And ladies and gentlemen, thank you for standing by. Welcome to the Lilly Q2 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, your conference is being recorded. I would now like to turn the conference over to your host, Kevin Hern, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone and thank you for joining us for Eli Lilly and Company's Q2 2022 earnings call. Apologies for the hour delay. We had some technical issues on AT&T side. So thanks for your patience. I'm Kevin Hern, Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO; and nadashKanazi, Chief Financial Officer; Dr. Dan Scabronsky, Chief Scientific and Medical Officer; Anne White, President of Lilly Neuroscience; Bilia Yuffa, President of Lilly International; Jake Van Norden, CEO of Loxo at Lilly; Mike Mason, President of Lilly Diabetes; and Patrick Jansen, President of Lilly Immunology and Lilly U.S.A. We're also joined by Mike Spring ether, Kenzie and Warren Zirki of the Investor Relations team as well as Joe Fletcher, who will be taking over leadership of the IR team this month. 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 3. We -- additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent Forms 10-Q and 8-K filed with the Securities and Exchange Commission. 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.

Thanks a lot, Kevin. In Q2, we achieved a number of impactful pipeline milestones, including approval and launch of Mounjaro in the U.S., the FDA submission and acceptance of dononumab as well as pertibrutinib and positive top line results for lebrikizumab and EU and Japan submissions for mirikizumab. This pipeline progress underscores the breadth and depth of our exciting long-term outlook. Perhaps the headline story for Lilly in the second quarter was the launch of Mounjaro in the U.S., where initial uptake has been strong. We're hearing a great deal of enthusiasm from the field and we're excited about the potential for this new medicine to provide A1c and weight loss benefits to adults living with type 2 diabetes. We remain focused on gaining broad open access for Manzaro and expect the full impact of this medicine for patients and our business to be realized over time as that access is achieved. Turning to Q2 financial results and progress on our strategic deliverables, we saw a relatively flat top line performance in constant currency. As strong volume-driven growth for key products like Verzenio, Jardiance and Trulicity was offset by lower prices as well as for Alimta patent expiry in key markets around the world and last year's sale of Cialis rights in China. Volume for this quarter grew a robust 10%. When excluding revenue from Alimta, the sale of Cialis rights in China and COVID-19 antibodies, revenue grew 6% compared to Q2 2021. In Q2, our newer medicines contributed 18% to volume growth and now account for 67% of our core business revenue which we believe, together with our robust pipeline is the most important indicator of the strength and durability of our growth outlook. Our non-GAAP gross margin was 79.8% in Q2, an increase of approximately 50 basis points compared to the prior year. Our non-GAAP operating margin was 20.5% which includes a negative impact of approximately 680 basis points attributed to acquire in-process R&D and development milestone charges. At our investment community meeting in December, we outlined 5 potential new medicines that could launch over the next 2 years which could serve as catalysts to driving top-tier growth through the decade. There have been important pipeline development since our Q1 earnings call for all 5, including the U.S. approval and launch of Manzaro in type 2 diabetes and a positive CHMP opinion in the European Union. FDA acceptance and priority review designation for donanemab in early symptomatic Alzheimer's disease. FDA acceptance and priority review designation for purtaprutinib in mantle cell lymphoma for patients previously treated with a BTK inhibitor. -- submissions for mirikizumab in ulcerative colitis in the EU and in Japan, positive top line 52-week data for lebrikizumab in moderate to severe atopic dermatitis. And we also announced U.S., EU and Japan regulatory approval for Olumiant in alopecia areata. Last month, we announced plans for a $2.1 billion investment in 2 new manufacturing sites here in Indiana to support increasing demand for existing products as well as demand for potential new medicines in our pipeline. This announcement followed Lilly's recent investments in new facilities in Massachusetts, North Carolina and Ireland and will further expand Lilly's manufacturing network for active ingredients and new therapeutic modalities such as genetic medicines. These investments underscore our confidence in the growth of our portfolio in the company. Finally, we distributed nearly $900 million in dividends to our shareholders in Q2. On Slide 5, you'll see a list of key events since our Q1 earnings call, including several important regulatory clinical and COVID-19 antibody updates. As previously announced in Q2, we entered into an agreement with the U.S. government to supply 150,000 doses of beptalizumab for approximately $275 million in an ongoing effort to provide COVID-19 treatment options for patients. Doses of beptalizumab valued at approximately $130 million were shipped in Q2 and the remainder of that order will ship in Q3. Today, we are announcing that in collaboration with the U.S. government, we intend to begin making beptilizumab available for purchase by states, hospitals and certain other providers through a sole distributor agreement. This will happen later this month which is prior to the anticipated depletion of the U.S. government's currently available supply. As we move from large ad hoc federal government purchases, the sales and distribution of COVID-19 antibodies to a broader set of purchasers, we will now integrate estimated sales into our forward guidance. As we have said previously, we don't see COVID-19 antibodies as a major long-term driver of growth for the company. Nevertheless, we will continue to do our part where we can to help fight the COVID-19 pandemic with the last monoclonal antibody treatment standing that neutralizes against the Omacron variant.

And now I'll turn the call over to Anat, for a more detailed review of our Q2 results. A - Anat Ashkenazi: Thanks, Dave. Slide 6 summarizes financial performance in the second quarter of 2022. I'll focus my comments on non-GAAP performance. We had a few notable items impacting the year-over-year financial comparisons. Foreign exchange rates had roughly 300 basis point impact on revenue this quarter as we saw Q2 revenue declined 4% or 1% on a constant currency basis. In Q2 of 2021, we sold our rights to Cialis in China resulted in $170 million of onetime revenue impact. And this quarter, we also saw the full impact of the loss of exclusivity for Alimta in Europe and Japan and have started to see the impact of multiple generic entrants in the U.S. [Operator Instructions] A - Dan Skovronsky: To send a message to another subscriber under the area code and phone number of that subscriber or press the stake to enter your own mailbox Okay. Nothing has been selected to send a message to another subscriber under the area code and phone number of that subscriber or press the stake to enter your own mailbox. I'll continue and hopefully, everyone can hear. Nothing has been selected to send a message to another subscriber under the area code and phone number of that subscriber or press the stake to enter your own mailbox. When excluding revenue from Alimta, the sales of Cialis rights in China last year to send a message to another seroantibody under the area code and phone number of that subscriber or press the start normal... A - Anat Ashkenazi: Okay. Hopefully, you heard I will repeat my last intent. So when excluding revenue from Alimta, the sales of Calistri in China in Q2 of last year and COVID antibody total revenue grew 6%, highlighting the solid momentum for our core business in the second quarter. We expect that this growth rate will accelerate in the second half of the year. Moving on to gross margin as a percent of revenue increased 50 basis points to 79.8% in Q2 of 2022. This increase in gross margin was primarily driven by product mix and the favorable effect of foreign exchange rates on international inventory sold, partially offset by lower realized prices. Increase in logistics and manufacturing costs due to inflation had a modest negative impact on gross margin in Q2. Total operating expenses increased 14% this quarter which as discussed on our Q1 earnings call, are now inclusive of acquired in-process R&D and development milestone charges following guidance from the SEC. -- acquired IP R&D and development milestone charges represented nearly 1,200 basis points of the Q2 OpEx growth. Marketing, selling and administrative expenses decreased 4%, driven mostly by the favorable impact of foreign exchange rates. R&D expenses increased 8%, driven by higher development expenses for late-stage assets, partially offset by lower development expenses for COVID-19 antibodies. This quarter, we recognized acquired IP R&D and development milestone charges of $440 million or $0.46 of EPS primarily related to a charge associated with the buyer of substantially all future obligations that are contingent upon the development, regulatory and commercial success of our mutant selective PI3K alpha inhibitor. In Q2 2021, acquired IP R&D and development milestone charges were $43 million or $0.04 of EPS. Operating income decreased 32% in Q2, primarily due to higher acquired IP R&D and development milestone charges. Operating income as a percent of revenue was 20.5% which includes the negative impact of approximately 680 basis points attributed to these charges. Other income and expense was expense of approximately $13 million this quarter compared with income of $5 million in Q2 of 2021. Our Q2 effective tax rate was 14.2%, a decrease of 10 basis points compared to the same period in 2021. The -- this decrease was driven by favorable tax impact related to the implementation of a provision of the 2017 Tax Act related to the capitalization of R&D expenses, offset by the tax impact of nondeductible development milestones. At the bottom line, earnings per share declined 32% this quarter to $1.25 per share. The most significant driver of the year-over-year decline was the impact of acquired IP R&D and development milestone charges which had $0.46 negative impact in Q2 of this year compared to $0.04 in Q2 of last year. On Slide 8, we quantify the effect of price, rate and volume and revenue growth. This quarter, U.S. revenue grew 6%. Excluding revenue from Alimta which declined significantly due to broad generic entry in May and COVID-19 antibodies, revenue grew 11% in the U.S. This volume-driven growth was led by Trulicity, Verzenio and Dorian. We experienced a net price decline of 8% for Q2, driven by lower realized prices for Humalog, ALIMTA and Forteo due to higher rebated segments, making slightly larger portion of the business, higher contracted rates and the list price reduction for insulin lives for injection this year. Lower realized prices for Taltz were also a driver due to the impact of changes to estimates for rebates and discounts, largely driven by favorable adjustment in the base period and to a lesser extent, continued pull-through of existing access. For the first half of 2022, net price decline in the U.S. was 4% and we continue to expect mid-single-digit net price decline for the full year. Moving to Europe. Revenue in Q2 grew 1% in constant currency. Excluding revenue from Alinta which lost exclusivity in June of 2021, revenue grew 12% in constant currency, driven primarily by volume growth for Trulicity, Jardiance, False and Verzenio. For Japan, Q2 revenue decreased 22% in constant currency as our business there continues to be negatively affected by significant declines in off-patent products, primarily Cymbalta and Alimta which both faced generic entry beginning in June 2021. Key growth products represented 69% of total revenue in Japan and grew 11% in Q2 on a constant currency basis. We continue to expect a return to growth in Japan beginning in 2023. In China, revenue declined 32% in constant currency, driven by the impact of the NRDL formulary access, resulting in lower realized prices, partially offset by increased volume for certain newer products, including Verzenio, Tyva, Trulicity and Taltz. We also experienced a price decline for Humalog due to the impact of volume-based procurement. We expect improved access to continue to drive future volume growth more than offsetting the price decline over time. With the latest COVID-19 outbreaks in China and to subsequent protective measures intended to control the spread of the virus, we have seen lower volume than we otherwise would have expected in Q2, particularly for infused products. For Tivit, we are also seeing the impact of increased competitive pressures. Revenue in the rest of the world increased 3% in constant currency, primarily driven by increased sales of key growth products. For the full year, we continue to expect mid-single-digit net price decline in each of the U.S., EU and Japan and a double-digit price decline in China, resulting in a worldwide net price decline in the high single digits. As shown on Slide 9, our key growth products continue to drive robust worldwide volume growth. These products drove 18 percentage points of volume growth this quarter and continue to underpin our overall performance and outlook. Slide 10 further highlights the contribution of our key growth products. This quarter, these brands grew 20% or nearly 24% in constant currency, generating $4.3 billion in sales and making up 67% of our core business revenue. We continue to see further growth opportunities for these products. For example, we're extremely pleased to see the strong trajectory of Verzenio driven by the adjuvant indication, including recent acceleration in new to brand share of market. In the injectable incretin market, we see significant opportunity for further class growth as these medicines currently make up only 25% of total prescription in the U.S. branded diabetes market and have the prospect of expanding the market through the earlier usage for glucose control and weight loss in the treatment of type 2 diabetes. Trulicity is experiencing accelerated demand in many international markets due to market growth and the limited availability of competitor GLP in select markets. We are working to meet this increased demand, while also implementing actions in select countries to manage growth and minimize patient impact. This outlook for Trulicity is included in our guidance. Lilly is thrilled to have both Trulicity which has the longest length of therapy of any GLP-1 and Mounjaro which could offer a step change in innovation for the treatment of type 2 diabetes and other metabolic indications as option in this class of medicine. Given the excitement and significant interest with the FDA approval of Mounjaro for type 2 diabetes, I'd like to briefly provide an update on what we're seeing and hearing in terms of early launch. After U.S. approval in mid-May, our full scale launch began in mid-June. Our commercial team is prepared, energized and observing a high level of engagement across channels as we roll out a patient-centric approach to launching Monga for patients with type 2 diabetes. The financial results you see from Anjar today reflect significant utilization of samples were accepted and co-pay assistance program to get patients off to a strong start. Pierre negotiations are progressing as expected and we're taking a disciplined approach to establish Monza's access and are focused on delivering the same broad open access which we achieved for Trulicity. As we remain focused on strong execution, we're encouraged by the prescription trends from Mounjaro, including the most recent IQVIA data, shown over 20% share of market for new-to-brand prescriptions in the Type 2 diabetes injectable incretin class. We are also pleased to see that total Lilly-Ntabren share in the type 2 diabetes injectable incurring class has grown nearly 12 percentage points since the launch of Mounjaro. Given the heavy utilization of co-pay cards as we build out access for Mounjaro, prescription trends will likely provide a more accurate measure of launch uptake than net sales over the next few quarters. We are pleased with the initial uptake of Mounjaro which is at the high end of our contemplated scenarios. We do not anticipate supply constraints for the U.S. launch of Mounjaro and we will monitor U.S. uptake to determine the appropriate timing for OUS launches. As a reminder, over the last several years, we have made significant investments to grow our global manufacturing capacity to support Manja volume, including our new RTP side in North Carolina which will come online in 2023. On Slide 12, we provide an update on capital allocation. For the first half of the year, we invested $4.5 billion to drive our future growth through a combination of R&D expenditures, business development outlays and capital investments. In addition, we returned approximately $1.8 billion to shareholders in dividends and repurchased $1.5 billion in stock. Our capital allocation priorities remain consistent as we continue to fund our key marketed products and expected new launches, invest in our pipeline, pursue opportunities for external innovation to augment our future growth prospects and return excess capital to shareholders. Slide 13 is our updated 2022 financial guidance. Our full year revenue outlook is unchanged. And -- it now includes an additional $400 million of headwind from foreign exchange rates since our previous guidance update for a total impact of roughly $700 million of FX headwind for the full year compared with our original guidance. This incremental headwind is offset by additional forecasted revenue from our COVID-19 antibody betolizumab which includes $275 million from the U.S. government agreement announced in June of this year as well as estimated revenue from the inception of non-U.S. government distribution that Dave mentioned earlier. As we look ahead, Q3 will mark the first full quarter impact of Alimta U.S. fab Nexi. In addition, Q3 of 2021 revenue benefited from Ilunion COVID-19 sales that will provide roughly 2.5 percentage points of headwind to our top line growth in the quarter. Our outlook for gross margin, SG&A and research and development remains unchanged. While the range is unchanged, SG&A does include additional commercial investments for selected key growth products in the second half of the year. Our guidance now include acquired IP R&D and development milestone charges of approximately $610 million, reflecting total charges in the first half of the year. We have had no material acquired IP R&D or development milestone charges at this point in Q3 and this guidance does not include any impact from potential or pending business development transactions in the second half of the year. GAAP and non-GAAP operating margin decreased 100 basis points to approximately 27% and 29%, respectively, primarily due to the negative impact attributable to foreign exchange rates and acquired IP R&D and development milestone charges to date. Our non-GAAP range for other income and expense remains unchanged. On a reported basis, other income and expense is now expected to be expense in the range of $500 million to $600 million, reflecting the impact of net losses on investments in equity securities during the second quarter. Our tax rate and EPS in the first half of the year still includes a favorable impact of the provision in the 2017 Tax Act that requires capitalization of research and development expenses for tax purposes. Our financial guidance for the full year assumes this provision will be deferred or repealed by Congress, effective for 2022. We -- if this provision is not the further repealed effective this year, then we would expect a reported and non-GAAP tax rate to be approximately 10% to 11%. Based on these changes, we have lowered our reported EPS guidance by $0.34 to now be in the range of $6.96 to $7.11 per share and lowered our non-GAAP EPS guidance by $0.25 to be in the range of $7.90 to $8.05. The $0.25 reduction in our non-GAAP EPS range is driven entirely by the impact of foreign exchange rates as the impact of EPS of acquired IP R&D and development milestone charges for selected -- and selected products are offset by impact of additional sales of baptilozumab. Now, I will turn the call over to Dan to highlight our progress in R&D.

Thanks, Anat. Looking across Lilly R&D, I continue to be quite encouraged by the potential we have to turn cutting-edge science into life-changing medicines for patients. This potential is becoming a reality in the late-stage portfolio, where I'll focus my remarks today. But also it's becoming more and more evident in our earlier-stage projects and I look forward to providing updates on some of these assets in future quarters. Given updates we provided at ADA in June, including detailed results from Surmont 1, I'll focus today's R&D update on the late-stage progress since our last earnings call more generally. Slide 14 shows select pipeline opportunities as of August 1 and Slide 15 shows potential key events for the year. I'll cover both of these slides by therapeutic area. Starting with Immunology; along with our partner, Insight, we're proud that Olumiant has now been approved as a first-in-disease systemic treatment for adults with severe alopecia areata in the U.S., EU and Japan. Alopecia areata is a significant unmet medical need and we're delighted about what this medicine could mean for people living with this disease. We also announced top line data from the lebrikizumab Phase III monotherapy maintenance studies in patients with moderate to severe atopic dermatitis which showed 80% of lebrikizumab responders maintained improvements in skin clearance and disease severity at 52 weeks. Data supported both once every 2-week and once every 4-week maintenance dosing with consistent and durable responses. We believe the potential for a once every 4-week maintenance dosing regimen could be an important point of differentiation for patients and healthcare providers. Lilly's planning submission of lebrikizumab to the FDA in 2022, followed by submissions to other regulatory agencies around the world. Almirall has rights to develop and commercialize lebrikizumab for atopic dermatitis in Europe and is planning for submission to the EMA in 2022. Shifting to mirikizumab. We presented results from the Phase III maintenance study LUCENT-2, at the DDW meeting. This study showed that for patients who responded to treatment on mirikizumab in the 12-week induction period, 50% of patients who received mirikizumab maintenance therapy achieved clinical remission at 1 year compared to 1/4 of patients randomized to placebo. In addition to the U.S. regulatory submission of mirikizumab for ulcerative colitis that we announced earlier this year, we have now submitted in the EU and Japan. Also noted here in Immunology is a Phase II start for a BTLA agonist antibody in SLE and our new KB103 inhibitor shown in Phase I. Our IL-2 conjugate is now listed under its nonproprietary name, RespegAltusleukin. Moving to diabetes. We're thrilled that Manjaris now approved in the U.S. is the first and only GIP and GLP-1 receptor agonist for the treatment of adults with type 2 diabetes. We're pleased to have received a positive CHMP opinion in the European Union and we're hopeful for a full approval by the EMA later this quarter. We presented the exciting detailed results from Surmont 1, evaluating truzepatide for treatment of weight management and participants with obesity or overweight at ADA with simultaneous publication in the New England Journal of Medicine. New data included an exploratory analysis that showed roughly 40% of patients achieved at least 25% weight reduction on the 15-milligram dose compared to less than 1% of patients on placebo. Additionally, we saw meaningful reductions in blood pressure and lipids as well as reduction in fat mass that was nearly 3x greater than that in lean mass. Encouraging data also showed that for those patients who had prediabetes at the start of the study, over 95% returned to normal glucose levels. The efficacy, safety and tolerability data in Surmont 1 exceeded our expectations. Based on our existing robust data set for tirzepatide, we've now engaged with the FDA and we'll have a meeting soon to evaluate whether there's a potential path forward to registration for chronic weight management based on Surmont 1, combined with data from the SURPASS program. We'll continue to communicate to investors as there are material updates. We continue to expand our clinical program for tirzepatide and we've now initiated our Phase III study evaluating tirzepatide for treatment of obstructive sleep apnea. We also have become -- we also begun a new trial called SURPASS EARLY which evaluates the long-term safety and efficacy of tirzepatide compared to standard of care when initiated early in the course of type 2 diabetes. Later this year, we'll begin surmount 5, a head-to-head study comparing weight reduction for tirzepatide versus semaglutide 2.4 milligrams. And finally, later this year, we expect to initiate Surmount MMO, our Phase III morbidity and mortality and obesity study. Moving to our weekly basal insulin Fc, also known as BIF. We've now initiated a second Phase III trial Q2 which is evaluating BIF compared to DEGLIDEC in adults with type 2 diabetes who are starting basal insulin for the first time. Our Phase II GGG triagonist is now listed under its nonproprietary name, Retitrutide. Also in this area, 2 assets have now entered Phase I clinical development, our dual amylin calcitonin receptor agonist or DACRA and our PNPLA3-SIRNA. In oncology, we are announcing today that the FDA has accepted the filing for partabrutinub in mantle cell lymphoma for patients previously treated with a BTK inhibitor with priority review designation under an accelerated approval pathway. Improved treatment options are needed for this challenging disease and we're encouraged that this potential new medicine could be available to patients in early 2023 -- in early phase oncology, we've moved our mutant-selective PI3-kinase alpha inhibitor into Phase I development. And finally, moving to neuroscience. We're also pleased to announce the FDA has accepted the filing for genimab for the treatment of early symptomatic Alzheimer's disease and has granted priority review designation under an accelerated approval pathway. We continue to look forward to the top line results of the Phase III confirmatory study, Trailblazer ALS 2 by mid-2023 which, if positive, will form the basis of our application for traditional regulatory approval. You also noticed we're now referring to N3PG4 by its nonproprietary name Rimtenatak. We plan to initiate the Phase III program for remternatac in the coming weeks. As you can see, Q2 was another productive quarter for pipeline advancement at Lilly. Now, I'll turn the call back to Dave for closing remarks.

Thanks, Dan. Before we go to Q&A, let me briefly sum up the progress we've made in the second quarter. We're encouraged by the performance of our key growth products which now represent 67% of our core business. We expect to see this grow over time as we work to launch more innovative medicines like Manzaro. Excluding the impact of acquired IP R&D and development milestone charges, we expect to see operating margin expansion from both revenue growth and driving further efficiencies in our business. We saw significant progress in our pipeline this quarter with the approvals of Manzaro in type 2 diabetes and Illumina in alopecia areata. We also saw progress on our next wave of potential growth catalysts with the FDA acceptance of danonumab as well as pertibrutinib and positive top line readout for lebrikizumab and additional submissions for mirikizumab. Finally, we returned $900 million to shareholders via the dividend and share repurchases. Looking to the future, we are confident in our long-term growth prospects as we are focused on developing groundbreaking therapies in areas of significant unmet need as well as driving exceptional execution for our recently launched medicines, so they reach patients who need them. Before we close, I'd like to comment as well. This is Kevin Hern last call as Head of our IR team. And before I turn the call over to him to moderate the Q&A session, I'd just like to thank him on behalf of our shareholders, our board and of course, our executive team and employees. He's done an outstanding job for the last 4.5 years, strengthening our relationships with -- the Street as well as being an ambassador to both convey the company's messages to shareholders but also inform management about shareholder perspectives. We wish him the best in his new assignment transitioning to a leadership role in our U.S. commercial group. Now I’ll turn the call over to Kevin for his last Q&A session.

Thanks, Dave. Thanks for the kind words. I will definitely miss it. We'd like to take questions from as many callers as possible, so please emit your questions to 2 per caller. Louis [ph], if you can provide the instructions for the Q&A session and then we're ready for the first caller.

[Operator Instructions] The first question will come from the line of Geoff Meacham from Bank of America.

Just have 2 quick ones. One on Mounjaro. I know it's pretty early in adoption but maybe just talk about the source of new starts, meaning are they GLP naive or experience? And then talk about the expected payer dynamics looking to 2023 -- and for Dan on tirzepatide, I know your regulatory discussions are ongoing in obesity but do you think you can also use the safety database from diabetes and other indications when you look to kind of NASH, sleep apnea, et cetera.

Thanks, Geoff. We'll start off with Mike on Lazaro. And then Dan, if you want to comment on the regulatory for trispeidesaD. Mike?

Yes. Thanks, Geoff. Thanks for the question. What we've seen -- first of all, we're incredibly excited about the very robust launch we've had with Manzaro. We're also excited about the source of business that we're seeing. 72% of Monday's is coming from new patients into the entrain class. We think that's very important for accelerating class growth and we have seen class growth both at total prescriptions, new-to-brand and NTS accelerate since BonCharles launch. Of the 28% of the volume that's coming from switches, only 30% of that is from Trulicity and 70% is from other GLPs. And so as a result, as Anat indicated earlier, we're actually seeing Lilly incretin share market growing which is the sign that we -- of a robust solid foundation that we're laying. And so the NBRx have increased our share by the Lilly share in the injectable market by 12% and new to treatment starts by 10%. So we're very happy. We're growing the class and the market share at the same time. Your second question around payer dynamics, it's going as expected for us. We're trying to stay very disciplined. I think our focus is to set ourselves up for long-term success, not short-term success. -- and that's what we're doing. So it's going as expected. So far, we have both commercial and Part D access on Express Scripts, Cigna and Humana formularies.

Thanks, Mike. Dan? A – Dave Ricks: Yes. Thanks, Geoff, for the question. You’re pointing out that correctly that we intend to pursue a number of related indications for tirzepatide. Some of them have overlapping patient populations. Most of the indications we pursue have a base of patients that either have obesity as a pre-existing and sometimes causative condition such as obstructive sleep apnea or heart failure in people with obesity, other indications might be a mix of type 2 diabetes and obesity representing a large number of patients such as NASH. So where applicable safety exposures from similar proposition can be used to support submissions. Of course, some of those programs are staggered in time. And so by the time we get efficacy data of those indications, we’ll also have quite likely the rest of the Samat [ph] program. But where we are today is quite a large and robust safety database from the entire COBAS program as well as SME.

Thanks, Dan, Jeff.

The next caller is Chris Schott from JPMorgan.

Just two for me. I guess just on the obesity opportunity. I guess, basin the feedback you've been getting on that surmountidata, I guess is there any change in terms of how you anticipate payers will approach obesity? I guess the heart of the question is, do you anticipate we're going to really need to see some of the CV morbidity mortality data before we can think about broad coverage for obesity medications? Or are you seeing payers potentially more interested in covering these type of products given some of the profile that kind of emerged from that study? My second question was one for Dave. I guess, on just in healthcare reform. I know you love answering these questions. But I guess, as you guys just been so involved in this process. So just appreciate your thoughts on the latest bill we’re seeing and just kind of the impact you’d expect it to have in the industry and maybe a little more specifically.

Thanks, Chris. We'll go to Mike first and then on obesity, then Dave for healthcare reform.

Yes, great question. The SURMOUNT 1 data was phenomenal data for patients and physicians who treat obesity. We -- I think there's a combination of effects that will affect employers and the government to increase access for obesity agents. One is the data we produce. And I think, obviously, the first data we're producing is the weight loss as well as the factors like lipids and blood pressure. And the data we produce so far has been stellar. So I think the better data we produce and Surmont 1 through SMA4 is just going to help us in the short term. Long term, we think there's a lot of comorbid conditions associated with obesity like CV and heart failure and sleep Pactia and the better data we support there will open up those indications where are highly have a lot of overlap with obesity. And so we're excited about those trials and seeing those data as those trials complete. And then lastly, the more we can drive consumer interest in this, that puts pressure on employers and the government to be able to gain access for this. And so I think we've got strong plans on all 3 fronts and we're excited about the first data disclosure we've had on obesity. So we're very bullish on the long-term prospects of the obesity market and rolling it.

Thanks, Mike. Dave?

Yes Chris, thanks for the question. I think everybody probably on the call has a good grasp of what's in this package, Difficult to speculate on probabilities but certainly a lot higher than a month ago that something crosses the line. There may be some adjustments to this as they go through that parliamentary process and whatever changes might occur or still to come in the center in the house. But if what we're looking at passes, maybe that's your question, as you know, we've been for the Part D forms, I think they're good incremental changes, particularly capping annual out-of-pocket and getting rid of the donut hole concept. Unfortunately, they don't improve the concept of facing patient cost sharing on net pricing which we were hoping it would. But by itself, we would support that. The CPI adjustment is not really an issue as probably everyone on this call knows, there's already lots of CPI capping that goes on in the commercial marketplace. And with CPI being where it is now as well. I think list prices in the drug business are not nearly as fast as the rest of the economy. But the negotiation piece is a problem. And I think in the short term, speaking for our company but probably the industry, it doesn't do much. They don't really start until '26 anyway. But in the midterm, there will be, of course, some products that will have attenuated life cycles. And I think that will cause some headwinds for the industry and we'll see if any Lilly products get caught up in that. But probably, to me, the most damaging thing about it is it sends a signal to investors and capital allocators like us that small molecules and particularly small molecules in diseases that require stepwise development like cancer, where we start in stage at later stages and work our way to adjuvant or even in some orphan conditions really aren't wanted and are worth a lot less. So, we'll focus our resources on other areas of innovation. We've got plenty of those. And so will the rest of the sector. And I think that's really a miss for the patients that probably want better oral cancer drugs in the future and orphan disease drugs. So I think that's probably not being talked about enough and I just wanted to emphasize that.

The next call is Fernandez from Guggenheim.

Great. So just a couple of questions here. Dave, I was just hoping to get a little bit more color on the comment that you made there with regard to orals, how do you see that impacting your efforts to bring forward oral diabetes drugs? And is it more a benefit to complex oral therapies that aren't small molecule per se but perhaps a more peptide oriented. I know you guys are working on some efforts along those lines. So just interested to know if the legislation would imply that as well from a small molecule perspective, we see a number of oral GLP-1s seeking to come to market. at some point in time? And then separately, just on Dan, on the glucagon mechanism, I see BBG listed in 2 Phase II clinical trials but mazetide, your Axos modulin product is listed just in sort of the Phase 1 in diabetes. Wondering if you guys have officially made a decision to move forward with BG or if mazetide is still potentially in the mix as kind of your next-gen asset in the obesity space.

Thanks, Seamus. We'll go to Dave and then Dan.

Yes. Thanks, James. I mean, I guess, put a finer point on it. Each project will have to be evaluated one by one. But I think you will probably see 10 years down the line, fewer small molecule oral products developed in the industry than would have been otherwise the case if this bill passes. -- again, that to me is the miss. And I think it -- there's still probably quite a bit of advantage in oral small molecules in sort of large primary care indications, especially if in the case of like GLP, we could accept that weight loss will provide broader benefits for the earlier question about when sort of the belief system tips over and people just accept that chronic weight management could for health like reduced blood pressure is good for cardiovascular risk. And I think those products will be evaluated one by one and big opportunities, I think, will advance and do well. They'll have attenuated life cycle in the government business and that will have to be factored in but we'll look at that. What I was referring to is more, I think, in narrower revenue opportunities, it just gets a lot harder. And when -- by kind of construct, your new indications can't be compressed forward because of the way we develop drugs in some of these diseases, that's a problem. And I don't think that was well thought through and there will be a long-term implication to that. One other thing I probably should say is this bill raises $300 billion for the federal government off the back of the industry, probably cost the industry at least $0.5 trillion and only about $50 billion of that, like 10% is going back to patient benefit support. And I think that's another tenant when we were leading pharma literally was to make sure whatever came out of the industry went back to patients. That's not happening here and that needs to be discussed as well.

Thanks, Dave. Dan?

Yes. Thanks, Seamus, for the question on our glucagon containing molecules. We previously said that we have 2 in clinical development, mazdutide which is our oxyntomodulin that's glucagon plus GLP-1 and retitrutide which is our ABG which is glucagon GLP-1 and GIP 1. You're right that the ACG molecule is a head and development that's in Phase II and the oxyntomodulin is still in Phase I. I think they're both viable as next-generation weight loss products. But to be clear here, it's a very high borrower looking for a major step change above the really remarkable results we saw in Surmont One. I think they both have that potential but we're going to need to see more data to know which it either goes forward to Phase II. -- just like when we're doing Phase II interzepatide which was just a few years ago, we noted that it had to have a step change to go forward to Phase III. If you hear us talk about when or growth of these molecules going to Phase III, it means we saw that kind of a big step change.

Thanks.

The next caller is Louise Chen with Cantor.

So my first question for you was on the obesity product. Do you see any potential read-throughs from NOVO SELECT study to tazepatide? And have you given any color on how you want to structure your studies on an outcome basis for BC? And then secondly, it's been quiet on the Alzheimer's front but just curious if you have any updated thoughts on the market opportunity for demenumab, especially in front of some of these Phase III trials will read out at the end of the year.

Thanks, Louise. We’ll go to Dan for the question on the SELECT trial and then Anne for the question on Alzheimer’s.

Louise, thanks for that question. Of course, we always reach for our competitors' success on clinical trials. We want great data so that we can have great drugs to help patients. I think the novo they pass the interim analysis but didn't stop the trial for efficacy is fine. I think there's really pretty significant differences here between tirzepatide and semaglutide that we just have to remember, a different mechanism, a different degree of efficacy on various outcomes, different trial designs, different populations to some extent. So we don't change our design of our SURMOUNT MMO study. We don't change our thinking about probably success. As Mike said earlier, we're highly confident in this mechanism. -- based on all of the data that we've seen, of course, starting with a quite dramatic weight loss which should be a benefit on morbidity and mortality from obesity. But also all of the cardiovascular indicators that we reported out in that Phase III study, including a very significant drop in blood pressure that should have a benefit -- a drop in LDL, an increase in HDL a drop in triglycerides, all of that should contribute to cardiovascular outcomes. So we remain excited and confident about our own study going forward.

Thanks, Dan.

Louise, thanks for the question on Alzheimer's. So the fact is bottom line is we remain convinced about the mid- and long-term opportunity for donanemab and the Alzheimer's portfolio. Our focus right now is obviously on the rapid availability of donanemab for the appropriate patients through the accelerated approval pathway and then reconsideration with Phase III data. And we remain optimistic that with -- particularly with traditional FDA approval, FDA -- or sorry, CMS would not continue to limit coverage for on-label treatments. Now obviously, you mentioned competitor readout. As we've noted on prior calls, there is a chance that we'll see mixed results in some of these readouts due to the differences in the medicines and their trial designs. And as you know well, we have some unique design features in TV2 and a medicine that demonstrates rapid and deep plaqclearance. So we won't be discouraged if others miss their primary endpoints. And so we'll be following that closely, obviously. But in the near term, of course, we have to acknowledge that patient access will be very limited under the current CMS and CD with accelerated approval. But what that does do with the accelerated approval is really enable us to engage quickly with CMS following that Phase III data and hopefully drive reconsideration at that point. And it also allows us to accelerate the traditional approval through a supplemental BLA. So what we'll do in the near term, following a potential approval and the accelerated pathway is use that time to build out the diagnostic ecosystem to help physicians with the referral process and infusion systems. And so there's quite a bit to do, I think, to get ready for that Phase III data.

The next call is Terence Flynn from Morgan Stanley.

Two for me. I guess, Mike, you talked about aiming for long-term success with Manzaro from a reimbursement perspective. So can you just maybe define that for us, put a finer point on it? Should we assume that means you're aiming for a net price above Trulicity ultimately over time? And then as we think about your ability to supply the market here, obviously, launch, you said at the high end of your expectations. No, I think you touched on this a little bit during your comments in terms of confidence in U.S. supply. But how are you thinking about the broader supply dynamics globally and then remind us your flexibility to increase supply, if needed over time.

Thanks, Terence. We'll go to mic for both questions on Manzaro, with access and price and then just global supply outlook.

Okay. Thanks, Terrence, for those questions. Long term, I think our goals there is obviously to optimize our net price but also secure broad access like we have for Trulicity. So those are our 2 goals. Obviously, we don't give specifics on our net price negotiations publicly. But we're pleased with the progress. We're staying disciplined, trying to accelerate access before any new product launch. You got to be careful that you're not too aggressive, you get access to early but you pay too much for it. So we're staying disciplined. We've got a great product with a great profile. Payers are seeing that but it's a process and we're going through that process right now. From a supply perspective, Mongeral, as Anat said, we were planning for success. And so we had a lot of different launch scenarios. And we have lot scenarios that considered this level of uptake. As Anat shared, we don't anticipate any supply constraints for the U.S. launch of Manzaro. We -- our manufacturing team has been working around the clock for years to build manufacturing capacity throughout the supply chain. We have a number of sites who make this and they're optimizing our initial capacity on a daily basis. Also, we have made investments to expand our capacity over the next several years. We have a new parental plant at Research Dragon Park in North Carolina that's coming online in 2023 and another one behind that in Concord, North Carolina. Also, we're building 2 manufacturing facilities to make taconigredient for Mongeral and those will come on at a later time. So obviously, we're planning for success. And -- our manufacturing team is working around the clock to get as much of past supply as possible.

Thanks, Mike.

Next call is Tim Anderson with Research [ph].

On the outcomes trial for obesity, presumably, that's a cardiovascular outcomes trial with MACE was a primary endpoint? And if so, what level of benefit will it be powered to show? Novo is designed to show 17%. And then on the head-to-head versus Novo's product in obesity, anything you can see on trial design, specifically primary endpoint and perhaps, most importantly, the timing of having results...

Thanks, Tim. We’ll go to Dan for the first question on Surmount MMO and then Mike for the second question on the head-to-head trial with Novo for Costa.

Yes. Thanks for that question, Tim. You're raising an interesting point. I think implicit in your question is the observation that there's a lot of health benefits that come from losing weight Obesity is a risk factor for a number of things, not just the things that are traditionally measured in cardiovascular outcome studies or MACE studies. So probably also noting, we've called this morbidity mortality outcomes, MMO in obesity rather than CVOT. But beyond that, I think we've intentionally not gotten into details on the primary endpoint or the powering assumption. So that is yet to be disclosed.

Thanks, Dan. Mike?

Yes. On the head-to-head versus sema 2.4 milligram, there's been no head-to-head trials comparing receppatide to sema 2.4. So we believe there was a good opportunity to do that to demonstrate tirzepatide significant weight loss benefits and totality, the benefits it has for patients. Head-to-head studies are the gold standards. Every time we talk to healthcare professionals, they really value and get a lot out of head-to-head studies. It just really informs their treatment. So we think it's the right thing to do and we're pleased to do that. It's going to be a head-to-head study, where we're comparing tuxepatide versus 72.4 in people that have obesity and overweight with the weight-related core mobility. Other than that, we'll provide more on the design and the time line at the later date as we get closer to posting it on clinicaltrials.gov.

Thanks, Mike. Tim, thanks.

The next call is Steve Scala from Cowen.

A couple of questions. First, Lilly mentioned in the prepared remarks, a limited availability of competitor GLP-1s in select geographies. Can you be more specific on which geographies and the magnitude of the issue? And then a question for Dan. You must have been on the receiving end of many calls from DSMBs with interim updates on trials. For example, the trial of Trulicity in cardiovascular outcomes REWIND. The question is, what is the depth of the information exchange between DSMBs and sponsors at that time? For instance, if a study is continuing past an interim look, is the conversation only 3 words, study is continuing? Or is it more expensive? Or does it depend? And if it depends, what does it depend on? It would seem to me at least, counterproductive for DSMB not to provide some guidance just from the vantage point of further development of the molecule. So that's my question.

Thanks, Steve. We're going to go to Ilya for the question on the supply and demand that we're seeing for Trulicity outside the U.S. and then we'll go to Dan for the second question. Ilya?

Yes. Steve, thanks for the question. First, what we've seen is an accelerated demand for Trulicity in many of our international markets and there's probably 3 sources of that one, great commercial success. We've been really successful in our diabetes portfolio in driving the growth and utilization of Trulicity. At the same time, we've seen accelerated market growth. And we have seen in some select markets, the amplified demand for Trulicity because semaglutide is not available in full extent in a number of markets. In terms of where we've seen volatility in where that is occurring. And so we're evaluating the local situation is quite dynamic and we're ramping up as much as we can to need this amplified demand. At the same time, in some of these markets, we're going to have to look at managing some of the growth and making sure we limit any kind of patient impact.

Thanks, Ilya.

Dan?

Yes. Thanks,. I understand where your question is going and we probably don't weigh in specifically on what others might do or see but I'll tell you how we run DSMBs and how we think about them generally across the industry. There's a couple of principles at play here. First, of course, is independence. This is not something run by the sponsor. And I think that's an important consideration for patient safety. We don't see the data they see and we're not privy to the discussions as a rule. The second is that we do set for DSMB's rules in advance by which they should make decisions. Those could be very simple rules in some cases, like hit statistical significance with a certain alpha on the primary endpoint or they could be more complex rules looking for consistency across secondaries or subpopulations or a higher bar of efficacy on the primary so that you're sure that you have a compelling effect that varies from study study and sponsor to sponsor. I'm sure. The third thing is that the recommendations that DSMBs get back to sponsors are often prespecified. So we'll tell the DSMB if it meets these criteria. This is what you tell us. And if it doesn't, this is what you tell us. And they usually are a matter of fact, without color that could compromise the integrity or cause one unblinding of an ongoing study. So I hope that's helpful in understanding how DSMBs work. I think at many companies, if there is a surprising recommendation for the DSMB such as to stop a study, there will often be a process where the sponsor or 1 or 2 representatives of the sponsor are unblinded so they can confirm the DSMB conclusion before taking action. But that wouldn't be typical for a simple study continuous kind of decision.

Thanks, Dan.

Steve, thanks for your questions.

Next caller is Umar Raffat from Evercore -- to Andrew Baum from Citigroup.

A couple of questions. First on Wingo. -- you uniquely have labeling requiring second form of contraception during titration which Gobi had. The recent Supreme Court overturning of row versus weight put increased emphasis on the confidence in terms of risk of pregnancy given the consequences. How are you thinking about this, whether it's potentially an acute for the product, whether through additional pharmacology studies that could be overturned as the obesity indication rolled through. It does seem from the FDA review that there's a real pharmacologic concern rather than the forcedata here? And then second, on the positive side in relation to the pursuit filing, assuming you get approval on commence cells. I’m assuming that you would, therefore, get inclusion in the MCN NCCN guidelines for Brewing for CLL. So could you talk to how you think the expedited approval through mantle cell may accelerate your penetration of the CLL market when you’re waiting for the Phase I trial program mature…

Thanks andrew. We'll go to Mike for the first question on Mondoro labeling and the social climate and then we'll go to Jake for the question on prtibrutinib.

Thanks andrew. I appreciate the question. Let me just even said everyone, our label on Mongeral advisers women using contract oral contraception to switch to or add to a non-oral contraceptive methods for 4 weeks during initiation of the product and then during the dose titration for each dose. Given the -- so healthcare professionals are aware of this, given the profound benefits of Mongeral, this hasn't impacted at all HCP and consumer interest in Montara. If you look at the data in the marketplace, we have data with ONKVIA through July 22 which is just 5 weeks of full promotion. And we've -- and Mounjaro already reached 20% new brand share market. So we haven't seen this as an issue at all. As to the future works for and evaluating the issue, we have nothing new to report to investors at this time. But this has not been an issue that has impacted Montara's uptake at all.

Thanks, Mike. Jay?

So just as a matter of policy, we submit company sponsored guideline requests on consistent with labeling indications that we actually intend to receive or expect to receive. So we'll do that in this setting as well in the context of BTK pretreated relapsed/refractory metal cell lymphoma. What that -- from there, the NCCN and other guideline process is completely independent and has no involvement from us whatsoever to the extent that they choose to do something beyond our labeled indication is really completely out of our hands and hard for me to speculate on -- and of course, we'll be promoting the product only on the labeled indication that we received.

Thanks, Jake.

Andrew, thanks for your questions.

The next caller is David Risinger [ph] from SVB Securities.

So my questions relate to Manzaro, please. First, could you clarify the share gain percentages. So I believe the comment was that Lilly’s combined Trulicity and Manzaro share gained by 12 percentage points. So I wanted to just understand what was the starting point and where is the figure today? And then there was also a comment about new to treatment starts gaining by 10%. So if you could provide the X to Y on that. And then based upon your current view of the very strong U.S. uptake of the product, to what degree is Lilly planning to gate its ex U.S. Munzara launches due to the manufacturing supply constraints that you’re currently up against?

Thanks, David. We'll go to Mike for the questions around share gain and then Ilya for the questions around OUS launch.

Okay Dave, thanks. I'll give you more context of the percentages that we had earlier on in the call. So what we're looking at is IQVIA data, the beginning of that by our analysis is June 3. We had our launch meeting the week after ADA, so the week of June 14 and -- so we have been promoting kind of full on since then. And so when you compare where we're at today, this is -- we have IQVA data through July 22, so 5 weeks of promotion. So we're comparing the -- our NBRx volume, our new-to-brand volume and share at July 22 versus June 13 in the injectable anchor gen market. And so what we've seen since then is that Montero's NBRx share has reached 20.5%. We saw Trulicity's NBRx has declined by only 8.4 share points. And so that produces a net gain in the Lilly injected NBRx share of 12.2%. And -- and then with NTS same time period, same market, we have a 10% overall Lilly injectable NBR share gain.

Yes. David, thanks for your question on the launch of Manzaro outside of the U.S. and our thoughts around that. One of the key aspects of how we take a look at launching outside the U.S. It's typical for most product launches across pretty much all therapeutic areas to have some lag to U.S. launches, either through -- because of regulatory approval and process but also pricing and reimbursement -- and it can take up to a year to get reimbursement in a number of markets. So the volumes in that first year of launch are somewhat limited. We are encouraged by what we're seeing in the U.S. launch of Manzaro and looking forward to launching Anjar outside of the U.S. and leveraging our commercial expertise and strength in diabetes across our markets outside the U.S.

Thanks, Sylia. David, thanks for your calls.

Maybe just -- David, just to clarify that, because the way you framed your question, you said we're up against supply constraints. In the case of Major, as we said today in the prepared text, we don't anticipate supply constraints in the U.S. Of course, before introducing a product in a new market, we want to make sure we could fully initiate new patients and supply. And based on our competitors' actions, it's hard to predict a year from now what we'll need in a given market. So it's not that we don't have supply. It's more -- the demand picture is unstable. We want to -- we're just cautioning that we want to know that before we initiated a launch sequence. But we've launched in the U.S. and we're committed to that supply. It's not that we have an issue, just to be clear.

The next call is Chris [ph] from Goldman Sachs.

Two questions. The first one, thank you for that information about the relative trend as far as where the source of patients were narrowing in on the question of what portion were actually switches from Trulicity that was helpful back of the envelope that sounded like about 10%. Is that about what you expected? And where do you think that this will go? I'm asking, obviously, since we're relatively early stages of this launch. Second question would be about Verzenio, actually to bring up something that seems a little bit less focused upon but performance has been strong and logically would seem to be in the adjuvant setting. But could you speak to what you believe is driving this and what the outlook is for those trends that have thus far been delivering the strong performance there?

Thanks, Chris. We’ll go to Mike for the question of Maguro and then Jake for the question on Verzenio.

Yes, it's a good question. I think we're getting what we expected we thought we would see more new patients into the class. That's who we talk about with healthcare professionals and that's what we're getting. So we're not surprised by that, pretty typical what we'd expect with the new GLP launch. Now what you would expect when you have a new product like Monger especially with endocrinologists that they don't always see naive patients. They have a good bolus of patients who are already on GLPs. And so when they -- when we talked to them about Montero, they're excited about the opportunity to actually switch some of the patients who are not performing or not at goal at the current GLP. And so I think early on, you'll see like a higher percent coming from switches versus naive. And so today, we have 72% that is naive. If you look at at Trulicity, that's in like 88%. So what I would expect is that, that percentage coming from AE will grow over time. But I think this is what we would expect at launch and we're very pleased by both Trulicity and Darryl's performance since Mangerahas launched.

Thanks, Mike. Jay. Yes, thanks for the question on Verzenio. We too are pleased with how this has gone so far this year. I think to your question on why and where it goes from here. On the why, I think it largely comes down to the clinical data from the MONARCHY study itself. I think the data are demonstrable and when physicians and patients see them, they quickly want to integrate the drug into their practice. Now in addition to that and this is something we hoped would see happen, we think we're seeing some share gains in the metastatic setting as well, particularly among physicians who historically used other CDK4/6 inhibitors are gaining experience with Verzenio by utilizing it in the adjuvant setting and then starting to use it in the metastatic setting where perhaps they hadn't been before. So that was part of what we hoped might happen. I think we're seeing that happen a little bit so far this year. That having been said, in terms of where we go from here, I'll just say 2 things. One, we continue to interact with physicians who are still not yet aware of the MONARCHY data. And so that's, of course, good and bad. It's bad because there are patients who are appropriate for the medicine that should be on it. It's -- but it is opportunity to continue growing in the labeled indication that we have currently -- and on that note, as we've talked about in the past, we're hopeful that we have the opportunity to expand the indication to the enrolled trial population for MONARCH and we're awaiting that analysis of overall survival, as we talked about in the past. So yes, we're pleased with how it's going. We see plenty of opportunity ahead to continue the momentum.

Chris, thanks for your questions.

Next call is Carna Gold from Barclays.

I guess, first off, can you talk about how pronounced the cash pay component was of the early kind of Majoro number? And then how you expect maybe that to evolve? And then separately, maybe coming back to the drug pricing question but from a different angle, it would appear that Lilly could be one of the main beneficiaries from lower out-of-pocket costs on that side and you think about sort of improvement in compliance. So can you maybe help frame that impact or maybe think about how compliance today differs in the U.S. versus maybe other markets where those out-of-pocket costs or not it can don’t exist?

Thanks, Carter. Mike, for the first question. I'm on Dave [ph] for the follow-up on the drug pricing reform and the impact.

Carter, thanks for the question. On the cash pay side, we expect the percent of cash paid to follow our percent access in the marketplace. What we've seen so far, again, I reiterate what I said earlier, that we have both Part D and commercial access for Humana, Express Scripts on the National Preferred Formulary and Cigna. If you add that up, that's a little over 20% of the national lives. And so I think that's probably the best estimation of what you probably see with the cash pay.

Thanks, Mike. Dave …

Yes. Carter, I think you're pointing out something as I mentioned, we would be supportive as a freestanding measure of the Part D reforms that are in this reconciliation package for a bunch of reasons. One, it does, I think, more fairly distribute the burden of the industry pay for into Part D. Today, the way the donut hole math works, if you go back a couple of years, we had a lot of earnings calls, we had to describe that. There's this really disproportionate contribution from the industry inside the donut hole. So commonly used medications like in diabetes and cardiovascular, have a pretty big hit on that. That gets smoothed out. So now that drugs that hit the catastrophic pay more and it's more of a balanced contribution independent of drug type, that's a good thing for companies like Lilly, that have more commonly used drugs. The other thing though you're pointing out and I think this really would affect a product like Verzenio for us primarily is patients who get thrown into the catastrophic have this uncapped 5% contribution today. And we know that not only do patients discontinue and you mentioned about compliance rates which are better in oral oncology in Europe than the U.S., for instance. But I think also you'll see more initiation because physicians and their families screen themselves out of even qualifying for an appropriate medication for themselves because of financial burden and maybe go to chemotherapy instead of a more targeted therapy. So that presents another way in which we can both improve healthcare in America but also prospects for medicines at Lilly max. So those are good things. As I said, on balance, we still don't like it for the negotiation side but those are positive elements.

Thanks, Dave.

The next call is Kerry Holford from Berenberg.

To please. Firstly, on price, you’ve clearly cited low realized prices for a number of drugs this quarter, particularly in the U.S. And I’m wondering if you can speak specifically to how that’s evolving in the GLP-1 market. Any particular step-up on Trulicity rebates since the Manzaro launch. What are your expectations here going forward? Is it a trend is higher rebates and negative channel mix noted by your competitor on the eosyesterday. So interested to get in the meal perspective here? And then a quick question for Anat. When do you anticipate having greater clarity on the possible repeal in the 2017 tax…

Great. Thanks, Gary. We'll go to Mike for the question on anchored and market price trends and then not for the question on tax reform...

Mike?

Yes. That's a good question. I think naturally, payers will ask for additional rebates when a new product joins a formulary. So as part of our discussion of being disciplined and why you don't want to accelerate those discussions too rapidly and that's a factor into it. So I think net-net, I don't expect any step changes in GLP pricing as a result of Montero launching but it is part of the national pressure intention and contract negotiations.

Thanks, Mike. Anat?

So on taxes, what we are seeing is we're seeing broad bipartisan support for appealing that change of capitalizing R&D expenses. -- was evident in the recent Senate letter. This could come. We believe it will come through by the end of this year, most likely if I had to guess, I would say, towards the end of the year, potentially as part of a tech tender.

Thanks, Anat.

The next call is Mohit Bansal from Wells Fargo.

Maybe one question on the SELECT-EARLY study, the diabetic study. So maybe one for you, Dan. What you really need to show how long the trial and what you need to show in terms of delta versus control to be -- to prove that it is beneficial in prediabetic patients. And wouldn't oral JLP a better drug for those patients

Thanks, Mo. So Dan, the question on SURPASS early, the prediabetes study and then whether oral GLP would be better there.

Yes. That's an early diabetes study. But I think you're -- I don't believe we've disclosed the design of the endpoints yet. But I think with respect to diabetes prevention, that's certainly a very interesting area. And there are currently FDA guidance on what's required to show diabetes prevention of diabetes to get that kind of claim. It's a very high bar. And I suspect the field will come to an understanding about which drugs can actually decrease the risk of getting diabetes you can prevent diabetes before any drug is able to get that indication. I think this class of medications, particularly tirzepatide has great promise in that area. We highlighted the data from Sumant that showed the vast majority, more than 95% of people were prediabetic at the beginning of the study had normal glucose levels at the end of the study. That's really promising. -- longer-term data, including drug washout data required to get to that kind of claim.

Yes, I can add a few comments on that. This study is for people with diabetes have been diagnosed with diabetes. And we want to test what the impact could be on the progression of diabetes if you put a product like tirzepatide on very early in the course of treatment. And so this will study putting – starting patients who are naïve or very early in their treatment versus standard of care. We think weight loss with the benefits of a GLP and GIP and the improvement in beta cell function and insulin sensitivity could have a profound impact of disrupting type 2 diabetes. And so that’s what we’re testing in the study. It’s one that we’re very excited about. And we’ve already started to see weekly injectables being used earlier than just the injection space as more people understand that a weekly injection through an auto injector is a good experience and actually some some consumers prefer orals but some actually consume prefer a weekly injection with an auto injector like Monaro and Trulicity has.

Thanks, Mike.

The next caller is Evan Seigerman with BMO Capital Markets.

So as part of the FDA acceptance of your accelerated approval filing for donanemab, have you gotten clarity from the agency if the iADRS scale is acceptable as an acceptable endpoint for full approval? And can you also talk about what you saw with the N3 PG4 to move it into Phase III?

Thanks, Evan. We’ll go to Dan for those.

Yes. Thanks for the 2 Alzheimer's questions. So first one is on the accelerated approval application for genenimab and whether that's an opportunity to gain more insight about acceptability of iADRS which is our primary endpoint in the Phase III study. It may not be an opportunity actually because the accelerated approval is not contingent on an understanding of the cognitive or functional benefits of denetumab which we saw in the Phase II trial. Instead, the accelerated approval is just simply contingent on a demonstration of lowering amyloid levels. So I'm not sure we'll get into a deep discussion of that, although clearly, it's relevant in terms of the confirmatory study, Trailblazer 2. The second question that you raised was with respect to remternatug, the NTBG4molecule. This is a next-generation antiplaqueor plaque-removing antibody designed to attack the same power glutamate residue that donanemab goes after. We’ve seen robust ability of this molecule to clear plaques in patients. Remember that a liability or potential liability of genitimab is antidrug antibodies. And so we’ve also noted that this molecule doesn’t have that issue. So given the potent robust clearance of plaques combined with lack of ADAs, we think this is amenable to alternative dosage forms that could be more convenient to patients. So we’ll be looking at that.

Thanks, Dan.

The next caller is Robin Kinesis with Tuas Securities.

The next caller is Colin Bristow with UBS.

And Kevin, thanks for all the great work. On business development, we had 2 deals announced today. Can you just give us your updated thoughts on BD areas of interest, deal size? And then just what your -- what's the view that you're getting from potential targets on their willingness to transact given the market backdrop? And then secondly, just on donanemab, what's your latest thinking? Or have you had any interactions with CMS with regards to how a single successful Phase III trial would be viewed in the context of reimbursement?

Thank you. I'll invite not to weigh in on the BD question and then Anne for the donanemab question.

So on the business development side and in terms of areas of interest and what we're seeing in the marketplace, given some recent changes in valuation, our areas of interest remain really unchanged from what we've had the last several quarters which is our core therapeutic areas. So looking at potential breakthrough innovations in those areas in different stages of preclinical and clinical development as well as in areas of new modalities where we talked about expansions that we have in those areas. We do look at and what you've seen us do in the last 12, 18 months is more earlier stage opportunities where we can bring things into our pipeline to supplement our existing portfolio and add value as well as innovation in our core areas. Valuations will have changed in the last 6 months or so has not historically been the rate-limiting factor in terms of pursuing business develop opportunities. It's really finding those breakthrough opportunities where we make those investments. And you asked about kind of target engagement and whether or not those views have changed, we're looking at whether we look at a partnership or acquisition, everyone wants to get to value if the opportunity is there, then we tend to be able to get to a good spot.

Thanks for the question on donanemab. So it's our belief that the data package for donanemab which includes, obviously, both Trailblazzer all and all I should be sufficient to meet with CMS as described as that high level of evidence in CD. So the Trailblazer all study obviously was the first disease-modifying Alzheimer's trial to successfully meet its primary endpoint. And if Charles all 2 also delivers that direct evidence of clinical benefit as we expect it would, then we'll engage with CMS to discuss that path quickly and broadly expand access to the treatment. And we have been engaging with CMS throughout the process and we'll continue to do so moving forward. And they've shown openness to continue to meet. Obviously, they noted in the NCD, the promise of donanemab and they've shown a great deal of interest in understanding the Trailblazer 2 Phase III program. And so I think we'll have more clarity on the timing of reconsideration. We're able to share that data with them in mid- they've stated publicly they're committed to rapid reconsideration that I think we'll have to update you on timing once they have that data in hand, mine next year and we discuss next steps with them. Colin, thanks for your questions. We've exhausted the queue. Dave, for the close.

Okay, great. Thanks for joining us today. And I just want to apologize for all the technical challenges on the call, we'll get that cleaned up. We do appreciate you participating today and your interest in our company. And please follow up with our IR team, including Joe Fletcher, our new leader. And if you have questions we have not addressed today on the call. Have a great day.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T teleconference service.