Eli Lilly and Company (NYSE:LLY) Goldman Sachs Virtual Global Healthcare Conference June 10, 2020 2:10 PM ET

Company Participants

Josh Smiley – Senior Vice President and Chief Financial Officer

Conference Call Participants

Terence Flynn – Goldman Sachs

Terence Flynn

Great. Good afternoon, everybody. I’m Terence Flynn, the biopharma analyst at Goldman Sachs. Today, we’re very pleased to be hosting Eli Lilly. Joining us from the company is Josh Smiley, the CFO; and Mike Czapar, who’s Director of Investor Relations. Thank you both for joining us today. We really appreciate the time.

Just to start at a high level, COVID-19 been front and center and is going to have more and long-term impacts on the health care system and company’s business models. If we look at delivery of care, clinical trial conduct or the supply chain. So I would be curious, Josh, to get your take on any preliminary perspective, you could share with respect to the ways which COVID might change your business model or strategy.

Josh Smiley

Sure. Thank you. Thanks, Terence, and thanks for having us. I wish we were in Southern California right now. It’s my favorite conference to go to. But I appreciate everybody’s time today. First, I think in terms of business model, I think we all have learned a lot through this last number of months. And I think some of the things that we know will change is the way we interact with our customers, and that includes patients, that includes physicians, it includes payers and other thought leaders.

Well, I think we still see face-to-face communications as important, I don’t see, for example, sales reps going away. I do think that we’re going to be much better now at equipping them with digital tools. We’ve had them in the past, but I think the emphasis now on being forced over the course of the last three months or so to rely exclusively on digital means of interacting, including things like Zoom calls with physicians and virtual peer-to-peer events. I think those are things that not only are we now much more comfortable and confident using in a big way, our customers are much more receptive.

I think in many cases, we had good tools that we could use digitally with physicians, and you didn’t have a lot of physician receptivity. I think we have that now. I think for all of us, one of the benefits that seems to – will come out of this and will change all of the models in health care will be an increased acceptance of things like telemedicine. I think that in terms of efficiency and effectiveness in health care delivery, that’s a positive. And I think that will impact how we think about channel to communicate with our customers.

I think the other certainly positive benefit that we see is and we think this will persist as an emphasis on personal health. I think what we know from COVID is having underlying conditions and otherwise poor health indicators like obesity lead to worse outcomes with COVID. And I think that just reinforces the need to treat patients in underlying conditions well. And I think the communication, everybody’s lived now for month in fear of bad health event, I think that also opens up better and more effective ways of communicating with patients and prospective patients. I think that’s good.

On the R&D side, I think there are some pretty good changes that were already underway that are certainly accelerated. I think the way we run clinical trials, we have much better opportunities to move from, I think, very labor-intensive and people- intensive processes in terms of how we get patients recruited, how we get them to clinical trial sites, all the work that goes into that. I think what we found during this period is we’re able to conduct clinical trials with much less back and forth for patients to clinical sites. So to get to points where we can more efficiently and effectively run trials where patients can do most of what they most – or subject to do most of what they need to do from their home and be monitored digitally and different modes of getting clinical trial materials to them.

Those are all, I think, positive. I think the final thing on the R&D side, that is, we’re certainly doing this from a COVID perspective using the breadth of scientific platforms to try to address very important conditions. And again, whether these are things new approaches to vaccines like mRNA, looking at gene therapy, use of artificial intelligence. I think that’s one of the things probably we’ve been relatively cautious on is how much will AI impact things like drug discovery. I think we’ve had a good partnership on baricitinib, where the third-party came to us and said based on their AI work, baricitinib could be an effective treatment for patients who have , we’re studying baricitinib in a clinical trial as a result of that.

I think just everybody working together and doing everything we can to try to race and bring therapeutic options to patients with COVID, I think that’s going to have a lasting benefit down the road. So those are some of the things I think that are just more practically I think even two years from now, we’re going to have less people around the world sitting in our facilities on a day-to-day basis. I think we’ve proven that many of our work processes that we would have said without the forced work from home scenario couldn’t – we couldn’t close the books in Q1 without anybody being in the office or we couldn’t do patient monitoring those kind of things. I think we’ve learned a lot there.

And I think, one of the things we’ll see is a much more virtual workforce doesn’t mean our offices are going away, but I think the people working from different places and leveraging technology to get work done, I think, is an important thing we see for the long term.

Terence Flynn

Okay. Great, great. Well, I appreciate all the color on that front. Clearly, a lot of changes after this. I think the other big picture question just relates to guidance and the outlook for 2020. You guys were one of the earlier companies to reiterate guidance. And maybe just walk us through that process. What gave you the confidence so early in the pandemic to reiterate that guidance? And then the kind of back half of that question is now we’re seeing states and countries start to reopen here as we’re coming out in early June. How is that pace of recovery been tracking versus your expectation across maybe U.S. and some of your other key geographies?

Josh Smiley

Sure. First, as it related to 2020 guidance, just to remind everybody, we, over the last few years, have provided the next year’s guidance in December. So in December of 2019, we gave guidance for 2020. When we give that guidance, we’re doing it based on the work that we’ve done and prescription trends that we see in September and October. I think what we saw as we came into the year is really good end to the year from an operational perspective for our new products.

About 50% of our sales now come from products that we’ve launched since 2014. Those products are all still in a good growth trajectory. We saw a strong Q4 in terms of market share and market growth performance around the world. Started the year in Q1 in January and February with similar kind of momentum. So we had a great tailwind coming into the pandemic. And then I think as we saw the impacts coming from COVID perspective, we were able to take some of the positives that we saw put it against the downside that we expected, and that gave us the confidence, I think, to reiterate our guidance at the top line and actually increase our bottom line guidance a little bit.

What we said, though, as part of that guidance, that was based on a set of assumptions and those assumptions were really tied to health care utilization. So in late April when we were giving the outlook for 2020 or the revised outlook for 2020, what we said was we were seeing – we saw it in China, we saw in Italy, we saw it in Spain the contraction of health care activity and utilization and the follow-on effect then of fewer prescriptions, particularly fewer new prescriptions.

We started to see that coming in the U.S. and anticipated that. So what we said for the scenario for the year was we expected a sharp decline in health care utilization in the period between March basically and sometime into the second quarter. And we said we’d expect that health care utilization to begin to normalize to get back to pre-COVID levels sometime between the end of Q2 and end of Q3 in the U.S. and knowing that other geographies would either follow or precede that.

And our top line guidance sort of was mostly contingent around if we were on the earlier side of that, we probably would be trending towards the top end of our range. And if we were on the later side of that towards the bottom end of the range. We also said that we expect some payer mix impacts as a function of the rapid increase in unemployment we were seeing in the U.S., but then that would probably be a modest effect in 2020 and probably a more concerning or a big impact in 2021.

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I think what we’re seeing right now is very consistent with how we laid that out and probably more on the optimistic side as it relates to resumption of health care activities. So I think we’re starting to see – we triangulate really across four different data sets. We see the IQVIA prescription trend data, which you all see, we used Google Mobility to track when people are starting to go back to the doctors. Again, that’s a publicly available data set.

We work closely with our key distributors and payer partners around the world. And of course, they have real-time data around health care utilization, CBS knows at any minute who’s coming into their store, what they’re doing and that kind of work as does a company like UnitedHealthcare. And then, of course, we have our own shipping data and orders that are coming in. I think when we look at all of those things together, we think in the U.S., the sort of low point in terms of health care utilization and prescription trends was at the end of April. We’ve started to see pickup through the month of May. And again, you can see that in IQVIA trends I think we’re projecting that at least in terms of this wave that probably by the end of June, we’re getting back to pretty close to normal health care activities.

I think we have a note of caution, I think, which is as states are starting to open back up, you are seeing some concerning trends in some states. I think Texas and Arizona are two that are look like hotspots now in terms of increasing rates of COVID cases. I think we have to be careful there. But overall, I’d say, point in time, we feel like we’re on the more optimistic end of health care utilization. I think as it relates to the unemployment data and what it needs for payer mix, everybody on this call, I guess is better than mine probably. But I think we’re – certainly, the market appears to be reflecting a more optimistic view of 2021 than some of the really, really pessimistic ones. I’d say one way saying, Terence, I think, point in time are the trends that we’re seeing are reflective of the guidance that we gave in Q1, and we would hope to see in the month of June, good return to sort of pre-COVID levels of activity and pre-COVID levels of new prescription trends in the U.S.

And I think the U.S. is a good proxy for other markets that are sort of moving at the same pace. We’ve already seen a sort of a recovery to pre-COVID level in places like China that experienced sort of the front end of this.

Terence Flynn

Great. Great. Well, that’s great to hear. One corollary, I guess, you touched on this a little bit is just the unemployment figures. I mean we were just talking to Abbvie earlier today. They mentioned one of the other indicators they’re watching is their patient assistance program. So just looking at kind of the numbers of patients coming through that. So any early read there? It sounded like based on AbbVie, they were saying maybe there was this theory that workers who have gotten furloughed are now being coming back. So are you seeing similar dynamics? Or anything you can speak to on the patient assistance front?

Josh Smiley

Yes. I would say we have two things. I mean I think the macro trend is similar to what AbbVie was saying, which is we’re not seeing an underlying, a big underlying change in payer mix. Again, I think as we look at the unemployment figures, there are a couple of things that sort of mitigate the number that’s released by BLS or whatever and what that means in terms of payer mix impact to us. I think the first is where the unemployment is coming from. And I think in the early waves of the unemployment data, it was heavily skewed towards hospitality industry or retail industries, which typically have relatively low rates of health insurance to begin with.

So those workers were generally getting their drug coverage through – could have been patient assistance already or through a spouse or a family member or maybe buying insurance on an exchange or something. So we have seen a sort of as much of an immediate impact as you would probably think. I think secondly then the companies that do have robust commercial insurance that are good paying customers, I think many of the employees that they moved into unemployment are furloughed and are using – still able to leverage the commercial insurance that they have.

So I think for those trends, we – I think that’s probably similar to what you heard from AbbVie. I think in terms of our patient affordability initiatives, though you may know and I know you know, we’ve had a big emphasis, though, on this pre-COVID. I mean given the insulin dynamics that we see and the diabetes dynamics overall. We’ve been enhancing our patient assistance and patient affordability programs over time, most recently with the announcement of $35 co-pay assistance basically for anybody who’s in commercial insurance for insulin and extending that as well to products like Trulicity. So we are seeing an increase in utilization there. It’s not clear to me, though, that, that’s a direct outcome of COVID.

I think it’s probably more driven by the fact that we’re getting better and more effective at getting the kind of programs we’ve always wanted to have in front of patients. I think our projection as we head into next year is probably not different than what we’ve communicated on the Q1 call and then subsequent interactions, public interactions, which is we probably see a moderate pricing headwind coming at us in the U.S. in 2021, moderate to me without quantifying it means doesn’t change how we go-to-market with our products, it doesn’t change the shape of growth in terms of how we think about the intermediate or longer-term and doesn’t change how we think about acquisitions or investments in R&D, so manageable, I think, for now. And we’ll just have to see how that continues to play out.

Terence Flynn

Okay. And that moderate headwind that you’re discussing, that encompasses the changes in the payer mix and also the Part D savings model that’s being implemented. So that’s kind of all in everything that we know right now?

Josh Smiley

Yes. In fact, I guess I can give you a little more comprehensive answer in terms of layers. Independent of COVID, we were anticipating headwinds in 2021 where the fact that we give medium-term guidance or guidance between 2020 and 2025. We assume a single-digit, low single-digit price declines on a year-over-year at pricing lines in the U.S. That’s a function of competitive dynamics and the assumption that we’ll continue to see legislative, year-over-year legislative items come in. We think regardless of who’s President, who controls House and Senate in 2021, we think that many of the elements that are encompassed in the Senate finance, the old Senate finance bill, the Grassley-Wyden. We think most of those things somehow are going to show up. So those are built in already.

I think then if we layer on top COVID that is a payer mix question. And the big piece for us there is of the ultimate unemployment rate in 2021. What is it? And what portion of that increased unemployment is a sort of direct move from a commercially insured patient into either Medicaid or an uninsured. I think the final piece then would be the Medicare Part D change to the $35 program for insulin, for diabetes or for insulin patients. We see that as a great thing for seniors, modest impact in terms of pricing headwind for us and should result in better treatment for anybody who has diabetes.

Terence Flynn

Okay, okay. Understood. That’s really helpful context, Josh, thank you. I guess the one kind of related question is on the long-term margins. I know you’ve spent a lot of time focused on that post Elanco spin and really improving that margin profile, and that’s a focus on the forward year. So and again, it sounds like this – some of these pricing headwinds don’t really change that at all. But maybe just any more color you can provide on how either COVID impacts the margins or some of these other programs you just talked about as you think about that longer term picture?

Josh Smiley

Sure. Our guidance and target for this year is to be at 31% operating margin. That’s on an apples-to-apples basis taking into account Elanco and all those things. That’s the goal that we established years ago. We’re on track for that. I think COVID impacts, we think, in total, will still allow us to achieve that target in 2020. What we’ve said then is by 2025 expect the operating margin to increase to the mid-to-high 30s. And the way we will get there, I mean, obviously, the biggest driver would be to continue to drive top line growth in areas where we already have competitive scale.

So for us, every additional dollar of growth that we get in Trulicity or Jardiance springs with it margin expansion because we’re doing that on a relatively fixed SG&A base. I think similarly, we have other products that are still early in their commercial progression. So products like Emgality, now as we launch Reyvow[ph], we’re launching that into the same sort of commercial footprint, whether it be sales force or otherwise. So sales growth in pain will bring incremental margin with it because we don’t expect to increase the infrastructure that supports it.

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We just now are launching Retevmo, our first product from our Loxo acquisition. We’re very excited about the opportunity for patients there and the financial opportunity, that will be a high-margin driver, relatively targeted physician base, a product that has good durability for patients and so they’ll stay on for a long time. So I think there’s lots of reasons to believe that, that will be margin expansion opportunity for us. Similarly in products like Taltz, where it’s very competitive from a pricing and access and commercial perspective as we continue to see very good growth there, again, that brings more margin with it.

I think all the other pieces, and I talked about this upfront, to question your around business model, I think we continue to see ways for sales reps to be more effective, independent of product scale, just supplementing their activities with better digital tools with more receptivity from physicians. I think all those things will help on the margin side.

So I think the biggest driver for – mathematically for margin expansion in the next five years is going to be in SG&A. So you should expect to see our SG&A percentage of sales come down relatively considerably over the next five years. I think gross margin, we see opportunities to improve. Our target this year is 81%. We have lots of mix opportunities. Retevmo would be an important one, continue to drive volume through our manufacturing plants and the products that I’ve mentioned already is a benefit, at the same time, I talked about price headwinds. So we need 3% or 4% benefits in gross margin, whether it comes through mix or productivity just to stay even. So I think we’re – we’ll be pushing for margin expansion at the gross margin level, but that we’re not counting on a lot there. We need to do a lot just to maintain where we are.

I think in R&D, one of the probably the swing factors between mid-30s and high-30s is what kind of R&D opportunities, investment opportunities do we have in 2025. So I think we’d all rather be in the position where we have a very robust Phase 3, Phase 2 portfolio and can invest for the next 5 to 10 years in 2025, I think you’ve seen from our history. We’ll do that when we have the opportunities. Our expectation is as we continue to be successful on the top line for the next five years, we’re going to need to have a bigger pipeline and more opportunities to continue to drive long-term top-tier growth. And so I think that’s all factored into how we think about R&D.

Terence Flynn

Okay. Great. And I think that’s a perfect segue to my next question is on the business development front. Obviously, you guys have a robust internal pipeline, but you’ve been fairly active with both Loxo, Dermira as you kind of build out the opportunity set. Sounds like you’d prefer to have more opportunities rather than less opportunities. So as you look out over kind of the near- to medium-term, I mean is it more of the kind of Dermira type opportunities that you’re looking for? Or is it even earlier stage than that because you feel pretty good about your kind of later stage pipeline? So how should we think about that, the opportunity set and basically kind of a mix of stage of development?

Josh Smiley

Yes. I think from a positive perspective, Terence, we don’t see sort of very specific holes we need to fill. And all of the companies you follow, we all have been in those positions. We were in and we headed into our YZ period. So I think we can be somewhat agnostic as to the phase of development. I mean what we’re focused on or can we find potential projects that are either best or first-in-class or at least we have a hypothesis on how they could be that we can in-license, partner or acquire and still, if we achieve the hypothesis, built into that could still add value for shareholders on the back end.

I think if you – in the therapeutic areas that we’re in today, so in the five therapeutic areas that we focus on, which includes Nordic generation, where we don’t have products today, those therapeutic areas cover more than 50% of human disease and morbidity. So we think we’re in the right areas. So I think that’s where we’re focused. When we see Dermira like opportunity, so a late phase product that we think we can acquire and still add value, we’re going to jump on those. I think Loxo, we would love to do another Loxo acquisition. We’re thrilled with where we are there. Those are very few and far between.

But I think when you go to – I think what will limit us will not be the size of the opportunity, what’s going to limit us is those screening factors that I just mentioned, but we do want more. I think, particularly as we look at the launch opportunities between 2026 and 2030, we’ve got some really exciting things in the pipeline that may launch leading up to that or could be meaningful contributors in that period.

But again, if we’re – we achieve the kind of top line that we have the potential to achieve between now and 2025, we’re going to need a pretty robust next set of launches. And some of those are going to have to come from acquisitions. But again, I’d say that we’ll continue to focus on the product opportunities themselves. We don’t see – we’re not interested in broader combinations. Again, we think we have enough we have enough margin expansion opportunities ourselves by continuing to scale our products. We’re not interested in synergy types of plays. We want great products in our therapeutic areas.

Terence Flynn

Great. Okay. And you mentioned Retevmo in terms of the – you’ve launched the product, congrats on the approval, again, really exciting long-term opportunity. Any initial commentary you could share on just how to think about the early days of launch? I know it’s a – again, it’s a little bit different of a dynamic given COVID. And so how has the organization adapted? And how is the early launch going?

Josh Smiley

Yes. So we’re a couple of weeks in now. Basically, we just did a launch meeting in the U.S., a virtual launch meeting, I guess, about 1.5 years ago, it’s not optimal to launch in a virtual way. But I guess if you had to pick a product, Retevmo is tailor-made for this. We’ve got a relatively limited prescriber base. The primary use here will be in lung cancer followed by thyroid cancer. But as you know, we’re – we have long and deep relationships in lung given ALIMTA and CYRAMZA. So we know the physicians we need to talk to. I think there’s been lots of scientific interest in RET inhibitors. So we’re not trying to sort of educate physicians from a cold start, lots of receptivity. I think in some cases, we have patients who have been in a sense, warehouse waiting whether it be as a spillover from clinical trials or just from physician experience.

Loxo had done a good job even prior to the acquisition and sort of seeding the market with specialists in diagnostics. One of the big challenges here will be making sure patients who have lung cancer or thyroid cancer have their tumor sequence so they can see if they have a RET mutation. So that work was happening pre-COVID and will continue.

So I think we’re – we have a little bit of a handicap here, I guess, just because we can’t get reps in front of physicians. But I think there are a lot of conditions that would make us choose to sort of go full speed ahead here. I know some companies have chosen not to launch during this period. This product, I think the environment and dynamics are good. Of course, it’s going to take some period. I mean, we have very exciting, I think, financial projections for the product that we’ve talked about that in the past, it will take a while to build to that because part of it is – part of the benefit of this product is patients benefit from it for a long period of time. So you’ll get the cumulative effect over years of patients remaining on product.

We do have to ensure that we’re driving diagnostic testing up. I think testing happens well now in academic settings, but in the community, more in the community setting, there will be an education process, and they’ll take some time there. So I would – I’d expect that it will be a meaningful – you’ll be able to see patient data and actual sales over the course of the next couple of quarters, and I think it will be a meaningful contributor to our top line in 2021 and beyond.

Terence Flynn

Okay. Great. I guess the other one on the cancer side, which is pretty timely as there was a competitor readout from IBRANCE in the adjuvant setting, which I think we’re all generally surprised by the outcome there. So would just be curious, as you guys think about it internally. Are you still confident in seeing a positive outcome for Verzenio in your adjuvant setting? I know there are some differences in terms of trial design, profile of the molecule. But has that readout changed at all how you think about the outcome for Verzenio in the adjuvant setting?

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Josh Smiley

Yes. Well, first, I think there are pretty significant differences in the patient population. We designed monarchy really with a focus on high-risk patients who we thought would benefit most from CDK4/6 therapy. As you mentioned, there are some differences in the molecule as well. So I think there’s no doubt that PALLAS was a lower risk population and it would have read out positively. It would have only increased our confidence that CDK4/6 in Verzenio would work in a high-risk population. So I mean, it has to be a little bit of a worrying item. That being said, again, we are – we have a lot of confidence in the trial design and the data we had leading up and has subsequently generated around this space.

So our – we’re on track for a readout in clinical – I think, is April 2021. We weren’t impacted by COVID in this case. The trial was enrolled, and we’re just waiting for event or basically for event accruals, so we’re on track there. So I think at this point, all we can say is we – yes, we remain confident. That was a surprise, I think, to everybody that PALLAS didn’t read out, but our trials sufficiently different. The patient population is different. Our powering and numbers of patients, I think, give us a lot of hope that we’re going to have a meaningful product for patients with early breast cancer.

Terence Flynn

Yes. And I guess two corollaries is, one, from a timing perspective, is it possible that we see interim data this year? Or you think it’s still more likely our expectation should focus on next year for seeing that data?

Josh Smiley

I think the expectation should be next year. And as with any trial, again, as you know, in oncology trials, you’re – there are always interims and futilities as we are from Pfizer, but you also are dependent on event rates. As I said, we didn’t see any impact from COVID here. So more, certainly, we’re focused on the 2021 readout, and we could get surprised in the meantime, but that’s not our expectation.

Terence Flynn

Okay. And then I guess the second part of the question is, as you think about your long-range plan, how important or unimportant is Verzenio in adjuvant setting to achieving your kind of longer-term objectives?

Josh Smiley

When we give guidance, that I mentioned, our current guidance for 2020 to 2025 is top-tier CAGR revenue growth, and you can all infer from that what we mean, but it’s got to be high single digits, right? When we give that kind of guidance, that’s based on our probabilized assessment. As I mentioned, we saw where we see Verzenio as a higher probability event. But I think we’ve been in cancer for a long time, and you should assume that anything that we look at on the oncology side, we have the appropriate humility and risk adjustments there. So we’ll be disappointed if we don’t have a positive readout there, but it’s not a – I don’t think in and of itself any individual data readout to come, individual one will cause us a step off of that kind of guidance at this point.

Of course, the biggest opportunity we have in the pipeline right now from a commercial perspective is tirzepatide. We’re going to see data. Also, those trials were not impacted from a timing perspective by COVID. So we’ll begin to see the readouts in Q4 of this year. But more specifically on Verzenio, we have high hopes. And not just in adjuvant, right?

I think if you look at where we are in metastatic breast cancer, we have a compelling data. We had a – we launched well behind IBRANCE. And I think what we’re finding is this we’re making progress. And I think if you look at sort of share trends in metastatic, we’re doing well, but we’re well behind where we could be for the molecule and the data package we have. So I think one of the other hopes, of course, is in adjuvant is if we’re able to deliver a successful result that’s got an impact. It’s not just in the adjuvant setting, but more broadly around the strength of the molecule.

Terence Flynn

Great. Well, maybe just in the last few minutes, and I’m surprised it’s taken us this long to get here in terms of the diabetes portfolio. You mentioned tirzepatide. Congrats on shipping, starting dosing in that cardiovascular outcomes trial. I know that’s a big endeavor, and that data is longer term. But I really want to focus, maybe just in the last minute on Trulicity and kind of what you’re seeing in terms of the recovery here? Again, it sounds like tracking probably is based on your opening comments, like in line to maybe slightly better on the NBRx side? And then any dynamics we should consider with Rybelsus as we think about kind of back half of the year into 2021 on either kind of the contracting front or positioning front?

Josh Smiley

Yes. I think, first, the Trulicity trends are in line with when I talked about on a broader level, we’re hopeful that we’ll see the NBRx types of recoveries in June and heading into July. Of course, we and everybody in the space missed some prescriptions there, and we hope that will catch up quickly.

But overall, I think our share performance, our expectations for second half of the year growth are good. We have a couple of things that I think are really important as we’re able to reenergize, I guess, our commercial performance with sales reps in front of physicians. Otherwise, I think we haven’t seen the full benefit of the Rewind data yet because we basically were launching that in the context of the pandemic and quarantine. We have high dose Trulicity hopefully coming toward the end of this year. We think those are two important continued drivers of growth, again, playing on the underlying trends, which we continue to feel good about in terms of Trulicity’s central sort of roll and injectable GLPs.

On Rybelsus, I think we’re seeing up until March or April, we were seeing about what we expected, which was a reasonable launch, but most of the prescriptions coming more at the expense of oral therapeutics or on top of oral therapeutics in the diabetes space. I think our estimate was probably maybe one-third of new prescriptions would come at the expense of an injectable GLP. I think that’s probably in line with what we’re seeing right now.

I think to be fair, we would expect good performance or better performance from Rybelsus as we head into 2021. We know there’s some challenges with the product in terms of how it’s dosed or the pieces around that, that probably are difficult to communicate during the pandemic. So I’m sure novo is getting out of the gates as we start to reopen here in the U.S. with increased emphasis from a commercial perspective.

But none of that changes how we think about the product. It’s good. We’d like to have an even better oral GLP. And as you know, we have some in development. But I think as it relates to the injectable GLP space, we see that a pretty secure space that should continue to grow at 22-plus percent rate per year, the segment overall as we lead into tirzepatide and then we think tirzepatide can be an even accelerate to that growth.

Terence Flynn

Great. And maybe just the last topic, congrats on your antibody cocktail for COVID, your antibody approach, and that’s a big focus. Maybe just remind us in the last minute when we should expect initial data and next steps.

Josh Smiley

Yes. So we now have two separate antibodies in human testing. We expect to see the first results in June – by the end of this month, into July. I think then, of course, depending on that data, we’ll look at both single antibody opportunities in Phase 2/3, however you want to think about that and potentially combinations of the two. We want to look at – certainly, as we’re looking at now, hospitalized patients, I think the bigger benefit to the world will be if these antibodies can confer some kind of protection for patients that are at high-risk before getting – before vaccines available or knowing that even when a vaccine is available, there are lots of reasons that, for example, older patients don’t respond well to vaccines or there’s just no way that everybody is going to get vaccinated one.

So July, I think, will be an important month, both in terms of our programs as well as others, and we know there are other antibodies underway. I think it’s hopefully, in July, we get a good sense of our antibody is going to work here. I think we’re – all of us who are pursuing these programs have reasons to be optimistic, but we’ll need to see the data.

Terence Flynn

Yes. Great. Well, thanks so much for your time today, Josh, to Mike, really appreciate it. And best of luck over the coming months and take care.

Josh Smiley

Great. Thanks, Terence. Thanks, everybody. Bye.

Terence Flynn

Thank you.

Question-and-Answer Session

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