Q4 2025 Earnings Call Transcript

Thanks for holding. We appreciate your time and patience. Please stay on the line, and we'll be back in just a moment. Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q4 2025 Earnings Conference Call.

At this time, all participants are in 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 0, and an operator will assist you offline. I would now like to turn the conference over to your host, Mike Czapar, Senior Vice President of Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly and Company's Q4 2025 earnings call. I'm Mike Czapar, Senior Vice President of Investor Relations. Joining me on today's call are David Ricks, Lilly's Chair and CEO, Lucas Montarce, Chief Financial Officer, Dr.

Daniel Skovronsky, Chief Scientific and Product Officer, Anne White, President of Lilly Immunology, Dr. Carole Ho, President of Lilly Neuroscience, Ilya Yuffa, President of Lilly USA and Global Customer Capabilities, Jake Van Naarden, President of Loxo Oncology and Head of Business Development, Patrik Jonsson, President of Lilly International, and Kenneth Custer, President of Lilly Cardiometabolic Health. We're also joined by Mark Heiman, Susan Hedlund, and Wes Tull of the investor relations team. 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 several factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. 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 our non-GAAP financial measures. Now I'll turn the call over to David Ricks.

Thank you, Mike. 2025 was a strong year for Lilly. We delivered robust revenue growth, advanced our pipeline, expanded our manufacturing footprint, and helped over 70 million people around the world. The 2025 full-year revenue grew 45% compared to 2024, driven by our key products. We launched new medicines like Inlureo, secured new indications for Omvo and Jayperca, and entered new markets as we completed the international rollouts of both Mounjaro and Kisanlo.

We generated positive clinical data in more than 25 phase three trials, including registrational trials to support two new incretins, Orforglipron and Retatrutide. We submitted Orforglipron for obesity in the US and in more than 40 countries globally. We started 14 new phase three programs over the past few months, including Oloralintide and Brenepatide, and we have one of the largest clinical stage pipelines in our company's history. We executed 39 business development transactions across all our therapeutic areas and added multiple clinical stage assets through transactions, including Scorpion, FERV, SiteOne, Adverum, and the upcoming acquisition of Ventix.

We continue investing in artificial intelligence to discover and develop new medicines. In addition to our new supercomputer, we recently announced a new collaboration with NVIDIA to open a co-innovation AI lab. This project will combine Lilly's scientific expertise with NVIDIA's leading technology to accelerate drug discovery. We progressed our manufacturing expansion efforts and announced plans to build multiple new manufacturing sites in the US and Europe.

We increased our manufacturing capacity and began making medicine at our new sites in Wisconsin and North Carolina. We exceeded our goal to produce 1.8 times the number of incretin doses in 2025 compared to 2024. Since 2020, we've committed over $55 billion, the largest manufacturing build-out in company history. We announced an agreement with the US government to provide access to obesity medicines to millions of Americans with insurance through Medicare and Medicaid. We're proud of our ability to bring these important medicines to patients at a cost of only $50 per month out of pocket.

The number of people engaging with our US direct-to-patient platform reached 1 million patients in 2025. Our most popular offering, the Zepbound self-pay vials, now makes up one-third of new patient starts who start on any brand of obesity medication. Lastly, we distributed $1.3 billion in dividends and $1.5 billion in share repurchases. We also strengthened our leadership team with the addition of two new executives, and I welcome both Carole Ho and Anne White to this call for the first time. Now I'll turn it over to Lucas to review our Q4 results and share details on the 2026 guidance.

Thanks, David. We delivered robust financial performance in 2025. Our full-year revenue of $65.2 billion increased by 45% compared to 2024, and earnings per share grew by 86% to $24.21. Q4 financial performance was also strong, as shown on slide seven. Revenue grew 43% compared to Q4 2024, driven by our key products. Gross margin as a percentage of revenue was 83.2%, consistent with Q4 2024. Favorable product mix and improved production costs were offset by lower realized prices.

R&D expenses increased by 26%, driven by continued investments in our early and late-stage portfolio. Marketing, selling, and administrative expenses increased 29%, driven by promotional efforts to support our ongoing and future launches. Our non-GAAP performance margin was 47.2%, an increase of 4.2 percentage points compared to Q4 2024. Our effective tax rate was 19.7%, and earnings per share were $7.54, inclusive of $0.52 of acquired IPR&D charges. This compares to earnings per share of $5.32 in 2024, which included $0.19 of acquired IPR&D charges.

On slide eight, we quantify the effect of price, rate, and volume on revenue. US revenue increased 43% in Q4, driven by volume growth of Mounjaro and Zepbound, partially offset by a 7% decline in price. Revenue growth was strong outside the US as well, driven by double-digit volume growth in Europe, Japan, and China. In the rest of the world, volume doubled, driven by the launch of Mounjaro in new markets.

On slide nine, we provide an update on the performance of our key products, which contributed over $13 billion to revenue this quarter and grew by 91% compared to Q4 2024. Beginning with neuroscience, Kisanlo recently became the US market leader in the amyloid-targeting therapy space, with more than 50% share of total prescriptions. Revenue was $109 million, driven by overall market growth, increased awareness and diagnosis of Alzheimer's disease, as well as increased prescriber adoption based on Kisanlo's clinical profile. In immunology, Eblis delivered solid performance in atopic dermatitis, where use total prescriptions increased 25% compared to Q3 2025. Omvo continued its uptake, and global revenue increased 55% compared to the fourth quarter in 2024. Jayperca posted another strong quarter of sales performance, and global sales grew 30% compared to Q4 2024. We recently received an expanded US indication to include people previously treated with a covalent BTK inhibitor, significantly increasing the number of people who can benefit from this medicine.

Verzenio global sales increased 3%, driven by volume growth outside the US. Verzenio remains the market leader in its early breast cancer indication; however, overall market penetration has reached a plateau, as reflected in US trends. Finally, in cardiometabolic health, Zepbound and Mounjaro both delivered strong results. Outside the US, positive uptake trends of Mounjaro continued, particularly in our newest launch countries in Latin America and Asia.

We have launched in all major markets and are now the incretin share of market leader outside the US as well. Moving to the US, as shown on slide 10, we combine incretin analog market continued its robust growth trajectory, with total prescriptions increasing by 33% compared to Q4 2024. As market penetration within the population of people with obesity is only mid-single digits, we believe there is room for market expansion and sustained market growth in the quarters and years to come. We have Zepbound revenue more than doubled compared to Q4 2024. Zepbound continues to be the market leader in the branded obesity market with nearly 70% share of new prescriptions.

US total prescription growth for Zepbound was robust, both in auto-injectors and vials. We are encouraged to see sustained growth uptake of Zepbound vials, which represented approximately one-third of total Zepbound prescriptions and nearly 50% of new Zepbound prescriptions in Q4. In the US, Mounjaro expanded market leadership in the type two diabetes incretin market, exiting the quarter with over 55% of new prescriptions. On slide 11, we provide an update on capital allocation. Moving to slides 12 and 13, we share our 2026 financial guidance and highlight key factors that will impact our financial outlook.

We expect revenue to be between $80 billion and $83 billion. The midpoint of our revenue range is an increase of 25% compared to 2025. We expect to deliver industry-leading volume growth driven by our key products, partially offset by lower realized prices. Price is expected to be a drag on growth in the low to mid-teens. Three factors will impact US price: the government access agreement for obesity medicines, updated direct-to-patient Zepbound pricing, and lower Medicaid prices for later life cycle medicines.

Pricing outside the US will be impacted by Mounjaro's inclusion on China's National Reimbursement Drug List for type two diabetes. We believe these price concessions will be more than offset by increased volume over time as we expand the number of people who can benefit from Lilly medicines. As I shared earlier, we continue to see robust growth trends in the US incretin analogs market, and we expect a similar trajectory to continue in 2026. As seen with other new launches, we expect the launch of oral GLP-1s to expand the addressable market. We expect Orforglipron to launch for chronic weight management in the US during 2026 and to launch in most international markets during 2027. We anticipate new Medicare access to obesity medicines will become effective no later than July 1, 2026. While we anticipate a reduction in Medicaid access in 2026 due to key states like California removing obesity coverage, we expect new states will add coverage for people with Medicaid in 2027. Within revenue, we anticipate Eblis, Jayperca, Inlureo, Kisanlo, and Omvo will all contribute to growth, whereas late lifecycle products like Trulicity, Talsa, and Verzenio are expected to be flat or decline.

We expect our non-GAAP performance margin to be between 46% and 47.5%. Across the P&L, there are pushes and pulls that we anticipate will impact our performance margin expectations. We expect gross margin will be relatively stable to slightly down compared to Q4 2025, as favorable product mix and increased productivity are offset by price and new facilities coming online. Consistent with our strategy to invest in innovation, we expect R&D expenses will scale up in 2026. We have 36 active Phase III programs in our pipeline and plan to initiate even more new programs in 2026. With one of the largest clinical stage pipelines in company history, we are investing to maximize the impact of these potential new medicines.

Marketing, selling, and administrative expenses are expected to grow as we invest to support new launches across therapeutic areas. As we launch new medicines, we will fully invest in variable expenses while controlling fixed costs by leveraging our existing commercial footprint. We expect earnings per share of between $33.50 and $35, setting us up for another year of strong top-line and bottom-line growth. Now I'll turn the call over to Daniel to highlight our progress on R&D.

Thanks, Lucas. Since our last R&D update, we've made significant progress in R&D. I'll share updates by therapeutic area, including select data highlights from recent phase three announcements, a final update on key events, and the potential 2026 outcomes on which we are now focused. Beginning with immunology, just a few weeks ago, we released top-line data from Together PSA, a randomized controlled phase 3b trial evaluating ixekizumab plus tirzepatide as compared to ixekizumab alone in people with psoriatic arthritis and obesity.

This first-of-its-kind study assessed whether concomitant treatment with an incretin could deliver additional efficacy when added to an existing immunology treatment. As shown on slide 14, the combination not only achieved its primary endpoint of at least 50% reduction in psoriatic arthritis activity plus 10% weight reduction, but also showed a 64% relative increase in the proportion of patients achieving a 50% reduction in psoriatic arthritis symptoms compared to ixekizumab alone. An important finding from the study was the potential effect of tirzepatide when added to ixekizumab on psoriatic arthritis symptoms via both weight-dependent and weight-independent mechanisms.

These results further support existing treatment guidelines for psoriatic arthritis that recommend treatment of comorbid obesity and shed further light on how incretins may have a positive effect on other diseases independent from weight loss. We look forward to publishing these data in more detail in a peer-reviewed journal and presenting them at an upcoming medical meeting. With this important result in hand, we are encouraged about our ongoing trial studying ixekizumab and tirzepatide in psoriasis. In two separate studies of mirikizumab, receptor, Crohn's disease, and ulcerative colitis, we also advanced our new GIP GLP-1 agonist, presenphatide, into a phase II study of asthma, another serious immunologic disease that we think may benefit from dual GIP GLP-1 therapy.

Moving to oncology, the FDA granted full approval for pirtobrutinib, including the expanded indication for treatment of adults with relapsed or refractory CLL, SLL who have previously been treated with a covalent BTK inhibitor. This label update significantly increases the number of eligible patients and allows physicians to extend the use of BTK inhibitors to control disease longer. We also shared detailed data from two phase three pirtobrutinib trials, BREWN CLL313 and Bruin CLL314. As shown on the left side of slide 15, in Bruin CLL313, pirtobrutinib improved progression-free survival, reducing the risk of progression or death by 80% versus bendamustine plus rituximab in treatment-naive CLL, SLL patients.

This risk reduction is among the most compelling ever observed for a single-agent BTK inhibitor in a frontline CLL study. In the second study, shown on the right side of slide 15, Bruin CLL314, pirtobrutinib was compared to a covalent BTK inhibitor, ibrutinib, in treatment-naive or BTK inhibitor-naive patients. The study met the primary endpoint of non-inferiority of overall response rate. And while progression-free survival data were immature, they trended in favor of pirtobrutinib.

Notably, in the early analysis of the treatment-naive subpopulation, as shown here, pirtobrutinib reduced the risk of progression or death by 76% compared to ibrutinib. Both datasets were presented at the American Society of Hematology Annual Meeting and were simultaneously published in the Journal of Clinical Oncology. We submitted these results to regulatory authorities to potentially enable the use of pirtobrutinib in earlier lines of therapy. Later this year, we expect results from an additional phase three pirtobrutinib trial, Bruin CLL322. This trial evaluates pirtobrutinib in addition to a fixed-duration regimen of venetoclax and rituximab in previously treated CLL, SLL patients.

If successful, this could form the basis for an additional regulatory submission later this year. We also presented updated combination data of Imlunestrant with Abemaciclib in metastatic breast cancer, which showed additional benefit compared to Imlunestrant alone. We submitted these data to regulators and are seeking to expand the Imlunestrant label. While we're encouraged by these new data for patients with metastatic breast cancer, we're even more excited about the opportunity for Imlunestrant in adjuvant breast cancer.

Our ongoing 8,000-patient adjuvant breast cancer trial, EMBER-4, is fully enrolled and will be the next phase three readout of an oral SERD for patients with early breast cancer. In other oncology updates, we advanced sofetibart, mepetekcan, our next-generation antibody-drug conjugate targeting folate receptor alpha, into phase three testing for women with platinum-resistant ovarian cancer. We believe this program has the potential to benefit a broad population of patients with ovarian cancer, regardless of folate receptor alpha expression level. It may also offer improved tolerability compared to currently available antibody-drug conjugates.

We plan to initiate a study in platinum-sensitive ovarian cancer later this year. We're excited that this medicine received breakthrough therapy designation from the FDA earlier this year. We also expect to initiate new phase three programs for two other oncology small molecules. The first is tirsolecimid, our mutant-selective PI3 kinase alpha inhibitor.

We believe this program could represent the next generation of PI3 kinase alpha targeting agents by selectively targeting the pathway in cancerous but not in healthy cells, thus overcoming a key limitation of currently available medicines. This approach could potentially offer better disease control through deeper pathway inhibition, as well as improved tolerability. The second is vepubratinib, an FGFR3 inhibitor we believe may improve on the tolerability profile of existing agents and enable combination therapy in first-line metastatic urothelial cancer. In neuroscience, we began several trials exploring the use of incretins to treat substance use disorders and psychiatric conditions.

Last quarter, we announced plans to initiate a phase three program of brenepatide in alcohol use disorder. Since then, we've begun dosing patients in this trial, and we have also launched additional brenepatide phase two trials in tobacco use disorder and bipolar disorder. We expect to initiate several more phase II and phase III trials in 2026, exploring how brenepatide may be able to treat other conditions, including a phase three trial for major depressive disorder, testing if brenepatide can prevent relapse of disease. In Alzheimer's disease, we continue to look forward to the results from Trailblazer ALS3, our study of donanemab in people with normal cognition but a positive blood test for Alzheimer's disease.

This trial screened volunteers with a blood test for p-tau and randomized participants to a nine-month course of treatment with donanemab. By moving earlier in disease, even prior to individuals having any objective symptoms of Alzheimer's disease, the goal is to reduce the risks of them ever developing any impairment due to Alzheimer's. The primary completion is projected for 2027; however, the study will read out when the target number of progression events are accrued. Moving to cardiometabolic health, we had another busy quarter.

We were excited to announce positive top-line results from the INTEIN VANTAIN trial, evaluating orforglipron for weight maintenance. This unique phase three trial was designed to answer a common question from doctors and patients: Can people successfully maintain weight loss achieved on the maximum tolerated dose of injectable incretins by switching to an oral GLP-1 therapy? Participants in ATTAINMANTAIN previously on injectable semaglutide or tirzepatide then switched to orforglipron or placebo. As shown on slide 16, orforglipron helped people maintain weight loss that they had achieved on injectable therapies, and the study met all primary and secondary endpoints.

People who switched from semaglutide to orforglipron maintained their previously achieved weight loss, with an average difference of just 0.9 kilograms. This suggests that as an oral GLP-1 therapy, orforglipron may provide similar weight loss maintenance as the maximum tolerated dose of injectable GLP-1 therapy semaglutide. As expected, those who switched from maximum tolerated doses of the dual GIP GLP-1 agonist tirzepatide to oral GLP-1 inhibitor maintained much of their weight, although with a higher average difference of five kilograms. We expect to share detailed results later this year.

Other orforglipron updates since our last call include submission of orforglipron to the FDA for treatment of obesity, with approval expected in Q2 of this year, submission of orforglipron for obesity and for type two diabetes in a number of other countries around the world, initiation of orforglipron phase three cardiovascular outcomes trials, and initiation of orforglipron phase three for treatment of peripheral artery disease. We look forward to completing the US regulatory submission of orforglipron for type two diabetes later this year after the Achieve IV trial is complete. We also announced new data for our GIP GLP-1 glucagon triple agonist, retreutide.

In the first phase three trial to complete, TRIUMPH-4, we evaluated retreutide in adults with obesity and knee osteoarthritis. Participants taking retreutide 12 milligrams lost an average of 29% of their body weight at 68 weeks. Many people will not need this level of weight loss, but we see an important potential role for molecules such as retreutide in helping people with higher baseline BMIs or with more severe obesity-related comorbidities. Accordingly, we were pleased to see that retreutide reduced WOMAC pain scores by an average of 4.5 points, representing a 76% reduction in pain, and this was accompanied by a significant improvement in physical function.

Impressively, more than one in eight retreutide-treated patients were completely free from knee pain at the end of this trial. The safety profile was generally consistent with other incretins, with gastrointestinal events being most common. We observed higher discontinuation rates due to adverse events in people with lower baseline BMI, including participants who discontinued for perceived excessive weight loss. As shown on slide 17, patients with a baseline BMI of 35 or higher, which represented 84% of the trial population, had discontinuation rates due to adverse events consistent with those observed in clinical trials of other injectable incretins.

We expect to read out six additional phase three trials for retreutide in 2026, including the remainder of the core registration package for both the TRIUMPH obesity program and the Transcend type two diabetes program. Also in Q4, we started a phase three trial in high-risk metabolic dysfunction-associated steatotic liver disease, MACELD, studying retreutide as well as tirzepatide for treatment of this disease. We're planning to submit the results of the Core TRIUMPH program in 2026 to support applications for overweight and obesity, obstructive sleep apnea, and osteoarthritis of the knee for retreutide.

Based on the data we've seen so far, depending on these upcoming data readouts, we believe retreutide may have the potential to become a new treatment option for patients with significant weight loss with certain complications. Moving to tirzepatide, we're pleased that Zepbound was recently approved in the US in a multi-use QuickPen device. This presentation of tirzepatide is already available in many countries around the world, a convenient offering that includes four doses in a single pen. We look forward to launching this new Zepbound offering in the US within the next few weeks.

Slide 18 shows pipeline movement since our last earnings call. Slide 19 shows the full list of key events achieved in 2025. Notably, we achieved positive outcomes for nearly all R&D key events in 2025, a rare set of results in this industry. Slide 20 shows key events expected in 2026, with potential for data readouts and regulatory actions across our therapeutic areas. In addition to the substantial progress we're making in immunology, neuroscience, and oncology, I want to take a moment to reflect on our growth in the incretin and amylin portfolio.

Of course, there's been a lot of focus on tirzepatide and orforglipron, which I think is well warranted. Now, excitement is growing for retreutide as well. I see each of these as an example of a leading molecule within its own class. Behind these three incretin innovations, we have a robust pipeline of further inventions with potential to address patient needs, including our selective amylin agonist, oloralintide, which is currently in phase three, as well as our next-generation GLP-1 dual agonist, brinepatide, which is also now in phase three trials.

Behind these, we have a number of earlier-stage molecules that could similarly lead within new mechanisms and new classes of therapeutics for the treatment of obesity. We've built a substantial scientific lead in this field, and we aim to widen the distance through our R&D. This past year was busy and productive, and we expect more of the same in 2026 as we continue to create meaningful medicines on behalf of the patients that need us. I'll now turn the call back to David for closing remarks.

Thanks, Daniel. We're pleased with all the progress in Q4 and throughout 2025. It was a year of strong execution for Lilly. We delivered exceptional business results, invested in our future, and helped millions of people around the world improve their health. Now I'll turn the call over to Mike to moderate the Q&A session.

Thanks, David. 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 at eleven. If you have more than one question, you can reenter the queue, and we will get to your question if time allows.

Paul, please provide the instructions for the Q&A session, and then we are ready for the first caller.

Thank you. At this time, we'll be conducting a question and answer session. If you have any questions, please press 1 on your phone at this time. 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 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 Evan Seigerman from BMO Capital Markets.

Hi, guys. Thank you so much for taking my question. Congratulations. A year from now on this call, I'd love for you to characterize what you would ask for a good product launch. Specifically, what are some of the metrics that you're looking to meet? I know you're not gonna give guidance, but some qualitative kind of commentary would be most helpful. Thank you.

Great. Thanks for the question, Evan. It cut out a little bit, but I think you were just asking about a year from now, what are some things we'll be tracking on for orforglipron? So I think for that question, maybe we'll go to Kenneth to maybe talk about some things that we'll be looking at.

Sure. Thanks for the question about orforglipron. We're really excited to have this medicine submitted not just in the US but now 40 countries and looking forward to launches beginning this year. You know, as I think about success factors for us going forward maybe towards the end of the year, looking at a few things.

First of which is just market expansion. We're very encouraged by what we're seeing with oral Wegovy as it validates our belief that there's a substantial number of people with overweight and obesity who have been sitting on the sidelines waiting for an oral option. It looks like these are mostly new starts. That means it's expanding the market, and that's good news for Lilly.

We feel really good about the competitiveness of the profile. We've talked about that a lot on previous calls. I think we're at the point now where we're gonna pivot to how do the real-world results play out. We think this is going to be about patient satisfaction, and our profile, which is simple with no restrictions on food and water intake, could make a big difference in the real world.

So we're excited to get off to the races here, see this market expand, and really look at overall patient satisfaction scores and real-world efficacy with these agents. Thanks.

Great. Thank you, Kenneth. Paul, ready for the next question.

The next question will be from Courtney Breen from Bernstein. Courtney, your line is live.

Hi, everyone. Thanks so much for taking the question today. Just building on the question around orforglipron, you mentioned that you have submitted in 40 countries. Traditionally, you tend to think about kind of a full-year cycle for most approvals in many countries around the world.

Can you just help us understand if you're anticipating any kind of accelerated pathways that you might be able to access in these ex-US countries that would enable launch in 2026 for orforglipron products similar to some of the pathways that are available in the US, and you've been able to gather one of them? Thank you so much.

Great. Thanks, Courtney. And so for the question about how we're thinking about OUS regulatory approval timelines, we'll go to Patrik.

Thank you very much, Courtney. As I think we shared in the prepared remarks, outside the US, it's mainly going to be a matter of launching in 2027, with a few exceptions. There will be a few markets late in 2026, for countries like, for example, the UAE, that might reference an FDA-approved orforglipron. So mainly a play for late 2026, 2027 for international markets.

Thank you, Patrik. Next caller, please.

The next question will be from Christopher Schott from JPMorgan. Christopher, your line is live.

Great. Thanks so much for the question and congrats on all the progress here. Can I just ask about international Mounjaro? This seemed like this was a very significant upside driver, at least relative to Street numbers in 2025. Just interested in your thoughts on the ramp from here as we think about the $3.3 billion 4Q result you just reported.

I know last year was about a lot of new market launches. Now that you're in those markets, how do we think about sequential growth from these levels? Thank you.

Great. Thank you, Christopher. The question on OUS Mounjaro performance and the ramp from here, we'll go back to Patrik.

Thank you very much, Christopher. Well, you are right. Q4 was a very strong quarter for Mounjaro outside the US, and as Lucas referred to, we became the share of market leader for total incretins also internationally. When you look at 2026, I would just reflect back on 2025. We had major launches more or less in every quarter with the exception of Q4. So I would actually look for Q4 as a base for 2026 growth.

Also consider that there was a slight impact in Q4 driven by the NRDL listing in China effective January 1, 2026, which slightly impacts the purchasing pattern in China in December. So see Q4 as a base for 2025 and 2026. Moving forward, our business now OUS is 75% chronic weight, and that's pretty much out of pocket. 25% is reimbursed for type two diabetes. So the priorities for 2026 will pretty much be market expansion, driving more penetration through patient activation when it comes to chronic weight management. And for type two, we are leaning in to gain reimbursement in more countries.

We're currently reimbursed in nine, with the last one being China with the NRDL. And we will do that with a maintained discipline in terms of pricing. So I think overall, we are well positioned for continued growth for Mounjaro outside the US in 2026.

Thanks, Patrik. Next question, please, Paul.

The next question will be from Seamus Fernandez from Guggenheim. Seamus, your line is live.

Great. Thanks so much for the question. So I'm actually gonna ask a non-obesity question. So while you can't take your eye off the ball on obesity, just wondering why you couldn't attack immunology broadly in the same way as you have obesity, investing earlier, faster, and more aggressively given the substantial generation that we're starting to see from the overall portfolio.

What are the issues that would prevent you from doing something like this, whether it be by your internal efforts or perhaps a more aggressive business development approach, just because it seems like this is a cash-driven opportunity where there's a lot of spend, but a huge amount of upside opportunity with a $170 billion total market out there to access.

Great. Thanks, Seamus, and extra credit for the non-obesity question. We'll go to Daniel to talk about our approaches on attacking immunology early.

Yeah, no, thanks, Seamus. It's a great question. And actually, I'll come to immunology in a second, but let me just first point out that across our non-obesity work, which is of course, oncology, neuroscience, and immunology, we have our thumb on the scale for investment decisions. We see lots of good opportunities in those areas, and we're reinvesting some of the proceeds from the obesity opportunity to make sure we can further accelerate growth in those promising areas.

So today you heard me talk a lot about the oncology portfolio, which I think is really blossoming right now. I have high hopes for immunology behind it. I think there's really promising breaking science, including treating immunologic diseases earlier. And our research labs are doing everything in our power to harness that science.

I talked a little bit about some trials that are ongoing for incretins in immunology, which I think is promising. As are a number of other combination therapies that we now have in our late clinical trials. So I'm excited both early and late. Won't give you a Great.

Thank you, Daniel. Next caller, Paul.

The next question will be from Terence Flynn from Morgan Stanley. Terence, your line is live.

Great. Congrats on the quarter. Had a question on the guidance high level, Lucas. Just wondering if you can talk about what's embedded for Medicare volume ramp in the back half of the year and how that might drive the range we're seeing on the revenue side.

And then if that's had any impact on employer opt-ins on the commercial side, I know you guys previously talked about how that might have some impact to get some of the other employers over the hurdle on coverage. So just wondering if you're starting to see that yet.

Great. Thanks, Terence, for the question on guidance and kind of Medicare ramp in the back half of the year as well as if there's any commercial opt-in. We'll go to Lucas.

Yeah. Terence, thank you for the question. Maybe starting with Medicare. As highlighted in the call text, basically, we are expecting that access to be granted no later than July 1. And as I mentioned all along, this will take time to build over time.

But we feel very, very positive about the opportunity to bring anti-obesity medications to patients in Medicare. As I mentioned, again, the co-pay of $50 for the patients would be a compelling value proposition. There is a bolus of patients that we have nowadays in the Lilly Direct business that we believe are also Medicare patients. So expect that bolus, I think, is between 10-20% will actually move into the Medicare space.

I think that will happen relatively fast, and we will continue to build on top of that. So that's kind of the drivers to start to think about, again, the penetration, but we'll build over time. Think about, again, more about the size of the opportunity in Medicare, thinking about 2027 as well. The second part of your question was about the employer opt-in.

Ilya is right next to me here as well to talk about it. But as I mentioned, of course, again, the practice on physicians prescribing this medicine will become more natural, more broader in the anti-obesity medications. And physicians will be, again, more broadly basically also thinking about prescribing this in commercial. How that will then impact the employer side, I think the message is clear.

Right? Again, there is a clear recognition of the class as a chronic disease, and basically that will, in my eyes, propel also employers also to think about, again, this class and also employees to look for these class of medicines as well to be covered as well. But I don't know if there's anything else that you would like to add, Ilya.

Yeah. Maybe just some additional context, Terence, on commercial opt-in. Obviously, we start the year roughly on balance, stable. There are some employers adding coverage, some removing some coverage.

But putting additional focus in the employer space. We've stood up a team and also working with a number of third parties to actually provide alternative access channels to have some flexibility in design and transparency in the pricing. And the initial conversations and feedback have been positive. Of course, a lot of those decisions are for the following year.

We anticipate having some of those decisions and increased coverage over time in the employer space as we head into the back end of this year and mostly into 2027.

Great. Thanks, Lucas and Ilya. Next question, please, Paul.

The next question will be from Geoffrey Meacham from Citi. Geoffrey, your line is live.

Great. Good morning, everyone. Thanks for the question. Congrats on the quarter.

Daniel, I had one for you. The Together results are really super interesting. You're thinking about the potential for combo therapies with Zepbound and either I&I or oncology or neuro? I wasn't sure what drives the investment priorities, whether it's the drug or the indication, and if there's a clear path to labeling claim.

Thank you.

Yeah. Thanks, Geoffrey. Again, another non-obesity question. Lots of extra credit on this call. We'll go to Anne to talk about some of the combination therapy approaches and some of the strategy there.

Sure. We see this as a significant opportunity. More than a billion people worldwide have immune diseases like atopic dermatitis, psoriasis, IBD, and asthma. Patients who have both immune diseases and obesity tend to have a higher disease burden.

So we're really excited about the opportunity to find new ways to combat the underlying inflammation of these diseases and potentially unlock better, longer results for these patients. So we have broad efforts underway to look at additional combinations. We have the Together PSO trial evaluating the use of Taltz and Zepbound for adults with moderate to severe plaque psoriasis and obesity or overweight. Expect those top-line results in 2026. We're also looking at the Together Amplified PSA and Together Amplified PSO studies assessing the effectiveness of adding Zepbound after starting Taltz for adults with PSA and moderate to severe plaque psoriasis.

We also have the Phase IIIb commit studies in both ulcerative colitis as well as Crohn's disease, where we're looking at the concomitant use of Omvo and Zepbound and addressing outcomes for those patients. And then the phase two study of brenepatide for people living with uncontrolled asthma. So we're excited to continue to pursue the applications of incretins and unlocking better outcomes for people with immune diseases.

Great. Thanks, Anne. Thanks for the question. Next caller, Paul?

The next question will be from Asad Haider from Goldman Sachs. Asad, your line is live.

Great. Thanks for taking the question and congrats on all the progress. Back to obesity with apologies, Mike. Maybe just given the focus on pricing dynamics, can you just talk about what you're seeing in the contracting environment broadly speaking across the incretin portfolio? And also, what's your view on pricing elasticity in the cash channel as the year progresses? Thank you.

Yep. Asad, thanks for the question. To go through kind of pricing in the US and price elasticity, we'll go to Ilya.

Yeah, sure. Thanks for the question. Maybe just for the first part in terms of the commercial access and contracting. Obviously, we start the year with similar coverages as we ended 2025. We continue to have coverage for Zepbound in two of the three large PBMs.

We continue the conversations around expanding access in those PBMs for obviously the introduction of orforglipron in Q2. So we're in the discussions there. From a pricing standpoint, we've been pretty transparent on pricing for 2026 as it relates to Part D, as well as our direct-to-patient pricing, which we implemented in December. And then we have ongoing conversations with improving and continuing access in the commercial segment. In terms of price elasticity, we've seen over time, both in the US and outside the US, that affordability and opportunity on the entry as well as predictability of cost for patients matter.

That's why the out-of-pocket in Part D of $50 is an affordable option, as well as we've seen an increase in utilization of even Zepbound vial at the end of the year when we implemented improved entry price of $2.99 for Zepbound. So we continue to see that, and obviously, we're seeing significant and encouraging uptake in the oral market, which is expansive and bringing new patients to obesity treatment, and we're excited to launch orforglipron soon with the entry price being similar to oral semaglutide.

Great. Thank you, Ilya. Ready for the next question, please, Paul.

The next question will be from Mohit Bansal from Wells Fargo. Mohit, your line is live.

Good. Thank you very much for taking my question. So a strategic one. So I would love to understand what is your latest thinking on the importance of getting obesity-related indications on the label because we kind of get a little bit of mixed messages when we talk to payers because they kind of think that these drugs are just for obesity for now.

With NASH, there's coming for obesity. You know, with NASH, but do you think this could be an over time long-term differentiator here? Now that you are going into indications like I&I as well at this point? Thank you.

Thanks for the question, Mohit. So to kind of think about and address our strategy on obesity and expansion of indications more broadly, we'll go to Ilya to go, and then Kenneth, you can add if you have any other development thoughts.

Sure. Thanks, Mohit, for the question. You know, what we've seen thus far, even with Zepbound and looking at the Medicare population around sleep apnea, we're seeing an increase in utilization and thinking about obesity beyond weight and looking at outcomes related to obesity. And there's a lot of comorbidities, as Daniel had mentioned, even in our psoriatic arthritis trial with Taltz.

When we talk to employers as well as payers, they think about the multiple aspects of obesity and what that means for coverage and cost long-term. So we do see a growing body of evidence to support covering obesity medications for the population and having a positive impact on public health beyond just weight.

And so thanks for the question on other potential avenues of exploration as it relates to complications and comorbidities. As our incretin portfolio and amylin portfolio expands, we're always facing the question of do we spend our resources replicating findings from previous incretins on comorbidities and complications where we know these drugs are efficacious, or do we push into new areas and generate new evidence? You've probably seen with orforglipron, we're actually starting to explore new ideas like stress urinary incontinence, peripheral artery disease, and hypertension. We'll continue to look for new opportunities in incretins in addition to what we've talked about in the I&I space.

But we do also understand that with new molecules and new mechanisms, it's important to generate some data to continue to give prescribers and patients confidence that these medicines preserve the benefits of the previous class of medicine. So we continue to do that too, but very pleased, I think, with our overall balance of investment across the portfolio in both sort of established and emerging mechanisms of diseases of interest.

Right. Thank you both. Ready for the next question, please, Paul.

The next question will be from Umer Raffat from Evercore. Umer, your line is live.

Thank you, guys. Pay, I feel like, has been a very important driver of growth among other drivers. And I'm just trying to think out loud what the long-term implications of that could look like, especially with all the competition coming. On the one side, obviously, there's gonna be tremendous brand loyalty, which is very important in cash pay.

But on the other side, traditional PBM contracts and rebate walls may not apply. I'm just trying to think out loud how you're thinking about share retention and cash pay in the long run. Thank you.

K. For the question, Umer. To discuss a bit about sort of the cash pay dynamics, I'll ask actually, Ilya and Patrik to discuss how it plays out internationally and what is going on in the US. So Patrik, you wanna start first?

You know what? I think what we have been building the last couple of years, learning a lot from the US, has really been the consumer centricity. And I think some of our building platforms are on the lines as we've done in the US with Lilly Direct, where we are providing opportunity for patients both to seek start and to stay. I think that's a must that we need to continue to develop.

Yeah. Just to add on, I think we've learned quite a bit. There are frictions in the system for a number of diseases in the US and globally. Obviously, we've seen that happen in obesity.

What we've built within Lilly Direct has a pretty significant scaled direct-to-consumer platform that helps address some of the frictions. Of course, we can continue to think about how we evolve that consumer experience and make this more seamless, at the same time growing access across the different segments. And so both will play an important role, and we continue to look for ways for us to scale as well as improve on the experience over time.

Great. Thanks both for the comments. Let's go to the next question, please, Paul.

The next question will be from Alexandria Hammond from Wolfe Research. Alexandria, your line is live.

Hey, guys. Thanks for taking the question. One on oloralintide. So the weight loss results you guys presented last year look really strong.

But given prescribers and patients seem more interested in more favorable tolerability, how should we think about the potential for lower doses of oloralintide and lower dose combos of tirzepatide to potentially achieve a titration-free placebo-like with weight loss, let's say, comparable to monotherapy GLP-1? Thank you.

Thanks, Alexandria. We'll go to Kenneth to talk about the oloralintide development strategies and different ideas we're assessing.

Yeah. Thanks for the question, Alexandria, on oloralintide and future avenues. We were really excited about the data we shared at Obesity Week where patients achieved up to 20.1% weight loss for oloralintide with excellent tolerability that was improved with titration. In fact, in the 3.9 milligram titration group, I think we only had one incidence of vomiting out of more than 50 patients.

So that comparison we think is really favorable versus the existing incretin class. So we see a big opportunity for oloralintide in patients who maybe just can't tolerate incretin. We know that 5 to 10% of patients in our trials tend to discontinue on the incretin class, suggesting a pretty big opening given the size of the obesity market. Of course, we're also interested in thinking about oloralintide in combination with other mechanisms of action, and what you alluded to with GIP plus GLP-1 plus amylin as a very sort of physiological construct.

Three nutrient-stimulated hormones, and we've shared that we are exploring that idea in the clinic. Nothing to share yet, but stay tuned maybe towards the end of this year. We're testing other possible combinations, including a GIP agonist mecupatide with oloralintide as well, and so really just trying to understand the range of options, and like you said, is there really an optimal very simple permutation of mechanisms that could allow minimal or no titration with competitive efficacy.

Thank you, Kenneth. Paul, ready for the next question, please.

The next question will be from James Shin from Deutsche Bank. James, your line is live.

Thanks, guys. Hey, good morning. One for David. For CMS' upcoming obesity demonstration, David, can you share any similarities or differences you foresee with what you went through previously during the Part D senior savings model for insulins $35 co-pay rollout? Thank you.

Great. Thanks, James. And I will welcome David to get in the box score for the Q&A. Hey. Did share any similarities on the CMS obesity pilot versus the Part D senior savings?

Yeah. I mean, I think there are quite a number of analogies to draw. I mean, first, arriving at what would be perceived as a relatively low out-of-pocket is an important fact by itself. And while we know in this case, we're not moving from high out-of-pocket to low only, moving from covered, plus low out-of-pocket.

And I think patients who may be using GLP-1 and the data we have is that seniors are using these drugs at a lower rate than the general population, maybe because of income in particular, will benefit from that lower cost every month of $50. I think that's very expansionary to the class. And we'll draw a lot of interest from primary care prescribers who are concerned about the comorbidities of kind of lifetime overweight and obesity, which tend to manifest after 65 at a much higher rate. The second thing is the consistent variance. And I think when we negotiated this with the government, we wanted to make sure that we weren't just building a program that went into the normal Part D math in terms of out-of-pocket cost, but had a kind of that consistency.

Independent of the absolute amount people pay, they get very frustrated with different amounts month to month. So I think that's another important feature. Thirdly, like the insulin deal, it's open to all innovators. And I think that's an important concept that the doctor and the patient choose the best therapy.

Which could be one from us, one from our competitor. It could be oral. It could be injectable. It could include future therapies from Lilly or others.

Like retreutide or oloralintide when they're approved. So I think that also has a parallel to what we do with insulin. If you look back at that insulin pilot, utilization rates increased pretty dramatically in Part D and frustration levels with that issue basically disappeared. I think this program has similar promise to be both enormously popular and drive a lot of new uptake.

As I said, it's suppressed in the senior population. Probably benefit most, at least in the short term, from GLP-1 therapy. And I believe, and I know that CMS does as well, that within a few years, we'll demonstrate significant cost savings to the Medicare program. So that is different than the insulin part.

But that's associated with, you know, new products being added. So we're excited to get going. We expect this to be effective by July 1, working through the details with the administration now, and you'll hear more maybe on our Q1 call.

Thank you, David. Ready for the next question, please, Paul.

The next question will be from Steve Scala from TD Cowen. Steve, your line is live.

Thank you so much. 2026 revenue guidance is $15 to $20 billion higher than that delivered in 2025. Mounjaro and Zepbound are doing great. But we can kind of see their trajectory. Are there scenarios where these incremental sales can be delivered without orforglipron being a $5 billion product in 2026? And does the guidance tell us that Lilly believes orals will grow the market and not cannibalize?

Thank you.

Great. Thanks, Steve, for the great questions as always. We'll go to Lucas to talk a bit about the revenue guide and some of the moving parts that are contained within that.

Yeah. Thank you for the question, Steve. Thinking about the guide, again, you can do the math on that perspective. But when we think about the process, maybe start from there.

As always, we do a bottom-up approach on what we see in the marketplace and then across all the therapeutic areas and geographies as well. And we have, again, pointed our guidance as kind of what is our goal for the year to start with. There are many multiple pushes and pulls, and I described that during the call text as well. Talking about, again, the expansion in Medicare that David just covered.

Talking about the launch of orforglipron as well, and a continuation of growth that we expect to see both in the US and our US market. I think it's fair to go back as well about the basically, the price component as well that is embedded into the guide as well. That's another component that is gonna be actually accelerated in 2026, that erosion versus 2025. And I call out basically low to mid-teens. That's a new component to basically some of the math that you were thinking about 2025. That you need to factor as when you're doing those forecasting and models that you described.

In terms of your orforglipron question, I think it's important to highlight looking at even just the last four weeks of the data of the competitor launch, is mainly expansion of the market. So we are very, very encouraged from, again, the first month of seeing that data and it's very much consistent with our expectations and our guide. We will see how much, again, that class will continue to grow over the years, and we will update our guide throughout the year depending on that.

Great. Thanks, Lucas. Time for a couple quick ones. So if we could do the next question, please, Paul.

The next question will be from Akash Tewari from Jefferies. Akash, your line is live.

So David, you mentioned that investors really understand Lilly recognize it's a consumer stock. Can you talk about some consumer analog you'd point investors towards when you're thinking about long-term penetration for both the US and OUS for your weight loss product? And then maybe just on the cannibalization point, is it fair to say your guide isn't expecting meaningful cannibalization of the oral and obesity products versus what we've seen with Novo? Thank you.

Definitely a two-parter there, Akash. So we'll give David to talk about the more analogs.

Well, I think Lucas covered the cannibalization, but it's not what we're seeing right now nor is it what we really expect. In a way, though, just strategically, it doesn't really matter to us. I think we're interested in having people on the medicine that they think and their doctor think is best for them. If it comes from Lilly, that's our goal.

So not too concerned about that. I don't actually expect a ton of cannibalization, to be honest. In terms of consumer analogs, it's a difficult question. I'd be open to your feedback on this.

We spent a lot of time modeling out the trajectory of the out-of-pocket business. Patrik and Ilya commented on that. I think at the JPMorgan conference, I spoke about this. I think it is a bit of a wildcard in our short and midterm outlook.

Because I am hard-pressed to think of an analog where you have this many people paying out of pocket for prescription medication. People could look back at the PDE wars and the ED drugs. We were part of that. We've learned some things from that, but it's not the same as this.

You can look at cosmetics and aesthetics where it's quite common, but that also has some overlap but not complete because here you have really profound health benefits. And noticeable results that really drives a success cycle for people in their lives. It's kind of different. So I think it's hard for us to think about that.

What we can do is take learnings from other industries that were able to reduce consumer friction, unlock the power of first-party data in marketing, consider, you know, a platform and an interface with consumers that allows us to bring our really robust and deep pipeline that Kenneth's been talking about to market in a way that might be quite differentiated over time. Play with pricing opportunities, subscription models, these kinds of things. All that is in our future, and I think Lilly Direct, direct discussion, out-of-pocket business, all enables those things. It's pretty interesting strategically because I don't think there's a good analog in our industry.

And we're working through that and excited by the potential. As you know, we already see, you know, a million people in the US, hundreds of thousands more outside the US choosing this way to buy a medicine like Zepbound and Mounjaro.

Great. Thanks, David. I will do one last question, then we'll have to close the call.

Okay. Final question today is coming from Michael Yee from UBS. Michael, your line is live.

Just wanted to ask your expectation on the orforglipron launch general view of unit volume scripts vis-a-vis the tirzepatide launch, how you think either access or other channels are different here versus tirzepatide, and how you think about the launch here versus tirzepatide for orforglipron. Thank you.

Yep. Thanks, Michael. We'll go to Ilya to talk a bit about the orforglipron launch.

Yeah. Thanks for the question. Obviously, we're excited about launching orforglipron assuming in Q2. As we think about the overall market and every launch in this space, you're launching in a larger market and more greater consumer and provider awareness. We recognize that and we look for learning from how we've launched previously.

I think what's different here and people on the call have discussed this, is that there is a typically in the cycle of launches, you start with access, build access over time, and you see gradual uptake. What we've seen in this space in particular, and we have a scale direct-to-consumer platform as part of that. You also have a significant self-pay and consumer awareness in this category. And so our expectations are high in terms of what we expect for orforglipron in our launch.

And we again, we expect this to be market expansive and bring new people to therapy for obesity. That's our expectation for orforglipron over time.

Thanks, Ilya. David, over to you for the close.

Great. Well, as always, we appreciate your participation in today's earnings call and, of course, your interest in Eli Lilly and Company. Please follow up with the IR team if you have any questions that we did not address today and otherwise, have a great rest of your day. Take care.

Thank you. And ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1 p.m. today running through March 10 at midnight. You may access the replay system at any time by dialing 803-326-854 and entering the access code 331160. International dialers can call (973) 528-0005. Again, those numbers are 803-326-854, (973) 528-0005 with the access code 331160. Thank you for your participation.

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