Eli Lilly & Co. (LLY) Q4 2010 Earnings Call January 27, 2011 9:00 am ET Executives Jan Lundberg - Executive Vice President of Science & Technology and President of Lilly Research Laboratories
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We accomplished a great deal in 2010, while rapidly adapting to significant external and internal challenges. Here are some highlights. For the full year, we again delivered strong financial performance, generating 6% revenue growth, and we were able to leverage this 6% revenue growth into 8% non-GAAP net income growth, as we made substantial progress reducing headcount and containing costs.Our strong operating performance, along with prudent management of working capital generated nearly $7 billion of operating cash flow, easily covering capital expenditures of about $700 million, and our dividend of roughly $2.2 billion. During the year, we did experience pipeline disappointments with [ph] teplizumab and tasisulam. However, our scientists remain focused on speeding innovation to patients, making significant pipeline progress. Advancing 16 new molecules into Phase I testing, nine molecules into Phase II testing, and two molecules into Phase III testing. We also concluded a number of business development deals with a bias towards those that provide current or potential near-term revenues. Our strong financial performance, focus on speeding innovation to patients and targeted use of business development all support our goal of successfully navigating our upcoming patent explorations and emerging with an even greater strength and capacity to drive future growth. Since our last earnings call, we've made significant progress on a number of fronts. In clinical news, we began Phase III trials of our antibac antibody for both rheumatoid arthritis and lupus. Based on an interim review of long-term safety data, and after complication with the FDA, we made the decision to begin Phase III trials later this year of mGlu2/3 of monotherapy treatment for schizophrenia. And along with our partner, Incyte Pharmaceuticals, we disclosed promising Phase IIa data in rheumatoid arthritis for our JACK1/JACK2 inhibitor. In regulatory news, we received FDA approval of Cymbalta for the management of chronic musculoskeletal pain based on clinical trials in patients with chronic low back pain and chronic pain due to osteoarthritis. And we'll begin active promotion for this indication next week.
We also received FDA approval for Axiron as replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone. And we expect to launch the product midyear after building sufficient launch quantities.Health Canada approved Byetta to improve glycemic control in patients with type 2 diabetes. And we also submitted sNDAs for Byetta used in combination with basal insulin and for Cialis for benign prostatic hyperplasia. On the legal front, the U.S. District Court ruled that judgment will be entered in Lilly's favor in the Alimta compound patent challenge. Including a recently obtained six-month pediatric exclusivity, this patent provides protection for Alimta until January 17. And the Court of Appeals for the Federal Circuit heard our appeal of the U.S. District Court's ruling invalidating our Strattera method-of-use patent. As argued at the appeal hearing, we feel there is a strong basis for the CAFC to overturn the district court ruling. We are awaiting a decision by the CAFC. And in the meantime, an injunction from the CAFC prevents generics from launching. Finally in business development news, we announced and completed the acquisition of Avid Radiopharmaceuticals. Avid's lead asset, florbetapir, was assigned a priority review by the FDA. And just last week, an FDA advisory committee recommended approval of the beta-amyloid imaging agent if certain conditions are met related to physician training and re-reading of existing brain scans. Along with Boehringer Ingelheim, we announced a broad strategic alliance to develop and commercialize two oral diabetes compounds from BI and two basal analog insulins from Lily. As we've done in previous calls, we'll focus our comments on the non-GAAP results, which we believe brought insights in some underlying trends in our business. This view excludes certain items such as restructuring charges, asset impairments and other special charges. Read the rest of this transcript for free on seekingalpha.com