Eli Lilly & Co (LLY) Q3 2026 earnings call transcript

Eli Lilly & Co (LLY) held its earnings call for the third quarter of fiscal 2026 on 29 October 2026. What follows is my machine transcription of the company's public webcast, made on 29 October 2026, and not the company's official text.

A machine mis-hears names and numbers, so where one reads oddly, the webcast is the record. This recording is not split by speaker.

Transcript

Ladies and gentlemen, thank you for standing by and welcome to the Eli Lilly third quarter 2026 earnings conference call. At this time all participants are on a listen-only mode. Later we will be conducting question and answer session and instructions will be given at that time. Should you require operator 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 Separ senior vice president of investor relations.

Please go ahead. Good morning thank you for joining us for Eli Lilly and companies Q3 2026 earnings call. I'm Mike Separ senior vice president of investor relations. Joining me on today's call are Dave Ricks, who is chair and CEO, Luke Smentarse, chief financial officer, Dr. Dan Skravinski, chief scientific and product officer, Adrian Brown, president of Lilly Immunology, Dr. Carol Ho, president of Lilly Neuroscience, Ilya Yufa, president of Lilly USA and global customer capabilities, Jake Van Narden, president of Lilly Oncology and head of business development, Patrick Johnson, president of Lilly International, and then customer president of Lilly Cardio Metabolic Health.

During this call we anticipate making projections and for-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 is contained in our latest form 10k 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 or otherwise influence prescribing decisions.

Our commentary will focus on our non-gap financial measures. Now I'll turn the call over to Dave. Thank you Mike. Q3 was another quarter of solid execution. We delivered strong financial results, raised our full-year financial guidance, advanced our pipeline, and expanded our manufacturing footprint. Revenue grew nearly $7 billion compared to Q3 2025 and our key product revenue increased by over $6 billion. Within key products revenue from our oncology, immunology, and neuroscience portfolio doubled versus last year. We continued the global rollout of Foundeia, launching in the UK, Mexico, and Saudi Arabia for people with obesity, and in Mexico for people with type 2 diabetes.

We achieved several key regulatory and pipeline milestones since our last call including the US approval of our new weekly insulin and new indications for in Luria, Jay Perka, and Majaro. As part of the Medicare GOP One Bridge program, we expanded access to ABC medicines in the US for approximately 20 million seniors. Since the July 1 launch, more than half a million people have filled a prescription for a Lily medicine through this program. We've heard positive feedback from patients and physicians about the initial implementation.

Within the GOP One Bridge program, the Lily portfolio is performing well among new bridge patients seven out of ten starting on a Lily obesity medicine. We're encouraged to see the strong uptake of the bridge program and believe it has the potential to both improve outcomes for seniors and save costs for Medicare. A recent recently published paper from the University of Southern California Shaver Center for Health Policy and Economics estimated the expansion of anti obesity medications in Medicare could deliver over 20 billion dollars of cumulative savings over 10 years.

This is an encouraging indicator of the magnitude of savings the GOP One Bridge program could generate. We added to our pipeline through business development this quarter, acquiring a Ty Beckley and Merida biosciences. We also progressed our manufacturing build out to support our long-term growth outlook. We broke ground on two new manufacturing facilities a $6.5 billion facility in Houston, Texas, and a $5 billion facility in Richmond, Virginia. We distributed $1.5 billion dividends in the third quarter and executed $400 million in share and purchases.

We launched the Lily change the course commitment. Through this new initiative, we set a new goal. It reaches many people in resource-limited settings who have obesity and related diseases as in high-income countries prior to 2040. Lastly, we announced Patrick Johnson, president of Lily International, will retire at the end of 2026. Lily Yufo will expand his responsibilities to include Lily International as part of his as part of a newly created role called president of Lily Global Markets.

I want to thank Patrick for his many contributions over a successful 36-year career at Lily. And now I'll turn the call over to Lucas to review our Q3 results. Thanks, Dave. As shown on slide 7, Q3 was another quarter of industry-leading financial results. Revenue grew 39% compared to Q3 2025, driven by Monjaro, Sevan, and a strong momentum across therapeutic areas and geographies. We were smarting as a percentage of revenue increased 80 basis points to 84.4%. That's favorable product mix and improved cost of production were partially upset by lower-realized prices.

Marketing selling and administrative expenses increased 14%, as we invested in promotional activities to support current and plan product launches. I mean the expenses increased 23%, driven by investment in our growing pipeline of early and legislative programs and new molecules added through business development. Our non-GAAP performance margin was 54.2%, an increase of 5.9 percentage points from Q3 2025, driven by revenue growth. Non-GAAP earnings per share were $7.48, including a choir-appian need charges of $4.57. This compares to $7.02 in Q3 2025, which included 71 cents of a choir-app year in the charges.

On a slide 8, we quantify the effect of price, rate, and volume on revenue growth. US revenue increased 34% in Q3, primarily driven by volume growth from Sevan and Monjaro, partially upset by a 7% decline in price. US price benefited from a favorable adjustment to estimates from rebits and discounts, excluding this adjustment US price declined 10%. Europe revenue grew 29% in constant currency driven by sustained strong volume growth of Monjaro. Growth also benefited from a $410 million one-time milestone payment related to Jordan's.

No additional Jordan's milestone payment remains under our agreement with Burhingel in Japan. In Japan, revenue grew 26% in constant currency, driven by Monjaro and Kisanla. Monjaro posted a robust volume growth that share of new patients starts increased to over 50%. In China, revenue grew 62% in constant currency, driven by the uptake of Monjaro. Monjaro is the first medicine in China to exceed $1 billion of revenue during its first full year. In rest of the world, revenue grew 87% in constant currency driven by Monjaro, primarily in Korea, Turkey, and Brazil.

Your free revenue was positively impacted by approximately $900 million of previously mentioned items, including milestones and changes to estimates for rebits and discounts. On slide 9, we provide an update on the performance of our key products. With an immunology, ables worldwide revenue grew 59% compared to Q3 2025. In the US, ables continued to gain share of new prescriptions in the specialty dermatology market, and is the fastest growing medicine in a topic dermatitis. Oncology, Jaiprika had another strong quarter as worldwide revenue increased 59% compared to Q3 2025.

In the US, Jaiprika was the fastest growing PTK inhibitor as measured by total prescriptions. In Luria, continue its impressive uptake in the metastasic breast cancer or altered market, exiting Q3 with more than 60% share of new US prescriptions and 40% of US total prescriptions. In neuroscience, Cassandra revenue grew 175% compared to Q3 2025. Cassandra maintained its leadership position in US amyloid targeting therapies. Diagnostic testing momentum continues to build, and the number of PTEL 2017 blood tests more than double compared to Q3 2025.

Translating to more people being diagnosed with Alzheimer's disease and accessing treatment. Finally, in cadium metabolic growth, Monjara and Seppan combined for more than 16 billion dollars of revenue, contributing 6 billion dollars of growth compared to Q3 2025. As seen on slide 10, total prescriptions in the US ingredient market grew 32% compared to Q3 2025. Total GLP 1s and the Medicare GLP 1 bridge program are expanding the number of people taking in between therapy. In the US, total ingredient prescriptions for obesity grew 82% in Q3, approximately 6 out of 10 total prescriptions and more than 7 out of 10 injectable prescriptions were for a little medicine.

In the US, type 2 diabetes ingredient total prescription group 8% compared to Q3 2025, and the lily portfolio continues to lead here with more than 60% share of market. Outside the US, lilies portfolio again perform well. Slide 11 shows aggregate trends in international ingredients, which have increased by 53% since the same period last year, as measured by IQ via gross sales. Lilies trends in its leadership position outside the US gaining nearly 4 percentage points of share compared to Q2 20 26 to reach approximately 58%.

Slide 12 provides an update on the fundayo launch. In the US, total prescriptions and the share of new patients continue to rise. Approximately four in 10 patients studying an adult obesity medicine choose fundayo and the number of new fundayo patients in Q3 double from the previous quarter. We look forward to launching fundayo in type 2 diabetes in the US and expect regulatory action in Q4. Outside the US, fundayo has launched in four countries and is under regulatory review in more than 40 additional countries.

We continue to expect a global rollout in all major markets in 2027. On slide 13, we provide an update on year-to-date capital allocation. Moving to slide 14 is our updated 2026 financial guidance. Based on a strong underlying performance across our portfolio, we now expect full-year revenue to be between 91 and 92 billion dollars. We saw strengths in the US driven by rapid uptake of the Medicare GOP 1 bridge program and outside of the US from strong monjaro performance.

Even our updated revenue outlook, we now expect non-gap performance marching to be between 52% and 52.5%. We expect non-gap earnings per share of $35 to $36. This reflects an increase of $4.07 per share at the midpoint of the range before updates to the Q3 acquire a PR&D charges of $4.57 per share. We are pleased with our Q3 results and confident in our ability to deliver another year of industry-leading growth. We will share our 2027 financial guidance on our Q4 call in January.

However, I will share highlights on our initial thoughts regarding some of the pushes and pulls that we expect to impact our 2027 financial outlook. In and with the US revenue, we expect sustained volume growth in the increasing market and the full-year impact of the Medicare GOP 1 bridge access and the launch of Fundayo in type 2 diabetes. Outside the US, we expect Monjaro's leadership position to continue. We expect to launch Fundayo, which will drive additional market growth.

Consistent with previous, we expect net realized price to be a headwind more than offset by volume growth. It is also worth noting that the 2020 this revenue benefited from approximately $2 billion of $1.99 primarily related to milestone payments and changes in estimates for rebits and discounts that we don't expect to record. Now, I will turn the call over to Dan to provide an update on our pipeline. Thanks Lucas. So, it's our last earnings call we made progress across LILI R&D.

I'll begin in cardiometabolic health by recapping our most recent Phase 3 readout from our GIP-GLP1 glucagon triple agonist, Retatrutide. Just yesterday, we shared top-line results from Transcend T2D2, a head-to-head trial of Retatrutide versus semaglutide in people with type 2 diabetes. As shown on slide 15, Retatrutide delivered greater A1c reduction and more than double the weight loss of 2 milligrams semaglutide. Retatrutide reduced A1c by 2.2 percent compared to 1.8 percent on 2 milligrams of semaglutide. These data demonstrate Retatrutide can provide even more glycemic control than an approved diabetes medicine, provide a potential nutrient option.

What's even more striking was the 20 to 21% weight loss achieved in people taking Retatrutide compared to 9.4% weight loss in the semaglutide arm. For people with type 2 diabetes who struggle to lose weight, Retatrutide continues to demonstrate powerful weight loss alongside compelling glycemic control in this difficult to treat population. Moving to another lily triple agonist, at last month's European Association for the Study of Diabetes meeting, we presented Phase 2 data for Allora TZP. Allora TZP is a combination of our selective animal and receptor agonist, Allora lintide, in our GIP GLP1 dual agonist through septide.

As shown on slide 16, Allora TZP delivered weight loss of 23.3 percent at 48 weeks. People with type 2 diabetes at OPC. In a population that struggles to lose weight, this powerful combination delivered 57% more weight loss compared to Terzapatide, the world's most prescribed in Gritin. In addition, the highest dose combination of Allora TZP delivered A1C reduction of 2.9% at 48 weeks. In more than three out of four patients achieved an A1C below 5.7%, a level associated with normal blood glucose.

Depending replication of these first-of-their-kind results in our Phase 3 trials, we believe this drug could meaningfully improve what is possible in the treatment of type 2 diabetes in obesity. And these data highlight the potential importance of treating with three physiologic hormones at once. Moving to slide 17, as one might expect when rapidly escalating doses of a medicine with multiple mechanisms, the highest dose Allora TZP arm had a higher discontinuation rate due to adverse events. As we move into Phase 3, of course, we will use a slower, optimized dose escalation schedule, which we anticipate will improve tolerability.

Note that monotherapy Allora lintide showed excellent tolerability with discontinuation due to adverse events lower than placebo. We look forward to beginning the Phase 3 trials of co-formulated Allora TZP, imminently. We also presented results from a CHE4, the cardiovascular outcomes trial of Orfor-Glipron in people with type 2 diabetes in obesity with increased cardiovascular risk. As shown on slide 18, Orfor-Glipron met the primary endpoint of non inferiority versus insulin clargine, reaffirming its cardiovascular safety profile. In additional pre-specified analysis, compared to insulin clargine, Orfor-Glipron showed a 16% lower risk of MACE-4.

And for people fortunate enough to have been randomized to receive Orfor-Glipron in this trial, there was a 57% lower risk of all caused death. These data complement the six previously presented Phase 3 trials for Orfor-Glipron and support the potential of Orfor-Glipron as a foundational daily oral treatment for people with obesity, and people with type 2 diabetes. Also in cardiometabolic health this quarter, in the US we received two important FDA approvals. The FDA approved terzapatide to reduce cardiovascular risk in adults with type 2 diabetes, and the FDA approved our once weekly basal insulin, insulin epsitora alpha, for adults with type 2 diabetes under the brand name en suite.

Weekly basal insulin could significantly improve patient experience by reducing the number of injections compared to daily basal insulin. Moving to oncology, the FDA approved perturbutinib for certain patients with previously untreated CLL or SLL based on the Bruin CLL 313 Phase 3 trial. perturbutinib reduced the risk of disease progression or death by 80% compared to bentomustin plus retuxinib. This approval underscores perturbutinib's versatility across the CLL continuum of care. It can not be used in the first line setting for appropriate patients, in addition to its valuable role in the relapsed or refractory post-covalent BTK inhibitor set.

The FDA also approved immunostrins in combination with a bemicyclib, an ER positive HER2 negative ESR1 mutated advanced breast cancer. The all-oral combination of immunostrins and a bemicyclib gives patients a treatment approach that targets the two central drivers of ER positive breast cancer with an evidence-based treatment approach, an established tolerability profile and no new monitoring requirements. We look forward to the results from Ember 4, ongoing Phase 3 trial of immunostrins in high-risk early breast cancer. Elsewhere in oncology, we initiated a Phase 3 trial with our PI3 kinase alpha inhibitor, Tercelyssep, in combination with a CDK46 inhibitor and endocrine therapy in advanced breast cancer.

Tercelyssep is a mutant selective PI3 kinase alpha inhibitor. Intended to target, the PI3 kinase mutations in breast cancer, while sparing normal PI3 kinase and healthy tissue. We believe this profile could lead to efficacy in the first line metastatic setting without as much of the toxicity the scene with other agents. We now have eight new oncology medicines or major new indications that are in Phase 3 trials or will start Phase 3 shortly. Moving to neuroscience, we completed the acquisition of a tie-backly, adding a portfolio of neuroplastigence with potential to treat depression and other serious mental health conditions.

We're pleased to welcome the tie-backly team to Lilly and look forward to advancing multiple clinical programs together. Moving to immunology, we shared positive Phase 3 results for a leverchism map in people with moderate to severe atopic dermatitis of the hands and feet. Hand and foot atopic dermatitis is painful and difficult to treat and these data show leverchism map can be a new option for patients without the need for topical treatments. We've submitted these data to the FDA for potential label update.

We also shared 52 week results from Phase 3B trials of exochizumab and terzepitide used together in people with psoriasis or psoriotic arthritis and obesity. The exochizumab and terzepitide arm delivered greater improvements in skin and joint outcomes than exochizumab alone, highlighting the importance of immunomatabolic health. Earlier this month, we closed the acquisition of Merida biosciences, which is developing Mer 511, a precision immunology therapy in Phase 1 for Graves disease and thyroid eye disease. This drug was designed to selectively degrade the disease causing autoantibodies while preserving normal immune function.

We're excited about the potential to help patients here and we're pleased to welcome the Merida team to Lilly. By its 19 and 20 show pipeline movements since our last earnings call and the key events we expect in the remainder of 2026. We look forward to sharing more details about our pipeline at the upcoming Lilly Innovation Day on December 7. Although we won't have time to share everything we're working on, we'll do our best to curate a few examples that illustrate the depth and breadth of our capabilities and our pipeline definitely.

And I'll turn the call back to Dave for closing remarks. Thanks, Dan. We're pleased with the progress in Q3 and throughout 2026. Delivered another quarter of strong financial results, advanced our pipeline through Lilly Research Labs and Business Development, and started building two new manufacturing facilities in the US to support our future growth. While we continue to make excellent progress during a period of industry leading growth, we remain focused on investing now to support our long-term vision.

Redefine, however pharmaceutical company, can improve human health at a global scale. We've developed differentiated capabilities in R&D manufacturing and commercial operations where we're engaging directly with patients through platforms like Lilly Direct, changing the way people access health care. Given the depth of our anchorage and pipeline, we expect our leadership position in cardiometabolic health and broad pipeline of next generation of BC medicines to have an impact on global health for decades to come. And with three-fourths of our clinical pipeline focused on diseases outside of obesity, we're developing new medicines that have the potential to impact a broad range of disease.

Delivered diversified, durable growth for Lilly and our shareholders. Q3 was another strong quarter and another step toward our long-term goals. Now I'll turn the call over to Mike to moderate the Q&A session. Great. Thank you, Dave. We'd like to take questions from as many callers as possible. So to that end, consistent with prior quarters, please limit yourself to one question. Operator, please provide the instructions for how to join the Q and then we're ready for the first caller.

Thank you. At this time, we will be conducting our question and answer session. If you have any questions, please press star 1 on your phone at this time. We ask the participants limit themselves to one question on today's call. If you have a follow-up question, please rejoin the Q by pressing star 1 at any time. We also ask if listening on speakerphone today, please pick up your handset while asking your questions to provide optimum sound quality.

Please hold when we pull for questions. Thank you. Our first question today is coming from Chris Schott with JP Morgan. Your line is live. Great. Thanks so much and congrats on all the progress. I guess bigger picture one. You've raised guidance on the top line by roughly $10 billion a year to date. I guess we reflect on what's happening here. Just talk a little bit about what the biggest surprises have been as we think about U.S. versus O.S., cash pay versus commercial, etc. And probably as importantly, just when you think about these dynamics going forward, are we just seeing a fundamentally larger and pertinent opportunity than you anticipated?

Or is this more of a pull forward of demand as we think about that kind of longer addressable tan for the company? Thanks so much. Great. Thanks for the question. Talk a bit about guidance and our outlook for Anchorage and the teacher will go to Lucas. Yeah, Chris, thank you for your question. I think that's that important if you go back when we set up the guide at the beginning of the year. You may remember that we have that slide with again the opportunities and still events that we had in front of us for 2026.

We talk about the launch of LinkedIn Q2. We talk about the study in the Medicare rich program. And then, of course, we talk about the variable of the growth all U.S. in particular on the increasing out-of-pocket business and the runway of that growth. Again, what you see now in the latest guidance that we just shared today is actually a confirmation that we are tracking well across all of them even better than what we anticipated. So that's, I think, a positive confirmation of the strengths and the solid performance that we continue to see.

Going back to your second part of the question about the runway of that is that pulling forward or not. The way that we think about it, if you look at just the ingredient business, we're still scratching the surface on the number of patients that we can reach. You look at the U.S. and we're talking about one out of 10 patients that we are reaching nowadays. And even in all U.S., we are talking about two patients out of 100 patients.

So it's actually a really low base. Though the number seems really big, 16 billion dollars this quarter of ingredient business, the runway of opportunity of growth is still for many years to come from my perspective. And on top of that, we continue to run the breadth across all the therapeutic areas. Super also happy to report the 100 percent growth on the rest of the key products across on collage immunology and neuroscience. So that's just to give you some color about the short term and how we think about also long term.

Great. Next question, please. Thank you. Our next question is coming from Jeff Meachum with City. Your line is live. Oh, great. Hey guys, good morning. Thanks for the question. I want to ask about what data you have on triset the tide, persistency and obesity, just over the course of the past year or so. And importantly, when you look to next year, you know, would you expect Foundeo and Ratatra tide to be different than that in terms of real war experience?

Thank you. Thanks, Jeff. To talk about triset bedside for persistency and obesity and thoughts on the pipeline looking in the future. We'll go to Ilya. All right, Jeff, thanks for the question. What we've seen in persistency and actually before we've launched Zepbound and we've had success with trilicity in the past. And that was kind of the standard, what is possible for chronic medicine for adherence, which ended up coming around 16 to 18 months of adherence. What we're seeing with Zepbound is that in the covered space, we continue to see the trajectory of being just as beneficial in terms of adherence as we've seen in trilicity.

And even in the self-pay, we're seeing that close to the covered market. And so the persistency actually for economic medication, Zepbound is doing extraordinarily well. Now, expectations for oral, it's still early. But as typical chronic medications, as well as we take a look at oral, they typically are lower adherence overall relative to weekly injectable therapies. And that's what we expect to see. One additional data point I think will be important as we look at even the success of bridge, early days in bridge, having a low out-of-pocket helps with that friction point.

And we're seeing improved adherence in bridge. So that will all play out as part of the different friction points, both in terms of out-of-pocket, as well as the benefit that people gain from these therapies. Great. Thanks, Ilya. Next question, please. Thank you. Our next question is coming from Sheamus Fernandez with Guggenheim. Your line is line. Oh, thanks so much. I'm going to do the non-obesity question. Cassandra is actually, you know, starting to show the prospect of becoming a blockbuster product and, you know, starting to grow faster, maybe a little bit faster overseas.

But, you know, it's hoping, Dan, you might weigh in on the prospects for TB3, the prospects for success, and how you see that program really evolving the treatment paradigm should it succeed, particularly in the context of some of the, you know, novel towel biomarkers that we're starting to see. I think there are a lot of questions from investors that we get on, you know, what really is the market opportunity here, given the Kasimla uptake. But it does seem like some of those behaviors are changing.

Thanks. Great. Thanks, Sheamus. Always welcome neuroscience questions. So we'll go to Carol to talk about prospects for Kasimla, and maybe kind of the neuroscience space more broadly. Yes, we're very excited to see the growth of Kasimla over the last year, and this growth is both driven by our confidence in this product with its convenient 30-minute infusion time once monthly dosing and the opportunity for a treat to clear in this patient population. We've also seen a tremendous growth in the opportunity for diagnosis with blood based biomarkers with PTAL-217 becoming available, and we see this becoming a diagnostic that enables access to early diagnosis potentially even in primary care offices in the future.

As we look at trailblazer 3, which is our study looking at prevention in cognitively unimpaired people looking at prevention of progression to early symptomatic Alzheimer's disease, these biomarkers will certainly also enable early diagnosis for people that have risk concerns about their cognition before loss of their cognition. So we're excited both about the growth in early symptomatic Alzheimer's disease, but also if trailblazer 3 reads out positively really expanding this market to earlier stages of disease, where we already have preliminary evidence from our early symptomatic Alzheimer's disease space that treating earlier will have a more significant impact on cognition.

Thanks, Carol. Next question, please. Thank you. Our next question is coming from Evan Seegerman with BMO capital markets. Your line is live. Hi guys, thank you so much for taking my question. A bigger picture one here, so clearly the incretin franchise is becoming an enormous earnings driver, but also raises the question of what comes next. When you look beyond the cardio, cardiometabolic disease, where do you see the best opportunity to build Lily's next multi-billion dollar growth pillar?

And as recent BD activity suggests that neuroscience and immunology are emerging as higher strategic priorities, thank you so much. Great, thanks Evan for the question about the next big opportunity after incretin, so go to Dan to talk a bit about some of the pipeline opportunities you're excited about. Yeah, thanks Evan. I would say that we're excited about all three of our other therapeutic areas, which are immunology, neuroscience, and oncology, and the BD activity reflects just our strategic intent to grow those areas, but the intersection of that strategic intent with assets that are actually out there and are attractive to us.

Oncology is probably the space where we've made the most progress and we highlighted eight really important late-stage programs, several of which could be quite large in size. For example, the recent colonial acquisition which targets myeloma is a huge opportunity if the data continue to hold out the way we expect them to. Neuroscience of course is the area that has the largest unmet medical need and really the least progress in the pharmaceutical industry towards addressing that. We're firmly committed to making a difference for patients in this space and you can see our acquisitions and sleep and psychiatry combined with our in-house expertise and neurodegeneration are aimed to really grow that market on behalf of patients.

Then finally immunology, I think there's been a lot of crowding in immunology on a few probably important targets, but we also see a great opportunity actually to raise expectations in immunology with breakthrough therapies that I think can deliver efficacy that that's never been seen before and that's what we're trying to do with programs like the Merida acquisition or the ORNA acquisition, which is aimed at the immune reset. So lots of growth opportunities across those areas. Thank you, Dan.

Next caller please. Thank you. Our next question is coming from Kerry Halford with Berenberg. Your line is live. Oh, thank you for taking my question. I wonder if you can speak a little more about Medicare bridge. How does the split between Jackson and Pearl in that channel differ from others? It seems by the majority of Medicare demand is injectable. I wonder if that surprised you with regard to your products in that space and also could you talk to what proportion of patients in that Medicare channel for the bridge program specifically, a naive versus existing patients transferring from other channels.

Thank you, Kerry. We'll go to Elliot to talk a bit about bridge, the injectable versus pill split as well as the naive versus switches. Yeah, thanks for the question. You know, for bridge one, it's performed extraordinarily well. I mean, we knew that it was going to be a significant benefit for seniors. The program itself is simple in understanding the criteria and a low out of pocket. And so all of those things combined, we have seen about three quarters, 75% of people coming into bridge, going into injectable therapy, seven out of ten in total, choosing really medicine.

And so we've performed really well across bridge. That is higher than maybe some of the self-paced segment. One of the components of that is the same low out of pocket and getting the greatest efficacy in the standard of care that's been established in obesity, has favored zep bound in particular. But we're seeing good growth and uptake of oral and foundation as well. In terms of expanding, a number of people actually being treated after the first boldness of people coming into Medicare.

We're seeing now that about 80% of the people getting treatment under bridge are naive or have not been on equity therapy in Austin. So we see this as a significant driver of access long-term. And it's still early days. And while it's performing above our expectations, we see continued opportunity here to expand access and utilization and not only improve care of seniors, but as we shared earlier on independent study, also a potential of saving significant amount for Medicare overall.

Thank you, Julia. Next caller, please. Thank you. Our next question is coming from Assad Hider with Goldman Sachs. Your line is live. Great. Thanks for taking the question and congrats in all the progress. Maybe just back to the sundale. Thanks for the comments earlier. And I know that's still very early in the trajectory. But just curious to hear any updated framing on how the launch is playing out both in the U.S. as well as internationally in the context of both competitive dynamics versus or the GOVI and then your own internal expectations.

And then on the titration schedule for FONDAO, the two lower doses still represent about 75% of TRXs in recent weeks. So where do you see that going at steady state? Thank you. Great. Thanks, Assad. I think we'll start maybe with international and go to Patrick to talk a bit about some of the XUS launches. And then, Julia, maybe a couple of nuggets on the U.S. as well. Well, thank you very much. We have now launched in four markets outside the U.S. We started with UAE, very late in Q2.

And the second half of Q3 we launched in UK, Saudi and Mexico. I would say that so far the launch is very much in line with our expectations. There are a lot of similarities with the learnings from the U.S. in terms of the URLs are truly expanding the market. And we see a huge amount of patience actually being new to ingredients. In the Middle East, I think we have the political situation to take into account, but we have a market leader in UAE with competition from the GOVI.

In Saudi, we have launched in both Type 2 and chronic weight management. And we have a good uptake. UK, we have been subject to be pre-veting requirements by the MHRA. So we have actually not been able to fully promote until now in October. But the signs here are also about the URLs are expanding the market. Mexico, week six, a very good uptake and actually spec above our expectations. But most importantly, I think we see that there is a lot of work to be done here.

And we need to do all the work that has been done in the U.S. as well. We recently got the CHMP positive opinion that should hopefully result in a regulatory approval by year end. And we are ready to launch across chronic weight management and Type 2 diabetes in more than 40 markets next year. But the initial focus is going to be on cash pay and chronic weight management since Type 2 remembers and will take some time.

In the U.S., we've made significant progress since last quarter. We've seen over half a million TRX in the quarter, but fundamentals and some of the key indicators that we've been talking about as part of our initial launch have been moving in a really positive direction. Consumer awareness and interest has improved with our investment and campaign with Martha Stewart. You're seeing also a number of trialists have more than doubled since last quarter. And so we're seeing good progression of adoption from providers.

And that's showing up in our share market. So our NBRX share market is approaching around 4 out of 10. And so good progress overall for the growth of Foundeo in the oral segment and even in the sequential growth of oils within from Q2 to Q3, we're taking 45% of that growth with Foundeo. In terms of the titration, it's expected that it takes time to titrate to the maintenance doses, but we've actually seen good progress on our maintenance doses.

We have multiple maintenance doses, so about 25% of people are at one of our maintenance doses. That's actually higher than what you see on the Gobi pill. And so we're encouraged by that. Of course, that's something to continue to monitor, but the experience overall that we're seeing both from provider and consumer has been positive. I would just add, you know, we're under review for type 2 diabetes and we see that as an extraordinary opportunity for for Foundeo as well.

Remembering today in the US, roughly half the volume of GOP ones is in diabetes. So that's a big market expansion. Of course, it needs access and reimbursement when we get that, but that's very promising sort of another leg to the stool here for the Foundeo performance. Thank you all. Next question, please. Thank you. Our next question is coming from Steve Skala with TD Cowan. Your line is life. Oh, thank you so much. This is a follow-up to Chris's earlier question.

And with all due respect, Lily's financial guidance hasn't been a good predictor on ultimate results. And I'm curious, what is the most frequent source of the surprise? So specifically, has it tended to be positive unit developments? Or has it been lack of negatives on price? Or is it some desire to just lean incredibly cautiously on guidance? And if it's the latter, why is that? A key for investors, I think, is to determine when the surprise factor runs its course.

So any color would be appreciated. Thank you. Great. Thanks, Steve, for the direct question. We'll go to Lucas to maybe provide a little extra color on guidance. And David, do you want to add anything to appreciate it? Well, yes, Steve, thank you for the question. I think in terms of the variable study, this crap on the first question, there are still, again, the variables that we had when we started the year that, of course, again, now with yesterday newspaper, you think about that.

Again, we are performing way much better that, again, what we had initially guided to. But if you look at the runway of that growth across the U.S. and our U.S. has been, all the events we were public about again, that they are not associated with that. He's starting with the bridge program, when that bridge program will start, the uptake of that as well. The progression of all U.S. markets both ensure and also penetration. And those all played out better than what we anticipated.

So still, the drivers are those ones. Again, we continue to guide to what we forecast in our internal bottom-up approach that we have on our forecasting model and try to, as public as possible, about how we see the projections. And now we provided some perspective into 2027 as well. So I think in my, from my perspective, we continue to drive again a very thorough process every single quarter and be public about, again, the variables that could affect positively or negatively as well, and we're guidance projections.

Yes, Steve, I appreciate the question you follow the company a long time. You know, our goal is to give as accurate projections as we can. But of course, you know, there's asymmetry with missing on the downside. That's like everyone's impulse. But let's remember, like, we're in the middle of the largest new category expansion in the history of the pharmaceutical industry. And Lily's leading that. So there's a number of things that have never actually happened before that we're trying to project.

And you know, we prefer to, you know, posture that investors can rely on versus one that, you know, is more speculative. And, you know, when at the JPMorgan Conference at the beginning of the year, I said there's like two big variables this year. If I knew the answer to it, we would have had a tighter range. One was the uptake in bridge, which we didn't really know. We weren't even sure about the start time of bridge at that point.

And the other was the depth of the consumer purchasing internationally and whether we were really just skimming very high net worth individuals in these out-of-pocket markets or if more middle-income households would be interested in improving their health and losing weight at scale. And I think both of those this year turned out to be positive for us. Thus, the roughly $10 billion improvement over first-time guide. You know, as time goes on, I suspect we'll have fewer and fewer of those never before done things and the guidance can become more predictable.

So appreciate the question. But, you know, that's sort of how I've seen it over the last three years. And, you know, we're beating on the op that's better than missing on the down. And I think that's good news mostly not because of the earning speeds, but because we're actually executing against a really scaled opportunity and performing well. Thanks. Okay. Thank you, David Lagus. Next question, please. Thank you. Our next question is coming from Terrence Flynn with Morgan's family.

Your line is live. Great. Thanks for taking the question. Maybe one on the pipeline for Dan. There's been a growing focus on longer-acting incretins. You guys recently said you have three different programs in the clinic. So just wondering if we can expect any clinical data at the R&D day on these programs or if you can tell us what the stages of development because I think that is probably the only hole you have in your incretin pipeline.

Thank you. Thanks, Dan. We'll actually go to Ken to talk about the long-acting approach and if there's anything to share of you and what's been in public. Thanks for the question, Terrence. As we discussed previously, we do see an opportunity for longer-acting incretins, particularly in a category that's big with such a consumer emphasis. We're taking the same approach we usually do when we see an important square on the board that we want to fill, which is baking off several competing platforms to see which one provides the best product possible.

This is a space where we think the molecule properties are really going to matter and so that's why we haven't signaled anything yet, but it is true we have multiple efforts. In the clinic, those are a range of different technological approaches, including existing time extension technologies as well as ones that could be part of the future and then we have other efforts that we've disclosed in business development around formulation technologies. Again, we'll look at all these data and make an informed decision on which effort or efforts to advance to Phase 3.

Thank you, Ken. Next question, please. Thank you. Our next question is coming from Truman Wing with RBC. Your line is live. Hi, guys. Thanks for taking my questions. As you look to 27, what are you seeing in terms of opt-in trends, the GLP1 coverage amongst the larger employers in the U.S., and with those dynamics in mind and bridge continuing to ramp, could your U.S. channel mix meaningfully evolve next year? So it potentially creates additional pricing pressure amongst the mid-teens, the time that you've absorbed in 26, or could we see pricing headwinds in the same range for 27?

Thank you. Thanks, Tran. We'll go to Iliad's talk about 2027 early opt-in trends and maybe the broader access environment as well as we look into the next year. Yeah, overall, obviously there's been noise around a number of employers opting out of average at the same time. We're having positive discussions to our employer connect and other channels on improving access there as well. Our expectation is that overall access on the commercial side will maintain it relatively stable through 2027.

Obviously, we continue to have conversations to improve on that. The main access improvements overall for 27 will most more likely be predominantly growth of Medicare and Medicaid as opportunities for expanded coverage. That will have a segment mix more towards a lower price, lower net price, not about decreasing the price overall, but more just a segment mix. That as well as some level of self pay in the lower net price per TRX. In terms of commercial overall pricing, I would expect modest and disciplined approach around pricing and access to maintain, but overall stable in the commercial and increased coverage in Medicare and Medicaid.

Great. Thank you, Iliad. Next question, please. Thank you. Our next question is coming from Akash Tawari with Jeff Jeffries. Your line is live. Thanks so much. So, your team's talked about generally predictable and consistent GLT1 pricing declines in the US out to the end of the decade. How does that look XUS? Could we see more stability there than maybe investors expect? And how do you think about the net price per patient in the US versus international markets X China evolving over time?

It currently seems quite similar. Dave, you mentioned something interesting. Can you talk a bit more about the size of this emerging middle-income cash pay international market opportunity relative to what we've seen in the US so far? Thank you. Thanks, Akash. I have questions for Patrick. So, we'll talk a bit about price and expectations kind of on the kids from here. I'm thinking about net price US versus XUS and anything about the emergence of a middle-income cash pay market.

Thank you very much. You're not worth taking a very disciplined approach to pricing OUS. And I think we've seen that both providers, consumers, and pay so willing to pay for a differentiated product. And we've seen that even after the launch of generics in India, Brazil, and Canada, we're holding our shares and continue to grow. And that's a discipline that we will continue to apply. In terms of the out-of-pocket willingness, we actually see quite a big willingness to pay out-of-pocket OUS as well.

Of course, when marketer getting further penetrated, and like the UK, where we launched more than two years ago, and where we have a penetration, very much along the lines of the US, we see a lower growth as we expected. But I think overall taking into account where we are penetration-wise low single-digit long-term. We see a tremendous opportunity, OUS, for the interest ends. And we will continue our efforts as well to gain type 2 reimbursement, which is very important.

And we made some progress in Q3 here, now having nine European markets covered. But we will continue those efforts and continue to take a disciplined approach in terms of pricing. Maybe just to come on the XUS versus US. I mean, our goal, because of the consumer nature of this, is to put a much tighter band of pricing on OVC medicines than maybe you've seen historically in other medicine categories. Next thing, Patrick. Next question, please. Thank you.

Our next question is coming from Umura Fath with Evercore. Your line is live. Morning, guys. I wanted to spend a quick second on a potentially sizable opportunity in the early breast cancer for Emil and Estrin. And I understand there's a plan interim for you guys, a competitor trial. Stopped on interim. How should we think about early stoppage odds for your trial? And perhaps more importantly, if you could put the effect-sized comparisons versus Lidara and perspective, knowing that the treatment setting for you is a little more real world with meaningful post-CDK4 demonstration.

Thank you very much. Great. Thank you, Emmer. We'll go to Jake to talk a bit about Ember 4. Yeah, thanks, Emmer. Super excited about in L'Orio, both in its current actual commercial performance, where it's doing great and having lots of people with monotherapy and new combination with Rosennio. And as you mentioned, the real big opportunities in the adjuvant setting with the Ember 4 study, we've not talked about inner monographies on this study. We've been pretty consistent that we expect the study to read out in 2027 next year.

So we're sticking with that. That is what we expect. I think you're raising a good point. The treatment setting that we're exploring is much more real world, I think, than what was examined in Lidara, both in the context of the prevalent population that exists that may want to switch from existing endocrine therapy to a new oral cert, and a study run in the context of modern standard of care of CDK4-6 inhibitors like Rosennio, which our study had, and there's didn't.

So a bunch of differences. I think what our study does read out successfully. I hope it'll be much more relevant to clinical practice and easy to understand how to slot it in. I don't want to comment on anticipated effect sizes because we just need the study to read out and see what it shows us. But excited to get to that point. Thank you, Jeg. Next question, please. Thank you. Our next question is coming from Character Gould with Comter.

Your line is live. Great. Good morning. Congrats from the quarter. Maybe just to go back to the bridge program, have you had conversations with the admin or the various plan D sponsors that give you confidence. This program will either be extended or balanced, will be revisited in a different iteration, I guess, to the point. Just your confidence that there won't be a disruption at the end of 27. Thanks, Carter. I'll go to Dave to talk a bit about discussions with the administration.

Yeah. Well, I think we're pretty optimistic about expansion, I think, for three reasons, Carter. One is the early uptake is strong, and I think you see both demand and appropriate on label use of the medications. The administration did a fantastic job implementing the PA criteria in a way that was not kind of over-indexed or under-indexed. I think if we look at the people using the medicines, relatively high BMI, comorbid people. And that leads to the second point, which is cost effectiveness.

And I think we highlight today that independent study from USC that estimates not just break even, but like massive cost savings for Medicare due to this program. CMS will, because it's being done as a pilot program, will do their own analysis. But I think all signals now point to a pretty successful cost effectiveness, which could yield either a legislative or a regulatory shift in the coverage permanently. In the meantime, I think there's a lot of energy with the people running CMS at the current point to continue this, and the right way to do that is put this into the Part D benefit.

So I would expect probably a good conversation to have on our Q1 call, this to then shift to working with the carriers for the 28 calendar year. And we'll certainly work with the administration and all our partners who supply Part D coverage to have good access across our portfolio, and, you know, contain the success of the program so far. Thanks, Dave. We'll try to squeeze in two more if we could, please. Next question, please. Thank you.

Our next question is coming from Michael Yee with UBS Securities. Your line is live. Great. Thank you. Maybe just a long-term portfolio question around obesity and how you view a consumerism-driven market where people will gravitate towards differentiated or at different options within your portfolio. So I'm thinking about Redditrutet and Ammon. Can you maybe just put on your prediction hat about what that portfolio would look like and how consumers would choose between these different products given various competition and price points?

Thank you. Thanks, Mike. We'll go to Ken to talk about the breadth of the obesity portfolio and how to think about what patients each are for. Thanks, Mike, for the question. I mean, maybe let's start with the size of the problem we're confronting here is 110 million or so people living in the U.S. with obesity or overweight and internationally. That number has a B at the start of it. That's why we're pursuing a portfolio approach knowing that many individuals will seek out and find over time what works best for them.

Each of the molecules in our growing portfolio, they have unique features and probably each of them can fill multiple roles. We've talked about how foundeo is a great on-ramp for patients earlier in the weight loss journey but can be a great maintenance option as well. Trizapatide we see a sort of a cornerstone with a growing body of the evidence to support it including Surmount MMO very soon. And then if we focus on RETA, this is a medicine that looks like it could do a lot of jobs on the high-end delivering tremendous power, lowering delivering a lot of simplicity, and really differentiated responses in some important sub-populations including men and type 2 diabetics where it's the first agent that's ever shown greater than 20% weight lowering.

Beyond that we have our selective amylin portfolio which opens up a new pharmacological axis that can offer incretin-like weight lowering with really more placebo-like GI tolerability in the last but not least. So Laura, TCP, we see this as sort of the most physiological approach yet to weight loss that could also again play a lot of roles in this including providing really different sheet HPA1C lowering in patients with type 2 diabetes. So again all these agents we think they can play a lot of roles we probably can't a priority stipulate for any individual patient what's going to work best for them but what's important to us is that we offer all of them, we offer choice, we put them on a really a platform with a consistent appearance experience that allows patients to start, switch and step up to any lily medicine that works best for them and overall no matter which one they choose they'll still be on a lily medicine.

Great thanks Ken. We'll go to the last question please. Thank you. Our final question is coming from Courtney Breen with Bernstein. Your line is live. Hello team thanks for the question today. I know we've spoken a little bit about the pipeline but I instead wanted to think about other sources of innovation and namely the the anNA that you've been doing and licensing that you've been doing externally to support your pipeline. Obviously there's been a rapid pace for the first part of this year.

Can you just help us understand when you believe you're at in terms of the risk/reward balance across your portfolio the types of areas that might be of interest to continue adding and how you're kind of ensuring that you're keeping the bar high as you continue to take on and broaden this pipeline kind of beyond what we see and face to right now. Thank you so much. Thanks Courtney. We'll go to Jake to talk a bit about kind of BD strategy the process to assess different transactions and kind of the interest across the board.

Yeah thanks for the question. You know it's funny you mentioned risk/reward. Risk is really our friend here. Risk allows us to actually create value and one of the ways we can deploy that for the reasons we can is because we don't need revenue tomorrow. You know I think you know we have this opportunity while the Inkerton business and the rest of the commercial businesses are doing so well to plan for the next decade or two ahead which allows us to take more risk in a calculated way and some of that is very early stage deal making which you know oftentimes are not really even press release by us so some of them you don't maybe know as much about and you know we've done a bunch of I would say clinical stage but not super late stage clinical deals this year where we see enough risk still within the program for us to create value but enough de-risking for us to feel confident that there's a real medicine or maybe more than one medicine there and you know we can point to a handful of deals even on the year this year that fit that paradigm.

So you know I think you'll see more of both of those categories from us across all the therapeutic areas we're not solving for any one given therapeutic area we're just solving for great products great science and great people that we can bring it to the company and fuel growth into the decades to come I think that gives us a competitive advantage frankly and in how we look for what we want to take inside relative to our peers so we have a pretty rigorous process to stay disciplined on a deal-by-deal basis and I'm excited about what we've done so far and what's the come thanks go to closing comments okay excellent thanks for joining us for today's call obviously a strong quarter for the company I want to take a moment though to promote a upcoming event which is our December 7th Investor Day this will really be an R&D and pipeline focused day we'll have other sections in that as well and I hope all of you can join us live or if not remotely for that event I also want to take a minute just to again congratulate Patrick on a great career and I think it's your last earnings call with us you played a big part in our success over the last well 30 years of your career but certainly the most recent six or seven so thank you Patrick for everything please follow up with the IR team if you have additional questions we didn't get to and look forward to seeing everyone in early December thank you this does conclude our conference for today this conference will be made available for replay beginning at 1 p.m. today and running through 11 26 26 at midnight you may access the replay system at any time by dialing 8 0 0 3 3 2 6 8 5 4 and entering the access code 938 9 0 4 international dollars can call 9 7 3 5 2 8 0 0 5 again those numbers are 8 0 0 3 3 2 6 8 5 4 and 9 7 3 5 2 8 0 0 5 with the access code 938 9 0 4 thank you for your participation and you may now disconnect your lines

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