Eli Lilly's top-launching new meds Trulicity and Taltz didn't deliver as expected in the first quarter, and executives faced a grilling Tuesday on what they plan to do about it.
Market-watchers expected almost $950 million from the GLP-1 diabetes drug Trulicity, but it brought in just $879 million in the first quarter. And the next-gen immunology drug Taltz delivered $252 million when analysts were looking for $300 million-plus, Credit Suisse analyst Vamil Divan wrote Tuesday morning.
That's a problem, given that the two meds are critical growth drivers for Lilly as the ex-blockbuster erectile dysfunction drug Cialis squares off against generic competition and basal insulin Humalog faces ongoing pricing pressure. Their "light" first-quarter revenue "will likely raise eyebrows," Divan noted ahead of the company's Q1 earnings call.
And sure enough, on Tuesday’s conference call, analysts spent considerable time questioning Eli Lilly execs about market dynamics for Trulicity in the competitive GLP-1 diabetes drug class and for Taltz now that AbbVie has launched its rival psoriasis med Skyrizi.
On Trulicity, Lilly SVP of Lilly Diabetes and Lilly USA Enrique Conterno said the med’s market share of 46% is at an “all-time high” and that the drug is benefiting from class expansion. But those script gains were offset by falling U.S. prices, putting a damper on growth. Still, Trulicity's sales jumped 30% over the same period last year.
Analysts also questioned the prospects for immunology med Taltz after AbbVie’s Skyrizi launch in psoriasis. Lilly BioMedicines president Christi Shaw said Taltz's market share in dermatology is 15%, and the company believes its strong data will keep that number on the upswing, despite “fierce” competition. As new treatments hit the market, she expects the overall market to grow, Shaw told analysts.
“It’s a competitive marketplace, but we like our chances,” Shaw said.
While those two meds are kicking in meaningful sales already, the company is also launching Emgality, a migraine prevention drug that has yet to gain steam sales-wise. There are some signs that's changing, though. The drug hit the market third in its class behind Amgen’s Aimovig and Teva’s Ajovy, but it has passed up Ajovy in new prescriptions and total prescriptions, Shaw said. And Lilly expects Emgality to beat Aimovig in the new prescriptions department this quarter, she added.
Worldwide, Lilly’s prices fell 3% in the first quarter versus the same period last year, the company said in a Tuesday investor presentation. Currency headwinds shaved another 2% off growth. Global sales for the quarter of $5.1 billion were up 3%, or 5% at constant exchange rates, but overall revenue missed analyst estimates by about $200 million, Divan wrote.
As Lilly shifts away from older meds, its new launches contributed 39% of first-quarter sales, the company said.
Overall, the company’s operating income fell 8% in the first quarter as costs grew. Lilly’s operating margin for the quarter came in at 26%; Lilly expects it can reach a 28% margin this year. In future years, Lilly execs said they believe they can expand the company’s operating margin as Lilly will suffer “limited” losses of exclusivity in the early 2020s and progress with new launches.