Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2015 Earnings Call. As a reminder, today's conference is being recorded. And I would now like to turn the conference over to your host, Chief Financial Officer, Mr. Derica Rice. Please go ahead, sir.
Thank you. Good morning, and thank you for joining us for Eli Lilly and Company's Q1 2015 earnings conference call. I'm Derek Horace, Leelay's Chief Financial Officer. John Lechleiter, our Chairman, President and CEO is traveling overseas and is unable to join us today. However, I do have a number of my colleagues with me here in person or dialing in and they are Doctor.
Jan Lundberg, our President of Lilly Research Laboratories Sue Mahoney, President of Lilly Oncology Enrique Contrego, President of Lilly Diabetes Dave Riggs, President of Lilly Biomedicines Tito Zuweta, President of Emerging Markets Jeff Simmons, President of Elanco Animal Health and Alyssa Rasner, Brad Robling and Phil Johnson of Investor Relations team. During this call, we anticipate making projections and forward looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide 3 and those outlined in our latest Forms 10 ks and 10 Q filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions.
Now 2015 is off to a very good start. This quarter, we had solid underlying business performance, offset by the continued strengthening of the U. S. Dollar and lingering headwinds from U. S.
Patent expirations of Cymbalta and Evista. Our continued focus on cost controls drove strong leverage at the bottom line and we saw positive progress with our pipeline spanning regulatory approvals, submissions and Phase 3 data readouts. Now I'll begin today's call by highlighting key events that have occurred since our last quarterly earnings call and there have been quite a lot of them. Starting with commercial milestones. Our U.
S. Colleagues began promotion of SIRANZA for second metastatic non small cell lung cancer after receiving FDA approval late last year. While in Europe, our colleagues launched SIRAMZA for the treatment of second line gastric cancer. In diabetes, following EU approval in Q4, we launched Humalog 200 units per ml QuickPen, the first 200 units per ml mealtime insulin that is targeted for people who to take more than 20 units of rapid acting mill time insulin per day. And following FDA approval at the end of January, along with Boehringer Ingelheim, we launched Glixambi in the U.
S. In March. We're excited about the potential of this product, which is the first approved single cell combination of a DPP-four inhibitor and an SGLT2 inhibitor. Turning to regulatory milestones. In addition to FDA approval of Gluxanbia, Boehringer Ingelheim received a positive opinion from Europe CHMP for the single pill combination of empagliflozin and metformin for the treatment of patients with type 2 diabetes.
If approved, the product will be marketed under the trade name SYMJARDI. In oncology, we achieved a number of regulatory milestones for SIRAMZA. After receiving a priority review, SIRAMZA was approved in Japan as a treatment for patients with unresectable advanced or recurrent gastric cancer. Given the regulatory timelines for pricing and access decisions, launch is expected mid year. We also submitted SIRAMZA in both the U.
S. And the EU for second line metastatic colorectal cancer. I would note that the FDA's review of this SBLA is removing very quickly. And also in the EU, we submitted SIRAMZA for second line non small cell lung cancer. We're very pleased with the progress we've made in bringing SIRAMZA to the market, having received regulatory approvals in the U.
S, the EU and Japan within less than 12 months. As I'll discuss later, we're also excited about lifecycle opportunities for this brand. In our biomedicines business, we submitted ixekizumab to the FDA for review as a treatment for patients with moderate to severe plaque psoriasis. And along with Pfizer, we announced that the FDA removed the partial clinical hold for tanezumab. As a result, we will begin Phase 3 trials in multiple pain indications before the end of the year.
Our decision to proceed with the development of tanezumab triggered a $200,000,000 payment to Pfizer. On the clinical front, along with the insight, we announced that baricitinib met the primary endpoint of improved ACR20 response compared to placebo in the Phase 3 RA build study BUILD study in patients with moderately to severely active rheumatoid arthritis who had an inadequate response to or were intolerant of at least one conventional DMARD. At the American Academy of Dermatology meeting in March, we presented detailed results from the positive Phase 3 UNCOVER-one study evaluating ixekizumab in patients with moderate to severe psoriasis. Also for announcing positive results from the Phase 3 SPIRIT P1 study evaluating it'sikizumab in patients with active psoriatic arthritis who were naive to biologic treatment. I'm also pleased to announce that we have completed enrollment of the expedition 3 trial evaluating solanizumab in amyloid positive patients with mild Alzheimer's disease.
Given that we completed enrollment ahead of schedule, we now expect last patient visit in October of 2016. For our CETP inhibitor, evacetrapib, we announced that the ACCELERATE Phase 3 study in people with high risk vascular disease will be extended by approximately 6 months. Last patient visit for this study is now expected in July of 2016. And we announced that regulatory submission of our basal insulin PEGLYSEPRO will be delayed in order to generate additional clinical data to further understand and characterize the potential effects, if any, of changes in liver fat observed with Bell treatment in the Phase 3 trials. We are working with regulators to determine specific next steps, but we do anticipate the regulatory submission is likely to occur after 2016.
And we look forward to a detailed Phase 3 data at this year's ADA meeting. On the business development front, we announced 3 deals. The first was an agreement with Hamni for the development and commercialization of Handmeid's oral BTK inhibitor for the treatment of autoimmune and other diseases. Lilly will have worldwide rights excluding China, Hong Kong, Taiwan and Korea. The second was a collaboration with Innovent for the development and investigational cancer treatment.
In addition, Lilly will be responsible for the development and commercialization outside of China for a preclinical immuno oncology molecule and for up to 3 preclinical bispecific immuno oncology molecules from INNOVENT. And the 3rd deal, which we announced last week with Bristol Myers Squibb was for the transfer back to Lilly of Erbitux commercial rights in North America. These rights were scheduled to revert to Lilly in September 18, but we expect this deal will accelerate that transition to Q4 this year. In other news, the German Court of Appeal ruled that the vitamin regimen patent for Olimta would not be infringed by generic competitor that intends to market a dipotassium salt form of pimatrexed in Germany once the compound patent expires in December 2015. We will seek permission to appeal this ruling to the German Supreme Court.
And finally, repurchased just over $300,000,000 of stock in Q1, leaving $3,400,000,000 remaining on our $5,000,000,000 plan. In addition, during the Q1, we distributed over $500,000,000 to shareholders via our dividend. We remain committed to providing a robust dividend and to returning excess cash to shareholders via share repurchase. 2014 was a productive year for execution of our innovation based strategy. Likewise, 2015 is off to a strong start with more to come.
Now, I'll turn the call over to Phil for a discussion of our financial performance for the quarter. Phil? Thanks, Derica.
Before I review our Q1 results, it may be helpful to comment on the presentation of our GAAP results and non GAAP measures. For our GAAP results, remember that we closed the Novartis Animal Health acquisition on January 1. So when interpreting our GAAP results and growth rates versus 2014, please keep in mind that 2014 does not include Novartis Animal Health, while 20 15 includes the operating results
of this business as well
as all the costs associated with the acquisition, including financing costs, integration costs, inventory step up costs, amortization of intangibles and other miscellaneous adjustments. For our non GAAP measures, recall that like our peers, we are now excluding amortization of intangibles from our non GAAP measures. To provide you a better idea of underlying trends in our business based on our current reporting practices and business configuration, we've adjusted our non GAAP measures for 2014 to exclude the expense associated with amortization of intangibles and to include Novartis Animal Health as if we had closed the acquisition on January 1, 2014. This places 2014 on the same basis upon which we are reporting our financials this year. In addition to aiding your analysis of our non GAAP measures, you'll see that we posted an Excel file to our Investor Relations website that contains our 2014 non GAAP measures adjusted to remove intangible amortization and to add Novartis Animal Health.
With that background, let's take a look at our results for the quarter. Slide 8 provides a summary of our GAAP results. As I'll focus my comments on our non GAAP adjusted measures to provide insights into the underlying trends in our business, please refer to today's earnings press release for a detailed description of the year on year changes in our Q1 reported or GAAP results. Moving to slide 9, you can see that Q1 revenue was just over $4,600,000,000 The decrease of 6% compared to Q1 twenty 14 reflects significant FX headwinds. Excluding FX, our Q1 revenue on a non GAAP basis was essentially flat.
As we discussed on our guidance call, this year we will still feel the negative effect of the loss of U. S. Exclusivity for Cymbalta and DaVista. This quarter, sales of those 2 products in the U. S.
Declined by nearly $200,000,000 Excluding the unfavorable impact of foreign exchange rates and Cymbalta and Avista in the U. S, the rest of our worldwide revenue increased 5% this quarter. Gross margin as a percent of revenue increased to 3.6 percentage points going from 74.6 percent to 78.2%. This increase was entirely driven by the favorable impact of foreign exchange rates on international inventories sold, which increased cost of sales in Q1 last year, but decreased cost of sales in Q1 this year. Excluding this FX effect, our gross margin percent declined by 1.1 percentage points, going from 76.4 percent in last year's quarter to 75.3% this quarter.
Please do take note of the level of our gross margin percent excluding the FX effect on international inventories sold. Again, you'll see that this is running at roughly 75%. As we discussed when updating our guidance on our Q4 earnings call, in 2015, we expect a substantial FX benefit that should push our gross margin percent into the 78% range. However, if FX rates stay at their current levels, that benefit will essentially go away in 2016. So as you construct your estimate of our 2016 gross margin percent, you should be making adjustments off of a 2015 base level of roughly 70 5%.
As in past quarters, you'll find a supplementary slide providing our gross margin percent for the last 10 quarters with and without this FX effect. Total operating expense, defined as the sum of R and D and SG and A, declined by 7% or nearly $200,000,000 compared to Q1 of 2014. Marketing, selling and administrative expenses declined 6%, while R and D declined 9%. The reduction in marketing, selling and administrative expenses was due primarily to the favorable impact to foreign exchange as well as to ongoing cost containment efforts. The reduction in R and D expense was driven primarily by the lower late stage clinical development costs and to a lesser extent the favorable impact of foreign exchange rates.
As implied by our full year guidance, we do expect the level of R and D spend to be higher for the remainder of the year as we start Phase 3 trials for tanezumab, our CGRP monoclonal antibody, oloratumumab and additional indications for Cyramza. Other income and expense was income of $93,000,000 in Q1 2015 compared to income of $36,000,000 in the Q1 of 2014. This increase versus last year was due to a favorable legal judgment and larger net gains on investments. Our tax rate was 22.9 percent, an increase of 3 percentage points compared to the same quarter last year. This increase is primarily due to a discrete tax benefit realized in Q1 last year.
Also, our tax rate in both periods did not include the benefit of certain U. S. Tax provisions, including the R and D tax credit, as those provisions had lapsed. At the bottom line, net income increased 16%, while earnings per share increased 18%, reflecting the benefit of our share repurchases. Slide 10 provides a reconciliation between reported and non GAAP EPS and you'll find additional details on these adjustments on slide 19.
Now let's take a look at the effect of price rate and volume on revenue. On slide 11, in the yellow box in the middle of the page, you'll see the total revenue decline on a non GAAP basis that I mentioned earlier of 6 percent. The significant strengthening of the U. S. Dollar against many foreign currencies drove this decline, as you see the 6% negative effect from FX that we booked this quarter, with a favorable price effect of 3%, offset by a volume decline of a similar amount.
By geography, you can notice that U. S. Pharma revenue increased to 4% driven by price, partially offset by volume. A number of pushes and pulls affected U. S.
Pharma revenue growth this quarter. First, as I mentioned earlier, Cymbalta and Avista declined following their patent expirations. Excluding Cymbalta and Avista, the rest of our U. S. Pharma revenue increased 18% with over 7 percentage points coming from volume.
Also recall that on our Q4 earnings call, we mentioned that an extension of shipping days through the end of December 2014 resulted in lower wholesale inventory build in Q4 of 2014 than in Q4 of 2013. As expected, this led to less wholesale inventory burn in Q1 this year than in Q1 last year, benefiting this year's growth rate. So when adjusted for wholesaler buying as well as Cymbalta and Avista, our U. S. Pharma revenue grew 14% this quarter with 3 percentage points coming from volume.
Moving to our international operations. In Australia, Canada and Europe or ACE, you'll see a negative 13% rate impact was the primary driver of the overall 16% decline in revenue. While on a constant currency or performance basis, ACE revenue decreased 3%, driven primarily by the initial effects of the loss of exclusivity for Cymbalta. In Japan, pharma revenue decreased 23% with half of the decline coming from the weaker yen. On a performance basis, our Japanese pharma revenue decreased 11%.
You may recall that we experienced substantial wholesaler buying in Q1 2014 in advance of an increase in the local consumption tax. Adjusting for the increased buying we saw last year, our pharma revenue grew by 9% on a performance basis, driven by volume. Turning to emerging markets. We saw mid single digit performance growth driven by volume growth of 7%. As a result of the significant negative effect of FX, our reported emerging markets revenue declined 4% versus last year.
Our pharma revenue in China grew 6% with nearly all of that growth coming from volume. On a non GAAP basis, which adjusts 2014 as if we'd completed the Novartis Animal Health acquisition on January 1 last year, Elanco Animal Health revenue declined 4%. Excluding the negative effect of FX, Elanco revenue increased 2%. This performance increase was affected by competition in the U. S.
For Companion Animal Products. Moving to slide 12, you'll see the effect of changes in foreign exchange rates on our Q1 2015 results. Given the significant and swift strengthening of the U. S. Dollar, this is one of those quarters where FX has the opposite effect on the top line as it does on the bottom line.
This quarter, FX was a top line headwind, reducing revenue in U. S. Dollars by 6 percentage points. In terms of cost of goods sold, however, FX provided a substantial benefit, which led to FX providing a tailwind or benefit for operating income and EPS. Excluding FX, you can see that our non GAAP EPS in the Q1 grew 7%, while including FX non GAAP EPS grew 18%.
Slide 13 shows our pipeline as of April 17. Changes since our last earnings call are highlighted with green arrows showing progression, red arrows showing attrition and stars showing molecules added through business development. You'll see that it'sikizumab has moved into the regulatory review column following regulatory submission in the U. S, Following our agreement with Zosano to develop their proprietary formulation of parathyroid hormone 1 to 34 using a microneedle patch system, you'll see that asset showing up in Phase 2. And in Phase 1, you'll see 2 assets have been added through business development activities, an ultra rapid acting insulin through our deal with the Docea and a BTK inhibitor initially being studied in immunologic diseases through our deal with Hanmi.
In addition, we began Phase 1 testing of a small molecule for diabetes and another for Parkinson's disease. And we terminated development of a Phase 1 small molecule for cardiovascular disease. You'll also see that we've moved losozumab from Phase 2 to Phase 1. Our efforts to identify a commercially attractive formulation have been unsuccessful and we've decided not to move blasozumab into Phase 3 development for osteoporosis at this time. We'll evaluate our strategy for the blasozumab development program to determine next steps.
Now, let me turn the call back over
to Derichem. Thanks, Phil. I'll recap progress we've made at our key events for 2015 and then review our 2015 financial guidance. Turning to slide 14, you may recall that when we showed this slide on our Q4 earnings call in late January, we had already achieved 2 events presentation of data for ramucirumab and second line metastatic colorectal cancer and completion of the acquisition of Novartis Animal Health. Since that time, we've achieved a number of additional milestones.
We began our 2nd wave of Phase 3 trials for SIRAMZA, initiating a pivotal trial in first line gastric cancer. In terms of the additional lifecycle investments in SIRAMZA, you'll also see that we've specified that the Phase 3 lung cancer trial will be in the first line setting in patients with the EGFR mutation positive and we've added 2 new Phase 3 trial starts to our list of 2015 events, 1 in second line bladder cancer and the other in second line liver cancer in patients with elevated baseline alpha fetoprotein levels. This is the population where we saw a pronounced overall survival benefit in the Phase 3 REACH trial. You'll also see that we've added a key event for our CGRP monoclonal antibody. In the coming weeks, we expect to start a Phase 3 trial in patients with episodic cluster headache.
Moving to the next section, as mentioned earlier, we issued a second positive Phase 3 top line press release for baricitinib and rheumatoid arthritis. And earlier this week, we issued a top line press release outlining positive results from a Phase 3 trial of itzakizumab in psoriatic arthritis. Also for itzikizumab, but in moderate to severe plaque psoriasis, we presented detailed results of the Phase 3 UNCOVER-one trial at the AAD meeting in March. In the regulatory submissions category, you'll see the green check marks for the ramucirumab and etekizumab submissions I mentioned earlier as well as the red check mark for the delay in submission for basal insulin peglifepro. While in the regulatory action section, you'll see the green check marks for the approvals received in Japan for we reflected the progress made with tanezumab, lifting out the partial clinical hole paving the way to resume Phase 3 trials as well as the negative appeals court ruling on Alenta in Germany.
2015 represents another year for execution of our innovation based strategy and we're pleased with our progress so far and are excited for what lies ahead. While we know not all of the remaining events are likely to be positive, we're increasingly confident that a significant majority will break our way and solidify our near to medium term growth prospects. Now turning to our 2015 financial guidance. I first point out that our substantial EPS beat in the quarter relative to consensus came from 2 line items, lower R and D expenses and higher other income. In both cases, we believe these represent differences in timing between our expectations and consensus, not differences in expectations for the full year.
In terms of our non GAAP guidance for 2015, at a high level, we are reconfirming our full year guidance, both the individual line items and the EPS range. To provide some more color, we have seen further strengthening of the U. S. Dollar since our call in late January and this is causing further FX headwinds at the top and bottom lines. However, the underlying performance of our business is offsetting this we expect the continued strengthening of the U.
S. Dollar to trim an additional $150,000,000 to $175,000,000 for revenue and another 0 point EPS. For the full year, we now expect FX to reduce revenue growth by about 7.5 percent or about $1,400,000,000 to $1,500,000,000 In terms of EPS, we now forecast a negative FX effect of about 0 point $3 comprised of an operational FX hit of about $0.60 offset by benefit to cost of sales of nearly $0.50 As we discussed, should FX rates remain at current levels, this cost of sales benefit in 2015 would essentially go away in 2016. You'll want to consider this as you model our gross margin percent and EPS for 2016. For our GAAP guidance, you will see that we've incorporated changes related to our decision to proceed with the development tanezumab and the deals we signed with Hanmi, INNOVENT and Bristol Myers Squibb.
Finally, keep in mind that our 2015 GAAP guidance is based on our current estimate for how we'll account for the Novartis Animal Health acquisition and the Erpatex deal and could change based upon revised estimates and final accounting treatment. In summary, while our Q1 revenue reflects the impact of foreign exchange headwinds and the lingering effects of U. S. Patent expirations for Cymbalta and Avista, Lilly remains on track to return to growth in 2015, driven by excellent progress in our innovation based strategy. We had solid underlying business performance and our continued focus on cost controls drove strong leverage at the bottom line.
Recent new product launches along with the growing success of our late stage pipeline reinforce our confidence in our future. Since our last earnings announcements, we've seen 1 FDA approval and 2 FDA submissions, in addition to approvals and submissions in Europe and Japan. We've also seen a continuing series of positive data readouts for our late stage assets. We are pleased with the performance of recently launched products as well as growth in several established products. Excluding the hit from unfavorable exchange rates and lower U.
S. Sales of Cymbalta and Avista, the rest of our worldwide revenue increased 5% this quarter. We've started 2015 in a position of strength and our continued cost containment efforts allow us to build on our innovation based strategy through both internal and external investments. As we transition from a period of unprecedented patent expirations to an era of growth, we are seeing tangible results throughout the balance of this decade we aim to drive revenue growth and expand margins. You'll see us sharpen our focus and find ways to increase productivity and do the work of pharmaceutical R and D better.
This concludes our prepared remarks. Now I'll turn the call over to Phil to moderate the Q and A session. Phil?
Thanks, Derica. Keely, if you could prompt the folks on the line for the procedure for getting into the queue and asking questions and then move to the first caller please.
Hey, guys. This is Salim in for Mark. Thanks so much for all the color on the call. It's really helpful. Just two questions.
One on Gluixambi. Can you just give us your thoughts where are the patients going to come from? Or do you expect cannibalization in your current products? Are these going to be new patients to the Lilly franchise? And then SIRANZA, if you could provide please a breakout on gastric versus lung sales?
Thanks.
Great. Salim, thank you for the questions. Obviously, Enrique, first question for you on GYXAMBI and then over to you, Sohu, for the Saramza question. Enrique?
Very good. On Gixambi, clearly, we are looking at the benefits that this product could provide for patients that are not achieving good control on metformin. So we see these as very attractive options for many of those patients. And that's basically what our clinical results also say. So we are excited.
We're in the very early stages of our launch. We launched in late March. So we are at this time basically introducing this product to health care providers.
Sure. And with Cyramza, the vast majority of the cells that we're seeing is in gastric cancer. In fact, in the U. S. Where we launched last year, we're seeing use with the majority of the cells coming from use in combination of paclitaxel as we expected.
We did see in Q1 there were proportion of cells coming from the lung launch. It's early days yet on lung, but we are seeing uptake there and the feedback so far is positive from physicians in the use of Cyramza in lung cancer indication. And clearly in Europe, we just launched beginning of this year in Europe. And where we're seeing access, for example, in countries like Germany, again, early days, but the uptake in the gastric indication there is positive.
Yes. Just I did not answer the question on what impact would Glixambia have on both Tradjenta and Jardiance. We are not really thinking about the cannibalization aspects when introducing this product. We think this product is a very unique product. And if anything, we believe that this product is actually going to strengthen both Tradjenta and Jardiance as it becomes as it basically gains acceptance in the marketplace.
Okay, great. Thanks.
Thanks, Ricky. Thanks, Susan. Thanks for the questions. KeyBanc, we can go to the next caller, please.
We'll go to the line of Tim Anderson with Bernstein.
Thank you, Jim. There's opportunity in light of the Biogen data. Mechanistically, of course, both products target A beta. They do it in reasonably different ways. Yesterday, Roche, who has 2 monoclonals, suggested that they may push forward with the plaque targeting version of their drug versus the other product that hits multiple forms of abeta.
Your product targets soluble abeta, yet you also have in development a plaque specific monoclonal. So given the totality of that data, what's your latest thinking here? What has the best chance of success, a drug that targets soluble or deposited plaque? And then another question, if last patient visit is October 2016, does it mean that we would only learn of results downstream of that? Or would we possibly learn of a top line ahead of that last patient visit?
Great, Tim. Thank you for the questions. Dave, if you'd like to take a shot at the 2 questions. Jan, do feel free to chime in as well to take on the first portion of Tim's question, you'd like. Dave?
Great. Thanks, Tim. Yes, obviously, the excitement and interest in Alzheimer's these days. And as you know for a long time, we believed in somnizumab's mechanism clearing the CYADOA data. It's exciting to have us conclude enrollment in EXHEDITION 3 and now we're on the clock for watching patient the last patient achieved 18 months of therapy.
In the past, we've communicated there was a chance we may we had allowed for an interim look. But as I've said before, that feature of the program was only valuable in the case of a slower enrollment rate. Again, at this point, we haven't made a definitive decision, but I would continue to guide people to focus on the end of the study as when we'll be learning really about the effects of solinizumab. So to your question, that would be after the October 16 VOS patient visit. As you rightly point out, we also have tox specific interests and a Phase 1 program in that area.
We're also excited about that mechanism, recognizing that the mechanisms may in fact be complementary in some sense either sequentially or combined together that tox specific cancers we see disease modifying effects from multiple different programs.
Jan, any additional comments or
Let me just add that I think it's very likely that these mechanisms are complementary. And clearly, zulanezumab has also shown a preferable safety profile, particularly in relation to ARIA either in the brain edema dilemma that you see with this plaque specific antibodies at least then from competitors. So I think we now need to wait and see what happens within these bigger trials.
And Tim just a little more color on your question about hearing results down stream from that October 2016 date. As we've been through this a number of times, if you may recall that after last patient visit, there is time that needs to transpire for the database to actually be locked, clean and validated and then for us to run tables and figures and lists. So typically top line press releases have been after last patient visit by multiple months. So you should expect to see a top line press release downstream certainly of that October 2016 last patient visit date. Keely, can we have the next caller please?
Yes. We'll go next to the line of Greg Gilbert with Deutsche Bank.
Thanks. I was hoping
you could provide a little more color on some of the softness in the quarter for Alimta and Animal Health. You mentioned some competitive pressures there. Could you expand a bit? And then on the pipeline, Jan, on the CGRP product, are you still pursuing chronic and episodic headache as well? And when might we see data on those products?
And then lastly on the glucagon receptor antagonist, can you frame for us what you're trying to accomplish there? Where it might fit in into the broader spectrum of treatments? Thanks.
Great. Greg, thanks for the questions. Sue, if you can comment on the Alinta performance in the quarter. Jeff, obviously, for Animal Health. With CGRP actually having transitioned Dave's organization, I think from a planning perspective, Dave, why don't you take a first crack at talking about our development plans for CGRP?
And then Enrique Nyan, if you want to fill in for the glucagon receptor antagonist, that would be great. Sue, let's start with you.
Sure. Elimta performance was mainly impacted by FX. Worldwide, we had a 1% volume decline with a 7% rate and a 1% price. If we look at it by geography, we actually increased in the U. S.
By 3% that was mainly driven by price. In Europe, we had a 2% volume increase and that was offset mainly by FX with also some price impact. In EMBU, we also had a volume increase again offset half by price and half by rate. In Japan, we had the same impact that was mentioned earlier with regards to the buy in that we saw last year on the consumption tax increase. So we did have a volume decrease versus last year's quarter, but also a rate impact in Japan.
On companimals, real quick, like we've seen and really expected these headwinds with increased competition really coming in a couple of areas, 2 new competitive entries as well as a reentry in the marketplace were 2 drivers. I would add an additional one which has really been some distraction from the integration. We've really used a rapid pace with the integration of both companies And from this being the 1st and second quarter critical to the companimal business, this also had an impact. I will note though on the integration, it's going better than expected. We're 3 months in.
And I do believe that both Novartis and Lomon will be enablers to our medium and long term growth in the companimal segment as well as globally. We've relaunched as well Interceptor, 3 weeks after the closing. The management teams have both been combined. We've got a management team that includes some Novartis executives. And I believe that we've now got the majority of the global sales force in place.
So again, we're finding far more positives and negatives at this stage with the Novartis integration. It will be an enabler for growth. And as we've previously communicated, the savings level of $200,000,000 will be our minimum expectation.
Great. Dave on CGRP development plans?
Yes. So I think your question was what are our plans for chronic or episodic headache? Remember there's actually 2 types of headaches we're looking at here. What we've been talking about today is the addition to the pipeline advancement chart of moving CGRP into Phase 3 here in the coming months for a condition called cluster headache. And we'll be studying that in both the chronic and the episodic forms.
This is an orphan type indication we're moving into. We are also continuing the development in episodic migraine. Lilly is not planning to study chronic migraine at this time and we have impressive results from our Phase 2 program in episodic migraine. We'll be seeking to replicate those results in Phase 3. And right now we have a Phase 2b program going on to further define the dose for that larger migraine program.
Great. And then to either Enrique or Jan on the GRA?
Maybe I'll start and then John can help here. But clearly, we our glucagon rapid reductions in hemoglobin A1c without increased hypos or weight gain. The way we're thinking about this product is this product has to offer vis a number of oral options that will be that are available today and that in the future will be available in generic form. So we are thinking that this product could be an attractive option in the elderly segment for patients that have impaired renal function, where beta cell health might not be great. We don't see lots of options for these types of patients and GRA could be an attractive option there, Jan?
Yes. And just to complement there, the metabolism of this agent is independent of renal function. So therefore, it's suitable with patients then that have some compromise in their renal function.
Great. Thank you. Keleigh, if we can go to the next caller please.
And that will come from the line of Tony Butler of Guggenheim Partners.
Yes. Good morning. Thanks very much. Number 1, Jan, if you could comment on restarts for tanezumab, would the focus again be NOA or osteoarthritis? The evacetrapib look?
Was it just simply the DSMB making some judgments about event rates? And then finally, again back to Alzheimer's, I think there is data supporting combination maybe it's totally in animals, but combinations of A beta antibody and the base inhibitor and just trying to understand how you think about really from a cost standpoint and also from a mechanistic standpoint, think about combinations versus solanezumab versus 1 or the other antibodies alone as we progress over time? So something beyond 2016. Thanks very much.
Great. Tony, thank you for the questions. Dave, actually I think I'll ask you to take a crack at these since these assets are currently sitting with your business unit. Jan, obviously feel free to supplement his response if you think it's appropriate. Dave?
Okay. Sure.
Phil, can you hear me well?
Yes, we can.
Okay, good. So as it relates to tanezumab, yes, we're pleased to be able to now move off of clinical hold and do plan to proceed into Phase 3 as soon as later this year with Pfizer. There will actually be 3 indications that will be pursued. Osteoarthritis, as you mentioned, Tony, we'll also be looking at chronic low back pain and then chronic pain associated with cancer. And that program is similar to what had been previously studied and then stopped in Phase 3.
On evacetrapib, as we mentioned earlier in the quarter, the extension of time is really not related to the evacetrapib study Accelerate. It was a set of recommendations made by our academic advisors and accepted by the company based on information coming from other major long term cardiovascular event studies, where it has been noted that in immediate or recent ACS patients that the impact of lipid management is a bit delayed in these patients. And we wanted to make sure we fully accounted for this new information in sizing the trial, thus the 6 months extension into middle of 2016. Maybe just briefly on Alzheimer's and Jan perhaps can elaborate on the Lilly generated combination data, but we have no doubt that this disease when we find and have approved disease modifiers will be requiring multiple mechanisms to fully arrest its impacts. And we do think mechanisms such as plaque targeted antibodies, such as base inhibitors and soluble A beta antibodies and maybe even tau based therapies could be combined in all kinds of forms to achieve optimal results.
Of course, the science in this space is evolving rapidly and frankly pretty new. We don't have human data in combinations that I'm aware of. So that's a whole field that will need to be explored hopefully after a positive solenozumab study in late 2016.
Yes. Let me just add a comment about tanezumab, the anti nerve growth factor antibody, which I feel is highly exciting based on that the chronic pain area is really needing a new agent. And if you consider the current dilemmas and problems there are with opioids in relation to addiction, tolerance or even deaths than due to abuse and so on. And NSAIDs has a number of gastrointestinal side effects and there is an increased cardiovascular risk. So I think the opportunity for a new chronic pain agent is a major one.
In relation to the Alzheimer combos, it's quite intriguing to think about different mechanisms again than the if you have existing plaque, they need to be cleared and most likely by some microglial PG plaque specific antibody that can do that. And then you need then to prevent further buildup of plaques with A beta and that can be achieved either by a base inhibitor or potentially by solanesimab binding then the free A beta. So we are looking forward to making the not only the preclinical experiments in a further solid way, but also to test this in the clinic. But first, we need to have good data with these different agents before
we can combine them. Great. Thank you, Jan. Keely, if we can go to the next caller please.
Yes. We'll go to the line of Jamie Rubin of Goldman Sachs. Please go ahead.
Hi. It's Jay Olson in for Jamie Rubin. Thanks for taking the questions. On Olymta, can you help us understand when should we expect to get news on the appeal of the German and U. K.
Court decisions regarding the Yolinta method of use patent? And then do you expect the approval of PD-one antibodies for use in lung cancer to ImpellaLimpta? And then just on Trulicity, any details if you could provide on how the launch is progressing? Thank you.
Great. Jay, thank you for the questions. Sue, the first two for you and then over to Enrique for the last question on Trucili.
Sure, Jay. With regards to the Alimta patent, in the German court, as you know, ruled in our favor last year on the infringement case. In March, they that was appealed and the appealed ruled against Alimta. And so basically has ruled that the vitamin version patent would not be infringed by generic competitor if they intend to market post the loss of the compound patent the end of December of this year. And we do seek we will seek permission to appeal this decision to the German Supreme Court.
We anticipate that that appeal hearing will happen though after the compound patent has expired in Germany. In the U. K, the High Court ruled against Lilly in the first instance in May of last year. We have appealed this ruling. The appeal was heard in March of this year.
We have yet to hear the outcome of that appeal. And as a reminder, that case covered the U. K, but also France, Italy and Spain. So we're waiting to hear what the outcome of that appeal would be. Regarding your question on the PD-one inhibitors, on Alimpta.
The main use of Alimpta and where we promote Alimpta because we believe that's where we see best benefit for patients is in the first line setting and in the maintenance setting. As you're aware, the Opdivo launch and the data that we're seeing is in later lines therapy. So we do not see an impact in the near future on Alimta. Clearly, there are other studies ongoing in the first line setting. We'll need to see what those readouts are over the coming years.
Additionally, we do believe that combinations are going to be important going forward. And so we have a collaboration with Merck to look at combining KEYTRUDA and ALIMTA in the first line non squamous setting. So clearly, we need to see the data from all those trials over the coming months and years.
Okay. Enrique? Sure. So far, I think the launch of Trulicity is going well. Let me comment first on the market, the GLP-one market, because we had shared that we felt that Trulicity could be an important catalyst for the overall growth in that class.
And long term for us, this is critical as we think about the prospects for this product. A year ago when we look at Q1 of 2014, this class was growing 6% when we look at TRx growth. This year, this class is growing 10 percentage points higher. So the growth is at 16%. And importantly, the growth is still accelerating as we look at new prescriptions.
So it is an important start because we do believe that Trulicity will be a major player in this class, but we want to make sure that this class is as relevant as it basically could be. To give some details on our penetration within the class itself, Trulicity today has an 11% new to patient, new to brand share. This is comparable to Bydureon at 23% and Victoza at 51%. We are pleased with what we see. Importantly, because we have to put into context that in Q1, what we've shared is that our access discussions are going well.
And just to provide some color in Q1, we had a 65% availability in commercial and no availability in Part D. Commercial is about 75% of the overall market. So clearly, what this basically means for Trulicity that we had access to about 50% of the market. So we need to look at the 11% need to run-in, of course, in that context. What we have shared is that we feel good about our access in commercial.
We continue to advance those numbers, so we're closer to 70% now. And in Part D, we had shared in the past that we were expecting access most likely starting 2016. We are pleased to report that we have already some limited access in Part D and we believe that access will continue to increase through Q2 and Q3. So we're getting access faster than we had expected. And this I think responds to the value that the payers see in this particular product.
Thank you. Keely, if we could go to the next caller please.
We'll go next to the line of John Boris with SunTrust Robinson Humphrey.
Thanks for taking the questions. Just back to a question for Enrique on Trulicity while you're still on it. With that kind of growth, 16% growth, can you just maybe talk about how the launch of the primary care is going? What percent of the business or prescriptions that are generated are being generated by Endoz versus primary care. And then you'll approach about 6 months post launch about mid year.
With that kind of growth in the market, one would think a good dose of direct to consumer advertising might be useful in driving uptake of the product. So just commentary around that. Second question has to do with the Alimta ruling in the U. K. On the appellate decision.
Just your thoughts around timing of that. Is that something you're expecting to happen in the Q2? And then I noticed in your slide deck you do have outcomes coming on U. S. And Japan.
Can you just remind us what's going on there? And then lastly on Alzheimer's disease and tau, you made some acquisitions of some diagnostics in 2013 on tau. Neurofibrillary tangles are a little bit different. When might we potentially see some assets targeting the tau area coming out of your pipeline? Thanks.
Great. Thanks, John. And Ricky, I'll start with you for the Trulicity questions. And Suji, do you want to comment on Alimta and Jan for the tau?
Sure. So providing a little more detail when we look at both Endos and primary care. Endos, which represents slightly under 30% of the overall GLP-one market. Our new to patient share is 18%. So clearly, this reflects the fact that we've been we launched in that to end those earlier.
In primary care, our share is still in the high single digits when it comes to new to patient share, but it's increasing fast. So we feel good in terms of where we are today. I think it's important to note that in primary care, we basically really have about 2.5 months basically since we launched. So it's still very early, but we're seeing week to week progression when it comes to our new to patient share. And clearly, the continued improved access, I think, is going to play very well for us.
In terms of our plans, as we seek to build this brand, I won't comment, but clearly, we're not ruling out direct to consumer or any of those investment. Clearly, there's a lot of direct to consumer investments in the U. S. Right now and that's something that we look very closely for all of our brands.
Great. Sue?
Okay. With regards to the Elimta hearing or the Elimta patent, the U. K. Decision will clearly depend on the timing from the court, but we do anticipate we'll hear sometime later this year on that. In Japan, the JPO hearing was heard in February.
And again, we're expecting to get a Court has ruled in Lilly's favor on validity. The case has gone back to the court regarding infringement. That case is now being heard on May 28 this year.
Great. And Jan on TAL?
Yes. First the Tau imaging agent is making intriguing progress and seems to differ in relation to what you can achieve then compared then to the amyloid imaging. The tau imaging seems to correlate quite well to symptom decline in and progression then of Alzheimer's disease. It also has a regional distribution in the brain also seems to correlate with symptoms. And there is a great interest in the overall academic and pharmaceutical community for this particular agent.
We are also testing whether the tau imaging could potentially be a surrogate marker then for Alzheimer's disease progression and how you can influence that with pharmaceuticals. And there will be a subgroup in Expedition 3 then for sullanesumab that will have the tau tracer before and after treatment. In relation to tau therapeutics, we are very interested to see if we can inhibit the spread of tau misfolded protein in the brain, which seems to happen in a prion like fashion. And we have Thank
you, Jan. Thank you, Jan. We'll
go next to the line of Chris Schott with JP Morgan. Good morning. This is Wendy Lynn on for Chris. Thanks for the questions. Just a couple.
How are you thinking about what insight you have learned from the recent DPP-four AdCom panel and any impact it might have on the DPP-four class? And can you talk about your relative confidence in Jardiance with regards to the CV outcome study and the possibility that the study could show a net benefit to patients? And then in oncology, in light of the Pfizer Ibrance approval and the early stoppage of their second line study, can you update us on your program? Thanks.
Sure. Thanks for the questions, Wendy. So Enrique, obviously to you for the DPP-four AdCom question and our CV outcomes trial for Jardiance and then Sue for the ovemiciclib
update. Well, on the DPP-four, I think we all have seen the or heard the discussion at the advisory committee. Clearly, there was a lot of focus on both CV safety, but also all costs mortality endpoints. It is difficult for me to speculate any action that the FDA may take. I think what I can basically say as far as Trajenta is concerned, even though we have to keep in mind that these numbers are very low.
So we cannot have any type of conclusive interpretation from this data. But when we look at our randomized placebo controlled clinical trials and when we look at our the data for Tradjenta in both cases when it comes to CV mortality and when it comes to all cause mortality, our hazard ratios were below 1. So we have no signals that would indicate that linagliptin would cause would have an issue when it comes to either all cost mortality or CV death. When it respective companies. As far as Jardiance is concerned, we are very excited to be able to get to see the results from our outcome trial.
At this stage, I've characterized our chances as decent, but we have to wait and see. So we will be basically having a chance to look at these results over the summer and we expect to basically publish top line results when we have this data available.
Great. Sue?
Okay. Regarding ebemaciclib, we are very excited by this molecule and we believe that the latest news with Ibrance validates the CDK4six class. We believe that we could have a best in class molecule here with single agent activity, continuous dosing and also our molecule crosses blood brain barrier. We're moving quickly on our trials. We have our 2 Phase 3 trials ongoing and rolling MONUP-one which is our Phase 2 trial ongoing as well as our KRAS lung study ongoing.
So we're moving quickly. Our plan is to enroll these trials as quickly as possible, so we can get data out hopefully over the next year also on these trials. Also we have started a breast cancer study for women with brain mets that will be because we know that the bemacitlicid crosses the blood brain barrier we believe that that could be a good opportunity for this molecule. So we're excited and we look forward to sharing more data with you.
Great. Thank you. Keely, if we could have the next caller please.
And we'll go to the line of Seamus Fernandez with Leerink. Please go ahead.
Thanks very much. So maybe you could just update us on some key data sets through the balance of this year? And maybe if you could focus a little bit more on the data sets for Phase 2 that could actually have products entering into Phase 3 that would be very helpful. As a second question, this may be for the CV team, but maybe you could talk to us a little bit about the target event rate in that study? And just update us on what your expectations are for the baseline LDL?
And when you talk about that, could you just confirm that the baseline LDL is on a maximized statin background? And then lastly, can you just help us better understand in the sort of evolving pricing environment, what do you think are the thresholds of benefit that are going to be necessary for you to show to really achieve an appropriate payment scheme for the anti NGF therapy? Thanks a lot.
Great, Seamus. Thank you for the questions. So
Dave, I
think probably the second question, the third are up your alley. I would say, Seamus, this is Phil. We have not yet published the design paper for the accelerated trial of evacetrapib. I think we're close to doing that last year. But when the IMPROVE IT data came out, as Dave mentioned earlier, we wanted to make sure that we could fully analyze that and take into consideration how that might impact if at all the trial design for Accelerate.
As you've now seen that has impacted resulted in additional 6 month extension of the study to accrue additional events and additional late events. So Dave, if you could maybe start out talking about, to the extent that you can, target event rates, baseline LDL and it was on max statin background and then talk a bit about the pricing environment as you see it for the anti NGF. And then we'll come back to your first question Seamus on in particular, Phase 2 data that you can read out this year and more broadly, data readouts that you should have on your radar screen for the balance of 15. Dave?
Yes, sure. Thanks, Seamus. As it relates to the target event rates and specifics about the population in the Accelerate program. And I know we've said this before, but we are anticipating publishing a design paper for Accelerate, which will include those details. So I think until that is published, it's probably not appropriate to comment further.
I will only generally say that ACCELERATE really is a study designed to study secondary in high risk vascular disease. And as a result, we are expecting a decent event rate in this population. And in fact, that's what we're observing having enrolled it. The details of that again, we'll be publishing in the forthcoming journal. As it relates to NGF and tanezumab and the pricing scheme, of course, we're not going to go into the detail on that here.
But I think Jan touched on this earlier that we see chronic pain management, different from acute pain management. Chronic pain management is a area of very significant unmet need, particularly in the United States. The patients that will be targeted with tanezumab will be patients who have exhausted other pain management options and other more significant intervention is the likely next step in their disease course. And we think in this space, there's both for pharmaceutical, but in the health system itself. And not to mention the side effect and addiction issues for the current therapies, today even demonstrated already in a large Phase 3 program, pretty substantial effect size in this patient.
It's important for the effect of the clinic, but we think there's clearly a place where the stroke can be reimbursed in chronic pain management.
Great. Thanks, Dave. This is Phil. Go ahead.
No, I wrote down the questions here, but baseline LDL. And the baseline LDLs, just to confirm, in Accelerates, we haven't published that number, but patients enroll on the maximum tolerated dose of the SNAP.
Great. Thanks, Dave. Seamus, let me start with some of the trial readouts that you should be expecting and or detailed data presentation that we think you should have on your radar screen. And then, Jan, Su, Enrique or Dave if there are other Phase 2 readouts that you want to highlight please do so. So, as Derica mentioned, at the ADA meeting this year, we would expect to have detailed data from a large number of the Phase 3 trials for our basal insulin PEGLYSEPRO.
We also hope in the middle part of this year in the summer to have the first detailed Phase 3 data disclosures for both ixekizumab and for baricitinib, respectively in psoriasis and rheumatoid arthritis. Recall as well, Enrique mentioned the CV outcomes trial for Jardiance in the middle part of the year and then the solanezumab extension data from the 2 year extension we would expect to be presented at the medical meeting this year as well. If you think about some of the additional top lines that are yet to read out, probably the main one or ones that I would highlight for you would be the latter part of the year, we expect have data from the remaining 2 of the sort of the 4 main pivotal trials for baricitinib in rheumatoid arthritis. We've also talked about moving oloratumumab or 3 gs3 into Phase 3 trials in soft tissue sarcoma and would hope at an upcoming medical meeting to have some of the detailed data presented to allow you to see our reason for optimism with that drug. Clearly ASCO would be a great venue for us to do that.
With that, let me turn it over to Jan or the other business unit presidents if there is additional readouts that you'd like to highlight. I think I've hit them all.
I think you have.
Okay, great. Keay Lee with that, we could go to the next caller please.
Thank you. We'll go next to the line of David Risinger with Morgan Stanley. Please go ahead. Sir, your line is open. If you have your mute button on, please take it off.
Mr. Risinger? We'll move on to the line of Vamil Divan with Credit Suisse. Please go ahead.
Hi. This is Ari Jaja on behalf of Vamil Divan. Thanks for taking the questions. I have a few here. First, on the Animal Health business, can you talk about the pricing environment for food and companion animal health products and outlook longer term?
And then secondly on baricitinib, we have now seen some initial Phase 2b data from another competing oral JAK. How do you see baricitinib's profile stacking up now against competitors? And when should we expect to see additional detailed data from the program? Thank you.
Great. Thanks, Ari. So Jeff, you'd like to handle the first question on animal health pricing and then Dave back across the pond to you for baricitinib.
Yes. The pricing environment overall remains stable in Animal Health. We saw last year as you know 4 percent increase in our business. Industry averages have been between 23%. And I believe that we've got different economic conditions across geographies and species, but a pretty stable market.
So I would see it in the range of this industry average of between 23.
Great. Thank you. And Dave?
Yes. So baricitinib, we're right in the middle of Phase 3 readouts. As Phil mentioned previously, the first two studies we have top lined already and you should expect to see some of that data presented at EVAR coming up in the middle of the year, this will be the BEACON and BUILD studies. Additionally, we have a early RA study and then a first line biologic comparative study, which is a fully powered non inferiority against adulimumab. Both of those studies, what we've said is in the second half of this year, we'll be top lining of those.
So exciting year for baricitinib and then shortly following all that, we'll be submitting to FDA and other global regulators. In terms of how we compare our results to others, of course, it's not appropriate to make direct there are no direct comparison studies between tofacitinib and baricitinib or the recent Galapagos data. But I think we've said along we like the JAK1two signaling pathway particularly in RA And we feel like Vericin has a chance to be the best in class product. If you think of this as one whole class and so far we're pleased with the results from the studies that we've read out.
Thanks, Dave. Keely, if we can go over the next caller, please.
And we'll go to the line of Kathy Miner of Cowen and Company. Please go ahead.
Thank you. Good morning. Just two topics. First on Ixepuzumab, can you comment I think on clinicaltrials.gov it shows that the trials for alkalosing spondylitis was withdrawn. Can you comment whether you're still pursuing that indication?
And also recently we've seen some top line data from one of your competitors which had some very strong PASI 100 scores. And is that something mechanistically there's differences between these products or how can we look at that? And second question is just on guidance for 2015. We appreciate that you've had a very strong Q1 and there were some timing issues and also you've highlighted very clearly the currency impacts going forward. But can you tell us whether Lilly has ever changed annual guidance in the Q1 historically?
Thank you.
Great. Thanks, Kathy. Appreciate the questions. Dave, if you could comment on nikikizumab questions. And Derek, we've got one finally for you on financials, if you want to talk about the guidance.
Dave? Sure.
Yes. Thank you for the question on ekseyzumab. To clarify the ankylosing combined license study that was withdrawn was originally designed to be a supportive study for exposure to the PSA program as we are several years ago. And as we are midstream on the additional indication work for axikinab, we changed the strategy and that supportive evidence wasn't required anymore under the approach. So what we have with excisimab now is a complete set of studies in moderate to severe plaque psoriasis and cover 1, 2, 3 studies.
I'm not sure which competitor you're referring to on the PASI 100 scores, but we are pretty impressed with our PASI 100 scores, which as you know at the high end have achieved up to 41%. And I think that's as good as I've seen, but interested in, of course, a few other insights on that. And IL-seventeen is the class. Do you have differences? Secukinumab, which is now launched from Novartis, IL-17A antibody to the protein, so are we, whereas others have taken different approaches notably the Amgen approach, which is a receptor antibody.
So it would be not unexpected to have slightly different types of clinical results and safety profiles as a result of those differences. In terms of other things going on with vaxitinib, we recently top lined our 1st psoriatic arthritis study and there's another psoriatic arthritis study ongoing. And as it relates to AS back to the original question, we remain interested in this indication and we think targeting IL-seventeen is a logical step and could advance care for this very debilitating condition.
Thanks, Dave. Derica? As for our guidance this year, historically, yes, we have. It has happened. I would say it's not common.
But we do look at it each and every quarter to see if there's anything meaningful enough to cause us to move our estimates. As I stated earlier in my opening remarks, we are off to a very good start to the year. Despite the FX headwinds, we are driving volume growth in those areas we had anticipated at least versus our internal expectations. And that coupled with the good cost containment efforts really is driving our strong bottom line performance. And as importantly, we do expect to return to growth for the year this year in 2015.
So we're very encouraged by our start to the year and we'll keep you updated as we progress through the remaining
months. Great. Thanks, Derica. Keeley, next caller please.
And we'll go to the line of back to David Risinger of Morgan Stanley. Please go ahead sir.
Thanks very much. Sorry about that earlier. So I have three questions. First, with respect to the 2 year extension SOLA data that's forthcoming, could you just please provide a framework for us for what data set we should be expecting, how you might carve out the mild patients, any caveats that you would highlight before we see the data? 2nd, with respect to Glargine, could you just remind us your timing for launch in Europe and in the U.
S? And then on the Erbitux deal, Derica, maybe you could just explain some of the income statement mechanics we should be thinking about for late this year and then the accretion from that deal in 2016? Thanks very much. Great, Dave. Thanks for the questions.
So Dave Ricks, if you could talk about the 2 year extension, sort of how people should be thinking about that, both the general framework
of what they might be expecting to see
in the data or what we'd like to seeing in the data. We'll be carving out mild patients and any caveats to be provided. Enrique, over to you for timing for launch for Glargine, both U. S. And EU.
And then, Derica, if you want to comment on the Erbitux mechanics. If not, I can chime in as well. So, Dave, over to you first.
Sure. Thanks, Dave, for the question. We said previously that we'll be hoping to disclose that data middle of this year, the 2 year extension from Expedition 12. We have disclosed at CTAD November 14 some of the earlier data. And just on limitations, just a few comments.
Of course, this is open label data. It's a progressive and significant disease burden on the patients. And so we never get 100% completing all the way through and probably most importantly, patients in expedition 12 were not deselected for lack of amyloidosis. And so we still have a mixed caused dementia in the study, which of course we've corrected in EXHIBITION 3. That said, I think there's 2 primary effects.
We hope to see, to answer the question, did we see disease modification in the controlled phase of Expedition 12? And we will be focused on the mild patients. You'll see that broken out. One is that there's no catch up meaning that if you start later, you can get to the same point. I think one definition of disease modification is that it's abating the progression and therefore starting earlier is better.
But I think then you'd also hope to see that the later started patients would also follow a parallel curve of decay to those who are on the drug the whole time, so that there is a drug effect. And in a sense, one could say we didn't just get lucky with randomization in the first set of studies. So those are two comments and color to frame what we'll see for the July.
Enrique? Sure. So when it comes to glargine, we are anticipating launching in Europe late the summer of this year. And in the U. S, as you are aware, we are subject to a 30 month stay.
We do have a trial happening later this year in the month of September. Assuming of course that we have a favorable resolution of the trial prior to the 30 month stay, we would be launching earlier. But the 30 month stay basically takes us into Q3 of 2016.
Great. Thanks, Enrique. So Dave on Erbitux, it might be helpful just to review really quickly the current accounting. So essentially when you look at things like our investor workbook we post on the website and look at the detailed product revenue tab, you'll see that there are 2 different lines. 1 is for the net revenue that we book, which is essentially 39% of the revenue that actually is sold for example by Bristol offset by some of the 3rd party royalty obligations that exist.
Then you see a second line, which is the sale of bulk product to Bristol for which we book the cost of sales and our cost of sales as well. That sales number for the API that we produce and the cost of sales are not largely different numbers. If you think about going forward, once we transition the product back to Lilly from Bristol, we will sell to end customers and book the full sales. We will have no longer any kind of bulk sales out to them. So the full cost of bulk will hit our cost of sales.
And we'll also have the still finished cost of sales through 3rd parties that Bristol currently would show on their income statement. We'll also have additional selling, marketing and R and D expenses related to ongoing support of the brand. And then on a GAAP basis, we would also have amortization of intangible. And I'm not sure exactly which line that hits. I think it's likely going to be hitting our cost of sales line for our reported or GAAP results.
There are likely to be some other accounting related effects that could happen essentially as we're monitoring over time and truing up the asset that has been created as well as the liability that's been created as part of the essentially business combination type accounting that was applied for this particular business development deal. But the major effects, I believe, are the ones I just outlined for you. We would expect it to be accretive starting in 2016. I'm not
in a position at this
point in time to quantify how much. I would underscore that the basis for the deal really is value as the long term owners for the asset, because it's already originally scheduled to come back to us in late 2018. We believe we're best positioned to be the stewards of it up until that time. And overall, this should allow us to drive better value for the company for the life of the asset. Got it.
Do you have a follow on question, David? Yes. Thank you. So the benefits of it coming back to you in late I think you said late 2018 basically are shifting forward to 2016? That's correct.
But there is a different set of economics that govern those two periods. Since Bristol had a larger economic right through the end or near the end of 2018, we'll have different economics between now September of 2018. After September of 2018, both currently under the existing agreement as well as under the revised agreement once it's implemented, we have full North American rights with no trailing obligations to Bristol. Great. Thanks very much for all the answers.
Sure. You're very welcome. Keeley, next caller please.
We do have a follow-up from the line of John Borris with SunTrust Robinson Humphrey.
Thanks for taking the question. Just on evacetrapib, just has to do mechanistically and also in your clinical plan, you're capturing IVAS data. Can you maybe just address the HDL elevation component and whether you're going for a slowing of the progression or a reversal of the regression or reversal of the accumulation of plaque in the arteries? And then any animal model data that potentially substantiates what you're doing on the IBI side. I guess Crestor is one of the few molecules that have been able to get a slower progression in their label from using IVUS.
But just your commentary on that would be helpful.
Great. Thanks, John for the question. Dave, if you want to answer and obviously Jan, you're probably well positioned to provide some comments as well. Dave?
Sure. Yes. And Jan, please jump in. Of course, all along we've been saying with this program, we've powered it based on the LDL impacts and which we're expecting around 30%. However, we also believe that very high levels of HDL reduction can impact cardiovascular risk.
And of note, at the recent cardiovascular meeting in San Diego in March, Dan Raider's lab presented some interesting data regarding cholesterol efflux with evocetroprid, which demonstrated a very substantial degree of efflux out of the plaque using that to the macrophage back to the liver of cholesterol. And this is sort of the mechanistic underpinning for believing in the type of HDL raising we're providing being additive to that cardiovascular event reduction. And I'm sure offline we can refer you to that paper John. Jan, do you have anything else to add?
No. Great. And then one follow-up then for Dave's question. My counterpart over at Bristol Myers Squibb John Elicker would probably want me to point out that there will be during this period on Erbitux from Q4 this year through late 2018, a payment that we will be making to Bristol Myers Squibb. I believe subsequently they'll be disclosing the amount of that payment with their SEC filing.
And that payment for us would show up in cost of sales. Keely, are there any other callers on the line now?
We have no further questions in queue.
Excellent. Thank you. So Derek, if you'd like to close the call?
Thanks, Phil. We appreciate your participation in today's earnings call and your interest in Eli Lilly and Company. Please note that we'll host a call from ADA on Sunday evening, June 7th to provide an update on our diabetes business. And do keep an eye out for conference calls later this summer to discuss Phase 3 data for both Ixikizumab and baricitinib. Finally, if you have questions we did not address during today's call, please contact our IR team and they'll be happy to help.
Have a great day.
Thank you. And ladies and gentlemen, this May 23. You may access the AT and T teleconference replay system at any time by dialing 1-eight hundred-four seventy five-six thousand seven hundred and one and entering the access code of 356,843. International participants may dial 32036 53,844. Those numbers again are 1-eight hundred-four seventy five-six thousand seven hundred and one and 320365 3844 with the access code of 3,56,843.
That does conclude your