Source: Seeking Alpha
Eli Lilly and Co (NYSE:LLY)
Q2 2014 Results Earnings Conference Call
July 24, 2014, 09:00 am ET
John Lechleiter – Chairman of the Board, President, Chief Executive Officer
Phil Johnson – Vice President, Investor Relations
Derica Rice – Chief Financial Officer, Executive Vice President – Global Services
Enrique Conterno – Senior Vice President and President – Lilly Diabetes
Dave Ricks – Senior Vice President and President, Lilly Bio-Medicines
Jan Lundberg – Executive Vice President – Science and Technology, President – Lilly Research Laboratories
Sue Mahony – Senior Vice President and President – Lilly Oncology
Ilissa Rassner, Director, Investor Relations
Tim Anderson – Sanford Bernstein
Mark Schoenebaum – ISI Group
Jamie Rubin – Goldman Sachs
John Boris – SunTrust
Chris Schott – JPMorgan
Seamus Fernandez – Leerink
Steve Scala – Cowen
Vamil Divan – Credit Suisse
Colin Bristow – Bank of America Merrill Lynch
Jeff Holford – Jefferies
Alex Arfaei – BMO Capital Markets
Marc Goodman – UBS
Damien Conover – MorningStar
Gregg Gilbert – Deutsche Bank
Mark Purcell – Barclays
Ladies and gentlemen, thank you for standing by. Welcome to the Q 2014 earnings call. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded.
I would now like to turn the conference over to our host, Chairman, President and CEO, Dr. John Lechleiter. Please go ahead.
John Lechleiter – Chairman of the Board, President, Chief Executive Officer
Thank you. Good morning, everyone. Thanks for joining us today to discuss Eli Lilly and Company’s second quarter 2014 earnings. As the operators said, I am John Lechleiter, Lilly’s Chairman, President and CEO.
Similar to our last call, this morning we are bringing more of our senior leaders into the room here to participate and to answer your questions and we hope that this enhances the quality of the information we provide you during these sessions. Joining me on today’s call are Derica Rice, our Chief Financial Officer, Dr. Jan Lundberg, our President of Lilly Research Laboratories, Sue Mahony, President of Lilly Oncology, Enrique Conterno, President of Lilly diabetes, Dave Ricks, President of Lilly Bio-Medicines, Chito Zulueta, President of Emerging Markets, Jeff Simmons, President of Elanco Animal Health and Ilissa Rassner, Brad Robling and Phil Johnson of Lilly’s 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 a number of factors, including those listed on slide three and those outlined in our latest forms 10-K and 10-Q filed with the Securities and Exchange Commission. The information we provide about our products and our pipeline is for the benefit of the investment community. It’s not intended to be promotional and is not sufficient for prescribing decisions.
Before we get into our Q2 results in detail, I would like to offer this context. Even as we feel the full brunt of our patent expiries, we continue to execute our strategy. Our performance is in line with our expectations and we are on track to meet the goals we have shared with you for the year. And the steady advance of our pipeline only strengthens our confidence in our innovation-based strategy.
Cyramza launched to a good reception in the U.S. Empagliflozin has been granted approval in the EU. Our insulin glargine product has been recommended for approval in Europe. And we presented positive data on a number of late stage molecules at the recent ASCO and ADA meetings. We anticipate a number of additional regulatory actions this year as well as additional regulatory submissions and important Phase 3 data readouts. And we continue to manage our expenses rigorously even as we invest to ensure successful launches and continue to advance our pipeline.
With that, let’s turn to the key events since last quarter’s call. Since our last call, we launched Cyramza in the U.S. as a single agent treatment for patients with advanced or metastatic gastric cancer or gastroesophageal junction adenocarcinoma with disease progression on or after prior chemotherapy. We are pleased with the uptake we are seeing with the reports we are receiving from the sales organization and with feedback from customers on their experience to-date.
We have also a number of positive developments on the regulatory front spanning diabetes and oncology. The European Commission approved empagliflozin or Jardiance indicated in the treatment of Type II diabetes to improve glycemic control in adults. As I mentioned on last quarter’s call, Lilly and Boehringer Ingelheim anticipate launch of the product in European countries to begin this quarter.
In the U.S., Boehringer Ingelheim resubmitted the empagliflozin NDA to the FDA. This was deemed a Class I resubmission, which carries a two month review period. Consequently, we expect FDA action this quarter. In Europe, Boehringer Ingelheim submitted the fixed dose combination of empagliflozin and metformin. Also in Europe, the CHMP issued a positive opinion recommending approval of our new insulin glargine product for the treatment of Type I and Type II diabetes. This product, which is part of the Lilly-Boehringer Ingelheim Diabetes alliance is the first biosimilar insulin recommended for approval in the European Union.
Moving now to oncology. In the U.S., based on data from the RAINBOW study, we submitted a supplemental BLA for Cyramza as combination therapy in patients with second line gastric cancer. This will be a standard review and therefore we expect FDA action in the first half of 2015. In Europe, where our initial submission was based on the REGARD monotherapy study, we have now incorporated the RAINBOW data in our submission dossier which is currently under review. And finally, we announced that the FDA granted fast track status for our BLA for necitumumab as first-line treatment of metastatic squamous non-small cell lung cancer. We continue to expect FDA submission before the end of this year.
In clinical news, we had a number of detailed data presentations at the annual meetings of the American Society of Clinical Oncology and the American Diabetes Association. At the ASCO meeting, we presented detailed data from the Phase 3 REVEL trial studying ramucirumab in second line non-small cell lung cancer. In this study, Cyramza demonstrated statistically significant improvements across multiple efficacy endpoints including overall survival, progression free survival and overall response rate. The improvement of overall survival and progression free survival on the Cyramza plus docetaxel arm was consistent across the majority of subgroups including nonsquamous and squamous histologies. We remain on track to meet our commitment for regulatory submission in the second half of 2014.
We also presented detailed data from the Phase 3 SQUIRE trial studying necitumumab in first-line squamous non-small cell lung cancer. In the Phase 3 SQUIRE trial, patients with stage IV metastatic squamous non-small cell lung cancer showed a statistically significant improvement in overall survival, progression free survival and disease control rate. As I mentioned earlier, we intend to submit this BLA by year-end.
Finally, following our initial disclosure at AACR in April, we presented additional data from the Phase 1 trial of our CDK 4/6 inhibitor, Abemaciclib. These data were from two different cohort expansions. One as a single agent in patients with advanced non-small cell lung cancer, and the other in combination with fulvestrant in patients with advanced breast cancer. Based on these data as well as the data presented at AACR, we will begin Phase 3 trials later this year in both advanced breast cancer and advanced lung cancer. We are pleased with the single agent activity we have seen with Abemaciclib as well as with the product safety profile and believe we could have a best-in-class molecule.