Eli Lilly Co. (NYSE:LLY) reported its second-quarter 2025 financial results ahead of the opening bell on Thursday.
Below are the transcripts from the Q2 earnings call.
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
Thank you for waiting. Your patience is appreciated. Please hold the line and we’ll be 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. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q2 2025 earnings conference call. At this time, all participants are on a 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 Q2 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 Mondarce, Chief Financial Officer Dr. Daniel Skovronsky, Chief Scientific Officer and President of Lilly Immunology Anne White, President of Lilly Neuroscience Ilya Ufa, President of Lilly USA and Global Customer Capabilities Jake Van Narden, President of Lilly Oncology Patrick Janssen, President of Lilly International and Ken Custer, newly appointed President of Lilly Cardiometabolic Health.
We’re also joined by Mark Heman, Susan Hegelin and Wyatt Wong of the Investor Relations team. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results may 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 our commentary will focus on our non GAAP financial measures. Now I’ll turn the call over to Dave.
Dave Ricks (Chair and CEO)
Thanks Mike. Q2 was a strong quarter. We delivered robust revenue growth, shared top line clinical data from multiple Phase three programs and invested in several initiatives that will support our future growth. Today we shared positive top line data from the ATTAIN 1 or forgopron trial in people with obesity. In ATTAIN 1, patients taking the highest dose of orforglipron lost more than 27 pounds or 12.4% of their body weight. In addition, the safety and tolerability in ATTAIN 1 was consistent with the injectable GLP1 class orforglipron also met all secondary endpoints in the study, improving key markers of metabolic health such as blood pressure, cholesterol and inflammation. This is the second positive phase 3 trial for orforglipron we reported this year and we’re encouraged by these results. Our goal from the beginning was to create a medicine that has a clinical profile consistent with approved GLP1s while offering the convenience of a once daily pill and the production flexibility of small molecule chemistry to meet global demand. We believe this medicine has the potential to make a significant impact on human health and we will now work with urgency to submit orforglipron around the world to meet the global challenge of obesity. On slide 6, we list key Q2 financial metrics and highlight progress related to our strategic Deliverables.
Revenue grew 38% compared to Q2 2024 driven by our key products. These include Ebglis, Jperka, Gisunla, Mounjaro, Omvo, Brzenio and Zepbound. In the US we continue the robust uptake of Zepbound and Mounjaro and Lilly gained market share in the Inkerton analog class for the fourth quarter in a row. Mounjaro also recently became the market leader in the US in total prescriptions within the type 2 diabetes incretin market. Outside the US we continue to launch Mounjaro in new countries. These include Mexico and Brazil. Most recently, we have now launched Mounjaro in most major markets. Q2 was also a quarter of continued investment for Lilly. In addition to increasing commercial activities to support our newest medicines, we started multiple new clinical programs. While the company is experiencing rapid revenue growth, we’re also increasing our R and D investment as early phase program data continues to impress us and to support our future growth. The company Our financial performance in the first half of 2025 was strong and as a result we raised our revenue and earnings per share guidance. Lucas will cover this in more detail during the financial update. In addition to the results from ATTAIN 1, we achieved several key milestones since our last earnings call. These include the US FDA approval of a new dosing schedule for Kisandla, the positive European CHMP opinion for Kisandla announced positive results in The SURPASS CVOT Phase 3 trial for tirzepatide in people with type 2 diabetes and heart disease. We announced positive results in the Bruin CLL314 Phase 3 trial of pertobrutinib in CLL and SLL and we launched the two highest doses of Zepbound in vials in the United States.
We announced and closed the acquisition of SiteOne Therapeutics, which expands Lilly’s pain portfolio and adds a clinical stage non opioid pain program to our mix, and Verve Therapeutics, which adds new genetic medicines for cardiovascular disease with potential to only be administered once in a person’s lifetime. We made progress in Q2 and throughout the first half of 2025 to bring new manufacturing capacity online. We produced more than 1.6 times the amount of saleable incremental doses during the first half of 2025 when compared to the first half of 2024. This includes a significant step up in capacity from our recently constructed facility in Research Triangle Park, North Carolina. We will continue to bring more capacity online in the second half of 2025 and expect our production capabilities to increase further. We also plan to announce the location of two of our new US Manufacturing facilities later this quarter. During the quarter we distributed $1.3 billion in dividends and executed approximately $700 million in share repurchases. Before I turn the call over to Lucas, I’d like to offer some perspective on the drug pricing reform discussion that’s going on. While we support the administration’s position that medical research costs need to be shared more equitably across developed countries, it’s also true that the US Pharmaceutical market has significant defects which shift costs to consumers and increase red tape.
These problems also require urgent reform and make apples to apples comparisons of ex factory pricing inaccurate and misleading. At Lilly, we’ve already implemented several initiatives which directly lower patient costs for our most commonly used medicines. We operate a direct to consumer model at scale through Lilly Direct which provides more affordable access to Lilly medicines. This includes our leading weight loss medications that found at a discount of more than 50% off the list price. We also led in resolving insulin pricing issues in our country by reducing list prices by 70% and ensuring broad access to $35 monthly patient costs including for Medicare. Negotiated prices in Europe come with broad access, low patient co pays and without administrative hurdles like prior authorizations. There are also no intermediaries that distort prices and hospitals do not seek profit by selling medicines and marking them up. If we import foreign price controls and insert them into a US system that isn’t built to function for patients, we risk embracing the worst of two worlds the low productivity and output of Europe’s biopharma sector. With the high out of pocket and distorted prices of the US Insurance market, both today’s patients and the future of new cures and treatments will suffer along with the United States competitiveness. Of course we will engage and are committed to working constructively with the administration to find solutions that both benefit patients while preserving the hope for tomorrow’s cures and the scientific base that has made America the envy of all in global pharmaceutical innovation. Now I’ll turn the call over to Lucas to review our Q2 results.
Lucas Mondarce (Chief Financial Officer)
Thanks, Dave as shown on Slide 7, Q2 was another strong quarter of financial performance. Revenue grew 38% compared to Q2 2024 driven by our key products. Gross margin as a percentage of revenue was 85% in Q2, an increase of 3 percentage points versus the same quarter last year. The increase in gross margin was primarily driven by improved cost of production and favorable product mix which were partially offset by lower realized prices. Marketing, selling and administrative expenses increased by 30% as we continue to increase investment to support our newest launches across therapeutic areas and geographies. R and D expenses increased 23% driven by higher expenses for late stage assets and additional investment in early stage research. 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 45.9%. Performance margin increased by more than 6 percentage points from Q2 2024 driven by revenue growth. Our Q2 effective tax rate was 16.5% consistent with Q2 2024. At the bottom line, earnings per share increased 61% to $6.31, including of a negative impact of $0.14 from acquired IPRND charges. This compares to $3.92 in Q2 2024, which also include $0.14 of acquired IPRND charges. On Slide 8, we quantify the effect of price rate and volume on revenue growth. US revenue increased 38% in Q2 driven by strong volume growth of Zepbound and Mounjaro, partially offset by an 8% decline in price. In Europe, revenue grew 77% in constant currency, reflecting the strong uptake of Mounjaro. Japan revenue grew 7% in constant currency driven by Mounjaro and Epclusa. In China, revenue increased 19% in constant currency driven by volume growth of Mounjaro. Revenue in the rest of the world decreased by 1% in constant currency, driven primarily by stocking in the base period related to Mounjaro launches in new markets. This impact was largely offset by volume growth of Mounjaro and Barsenio this year. Slide 9 provides an uptake of the performance of our key products beginning with immunology. EPC list continues to perform well in atopic dermatitis New patient starts and revenue trends are strong and total prescriptions have nearly doubled since Q1. We also made progress securing access and Eblis is now covered by all three of the largest pharmacy benefit managers that represent 90% of people with commercial insurance for Ombo. We are one full quarter into the launch in Crohn’s disease and are making progress in a competitive market. The new Citrate free formulation is available in most major markets and we are seeing positive trends in new patient starts in the us, Germany, Japan and other international markets. Moving to Oncology Physician feedback on Chaipirka continue to be very positive while still only approving later lines of CLL and mcl. We have seen a strong uptake within the label population and encouraging trends regarding time on therapy. We continue to generate additional data in phase three trials that we believe will support an expanded label and use in early CEL. We recently announced positive results of Bruin 314 in CLL and sell is another positive step forward. Those goals Verzenio Global sales grew 12% in Q2 driven by volume growth. Verzenio continued to be the NBRX and TRX market leader in the US and standard of care in high risk early breast cancer. US prescriptions grew by 4% in Q2 compared to Q2 2024 and international volume grew by 18%. Within neuroscience, Kisandla is continuing a steady launch trajectory and we are making significant progress in driving healthcare system readiness and adoption. In the US we are seeing strong diagnostic growth driven by PET and the acceleration of blood biomaker tests. This momentum is leading to more people being diagnosed and accessing treatment. Over 1500 physicians and 150 of the top healthcare organization have started patients on Quezonda. Outside the US efforts are progressing as well with approval in 13 countries. In Europe, we anticipate approval and launch later this year following the recent CHMP positive opinion. Finally moving to cardiometabolic health, Mounjaro and Sepban both delivered impressive performance. Mounjaro posted $5.2 billion of global sales and exited the quarter with more than 50% of new type 2 diabetes incretin prescriptions in the U.S. mounjaro also became the U.S. market leader in total type 2 diabetes incretin prescriptions In July and has gained 8 percentage points in total prescription share of market during the first seven months of 2025. With the recently announced positive results from SUBPARS CBOT, we look forward to submitting this data to global regulators to support a labeled cardiovascular indication outside the U.S. tirzepatide is now launched in most major markets. As a reminder, Mounjaro is marketed as a single brand for both chronic weight management and type 2 diabetes and in all international markets except Canada and Japan. While the initial reception of recent launches in Mexico, Brazil, China and India has been excellent, the commercial activities have been measured to ensure demand doesn’t exceed supply and that patient and physicians have a good experience. Cepan performance was strong in Q2, contributing $3.4 billion of sales. SEPAN continues to be the US market leader in the branded anti obesity market with two thirds of total patients taking Sepam. We recently launched the 12.5 and 15mg single use vials in Lividirect. All doses of Zepbounds are not available in the vial presentation. While we work to secure broader reimbursement of anti obesity medicines, we are encouraged by the uptake of Sapan in vials. The cash pay vials were approximately 20% of total US SEPAN prescriptions and over 35% of new prescriptions in Q2. As a reminder, effective July 1, the CVS Pharmacy Benefit Manager began excluding Zepbound as an offering for patients on its template formula insurance plans. This has caused significant disruption to patients and we strongly disagree with the decision to restrict access to medicines for patients. As demonstrated in randomized clinical trials, incretine medicines for chronic weight management are not all the same. While it’s still early, we have seen this decision negatively impact CEP band prescriptions during July and expect it to be a headwind to the rate of volume growth in Q3. We remain confident in the long term growth outlook for Zepbound as the most widely used incretin therapy in the branded anti obesity market. On slide 10 we provide a view on the US incretine analog market which include prescription for both type 2 diabetes and chronic weight management. Q2 was another quarter of steady market growth as total Prescription grew by 41% compared to Q2. 2024. Lilly Performance was again strong with share of market reaching above 57%, an increase of 3.8 percentage points compared to Q1. 20212025 While market growth continued to be robust, overall penetration into the addressable population is still low and we believe significantly more patients can benefit from increasing therapy. On slide 11 we provide an update on capital allocation. Moving to Slide 12 is our updated expectation for our 2025 financial performance. We are encouraged by the underlying performance we saw across the business in the first half of the year. We are increasing the bottom and the top end of the revenue range as well as our expectation for performance margins and earnings per share. We now anticipate our revenue will be between 60 and 62 billion dollars. This range reflect the strong performance and a tailwind from foreign exchange rates. We will continue to invest to support our newest launches and to develop new benefits. Given our updated expectations for revenue growth, we now expect non GAAP performance margin to be between 43 and 45.5% as a percentage of revenue. The potential effect of tariffs remains dynamic and we will continue to update our estimate as the situation changes. We expect the 2025 impact of currently announced tariffs to be modest and this has been factored into our 2025 guidance range. @ the bottom line, we have increased our outlook for non GAAP earnings per share and expect EPS of $21.75 to $23.00. As Dave mentioned earlier, we exceeded our increasing sellable doses production in the first half of the year and expect to bring more capacity online during the second half of 2025. We expect to produce at least 1.8 times the number of sellable incretin doses in the second half of 2025 compared to the second half of 2024. Now I will turn the call over to Dan to highlight our progress on.
Dr. Dan Skaronski (Chief Scientific Officer and President of Lilly Immunology)
Thanks Thanks Lucas. We’ve made quite a bit of progress since our last earnings call. During just the past two weeks we shared three phase three readouts from some of our most important molecules. I’ll start with these Last week we announced results from the Tirzepatide surpassed CVOT trial where Tirzepatide demonstrated cardiovascular protection in a landmark head to head trial which was the first ever cardiovascular outcomes trial comparing two incretin …