Loading...
Loading...
Eli Lilly and Company
expects to launch several new medicines to
treat unmet patient needs beginning next year, and return the company to
revenue growth and expanding margins after 2014, senior executives told the
investment community today at the company's global research and corporate
headquarters.
Lilly also reaffirmed its near-term goals of generating at least $20 billion
in revenue, $3 billion in net income and $4 billion in operating cash flow
through 2014, despite the impending loss of revenue due to patent expirations
for two major products in the U.S., beginning in December of this year. The
company also announced a new share repurchase program that will return an
additional $5 billion to shareholders over time.
The upbeat outlook demonstrates that Lilly has been successfully executing its
long-term innovation strategy to weather the significant impact of patent
expiries from 2011-2014 and advance more medicines through late-stage
development, approval and launch. The company's strategy to focus on
development of innovative medicines has produced the strongest pipeline in
Lilly's 137-year history, with 13 potential medicines in Phase 3, the final
stage of clinical studies, or in regulatory review; and 26 more in Phase 2.
This represents a total number in mid-to-late-stage development that is five
times greater than the comparable total in 2004.
Launching several of those late-stage molecules will bring new medicines to
patients and enable the company to return to revenue growth after 2014, John
C. Lechleiter Ph.D., Lilly's chairman, president and chief executive officer,
told analysts gathered at the investment event.
"We've undertaken extensive efforts to transform our company to address the
challenge of patent expirations and the demands of patients and payers for
greater value from medicine," Lechleiter said. "Today, we're seeing our
strategy bear fruit, backed by clinical data that strengthens our confidence
in our innovation-based strategy and in our ability to return to growth. We're
determined to seize the tremendous opportunities before us and drive a new era
of growth for Lilly and its shareholders, while delivering on our mission of
improving the lives of patients."
Specifically, Lilly executives noted several key events this year that
demonstrate progress in the company's innovation-based strategy:
o U.S. and European regulatory submissions for two medicines to treat type 2
diabetes: empagliflozin (with partner Boehringer Ingelheim) and
dulaglutide.
o European submission of a new insulin glargine product to treat type 1 and
type 2 diabetes.
o U.S. and EU regulatory submissions completed for ramucirumab as a
single-agent treatment for patients with advanced gastric cancer who have
had disease progression after initial chemotherapy.
o Second positive Phase III trial of ramucirumab in advanced gastric cancer,
with the RAINBOW combination therapy trial demonstrating both improved
overall survival and progression-free survival.
o Positive results for necitumumab for patients with metastatic squamous
non-small cell lung cancer, which could form the basis for a regulatory
submission as early as 2014.
In 2014, the company believes it could launch empagliflozin, dulaglutide, and
ramucirumab, subject to regulatory approval.
"Lilly has successfully replenished and advanced our pipeline to drive growth
post-2014, while building a sustainable R&D engine for the long-term," said
Jan M. Lundberg, Ph.D., executive vice president of science and technology and
president of Lilly Research Laboratories. "We've filed for regulatory
approval for an unprecedented number of investigational medicines this year
with three in diabetes and one in oncology. In the future we expect to
maintain a steady state of Phase 3 programs in the mid-to-high single digits,
with a robust Phase 1 and Phase 2 pipeline to fill in behind."
Lundberg noted that in the 2013 – 2014 timeframe, the company expects data
readouts or pipeline advancements for nine of the assets in late-stage
development. These include the three potential launches noted above, the
regulatory submissions of necitumumab and the new insulin glargine product,
and new data readouts for four other late-stage assets by the end of 2014.
Lundberg also said the company anticipates seeing clinical readouts for the
vast majority of its Phase 2 assets during this period.
Business outlook
Chief Financial Officer Derica Rice highlighted the company's strategy to
deliver on its financial goals through 2014 and grow revenue and expand
margins post-2014.
"To prepare Lilly for 2014 and beyond, we committed to replenishing and
advancing our pipeline, driving revenue in our growth engines and key marketed
products, and increasing productivity and reducing our cost structure," Rice
said. "We've taken these commitments seriously and made substantial progress
toward achieving our near-term goals, and we're confident that this progress
positions us for future success."
Near-term business outlook (through 2014)
In the near-term, Rice said the company still expects to hit its financial
goals in 2014, noting:
o Selling, general and administrative expenses will decline as the company
realizes the full benefit of the restructuring efforts in Europe and the
U.S. sales organizations as well as savings from ending the
direct-to-consumer promotion of Cymbalta^®.
o The company will realize additional efficiencies in research and
development and benefit from a substantial reduction in R&D costs as the
pipeline progresses through Phase 3 into regulatory submission.
Rice noted that market factors, including the devaluation of the Yen and
slower market growth in key emerging market countries, have moderated the
company's near-term revenue growth expectations. These headwinds will make it
challenging for the company to meet the minimum revenue goal of $20 billion in
2014, but Rice said the company is focused on finding appropriate ways to
achieve this goal. Rice also said the company can and will take additional
actions to achieve its 2014 net income and operating cash flow targets through
reductions in operating expenses.
"Current consensus for 2014 is in-line with our net income goal, although we
may get there in a different way," Rice said. "For instance, current consensus
may underestimate the impact of the Cymbalta and Evista^® patent expirations
on our gross margin percent and our ability to reduce operating expenses,
while it may overestimate our tax rate, which is trending in the low 20s
percent. As usual, we'll provide specific 2014 line-item guidance in
January."
Medium-term business outlook (post-2014)
Moving beyond 2014, Lilly expects continuing revenue growth in four of its
five businesses: Diabetes, Oncology, Emerging Markets and Animal Health. The
fifth, Bio-Medicines, loses U.S. marketing exclusivity on Cymbalta in 2013 and
Evista in 2014, but is then expected to provide a large, stable and profitable
revenue base moving ahead.
o In Diabetes, Lilly expects continued growth for currently marketed
products (insulins and Trajenta^®), with additional growth driven by the
potential launches of empagliflozin, dulaglutide, the company's insulin
glargine product and its novel basal insulin.
o In Oncology, Lilly has patents that could provide exclusivity for Alimta^®
into the early 2020s in the U.S. and Europe, and sees significant growth
opportunities from the potential launches of necitumumab and ramucirumab.
o In Emerging Markets, the company sees continued strong underlying demand
for pharmaceuticals in key Lilly therapeutic areas, led by Diabetes.
o In Animal Health, strong global demand for animal-based protein and a
growing companion animal market provide a strong platform for continued
growth. Rice noted that the company intends to augment its strong organic
growth in animal health with continued business development.
o After the U.S. patent losses from Cymbalta and Evista, Rice said mid-term
revenue in Bio-Medicines should be relatively stable, anchored by
continued growth from Axiron^®, Cialis^®, Forteo^®, Strattera^® and
Effient^®. Later in the decade, Bio-Medicines could provide significant
revenue growth through a combination of launches of new molecules
currently in Phase 3 development, including solanezumab, evacetrapib,
baricitinib, ixekizumab, tabalumab and edivoxetine.
"With positive Phase 3 data on a number of assets, we've begun to de-risk our
expectations for mid-term revenue growth," Rice said. "I am confident in our
outlook to return to a period of growth and expanding margins."
Rice said the company still expects over time to lower SG&A as a percent of
revenue to the range of 28 percent to 30 percent and R&D expense as a percent
of revenue to a range of 18 percent to 20 percent. This would allow the
company to achieve a total operating expense efficiency of approximately 50
percent of revenue by 2019, if not earlier.
Dividends and share repurchase
Lilly also reconfirmed today that it expects to maintain its dividend at least
at its current level and announced that it will supplement its annual dividend
of approximately $2 billion per year with share repurchases totaling $5
billion over time.
Webcast of Investment Community Meeting
A live webcast of the Lilly Investment Community meeting, along with
presentation slides, is available through a link on Lilly's website at
www.lilly.com. The meeting will start today at 8:30 a.m. ET and last until
approximately 12:30 p.m. The webcast will be available for replay over the
next 12 months.
Loading...
Loading...
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ex-Date | ticker | name | Dividend | Yield | Announced | Record | Payable |
---|
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in