Lilly Highlights Transformation Strategy for Wall Street, Reviews Robust Pipeline and Sets 2009 Financial Guidance
"Lilly continues to deliver strong financial results to our shareholdersthrough an attractive combination of volume-based sales growth for keymarketed products and an ongoing commitment to productivity and costcontainment," commented John C. Lechleiter, Ph.D., Lilly's president and chiefexecutive officer. "Our scientists are dedicated to maximizing the potentialof our pipeline, which now boasts an unprecedented 59 molecules in clinicaldevelopment, 40 percent of which are biotech-based. Lilly's success depends oninnovation, and the promising molecules we are discussing at today's meetingbode well for the future of our company and the patients we serve."
"The pharmaceutical industry, however, continues to face major challenges,and we must act quickly and decisively to address them," noted Lechleiter. "Wemust respond to the demand for greater value among payers, providers andpatients. We must also prepare for the wave of patent expirations that willcome in the early part of the next decade. At Lilly, we recognize thosechallenges, and also recognize the tremendous opportunities that can becreated by a company with a clear vision and a commitment to change. We arefundamentally transforming our business, and are doing so from a position ofstrength. Our strategy is to create value for our stakeholders by acceleratingthe flow of innovative new medicines that provide improved outcomes forindividual patients."
Pipeline Progress - Expanding Biotech, Reducing Costs and IncreasingProductivity
Steven M. Paul, M.D., executive vice president, science and technology andpresident of Lilly Research Laboratories, explained how Lilly's strategy forresearch and development is designed to respond to the challenges ofpharmaceutical R&D. "Lilly's goal is to substantially improve R&D productivityand reduce late-stage attrition, thereby lowering the cost to bring a newmolecular entity (NME) to market, from $1.2 billion in 2007 to $800 million by2010. Our most recent estimate of $1.0 billion shows that we are makingsignificant progress toward achieving this goal through our R&Dtransformation."
Dr. Paul then detailed several key U.S. and international examples ofFIPNet transformation and their positive impact on R&D productivity. Theseexamples include the sale of Lilly's Greenfield Laboratories site to Covance,the expansion of Chorus, Lilly's virtual drug development organization, thecreation of a joint venture in India with Jubilant Organosys, and otherrisk-sharing collaborations with companies in both India and China.
Tom Bumol, Ph.D., vice president of biotech discovery research, explainedhow the company's biotechnology strategy is transforming the Lilly pipeline."We see more and more that biotech is a key to sustaining pharmaceuticalinnovation for the future, and Lilly has more than eight decades of experiencewith biologicals. Today, Lilly is the fifth largest biopharmaceutical companybased on biotherapeutic sales, and we are making the necessary investments tostrengthen our leadership position. Over the past decade, we have built a newintegrated biotechnology infrastructure, from discovery through development,and including delivery devices and manufacturing."
Highlighting Lilly's growing biotech prowess, Dr. Paul remarked, "With theaddition of the ImClone cancer antibodies, currently 40 percent of Lilly'sclinical stage pipeline and 50 percent of Lilly's late-stage pipeline arecomprised of biotechnology-based molecules. Through the ImClone acquisition,we have simultaneously accelerated our emergence as both a biotech and cancerpowerhouse, with a pipeline that we believe will provide a continuous flow ofhigh value medicines."
Key late-stage and select mid-stage compounds in each of the company'score therapeutic areas were reviewed by Drs. Paul and Bumol.
Select Pipeline Developments
-- Prasugrel - The company continues to invest heavily in the ongoingdevelopment of prasugrel. Prasugrel, which Lilly is developing with itspartner Daiichi Sankyo, continues to be under review with the U.S. Food andDrug Administration (FDA) and European Medicines Agency (EMEA) for treatmentof acute coronary syndrome (ACS) in patients undergoing percutaneous coronaryintervention (PCI). Lilly remains in active dialogue with both regulatoryagencies. In addition, prasugrel is also being studied in the TRILOGY trial inmedically-managed ACS patients. TRILOGY will include approximately 10,000patients at more than 800 hospitals in 35 countries and is structured as asuperiority trial against clopidogrel. Since December, 2007, several follow-ondata analyses of the TRITON TIMI-38 study have been published and presentedregarding secondary endpoint data and data on relevant patient subpopulations.These include analyses of stent thrombosis, recurrent cardiovascular eventsand prasugrel's use in patients with either diabetes or STEMI (ST-SegmentElevation Myocardial Infarction).
-- Arzoxifene - A five-year Phase III study, GENERATIONS, that enrolledmore than 9,000 patients is expected to be completed in 2010. Two additionalPhase III trials, FOUNDATION and NEXT, have already completed. The companyexpects to submit a New Drug Application (NDA) to the FDA in the fourthquarter of 2009. The submission will seek approval for three indications inpostmenopausal women - treatment of osteoporosis, prevention of osteoporosisand reduction of risk of invasive breast cancer.
-- Exenatide once weekly - The company continues to develop exenatide onceweekly with its partners, Amylin Pharmaceuticals, Inc. and Alkermes, Inc.During 2008, the partners made significant progress toward commercializationof the molecule. A pre-NDA meeting was held with the FDA, commercial-scaleproduction was begun at Amylin's Ohio facility, and the FDA has agreed toaccept data from the DURATION-1 trial as an appropriate way to demonstratecomparability between clinical trial scale and commercial scale material fromthe Ohio facility. The companies anticipate regulatory submission to the FDAby the end of the first half of 2009. European regulatory submission isexpected in late 2009.
-- Olanzapine long-acting injection - The European Commission recentlyapproved Zypadhera(TM), the company's long-acting injectable formulation ofZyprexa(R). Zypadhera is approved in Europe for maintenance treatment of adultpatients with schizophrenia who are sufficiently stabilized during acutetreatment with oral Zyprexa. In the U.S., the company has submitted a completeresponse to the FDA's not approvable letter and is currently awaiting theFDA's final review.
-- Gamma Secretase Inhibitor - In March 2008, the company began its firstpivotal trial in Alzheimer's disease for the gamma secretase inhibitor, asmall molecule designed to reduce the levels of the amyloid beta peptide inthe brain. The trial, called IDENTITY, is actively enrolling and is ahead ofschedule. A second pivotal trial, IDENTITY 2, was started in September 2008and is also enrolling at a better-than-expected rate. Approximately 400subjects have now been randomized in the two studies.
-- A-beta Antibody - A monoclonal antibody, the company's A-beta antibodyoffers the potential for slowing down the progression of Alzheimer's disease.It is expected to enter Phase III in 2009.
-- Enzastaurin - A Phase III clinical trial is currently under way for theuse of enzastaurin as a maintenance therapy for diffuse large B-cell lymphoma.Because events are occurring at a slower rate than projected, the company isconsidering expanding enrollment and extending the trial. The company nowexpects U.S. regulatory submission to occur in mid-2013.
-- Teplizumab - The company continues to collaborate with its partner,MacroGenics Inc., on teplizumab, which is currently being studied in a pivotalPhase II/III clinical trial for Type 1 diabetes.
-- Dirucotide (MBP8298) - Along with its partner, BioMS, the company isstudying dirucotide for the treatment of several types of multiple sclerosis(MS). There are two Phase III clinical trials ongoing targeting secondaryprogressive MS, one in Europe and Canada, and the other in the U.S. There isalso a Phase II clinical trial underway in Europe for relapsing remitting MS.
-- Tasisulam (ASAP) - Currently in Phase II, tasisulam has exhibitedproperties resembling a targeted agent as well as a cytotoxic. The company istesting the anti-tumor activity of tasisulam in several ongoing Phase IIstudies. Potential registration studies could begin in 2009.
-- GLP-Fc - A Phase II/III adaptive, seamless trial was initiated in early2008 for the company's leading proprietary GLP-1 asset, a novel Fc-fusionprotein GLP-1 analog, or GLP-Fc. Two other Phase II studies of GLP-Fc are alsounderway in over 400 patients. The company expects safety and efficacy datafrom the first of these two studies to become available in 2009.
-- Inflammation - The company has made a strong commitment to research ininflammation, as evidenced by four leading internal antibody candidates. IL-17is progressing into larger Phase II clinical trials in the near future, whileIL-23 entered Phase I in 2008. The company also anticipates initiating largerPhase II clinical trials for its BAFF antagonist antibody and IL-1beta in thenear future.
Dr. Eric Rowinsky, M.D., executive vice president and chief medicalofficer of Lilly's wholly-owned subsidiary ImClone Systems, reviewed thenumerous additional indications being pursued for Erbitux, as well as thelater-stage oncology compounds currently in development.
-- ERBITUX(R) - In addition to its approved indications, Erbitux is alsobeing studied in numerous cancer types, including colorectal, head and neck,non-small cell lung, gastric and esophageal.
-- IMC-1121B is a fully-human monoclonal antibody that targets thevascular endothelial growth factor (VEGF) receptor. Phase II studies areunderway for metastatic melanoma, renal, liver, ovarian, prostate andnon-small cell lung cancers. Metastatic breast cancer is in Phase III testing,while Phase III testing in gastric cancer is expected to begin in 2009.
-- IMC-A12 is a fully-human monoclonal antibody that targets theinsulin-like growth factor-1 receptor (IGF-1R). Phase II testing is underwayin breast, prostate, pancreatic, colorectal, liver and head and neck cancers,as well as sarcoma, with Phase III trials planned in 2009. IMC-A12 has thepotential to work with a variety of other targeted agents.
-- IMC-11F8 is a potent, fully human monoclonal antibody that targets theepidermal growth factor receptor (EGFR). It is currently in Phase II studiesfor metastatic colorectal cancer with one or more Phase III trials planned in2009.
In summarizing Lilly's research and development potential, Dr. Paulconcluded, "Despite the challenges we face, the opportunities are also growing- the science has never been richer and there is no lack of unmet medicalneeds that we can address through our R&D efforts."
Commercial Performance - Top 10 in Worldwide Sales, Fastest Growing U.S.Pharma
Derica Rice, Lilly's chief financial officer, provided an update on thecompany's commercial performance, focusing on the five key medicines that aredriving top-line growth (Cymbalta(R), Byetta(R), Humalog(R), Cialis(R), andAlimta(R)), as well as the company's largest-selling product, Zyprexa, andElanco, the company's animal health division.
"Lilly is completing another year of solid operating performance," saidRice. "The strong results we've seen year-to-date reflect an ongoing focus onexecution across all geographies and across our product portfolio. Thispositions us for success in 2009 and will enable us to effectively deal withthe patent expirations we will face in the next decade."
Through the first nine months of 2008, the company's sales have grown 12percent on a pro forma basis, with fully half of that growth, or 6 percent,resulting from volume gains in most major geographic areas. According torankings published by IMS, Lilly has moved into the top 10 pharmaceuticalcompanies in worldwide sales. Among the top ten, Lilly was the fastest growingcompany in the U.S., the fourth fastest growing company in Europe and in thepharmerging markets, and the fifth fastest growing company in Japan. Tomaintain this growth, the company is focused on maximizing the value of itsmarketed product portfolio by investing in selected promotional efforts andpursuing multiple new indications and line extensions.
Cymbalta sales for the first three quarters have grown 28 percent in theU.S. and 74 percent internationally. In the U.S., Cymbalta is the onlyestablished branded medicine in the antidepressant category that is growingits share of market, and formulary access continues to be strong. U.S.Cymbalta sales are also expected to benefit from its recent FDA approval forfibromyalgia. Outside the U.S., Cymbalta continues to gain market share inmost major international markets, with additional launches in 2008 inAustralia, Canada and France.
Byetta, which the company markets along with its partner, AmylinPharmaceuticals, has now been used by more than 1 million patients worldwide.In the U.S. sales for the first three quarters have grown 12 percent comparedwith the first three quarters of 2007, and efforts are underway to accelerateByetta's adoption. In addition, a new indication for use as monotherapy iscurrently awaiting the FDA's final review. Outside the U.S., Byetta continuesto be launched in new markets. In 2008, Byetta has been launched in France,Italy, Spain, Australia, Brazil and Mexico. Fueled by these new launches,Byetta sales are expected to double outside the U.S. in 2009.
Humalog sales for the first three quarters have grown 15 percent in theU.S. and 29 percent internationally. The U.S. performance includesaccelerating growth in total prescriptions, an improvement that is in part dueto the 2008 launch of a new pre-filled pen called the Humalog KwikPen(TM). Thenew pen has also been launched in Japan, the U.K. and Germany. Additionallaunches in the European Union are expected in 2009.
Cialis generated more than $1 billion in worldwide sales in the firstthree quarters of 2008, with international markets accounting for nearlytwo-thirds of the total. Cialis is now available in more than 100 countriesand is the market leader in more than 20 of them. U.S. sales and share ofmarket for Cialis have been aided by the 2008 launch of a once dailyformulation. Cialis is also being studied for new indications in pulmonaryarterial hypertension (PAH) and benign prostatic hyperplasia (BPH). In 2008,the company filed regulatory applications for the PAH indication in the U.S.,Japan, Europe, Canada and Mexico. The company also anticipates initiatingenrollment in additional Phase III trials in BPH in the first quarter of 2009.In November, 2008, the company licensed the U.S. rights for the PAH indicationto United Therapeutics.
Worldwide sales of Alimta have grown 37 percent in the first threequarters of 2008 compared with the same period in 2007. Alimta is now approvedin 92 countries and remains the most successfully launched cytotoxic inhistory, having sold over $3 billion since its introduction in early 2004.Near-term opportunities for Alimta are being pursued in non-small cell lungcancer, particularly in patients with nonsquamous cell histology. Otherindications being studied include locally advanced non-small cell lung cancerand advanced, metastatic head and neck cancer.
Zyprexa continues to provide a stable revenue base, despite genericcompetition in Germany and Canada and the entry of generic versions ofcompetitor products in several markets including the U.S. In the U.S., retailmarket volume trends remain stable while institutional market volume isgrowing for the first time in five years. Future Zyprexa sales should benefitfrom a long-acting formulation, olanzapine LAI, which was recently approved inEurope and is under review by the FDA.
The company's animal health division, Elanco, has produced solid growth in2008 and is expected to deliver double-digit earnings growth during the earlypart of the next decade, when several of the company's pharmaceutical productslose patent protection. Elanco sales have increased 15 percent through thethird quarter, driven by volume expansion in emerging markets and theacquisition of Ivy Animal Health in 2007, as well as the strong U.S. launch ofComfortis(TM), a companion animal flea medicine. Companion animal is both thelargest and fastest growing animal health segment. The company expects strongfuture growth in the companion animal segment and plans to launch several newproducts over the next three years in the U.S. and internationally. Inaddition, after the acquisition of the Posilac(R) brand, Elanco is now rankedat the top of the dairy segment and is also at the top of the medicated feedadditive segment.
2008 Financial Guidance
The company has reconfirmed its full-year 2008 financial guidance on a proforma non-GAAP basis and has lowered its guidance on a reported basis. On areported basis, the company now expects to record a loss of $1.56 to $2.06 pershare. The change from earlier guidance of earnings per share of $2.44 to$2.49 results from an estimated $4.05 to $4.50 per share charge related to theImClone acquisition which closed in November, 2008. Excluding significantitems, the company has reiterated its pro forma non-GAAP earnings per shareguidance of $3.97 to $4.02 per share. All other aspects of the company's 2008guidance remain unchanged.
2009 Financial Guidance
In 2009, the company expects earnings per share of $4.00 to $4.25 on botha reported and non-GAAP basis. Excluding the estimated dilution impact of$0.30 to $0.35 per share related to the ImClone acquisition, earnings pershare would be expected to be in the range of $4.35 to $4.55, reflectinggrowth of 8 percent to 15 percent compared to 2008 non-GAAP earnings pershare.
The company expects robust volume growth in sales again in 2009, driven byCymbalta, Alimta, Cialis, Humalog and the anticipated launch of prasugrel, aswell as by the Elanco animal health division. However, due to the negativeimpact of weaker foreign currencies and the impact of generic competition incertain markets for Gemzar(R), reported sales are expected to grow in thelow-single digits.
The company expects gross margin as a percent of sales to increasesubstantially, driven by the strengthening dollar. This impact could beparticularly pronounced in the first and second quarters of 2009.
Marketing, selling, and administrative expenses are projected to show flatto low-single digit growth while research and development expenses areprojected to grow in the low-single digits. Operating expenses, as defined asthe sum of marketing, selling and administrative expenses and research anddevelopment expenses, are expected to grow more slowly than sales, registeringflat to low-single digit growth.
Other income is expected to contribute less than $75 million, and the taxrate is expected to be approximately 22 percent. Capital expenditures areexpected to remain level at approximately $1.1 billion and the company expectscontinued strong operating cash flow.
In addition, the company reaffirmed its commitment to generatedouble-digit compound annual earnings per share growth between 2007 and 2011.
Webcast of Investment Community Meeting
A live webcast of the Lilly Investment Community meeting, along withpresentation slides, is available through a link on Lilly's web site atwww.lilly.com. The meeting will start today at 8:30 a.m. Eastern Time and lastuntil approximately 12:30 p.m. The webcast will be available for replaythrough January 9, 2009.
Lilly, a leading innovation-driven corporation, is developing a growingportfolio of first-in-class and best-in-class pharmaceutical products byapplying the latest research from its own worldwide laboratories and fromcollaborations with eminent scientific organizations. Headquartered inIndianapolis, Ind., Lilly provides answers - through medicines and information- for some of the world's most urgent medical needs. More information aboutLilly is available at www.lilly.com. C-LLY
This press release contains forward-looking statements that are based onmanagement's current expectations, but actual results may differ materiallydue to various factors. There are significant risks and uncertainties inpharmaceutical research and development. There can be no guarantees withrespect to pipeline products that the products will receive the necessaryclinical and manufacturing regulatory approvals or that they will prove to becommercially successful. The company's results may also be affected by suchfactors as competitive developments affecting current products; rate of salesgrowth of recently launched products; the timing of anticipated regulatoryapprovals and launches of new products; other regulatory developments andgovernment investigations; patent disputes and other litigation involvingcurrent and future products; the impact of governmental actions regardingpricing, importation, and reimbursement for pharmaceuticals; changes in taxlaw; asset impairments and restructuring charges and the impact of exchangerates. For additional information about the factors that affect the company'sbusiness, please see the company's latest Form 10-K, filed March 2008, andForm 10-Q filed November 2008. The company undertakes no duty to updateforward-looking statements.NEW YORK, Dec. 11 /PRNewswire-FirstCall/ -- -- Innovation and Patient-Centered Approach Expected to Drive Future Success -- Lilly Climbs into Top 10 Pharmaceutical Companies in Worldwide Sales and Is Fastest Growing in U.S. -- FIPNet Strategy Expands Global Reach and Improves R&D Productivity -- Company Aims to Reduce Cost of Bringing New Medicine to Market from $1.2 Billion to $800 Million by 2010. -- R&D Pipeline Boasts Unprecedented 59 Molecules in Clinical Development -- Investment in Biotechnology Capabilities Results in Expanded Large Molecule Portfolio -- ImClone Acquisition Creates Leading Oncology Franchise -- 2009 EPS Guidance Set at $4.00 to $4.25, Including $.30 to $.35 of ImClone Dilution -- Excluding ImClone Dilution, 2009 EPS Expected to be $4.35 to $4.55
SOURCE Eli Lilly and Company
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