Eli Lilly & Co. (LLY)

Q3 2011 Earnings Call

October 20, 2011 9:00 am ET

Executives

Jan M. Lundberg - Executive Vice President of Science & Technology and President of Lilly Research Laboratories

Derica W. Rice - Chief Financial Officer, Executive Vice President of Global Services, Member of Operations Committee and Member of Policy & Strategy Committee

Philip Johnson -

David Ricks - Vice President, Operations

John C. Lechleiter - Chairman, Chief Executive Officer and President

Ronika Pletcher - IR Department

Analysts

Charles Anthony Butler - Barclays Capital, Research Division

Steve Scala - Cowen and Company, LLC, Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

David Risinger - Morgan Stanley, Research Division

Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division

Marc Goodman - UBS Investment Bank, Research Division

Seamus Fernandez - Leerink Swann LLC, Research Division

Barbara A. Ryan - Deutsche Bank AG, Research Division

John T. Boris - Citigroup Inc, Research Division

Christopher Schott - JP Morgan Chase & Co, Research Division

Catherine J. Arnold - Crédit Suisse AG, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. Your host and speaker, Vice President of Investor Relations, Phil Johnson. Please go ahead, sir.

Philip Johnson

Good morning. And thanks for joining us for Eli Lilly & Co.'s Third Quarter 2011 Earnings Conference Call. I'm Phil Johnson, Vice President Of Investor Relations. Joining me today are John Lechleiter, our Chief Executive Officer; Derica Rice, our Chief Financial Officer; Dr. Jan Lundberg, our Chief Scientific Officer; Dave Ricks, who's currently President of our U.S. affiliate, and as announced last week, Dave will assume the role of President of our Biomedicine business upon the coming [ph] of his retirement at the end of the year; and we have Ronika Pletcher and Elisa Razner [ph] for Investor Relations.

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 3 and those outlined on latest forms 10-K and 10-Q filed for Securities and Exchange Commission. The information we provide about our product and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions.

Let's begin with a recap of events since our Q2 earnings call. With multiple developments on the regulatory front, the European Commission granted final approval for Trajenta for adults with type 2 diabetes. EU launches have begun starting with the U.K. Launches in other European countries are expected over the balance of 2011 and the first half of 2012. Despite initial impact, we hope to reach an agreement with local authorities that allows Trajenta to be made available to German patients.

The FDA approved Cialis for once-daily use for the treatment of men who have signs and symptoms of benign prostatic hyperplasia or BPH, and men who have both erectile dysfunction and signs and symptoms of BPH. Cialis is the only medication approved by the FDA to treat both ED and BPH.

Just last night, the FDA approved BYETTA for use with insulin glargine. Europe's CHMP issued a positive opinion for use of ALIMTA as a continuation maintenance therapy in patients with nonsquamous non-small-cell lung cancer after initial treatment with ALIMTA plus cisplatin. We expect EC approval during Q4.

Along with Amylin and Alkermes, we submitted our reply to the FDA's Complete Response Letter for Bydureon, and the FDA assigned a PDUFA goal date of January 28, 2012. We also submitted our reply to the FDA's Complete Response Letter for Amyvid, a PET imaging agent under investigation for the detection of beta-amyloid plaque in the brains of living patients. And finally, we submitted the sBLA for ERBITUX in first-line metastatic colorectal cancer.

On the business development front, we entered into 2 different agreements to bolster our diabetes presence in EMEA. First, we entered into collaboration with Lupin Limited, under which Lupin will promote Humulin in India and Nepal. And we expanded our collaboration with Boehringer Ingelheim to include co-promotion Linagliptin by Lilly and copromotion of Humalog by Boehringer Ingelheim.

Also, in earlier stage of this development initiative, we launched a new platform called Open Innovation Drug Discovery to both build our own pipeline and identify molecules that may be useful in the treatment of multiple-drug resistant tuberculosis.

On the legal front, the Court of Appeals for the Federal Circuit ruled in Lilly's favor in the Strattera patent case, overturning a prior ruling by the U.S. District Court in New Jersey and upholding the Strattera method-of-use patent, which will expire in May 2017. The defendants filed a motion for rehearing on en banc and earlier this week, the court denied their request.

Lastly, an important news for our industry and for Lilly. The America Invents Act was signed into law. Not only will this new law align U.S. patent laws more closely to those of other countries, but we believe, it will improve U.S. competitiveness by: reducing the backlog of patent applications, enhancing the quality of issued patents; and providing greater certainty for those that invest in innovation.

Now for the background, Ronika will discuss our Q3 financial results and provide our pipeline update. And then Derica will cover our financial guidance for 2011 and key events for the remainder of 2011 and 2012. Ronika?

Ronika Pletcher

Thanks, Phil. As we've done on previous calls, we'll focus our comments on non-GAAP results, which we believe provides insight into the underlying trends in our business. This view excludes certain items such as restructuring charges, asset impairments and other special charges. We'll also provide commentary on our Q3 results, excluding the effect of headwinds that were highlighted in previous discussions of both our quarterly performance and our 2011 guidance.

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