ELI LILLY Q1 FY25 earnings call LLY

Eli Lilly announced positive Phase III data from the ACHIEVE-1 trial for its oral GLP-1, orforglipron, in type 2 diabetes. The study demonstrated A1c reductions of 1.3% to 1.6% and weight loss of approximately 16 pounds (7.9%) at the highest dose, aligning with expectations for injectable GLP-1 monotherapy. The safety profile was consistent with the GLP-1 class, with low discontinuation rates due to adverse events (4%-8%). The company expects Phase III data from seven global clinical trials for orforglipron over the next 12 months across type 2 diabetes and obesity, with regulatory submissions for obesity planned by Q4 2025 and type 2 diabetes in H1 2026. Orforglipron is seen as a scientific breakthrough with the potential to reach hundreds of millions globally, offering convenience and scalability.

Q1 FY25 revenue growth of 45% was primarily driven by the strong performance of key products, which collectively generated $7.5 billion in revenue, an increase of over $4 billion year-over-year. Mounjaro sales more than doubled to $3.8 billion, leading new prescriptions in the U.S. diabetes incretin analog market. Zepbound sales surged to $2.3 billion, establishing it as the U.S. branded anti-obesity market leader with 60% of total prescriptions and 74% of new prescriptions. The launch of higher-dose Zepbound vials contributed significantly, accounting for 10% of total and 25% of new prescriptions in Q1, particularly in the self-pay channel.

Lilly highlighted its substantial manufacturing investments in the U.S., announcing plans to more than double its footprint with four new facilities, three of which will be API facilities. Total U.S. manufacturing investments since 2020 now exceed $50 billion. The company expressed support for increasing domestic investment but opposed tariffs as a mechanism, advocating for enhanced tax incentives instead. While current announced tariffs do not materially impact Lilly's 2025 financial outlook, the company warned that expanded or retaliatory tariffs could have negative effects on the industry. Lilly aims to supply the U.S. market entirely from U.S. facilities upon completion of its manufacturing agenda.

The company addressed investor concerns regarding PBM dynamics, specifically the CVS Caremark announcement favoring Wegovy over Zepbound on its formulary. Management noted that such announcements are not surprising given market competition but reiterated its focus on expanding patient choice and access rather than restricting it. Lilly emphasized its strategy of offering a meaningful discount on Zepbound's list price to reduce gross-to-net spreads and promote more transparent pricing. Despite the CVS decision, Lilly maintains strong momentum for Zepbound, with continued efforts to drive employer opt-in and expand Medicaid coverage, which has grown from 11 to 14 states.

Beyond the GLP-1 franchise, Lilly made several key pipeline advancements. The company initiated a Phase III program for olomorasib in resected adjuvant non-small cell lung cancer, representing its third potential indication. In cardiometabolic health, a new Phase III trial for the triple agonist retatrutide was announced for obesity and chronic low back pain. Furthermore, Lilly plans to initiate a Phase III program for muvalaplin, an oral Lp(a) lowering agent, later this year in atherosclerotic cardiovascular disease, following promising Phase II data showing up to 85% Lp(a) reduction. Five new medicines also advanced into Phase I clinical trials, underscoring a broad and active early-phase portfolio.

Lilly reported a strong financial quarter with revenue growth of 45% and a non-GAAP performance margin of 42.6%, an increase of over 11 percentage points. Non-GAAP EPS was $3.34, inclusive of $1.72 negative impact from acquired IPR&D charges related to the Scorpion Therapeutics acquisition. The effective tax rate was 20.2%, negatively impacted by these non-deductible IPR&D charges. The company returned $1.3 billion to shareholders through dividends and executed $1.2 billion in share repurchases during the quarter, demonstrating continued commitment to capital return alongside significant investments in growth.