Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q3 2024 Earnings Call. At this time, all participants are on a listen-only mode. Later, we will be conducting a question-and-answer session, and instructions will be given at that time. Should you request assistance during the call, please press star, then zero, and an operator will assist you offline. I would now like to turn the conference over to your host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead. Thank you, Paul, and good morning, everybody. Thanks for joining us for Eli Lilly and Company's Q3 2024 Earnings Call. I'm Joe Fletcher, Senior Vice President of Investor Relations. And joining me on today's call are Dave Ricks, Lilly's Chair and CEO; Dr. Dan Skovronsky, Chief Scientific Officer and President of Lilly Immunology; Lucas Montarce, Chief Financial Officer; Anne White, President of Lilly Neuroscience; Ilya Yuffa, President of Lilly International; Jake Van Naarden, President of Lilly Oncology; and Patrik Jonsson, President of Lilly Cardiometabolic Health and Lilly USA. We're also joined by Susan Hedgeland, Michaela Irons, Mike Sprengnether, and Lauren Zierke of the IR 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 several factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filings with the SEC. The information we provide about our product and pipeline is for the benefit of the investment community. It's not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures. Now I'll turn the call over to Dave. Okay, thanks, Joe. In Q3, Lilly continued to make progress across the business. We delivered strong revenue growth, we advanced and expanded our pipeline, and we invested in new product launches and continued expanding our manufacturing network. On slide five, you can see details of our financial performance and progress related to our strategic deliverables. Revenue grew 42% after excluding the impact of revenue from the olanzapine portfolio, which we divested in Q3 2023. New product revenue grew by over $3 billion, led by Mounjaro and Zepbound. U.S. demand for Mounjaro and Zepbound has been strong and continues to grow as we expand both access and supply. U.S. sequential quarter-over-quarter prescription volume growth was 25% in Q3. All doses are available for order from Lilly in both the wholesale channel and LillyDirect Pharmacy Solutions. The launch of a single-dose Zepbound vials in the U.S., exclusively through LillyDirect's self-pay channel, further expanded supply and access in the quarter. And finally, we remain on track to exceed the production target of at least 1.5 times the saleable doses of incretin medicines in the second half of this year compared to the second half of last year. We continue to see strong performance across the balance of our portfolio in oncology, immunology, and neuroscience. Excluding revenue from the incretin portfolio, the non-incretin growth of the company was 17% in Q3. We achieved several key pipeline milestones this quarter, including the approval of Ebglyss in the U.S. for the treatment of moderate to severe atopic dermatitis, the approval of Kisunla in Japan and Great Britain for the treatment of early symptomatic Alzheimer's disease, disclosure of positive 176-week data from the SURMOUNT-1 phase III study of tirzepatide in adults with prediabetes and obesity or overweight, and the recent presentation of positive data from the phase III TRAILBLAZER-ALZ 6 study evaluating different dosing regimens for donanemab. Our manufacturing expansion agenda remains a top priority. In September, we invested nearly $2 billion to increase our manufacturing footprint in Ireland. This brings the total commitments to build, upgrade, and acquire manufacturing facilities announced since 2020 to more than $20 billion, and beyond this $20 billion commitment, we also announced a separate $4.5 billion investment to develop the Lilly Medicine Foundry. This first-of-its-kind facility will be dedicated to research and development for manufacturing process design and to develop high-quality investigational medicines for our clinical trials. It will be located in Lebanon, Indiana, a short drive from the corporate headquarters. This investment underscores our confidence in our pipeline and the urgency we bring to bring our innovative medicines to patients around the world. In August, we closed the acquisition of Morphic Therapeutics, adding oral integrin assets to our early-phase immunology portfolio. Lastly, we returned over $1.6 billion to shareholders via dividends and share repurchases. On slide six, you'll see key events since our Q2 call, including the milestones I mentioned earlier and several other key updates. Last month, we appointed Lucas Montarce as Lilly's Executive Vice President and Chief Financial Officer. Lucas has 23 years of experience at Lilly and has worked with the executive team and the board for a long time. So congratulations, Lucas. Now let me turn the call over to Lucas to review our Q3 financial results and provide an update on our 2024 financial guidance. Thanks, Dave. Slide seven summarizes our financial performance in the third quarter, which is highlighted by strong revenue growth across our new products as well as our non-incretin medicines. As Dave mentioned, revenue grew 42% after excluding the impact of revenue from the olanzapine portfolio and was primarily driven by Mounjaro and Zepbound. Revenue from our non-incretin portfolio grew 17% after excluding the impact of revenue from the olanzapine portfolio. Gross margin as a percentage of revenue increased to 82.2%. Gross margin primarily benefited from favorable product mix and higher realized prices, partially offset by the sale of rights for the olanzapine portfolio in Q3 2023 and higher manufacturing cost. R&D expenses increased 13% driven by continued investment in both our early and late-stage portfolio. We recognized $2.8 billion of acquired IP R&D charges primarily related to the acquisition of Morphic Therapeutics. Marketing, selling, and administrative expenses increased 16%, primarily driven by promotional efforts supporting ongoing and future launches. Operating income increased to nearly $1.8 billion, driven by higher revenue from new products, partially offset by operating expenses growth. The effective tax rate was 37.6%, reflective of the unfavorable impact of non-deductible acquired IP R&D charges. Other than the impact of acquired IP R&D, the underlying tax rate was consistent with previously provided guidance. We delivered earnings per share of $1.18, up from $0.10 in Q3 2023, and this includes a negative impact of $3.08 from acquired IP R&D charges. On slide nine, we quantified the effect of price, rate, and volume on revenue growth. U.S. revenue increased 46%, with volume growing 35% driven by Zepbound and Mounjaro, partially offset by declines in Trulicity. Realized prices increased 11% in the U.S., primarily driven by Trulicity, Humalog, and Verzenio. While Mounjaro and Zepbound demand remains strong and growing, quarter-by-quarter revenue growth in 2024 has been impacted by supply and channel dynamics. As we highlighted in Q2, increasing supply led to higher shipments that allow us to fulfill the majority of wholesalers' back orders, serving as a tailwind to sales. In Q3, we saw channel inventory decrease as wholesalers continued to navigate the complexities of high-volume cold chain products across a dozen different dose and brand combinations. We estimate this inventory decrease impacted Q3 sales of Mounjaro and Zepbound by mid-single digits as a percentage of aggregate used sales of these products. Europe revenue grew 39% in constant currency when excluding the impact of the divestiture of the lixisenatide portfolio. This growth was primarily driven by Mounjaro, Verzenio, and Jardiance. We continue to be pleased with the Mounjaro KwikPen launches in Europe and have now launched in the U.K., Germany, Spain, and most recently, Italy. Revenue in the rest of the world grew 45% in constant currency, driven by volume growth of Mounjaro and, to a lesser extent, strong performance of Verzenio and Jardiance. Moving to China, revenue increased 17% in constant currency. This increase was driven by volume growth of Tyvyt, and favorable pricing impacts for Humalog. Finally, Japan revenue grew 17% in constant currency. Volume growth of 20% was driven by uptake of Mounjaro, Verzenio, and Jardiance. Slide 10 provides additional perspective of performance across our product categories. Mounjaro sales were $3.1 billion globally, with almost $2.4 billion of net sales in the U.S. We continue to see solid uptake of Mounjaro outside the U.S., with sales in Q3 totaling $728 million. Verzenio continued its growth trajectory with worldwide sales increasing 32%, driven by strong execution in the early breast cancer indication. Jaypirca worldwide revenue was $81 million. When excluding the impact of Japan collaboration milestones recognized in Q2, Jaypirca continued its sequential quarter-over-quarter growth trend, demonstrating sustained uptake in both the MCL and CLL patient population. Worldwide Omvoh revenue increased to $41 million. We are pleased with our progress gaining commercial access for Omvoh in the U.S. As of January 2025, we will have first-line access at two out of the three major PBMs. We were also excited to receive U.S. approval for Kisunla and Ebglyss in Q3. The Kisunla launch is underway and progressing, and the Ebglyss launch began early this month. We are pleased to have already secured formulary access for Ebglyss with one of the major PBMs. Worldwide Trulicity revenue declined 22%, driven by lower volume, partially offset by higher realized prices. Slide 11 provides an update on the U.S. launch of Zepbound. We continue to see strong growth trends leading to sales of over $1.2 billion. We have broad formulary coverage for Zepbound. As of October 1st, Zepbound has approximately 87% access in the commercial segment, and we are making ongoing progress expanding our employer opt-ins. We are in the early days of launching single-dose Zepbound vials in the U.S. exclusively through LillyDirect. 2.5 and 5 milligram single-dose vials are currently available to self-pay patients at a 50% or greater discount compared to the list price of other incretin medicines for obesity. This offering helps even more adults living with obesity access Zepbound, including Medicare beneficiaries and those without. Slide 12, we provide an update on capital allocation. On slide 13, you can see our updated guidance for the full year. We are updating our revenue guidance range to $45.4 billion-$46 billion. The new midpoint range represents approximately 50% growth in Q4 2024 compared to the same quarter last year, demonstrating a continuation of revenue growth acceleration. We are investing heavily in increasing supply of Tirzepatide and have been carefully balancing our demand creation activities and launches into new markets with our production to support continuity of care for patients. In Q3, we continue to be prudent in scaling up and demand generation activities. This is the driver for lowering the top end of the range. We continue to expect that we will exceed our goals to increase production of incretin sellable doses by at least 50% in the second half of 2024 compared to the second half of 2023. Now, with all the doses of Mounjaro and Zepbound available, we will accelerate demand activities, and while there is a lag to flow through revenue, we expect to see the impact of these efforts in Q2 and into 2025. Lastly, we are also expecting new Mounjaro launches internationally to contribute to growth in Q4. Our expected ratio of gross margin less OpEx divided by revenue remains unchanged on both a reported and a non-GAAP basis. Other income and expense is now expected to be in the range of $425-$325 million of expense on a reported basis and is unchanged on a non-GAAP basis. We have updated our estimated effective tax rate to be approximately 17%, driven by the impact of non-deductible IP R&D increase in Q3. EPS is now expected to be in the range of $12.05 to $12.55 on a reported basis and $13.02 to $13.52 on a Non-GAAP basis. Both ranges reflect the update mentioned earlier, as well as acquired IP R&D charges through Q3 of approximately $3.1 billion. Now, I will turn the call over to Dan to highlight our progress on R&D. Thanks, Lucas. Lilly R&D had another productive quarter. Let me begin by sharing some late-phase updates, including some exciting phase III data that we shared at recent medical congresses. Starting with neuroscience. Yesterday, at the Clinical Trials in Alzheimer's Disease Conference, we were pleased to share positive results from our phase III TRAILBLAZER-ALZ 6 trial, which evaluated different dosing regimens for initiation of donanemab treatment to understand their effect on ARIA-E. In this trial, we tested a modified titration, which shifted one vial of donanemab from the first infusion to the third, as shown on slide 14. We designed this modified titration to achieve identical total dose of donanemab administered in the first three months, as does our standard dosing regimen, but we hypothesized that the smoother increase in dose could result in less ARIA. We were pleased to see in this trial that indeed, by pharmacokinetic analysis, we achieved equivalent cumulative exposure between the modified titration and the standard dosing regimen, and as a result, we achieved similar levels of amyloid plaque removal and phospho-tau 217 reduction. Importantly, we also confirmed our hypothesis on ARIA and showed that the modified titration reduced the incidence of ARIA-E to 14% compared to 24% for those receiving the standard dosing regimen. As well, lower frequency of symptomatic ARIA-E, lower radiographic severity of all categories of ARIA-E, and lower ARIA-E in APOE4 genotype carriers was observed using the modified titration as compared to the standard dosing regimen. We plan to submit a supplemental sBLA to the FDA in the coming weeks for this modified titration. Our efforts on Remternetug continue to progress, and we're starting a phase III efficacy study of Remternetug focused on the preclinical stage of the disease, similar to our ongoing Trailblazer-Alz 3 trial for donanemab, where we are trying to reduce the risk of progression to symptomatic Alzheimer's disease. In this upcoming phase III registration trial called TrailRunner 3, we are evaluating a fixed duration of monthly subcutaneous administration of Remternetug, offering what we see as a potentially convenient option for this earlier patient population. We'll share more details about the study design of TrailRunner 3 tomorrow at CTAD. Turning to cardiometabolic health, last month we shared data from our remaining phase III studies for our weekly basal insulin called Efsitora alfa. As a reminder, the Efsitora phase III consists of five global registration studies, four of which are in adults with type 2 diabetes, and one is in adults with type 1 diabetes. We are pleased that each study met its primary endpoint of non-inferior A1C reduction versus insulin glargine or insulin degludec, which are the most frequently used daily basal insulins. In the studies evaluating Efsitora in people with type 2 diabetes, the results demonstrated that Efsitora achieved meaningful A1C reductions with relatively low hypoglycemia rates. We were particularly excited with the results for QWINT-1, in which Efsitora was administered via fixed doses using a single-use autoinjector. In this 52-week study in people with type 2 diabetes, Efsitora lowered participants' A1C by 1.31% compared to 1.27% for insulin glargine. This impressive A1C reduction was achieved with low hypoglycemia rates. Actually, Efsitora had approximately 40% lower rates of severe or clinically significant hypoglycemia than did daily insulin glargine. These data highlight the power of an easier-to-use dose form of a weekly insulin for people who are just initiating basal insulin therapy for the first time. We look forward to discussing the results from the QWINT phase III program with global regulatory agencies. It has also been a productive quarter for our late-phase incretin programs. First, as shown on slide 15, we shared positive 176-week data from the SURMOUNT-1 phase III study of tirzepatide in adults with prediabetes and obesity or overweight, which demonstrated a remarkable 94% reduction in the risk of developing type 2 diabetes. This is the longest duration of Tirzepatide data to date, and we are highly encouraged to see that patients on the 15-milligram dose achieved sustained weight loss of nearly 23% during a more than three-year treatment period, and that this weight loss was accompanied by a significant reduction in risk of developing diabetes. We look forward to sharing the detailed results next week at Obesity Week. These results add to compelling data showing the benefit of the combined pharmacology of dual GIP and GLP-1 receptor agonism in several obesity-related complications, including type 2 diabetes, metabolic dysfunction-associated steatohepatitis or MASH, moderate to severe obstructive sleep apnea, and heart failure. We are working quickly to bring Tirzepatide to more adults living with obesity and its complications, and we are pleased to share that we expect U.S. regulatory action for tirzepatide in adults with obesity and obstructive sleep apnea yet this year, and that we will submit for U.S. approval of tirzepatide in adults with obesity and heart failure with preserved ejection fraction before the end of this year. Another avenue to advance patient care is the maintenance of body weight reductions. We're conducting two phase IIIb weight loss maintenance trials. The first is SURMOUNT Maintain, which compares either tirzepatide five milligrams or tirzepatide maximum tolerated dose to placebo. The second is a study, which evaluates our oral GLP-1 orforglipron versus placebo after tirzepatide or semaglutide in participants who complete SURMOUNT 5, the 3B head-to-head study of tirzepatide versus semaglutide. We look forward to sharing the top-line data readout for SURMOUNT 5 later this year. Next, in oncology, the phase III Ember 3 study evaluating our oral SERD imlunestrant in patients with second-line ER-positive HER2-negative metastatic breast cancer was positive. The study evaluated three arms: imlunestrant as a monotherapy, investigator's choice of endocrine therapy monotherapy, and imlunestrant in combination with abemaciclib. Based on the results from this trial, we expect to submit an NDA to the FDA by year-end, and we look forward to sharing detailed results at an upcoming medical meeting. The phase III portion of the olomorasib first-line KRAS G12C lung cancer study is now underway, the first phase III trial for this class of medicines in newly diagnosed locally advanced or metastatic lung cancer, regardless of PD-L1 expression. This comes after recently defining the dose of the medicine in combination with standard of care regimens in consultation with the FDA under Project Optimus. We continue to believe we could have a leading agent in this class and look forward to execution of the late-stage program. Finally, in immunology, we're excited by the recent U.S. FDA approval of lebrikizumab as Ebglyss for adults and children 12 years and older with moderate to severe atopic dermatitis. Ebglyss provides a new first-line biologic treatment that targets a main cause of eczema inflammation and offers significant early skin clearance and itch relief with convenient once-monthly maintenance dosing following the initial phase of treatment. We recently shared compelling long-term data showing that lebrikizumab provides sustained disease control for up to three years in more than 80% of patients with moderate to severe atopic dermatitis who responded to Ebglyss treatment at 16 weeks. We have also initiated two phase III studies of lebrikizumab in adults with perennial allergic rhinitis and chronic rhinosinusitis with nasal polyps. As we continue to expand our immunology portfolio to help more patients, we're conducting two phase III studies evaluating ixekizumab and tirzepatide together in patients with obesity or overweight and either psoriatic arthritis or moderate to severe plaque psoriasis. Obesity is associated with an increased risk of developing autoimmune diseases and can negatively impact disease outcomes. Taltz has already demonstrated strong efficacy in treating psoriatic arthritis and plaque psoriasis, and we are excited to see the potential for additional benefits for patients when combined with the significant and sustained weight loss offered by Zepbound. Slide 16 shows select pipeline opportunities as of October 28, and slide 17 shows potential key events for the year. I've already covered our late-phase progress, so now I quickly cover updates for the early-phase pipeline. Starting again with neuroscience, we recently initiated a phase II study of an epiregulin antibody in chronic neuropathic pain associated with distal sensory polyneuropathy. We had previously shown this molecule in phase I of the pipeline as an undisclosed mechanism in pain. We also have begun phase I studies on two new neurodegeneration assets, an alpha-synuclein-directed siRNA and a tau-directed siRNA. Earlier this morning at CTAD, we disclosed detailed results from our phase II study of ceperognastat, our oral O-GlcNAcase anti-tau agent. While neither dose slowed clinical decline in early symptomatic Alzheimer's disease, biomarker data suggest potential impacts on tau pathology, brain volume, and neuroinflammation. Safety follow-ups for the study are ongoing. Turning to cardiometabolic health, in the coming days, we will initiate a phase II study of Valoralintide, our long-acting amylin receptor agonist, for chronic weight management in combination with tirzepatide in patients with type 2 diabetes, and a phase II study of Bimagrumab alone or in combination with tirzepatide for chronic weight management in participants without type 2 diabetes. We will also be advancing volinrelaxin, our long-acting relaxin molecule, into phase II in adults with chronic kidney disease. We removed the phase I ApoC3 siRNA asset in cardiovascular disease as it did not meet our bar for continuing clinical development. In oncology, 2024 continues to be a very productive year for new clinical starts. Since the last call, we advanced three new molecules into phase I studies: our oral SMARCA2 or BRM inhibitor, our KRAS G12D inhibitor, and our pan-KRAS inhibitor. These three initiations bring the total new clinical starts in oncology in 2024 to seven, exceeding the goal we shared earlier this year to put at least five new potential medicines in the clinic. We've done that across three different modalities, emblematic of our strategy to utilize therapeutic modality diversification to combat treatment resistance and improve patient outcomes. We expect this new slate of clinical programs will set us up for an exciting 2025 as we look to see which programs deliver differentiated and important early clinical data sets for patients. Finally, in early-stage immunology, we're also excited to initiate several new phase II studies. First, we moved DC853, an oral IL-17 inhibitor from the DICE Therapeutics acquisition, into phase II in adults with moderate to severe plaque psoriasis. We removed DC806 from the pipeline in favor of 853, which is a more potent molecule. Second, we're initiating a phase II study combining eltrekibart and mirikizumab in adults with moderately to severely active ulcerative colitis. In addition, we are terminating the phase IIb study of peresolimab in rheumatoid arthritis due to the overall benefit-risk profile of the molecule in this study. Finally, after welcoming our Morphic colleagues to Lilly in August, our pipeline now reflects the oral alpha-4 beta-7 integrin inhibitor MORF-057 in phase II for moderate to severe ulcerative colitis and moderate to severe Crohn's disease. Q3 was an exceptionally productive quarter for Lilly R&D, and we're pleased with our important progress we're making for patients across all of our therapeutic areas. Now I'll turn the call back to Dave for closing remarks. Okay, thanks, Dan. Before taking questions, let me briefly summarize our progress in the quarter. We had strong revenue growth across both Mounjaro and Zepbound, as well as our oncology, immunology, and neurosciences medicines. Significant advancements in our pipeline included approval of Ebglyss for moderate to severe atopic dermatitis in the U.S., Kisunla for early symptomatic Alzheimer's disease in Japan and Great Britain, and positive data disclosures for phase III studies of tirzepatide and donanemab. We are confident in Lilly's bright future. We have now launched in major geographies the cohort of medicines that we expect will serve as the driver of our growth through the balance of this decade. That is Mounjaro, Jaypirca, Omvoh, Zepbound, Kisunla, and Ebglyss. We expect these products, together with our already launched products, will contribute to strong growth of the company in 2025. In addition, we plan to continue to scale R&D and step up our investment across manufacturing and commercial to support the successful launches of these medicines to help even more patients next year. So now I'll turn the call over to Joe to moderate the Q&A session. Thanks, Dave. We'd like to take questions from as many callers as possible and conclude our call in a timely manner. So consistent with prior quarters, we'll respond to one question per caller. So ask that you limit to one question per caller as we will end the call at 11:00 A.M. If you have more than one question, you can re-enter the queue, and we'll get to your question if time allows. So Paul, please provide the instructions for the Q&A session, and then we're ready for the first caller. Certainly. At this time, we will be conducting a question-and-answer session. If you have any questions, please press star one on your phone at this time. We ask that participants limit themselves to one question on today's call. If you do have a follow-up question, please rejoin the queue by pressing star one at any time. We would also ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. And the first question today is coming from Chris Schott from J.P. Morgan. Chris, your line is live. Great. Thanks so much. Just to kick off the questions, can you just help bridge a bit from the 3Q sales we just saw reported to the 4Q implied results? It's obviously a substantial step-up in sales. Sounds like part of this is you're now accelerating demand-generation efforts given the improved capacity. But I was just hoping to get a little bit more color on exactly what those efforts are and how quickly you expect those programs can translate to an acceleration in prescriptions? Thank you. Thanks, Chris, for the quest ion. I'll maybe hand over to Patrik, since I'm guessing a lot of the question is around Tirzepatide-related, but let Lucas jump in as needed. Patrik? Thank you very much, Chris. I think it's first important to emphasize that the overall performance and health of both Mounjaro and Zepbound are very strong. And we saw a slightly accelerated growth in Q3 of more than 25%. And also the market, the underlying market for both type 2 and obesity continues to grow. We took a more prudent approach than we anticipated in Q3, pretty much driven by the need to deliver a good consumer experience. That has been one of our triggers for any investment based upon the experience we faced in the first half of the year when a lot of the calls to our customer service center was about supply, actually more than 20%. We are now down to less than 1% of those being supply-related. So what we are doing right now is that we are investing heavily in our DTC effort, which we haven't done in the past, because supply allows us to invest stronger there. But it's not a demand issue. And similarly, we're fully leaning in on all the HCP promotional efforts, also providing samples in the marketplace to providers. So we remain very confident based upon the underlying trend in the marketplace today and also the growth of both Zepbound and Mounjaro in terms of TRx, NRx, and TRx that we are after a good Q4 for. Maybe just to add to that, thank you, Chris, for the question. When you look at the midpoint that I mentioned, 50% growth that we expect for the fourth quarter compared with the 42% is at a step-up of 8%. When you remove the channel dynamics that we alluded to in Q2, the step-up of growth is very consistent throughout the quarters. So the acceleration and the drivers are the ones that Patrik mentioned. Maybe just to add to that, OUS as well, we continue to advance and engage new countries that we are going to be launching Mounjaro as well that will drive that part of that growth acceleration in the fourth quarter. Thanks. Paul, next question. The next question will be from Geoff Meacham from Citigroup. Jeff, your line is live. Hey, guys. Thanks for the question. I guess related to that, I just want to dig into the 3Q volatility. I mean, Dave, you mentioned the script demand sequentially. I guess, so given that, why would you see such a big drawdown this quarter? I guess investors are trying to figure out if the sequential trends are perhaps a leading indicator of a moderation in demand or if it's just the lumpiness of the rollout and excess. Thanks. Dave, you want to fill that? Yeah, maybe because it's kind of a macro thing you're asking there. I think, first of all, there is a lot of lumpiness in channel stocking. I think all the sell-side analysts on this call have probably struggled with that as we have. Entering Q1, we can recall that we had a number of our dosage forms on back order, and we pretty much reached a nadir of supply in the wholesalers. That was restocked in Q2, and then we saw a drawdown in Q3. I think what we really don't control and don't attempt to, but is a reality, is that downstream customers from Lilly, wholesalers, and retailers are making their own decisions about which of the 12 different dosage forms they want to stock and at what level. There are some physical constraints to that. Cold chain capacity is constrained, and there are financial constraints, working capital that they're managing too. Those are their decisions to maintain their customer service levels. I think what we've done is sort of move our setpoint of how much stock we want to have on hand before we go initiate demand-stimulating activities, which we had more or less paused from Mounjaro in the first half and never started for Zepbound, remembering we launched in December of last year. So I think in market data, you guys can all read and you see, Jeff, yourself, and we do see acceleration of both brands in Q3 over Q2 in actual consumption. And our estimate is that will continue or accelerate as we add U.S. stimulation to that demand, which, as Patrik said, we're going to begin doing here really mid-November in earnest. XUS demand is another factor that affects sales, and that too, we moved out launches by about a quarter just to make sure we had enough buffer so when customers wanted a prescription, they could get it filled reliably. And I think that's an important thing for us to keep that trust going forward. So at a macro level, is there a demand problem here? No, actually. Is there a supply problem? No. Although if we had unlimited demand, there would be. So we're carefully gating those two things together as we escalate supply in Q4, which, as I mentioned, we're going to beat the 50% growth number. You'll see us grow our demand stimulation as well. And I think that's really about Q4, but even more about Q1 of 2025 and continuing acceleration there. So business is super healthy. We feel good about where we are. Obviously, there was some choppiness this quarter, but I think underlying growth here is as strong as we would have hope d. Thanks, Dave. Paul, next question. The next question will be from Evan Seigerman from BMO Capital Markets. Evan, your line is live. Hi, guys. Thank you so much for the question. And Joe, congrats on your new job. I want to touch on compounding. Given the headlines, do you believe that compounded drugs are impacting demand? Secondarily, how do you frame kind of the FDA's waffling on the shortage list as it relates to compounding? It seems that this has been a hot button issue. I'd love your perspective. Thank you so much. Thanks, Evan. Yeah, hot topic indeed. Maybe in terms of talking about whether there's a financial impact, we see that. I'll let Patrik field that. And then maybe the broader question around the FDA, I'll let Dave chime in. Patrik. Thank you very much, Evan. I think, as we all know, there is not one reliable source when it comes to quantifying the compounding market. We also know that it's opaque and mainly cash, and there are probably reasons to believe that some of those patients are off-label. From our perspective, we actually don't estimate there to be a huge financial impact of compounding on our business. But our major concern here has been driven by safety. But thousands of people in the U.S. are getting medicine that is not approved by the FDA for quality safety or efficacy purposes. So that has been our concern. And we are mainly leaning in now, as we said earlier, to drive demand in the U.S. marketplace for patients with obesity and type 2 diabetes. Yeah, I mean, I can't really speculate too much what's going through the FDA's mind, but I think other commentators have mentioned that the longer this goes on, the more risk they have to their own regulatory framework. And so my guess is the FDA is concerned about that, and they want to win this case, and they're putting their ducks in a row to do so. There is an alternate, I guess, perspective that they don't care, but I think they do care. The other thing I'll say is we work closely with the FDA to approve new capacities, and it's important to note here, we could do more with them, and we communicate this to them directly. They're not hearing anything here. They haven't heard from me already, but we have invested massively in parenteral filling capacity and API capacity, and a big part of the delivery schedule for that, which can take two and a half to four years, is actually the regulatory process itself, so it's difficult to think about a world where the workaround to that is to unleash unregulated product. The workaround should be to collaborate with the companies to speed up legitimate product delivery, and we would embrace that discussion fully. We have a lot of things in queue now at the FDA or about to be that could speed up what already is an impressive production ramp. We would welcome that opportunity. Thanks, both. Paul, next question. The next question will be from Seamus Fernandez from Guggenheim. Seamus, your line is live. Oh, thanks. My question is actually on how you feel the compounding situation could be resolved by the availability of an oral small molecule that can be provided at substantial scale. It seems like this is the easiest and most straightforward answer to the compounding crisis. Once that occurs, does it make sense with that availability, regardless of product, that the agency would move to resolve the crisis, or is this a product-by-product situation such that if Novo can't get their house in order in that context, that we'll end up with having this compounding issue just draw out over time? Thanks. Thanks, Seamus. Yeah, I'll hand back to Dave. I mean, if you're referring to, of course, our oral GLP-1 non-peptide agonist orforglipron, I mean, that's still a ways away from the phase III turning over and then ultimately coming to market. But Dave, maybe what would you add to your prior comments? Yeah. Well, I mean, in the long run, of course, there's a potential billion customers on the planet. I think we've said, I've said that probably the only way that a big chunk of those are served well is with the oral products because of the production system efficiencies there versus parenteral filling of proteins. So it's important. Of course, we're in the lead there, and we want to see our GLP-1 front be successful, but we need the data and then submission and launch. We put that sometime, something like less than two years from now. But first of all, I wouldn't characterize compounding as a crisis. It certainly isn't one for us. I think the problem is people are being harmed and duped, right? And so that's kind of what we'd like to see stop. But as Patrik said, we don't really see a financial impact on Lilly of compounding. I think that as an industry, we should probably be worried that if this grows and is allowed to continue, then it sort of creates this backdoor generic world. But as I said, I think the FDA wants to stop that for good reasons, for public safety reasons, and they'll do that. At the end of the day, FDA views this as a product-by-product analysis. And right now, Tirzepatide is not in shortage, and therefore, for mass compounding, should not be permitted. There's a stay, etc., in the court, but we think that should be the stay there. As it relates to semaglutide, I feel to ask Novo that, although we're working hard to help Novo with their supply problem by reducing demand for semaglutide and increasing it for Tirzepatide. So maybe it'll resolve that way. Thanks, Dave. Paul, next question. The next question will be from Mohit Bansal from Wells Fargo. Mohit, your line is live. Great. Thank you very much for taking my question. Maybe if I can ask the demand question and supply question differently. So now you will be starting some demand generation activities in the later half of the later part of the year. How are you thinking about the access side of it? Do you think that there is some convergence between access, demand generation, and supply into 2025? Because we are hearing that some of the payers are restricting it even more now. So we'd love to understand your thoughts on access side, given that you have done the negotiations at this point. Thanks, Mohit. I'll hand over to Patrik to talk about maybe access updates and go forward. Maybe just a few comments with Mounjaro prior to moving into Zepbound. I think with Mounjaro we have really good access, and it's 93%. And I think we have pretty much where we need to be across commercial and Medicare. In terms of Zepbound, I think we have made progress in record time here, close to 90% commercial access, and we'll continue to see improvement in terms of employer opt-in. You're correct, Mohit. We heard stories about some employers opting out, but the major trend is actually in favor of opting in to cover obesity medications. We are definitely north of the 50%, and I think we will have some new data in the first part of 2026 since most of the employers are making those decisions effective January 1 in the new year to come. So I think we are very, very optimistic in that part of our business, but we're also continuing to make progress in terms of access for Medicaid. And just since we connected last time, we have gained six incremental states for Medicaid, and most recently, effective 10-1, we have California and Massachusetts. So big states are now covering more than 30 million lives, and we expect to continue to make progress in that space. And lastly, I would just emphasize the potential approval here of obstructive sleep apnea. The approval of obstructive sleep apnea will help us with employer opt-in, because we know that outcome studies are critical to convince employers. But on top of that, it also opens up the door for access in Medicare. With the decision that CMS announced back in April this year, we are confident that we will gain access also for OSA and Medicare. So I think we have many reasons to be excited about the outlook for 2025, driven by improved access across the commercial and Medicare space, as well as the investments we have done with LillyDirect. Thanks, Patrik. And Mohit, even though you didn't ask about OUS access, and I don't allow multi-part questions, maybe I'll see if Ilya wants to chime in and talk a little bit about OUS access progress to date and what we see going forward. Ilya, would you like to chime in on that? Sure. Overall, we have seen significant progress on our launches OUS. We have both access for type 2 diabetes. We're in some of the markets like U.K., Germany, and Japan, and we're seeing some good progression of our share in those markets where we're already seeing leading share of market in new patient starts in those places. Of course, we need to continue to develop access in other markets. Then on the chronic weight management side, we feel good about the prospects of adding countries to drive access. At the same time, there's also developing self-pay markets like the U.K., UAE, and Saudi Arabia. We're already seeing significant progression of our share and penetration where we actually have leading share of market in TRx in these markets. And we continue to focus on both developing the self-pay, but also increasing access for both type 2 diabetes and chronic weight management over time. And that will be gradual as we enter new markets. Thanks, Ilya. Paul, next question. The next question will be from Terence Flynn from Morgan Stanley. Terence, your line is live. Great. Thanks for taking the question. I was just wondering. I know you've already framed out kind of where supply would be for the second half of this year. Again, as we look out to 2025, can you give us an early read on how your supply capacity efforts have been progressing and how we should think about the amount of new capacity, especially on the auto injector side that you can bring on for 2025? Thank you. I can start. Let me just jump in. I mean, we'll have a chance to lay out that as we did this year in our guidance call in early February. But qualitatively, you can see the flow of our investment and CapEx into this space. You could kind of go backwards three years or so and expect the capacity to be enough then to be coming online in that timeframe and then rolling that forward. Of course, we made an announcement this year, and those are a couple of years away from having full impact. If you go back to 2021, 2022, 2023, we are working hard to bring those online and expect good growth next year. I think Lucas mentioned we're seeing acceleration in demand, but that means acceleration in supply during this year. We expect strong growth on the total for next year, and we'll lay out the details when we ge t into the guidance call. I don't know if you have anything else to add to that, Lucas. Maybe just a comment from my side. When we talk about more so from the demand perspective, I think in the U.S. in particular, the proxy that we alluded to on the growth that we see across both the Mounjaro and Zepbound in TRx of that 25% sequential quarter on quarter is a good proxy to start basically trending out into next year, more so to provide more perspective from the market side and the demand side than the manufacturer. Thanks, both. Paul, next question. The next question will be from Umer Raffat from Evercore ISI. Umer, your line is live. Hi, guys. Thanks for taking my question. Maybe just to spend one more minute on the inventory dynamic in the quarter. I'm trying to think out loud. Could the launch of cash-pay single vial option via LillyDirect have impacted channels' interest in filling out their inventory given how the launch is going? And/or were there any changes in your incentives or fees to the distributors that could have impacted it? Thank you very much. Thanks. I'll let Patrik quickly handle that. But o verall, we launched the LillyDirect self-pay vials just a month ago. We are pleased with the uptake, but we also realize that it takes some time for the healthcare system to adopt the self-pay in their EMR systems. But so far, I would say that the impact of TRx has been quite limited and would be defined as being at a low single-digit level. We expect LillyDirect self-pay, though, to be a very important channel to grow new therapy starts moving forward, but not significantly in Q3. I think a short answer to both your questions is no and no. We didn't change our terms, and I don't think we've seen any change in retail stocking of the auto injector because the vials are available. Thanks, Umer. Paul, next question. The next question will be from Steve Scala from TD Cowen. Steve, your line is live. Oh, thank you so much. For a product with a seemingly unlimited market opportunity, what appears to be great market awareness and persistent supply shortages, DTC for Zepbound really shouldn't be necessary, particularly now. DTC, in my experience, usually signals concern about patient volumes, awareness, or competition. So the question is, if DTC were not instituted, what would be the trajectory of Zepbound over the next, say, 12 months? Would consensus be achieved? And if competition is the concern, are you getting ahead of CagriSema data due out soon? Thank you. That's a lot to unpack, Steve. I don't think we're going to speculate around a hypothetical demand curve, but maybe I think Patrik kind of touched on this in his first answer with regard to why we're doing DTC now. Maybe just reiterate that point very briefly, Patrik, around. Yes. You know what? I think we are confronting a very different market the first half of 2025 versus the second half of 2025. We face some significant supply constraints, and it wouldn't be responsible for us at that point in time to drive any major DTC investments and just provide consumers with a bad experience at the pharmacy level. We have much more confidence now in terms of the supply moving forward, and this is not a demand issue problem. It's actually just a supply opportunity, and we want to drive up that consumer awareness. So while we're doing extremely well, we just need to have in mind that the penetration in terms of obesity is just at the low single-digit level, 4%-5%. And there is still a huge stigma. So whatever we can do here to drive patient activation is going to serve us very well moving forward. I would just add that actually unaided awareness for Zepbound, although everyone on this call is highly aware of the brand name, is actually not very high. And then we launched this drug almost a year ago and have done no advertising. So I think it is time to introduce the brand and so people are aware of that when they speak to their doctor. Great. Thank you. Paul, next question. The next question will be from Dave Risinger from Leerink Partners. Dave, your line is live. Yes. Thanks very much. A number of my questions have been asked. So with respect to peresolimab, I'm hoping that you could just provide a little bit more color. You mentioned that it was dropped due to the benefit-risk ratio, but did you see any specific safety problems? And what is your view of the opportunity to develop another PD-1 agonist for IBD disease in the future? Thank you. Thanks, Dave. And I was getting worried that Dan wouldn't get a chance to speak on the Q&A, so maybe I'll hand this over to Dan for his thoughts. Good. Thanks for your concern, Joe. Thanks for the good question, Dave. Yeah. I mean, peresolimab was a really interesting mechanism for us, and we were excited when we saw the phase IIa data. It was a small number of patients, but had a relatively profound effect on RA symptoms, particularly in patients who had failed a previous biologic. So we sought out to replicate that in a larger phase IIb study. Unfortunately, when we came to the end of that study, the benefit-risk that we had seen in the phase IIa study was not fully borne out in phase IIb. So just based on the overall profile, which includes both the efficacy and the safety of the drug, we decided not to pursue that. As to your question on a follow-on PD-1 agonist, we don't have one that we're pursuing right now. So that's what I'll say about that. And I think, of course, we'll look forward to presenting the full data package at a future meeting. Thanks, Dave. Thanks, Dan. Paul, next question. The next question will be from Kerry Holford from Berenberg. Kerry, your line is live. Thank you very much, Kerry Holford, Berenberg. My question actually on Verzenio, please. So your competitor in this space, Novartis, Kisqali, recently received a broad approval in early breast cancer, which obviously includes the high-risk patient group. So I would just be interested to hear you speak about your expectations for market share evolution in that space, how you protect your position with Verzenio in the high-risk setting. And then also, if you can talk to the impact of IRA that you expect on that brand as you move through Part D reform next year and whether or not you expect the drug to be on the negotiation list for 2027. Thank you. Thanks, Kerry. Sort of a two-part question, but I'm excited to ask Jake to chime in and maybe talk about Verzenio and the potential Kisqali impact as well as IRA. Jake? Yeah. Happy to take it. Thanks for the question. Our position and expectation here around market share with respect to the adjuvant setting for Verzenio versus Kisqali hasn't really changed sort of pre-approval versus now. I think we have a very robust clinical data package with a lot of follow-up on our data set, which is critically important for prescribers, and a two-year regimen where patients can finish their adjuvant therapy and move on with their life, hopefully remaining recurrence-free. That's a pretty compelling proposition. It has been and I think is recognized as such in a variety of treatment guidelines that for the high-risk population, the monarch E patient population, prefer Verzenio over Kisqali as standard of care. Those expert guidelines have weighed in over the past couple of months. I don't expect that to change materially. Of course, with a new market entrant, the percentage of patients in this setting who get any CDK4/6 inhibitor as adjuvant therapy could go up, and that would benefit us. And I expect that there will be some patients for whom Kisqali is a more appropriate choice, but I don't expect it to be a significant shift in our overall market dynamics. And of course, the node-negative population is not where we're indicated and not where we're used, and that's a story for them to tell. On the second part of your question around Part D reform, it will have an impact. Of course, there's a push and pull here on the amount we have to contribute for catastrophic coverage being a downside. And of course, the copay cap, out-of-pocket cap on patients, particularly in Medicare, where that could be a tailwind on the brand. I think it's hard to know exactly where that will net out. It probably nets out sort of in the neutral range. I don't think it'll end up being a headwind or a tailwind sort of in totality, but we have to see how that shakes out. On the last part of your question around negotiation list, I don't want to speculate on that. I don't think we have enough information yet, given the evolving nature of all of the different medicines that could be up for negotiation, to actually say one way or another which ones will be there just yet. Thank you, Jake. I know we're running short on time, so Paul, maybe just two or three more questions. Next question. The next question will be from Chris Shibutani from Goldman Sachs. Chris, your line is live. Great. Thank you very much. Lucas, welcome to these calls. Just curious, there's a little bit of a tension point between the thought of what the operating margins, and I know Lilly uses a very unique and specific precise calculus for that, with most people longer-term forecasting, at least amongst the sell side, approaching high 40%. And I believe some of your commentary suggested that perhaps that would not be where you would aim for. Can you just maybe clarify for us your view, your take on where you think the operating margin trajectory would go under your purview? Well, Lucas, go ahead. Yeah. Sorry. Thank you, Chris, for your question, and thank you for quoting me about this new ratio, the gross margin minus OPEX divided by revenue. It's quite a lengthy ratio, but just going to your question, in the short run, you see that we have grown our ratio in the last few quarters as we have been having this cycle of significant growth trajectory, and we are starting to ramp up our investment both in SG&A and R&D. That effect will continue, for sure, for getting into the fourth quarter of the year. That is included as part of our guidance. And what we expect to see moving into 2025, going into your question, is we do expect to ramp up our demand generation activities in SG&A that will play down into 2025, as well as we will scale our R&D. We talk about some of the assets on our portfolio that moves into phase II and phase III that will continue to play out as we ramp up those investments to drive long-term sustainable growth. So I would expect that in the short term, we continue to see some operating margin expansion on this ratio. In long term, again, we will continue to expand and drive sustainable growth that will basically justify the investments that we do in SG&A and R&D. Thanks, Lucas. Next question. The next question will be from Trung Huynh from UBS. Trung, your line is live. Hi, guys. Thanks for squeezing me in. So in your PR, you note favorable changes to estimates for rebates and discounts for Mounjaro. If you X on our numbers, if you X out mid-single-digit destock, it does look like price has gone up for the year for that product. Also, Zepbound pricing looks pretty stable. So perhaps can you just talk about what you see in pricing evolution for the rest of the year, but also next year as you'll have potentially sleep apnea and HFpEF on the label, which may mean that you go into more government settings. Thank you. Lucas, if you'd like to talk kind of high level on any net pricing dynamics worth sharing. Yeah, sure. And thank you for the questions. Going back to the Mounjaro so far in the year, we kind of signaled throughout the year that once we were sunsetting last year, the copay program that we had, that we will see that basically tailwind on the price year-on-year comparison that played out as what we expected. And the sunset, of course, takes again a little bit of time to see that playing out. So you see a little bit of that spillover effect getting into Q3. Getting into Q4, we don't expect to see major dynamics on that. And what you're starting to see basically in Q3 is what we project into the fourth quarter of the year. Maybe getting into the obstructive sleep apnea indication, any comments that you would like to add, Patrik, on that front? I would just say in terms of Zepbound, we are still very early on in launch. And I think you clarified the stability and pricing Q3 over Q2, Lucas. What we need to have in mind is that we will continue to increase access. We will see launches outside of the U.S. as well now with Mounjaro being approved, but also can impact the global net pricing dynamics moving forward. Thanks, both. Maybe last question, Paul, and then we'll wrap up. Yes. The final question, so it will be from Courtney Breen from Bernstein. Courtney, your line is live. Hi there. Thank you so much for the question and for squeezing me in. Coming back to obesity and perhaps looking a little longer term, you spoke to the ATTAIN -maintain trial off the back of SURMOUNT-5. I note that for orforglipron, this is placebo-controlled. And so I just wanted to kind of get your thoughts on kind of that being the comparator. For us, kind of that being the comparator suggests that this is about kind of duration of treatment expansion for patients, which would really be an expansion of the total market rather than kind of displacement of necessarily another obesity product. Can you just talk a little bit about orforglipron and kind of the future of how this could expand the market? Yeah. Thanks, Courtney, for the question on Orfo. Maybe I'll hand it to Patrik to talk about that and some of the potential commercial strategy and the ATTAIN-maintain trial. Thank you for noticing that. Patrik, would you? Thank you very much, Courtney. We are looking forward to the readouts of the OrfTTo phase III trials next year, 2025. But I think overall, we see a significant opportunity here. It's going to be the first oral if we deliver along the lines that we saw in phase II with an efficacy along the lines of an injectable, along the lines of semaglutide. So I think that will really position us to scale globally. We are avoiding the cold chain requirements, etc. But also in the U.S., we see an opportunity to further penetrate because we know that even if experience with the autoinjector, once you have tried it, is really good, we know that there is a needle fear in the marketplace that probably impacts 20%-25% of the population. So I think there is a huge opportunity to expand. When you refer particularly to the ATTAIN-maintain, I think there is an obligation on our side to really better understand how can you best keep patients on treatment for a longer period of time, knowing that obesity is a chronic disease. That's why we are leaning in on some maintenance to see what is the lowest efficacious dose that you can keep patients on during a longer time. And similarly, with ATTAIN -maintain, we don't expect a major shift by clinicians from injectables to orals. But I think this is one alternative to continue to treat patients for the periods they need to be on medication, which is a chronic disease, and we are doing whatever we can to improve adherence and improve patient outcomes. Great. All right. Thank you, Patrik. And I think we're wrapping up, Dave. Okay. Great. Well, thanks for joining us today, everyone. I want to end the call by just thanking Joe Fletcher, who is moving on from his role as head of IR to a new role, critical role of CFO manufacturing. I think you'll agree, Joe did a great job in representing Lilly to the street over the last many years. And we welcome Mike Siper into the role and returning to IR, actually, after various rotations in the business. And it'll be an exciting time ahead with Mike as your main point of contact. Thank you all for joining us today. As usual, if you have follow-up questions, please give us a call at the IR team, and look forward to seeing everyone on the road over the coming months. Take care. Thank you. Ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1:00 P.M. today, running through December 4th at midnight. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 98.