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Original Source: FD (FAIR DISCLOSURE) WIRE
. Jim Davlin, Eli Lilly, Dir. of IR . Jim Greffet, Eli Lilly, Mgr. of IR . Jim Ward, Eli Lilly, IR . Chris Schott, Banc of America, Analyst . John Lechleiter, Eli Lilly, President, COO . Roopesh Patel, UBS, Analyst . David Risinger, Merrill Lynch, Analyst . Tim Anderson, Prudential Securities, Analyst . James Kelly, Goldman Sachs, Analyst . Chris Shibutani, JPMorgan, Analyst . Jami Rubin, Morgan Stanley, Analyst . Tony Butler, Lehman Brothers, Analyst . Catherine Arnold, Credit Suisse First Boston, Analyst . Scott Henry, Oppenheimer, Analyst . Steve Scala, Cowen, Analyst . John Boris, Bear Stearns, Analyst . Stephen Williams, Friedman Billings Ramsey, Analyst
LLY reported 2Q06 worldwide sales of $3.867b and diluted EPS of $0.76. 3Q06 EPS is expected to be $0.77-0.79. Full-year 2006 sales growth is expected to be at approx. the low end of the previous guidance of 7-9% growth. Full-year 2006 EPS excluding future material unusual items is expected to be $3.10-3.20.
A. Key Data From Call 1. 2Q06 worldwide sales = $3.867b. 2. 2Q06 diluted EPS = $0.76. 3. 2Q06 GM as a percentage of sales = 77.7%.
4. Full-year 2006 sales growth expectations = to be at approx. the
low end of the previous guidance of 7-9% growth. 5. Full-year 2006 EPS expectation excluding future material unusual items = $3.10-3.20. 6. 3Q06 EPS expectation = $0.77-0.79.
S1. 2Q06 Review (J.W.) 1. Key Events: 1. LLY and Alcon signed a long-term agreement to co-promote Arxxant in the US and Puerto Rico. 1. The agreement is subject to FDA approval of Arxxant which is currently under regulatory review as an oral medication to reduce the risk of vision loss associated with diabetic retinopathy.
2. Gemzar was approved in the US for treatment of recurrent
ovarian cancer in combination with carboplatin. 1. Gemzar, which recently celebrated its 10th anniversary in the US, is already approved in the US for treatment of breast, lung, and pancreatic cancers. 3. LLY submitted Arxxant for the treatment of diabetic
retinopathy in Europe. 4. LLY submitted a supplemental new drug application to the FDA for Cymbalta for the treatment of generalized anxiety disorder. 5. LLY initiated a Phase III clinical trial to study Enzastaurin as a maintenance therapy to prevent relapse in patients with diffuse large B-cell lymphoma, the most common form of non-Hodgkin's lymphoma. 6. Enzastaurin, a targeted oral agent, is also being studied in Phase III trials for the treatment of relapsed glioblastoma multiforme, an aggressive and malignant form of brain cancer. 7. LLY announced that it is discussing the future of three European facilities, including proposals to close the sites, which include two R&D sites and one manufacturing site. 1. Any closures would be subject to consultations with employee representatives at the affected sites and then approval by the LLY BOD. 2. No final decisions have been made at this time. 3. If the sites are closed, the majority of the 900 employees
would be laid off and LLY would need to take charges that would like to be significant. 8. LLY announced that it would be extending its patient assistance program, LillyAnswers, through the end of this year to qualifying patients currently participating in the program to help bridge the gap in coverage for people who need LLY medicines but are not yet enrolled in Medicare Part D. 9. LLY is also asking for an opinion on a proposed outside Part D patient assistance program which would extend assistance
beyond the end of this year to Medicare patients for Forteo
S2. Financial Review (J.D.) 1. 2Q06 Results: 1. Worldwide sales grew 5% to $3.867b. 2. GM was 77.7% of sales, a 1.5 percentage point increase vs. 2Q05. 3. Total OpEx increased by 5%.
1. This increase in total OpEx resulted from an increase of 8%
in SG&A and growth of 2% in R&D expenses. 4. Operating income increased 12% after excluding the $1.1b product liability charge principally related to Zyprexa taken in 2Q05. 1. Other income and deductions was a contribution of $47m in 2Q06. 5. The tax rate remained at 21%. 6. Diluted EPS was $0.76. 1. Adjusted EPS was $0.67 in 2Q05. 2. This represents a 13% growth in earnings for 2Q06. 3. 2005 earnings were adjusted to exclude a $1.1b charge. 7. Topline growth of 5% was the result of an increase due to price of 3%, a 1% decrease from exchange rates, and a 3% increase in volume. 2. 2Q06 Product Sales: 1. Zyprexa:
1. Worldwide Zyprexa sales increased 2% to $1.1b. 2. Sales in the US declined 1% to $543m due to lower underlying demand vs. last year offset by higher prices. 3. In the US, the rate of share losses declined as numerous interventions take hold. 4. In the US, an encouraging trend is visible with new prescriptions in consistent ranges since the start of the year. 1. A similar trend is also seen in total prescriptions. 5. Zyprexa sales outside the US were up 5% to $572m, 6% excluding the exchange rate impact.
2. Cymbalta: 1. Sales were $310m, up 92% vs. 2Q05. 2. On a sequential basis Cymbalta sales increased 33% from 1Q06.
3. US sales were $270m, an increase of 79%. 4. Sales overseas were $41m. 5. Cymbalta is now launched in over 45 countries outside the US and the Co. expects launches to continue throughout the year. 6. During 2Q06, Cymbalta gained almost 100 BP of new prescription share. 1. This gain is more than twice the share gained during the previous six months. 2. A similar inflection is seen in the total prescription share. 3. …