Eli Lilly and Company (NYSE:LLY) reported fourth-quarter financial results on Wednesday. The transcript from the company’s earnings call has been provided below.
- Eli Lilly and Co shares are climbing with conviction. What’s behind LLY gains?
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Operator
Thanks for holding. We appreciate your time and patience. Please stay on the line and we’ll be back in just a moment. Thank you for waiting. Your patience is appreciated. Please hold the line and we’ll be right back with you. Right back with you. Thank you for holding. We look forward to talking with you soon. Please hold the line and we’ll be right back with you. Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q3 2025 earnings conference call. At this time, all participants are on listen only mode. Later we will be conducting a question and answer session and instructions will be given at that time. Should you request assistance during the call, please press star then zero and an operator will assist you offline. I would now like to turn the conference over to your host, Mike Safar, Senior Vice President of Investor Relations. Please go ahead.
Mike Safar (Senior Vice President of Investor Relations)
Good morning. Thank you for joining us for Eli Lilly and Company’s Q3 2025 earnings call. I’m Mike Safar, Senior Vice President of Investor Relations. Joining me on today’s call are Dave Ricks, Lilly’s chair and CEO Lucas Lilly, Chief Financial Officer Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology Anne White, President of Lilly Neuroscience Ilya Yuffa, President of Lilly USA and Global Customer Capabilities Jake Van Narden, President of Lilly Oncology, Patrick Johnson, President of Lilly International and Ken Cacciatore, President of Lilly Cardiometabolic Health. We’re also joined by Mark Heman, Susan Hedgeland and Wes Tall of the Investor Relations team. During this 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 4. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10K and subsequent filings with the SEC. 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. Dave, we’ll turn the call over to you. Oh, sorry.
Dave Ricks (Chairman and CEO)
Thanks Mike. Appreciate it. Q3 was another strong quarter for Lilly. We made progress across all our strategic deliverables. We delivered compelling financial results, advanced our pipeline and achieved key milestones to expand our manufacturing footprint. This is all shown on slide 6. In Q3, revenue grew 54% compared to the same period last year. Revenue from key products more than doubled as our medicines continued to increase their global impact. In the US Lilly gained market share in the incretin analogs market for the fifth consecutive quarter. Lilly medicines account for nearly 6 out of 10 prescriptions within this large and growing class. Outside the US Mounjaro performance accelerated driven by robust uptake around the world. As a result of our strong financial performance, we raised our revenue and earnings per share guidance. Lucas will cover this in more detail. Later in the call. Since our last earnings call, we achieved several key milestones including US FDA approval for imlunestrant under the brand name Orserdu for HR positive HER2 negative ESR1 mutated advanced or metastatic breast cancer. The EU approved Donanemab for early symptomatic Alzheimer’s disease. Positive results from a Phase 3 trial of Jaypirca in treatment of Naive Positive overall survival data for Verzenio in high risk early breast cancer. Positive results from the second phase 3 trial of Orforglipron in obesity, enabling NOW global submissions to begin later this year. Positive results from three additional phase 3 trials of Orforglipron in type 2 diabetes, including one trial that demonstrated head to head superiority versus oral semaglutide. We also made good progress executing our manufacturing expansion agenda. We announced plans to build two new US Facilities that will make active pharmaceutical ingredients and the expansion of an existing facility in Puerto Rico. The new facility in Virginia will support our bioconjugate and monoclonal antibody portfolio and the new facility in Texas and the expansion in Puerto Rico will support our small molecule portfolio including Orforglipron. We plan to announce updates on our two remaining new US Manufacturing facilities in the coming months. During the quarter, we distributed $1.3 billion in dividends and executed approximately $700 million in share repurchases. Now I’ll turn the call over to. Lucas to review the Q3 results.
Lucas Lilly
Thanks, Dave. As shown on Slide 7, Q3 was another strong quarter of financial performance. Revenue grew 54% compared to Q3 2024 driven by our key products. Gross margin as a percentage of revenue was 83.6% in Q3, an increase of 1.4 percentage points versus the same quarter last year. This improvement was driven by favorable product mix partially offset by lower realized prices. Research and development expenses increased 27% driven by continued investments in our portfolio. We have initiated 16 new Phase 3 programs since the start of 2024 and continue to advance our pipeline. Marketing, selling and Administrative expenses increased 31% as we continue to increase investment to support ongoing and future launches across therapeutic areas and geographies, our non GAAP performance margin, which we define as gross margin, less R and D marketing, selling and administrative expenses as a percentage of revenue was 48.3%. Performance margin increased by more than 8 percentage points from Q3 2024 driven by revenue growth. At the bottom line, ear
Lilly RD had another productive quarter. I’ll summarize progress by therapeutic area beginning with cardiometabolic health. Since our last call, we announced results from four additional positive phase 3 trials for orphaglipron. Of note, one of those trials was a TANE 2 in people with both obesity and type 2 diabetes. As a reminder, patients with obesity and type 2 diabetes are less responsive to weight loss on GLP1 monotherapy than those without type 2 diabetes. For example, in the step 2 clinical trial of people with obesity and type 2 diabetes, Semaglutide at 2.4 mg and 1 mg resulted in 10.6% weight loss and 7.6% weight loss, respectively. As shown on slide 13. ATTAIN 2 demonstrated 10.5% weight loss and 7.8% weight loss at the 36 mg and 24 mg doses of orphoglipron, respectively aligned with our goal to deliver efficacy similar to injectable GLP1 monotherapy in an easy to use daily pill. This trial completed the clinical package required to initiate global re
Dave Ricks (Chairman and CEO)
Thanks a lot, Dan. A lot to talk about there in the pipeline. We’re pleased with all the progress in 2025 and we’ve had another quarter of really strong execution both in driving the business results and making investments that will help us discover and develop New Lilly medicines to help more people around the world. Now I’ll turn the call over to Mike, who will moderate our Q and A session. Mike?
Mike Safar (Senior Vice President of Investor Relations)
Yeah, thanks, Dave. We’d like to take questions from as many callers as possible. So consistent with prior quarters, we will respond to one question per caller and end the call promptly by 11. If you have more than one question, you can reenter the queue and we will get to you as time allows. Paul, please, please provide instructions for the Q and A and then we’re ready for the first caller.
Operator
Certainly at this time we will be conducting a question and answer session. If you have any questions, please press star 1 on your phone at the start. We ask that participants limit themselves to one question on today’s call. If you do have a follow up question, please rejoin the queue by pressing star 1 at any time. We also ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. And the first question today is coming from Terence Flynn from Morgan Stanley. Terrence, your line is live.
Morgan Stanley Analyst
Hi. Thanks so much for taking the question. I really appreciate it and congrats on the quarter. A lot of focus obviously on Orphaglipron and path-to-market. I was surprised that it wasn’t on the first list of the Commissioners’ National Priority Review Voucher program. And so maybe you could just comment on kind of if you guys are seeking that voucher and then if not, why not and then how to think about timelines for launch and some of the puts and takes as we think about maybe consensus expectations for 2026. Thank you.
Dave Ricks (Chairman and CEO)
All right, great. Thanks for the question, Terrence. We’ll go to Dave to talk a bit about Orphaglipron. Yeah, hi. Thanks, Terence, for the call. I think as we’ve said before, we’re interested in getting orphaglipron to as many patients around the world as fast as we can, including those in the US So without commenting on specific vehicles, I think investors can expect us to be pursuing an all of the above strategy to get the medicine out more quickly. Also, I’d point out that if you look at this new voucher program, I think Orforglipron checks at least three or four of the boxes laid out. So we’ll see. It’s obviously a government decision about which pathway they choose and the review time itself. But we’re focused on speed here and we’re ready to launch. So the package will go in in the quarter and we hope to get approval as soon as we can after that. Great. Thank you, Dave. We’re ready for the next question.
Operator
Paul, the next question is coming from Chris Schott from JP Morgan. Chris, your line is live.
JPMorgan Analyst
Great. Thanks so much for the question. I just wanted to touch base a bit more on the Mounjaro International ramp. It’s obviously had a pretty impressive step up in sales these past two quarters. Can you just elaborate a little bit. More on how some of these new country launches are trending relative to your expectations, how to think about growth off of this new higher base and is just there any meaningful stocking as we appreciate kind of look at these numbers just a little bit more color on what’s been driving this big step up. Thank you.
Patrick Johnson (President of Lilly International)
Great. Thanks, Chris. Thanks for the question on Lilly International. We’ll go to Patrick for that to talk a bit about Mounjaro uptake new country launches growth. Thank you very much, Chris. I think we are very encouraged by what we’re seeing outside of the US and the business, as we shared earlier, is 75% out of pocket and 25% type 2 diabetes. What we have seen is of course an initial stocking in both markets where we launched and we refer to the big ones being in Q2 in China, Brazil, Mexico and India. Since then we have seen a lift in the performance also in Those markets in Q3 and A continued very strong performance globally. Looking forward, I think the major opportunities is number one in Type two, we have reimbursement currently in aid markets and we’ll continue those efforts across all of US Markets. But that’s going to take some time. And secondly, the big opportunity when it comes to obesity is really about patient activation and we will lean in on all of those efforts also in 2026. When you look at international, it’s important to while it’s one line in the income statement we are referring to more than 55 countries and our different market dynamics, different buying patterns such we have seen over the last several quarters. It’s not going to be a straight line but there are significant opportunities outside of us also moving Forward across type 2 and chronic weight management. Great, thank you Patrick. We’ll go to the next question.
Operator
Paul, the next question will be from Seamus Fernandez from Guggenheim. Seamus, your line is live.
Guggenheim Analyst
Thanks so much for taking the question. So mine is actually on some of the behaviors that we’re seeing in the market around M and A and how the competitors dynamics are playing out and how you, Dave and Dan see the market evolving from here. You’ve commented on Retatrutide, perhaps segmenting the heavier patient population with greater comorbidities. You have orphaglipron potentially targeting a maintenance and lower end portion of the market that’s massively scalable. And you also have Tirzepatide kind of blowing the numbers out and potentially cornering the competitor to some degree in other markets. Just wanted to get a sense of if that behavior would be concerning to you if …