providers from payers, from patients is understanding that this is a chronic disease. Once they get to the point where they're at their target weight or health goals, what options are there for maintenance. And I do think having an oral maintenance therapy would be a great component for increased utilization for those patients. But again, many that have -- were able to achieve their target goals on an injectable therapy may decide that they want to stay on injectable therapy. So it's hard to predict the exact proportion. I see both markets for oral as well as injectable incretins being significant size. And obviously, we've already had a few years on the market, where we've had the ramp in overall utilization for Zepbound, it will take time to have that same work out for orforglipron, but I'm pretty optimistic of that especially as you increase overall access and the deal with the White House related to Medicare and over time, Medicaid significantly increases the number of people that would be eligible for treatment.

Let's talk about that for a second. So Medicare is April 1, Medicaid, mostly over the course of next year. Talk about the sort of the pace of some of these payer segments and maybe as they fully roll out. And obviously, we haven't talked commercial, but that could be a component that sort of overlays all.

Yes. I can talk through each -- probably four segments that are worth discussing. And probably if you think about 2026, they're probably wider error bars than normal because of pretty significant assumptions overall. So you have Medicare that could start as early as April 1, but it could extend to July 1. So it's in that window. And what's important to note there is that what we've negotiated is a pretty broad access. So that 80% of on-label population would be covered through a pretty frictionless component of a prior authorization and a relatively low out of pocket of $50 per month. So that's an important aspect as part of the Medicare piece. And obviously, it's not a flip of the switch that everyone who's eligible will start day 1. And so that ramp will happen gradually over time. Medicaid, most states have already decided in their budgets for 2026. And so while we're in discussions currently with a number of states, that will take probably a longer period of time to incorporate incremental access on Medicaid. So I think you may have some improvement in 2026, but think 2027 for Medicaid to gradually increase. And then what we've also committed to as part of the agreement is improved price offering in the direct-to-consumer segment, which we actually announced yesterday to advance by 1 month, the -- our direct-to-consumer pricing. For Zepbound, so a lower initiation for the 2.5 milligram at $299, progressing to $399 for the 5-milligram and $449, so roughly $50 decrease for month's doses for the direct-to-consumer offering. And so that should increase the number of people that will enter through self-pay. And then the key component that we continue to work on that will be gradual in nature. And of course, we have this every year is pressure on the commercial pricing that we have all the time. So I anticipate that continuing. And the key there is to increase the employer opt-in. And so we're actively looking at how do we increase and improve kind of -- if you think about the lowest friction, which is on the self-pay actually, in terms of prior authorization, if someone is eligible, they can go directly on self-pay, but obviously, that comes at a cost to what we've negotiated in Medicare, which is the other spectrum of a low out-of-pocket covering about 80%. And then the commercial, which create -- which has kind of greatest variability in the friction. And our goal is to increase employer opt-in over time. And obviously, that's our focus, and that will happen gradually. And to the extent that will happen in 2026, we will continue to work hard on that piece and expect that as you improve access and eligibility in other segments like Medicare and Medicaid, that puts incremental pressure on employers to have that offering for employees as well as the incremental data multiple, not just on tirzepatide, but also for orforglipron and obviously, the introduction of orforglipron and the timing of that. Also, obviously, we have the voucher, but that's a new program and understanding exactly when orforglipron will be approved is an important element in that dynamic, but we anticipate early Q2 launch. So a number of different variables in the different segments. And the key is to expand access across all segments in the next couple of years. The government deal, while we took pricing as a concession, immediately, we believe that the acceleration of access by a few years is worth it.

Right. And to what degree is Lilly Direct a central component of broader access. Maybe talk a little bit about how that's evolved over time, and how the lessons learned on things like elasticity and -- kind of from a demand context?

Yes, it's interesting. When we first experimented with LillyDirect, it was meant to -- actually it was our backstop on ensuring transparency on insulin pricing and ensuring that patients can actually get insulin at our commitment on $35 out of pocket. And when we launched Zepbound vial in LillyDirect, what we learned to a great extent is the significant unmet need with people with overweight and obesity, where there's a lot of friction in the health care system. And where LillyDirect plays a significant role is, first, it allows for complete transparency on pricing and what to expect if prescribed treatment for obesity. That's one key component that we've learned. The second is around providing access to information and disease education and a way to talk to whether it's a telehealth physician or making appointment with a live physician having it go through one system and being able to fulfill on the back end to a patient at their home was a significant component as well. And so we've learned a lot about what patient preferences are related to -- and the frictions that exist in the system. And so LillyDirect is a key component in ensuring a frictionless or smooth process for a patient in their journey with obesity.

From a price elasticity standpoint, I mean anytime you launch any new pricing, you learn a little bit more about what a patient experiences, both at entry and maintaining therapy. What we've seen on maintenance of therapy and adherence to therapy in self-pay on kind of before we even modified the pricing to what we announced yesterday is that many patients get a great experience on Zepbound even in self-pay and the adherence rates are not that different to what we see in the covered lives. And so that's an important element in understanding price elasticity. There is a component of the profile of the medicine plays a key role as well on what benefits can be provided as part of the overall package on pricing as well as the overall experience. So bottom line is that LillyDirect regardless of how broad the access and coverage becomes a key component will still play a pivotal role in ensuring transparency and smooth experience for patients as they navigate their journey. And as we broaden out other therapies into LillyDirect, obviously, the plan is for orforglipron to become a component of that as well. And in years to come, we have a lot of progress in our pipeline as it relates to obesity.

And I know in your prior role in international, you looked a lot about the country by country and the kind of role out. Talk a little bit in the context of the White House agreement and MSN, talk a little bit about the pricing disparities and kind of volume versus price kind of trade-offs as you look more broadly outside the U.S.

Sure. I think there are different components and different therapeutic areas that are probably impacted with greater variability. So if you think about medicines in the primary care setting, the variability in pricing, OUS and the U.S. is probably in a tighter range. And so I don't see a significant impact. There is an impact that adds a significant impact in the primary care setting. Having said that, the deal with the White House regarding MFN, what we negotiated directly on pricing for incretins and for Zepbound and orforglipron, that is the pricing we incorporated, so that exists outside of the MFN component. Probably -- obviously, we made commitments around MFN related to existing portfolio in Medicaid. And so you'll have some impact in medicines like Taltz, Verzenio. So that will have a more significant impact for Medicaid. And then on a -- from a forward-going basis, the commitment on launching new medicines outside of incretin in the U.S. were tied to MFN to the G7 plus Denmark and Switzerland and taking out the lowest one. And those do have an impact on the calculus for medicines that have probably greater variability on gaining reimbursement in markets outside the U.S. I think the key component there is continue to think about policy in OUS markets in making sure that there's value seen in our innovation. And so how do we increase the value of innovation for our medicines in those categories. But those are probably the most challenged. If you look at immunology, oncology, in particular. The others, I think, are in a tighter window, and we'll continue to evaluate how we market those outside the U.S. They're contained in those markets. At the same time, our mission is to improve global health and improve human health for the medicines and the therapeutic areas that we play in. And so we'll actively look on how we actually do that. But to your point, the dynamics between the U.S. and OUS are probably front and center in our negotiations for reimbursement and access in OUS markets.

So the White House agreement, at least for incretins could be a good model for OUS kind of price involving generally speaking?

Yes, I think that's what we've negotiated there and the differential what we see between Zepbound and orforglipron would probably expect something similar outside the U.S.

And talk a little bit about the compounding risk. I mean, I think in the early launch of tirzepatide, that was a bigger deal, and it's affected Novo more than you guys. But to what degree do you think that still remains kind of a lingering issue as you're -- before you really see this pretty profound rollout, right, from volume perspective?

Sure. Well, listen, the first and foremost, illegal compounding is a significant issue primarily from a public health standpoint. And then we get a lot of reports from patients and providers on fraudulent and pretty concerning facts related to illegal compounding and what's in the market. And so it's a significant health concern. There are several aspects that I think are important to address. I think the first is we're doing what we can from finding this from a legal standpoint and there are a number of cases that we've won, but that's one effort. The second, which is the FDA needs to play their role in increasing their enforcement in a legal compounding. And the third element is broadening out access to authentic medicine is a key component for us to broaden out that coverage. We're not as impacted in the way that we evaluate and forecast demand compounding to our overall revenue and demand for Zepbound and for the future orforglipron. At the same time, increasing access and increasing activation of patients through LillyDirect is a key component for us to combat this.

So if you look at the GLP-1 and sort of the evolution of the indications we start off with diabetes and now have obesity, and you guys have expanded into alcohol use disorder and related indications like stress urinary incontinence. So how would you prioritize maybe related indications for GLP-1s into things like neuro psych or inflammation. And then maybe what's the selection process with the assets that you have, like which ones are going to be more aptly suited?

Yes. Maybe -- a couple of different components there. So maybe first, we're looking at three different broad areas. The first one, which is cardiometabolic health. That's a key component where we know more about the mechanism and efficacy, and what we should expect there and all of the adjacencies related to comorbidities within obesity, that's a significant priority, and the way that we think about that is whether it's sleep apnea or looking at other related comorbidities, increasing the body of evidence on where Zepbound, orforglipron or other incretins can work in obesity helps on improving access. So widening the the ability to gain access with payers, both U.S. and OUS. It also creates with providers and with patients, a sense of urgency to do something beyond weight. And that is also a key component of ensuring that we're focusing on improving health as it relates to obesity. So that's one key component of driving evidence in all of the adjacencies related to obesity care to widen access, and how you think about the sense of urgency to actually treat. So it should increase the penetration in the overall market within obesity. The other two pieces are around probably inflammation and kind of brain health. And those are probably some higher risk areas for us to study. Obviously, we're looking at tirzepatide, and how it can work with maybe Taltz or Omvoh and whether or not it can amplify effect in inflammatory diseases. We're looking at asthma with brenipatide, so whether or not that can be a component of incremental areas where we can improve health. And then obviously, we're looking at brain health in relation to whether it's depression disorder or aspects like alcohol user substance abuse where there really aren't many options there and many people that are even diagnosed typically don't have access to any viable treatment. And so that's an opportunity for us to make a real difference in human health. So the way I would prioritize it is obviously the big bucket of where we need to expand overall access and utilization in obesity. And then based off of the science, go after opportunities where we can improve human health in other areas outside of obesity like inflammation in neuro diseases.

Yes. And then on the brain health component, I know we just had the EVOKE studies from semaglutide. I don't think that was much of a surprise to anyone. But talk about kind of the next steps for Lilly. How do you maybe process that and kind of think about growth opportunities beyond.

Sure. Well, I think Alzheimer's in general in dementia is an important aspect of human health that we need to still do a lot of work towards. We've had three decades worth of work in Alzheimer's. And after each study and failure, you learn a lot, and you iterate, and you incorporate that learning back into new science and innovation. And so we've actually -- we have that with Kisunla now, and we're to learn more about Kisunla and looking at preclinical. And obviously, the EVOKE, we need to study once we get all of the readout from EVOKE to understand that and the implication there and whether or not there's something for us to pursue. We're committed to Alzheimer's space, and we have that expertise. We have the expertise in incretin. And so if there's a pathway there for the future, we'll go after it, and we have that expertise to incorporate. But again, I see this as a -- on the learning journey that we've been on for the last three decades will incorporate the incremental data point and put that back into our funnel of innovation to see if there's something that we can do about it.

Yes. So following up the conversations on indications. If you look at mechanisms, so eloralintide, the amylin agonist, we just -- you had recent data at obesity week. They look great. Talk about how you would prioritize a mechanism like that over an incretin or GLP-1 type of mechanism, and maybe how do you sort of balance the -- what indications you go after for amylin versus GLP-1?

Yes. I guess -- well, first, the data readout that we had in obesity week with eloralintide in the monotherapy setting is an exciting kind of next step for us in having a suite and pipeline of assets that can make a real difference for people in kind of the wider lens of spectrum of where you are on living with overweight and obesity. And so eloralintide, we see -- if you take a look at the profile, it may have an improved tolerability profile, and so it gives you optionality on monotherapy. So whether it's entry or in combination, we're -- we should have data on the use of eloralintide with tirzepatide next year. And so that could be a component of either sequencing or a combination at the entry point. It could also similar to comments I made with orforglipron in maintenance setting. It could also be a good option. And once you have match our goals from a weight and health standpoint, could it be a great maintenance therapy as well. And so the different components that we know on the value of incretins and other elements, whether it's cardiovascular health or other properties in inflammation, that's something that we still need to develop our understanding of amylin, but we're excited about where this fits in. Maybe thinking back to your kind of question related, how do we see eloralintide or orforglipron or Zepbound or you haven't asked yet but retatrutide, how do we see all of those being positioned. It's interesting, this is coming on to like next year will be my 30th year at Lilly, and we've seen a lot in the diabetes space over time with different mechanisms, playing a significant role in each innovation provides an opportunity for us to enhance treatment and outcomes for people living with diabetes. And I see obesity may be in the same kind of parallel to what we saw in diabetes decades ago and over time is that each mechanism in each therapy added to the space only increases the ability to actually get greater outcomes overall to the greatest range of patients, both their initial composition as well as their preferences and their goals of treatment. And so having a suite of medicines and mechanisms provide us the greatest ability to tackle obesity and the outcomes related to obesity from a health standpoint. And so they all have their ability to position in different subsegments. But in the end, it's actually the accumulation of those medications that provide the greatest benefit.

Yes. And then, I guess, one of the last questions, and we naturally focus on incretins and metabolic health, but you do have a pretty diverse portfolio, right? So maybe when you look at oncology versus I&I versus neuro, what -- or maybe some of the pushes and pulls, we can think about as you look to next year in the non-incretin portfolio?

Sure. Well, it's exciting across the board because we're launching in every therapeutic area, and we have exciting science and medicines that can really improve health in each of these categories. Maybe on the pushes and pulls, obviously, some of our legacy medicines, whether it's Trulicity, Taltz, Verzenio, you should assume kind of continued kind of decline in growth or the continued trajectory that they're on. I don't see any kind of step changes in those medicines. At the same time, if I look at each of the therapeutic areas, there are exciting components and catalysts for growth in neuroscience or in Alzheimer's because some -- I think the two key components there is that we've -- one, we've established Kisunla has a great medicine and obviously positioning it well within the market and gaining traction and share. The key there is to grow the market. And the friction that exists in being able to diagnose early Alzheimer's is a key component. And so the advancement of blood-based biomarkers and the ability to confirm diagnosis early is going to be a key component there. And also the readout for preclinical at some point, it will be a catalyst if positive for us to grow the overall ability to create outcomes and maybe prevent some of the symptoms related to Alzheimer's. So that's an exciting area of growth and trajectory and catalyst for growth in the future. In immunology, Ebglyss is the key component in catalyst of growth. It's obviously a growing space in atopic dermatitis. We're continuing to see good traction in -- for Ebglyss, and the key there is to gain beliefs and traction in first-line therapy. And so I'm optimistic that, that will continue to be a growth driver. And then lastly, in oncology, obviously, we have two key medicines that were in the midst of still continued launch. Jaypirca probably has the greatest propensity and catalyst for growth. We're anticipating approval any day related to the expansion of our label for incorporating BRUIN-321, where you have ability to expand the number of population eligible for treatment. That's already incorporated NCCN guidelines after ABTK failure. And so optimistic about our growth trajectory on Jaypirca, and obviously, we just launched Inluriyo. It's still in its first indication and probably later indication in an adjuvant setting are the greatest opportunity, but it's an important start for us to launch Inluriyo in the market. And so -- and each of those spaces, it's exciting. We have a catalyst for growth outside of incretins but obviously, incretins play an outsized role in our growth trajectory over the coming year.

And then last question, Ilya, and I know it's not your primary, but if you look at sort of external innovation through BD or M&A, there's a lot to work on inside Lilly in-house. To what degree do you -- how is the thinking evolve to looking externally to be additive to the portfolio?

Sure. Well, we're quite active. We're active across the board in kind of maybe if I categorize two different elements. One is in the therapeutic areas where we've decided to put focus, we were very active in enhancing our overall pipeline in each of those areas. That's an important element. We're probably -- we're active in each of those therapeutic areas. The other one is related to platforms, platforms that we believe can have a long-term view maybe even beyond the therapeutic areas that we're in can play, whether it's in genetic medicine or even the work where we've announced with NVIDIA related to AI and incorporating our ability to advance innovation and accelerate innovation. That is obviously a key component for the future that's going to take time to evolve, but that is an important element for us to grow beyond this decade is to increase innovation outside of just our therapeutic areas, but the platforms we believe have the ability to have traction beyond.

Great. Thank you very much. It's been a great conversation.

Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q3 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly Company's Q3 2025 Earnings Call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Louis Chair and CEO; Lucas Montarce, Chief Financial Officer; Dr. Dan Screvoski, Chief Scientific Officer and President of William Immunology; Anne White, President of Blue Neuroscience; Ilya Yuffa, President of Lilly USA; and Global Customer capabilities; Jakeman Norton, President of Lilly Oncology; Patrick Golsen, President of Lilly International; and Ken Kuster, President of lid CardioMetabolic Health.

We're also joined by Mark Keeman, Susan Hagelin and Wes Paul, of the Investor Relations team. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to several 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, it is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures.

Now I'll turn the call over to Dave. Dave, we'll turn the call over to you.

Sorry. Thanks, Mike. Appreciate it. Q3 was another strong quarter for Lilly. We made progress across all our strategic deliverables. We delivered compelling financial results, advanced our pipeline and achieved key milestones to expand our manufacturing footprint. This is all shown on Slide 6. In Q3, revenue grew 54% compared to the same period last year.

Revenue from key products more than doubled as our medicines continued to increase their global impact. In the U.S., Lilly gained market share in the anchor tin analog market for the fifth consecutive quarter. Lilly medicines account for nearly 6 out of 10 prescriptions within this large and growing class. Outside the U.S., Montara performance accelerated, driven by robust uptake around the world. As a result of our strong financial performance, we raised our revenue and earnings per share guidance.

Lucas will cover this in more detail later in the call. Since our last earnings call, we achieved several key milestones, including U.S. FDA approval or [indiscernible] under the brand name INLURIO for HR-positive, HER2-negative ESR1 mutated advanced or metastatic breast cancer. The EU approved Kassunla for early symptomatic Alzheimer's disease, positive results from a Phase III trial of J. PICA in treatment of naive CLL, positive overall survival data for Verzenio in high-risk early breast cancer. Positive results from the second Phase III trial of orforgepron in obesity, enabling now global submissions to begin later this year. Positive results from 3 additional Phase III trials of aforgepron in type 2 diabetes, including 1 trial that demonstrated head-to-head superiority versus oral semaglutide. We also made good progress executing our manufacturing expansion agenda. We announced plans to build 2 new U.S. facilities that will make active pharmaceutical ingredients and the expansion of an existing facility in Puerto Rico.

The new facility in Virginia will support our bioconjugate and monoclonal antibody portfolio. And the new facility in Texas and the expansion in Puerto Rico will support our small molecule portfolio, including or [indiscernible]. We plan to announce updates on our 2 remaining new U.S. manufacturing facilities in the coming months. During the quarter, we distributed $1.3 billion in dividends and executed approximately $700 million in share repurchases.

Now I'll turn the call over to Lucas to review the Q3 results.

Thanks, Dave. As shown on Slide 7, Q3 was another strong quarter of financial performance. Revenue grew 54% compared to Q3 2024, driven by our key products. Gross margin as a percentage of revenue was 83.6% in Q3, an increase of 1.4 percentage points versus the same quarter last year. This improvement was driven by favorable product mix, partially offset by lower realized prices.

Research and development expenses increased 27% driven by continued investments in our portfolio. We have initiated 16 new Phase III programs since the start of 2024 and continue to advance our pipeline. Marketing, selling and administrative expenses increased 31% and as we continue to increase investment to support ongoing and future launches across therapeutic areas and geographies. Our non-GAAP performance margin, which we define as gross margin less R&D, marketing, selling and administrative expenses as a percentage of revenue was 48.3%.

Performance margin increased by more than 8 percentage points from Q3 2024, driven by revenue growth. At the bottom line, earnings per share increased to $7.02 a inclusive of $0.71 of acquired R&D charges. This compares to $1.18 in Q3 2024, which included $3.08 of acquired IPR&D charges.

On Slide 8, we quantify the effect of price, rate and volume on revenue growth. U.S. revenue increased 45% in Q3, driven by strong volume growth of Sean and Monaro partially offset by a 15% decline in price. Price was negatively impacted by a favorable onetime adjustment to estimates for rebates and discounts in Q3 2024. Excluding this base period effect, U.S. price declined by high single digits.

In Europe, revenue increased by over 100% in constant currency, reflecting the strong uptake of Monzaro. Revenue was positively impacted by $380 million onetime benefit related to a milestone payment and business development. Excluding this impact, revenue grew 81% in constant currency. Japan, China and Rest of the World delivered constant currency revenue growth of 24%, 22% and 51%, respectively, driven by Montara volume growth.

On Slide 9, we provide an update on the performance of our key products, which accounted for $12 billion of revenue within the quarter. Beginning with immunology. [indiscernible] delivered strong performance in atopic dermatitis as U.S. total prescriptions increased by 41% compared to Q2 2025. We saw increased use in the first-line setting, which now accounts for more than 50% of new [indiscernible] patients. One continue a steady uptake and the newly published 4-year data in ulcerolitis show long-term safety and efficacy benefits. Within oncology, Chipeta continued to build momentum. Both in the marketplace and with new data from Phase III trials.

Dan will talk more about this later during the R&D update. Verzenio remains the market leader in the U.S. for the note positive high early breast cancer population, reflective of its position as standard of care in this setting. In the U.S., prescription grew by 3% compared to Q3 2024 and international volume grew by 14%. In neuroscience, [indiscernible] total prescription grew by 50% compared to Q2 2025 and continue to increase share of market versus the competition. We also recently received marketing authorization by the European Commission, and we are in active reimbursement discussion across Europe and expect launches beginning this quarter and throughout 2026.

Finally, moving to cardiometabolic [indiscernible], SURMOUNT and Mounjaro both posted a strong global performance. Beginning outside the U.S., Mounjaro performance was robust. We have now launched in 55 countries in all major markets. We have seen a strong reception globally and have gained significant share in most major markets as a result. While obesity reimbursement remains limited internationally, we are encouraged by the strong uptake. Approximately 75% of Mounjaro revenue outside the U.S. is coming from people with obesity, paying out of pocket, demonstrating a high level of clinical need and high willingness to pay.

Moving to the U.S., SURMOUNT prescription tripled in Q3 2025 compared to the same period last year. While the impact of the CVS template formulary change was disruptive to patients and physicians, the impact on SURMOUNT performance was modest. Share of total U.S. prescription in the branded and the obesity market declined by approximately 2 percentage points compared to Q2 2025.

However, performance is back to Q2 levels and SURMOUNT exited Q3 with 71% share of new prescriptions. We saw strong uptake of 7 in vials, which comprise approximately 30% of total U.S. and prescriptions and over 45% of new prescriptions in Q3. Mounjaro posted robust Q3 in the U.S. as total prescriptions grew by over 60%. Mounjaro also gained share of market in the type 2 diabetes incretin analog market, increasing by 4 percentage points compared to Q2 2025. Mounjaro is the most widely prescribed Incretinsfor people with type 2 diabetes in the U.S. As shown on Slide 10, the combined U.S. incretin and market growth was strong, increasing by 36% in Q3 compared to the same period in 2024.

Lilly Incretins gained share of market compared to Q2 2025 and approximately 2 out of every 3 new prescriptions in the Incretins analog market, Isalilimedicine.

On Slide 11, we provide an update on capital allocation. Moving to Slide 12. We share our updated expectations for Lilly's 2025 financial results. Based on the strong underlying performance and the favorable impact of foreign exchange rates, we are increasing the midpoint of our revenue range by over $2 billion and now anticipate our full year revenue will be between $63 billion and $63.5 billion. Given our updated expectations for revenue growth and performance margin over the first 9 months of the year, we now expect non-GAAP performance margin to be between 45% and 46% of revenue. On the bottom line, we have increased our outlook for non-GAAP earnings per share and expect EPS of $23 to $23.70.

Now I will turn the call over to Dan to highlight our progress on R&D.

Thanks, Lucas. Lilly R&D had another productive quarter. I'll summarize progress by therapeutic area, beginning with cardiometabolic health. Since our last call, we announced results from 4 additional positive Phase III trials for orpaglipron.

Of note, one of those trials was attained too, in people with both obesity and type 2 diabetes. As a reminder, patients with obesity and type 2 diabetes are less responsive to weight loss on GLP-1 monotherapy than those without type 2 diabetes. For example, in the STEP 2 clinical trial of people with obesity and type 2 diabetes, semaglutide at 2.4 milligrams and 1 milligram resulted in 10.6% weight loss and 7.6% weight loss, respectively.

As shown on Slide 13, the team 2 demonstrated 10.5% weight loss and 7.8% weight loss at the 36-milligram and 24-milligram doses of Orforglipron, respectively, aligned with our goal to deliver efficacy similar to injectable GLP-1 monotherapy in an easy-to-use daily pill. This trial completed the clinical package required to initiate global regulatory submissions for the treatment of obesity. These submissions are beginning imminently, and we anticipate launching Orfoglipron in the U.S. for treatment of obesity next year.

We also made great progress on Orforglipron for type 2 diabetes since the last call, with positive results from ACHIEVE-1 and ACHIEVE-3. Orforglipron demonstrated superior glycemic control and weight loss compared to dapaglflosin and ACHIEVE-2 and compared to oral semaglutide and ACHIEVE-3.

As shown on Slide 14, and ACHIEVE-3, both the 12-milligram and 36-milligram doses of Orforglipron were superior to the highest available dose of oral semaglutide on both A1c reduction and on weight loss. People taking Orforglipron saw an average A1c reduction of 2.2% from baseline and lost nearly 20 pounds on the highest dose of Orforglipron. We also announced results from ACHIEVE-5 which demonstrate that Orforglipron has the potential to provide benefit as an add-on therapy to titrated insulin glargine.

With 4 positive Phase III diabetes trials now completed. We believe Orforglipron has the potential to be a foundational treatment for type 2 diabetes. We now await results from ACHIEVE-4, which will trigger submission of Orforglipron for treatment of type 2 diabetes anticipated in the first half of 2026. With data from over 8,000 participants across 6 completed Phase III Orforglipron trials. We've observed benefits across multiple cardiometabolic health measures as well as consistent safety and tolerability.

Overall, Orforglipron has delivered a profile consistent with our goal of developing an oral and scalable small molecule GLP-1 with efficacy, safety and tolerability comparable to injectable monotherapy GLP-1s for treatment of obesity and type 2 diabetes. Outside of the core registrational programs for these 2 important indications. We have several additional ongoing Phase III Orforglipron trials, shown on Slides 15 and 16, and including new Phase III starts for treatment of osteoarthritis pain and for treatment of stress urinary incontinence, a new indication that we think could benefit from weight loss seen with Orforglipron.

The next study to read out will be maintain the Phase III study of weight loss maintenance. This study is the first of its kind. It's designed to measure the impact of switching from injectable semaglutide or injectable tirzepatide to oral Orforglipron. Our goal in this novel trial is to measure what level of weight loss patients can maintain after switching from an injectable incretin to Orforglipron. Since the patients in this trial were previously escalated to a maximal tolerated dose of semaglutide or tirzepatide and treated for 72 weeks. This is a very ambitious trial.

For those people switching from tirzepatide, maintaining weight loss after switching to Orforglipron is a high bar given the strong efficacy of tirzepatide as a dual incretin agonist. As this trial includes moving patients off of an active therapy onto a placebo maintenance arm, the tan maintain allows patients who are randomized to placebo to switch to Orforglipron as a rescue therapy if weight regain exceeds a specified threshold. This will be a rich data package, and we look forward to seeing the results in the coming months, either late this year or early next year.

Moving to retatrutide, our GIP GLP-1 glucagon triple agonist. We expect results from up to 6 Phase III studies by the end of 2026 and to support the obesity and related complications program called Triumph and the type 2 diabetes program called Transcend. With its first-of-a-kind triple acting mechanism. We expect retatrutide can deliver deeper and more rapid weight loss than existing obesity medicines even more than terzepatide. Of course, not all patients may need this potentially very high level of efficacy. And we believe retatrutide will likely be best suited for patients with a very high BMI or with obesity-related complications that require a high degree of weight loss. While the global development program for retatrutide includes people with a broad range of BMIs, spanning across overweight and obesity, we anticipate we'll be focused on the clinical profile of this medicine in patients where the clinical needs are at the highest.

The first trial to read [indiscernible] compares retatrutide to placebo in patients with obesity and knee osteoarthritis pain. This 68-week study is designed primarily as a pain relief study to support an indication for treatment of knee osteoarthritis pain in combination with other trials in the Triumph program. We look forward to sharing top line results from Triumph 4 later this year. Given this is the first Phase III trial for retatrutide, we'll be cautious not to over extrapolate from these results.

We have 7 more Phase III trials reading out in 2026 and 2027. We and we'll likely need to see data from at least a few of these before we more fully understand the profile of this medicine across a wide range of patients. For the obesity indication specifically, we look forward to results from 3 additional Phase III studies in the second half of 2026.

Moving now to muvalaplin, which is our once-daily oral small molecule inhibitor of lipoprotein A or LPA. LPA is a biomarker associated with increased cardiovascular risk. In Phase II, muvalaplin demonstrated over 85% reduction of this biomarker at the highest dose compared to placebo. Based on these data, we've now initiated a Phase III study in people with elevated LPA levels and atherosclerotic cardiovascular disease, known as the MOVE LPA trial.

Muvalaplin is the first small molecule approach to LPA and our second program in Phase III development against this important target. In other updates from cardiometabolic health, we submitted our once-weekly insulin called insulin [ EpcotoraAlpha ] in the U.S. for treatment of type 2 diabetes and we announced plans to initiate 2 Phase III trials with baricitinib in type 1 diabetes. From the early phase portfolio, we look forward to presenting Phase II data from our selective amylin agonist [indiscernible] at Obesity Week in November.

Moving to oncology. We're very pleased to have received U.S. FDA approval of imlunestrant under the brand name in L'Oreal as a monotherapy for ER-positive HER2-negative ESR1 mutated metastatic breast cancer. Imlunestrant is also being studied in an ongoing Phase III trial called EMVER-4, which compares imlunestrant to the standard of care endocrine therapy in high-risk early breast cancer. This 8,000-patient trial is the largest oncology trial we've ever conducted, and it is on track to be fully enrolled by early 2026.

The positive results in the metastatic setting provided an important signal that imlunestrant could have a role in early breast cancer, where we believe an oral SERD could have the largest patient impact. Also in oncology, we top lined the study readout from the third positive Phase III trial of pertibrutinib in the BRUIN CLL development program.

In BRUIN CLL-313, a trial of pirtobrutinib compared to chemoimmunotherapy in treatment naive CLL/SLL, pirtobrutinib demonstrated a highly statistically significant and clinically meaningful improvement in progression-free survival. Pirtobrutinib demonstrated the most compelling effect size ever observed for a single BTK inhibitor in a treatment-naive CLL study compared to this compare. We look forward to sharing these data at an upcoming medical meeting. as we continue to build evidence supporting the potential role for pirtobrutinib in treatment-naive CLL. We expect these data in combination with BRUIN CLL-314 to form the basis of regulatory submissions globally. We also presented updates from our early-stage oncology portfolio at the recent European Society for Medical Oncology meeting, including data on our mutant-selective PI3-kinase alpha inhibitor for people with advanced breast cancer and PI3 kinase alpha mutations or folate-receptor alpha antibody drug conjugate for treatment of ovarian cancer and [ vepugratinib ], our FGFR3 selective inhibitor for FGFR3 altered metastatic bladder cancer. We continue to be encouraged by the emerging clinical profiles we've observed across each of these 3 programs. And we plan to initiate Phase III trials for these medicines in 2026, if not sooner. In Neuroscience, we received the EU marketing authorization for [indiscernible].

Importantly, this approval came with the modified citation dosing in the label, which is also approved in the U.S. and now approved in Japan. The modified dosing schedule is thus approved in most major geographies and we're pleased that it's being used to further lower the risk of ARIA. Our Phase III trial with [indiscernible] is also progressing well, and we've now completed enrollment in TrailRunner ALS3 which is evaluating subcutaneous romtanatug in treatment of preclinical Alzheimer's disease with a similar time-to-event design as we are pursuing with the ongoing Trailblazer IIIA trial for genenimab.

Separately, we're pleased to announce that we've initiated our Phase III program in alcohol use disorder with brenepatide, the GIP/GLP-1 dual agonist that we believe could have the optimal properties for neuroscience indications, growing evidence from real-world clinical studies suggest that incretin therapies may reduce cravings, an observation that is supported by nonclinical studies that show decreased dopamine release in reward pathways after treatment with incretin therapy.

Given the data we've observed thus far with brenepatide, we believe it has the potential to treat a range of diseases. We expect to initiate several additional Phase II and Phase III trials in the coming months. including testing this medicine in important but extremely challenging unmet medical needs, such as opioid use disorder.

In addition to neuroscience applications, we will test [indiscernible] in immunologic disease including a Phase II trial in asthma, which has recently begun enrolling patients. Also in immunology, new data were presented for lebrikizumab at the 2025 Fall Clinical Dermatology Conference. Lebrikizumab delivered durable disease control in people with moderate to severe atopic dermatitis, when dosing was reduced from once every 4 weeks to once every 8 weeks, reducing the number of maintenance doses to as few as 6 doses per year could provide flexibility and reduce the treatment burden on patients.

We've now submitted these data to the FDA for a potential label update and continue to explore opportunities for even less frequent dosing of this medicine for people with atopic dermatitis. While we continue to pursue innovative modalities across several immunological disorders, we're also developing combination therapies with the potential to deliver differentiated efficacy. We recently began 2 new studies combining mirikizumab with tirzepatide in people with ulcerative colitis and people with Crohn's disease. These 2 new studies complement the previously initiated together studies of ixekizumab plus tirzepatide in people with psoriasis and psoriatic arthritis. We expect the first data from the Together trials to read out in the next 6 months.

Slide 16 shows additional milestones and updates to our clinical portfolio. It has been a very productive period since our last earnings call, and we still have an ambitious R&D agenda for the last 2 months of 2025.

Slide 17 shows the remaining list of potential key events expected yet this year.

I'll now turn the call back to Dave for some closing remarks.

Thanks a lot, Dan. A lot to talk about there in the pipeline. We're pleased with all the progress in 2025, and we've had another quarter of really strong execution both in driving the business results and making investments that will help us discover and develop new Lilly medicines help more people around the world.

Now I'll turn the call over to Mike, who will moderate our Q&A session. Mike?

Yes. Thanks, Dave. We'd like to take questions from as many callers as possible. So consistent with prior quarters, we will respond to 1 question per caller. And then [indiscernible] probably by 11. If you have more than 1 question, you can enter the queue, and we will get to you as time allows.

Paul, please provide instructions for the Q&A and then we're ready for the first caller.

[Operator Instructions] And the first question today is coming from Terence Flynn from Morgan Stanley.

I really appreciate it and congrats on the quarter. A lot of focus obviously on Orforglipron and path to market. I was surprised that it wasn't on the first list of the Commissioner's national priority review voucher program. And so maybe you could just comment on kind of you guys are seeking that voucher? And then if not, why not? And then how to think about time lines for launch and some of the puts and takes as we think about maybe consensus expectations for 2026.

All right. Great. Thanks for the question, Terrence. We'll go to Dave to talk a bit about Orforglipron.

Thanks, Terrence, for the call. I think as we've said before, we're interested in getting Orforglipron to as many patients around the world as fast as we can, including those in the U.S. So without commenting on specific vehicles, I think investors can expect us to be pursuing in all of the above strategy to get get the medicine out more quickly. Also, I'd point out that if you look at this new voucher program, I think Orforglipron checks, at least 3 or 4 of the boxes laid out. So yes, we'll see. It's obviously a government decision about which pathway they choose and the review time itself. But we're focused on speed here and we're ready to launch. So the package will go in, in the quarter, and we hope to get approval as soon as we can after that.

The next question is coming from Chris Schott from JPMorgan.

I just wanted to touch base a bit more on the Mounjaro international ramp. It's obviously had a pretty impressive step up in sales these past 2 quarters. Can you just elaborate a little bit more on how some of these new country launches are trending relative to your expectations, how to think about growth off of this new higher base and is just there any meaningful stocking as we appreciate to kind of look at these numbers? Just a little bit more color on what's been driving this big step-up.

Thanks, Chris. Thanks for the question on Los International. We'll go to Patrik for less talk a bit about a Mounjaro uptick, new country launches, growth.

Thank you very much, Chris. I think we are very encouraged by what we're seeing outside of the U.S. And the business that we shared earlier is 75% out of pocket and 25% type 2 diabetes. What we have seen is, of course, an initial stocking in both markets where we launched, and we refer to the big ones being in Q2 in China, Brazil, Mexico and India. CSN, we have seen at least in the in the performance also in those markets in Q3 and a continued very strong performance globally.

Looking forward, I think the major opportunity is number 1 in type 2. We have reimbursed on care P&A market and we'll continue those efforts across all of the U.S. markets, but that's going to take some time. And secondly, the big opportunity when it comes to visit, it's really about patient activation. And we were lying in on all of those efforts also in 2026. When you look at international, it's important to while it's 19 in the income statement, we are referring to more than 55 countries and our different market dynamics different buying patterns. So as we have seen over the last several quarters, it's not going to be a straight line, but there are significant opportunities outside of the U.S. also moving forward across type 2 and chronic weight management.

The next question will be from Seamus Fernandez from Guggenheim.

So mine is actually on some of the behaviors that we're seeing in the market. around M&A and how the competitors' dynamics are playing out and how you, Dave and Dan see the market evolving from here. You've commented on retatrutide, perhaps segmenting the heavier patient population with greater comorbidities. You have Orforglipron potentially targeting a maintenance and lower end portion of the market that's massively scalable and you also have truzepatide kind of blowing the numbers out and potentially cornering the competitor to some degree in other markets. Just wanted to get a sense of if that behavior would be concerning to you if you don't really spend much time thinking about it because you're so focused on your own business or if there are other considerations as you work to further segment the market and take a deeper leadership position?

Thanks for the very long involved question, they're Seamus. I think we'll go to Dan actually to talk about that.

Yes, sure. Thanks, Seamus, for a good question. Of course, Lilly's been focused on the obesity opportunity for quite some time. We have a very strong R&D engine behind it. I think when you look at where the science leads us and sort of every kind of reasonable or logical target to pursue, we have robust programs against those targets. And in nearly every case, I think we have either a best molecule or first molecule for both, actually. I like our portfolio.

Clearly, the late-stage clinical molecules that the Street is paying attention to, we like where they are. But behind it, I can assure you there's a robust pipeline that we like. No surprise then that every probably just about every other company in this industry looks at that and wants to improve their own position. So that doesn't surprise us. We watch that and of course, pay attention but we haven't seen anything that changes our view about the competitiveness of our portfolio or the lead that we have in this space, which we intend to maintain through robust investments, not just in research and development, but as you've seen today, in multiple Phase III trials and new indications.

Maybe just I think -- sorry, Mike, maybe just to add. I think that's a great answer. I think for a long time, we've all been saying we're focused on every logical target and pursuing the full extent of what these medicines can do for various conditions. I mean today's call highlights that with some of the new studies Dan highlighted. But it's also important to note, in addition to innovation, you need to execute. This is a highly scaled business and reaching potentially tens or even hundreds of millions of people. And here also, I think Lilly has really done well. It's a combination of those 2 things that, I think, built the lead we have. And we are very focused on both of them, both innovation Dan talked about, but also executing with manufacturing build-out in market performance. new ways to reach consumers.

Of course, everybody would like to be in our position, but we're focused on defending it and mostly just executing the play we have. So it's a good question. We'll probably see more dynamics and noise from other pharmaceutical manufacturers, that's normal. What we need to do is run the strategy out that we've outlined. Thanks for the question.

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

I've got 1 for David. David, you previously mentioned narrowing the gap between list and net pricing. Cigna recently announced drug rebates would be replaced with GPO fees. And it sounds like that leads to greater discounts as well as more employer opt-ins. So does that suggest greater GTN pressure and we normally have with the rebates and just make clinical profile is more relevant to format positioning or access? Like what kind of changes should we expect?

Great. Thanks, James. We'll go to Dave to talk about some of the recent announcements from PBMs on business file.

Yes. I think you're talking about the Cigna move, and there's also -- I'd also point out, increasing share in large employer market from kind of nontraditional PBMs, I guess we call them I applaud this. I think it's a good move for innovators. It's a good move for patients. It's a good move for payers, for the commercial payers and probably smart of Cigna to make this first move to recoup market share or gain market share. I think that everyone wants more transparency and lower out-of-pocket for patients. And this kind of model will produce both of those. And what we want is to make the basis of competition, 1 of clinical differentiation that doctors and patients both appreciate in a way, the nontransparent rebates and other behind the scenes activities that determine which medicine a patient gets is not in our interest.

So as an innovator, probably the leading spender on innovation in the sector coming up, we're for this. I think David and his team at Cigna did a good thing here. and we hope others follow in the market in the U.S. can rapidly transition to such a system. I don't think that per se that reads through to some pricing effect, what I hope is that more valuable medicines will have that value recognized in pricing and less valuable medicines will have a harder time competing now because you can't just rebate away some number and find formulary position ahead of a better medicine. So we're for this. And again, it's a good move hat's off to David Cordani and the team. And hopefully, others rapidly follow.

The next question will be from Jeff Meacham from Citi.

Just had another 1 on Orforglipron. When you guys think about commercial strategy, would you characterize it as more consumer-centric through Lilly Direct? Or should we think about it as a more typical pharma launch with PBM and payer negotiations being really critical on day 1. And I guess the puts and takes of both of those.

Okay. Great. Thanks for the question, Jeff. Orforglipron kind of a U.S. bent. So we'll go to Ilya to talk about some of the Orfor launch thinking.

Sure, Jeff. Thanks for the question. Obviously, we're excited about the profile of Orforglipron and how to commercialize it in the U.S. and outside the U.S. as well. Obviously, we think about this similarly to how we've viewed ZEP, where we need to drive great commercial and overall access for patients for accessibility, but we also recognize that there is significant demand in the consumer segment related to finding ways to get outside some of the frictions in the health care system. And so we see both looking at broad coverage as well as looking at expanding how we do our direct-to-consumer platform and ensuring that every patient has the ability to access medicines across the portfolio.

The next question will be from Steve Scala from TD County.

I know it's Lilly's policy not to comment on interims, but it's also a bit unusual for Lilly to speak about them in some detail. And Lilly has spoken in some detail about the Trablazer-LS3 interim on both the Q1 '25 and Q4 '24 calls in likely other forms as well. So with that said, has the Trailblazer AWS 3 interim already been taken? The initiation of return in the same setting would not seem the best sign for to none in Alzheimer's prevention.

Well, thanks, Steve, and thanks for the question on Alzheimer's. We'll go to Anne to talk about some of our clinical trials in early Alzheimer's.

Great. Well, thanks for the question. Yes, I think we're all looking forward to these results. As you know, we tend not to comment on interim. As we've shared previously, we have completed enrollment in [indiscernible] II. So now it just continues to be a matter of reaching the sufficient number of events, and this is an event-based trial.

In clinical trials [indiscernible] at of 2027, though it could be earlier than that. We are pleased, though, and this is what I think we comment on just see momentum and awareness in the space. I think that was really evidenced by the enthusiastic enrollment in our remtenitine preclinical study as well. And as Dan mentioned, what we have the opportunity there is to innovate with the subcu dosing formulation as well as the monthly dosing in a -- and again, in a fixed duration dosing paradigm. So we continue to innovate in the Alzheimer's space, and you'll see us continue to commit to that even as we build on the foundation of a very strong Kasama performance. There's a couple of things that we're doing right now to make sure that we're ready for this readout, and we'll mention in preclinical because it does require a few fundamental shifts. It requires awareness and education on the importance of treating in that earlier stage of disease and the need to be proactive really around green health. And very importantly, it requires a simple and accessible blood test to make the diagnosis in the preclinical space, which is also referred to as Stage 1 and 2 there's quite a bit to do. So you'll hear us continue to talk about the readiness work that we need to do to get ready for this readout, but more to come in the future.

Next question will be from Mohit Bansal from Wells Fargo.

Congrats on all the progress. I would love to understand or think to include your thoughts around EVO trial and GIP in general for Alzheimer's disease. How do you think about this space evolving? And could benefitite the new GLP GIP be a drug for Alzheimer's given that this has neuro properties?

Great. Thanks, Mohit, for the question about Evoke as well as just [indiscernible]. So we'll go to Dan to take both of those.

Yes. Thanks, Mohit. Obviously, we follow this space closely. I think we are leaders in Alzheimer's disease and also leaders in Incretin therapy. You correctly point out that burnepatide is I got some of the attributes that make us excited about it for use for CNS indications that could be inclusive of Alzheimer's disease, although we haven't laid out any plans there yet. We're sort of on the verge of seeing, I believe, Evoke data. That will be very informative I think given our strength in our portfolio, almost regardless of that outcome, we have opportunities to build there and create something that could potentially be more meaningful for patients. So we'll wait, we'll see that, and then you can expect us to talk in more detail about our next steps.

The next question will be from Courtney Breen from AllianceBernstein.

I wanted to loop back to [indiscernible] which has to focus on you think we're preparing for a very large scale launch and by our calculations on the basis of some of the comments you made, you couldn't have enough doses to support at let 5 million patients for a full year based on the inventory sales I think, Dave, you mentioned kind of this could be the GLP-1 for all. Can you help us understand kind of the potential for expansion to the market with [indiscernible] and should we expect to see a slowdown and get on new starts during the initial period of that also.

Yes. Courtney, it was a little hard to hear, but I think some of the questions was about thinking about how to expand the market for RFO different indications, different opportunities. So we'll go to Ken to talk a bit about some of our ambitions for Orforglipron.

Sure. Courtney, thanks for the question. Now with 6 Phase III studies in hand, I think we really understand the profile of this emerging medicine continues to recavitulate the efficacy and safety of injectable GLP-1s. In fact, an recapped some of that during the early part of the call, recapping the ATN2 data, which seemed very consistent with step 2 as well as the ACHIEVE-2 data showing superiority versus oral semaglutide. So we think this was a great profile. You're getting glucose benefits, waste benefits, improvements in blood pressure, lipids inflammatory markers. All that in a simple once-daily pill with no restrictions on food and water and of course, which we can manufacture and distribute it at scale. So we tend to think a different magnitude about the opportunity here than historically what we've with incretins. In the United States, there's probably 8 million or 8.5 million people on incretins out of maybe 170 million might benefit. And globally, that's a much bigger number, probably measured in the hundreds of millions or billions.

So this is now, I think, a generational opportunity to figure out how to get incretin to a much larger group of people. We can do that through the simplicity of the profile, which is also easier to manufacture and distribute. So really, our plan will be about accomplishing that at international level, getting it out there as quickly as possible.

Of course, we're also developing with [indiscernible] in a lot of other settings beyond obesity and diabetes, can recap some of those new [indiscernible] that we've announced, and of course, just to recap as well. We see an opportunity not just as a starter incretin here with Orforglipron, but also something that could potentially have been used for patients to continue the success they've had with the drug like [indiscernible] or [indiscernible] assessing that now in the [indiscernible] study and look forward to sharing those data later this year.

The next question will be from Asad Heider from Goldman Sachs.

Congrats on all the ongoing progress. Just sticking with opagiperon, maybe given it's important, just a high-level question on pricing and volume dynamics ahead of the launch. So the cash pay channel is where you're continuing to see the most rapid growth in the obesity market, the bond vials are now almost 40% of new scripts. And related on ex U.S. price elasticity, you saw a shift in volumes in the U.K. when Mounjaro prices increase.

So I guess -- what are the learnings from this for the Orforglipron ramp next year as it relates to the elasticity of demand across different price points? And I guess my question is specifically related to how you're thinking about U.S. versus OUS volume unlocks for Orforglipron as launches -- as it launches in a world of potential MFN equilibrium prices?

Okay. Thanks, Asad. I think we'll -- maybe we'll start with earlier to discuss some of the U.S. dynamics? And then maybe, Patrick, if you want to make a couple of brief comments about some of the OUS learnings from the U.K. as well.

Yes. Thank you for that question. Obviously, we have experienced significant growth overall in the total market. So we've seen sequential growth in the covered overall, the sequential growth is 15%, but we're seeing significant more volume go through a direct-to-consumer platform with Lilly Direct, which says a lot about, one, what consumers and patients as well as providers see as the benefit of Zeon in particular and also the ability to remove some of the friction and the ability to have accessibility to medicine. And so we see this channel as a significant channel.

Now into the future. And then as part of that, obviously, having more offerings, whether you include being able to pick up your Zeon vial at a local Walmart, which we announced yesterday or expanding the offering on having another treatment like origin. That's an important element for us to expand the ability for patients to get treated. That is the main goal that we have is to improve overall health outcomes, and we have multiple medicines and different platforms to achieve that.

Patrick? .

Maybe just a few additions from an OUS perspective, I think, first and foremost, in the U.K. with a raise and price that was effective September 1, I think we learned pretty much what we expected to learn. What we did was just to take the U.K. price at the level of rated to the level of a European price. And even if they have regulations in the U.K., we actually saw export of medicines out of U.K. to other markets. So that has probably stopped within the mention we did put in place.

Secondly, we're also learning something about consumer pricing elasticity, that exists. But most importantly, I think of Orforglipron will meet a slightly different need of the marketplace. We know that obesity is a heterogeneous disease. And for people with a BMI below 35 and that might not need away close of tirzepatide, we believe that it's a significant opportunity in a U.S. and also driven by the other teachers that Ken referred to earlier, the opportunity to scale here and to reach up a patient populations and with no need of free duration, et cetera. So receivables as being very complementary in the OUS business setting as well.

Next question will be from Tim Anderson from Bank of America.

I have a question on GLP-1 pricing. So with with NOVO Soma, we get IRA negotiated price within the next month. My sense from talking to some industry folks is that, that negotiated price may be more favorable in the investment community is expecting, meaning less degradation to the current net price. And that, of course, would be good for everyone in the space. What is Lilly picking up on this -- and whatever that level of discounting or being you agree that it quite likely has a direct impact on pricing of Lilly's owned products in 2027? Or do you think some has negotiated price just won't translate across.

Okay. Thanks for the question, Tim. We'll go to Ilya talk a bit about just some of the broad thinking about semi-hot negotiation technology were not part of the discussion.

Sure. Thanks, Tim, for the question. Obviously, we're -- we don't know the price has been negotiated at the same time. There are several things that are important to note. One, that it only applies to sema in Part D beginning in 2027. Overall, if you take a look at our volumes, Medicare Part D is a small proportion of our overall volume.

Obviously, predominantly in type 2 diabetes and there's lack of coverage in obesity. Probably the most important element to the good here is that tirzepatide has demonstrated superior efficacy versus sema and head-to-head trials, which is a strong foundation for any value-based discussions that we have with payers, not only in our data, but you see that as well in provider preference as well as patient preference that you see in the market.

Great. And then David, do you want to add a couple of comments?

Over well. Maybe just 1 thing because we've been talking about Orforglipron and its upcoming launch. We think about single-acting GLP-1s as 1 category in double and triple acting as others. And probably both weight loss and clinical value will be quite different between these medicines. And of course, we're paying close attention to the SEMA price. But as Ilya said, it's a Part D only channel. So -- let's let it all play out. I think we're in a good position because we have so many options.

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

Can you walk us through the importance of the upcoming ATEN MAINTAIN trial to Orforglipron's commercial opportunity? And is there an outcome that might meaningfully change your view on how quickly Orforglipron's launch may scale.

Great. Thanks, Alex, for the question on attain maintained, we'll go to Ken.

Sure. Thanks for the question, Alex, on Atamantain. This is really first of its kind study, and we're looking forward to these data this year, we took advantage of the opportunity to rerandomize patients for the [indiscernible] study who were maximally tolerated on either semaglutide or trade, we randomized them to Orforglipron or placebo, and we're going to measure the percentage of the weight that they lost over the course of 72 weeks that they keep off. While taking Orforglipron.

Of course, this is a first-of-a-kind study. We don't know exactly what the results will be, but we're hopeful that Orforglipron will provide a simple once-daily oral option that lets patients keep the majority of their weight off. And so we think this is really an opportunity to expand the market even further for Orforglipron. Of course, we have very bullish expectations for it as a first-line starter incretin, but also this is an opportunity to you to grow that. I don't think, as we think about government, we don't think about sort of cannibalization in that way. This is an opportunity to grow the market at a very different rate, and we think the data from attain maintained could be really just an exciting boost and allow us to have some medical information to disseminate the physicians about how they can how patients switch from drugs like [indiscernible] and bound. But of course, we also know that all management drugs are, of course, indicated for men. So these are just data to help HCPs and patients who guide between these assets.

The next question will be from Umer Raffat from Evercore.

I just wanted to touch up on Glip pricing. And on the 1 hand, there's a lot of commentary on some of the expectations you've laid out on Orforglipron pricing framework. If you could expand on that. But then also, on the other hand, there's a lot of actions and changes at your main competitor over the last few months. And I almost wonder, do you think they will stay a mature player from a pricing front? Or will that no longer be a base case for us?

Great. Thanks, Umer, for the question on GLP-1 pricing. Maybe we'll hear from Lucas to weigh in on those dynamics.

Yes. Thank you for the question, Umer. Maybe just thinking about the pricing dynamics when you actually unpack our Q3 performance, you see that actually, our pricing continued to perform as what we expected, right? So I think it's a good data going after the CVS move that we didn't see again, a significant price erosion, but actually was very much in line to what we said early in the year for the full year as well. So maybe just had a good data point that you can take from that perspective. And thinking more broadly about the competition in the marketplace. Again, we always pay close attention on the competition in the marketplace, but also how we differentiate both commercially, but also on the level of the product and Ilya than Ken mentioning about the differentiation. And you see that in the marketplace. So if you take, for example, a good proxy that for me is really direct we have been priced over the last maybe 6 months already at that starting point at 349 going to 499 and maintain that price and you see the penetration and the competition is placed at the same level as well. So we don't see materially change in the dynamics that we see from that perspective and as we continue to penetrate the market and mobilize patients to seek more treatment.

Next question will be from Akash Tewari from Jefferies. .

So at the all-in summit, Dave, you noted if ORPA was priced at $100 a month, there'd be no incentive for new medicines in that category. -- to kind of create the next best thing. A few weeks later in Chicago, you mentioned how Lilly's already made billings of doses for Ortho and it could have an impact on human health at a global level. can Lilly achieve both goals of kind of preserving continuous innovation in obesity and having ortho be a drug for hundreds of millions of patients with the parity pricing model between the U.S. and rest of the world.

All right. Thanks, Akash. We'll go to Dave to address those 2 comments.

Thanks for tuning into all my podcasts and public event. So I mean, yes, our strategy is to bridge both. We think, as you're pointing out, that flatter pricing between the U.S. and other developed countries is important. But there's like 3 ways that this works. And I think 1 important thing here that -- just to point out on all these pricing questions that is different in this GLP-1 category is the consumer self-pay channel.

We haven't really seen that at scale in other categories. And it certainly is a channel here, partly because of underinsurance but partly because the benefits of these medicines manifest so consistently. There really aren't that many nonresponders at all. And produce a very desirable short-term effect, in addition to enhancing long-term health benefits, it really is a unique situation. So we have seen price elasticity, as was mentioned, and that it's, on the 1 hand, in our interest to offer consumers a compelling price where they can afford to self-pay. It's also in our interest to continue to build out indications for chronic disease as Ken and Dan were outlining earlier, and we are committed to doing both, having a strong consumer offering, but also proving the health benefit and that should not compete for consumer dollars but for health care dollars, either government or from private payers. So it's a both and I do think these can bridge because we have so much evidence coming of long-term benefit. We should compete with other classes of medicines in chronic diseases or even create whole new classes -- and at the same time, we'll probably continue to see consumer self-pay demand, whether it be for prevention or there are other needs. So I think it's entirely possible to do both. And I think Ken mentioned earlier some of the numbers, we are literally just scratching the surface of global treatment here. And there really is a tremendous opportunity to reach tens or even hundreds of millions and more people in the coming years. And that's our goal.

The next question is coming from Evan Seigerman from BMO Capital Markets.

Dan, you any comments that you're super excited about your presymptomatic alters program. I appreciate that you want to comment on an interim look, but could you expand on drives this view and how it has changed since the initiation of the program?

Okay. Great. I double back on the recent pack Alzheimer. So we'll go [indiscernible] talk a bit about that.

Okay. Thanks, Evan. I apologize, I didn't say super excited on this call. I'm still super excited about the Alzheimer's opportunity here to treat in the preclinical space. The reasons for my excitement go back to the data that we saw actually in [indiscernible] and [indiscernible] 2 in both of those trials where we were treating symptomatic patients, we saw the largest treatment effect on patients who are the earliest in their disease course, whether you measure early in disease corified symptoms or pathology, et cetera, that's where the drug had the biggest effect. And in fact, we looked at prevention of progression as an outcome in that trial in those patients, we had really profound results.

I actually expect the same in [indiscernible] II as well as [indiscernible] 3, which is the trial with [indiscernible]. So I remain extremely excited. No change here at all to my level of enthusiasm or confidence success.

Great. Thanks. With that, we'll close the Q&A. And Dan go to Dave for you for a couple of closing remarks.

Thanks, Mike, and thanks to everyone who called in today and for the excellent questions from the sell-side community. We appreciate everyone's participation here. And as always, follow up with our excellent IR team if you have questions that didn't get answered today. And have a great rest of your day. Take care.

Thank you. 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 December 4 at midnight. You may access the replay system at any time by dialing (800) 332-6854 and entering the access code 797327. International dialers can call (973)-528-0005. Again, those numbers are (800) 332-6854)nd973)528-0005 with the access code 797-327. Thank you for your participation. You may now disconnect your lines.

Fantastic. Hi, everyone. Thank you so much for being with us here today, and I am thrilled to have with me Lucas Montarce, the CFO of Lilly; and Mike Czapar, I'm going to say the last name incorrectly, undoubtedly, the Head of IR for Lilly as well. For those of you who do not know me, my name is Courtney Breen. I am the U.S. large-cap pharma analyst here at Bernstein. And I feel very privileged to share the stage with these 2 here today. Hopefully, we're going to have a wonderful conversation getting to poke and prod at the Lilly business in a few different ways.

As a reminder, for those of you who are here in the room, you're very welcome to add questions through the Pigeonhole app to make sure that we can kind of answer the types of things that you're most interested in today. But with that, I'll perhaps I hand over to Lucas for him to set the tone a little bit in this conversation, and then we'll dive into the Q&A after that.

Sure. Good morning, everybody, and thank you, Courtney, for having us today here. Maybe just a few highlights from my side. Of course, we are getting into the earnings season, so I'm going to talk more about the first half of the year, but very pleased with the progress that we continue to make across our strategic pillars. Of course, starting with the revenue growth, great progress that we are seeing 38% in the second quarter, 40% in the first half of the year, outpacing pretty much the entire industry on growth. And again, continue to drive significant progress on -- across our key products.

Those products, by the way, already represent more than $10 billion in the second quarter, growing 80% -- so the runway of continuation of growth of those products will continue to drive the growth into the future. Of course, tirzepatide, both Mounjaro and Zepbound are leading the way. But again, very good progress across all the other key growth products as well, again, immunology, oncology and neuroscience. So great progress on the revenue side, all volume-driven and also U.S. and OUS. I got a lot of questions about the OUS business that I'm always very happy to respond. And we have the CFO for the Lilly International business here as well that can help us to address some questions on that matter as well.

The second pillar, manufacturing, we did 2 announcements this week, and it's becoming almost like a norm. Don't get too used to that to have a lot of new sites every week, but also great progress. And I call it in 2 fronts. Very important is making medicine today. If you go back almost 15 months back, we were still dealing with a shortage of tirzepatide and navigating through that process to get out of the shortage list and to start to launch the product in OUS markets. I can call it that, that's behind us, and we continue to ramp up production. We meet our goal of 1.6x in the first half of the year. We put another mark for the second part of the year of 1.8. I will give the disclaimer that I'm planning not to provide that number into the future into 2026 because it's becoming irrelevant. We are shipping product every day in all the countries that we launched the product, and we continue to launch into new countries as well.

So very pleased with the progress that we are making in manufacturing, making medicine today. But also they are very busy on their nice shift, how I call it, that they are working also as well on building new facilities to ramp up production for the future as well. Many sites around the globe. This is, by the way, a journey that we started in 2020. I always get the question, are we doing this for tariff reasons. No. The answer is we started this even when tariff was not a hot topic. And we have even some of those sites already up and running, 2 in North Carolina, RTP and Concord. They are producing medicine as we speak. So we continue to ramp up production and continue to advance our agenda in manufacturing. The last part is the most important one that is the R&D one and continue to make significant progress across all stages and phases that we have in development and across all the therapeutic areas as well.

In cardiometabolic health, we have a breadth of a portfolio of opportunities behind it. Again, very pleased with the data readouts of orforglipron and more coming every single quarter. Also in oncology, every single quarter, we have new data readouts and new products that will come into the market and starting with imlunestrant, our oral SERD that potentially will come into the market next year. And we continue to make progress as well in immunology and neuroscience. As you know, again, we have as well donanemab for preclinical and TB3 that could potentially read out into the future and bring new opportunities for patients suffering on Alzheimer's. So great progress across the board. Sorry, it's a long answer -- a long intro, but I'm very pleased with the products that we are making and how we continue to advance again our strategy into the future.

Fantastic. Thank you so much for that context. And I think you mentioned there was a lot in that upfront, and there's a lot going on for stop kind of outside Lilly, inside Lilly, there's policy pressures, there's manufacturing kind of requests, there's pricing, there's go-to-market, there's changes potentially to advertising, compounding kind of direct-to-consumer platforms. And then you're expanding, you're growing, you're making new business and new investment decisions on a consistent basis, both within the metabolic opportunity and beyond.

Given all of the scenarios that are out there and the fundamentals of Lilly, what are the primary principles that you are applying to the investment decisions that you're making today? How do you make the right decision today for the next 3 years, but also the next 10 years, but also the next decade for Lilly.

Yes. That's a great question, and maybe there is not a perfect answer, but how we think through this on the investment side and how we prioritize is very much a very thorough process that we do bottom-up across all the business units. But then we review it at executive level on how we make, again, trade-offs and decisions to continue to invest. They are short-term decisions and long-term decisions, long-term decisions like the one that I mentioned in manufacturing. And for those ones, we look at what we call long-term plans or strategic plans that we look, again, our demand projections over the next 15, 20 years, and then make those decisions for the future.

Similar, maybe not so long term, but also midterm is in R&D, how we continue to make decisions at advancing our pipeline and then making trade-offs in the pipeline as well. And last but not least, that is the more short term and more variable is on what we call SG&A, that is the commercial front that also we make decisions based on, again, opportunities that we see and continue to drive the uptake and the demand of our products. Worth to note that, again, in that area, all the investment that we are doing is more on the variable side, right? So we are very disciplined at this time going also all the variables that we are seeing, but also our strong belief that we need to remain disciplined, in particular, to remain agile as an organization.

And if you look at our trends over the last few years, though, we have been growing in revenue significantly and growing the company, our headcount footprint remain outside of manufacturing relatively flat. And that's based on the discipline that we have put in place to, again, leverage AI, leverage automation and having a strong discipline from finance across the entire organization, not to start basically building a lot of organizations or footprint that we may then regret into the future as well.

Absolutely. That trade-off between discipline, taking the most of the opportunity, balancing risk and reward might be a hard continuum to kind of navigate.

Yes. Indeed.

I did want to dive into some of those manufacturing pieces. You mentioned 2 announcements for API plants in the last couple -- or last week even. Can you tell us a little bit more about this decision? I mean, traditionally, API is manufactured in some lower-cost countries around the world or sourced from lower-cost countries. As we think about more API being manufactured in the U.S., does that translate to a more expensive on a per unit basis? What supports the business case to make this investment in the U.S. and establish API here?

Yes. Very pleased with both announcements. If you haven't seen the news, we announced one API site in Virginia that will be focused on monoclonal antibodies and ADC, antibody drug conjugates. And then I think yesterday or the day before, we announced another one in Houston, Texas that will be focused on API for a small molecule or a small molecule, right? So very pleased with both. As I said, we look at the next 20 years and what are the projections on demand to base the decisions that we make. These lines are also fungible in terms of, again, different lines of production within those areas, right? So don't think about that is, again, one site for one asset, but actually, there is a lot of fungibility and also ability to scale up those sites as well over time if needed.

So that gives us a lot of flexibility as well into the future. Some of the decisions on comparing on the cost, I think a few thoughts from my side. There are always push and pulls when you think about, again, the manufacturing investments that you have. And again, it's not just the line of what is the API cost, but you look at from the tax perspective, your flexibility and resiliency to supply the product around the globe as well, the tariffs as well associated with that. There is a component of decisions. Tariffs is not the main one, but there is a component of decisions that we take into consideration for the decision to make this long-term investment and then the decision on where the site will be located. One thing that maybe more broadly is important for us, and again, we learned a lot in the last 3 years going back to the supply situation is there is not a single trade-off that we will continue to do to actually make sure that we can supply the market, right?

So -- and having that resiliency and flexibility is an important lever in my eyes that is also considered as part of the cost definition when we decide about this. What I mean by that is, for example, in the past, if you go back maybe 10 years ago, we were pretty much having a footprint that it was operating at full capacity, and we were actually having single source for every single product. Nowadays, we are focusing on creating more capacity and then having for the major products dual sourcing. You will say for that from the financial hub perspective, you will say it's not the most cost efficient. But actually having that flexibility and resiliency is way much more important for our P&L than the actual cost associated with that.

Absolutely. I would assume that, that also comes down to the fact that the API is such a low proportion of your -- when you think about the business.

Yes, you're right. Absolutely right.

What I did want to also spend some time on, and we'll probably have a few questions around this is orforglipron.

Okay.

And maybe starting from the manufacturing piece because this is what we were just talking about. You have spoken in the past about building inventory for this product in preparation for the launch. I think the last -- by last counts that I'm aware of, $850 million valued at COGS. Now we're getting kind of closer to the launch. You had to make a lot of manufacturing decisions at risk to establish this base, establish those manufacturing sites and build this inventory to this degree at this point in time. Now you know what you know. We've had 4 data cards turn over in Phase IIIs for orfo. Would you have been more aggressive, less aggressive, the same amount of aggressive in terms of that manufacturing risk that you took on?

Yes. Again, starting with the number, the $850 million is the one that is actually in our filing. It's not all orforglipron, but the vast majority is orforglipron. And I see all kind of numbers that people extrapolate to say how much that represents in revenue. It's funny to look at that, by the way. I'm glad that we are not going to go into those details to explain that. But yes, again, that's mainly what we are producing in advance for the launch of orforglipron. And it's going back to the learnings that we had in the last few years, how we prepare now for a global launch. And yes, taking risk, in particular, before the data readouts because we didn't have line of sight of the result of the data readouts. Now that having 4 of them 2 of them in actually obesity that we are planning to submit for approval here in the U.S., you derisk significantly actually that.

So I'm pleased of the decision that we made. In terms of is it too much or too little what we have produced, I think we will see that in demand in the future. I'm very encouraged about all 4 data readouts. I look at them always together, in particular, thinking about diabetes and obesity. But I feel really good about the profile of orforglipron and having a small molecule daily oral that we can scale demand and with no food or water restriction that will serve and help us to continue to drive the demand, which is very important in my eyes when you think about, one, again, you have 150 million potential patients in the U.S., you have another 900 OUS. and we are serving only a few percentage points of that OUS and 5 percentage points in the U.S. Many of them actually not even thinking about using, again, incretins because they don't like injectables.

So this will serve significantly those patients from my perspective. And then also patients that may have, again, different target weight reduction that they have a different BMI, and this will bring another option. And then we have more studies coming for orforglipron as well with different comorbidities, but also a very interesting study that we call ATTAIN-MAINTAIN that will actually start showcasing how you think about maintenance once you reach your target weight loss, how you maintain that and potentially switching as well to orforglipron. If you started with tirzepatide or sema, switching into orforglipron as well. So a lot to come. Again, there's going to be every single quarter, most data readouts that we will provide out there. I always tell investors, don't overreact to one single data point, 1 percentage point up or down, but look at this more holistically and think about the strategy that Lilly has in place that is to bring a full portfolio, including retatrutide that will have our first readout in Q4, bringing options for physicians and patients to decide what is best for them.

And to that point, I think at the EASD conference last week in Vienna, where some of the data was presented, there was a growing kind of conversation from physicians about right product for the right patient at the right time in their journey. And I want to be able to have that flexibility as a physician and meet the patient where they are. And so kind of bringing a portfolio makes a huge amount of sense. Maybe just to push a little bit on the orfo manufacturing piece as well. Where are we at scaling on the path for orfo as we think about kind of the ability you have to produce today? Is that the ability you will still have to produce in 2 or 5 years? Or is that going to -- we're going to see multiples on kind of the manufacturing potential for orfo? And how much will the gross margin launch evolve over the next kind of 5 years?

That's a question that I get all the time. On the first one, the ramp-up of production will continue to grow over time. That's very natural what we do. By the way, on the $850 million that you quoted, don’t be surprised that the number when we have the earnings call in the third quarter will continue to grow. That will be very natural. I'm super pleased that by the time that we launch orforglipron, that number will not be there. So I'm not going to get more questions because it will become more part of the total inventory. So we will not have a lot of line of sight of how much inventory we have for orforglipron. But we will continue to grow and ramp up more production, including bringing new sites, including this API site in Houston as well.

Thinking about the preparation for the launch, of course, again, the team are working very hard and fast to finalize all the paperwork to submit for obesity later this year. And then the teams are preparing commercially to launch the product at the global level as well. The beauty is that we have a large footprint, as you know, globally. So this don't assume that this will require to ramp up more significant commercial footprint, but we do have what is needed to commercialize this product as well from the commercial point of view. In terms of the gross margin question, while we don't talk about product level gross margin, just -- to give a few perspective on this, think about this as a small molecule oral. They have some complexity on production, but also has a royalty associated because this is a product that we acquired from Chugai. So that's a component that will be factored as part of the gross margin. Maybe more broadly on the gross margin, what I've been sharing more publicly about this is just to give some perspective on gross margin.

Q2, I think we reached what I call more the high end of the ceiling and 85% record high number in gross margin. I call it that the ceiling. Expect to see that, again, gross margin going into the low 80s. Some of the reasons on -- that I mentioned already as new lines and new manufacturing sites coming online as well and new products as well, price again, erosion. So there is a component of those drivers that will drive gross margin to those low 80s. It's still low 80s, by the way, is top tier in the industry. So I think that is very competitive. And think about what I mentioned about building more resiliency and flexibility globally, that is also maybe the major driver that is impacting that line.

Absolutely. Absolutely. And maybe to now poke on the other angle of the offer launch that everyone wants to know about when is it coming. And this question often comes is kind of -- it sounds like you're keen to get to market as quickly as possible. There's a variety of different potential paths, kind of traditional review, priority review, commissioners review voucher. When might we know or when might you know what the path is that is happening? Will we not know until the PDUFA date is announced? Or will something kind of become clearer so we can put a stake in the sand of when this might come?

What I can share now is, of course, our intent is to bring the product to the market as soon as possible. And we are exploring all options. You mentioned the commissioner voucher. We do have a priority review voucher as well. So we are trying to bring the product as soon as possible. That's why the team is working so hard and so fast to try to file this as soon as possible. That's the first step that we can take action, and it's in our control to make that happen. We will continue to work on preparing us to be ready also to launch the product in the market. And we talk about a few of them. We talk about from the manufacturing perspective. I mentioned commercially, we are going to be ready to go regardless of any of the scenarios to go as soon as possible. And then I wouldn't undermine as well, again, from the R&D perspective as well, again, all the data readouts that are coming will continue to strengthen the profile of the product in my eyes and the breadth with new studies, with new potential comorbidities that will be associated to maintain study.

So we are all cylinders putting again, all the efforts to have a global commercial launch. When we talk about a global commercial launch, it doesn't mean that we launch all the countries all at once. By the way, it's just the regulatory process that you have, but expect those, again, different to tirzepatide that there was a long period between the launches because of the supply situation, those will be significantly shorter, right? Again, once we have regulatory approval in all the countries, we are going to go as fast as possible.

Fantastic. And no gating of volume into those countries?

No gating on volume. We are not gating the volume, by the way, in the tirzepatide side on the countries that we launch. If there are -- if you hear 1 country or 2, you can blame [Fadi], by the way, that is seated over there. But sometimes, believe it or not, still, we are surprised with the initial demand that we see in the marketplace. After more than 40 launches, I'm giving the finance organization a hard time because we cannot be surprised again that we launch, we bring the product into the market. And after 2, 3 weeks, we run short. That's on us. But it's not a challenge for manufacturing. It's more a challenge for us to have a good demand forecast and not sandbag on what we expect to see in the marketplace.

There'll be a lot of country managers thinking that...

[indiscernible] happy with me, by the way.

So the final angle on offer that I do want to push on is pricing. And kind of pricing seems to be critical for the position that those products will take in market. And this comes down to the fact that when we speak to physicians or when we speak to patients today, organically in those conversations, price and affordability around these products seem to be one of the first things that get mentioned, which is quite rare in the U.S. for a physician to raise price early in a conversation usually for pharmaceutical products. We've heard Lilly say in the past, we plan to price to value. And we've heard Lilly also say we are willing to be flexible on price for volume. What are you doing right now to evaluate how you might price this product at launch? And what are the steps you're taking to get comfortable with the decision that you're making because it's a very big decision.

It is a big decision, and we are looking at that very carefully. The beauty is that it's not a completely new area for us, right? Again, we have been in the market, not only in the U.S., but in many of other markets. And so it's not just theoretical market research, but actually, we have real cases on the marketplace around many, many markets. So we are gathering all those insights to be factored on our decision on how we position from the pricing perspective of orforglipron. You mentioned, again, price to value, that is our strategy, right? It has been our strategy and will continue to be our strategy. Without getting into any of the details, maybe a few thoughts that I think is worth to provide more color on this regard is, there is always, again, a little bit of that tension between price and volume. I would say that, of course, having an out-of-pocket product will have more sensitivity to the price level that we set up. But I would use, for example, the LillyDirect Zepbound vial as a good a proxy in my eyes, not for orforglipron, but a good proxy on how we think about pricing altogether, right?

And when you look at, again, the [$499] that we have, again, depending on the presentation and the journey or loyalty program for patients to -- while they are titrating app, they maintain that price. That's a good way to think about it. The feedback that we are getting and seeing also the demand ramping up is very positive. And when we test or some of the competitors tested different pricing at even lower leverage didn't seem that was ticking significantly and shifting a lot of new demand. So I feel good about the pricing level that we have in LillyDirect. That is a good proxy in my eyes how we think about the price sensitivity. There is always that tension between price and volume, and it's our role to price it to value and try to maximize the value for the company, but also to reach as many patients as possible.

Absolutely. It's a very critical decision ahead for you guys. I do want to go a bit longer term now as well, kind of we spend a lot of time on orfo. And I know you get beaten up about orfo and what's going to happen and there's lots of things you can't say to us yet. But as we go longer term, kind of Lilly is arguably the first pharma company in kind of modern history where you have a very long vantage point on cash generation before a really big patent cliff might be coming, and kind of therefore, have a lot more time to prepare for the inevitable EPS troughs that come with patent cliffs for blockbusters.

It seems kind of sitting here in 2025 that there could be a path for you to make great decisions, get good science to turnover where you're able to grow continuously through the 2040s. How are you thinking about spending today in R&D and the risk/reward profile of those bets and the time horizon of those bets to ensure that you are kind of delivering for today, delivering for the next decade and the decades beyond that?

Yes. That's an important question. And first of all, again, going back to your comment about the EPS trough and even revenue trough as well that happens again, during those cycles. I think the formula is, of course, to continue to innovate and drive innovation in the marketplace. And I'm really pleased that we've already proven the first trough that we are going to continue to grow through that one. When you think about Trulicity, 3 years ago, Trulicity was our largest product. Again, 2022, I think Trulicity was like $7 billion in revenue, and it was our largest product. That product will go off patent starting in 2027 and will go through IRA as well, and we are not talking about that. So we have proven through innovation, through tirzepatide, orforglipron, all the other launches as well that we will continue to grow through that period as well. That's the success formula in my eyes. How we're driving that is a continuation of that agenda. Of course, again, you need to continue to ramp up that agenda, and it's on 2 fronts.

The first one in terms of the luxury of time, first, we are not just resting on that. We are taking action as we speak now and going with a sense of urgency as well because, again, if you think about it in 2, 3 years, maybe it's already too late as well. So we are taking that with a sense of urgency. And for example, we continue to drive the BD agenda. We signed more than 30 deals, all small ones, but that's intentionally because we have the time. We don't need to overpay it. We don't need to actually pay for revenue and the strategy is working well for us, right? Again, as part of our core therapeutic areas, we can take more risk because we have good understanding of the science, and we have proven even with the deal that we had for the asset that we are going to launch with orforglipron that we can do that successfully. Now there is more risk.

It's not that we will turn all the [indiscernible] that we will have all of orforglipron. But even with that risk, it pays off. Again, when you put it all together, the NPV is very positive. And we will continue to drive that agenda into the future because we have that time. So that's one of the actions that we will continue to do, maybe at more scale as well. The other one is on -- Dave has been talking about this on the R&D side across all the therapeutic areas, always following the science, but to continue to expand what we call adjacencies even within our core therapeutic areas or even extending our therapeutic areas. I will start with diabetes, obesity, 3 years ago, we used to call the therapeutic areas only diabetes, then we call it diabetes and obesity. Now we call it cardiometabolic health because we added cardiovascular as well. So we are continuing to extend. We have 2 assets moving into Phase III with lepodisiran and muvalaplin getting into the cardiovascular space.

And we are building a portfolio of products in cardiovascular as well. So that's expanding as well our therapeutic areas. You have in oncology moving into hematology, moving into new cancer areas that we didn't have in the past. Again, as part of, again, assets that will have data readouts in the future, we have in bladder cancer, in ovarian cancer as well. So we are expanding into areas that we didn't have in the past as well. And we are doing that in immunology with areas like GI as well that we signed again as well deals in the last 12 months and in neuroscience, including, for example, the new acquisition of SiteOne with an asset on the pain portfolio as well. So we are expanding and driving that innovation to continue to go -- to your question, to continue to drive that growth even beyond 2030 and getting into 2040s as well.

Fantastic. You mentioned kind of the risks are higher in some ways because of the types of earlier decisions that you're making. In some ways, the risks are also higher for some of the scientific areas you're going after. I think pain and neurodegeneration are 2 examples where kind of historically, drugs have gone to die, kind of it's been kind of a place where there's been a symmetry kind of assets that just haven't made it, but they're incredibly important and potentially very, very large TAMs. And so how do you think about the risk reward of those areas and contrast them with kind of your oncology, your immunology, your kind of next build-out on the innovation in cardiometabolic...

Yes. That's a very important question. Since I have a friend here, we'll call that friend, Mike, maybe he can start with this one.

Yes. I think absolutely, you want to have a good balance of risk reward. So take on an opportunity that has a large opportunity that is worth the high-risk [indiscernible] or something that is maybe takes time and capital, but there's strong scientific rationale. Lucas hit on a couple, but we have a few of those in our portfolio that we're investigating whether it's the Lp(a). It's a lot of scientific rationale there, but it takes a lot of time and investment in oncology, imlunestrant, we're looking at in earlier lines of cancer. That's again, it takes time and investment, but there's a lot of rationale for why that might be successful there.

The other space that is kind of a blend of the TAs we're in as well as the kind of modalities we're in is looking at incretins outside of cardiometabolic health. And so there's been a lot of real-world evidence as well as some preclinical models that show that using incretins in substance use disorders, psychiatry, inflammation, there's a lot of promise for potential use of those medicines. And we're in a luxury spot where we have a very large portfolio of incretins that kind of 3 agents that are very new to the market and then double digits that are in Phase I or Phase II. And so we've announced a couple of efforts there, but that's another space where high risk, a lot of rationale and something that fits a profile that Lilly can take on.

Maybe just one comment to that to that, in particular, in areas that you call it hard science like Alzheimer's and so on. I think the value of building the expertise in those therapeutic areas. And over time, that is still risky, don't get me wrong, but reduce the risk because you start building, again, the understanding of the area, understanding of the modalities. And then that is always in my eyes how we think through to, again, increase our probability of success as well, right? That's very intentional, right? Having the right scientists that they have the expertise in those areas always help to understand those still risky, but limit that risk or mitigate part of the risk.

Absolutely. I do want to make sure we squeeze in a question here on kind of the overall margin top to bottom for Lilly as well, particularly given your role. I think you've said in the past, and you said just now, for example, the kind of peak on gross margin that we might be seeing. Certainly, when we get out to near the end of this decade, if you look at the average sell-side model, you see operating margin north of 50% because it's really hard to figure out how to spend Lilly's money that's coming through from revenue all the way down to the bottom. Good problem to have. But I think you continually try and guide the fact that, that 50% or more is not sustainable. Can you talk about kind of is -- should we be expecting that R&D is going to start outpacing the rate of revenue growth? Or where else are we going to see this spend occurring in a way that perhaps the Street is not yet appreciating?