Eli Lilly & Co.'s CEO Discusses Q4 2011 Results - Earnings Call Transcript

Eli Lilly & Co. (LLY)

Q4 2011 Earnings Call

January 31, 2012 9:00 am ET

Executives

Ronika Pletcher -

Ilissa Rassner -

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

Philip Johnson -

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

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

Jeffrey N. Simmons - Senior Vice President and Head of Elanco Animal Health Business Unit

Analysts

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

Jami Rubin - Goldman Sachs Group Inc., Research Division

Marc Goodman - UBS Investment Bank, Research Division

Gregory B. Gilbert - BofA Merrill Lynch, Research Division

David Risinger - Morgan Stanley, Research Division

Steve Scala - Cowen and Company, LLC, Research Division

John T. Boris - Citigroup Inc, Research Division

Charles Anthony Butler - Barclays Capital, Research Division

Seamus Fernandez - Leerink Swann LLC, Research Division

Jeffrey Holford - Jefferies & Company, 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 Q4 earnings call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Ronika Pletcher, Director of Investor Relations. Please go ahead.

Ronika Pletcher

Good morning. Thank you for taking the time to join us for Eli Lilly & Co.'s Fourth Quarter 2011 Earnings Conference Call. I'm Ronika Pletcher, Director of Investor Relations. Joining me are our Chairman and CEO, John Lechleiter; our Chief Financial Officer, Derica Rice; our President of Lilly Research Laboratories, Dr. Jan Lundberg; our President of Elanco Animal Health, Jeff Simmons; and Ilissa Rassner and Phil Johnson from 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 in our latest form 10-K and 10-Q 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.

Since our last earnings call, we've had a number of significant events. Here are some of the highlights. In regulatory news, the European Commission approved the use of Alimta as continuation maintenance therapy in patients with advanced nonsquamous non-small cell lung cancer after initial treatment with Alimta plus cisplatin.

In the U.S., we submitted an sNDA to the FDA for the same indication. The FDA approved the use of ERBITUX in combination with chemotherapy as a first-line treatment for recurrent, locoregional or metastatic squamous cell carcinoma of the head and neck. The FDA approved Jentadueto, the linagliptin plus metformin fixed-dose combination for the treatment of adults with type 2 diabetes. But FDA also approved Amylin's BYDUREON as adjunct to diet and exercise to improve glycemic control in patients with type 2 diabetes.

We submitted Amyvid for regulatory review in Europe for the detection of beta-amyloid plaque in the brains of living patients, and we announced the withdrawal of Xigris in all markets following the results of the PROWESS-SHOCK study.

On the business development front, we agreed with Amylin to terminate the exenatide alliance. Amylin assume full responsibility for exenatide in the U.S. at the end of November, while responsibility for all OUS markets will transition to them by no later than the end of 2013. And we signed an agreement to acquire ChemGen Corp., a privately held company specializing in the development and commercialization of innovative feed enzyme products that improve the efficiency of poultry, egg and meat production. This marks our fifth Animal Health acquisition in the past 5 years. And we entered into a 6-month agreement with Prasco Laboratories to supply an authorized version of olanzapine upon exploration of the U.S. patent for Zyprexa on October 23, 2011.

In Clinical news, let me begin with an update on solanezumab. The Data Monitoring Committee for the Phase III trial of solanezumab met earlier this month, conducting both safety and futility analyses. The DMC indicated that futility was not met and recommended that both pivotal trials continue without modification. Please keep in mind that the lack of futility in an [indiscernible] analysis does not mean the drug is efficacious.

In these studies, not meeting futility simply means that only 1 of the 4 primary endpoints across the 2 pivotal studies needed to have more than a 30% chance of being positive upon study completion. In addition, while the DMC does not recommend modification to the 2 pivotal studies, the DMC did recommend that 2 additional ECG measurements be added to the open-label extension study to provide a level cardiac monitoring that is more consistent with the blinded pivotal trials.

As we've done in the past, we encourage analysts and investors not to read too much into the outcome of the DMC's review. While we are pleased with the outcome of the DMC's futility analysis, efficacy and safety can only be assessed at the end of the studies.

In other clinical news, we initiated Phase III trials to study our novel basal insulin analogue for type 1 and type 2 diabetes. We also initiated Phase III trials to study our anti-IL-17 monoclonal antibody in psoriasis, and we presented encouraging Phase II data at the annual American Heart Association meeting for evacetrapib in patients with hypercholesterolemia or low HDL-C.

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