Eli Lilly and Company (NYSE:LLY) Citigroup 17th Annual BioPharma Conference Call September 7, 2022 3:30 PM ET
Company Participants
Dan Skovronsky – Chief Scientific Officer, Chief Medical Officer & President of R&D
Conference Call Participants
Andrew Baum – Citigroup
Andrew Baum
So, good afternoon. Welcome back. Delighted to introduce our session. We have from Lilly, Dan Skovronsky, the CSO, CMO and President of Lilly R&D. Did I get that right?
Dan Skovronsky
Yes, perfect.
Andrew Baum
All three, excellent. I’m doing well. So we have about 40 minutes. I’d like to make this session interactive. Lilly currently enjoys by far the highest multiple of the group, which I’m sure everyone in this room knows.
Maybe just to kick off on donanemab, which is a program. We obviously have lecanemab data upcoming. We have the data from gantenerumab coming. The Lilly program, MACE [ph] program differs in a number of ways beyond the molecule, tau endpoint as well as molecule and epitopes and activity. Could you talk to how the expectations for that data shape out and your relative levels of confidence? Could you talk to the Bayesian analysis you are using, which is very different from the frequentist analysis that’s been used with the competitive trials. And overall, your level of confidence in the program, then I have one particular question on tau, but I’m going to leave that when you finish.
Dan Skovronsky
Okay, sure. Thanks, Andrew. Thanks also for hosting us here. Great to be together at this meeting again. So as you pointed out, donanemab is a differentiated molecule, a different mechanism of action here targeting just the pyroglutamated form of Abeta, which is a discovery that we made in our labs and really resulted in a molecule that is exquisitely specific for plaques. There’s lots of different forms of Abeta in the brain. This goes after plaques, and it does a really good job of clearing plaques, probably the fastest and deepest plaque clearance we’ve seen.
If you believe that clearing plaques is important for efficacy of Alzheimer’s drugs, this is probably the best way to test that. I think other mechanisms can get to pretty deep levels of plaque clearance, but it takes a longer amount of time. If you have an 18-month trial and you’re only achieving plaque clearance at 12 or 15 months, you don’t have as much of a window, in fact. So that’s on the molecule side.
I think on the design side, there’s a couple of improvements that we’ve made, and Lilly has been iterating for many years on how to run Alzheimer’s trials, hopefully getting better each time. Obviously, everybody now runs their trials only in amyloid-positive population, but we now run trials in tau-stratified populations, where we look at the tau levels at baseline and we exclude patients who don’t have any tau in their brain.
I think this is important. There’s a lot of patients, maybe about 30% of patients who would enroll in a typical — say, 20%, 30% patients you enroll in a typical Alzheimer’s trial have really very little to no tau at baseline. And what we found in other trials is those patients don’t progress. So having them in an Alzheimer’s trial doesn’t give you much window to see a slowing of progression since there was no progression. So we don’t include those.
We’ve also excluded here the very high tau patients. And this is more of a hypothesis. We don’t have data on these patients. The data we do have suggest that they typically progress very quickly, so there’s a good opportunity to see treatment intervention. But the hypothesis is that they wouldn’t be responsive to an anti-amyloid therapy. The disease is just past the amyloid stage, so we excluded those.
So we have this middle tau population. We think it’s the right population to test a drug and see a large effect size. I think that’s — in addition to the unique mechanism of action, that’s contributed to the level of efficacy we saw in Phase II.
Finally, we’ve tried to use the most sensitive outcomes to see an effect of the drug. So here we come to the endpoint measures and the statistical analysis methods. And again, here, we’re different than what most people are doing we’ve moved away from the most common outcome measure that’s used, which is CDR Sum of Boxes, which has been pretty unreliable. If you even look at 2 identical trials, like the 2 solanezumab trials or the 2 aducanumab trials that are identically run trials, discordant results in CDR Sum of Boxes, whereas almost all of the other treatment measures have very similar effect sizes. So we interpret that CDR is noisy and probably not the optimal outcome for seeing an effect in Alzheimer’s disease.
So we’re focused on iADRS here, which is a combination of ADAS-Cog measured recognition and activities of daily living, which is obviously a functional component. We expect to have effects on both of those. Combining them together gives us what we interpret to be the most sensitive measure for seeing the effect size.
And then finally, as you mentioned, we’ve used a Bayesian approach here, which is a disease progression model to look at how we can slow the disease trajectory for patients. It’s a different statistical approach than MMRM, which is the most common way of analyzing statistical data.
There’s a lot of other approaches between MMRM and disease progression model that we can look at. In fact, with our Phase II data, we showed it across all of the different statistical methods. The same data set was analyzed, and you could just sort of see the reliability of the results. It was similar across all of them, but I think DPM was the most sensitive for effect.
Andrew Baum
And the FDA because Bayesian statistical analysis in a Phase III outcome trial is — whilst we have seen is in the device side, it’s, I think, very novel on the pharma side. In fact, this may be the first Phase III drug product to use it unless I’m missing something. So I’m assuming because you wouldn’t have run it and set up as such that you’ve had this conversation with the FDA, and they’ve given you some degree of comfort. Is that a fair assumption? Or…
Dan Skovronsky
I think it’s more complicated than that, Andrew. So of course, we have discussions with the FDA about our trial design and try to reach alignment on the different elements of it, but that doesn’t mean that we have a full agreement with the FDA on everything. For example, what we said before that we don’t have alignment with the FDA on the endpoint. FDA for CDR Sum of Boxes were using something different. There’s risk there. I think same with the statistical method, there’s always risk there, and some of it depends on the data.
So when you have the actual data in hand, sometimes then you can say, well, did this statistical test fit the assumptions that needed to be true in order to make it the right statistical method for analyzing this data? And so some of that has to be done with the data in hand.
Andrew Baum
And then, just on the subject of tau. So with donanemab from TRAILBLAZER-ALZ, there was a lowering of tau in selective lobes. Was it Hansel and Gretel? I can’t remember exactly, but I think that was it, but not global tau from memory.
So again, we have to be very careful of biomarkers and what the significance is, and that’s a big, open question. But it’s pretty clear that the progress is associated with tau accumulation in particular lobes, and that was again published very recently. So how do you think about that biomarker and particularly, the geographical location of biomarker, i.e., the relative importance that you get lowering in the frontal and if I’m correct, frontal lobes?
Dan Skovronsky
No, it’s a great question, Andrew. So — and you’re pointing out that we had two different analysis methods. One, I think, was a way of analyzing the brain and trying to determine the global tau load, and the other was a regional analysis. These are complicated things to run. And this was the first time we had done this global tau level. I think in the end, there were methodological issues with that, that made that method not sensitive for seeing changes. When we looked at the regional analysis, however, we were able to see statistically significant changes in many of the regions, including the ones you mentioned.
I think actually, the pattern of changes that we see match what one might expect. So in other words, in patients, you can see spreading of tau across the brain as the disease progresses. And what we hoped is that when we remove the plaques, we would slow the tau spread in the regions that spread into. And indeed, that’s what we saw. I think the tau is an important confirmatory biomarker. Of course, this is going to be a much larger study with prespecified methods for analysis. So my expectation is that we will be able to show in TRAILBLAZER-2 if we have similar results to TRAILBLAZER-1, a pretty strong effect on slowing tau spread, which I think will once again correlate with slowing cognitive progression.
We also have tau biomarker in the plasma. So we can see it in the blood actually and near normalization of tau levels in blood, which I interpret very positively.
Andrew Baum
And then in terms of the risk/benefit analysis, obviously, the history of Abeta amyloid targeting vasogenic edema, ARIA, has been historically a concern. You’ll have to be put in context of the magnitude of the clinical benefit that you believe both in the Phase III but in real-world practice. Is there ways to mitigate that, i.e., informs a titration, patient selection? How are you and how much focus are you thinking about that?
Dan Skovronsky
Yes, it’s a great point, Andrew. I mean I don’t expect any of these amyloid long drugs to be cures for Alzheimer’s disease. At this stage of disease, they’re just unlikely to stop the disease in its tracks.
What we’re hoping for is something like what we saw in Phase II. We saw, say, a 30% lowering, slowing of disease progression. I think in Phase III, 20% to 30% slowing in disease progression would be a great outcome. And that has to be weighed against the safety considerations of which ARIA is the most significant. Many patients will have ARIA. I think the ones we worry about are the ones who have symptomatic, particularly seriously symptomatic ARIA. So that’s pretty rare. It’s about 6%, I think, in our Phase II, but it still needs to be mitigated as best possible.
So we’re working through that. I don’t think we have any easy answers. We don’t fully understand how to predict which patients get ARIA, how different dosing regimens can cause or diminish the rates of ARIA or what are the best ways with MRIs, for example, to monitor a patient who’s potentially going to develop ARIA and then how to prevent them from developing symptomatic ARIA. So we’re working on that. I think probably more studies are needed and more data are needed before we can fully understand the best way to mitigate it as best possible.
But I think as for any other drug, it’s going to be up to patients and physicians, should it get approved, to decide how to weigh that benefit against that risk for an individual patient. The important thing, I think, will be for the field to sort of communicate openly about this and in a transparent way, so doctors can manage patients as best possible.
Andrew Baum
And are there any defined prognostic, phenotypic or other markers to identify which patients are more prone to ARIA within an Abeta-lowering monoclonal, i.e., ethnicity, age?
Dan Skovronsky
You know what, I don’t think it’s great. So there’s some data that suggests that apoE4 genotype could be an important factor. Beyond that, we generally think about it being more common in patients with more advanced disease. So usually, a patient who’ve had it longer and have more amyloid in their brain. Could that be because of cerebral amyloid angiopathy? So when there’s sort of plaques around the vessels. That’s one theory that has some credibility although it is yet to be proven.
Andrew Baum
And in terms of TRAILBLAZER-ALZ 2, we expect data mid next year?
Dan Skovronsky
Yes.
Andrew Baum
Okay. I was going to segue on to another one of your small early launch drugs, Mounjaro. So I saw you sitting in the obesity session that we had today. So a couple of points…
Dan Skovronsky
I shouldn’t have come. I didn’t know you’re going to ask me questions about it.
Andrew Baum
Yes.
Dan Skovronsky
I was eating my lunch, Andrew.
Andrew Baum
Did you? Yes. So look, one obviously near-term question is the requirements for the FDA for filing in obesity, given the obese patient population is different from patients with type 2 diabetics in terms of age and so on and so forth. Our speaker gave a pretty encouraging viewpoint that one is enough, but I’m curious, and then we can kind of go from that.
Dan Skovronsky
Yes. All right. Well, on our last quarter earnings call, we went into some detail on this. I’ll reiterate some of those comments.
First of all, I should say that with — at the onset of the obesity Phase III program, we had very little data about tirzepatide in general. We come off of a Phase II that was exclusively in type 2 diabetes. And at that time, we sort of cautiously put together a program and came to agree with the FDA that we would submit for the chronic weight management indication after we had completed all of the obesity studies, and we had alignment with the FDA on that. Of course, as time passed and we got the type 2 diabetes data, and then we got the SURMOUNT-1 data, we had a drug where we felt we really understand. We do feel we really understand that. The safety profile efficacy is also very clear.
And so that led us to the question and started a discussion with the FDA about whether we could submit off of just the first trial or are additional data needed. FDA has a guidance document on the requirements for chronic weight management indication, but we do feel a sense of urgency here, given the unmet medical needs of people with obesity. So we said on the last call, and I sort of reiterated today that, that’s where we are in discussions with the FDA on what’s the right filing path here. And as we have clarity or updates on that, we’ll update our investors.
Andrew Baum
And then two other points, just picking up from the earlier conversation. So one is the point that I raised in a post Roe v. Wade world, the cost of an unwanted pregnancy are that much higher. And your label does require additional contraception, and the data suggests there is impairment of — or absorption of oral contraceptive pills, which is not present on Wegovy. So how does that impact once the obesity label comes out? Is there any additional data which you could show the FDA in order to get this removed?
Dan Skovronsky
Yes. Right now I would say — and of course, we’re in the type 2 diabetes population, which is different than obesity population. We don’t see any impact from that. The provision here — it’s not a provision, rather, the caution is in the period of time when the dose level is increasing, so when you’re either initiating dose or stepping up in a dose level. I think in type 2 diabetes, it affects just a couple of percent, maybe 1% or 2% of patients with type 2 diabetes being treated with a…
Andrew Baum
Yes, it’s tiny; but it’s fine. And then recently, it’s a big chunk of the public [ph].
Dan Skovronsky
Yes. So we haven’t seen any impact and super excited about the launch. I think if it turns out to be impactful, there are ways that we could address this through generation of additional data. I honestly don’t know if that will be necessary or not. We’ll have to work through that as we get further along in the process with the FDA.
Andrew Baum
Okay. And then the other point that was raised, and this was — well, actually, there’s 2 other points. So one point which I’ve had expressed a concern and the speakers seem to suggest, we have significant product experience with GLP-1 analogues, right, more than 10 years. The initial signals in animals have not transpired within humans. So far, so good in millions of patients, which is great.
GIP agonism is something different because this is the first time we have an approved GIP agonist. The FDA seemingly had limited concerns. You haven’t necessarily defined the contribution to efficacy, although it clearly has additional efficacy, at least in some part. How do you think about the potential risk associated with GIP agonism going into new mechanism of action going into millions of patients? And whether that is any concern and given your understanding of the biology, the mechanism. Because obviously, the GIP biology is sort of undefined.
Dan Skovronsky
Yes. So maybe I take difference with a couple of things you said. So let me just start with like it’s a new mechanism, and FDA wasn’t concerned. Most drugs, many drugs that are launched are new mechanisms. Many drugs that are launched with new mechanisms are for chronic disease where patients stay on for a long time. And so the reality is that we hold nearly all drugs up to a very high bar for safety. And tirzepatide has been in tens of thousands of patients in clinical trials at the time of the first approval and more since then.
So we have a really large safety database, probably the largest safety database Lilly has had for any drug that we’ve launched. So I’m not sure I — this drug has a low bar for safety. It’s probably higher than anything else we’ve done.
Andrew Baum
But I guess given this prevalent patient population of these patients, right, and obviously, the second question of how many are going to get it, it has the potential to go into millions of patients.
Dan Skovronsky
Yes, yes.
Andrew Baum
More than perhaps any other drug in the history of pharmaceutical industry.
Dan Skovronsky
I hope that’s right. Of course, that often takes time. And like any other drug, we watch post-marketing surveillance or looking for new safety signals. There’s only so much you can do in clinical trials, by definition. And like I said, this is about the largest clinical trial experience of any drug at Lilly, probably roughly in league with the largest clinical trial experiences of drugs in the industry maybe outside of vaccines. So I think in terms of safety, we’ve done what’s possible to do within the construct finds of Phase III trials. And then the next thing is post-marketing surveillance, which we’re doing. And of course, if there are signals that arise, we’ll address those. So far, so good. And I’m not expecting any. But that is an important way that we maintain the safety of drugs once they’re launched. And we would, of course, continue to do that in the obesity space.
I don’t see any particularly unique safety considerations for GIP in terms of the many, many new mechanisms that are launched every year. As I said, this one has got the safety that it’s more characterized than most. And preclinically, we don’t have signals of…
Andrew Baum
It’s certainly the prevalence. It’s like a vaccine. So with a vaccine trial, you’re running 100,000-odd patients because it’s going to go into every newborn child if it happens to a pediatric vaccine. Here, potentially, the numbers could get very large, and therefore, there’s a big — that’s the only reason that I was more focused than I otherwise would normally be on a new mechanism.
Dan Skovronsky
I see. Well, we’re — as I said, we’re really confident here in the safety of tirzepatide, particularly based on the data that we’ve collected and the safety profile we’ve seen so far. I’m not aware of any special or unique safety hurdles for the obesity population for this drug versus any other drug.
Andrew Baum
And in terms of monetizing the opportunity in the Medicare setting because it would seem the bar is high for — to expect Medicare to reimburse obesity, right? There are back doors into increasing usage under Medicare.
You’re exploring sleep apnea. You’re exploring NASH. There are ways that this can be monetized. Perhaps you could talk to that and how much of the Medicare patient population you think you could penetrate through comorbidities.
Dan Skovronsky
That’s an interesting thought that you’ve presented. It’s not sort of the way that we think about it, but I understand your interpretation. Medicare doesn’t reimburse drugs for the indication of chronic weight management. I don’t think that’s right. That ought to change. And I hope we can be part of a process to improve that for patients so that people who need this drug can get it for that indication.
At the same time, we’re pursuing, as you point out, tirzepatide for many other indications. Obviously, starting with type 2 diabetes. And many of those patients, most people with type 2 diabetes also have obesity and will benefit. But there’s a lot of other comorbidities that also come with obesity that we can address. And so you mentioned obstructive sleep apnea, which we don’t have data yet, but we’re conducting a Phase III trial. And my expectation or hope here is that by reducing body weight, we can reverse sleep apnea.
Clearly, there are standards of care here and CPAP and other things. And I expect to have a big benefit there. We’re working in a type of congestive heart failure, HF Path, which is linked to obesity. And studies have shown that reversing obesity here can lead to a benefit for patients. So that’s another patient population we can address. Still, there will be many patients who have obesity but don’t have comorbidities, and our goal will be to work towards the access for all of those.
Andrew Baum
So moving early in your pipe, could you talk to the additional modalities you’re looking at for both diabetes and obesity? So obviously, orals. You’ve got the Chugai license oral. And talk about your expectation for efficacy as it compares to parenterals, particularly Mounjaro. Could you talk about your GGG, particularly hepatic safety as well as efficacy? And we’ll go from that.
Dan Skovronsky
Okay. So let me start with our oral GLP-1 agonist. It’s an exciting molecule we licensed from Chugai a few years ago. And we’ve been working to develop it. It’s in Phase II clinical trials. We hope to have data yet this year and if successful, progress it to Phase III.
Our goal here is to have a small molecule that offers similar efficacy to the best possible results you can get with injectable GLP-1. I don’t know if that will be possible. That’s our aspiration, but do it in an oral, that’s once a day with the ease of administration that we’re used to for orals. So not complicated or restrictive regimen like maybe necessary for peptides, but take it any time of day with or without food. That’s our goal for our oral GLP-1. And like I said, we’ll get the data this year.
If we can do that, this will be a part molecule for — probably for both indications, for type 2 diabetes and for obesity. Of course, we’ve seen in type 2 diabetes, I think, thanks to Trulicity originally, really broad acceptance among patients and physicians of a once-weekly injectable.
Part of that is once a week. Part of it is probably the device and the injection experience, which obviously we’ve replicated with Mounjaro. So we’ll have to see because we haven’t really had that profile in the market that I just described to you. Efficacy that’s on par with injectable GLP-1s and administration similar to other orals, see what the market acceptance of that is versus a weekly injectable that is yet to be seen.
Obesity may be — there hasn’t been as much experience with injectables. More of an open space, as you pointed out earlier. And again, I think it will be good to have an alternative there. Of course, we can’t expect it to have the kind of efficacy that Mounjaro has. Tirzepatide is a dual agonist. And right now, in the oral space, we just have a single agonist. So that’s where we set the bar for that one.
The second program is another peptide. This is an injectable, our GGG, which adds glucagon activity to GLP-1 and GIP1. This is also in Phase II for diabetes and obesity. I think in diabetes, there’s a high bar here for efficacy in terms of A1C. We get close to 90% of patients to A1C target with tirzepatide. I don’t know how much better a medicine we can have, and I don’t know whether glucagon will help or hurt efficacy in type 2 diabetes. We have to see that data to really answer that question.
I think in obesity, the goal here is to drive off more weight loss. As we think about next-generation innovations here, we have to set our sights on a pretty big step change from tirzepatide.
Andrew Baum
The Amylin data. I mean the recent summer…
Dan Skovronsky
Yes. So, I — Novo and us are good competitors. I think we encourage each other to better and better innovation on behalf of patients. I think in this case, we’re probably in the lead with tirzepatide, having demonstrated a dense parity against semaglutide. And now Novo comes forward with a combination with Amylin. Looks like that’s likely to go to Phase III and could, I think — we don’t know for sure, but could have a weight loss similar to what we’ve seen with tirzepatide.
I don’t think that represents a kind of step change that we need to go forward. I think having tirzepatide already launched, our next step needs to be that much better than it. And we’ll see if GGG can deliver that. If it can, we’re really in the range of bariatric surgery weight loss, which could have profound effects. And in that case, you could be at the top end of what you really need for the vast majority of patients in terms of degrees of weight loss.
There could be other benefits. You mentioned hepatic safety. I actually see glucagon as potentially a prohepatic health mechanism. I suspect, and we’ll have to get the data to find out, that adding glucagon to other incretins actually can dramatically decrease hepatic fat. That’s what the early data have suggested and therefore, reverse or halt progression of NASH. So I would expect liver benefits to that kind of mechanism. We’ll have to wait for more data.
Andrew Baum
So, I want to spend some time talking about oncology because obviously, you have been Vernezio [ph] and pirtobrutinib, and it’s — it doesn’t get daylight as perhaps it need — should do in investor events. Before we go there, you do have a little — Lp(a). We’re speaking about it in the break earlier.
Could you remind us how far you are from initiating a pivotal trial? Novartis has taken a relatively large, lower-risk patient population, which takes an awful long time to get a signal, which is great for Novartis and defining the field and so on, but isn’t so great in maximizing the value of the asset. So to what extent could you define a much higher patient — risk patient population on a much curtailed trial and expedite the delivery of this drug?
Dan Skovronsky
Yes, we’re still pretty early. This is a Phase I molecule, but it’s an siRNA. And I think our goal here is to have a pretty deep — and we actually have 2 Lp(a)s I can talk about. One is an SI and one is actually a small molecule, an oral approach. But with si, the goal here is to have a pretty profound decrease in Lp(a). We know genetically this is a highly validated target for cardiovascular outcomes. We could probably have as deep reduction as we want, the question is durability. And with other siRNAs for other targets like PCSK9, we can see pretty durable effects.
I think that’s probably important for an indication like this. So that’s the kind of profile we’re going for. I think in terms of the ultimate Phase III outcome study, probably, we need to show a pretty good effect size, large effect size in order to stimulate usage here. I think overall, the situation with the PCSK9 is somewhat disappointing, the great class of medications that’s underutilized. One antidote to that could be to have CVOTs that have really stronger hazard ratios, which probably drives you to 2 things, a more severe patient population baseline.
I think fortunately, for Lp(a), we know that plasma levels Lp(a) correlate with cardiovascular risk. So you can set that risk threshold anywhere you want by selecting your patients with a higher or lower threshold. And then second is you may need longer trials to drive a larger effect. So, we’re working through the thinking there, but I wish we were first to the space. We’re not. But we’ll have the benefit of learning from others as well.
Andrew Baum
So then turning to oncology. And obviously, Verzenio has been a great success.
Dan Skovronsky
Yes.
Andrew Baum
You have the adjuvant data, where pending data from one of your competitors, but you are the first in defining the market. You’re waiting for the prostate cancer data, which is coming. When? Next year?
Dan Skovronsky
Yes, I think that’s right. We’re excited about prostate.
Andrew Baum
And then, we have the world beyond. And you have a SERD. I’m interested in how you’re thinking about clinical developments in light of some of the recent data defining patient populations and trials.
I’m also interested in the broader oncology strategy because you acquired Loxo. The RET inhibitor is not troubling the score, as you say, in commercial terms, although it’s important for patients.
Pirtobrutinib is entering a field where it’s likely there’s going to be very intense, at least in Medicare patients, which are the bulk of CLL, very, very intense formulary management, which would seem to curtail the commercial opportunity.
So are you happy with where Lilly oncology is right now absent Verzenio? So there’s lots of things tied up, you can take it on the level that you want.
Dan Skovronsky
Yes, maybe I’ll start with the overall assessment of Lilly oncology and then the Loxo question and then the SERD question. I — so I’m happy, but not satisfied. And I think oncology is so intensely competitive, and there’s still deep unmet medical needs. And the science is good, and I want more in oncology.
Probably every one of my peers says the same thing. We all want more drugs, better drugs for patients suffering with cancer. Where we’ve had great drugs like Retevmo for patients with RET fusions, we see profound effects for patients with really long-lasting benefits. We want more drugs like that to help more patients.
The pace of innovation is good, but probably not as good as it could be. And continue to work with the FDA, I think, to make sure that we have a permissive environment in oncology to bring new innovations forward.
Overall, the Loxo acquisition, I would say, has been a very strong success for us. I’m still quite excited about the potential of Retevmo. This is a very genetically defined population, so we — it requires more and more genetic testing to find the patients. That’s fine. I think that’s happening. And we’re helping grow the prevalence of genetic testing. And then it’s a long duration therapy. So we see patients staying on therapy, so it’s one that will build over time. But the trajectory so far is good.
Pirtobrutinib, I’m really excited about. The data exceeds — far exceeds my expectations. This was initially a C41S [ph] mutant BTK inhibitor. And what we discovered is by creating a better BTK inhibitor, it actually is better for everyone. And certainly, the data in second-line CLL after BTK failure is pretty phenomenal.
I think very high response rates and durable responses here. So notwithstanding the formulary challenges that you mentioned, those challenges exist because it’s a big class with big unmet medical need and a big opportunity. And I think we have an important role to play there.
We’re investing to win in the B-cell malignancy category here with pirtobrutinib. In addition to those 2 molecules, we have a team and a way of working that came from Loxo Oncology, that continues to serve us well, propelled the rest of the portfolio forward.
The SERD molecule, the oral SERD which just started this year in Phase III, I’m not surprised by the competitor readouts. It’s sort of what we predicted. I know there was a lot of excitement about this field from investors or competitors. I think we’ve always been a little more modest about what’s possible within oral SERD. I think that the PARSIFAL data 2 years ago, gave us some pause on the first-line opportunity in combo with a BTK inhibitor, and we said we wouldn’t try that.
Second line, I think we’ve seen from competitor readouts, it’s possible to have a positive effect here. Probably need adequately powered studies with a drug that fully engages the target to find success, but that’s what we set out to do.
But for us, the real opportunity with SERD is in the adjuvant setting. And as you pointed out, we’re making great progress there with Verzenio and love to add our SERD to help when — with breast cancer in the adjuvant setting, and that Phase III study is just getting started now. So still excited about the opportunity there.
Behind that in oncology, we have a KRAS G12C and a PI3-kinase alpha inhibitor, both in early clinical trials. Excited about both, particularly the PI3-kinase alpha, which is mutant selective and I think can offer — if it works, efficacy without some of the safety liabilities that others have seen.
I think it — these kind of molecules are somewhat indicative of our strategy, which is make drugs that are highly specific for highly validated targets. So we’re sort of looking for extremely high success rates in oncology.
Most of the things that we’re trying are working to some extent in patients. And some of them will turn out like pirtobrutinib to be quite large opportunities. Others may be more niche opportunities. I think that’s hard to predict on the outset, so we don’t necessarily use that as a [ gauge ].
Andrew Baum
And viewing your oncology strategy within the optic of IRA, the Inflation Reduction Act, which ostensibly 2 things. Number one, PBMs are now on the hook for catastrophic coverage, which gives them a very strong reason in crowded therapeutic [ classes, such as BTK, formulary ] management and reduced returns. And then second, you obviously have 9 years before you start getting clobbered potentially by an expanding number of drugs that fall in the bucket where government will, let’s call it, negotiate, but really it’s setting price.
So is that making you think, well, gosh, we have this very big exposure to small molecules, and they have a very significant effect. But running a large adjuvant trial or having a drug which is in a crowded class, even if better than peers, may not be the right way to proceed. And perhaps we’d need to think about capital allocation models in a different way.
Dan Skovronsky
Yes. And it’s a great question, Andrew. I wouldn’t say it’s as binary as you presented it. I think the reality is that right now, we have this unlevel playing field between small molecules and large molecules. The 9 years is frustrating, and it feels arbitrary. And the difference, it doesn’t seem right. Small molecules have many advantages for society, and I’m not sure why we’d want to create government disincentives for companies to invest in them.
That’s what we have now. Of course, hopefully, there will still be opportunities to change that and maybe we can. But surely, if that persists, and we only have 9 years of sort of pricing power to recoup our investments and generate returns for future investments, we’re going to have to think differently about small molecules.
Particularly in oncology, not just for the reason you stated, but also because it’s often the case in oncology that we have sequential indications. And sometimes you start out with pretty small indications, and then you build as you get more data. But you started the clock with that small indication.
We don’t want to turn our backs on patients we can help. But for next-generation molecules, I think we’ll probably, from the onset, think about our development plans differently, think about how do we build a program such that we launch into big indications with as much data as possible so we can recoup investment as quickly as possible.
So that’s a change and not a change, I think, that’s advantageous for patients. So it’s unfortunate, but the incentives have been put together that way, certainly an unintended consequence from Congress.
The second, and this also must be an unintended consequence, is what you’re saying, which is the bar has just gone up. Just at the margin, there will be slightly less investment, slightly fewer projects. And in small molecules, the hurdle will be higher. The project will have to be more promising to garner investment in small molecules than the exact same project if it’s a large molecule. That’s arbitrary and unfortunate, but it seems to be the reality of the incentives we’ve been given.
Andrew Baum
And you have pirtobrutinib, which is — looks like a best-in-class drug. [ You’ll have activity in ] [indiscernible], I mean, things that others don’t do. But it’s one drug in a large segment.
Lilly is not historically hematology player. It’s a highly competitive segment. But of course, there’s a lot of innovation going on. So when you look at BD, how is hematology prioritized versus broader oncology?
And then second question, in terms of platforms that you currently do not have, you have small molecule, you have medicinal chemistry, but things such as antibody drug conjugates, bispecifics, is there a need to expand through BD your access to these platforms and with what urgency?
Dan Skovronsky
Yes. I’ll take the second one first. I think irrespective of IRA, we’ve desired to expand our oncology efforts into those modalities you mentioned, particularly ADCs and bispecifics, other monoclonal antibodies. And we have that capability internal. We’ve augmented it with BD. I like where we are. We have a good platform. We don’t have products to talk about yet.
Andrew Baum
You don’t mean additional platforms you have?
Dan Skovronsky
No. But of course, we’re always open. If we see great things that are an upgrade of our internal capabilities, we would partner or bring them in. Yes, I think the — there was a second part to your question, but I forgot what it was.
Andrew Baum
Yes, me too.
Dan Skovronsky
Okay.
Andrew Baum
We can discuss over dinner when I remember because I can’t remember now.
Dan Skovronsky
Yes. That’s okay.
Andrew Baum
Is there anything else you’re going to add?
Dan Skovronsky
No, I’d just point out, it’s an exciting time at Lilly. We talked about one molecule in Alzheimer’s, one in obesity and a couple of follow-ons and a couple of things in oncology.
We didn’t talk about immunology. We have two potentially large molecules coming in immunology. Both are through Phase III clinical trials and look to have important differentiated profiles for large indications, atopic derm, lebrikizumab and inflammatory bowel disease, both ulcerative colitis and hopefully, Crohn’s with data to come with mirikizumab, pretty exciting.
I think if we didn’t have the other stuff to talk about, to have two antibody launches in large immunology indications for any company is a big deal. I’m excited about the future in immunology. [ After — the Phase II’s behind that. ]
Andrew Baum
The question I forgot and I should probably end after this was the prioritization on hematology.
Dan Skovronsky
Yes, that’s — yes, we try not to be driven by those kinds of thinking, which is like we need more drugs for a certain sales rep that calls on certain doctors. In general, we prefer to think about great medicines that meet unmet medical needs. If those are in hematology, we’ll take them. If they’re in another section of oncology, great also. So a little bit more science- and patient-driven and a little less sales rep-driven.
Andrew Baum
So we’ve reached time. In fact, we’re over. Dan, a pleasure. Thank you to the audience for listening, and we look forward to seeing you at the end of the day. Thank you.
Dan Skovronsky
Great. Thank you very much, Andrew.
Question-and-Answer Session
End of Q&A
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