Eli Lilly Reports Fourth-Quarter And Full-Year 2016 Results

INDIANAPOLIS, Jan. 31, 2017 /PRNewswire/ -- Eli Lilly and Company (NYSE: LLY) today announced financial results for the fourth quarter and full year of 2016.

Certain financial information for 2016 and 2015 is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the periods. Non-GAAP measures exclude the items described in the reconciliation tables later in the release. The company’s 2017 financial guidance is also being provided on both a reported and a non-GAAP basis. The non-GAAP measures are presented to provide additional insights into the underlying trends in the company’s business.

“Newly launched products - including Trulicity, Cyramza, Jardiance and Taltz - led Lilly’s volume-driven growth in 2016. Pipeline progress also continued with approvals of new products and new indications for existing products in our core therapeutic areas of diabetes, oncology and immunology,” said David A. Ricks, Lilly’s president and CEO. “We expect this momentum to continue in 2017 and remain focused on launching new products, improving productivity and advancing our pipeline as we work to bring life-changing medicines to patients.”

Key Events Over the Last Three Months

Commercial

• Basaglar^® (insulin glargine injection), part of the company’s alliance with Boehringer Ingelheim, became available by prescription in the U.S.
• Galliprant^® (grapiprant tablets) is now available to veterinarians for once-daily use in dogs with osteoarthritis. Galliprant is part of a collaboration between Lilly and Aratana Therapeutics, Inc.

Regulatory

• With respect to products on which we collaborate with Boehringer Ingelheim:
  • The U.S. Food and Drug Administration (FDA) approved and the company began efforts to promote a new indication for Jardiance^® (empagliflozin) tablets to reduce the risk of cardiovascular (CV) death in adults with type 2 diabetes and established CV disease.
  • The FDA approved Synjardy^® XR (empagliflozin and metformin hydrochloride extended-release) tablets for adults with type 2 diabetes.
  • The FDA approved supplemental new drug applications for Synjardy (empagliflozin/metformin hydrochloride), Synjardy XR and Glyxambi^® (empagliflozin/linagliptin) to include data showing empagliflozin reduced the risk for CV death in adults with type 2 diabetes and established CV disease.
  • The European Commission granted approval to update the Jardiance label including a change to the indication statement and inclusion of data on the reduction of risk of CV death in patients with type 2 diabetes and established CV disease.
  • The European Commission granted marketing authorization for Glyxambi, a single pill combining Jardiance and Trajenta^® (linagliptin), for use in adults with type 2 diabetes to improve blood sugar control when metformin and/or sulphonylurea and one of the monocomponents of Glyxambi do not provide adequate blood sugar control, or when a patient is already being treated with the free combination of Jardiance and Trajenta.
• The European Commission granted conditional marketing authorization for Lartruvo (olaratumab), in combination with doxorubicin, to treat adults with advanced soft tissue sarcoma not amenable to curative treatment with radiotherapy or surgery and who have not been previously treated with doxorubicin. As part of a conditional marketing authorization, Lilly will need to provide results from an ongoing Phase 3 study. Until availability of the full data, the CHMP will review the benefits and risks of olaratumab annually to determine whether the conditional marketing authorization can be maintained.
• The EMA’s CHMP issued a positive opinion, recommending the approval of baricitinib, for the treatment of moderate-to-severe active rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to, one or more disease-modifying anti- rheumatic drugs. Baricitinib may be used as monotherapy or in combination with methotrexate. Baricitinib is part of a development and commercialization collaboration with Incyte.
• The FDA extended the review period for the new drug application (NDA) for investigational baricitinib, a once-daily oral medication for the treatment of moderate to severe rheumatoid arthritis. The NDA for baricitinib was submitted to the FDA in January 2016. The FDA extended the action date to allow time to review additional data analyses recently submitted by Lilly in response to the FDA’s information requests. The submission of the additional information has been determined by the FDA to constitute a Major Amendment to the NDA, resulting in an extension of the Prescription Drug User Fee Act goal date by three months.

Clinical

• The company announced that solanezumab did not meet the primary endpoint in a Phase 3 study of people with mild dementia due to Alzheimer’s disease. Lilly will not pursue regulatory submissions for solanezumab for the treatment of mild dementia due to Alzheimer’s disease.

Business Development/Other

• The company announced an agreement to acquire CoLucid Pharmaceuticals, Inc. for $46.50 per share or approximately $960 million. Lilly will add lasmiditan, in development for the acute treatment of migraine, to its Phase 3 pipeline.
• The company completed the acquisition of Boehringer Ingelheim Vetmedica, Inc.'s U.S. feline, canine and rabies vaccines portfolio.
• The U.S. Court of Appeals for the Federal Circuit upheld the decision of the U.S. District Court for the Southern District of Indiana and ruled in the company’s favor regarding validity and infringement of the vitamin regimen patent for Alimta^® (pemetrexed for injection).
• The company and AstraZeneca announced a worldwide agreement to co-develop MEDI1814, an antibody selective for amyloid-beta 42, which is currently in Phase 1 trials as a potential disease-modifying treatment for Alzheimer’s disease.
• The company announced the expansion of an existing immuno-oncology collaboration with Merck to add a new study of Lilly’s Lartruvo with Keytruda^® (pembrolizumab) in patients with previously treated advanced or metastatic soft tissue sarcoma.
• The company announced that people who use Lilly insulin can access discounted prices for their purchases starting January 1, 2017. The discounts, provided by Lilly through a partnership with Express Scripts, may reduce costs for people who pay full retail prices at U.S. pharmacies, such as those who have no insurance or are in the deductible phase of their high-deductible insurance plans.
• As part of its previously announced share repurchase program, the company paid $300 million to repurchase company stock in the fourth quarter of 2016. For the full year 2016, the company returned $2.8 billion in cash to shareholders through both its dividend and share repurchase program.

Fourth-Quarter Reported Results

In the fourth quarter of 2016, worldwide revenue was $5.760 billion, an increase of 7 percent compared with the fourth quarter of 2015. The revenue increase was driven by an 8 percent increase due to volume, a 1 percent favorable impact of foreign exchange rates, and a realized price decrease of 1 percent, primarily due to lower realized prices outside the U.S. The increase in worldwide volume was driven by Trulicity^® and other new pharmaceutical products, including Jardiance, Taltz^®, Cyramza^® and Basaglar. The increase in volume was also driven by Humalog^®, Humulin^® and companion animal products. The total volume increase was partially offset by decreased volumes for Alimta, Zyprexa^® and Cymbalta^®.

Revenue in the U.S. increased 14 percent to $3.223 billion, driven primarily by increased volumes for Trulicity, Humalog, Taltz, Jardiance, Humulin and companion animal products. Realized prices increased U.S. revenue by 1 percent, reflecting a favorable adjustment of approximately $130 million related to changes in estimates for rebates and discounts, primarily related to Humalog.

Revenue outside the U.S. decreased 1 percent to $2.537 billion, as lower realized prices and volume from the loss of exclusivity for Alimta in several countries, Zyprexa in Japan, and Cymbalta in Europe and Canada were largely offset by increased volume for several new pharmaceutical products, including Cyramza, Trulicity, Basaglar and Jardiance, and the favorable impact of foreign exchange rates, primarily the Japanese yen, partially offset by other foreign currencies.

Gross margin increased 8 percent to $4.295 billion in the fourth quarter of 2016 compared with the fourth quarter of 2015. Gross margin as a percent of revenue was 74.6 percent, an increase of 0.4 percentage points compared with the fourth quarter of 2015. The increase in gross margin percent was primarily due to increased volume in the U.S. and efficiencies in manufacturing processes.

Operating expenses in the fourth quarter of 2016, defined as the sum of research and development, and marketing, selling and administrative expenses, remained flat at $3.241 billion. Research and development expenses were flat at $1.451 billion, or 25.2 percent of revenue. Marketing, selling and administrative expenses remained flat at $1.790 billion, as reduced spending on late-life-cycle products was largely offset by increased expenses related to new products.

In the fourth quarter of 2016, the company recognized an acquired in-process research and development charge of $30.0 million associated with an agreement with AstraZeneca to co-develop MEDI1814. In the fourth quarter of 2015, the company recognized acquired in-process research and development charges of $199.0 million, primarily associated with the acquisition of worldwide rights to an intranasal glucagon from Locemia Solutions.

In the fourth quarter of 2016, the company recognized asset impairment, restructuring and other special charges of $147.6 million.

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