Transcripts
Eli Lilly and Company (LLY) Presents at Bank of America Securities 2023 Healthcare Conference
Eli Lilly and Company (NYSE:LLY) Bank of America Securities 2023 Healthcare Conference May 10, 2023 1:00 PM ET
Company Participants
Patrik Jonsson – Executive Vice President, President-Lilly Immunology, President-Lilly USA & Chief Customer Officer
Conference Call Participants
Geoff Meacham – BofA
Geoff Meacham
Okay. Welcome to the second day of the BofA Healthcare Conference. My name is Geoff Meacham and I’m the Senior Biopharma Analyst here at BofA.
We’re thrilled today to have Eli Lilly. And speaking on behalf of Lilly is Patrik Jonsson, up on stage with me. He’s Lilly’s EVP and President, Immunology Lilly USA, Chief Customer Officer, lots of titles.
Patrik Jonsson
Yes.
Question-and-Answer Session
Q – Geoff Meacham
Patrik give us from an I&I perspective — most investors have talked about Mounjaro and Alzheimer’s. This is a franchise that has some differentiating assets. It has some — a great pipeline. So maybe give us a higher level of that franchise and how valuable it is to Lilly today?
Patrik Jonsson
Absolutely. Thank you very much. Yes, very happy to be here. So I know there is a lot of attention now on both Alzheimer’s disease with the Trailblazer-2 readout last week and the most recent SURMOUNT-2 for tirzepatide in obesity, but it’s a lot of exciting stuff going on in the space of immunology as well. And this is probably the disease area where we have only been for less than a decade, but we are very pleased with where we are.
We see our current medicines in the marketplace Olumiant and Taltz as really the cornerstone of our immunology franchise. And despite all the competitive activities we also see a continued strong volume growth of Taltz in psoriasis and rheumatoid — psoriatic arthritis. Extremely pleased with being the first one to bring Olumiant as first-in-disease when it comes to alopecia areata, some really awesome patient stories there to share. But we are excited about what we have in the future.
This year we are looking forward to most likely launching first mirikizumab for ulcerative colitis. We’re dealing with a complete response letter there, but we’re working very closely with the FDA. And secondly, launching lebrikizumab, an IL-13 for atopic dermatitis. So most likely by the end of this year we will be the only company with four mechanism of actions so an IL-17, 23 and a 13 and a JAK inhibitor. And by the end of 2025 we will be approved for at least 11 indications.
So that is really the base of our immunology franchise. But we are setting the bar higher. And we are aiming to be a top player in immunology. After just six, seven years in the market we already rank number five. But when we look into the early stage development pipeline we are really raising the bar and saying that we shouldn’t aim for anything less than resolution.
So I think particularly the checkpoint agonist that we have in pipeline today we’re a leader in checkpoint agonists with three in clinical development. Probably the most advanced one is the PD-1 where we presented data in rheumatoid arthritis the first proof of concept in rheumatoid arthritis last year.
And we have accelerated our efforts there with a IIb. With the CXCR1/2 for hidradenitis suppurativa, we presented first clinical and safety data at AAD a few months ago where we clearly demonstrated strong both efficacy and safety profile and we will announce some further moves there. So it’s an exciting time at Lilly, but also a lot of exciting stuff going on in Lilly Immunology.
Geoff Meacham
Right. Perfect. Well so at a higher level when you think about the commercial backdrop so you’ll have Humira biosimilar this year; next year Stelara. Give us some perspective on the kind of the pricing/reimbursement environment in that sort of context as it relates to Lilly’s I&I portfolio?
Patrik Jonsson
Yes. Thanks, Geoff. I think we’re all monitoring the entrance of the biosimilars to Humira. And I think it’s fair to say so far the impact has been quite modest in the marketplace. But we also realize that there might be more of an impact seen in 2024 with the 2024 contracting process going on right now. At the macro level, we don’t foresee that the biosimilars will have an impact on the innovative molecules in the immunology setting, but more impact in the dynamics among the DNA.
Geoff Meacham
Right. That makes sense. Okay, well you mentioned so mirikizumab, lebrikizumab. Let’s talk first about lebrikizumab. So it’s a great data, you know, lead indication and AD. Talk about kind of the value of that indication for you guys versus line extension given the mechanism down the road?
Patrik Jonsson
Yes. I will. First, atopic dermatitis, it’s probably were psoriasis use to be five, seven years ago. If we look at the biologic penetration it’s still relatively low. We also know that atopic dermatitis it’s a heterogeneous disease so there will be a need for more treatment options. So I think there a huge unmet need still there. But b, if we look at the totality of the data of lebrikizumab and we don’t have any head-to-head trials, but in for trial comparisons, I think, we can say that we are comparing very favorable to us in the marketplace and what’s in the pipeline within Lilly and with others as well.
So we saw that 80% of patients responded at induction actually maintained skin clearance at week 52 and statistical and clinically meaningful improvement on each on quality obelisk and with over same result in both Q2W and Q4W. So based up on the data, we actually had a significant interest from not only provider, but also from payers and of course we are extremely in last days right now to make sure that we are really aiming for full access for lebrikizumab once we get the approval for atopic dermatitis.
We believe we are extremely well-positioned to compete. B, it also makes perfect sense with our presence in dermatology. We have a strong infrastructure today in dermatology with tolls, and we will continue to build on that.
So we will start with atopic dermatitis. We have also announced a couple of Phase IIIb studies with the [indiscernible] population and the first one to really do a study, a significant study in skin of color, where we are looking into specific outcomes for people with skin of color such as hyper and hyper pigmentation. So lebri, we see a tremendous opportunity. We will start with atopic dermatitis. But since we have seen the results in atopic dermatitis, we are not like to stop there. We will consider other indications as well, and we are excited to have what we believe is an asset here that really targets the most relevant cytokine when it comes to treating atopic dermatitis being IL-13 and doing so with a high binding affinity, high potency and a slow off rate. Starts with atopic dermatitis, but more to come, and that will be announced at another conference, I guess.
Geoff Meacham
Perfect. Thanks. So you mentioned [indiscernible] and Olumiant. So these are your commercial products, and you’ve built the infrastructure and your perspective is interesting in that your Lilly is relatively new to I&I. how can you leverage that from a sort of from a profitability perspective when you think about lebrikizumab mirikizumab launching? And I’m just trying to get a sense for taking advantage of the wins that you guys have had in immunology and really trying to maximize the value.
Patrik Jonsson
I think, we are trying to take any opportunities here to really scale our presence in immunology. The acquisition of Dermira was an excellent example, which was finalized back in Q1 2020 now in a position to launch lebri, building on the infrastructure we have in dermatology. I think that makes perfect sense. We referred earlier to the upcoming launch in the IBD space. We have launched with mirikizumab, but we also have an early-stage pipeline with other indications in the IBD space to come. So I think that’s how we see ourselves scaling, and we have similar plans across dermatology, rheumatology, in gastroenterology and also considering adjacent areas to those.
Geoff Meacham
Right. Yes. So let’s talk about Taltz for a second. So, when you think about the next couple of years, what sort of commercially, what needs to be done to inflect? Are there still conversations to be had with respect to formulary status wins that you could drive growth there? And then from an investment perspective, how do you think about this franchise in the next couple of years?
Patrik Jonsson
Yes. In terms of Taltz, psoriasis is getting quite crowded. And I think we have seen new orders being launched. We expect another IL-17, most likely to be approved later this year. So it will continue to be extremely competitive. But even over the last years and we saw in Q1 we continue to outperform the market in the US. We saw volume growth globally of 27%. So, I think we can generally say that we expect to see a continued strong volume growth in psoriasis.
In terms of access, I think we learned the hard way that you need to aim for full access early on. And with Taltz today, we are the leader among the IL-17s when it comes to access for dermatology and we are slightly behind Cosentyx in rheumatology. We are working hard to make sure that we can improve that access. But of course, it needs to be at a realistic price as well. But with the two assets we currently have, we think that the Immunology portfolio will help us getting improved access for lebri and miri as well.
Geoff Meacham
Got you. And then Olumiant, you had a bit of a benefit right from COVID. But talk a little bit about kind of the attitudes towards the JAK class. I think, with next-gen assets like Olumiant, like RINVOQ, I think you have maybe less hesitation on behalf of physicians on the safety and tolerability. It does seem like you — we’ve moved the ball a little bit on safety and tolerability.
Patrik Jonsson
Yes. Olumiant, for us has probably been two different place, one outside the US. And outside the US, we have done extremely well with Olumiant. If we look at the uptake in rheumatoid arthritis, atopic dermatitis, we have done well. And Olumiant is really serving as one of our growth engines for our o-US business in the US. I think it’s fair to say that we didn’t have a huge success with Olumiant in rheumatoid arthritis, very much driven by only getting the low dose approved.
I think we have made a huge difference in alopecia areata. The uptake there has been actually far beyond what we could expect and it’s extremely well received among both providers and patients. And I think, it makes a difference being first in disease because there is a huge unmet medical need. So, I think moving forward for us, the US play with Olumiant and the JAK is pretty much going to be in alopecia areata.
For the competition or what’s happening, I still believe that the placement of the JAKs is impacting the uptake. And we made the decision not to launch in atopic dermatitis, because we didn’t agree with the FDA on the placement of Olumiant in treating atopic dermatitis. We don’t believe, it made the biggest difference for patients that have failed biologics, but it should be earlier in the treatment paradigm.
If we look upon those that launched in atopic dermatitis and with our launch in alopecia areata, if we line up those uptakes, I think it’s fair to say that we have probably done more in alopecia areata than the JAK inhibitors have done in atopic dermatitis. I think there is probably an interest among health care providers to look at combinations particularly in the IBD space. And I think that’s where we have seen a decent uptake of RINVOQ. But I think quite a few of the gastroenterologists, I’m just coming from the DDW in Chicago. Quite a few of those are referring to an increased interest in combining JAKs in induction with other assets as for example the IL-23s.
Geoff Meacham
Right. That makes sense. So let’s go to mirikizumab. Talk a little bit about the CRL. Was it a surprise to you guys? What are the steps forward to resolution?
Patrik Jonsson
Yes. Well, CRL is never anything that you are expecting yes? So I think it’s fair to say that’s something that we are working through right now. And then we have been quite clear that there is no concern with the medical or the safety profile of mirikizumab and not with the label either. The FDA raised objections in terms of the proposed manufacturing process for mirikizumab. And we believe that we are on top of that. We’re working very closely with the FDA to resolve this as quickly as possible and we are still expecting to be the first IL-23p19 for treating ulcerative colitis in the U.S. as well.
In the meantime, we are focusing on the launch in Japan. We got the PMDA approval late March and the positive opinion from the CHMP just a few days after and just working very diligently with the FDA to resolve this as quickly as we possibly can. But we remain very confident.
Geoff Meacham
Right. So should we look to manufacturing — the basis, I guess, for the CRL should — is there a read-through to other franchises with regard to manufacturing, or was it a mirikizumab-specific issue?
Patrik Jonsson
Well, that’s a good question, Geoff. No read-through to other assets. And we are very confident with the quality of the medicines we are producing and having in the marketplace today. So this is a mirikizumab-specific objection only and only related to the proposed manufacturing process of miri and nothing else. And we don’t foresee that it will have an impact on the upcoming launches in Japan or in Europe either.
Geoff Meacham
Got you. And when you prepare for those launches can — put it in the context of maybe the U.S. opportunity. I mean how — maybe for mirikizumab, but maybe I’d say the entire I&I portfolio. Is there a OUS component here that investors are sort of missing in terms of a peak opportunity?
Patrik Jonsson
Well, you know what, I think, when we look at specifically mirikizumab, yes, the U.S. opportunity is by far the biggest. So I think that’s the case for miri and that’s likely going to be the case for lebrikizumab as well. But the launch in Japan is an important one. And I think we have high expectations in Japan. We have high expectations in Europe as well. But of course the U.S. market is going to be key for success.
Geoff Meacham
Right. Okay. And just with respect to the competitive landscape here when you think about the Skyrizi and others right? So their competitive landscape in the IBD market lots of assets from orals to injectables coming. How do you see this fitting in the treatment paradigm?
Patrik Jonsson
Yes. You know what, I think, by default, I think, we will be used and so will other 23s and many other mechanisms of actions as a second-line treatment to start with and after TNFs. And I think that’s where we see the big opportunity at least in the beginning as well. But the totality of the data also for miri looks very good and we saw that more than 50% of patients remain in clinical remission at week 52. And almost 100% of those patients were steroid-free at week 52 as well.
So I think the data are compelling in that regards. And we are the first ones that studied the bowel urgency using a numeric rating scale from one to 10 not just a binary scale and we could see a clinically significant difference already at week two in terms of bowel urgency. And bowel urgency is probably one of the most debilitating symptoms for patients suffering from ulcerative colitis impacting the quality of life tremendously.
So I think starting as a second line, I think, that’s probably by default where we will end up in the beginning, but we are aiming for a first-line position over time, and again, driven by the safety of the IL-23s. That was the consistent feedback from the thought leader community at DDW. They want the IL-23s in ulcerative colitis. And of course, we have the Crohn’s readout. That’s a very important readout for us coming up in Q4, as well this year, but we’re looking forward to that.
Geoff Meacham
And in Crohn’s, what are the nuances that you would see in terms of the opportunity for a mirikizumab? Just compare and contrast maybe the UC versus Crohn’s as you see it?
Patrik Jonsson
I think, both UC and Crohn’s, we see patients are cycling through a lot of treatments. We also see a low biologic penetration or penetration of novel orals across UC and Crohn’s disease. It’s 15% in UC approximately and 30% in Crohn’s Disease. But it’s absolutely a need for new drugs. And several people said just the balance that we struck with the miri data the safety of an IL-23 and the remission data at week 52, being steroid-free that’s an appealing value proposition for a longer-term treatment of patients, with both UC and Crohn’s Disease.
Geoff Meacham
And Patrik, you’ve mentioned a few times on the mechanisms. Are there newer mechanisms in I&I that you think are untapped, or I’m just trying to think of the sort of internal versus external kind of balance.
Patrik Jonsson
Yes, definitely. And we’re having good progress in immunology, today. And of course, we are looking into opportunities to get our free cash flow to work. And we are looking into — there is not an opportunity out there today, that we are not thoroughly assessing from a BD perspective. So we — whatever is out there, we will thoroughly assess, and it’s going to be driven by a couple of guiding principles.
First and foremost, is there an unmet need from a patient perspective. The second one would be, okay, do we believe that the scientific conviction of this mechanism of action, is strong enough? And thirdly, it’s a matter of the business case evaluation. So those are the three guiding principles, that we will apply for any asset out there when we are making our decision to compete or not compete.
I think the beautiful part is that, we are not at the place of desperation where we need to go for an asset regardless of the price. We have 10 molecules in internal development now, in Phase I Phase II, with proof of concept, across the three disease areas of dermatology, rheumatology and gastroenterology. So we’re setting the bar high. But, if they meet those three criterias: Patients need scientific conviction, it makes business sense, we will compete externally as well.
Geoff Meacham
Got you. And then talk a little bit about the platform, right? So some products can be a pipeline in a product. But is there a kind of newer access to technologies, that you see out there that Lilly doesn’t have expertise in? Not just in I&I, but maybe more broadly.
Patrik Jonsson
Yes. That’s one of the drivers. I think we have been relatively consistent in our approach to BD, over the last years. We are first looking into those disease areas where we are committed: Immunology, neuroscience, oncology and diabetes, obesity, but also new platforms. And I think the acquisition that we made back in Q4, Akouos for hearing loss, that’s an excellent example. It’s outside of our core business, but we get access to a new platform that we eventually can amplify, in other disease areas as well.
And one example in immunology would be, the checkpoint agonists that I referred to earlier. I think that’s a really interesting area and — where we had the proof of concept last year, in rheumatoid arthritis. And we see opportunities there across many different indications. And with three different checkpoint agonists, we are looking into both SLE rheumatoid arthritis and atopic dermatitis, as proof of concepts.
Geoff Meacham
Got you. And thinking about the next couple of years, with respect to the I&I pipeline what — maybe talk us through like, what value-creating events beyond the ones you’re talking about that we could see not just in the unapproved drugs, but like in line extensions and the like.
Patrik Jonsson
Yes, I’m very happy to. So, I think the first one I referred – well, first the approvals of miri and lebari UC that’s going to be key. But I think the first major readout is going to be in Q4 and that’s going to be miri in Crohn’s disease. So, that’s going to be very important. If we look then in 2024 as well, we will have a readout on the dupi-experienced patients on lebrikizumab.
In 2024, I think a couple of really interesting readouts from the pipeline. We will have the Phase IIb readout of our PD-1 in rheumatoid arthritis, that’s coming next year. And we have a readout as well on the BTLA checkpoint agonist, that’s coming in 2024. And we will have a readout of the skin of color in 2024. So those are really important events over the coming 18 months I would say, in the space of immunology.
Geoff Meacham
Got you. And thinking about the I&I portfolio overall, when you look at some of the companies in this space, they’ve evolved kind of the market from the core indications like the top say seven or so, you’d get with TNFs to some more niche-ier indications. I wouldn’t call them orphan, but they’re more rare. How — what’s Lilly’s view on that? Do you — the goal is to maximize value and number of patients. But how do you guys look at more rarer, indications across the I&I portfolio as opportunities?
Patrik Jonsson
I would say, that’s just the way, we are assessing any opportunity. When we have a mechanism of action, we have a proof of concept. I think the first thing we do, together with Ajay and his team, we’re looking at okay where are the opportunities? Where can we make a difference for patients, with this asset? And again, through the same lens of pursuing external development, we are looking into the unmet medical need; the scientific conviction; and of course does it make business sense? But that includes the smaller indications. And several of those where there currently are very limited, if any treatment options. So, very often that can make a very big difference from an access perspective, as well.
Geoff Meacham
Yes. And just in the context — and I’ll be remiss, if I didn’t ask on Mounjaro. Does your success today in diabetes and going forward in obesity and Alzheimer’s, does that sort of change how you’re thinking about internal and external investing? Just the having to — the impact factor of other franchises, on the top line?
Patrik Jonsson
Yeah. I’m so excited with the cards we have in our hands today at Lilly across the different disease areas. And we are currently at the position of strength. So I think if anything it just enabled us to really look into opportunities across all of those four disease areas where we have decided to play and to play to win. So I think if anything it gives us just more opportunities. But we are not changing the bar. We are not at the place of desperation. We will just ask ourselves do we make a difference for patients. Do we believe in the science? And does it make business sense?
Geoff Meacham
Right. And as Chief Customer Officer let me just ask you on the Mounjaro launch. Obviously, historic demand. This middle part of the year, we’re going to get through the anniversary of the launch and a lot of the reimbursement co-pay kind of things. How should we think about the back half of the year for that business for Mounjaro in diabetes from a pricing reimbursement access perspective?
Patrik Jonsson
That’s a great one. You know what? We are so excited. And I think it’s important to have in mind even when we made the changes to the co-pay card back in October this is an uptake that is unheard of in the US marketplace. And it continues along those lines after the changes to the co-pay card as well.
We have seen an increase of 100% in terms of paid TRx since October until the end of Q1. We saw an increase in Q1 versus Q4 55% of our TRx were paid. And we have 60% commercial and Part D coverage today. And you should expect that to continue to improve along those lines. Mid this year, we will terminate the grandfathering of the first ones on the co-pay card. Most likely you will see a decrease in TRx, but you will continue to see an increase in paid TRx. And towards the end of 2023, we have also announced that our RTP site in North Carolina will be opening up and we will double our supply of incretins by the end of 2023.
So the outlook for Mounjaro continues to look very positive. And with the SURMOUNT-2 readout, I think we also announced that we are finalizing the rolling submission to the FDA and we could expect an approval as early as late this year for tirzepatide in obesity. So truly exciting.
Geoff Meacham
From a branding perspective when you look at Mounjaro and for diabetes and tirzepatide for obesity talk us through how you view at a high level your incretin business. How much investments would you have to make to build awareness to drive access from an obesity context? I’m just trying to get a sense for the lessons learned initially with access and all the commercial considerations for Mounjaro in diabetes.
Patrik Jonsson
Yeah. I think we have learned quite a lot over the last year. I think first and foremost the obesity market is different than type 2 diabetes market. And we will continue to lean in fully on both of those. But obesity specifically I think the near-term opportunity is more looking into patient activation. If we look at the coverage today with a competitive product, we know that they have a good commercial coverage but only 50% of employers have actually bought into that.
So I think through patient activation, we can get much more employer engagement. And I think that’s an area where we’ll spend much more time and investments over the coming months.
And secondly, we know that the willingness to pay in the obesity space is higher than in the type 2 diabetes space as well. That opens up for some new models of access as well for direct to patients.
Geoff Meacham
Got you. And there’s some — obviously, some nuances between the US and European launch. I mean, the cadence of it is different. But just at a high level like considering your background in the I&I portfolio are there lessons to be learned from the US rollout for Mounjaro in diabetes and then obesity that you can apply to accelerate the launch around the world particularly in Europe?
Patrik Jonsson
Absolutely. And I think we often get the question, how are you going to manage to launch five new medicines within 12 months? And that’s a great challenge to have. And in doing that with five assets that we actually — maybe we are full of ourselves in that regard, but we believe they are bringing huge value to patients.
The downside here is that they are resource intense and they are investment intense. And sometimes you just need to be concerned about the level of focus. But the upsides are just coming back to what you said, the tremendous learnings we have across the different disease areas. How we have launched Mounjaro? How can we apply those learnings when we launch in obesity or when we launch in atopic dermatitis?
So I think a lot of a plays when we are launching that actually can be replicated across different disease areas. And we are building capabilities, we are building expertise internally that we never had before. And that actually would take years to get unless you had those launch opportunities so tied to each other. We are forced to work very closely together today and that’s a great position to be in.
Geoff Meacham
Sounds great. Well, thank you Patrik for the time.
Patrik Jonsson
Thank you very much, Geoff.