GILEAD SCIENCES ANNOUNCES FOURTH QUARTER AND FULL YEAR 2022 FINANCIAL RESULTS

On Februray 2, 2023 Gilead Sciences, Inc. (Nasdaq: GILD) reported its results of operations for the fourth quarter and full year 2022 (Press release, Gilead Sciences, FEB 2, 2023, View Source [SID1234626768]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"2022 marked Gilead’s strongest full year growth in our base business since HCV sales peaked in 2015. This return to growth was driven by consistent and high quality commercial and clinical execution across our portfolio," said Gilead’s Chairman and Chief Executive Officer Daniel O’Day. "In HIV, Biktarvy gained market share in the U.S. as it has every quarter since launch, while our long-acting HIV agent, lenacapavir, received its first regulatory approvals. The strong full year growth in oncology was driven by continued increase in demand for Trodelvy and our Cell Therapies. We look forward to building on this momentum in 2023 and further increasing our impact for people and communities worldwide."
Fourth Quarter 2022 Financial Results
•Total fourth quarter 2022 revenue of $7.4 billion increased 2% compared to the same period in 2021, primarily due to increased sales in Oncology, HIV and hepatitis C virus ("HCV"), partially offset by lower Veklury (remdesivir) sales.
•Diluted Earnings Per Share ("EPS") increased to $1.30 for the fourth quarter 2022 compared to $0.30 for the same period in 2021. Non-GAAP diluted EPS increased to $1.67 for the fourth quarter 2022 compared to $0.69 for the same period in 2021. The increase was primarily driven by two charges in the fourth quarter of 2021 which did not recur in 2022: the $1.25 billion charge for a legal settlement and the $625 million charge for the Arcus Biosciences, Inc. ("Arcus") collaboration opt-in. The fourth quarter 2022 was, however, impacted by expenses related to the acquisition of GS-1811 from Jounce Therapeutics, Inc. ("Jounce"), the collaboration with MacroGenics, Inc. ("MacroGenics"), and the termination of the Trodelvy collaboration agreement with Everest Medicines ("Everest"), as well as higher R&D expenses.
•As of December 31, 2022, Gilead had $7.6 billion of cash, cash equivalents and marketable debt securities compared to $7.8 billion as of December 31, 2021.
•During the fourth quarter 2022, Gilead generated $2.6 billion in operating cash flow.
•During the fourth quarter 2022, Gilead paid cash dividends of $916 million and utilized $791 million to repurchase common stock.
Product Sales Performance for the Fourth Quarter 2022
Total fourth quarter 2022 product sales increased 2% to $7.3 billion compared to the same period in 2021. Total product sales excluding Veklury increased 9% to $6.3 billion for the fourth quarter 2022 compared to the same period in 2021, primarily due to increased sales in HIV and Oncology as well as contributions from HCV products.

HIV product sales increased 5% to $4.8 billion for the fourth quarter 2022 compared to the same period in 2021, reflecting higher demand and favorable pricing dynamics, partially offset by channel inventory dynamics in the United States.
•Biktarvy (bictegravir 50mg/emtricitabine ("FTC") 200mg/tenofovir alafenamide ("TAF") 25mg) sales increased 15% to $2.9 billion for the fourth quarter 2022 compared to the same period in 2021, primarily reflecting higher demand and favorable pricing dynamics, partially offset by lower channel inventory.
•Descovy (FTC 200mg/TAF 25mg) sales increased 13% to $537 million for the fourth quarter 2022 compared to the same period in 2021, primarily driven by favorable pricing dynamics as well as higher demand, partially offset by lower channel inventory.
HCV product sales increased 12% to $439 million for the fourth quarter 2022 compared to the same period in 2021, primarily driven by increased patient starts and favorable pricing dynamics in the United States, partially offset by fewer starts in Europe.
Hepatitis B virus ("HBV") and hepatitis delta virus ("HDV") product sales decreased 4% to $255 million for the fourth quarter 2022 compared to the same period in 2021. Vemlidy (TAF 25 mg) sales decreased 2% in the fourth quarter 2022 compared to the same period in 2021, driven primarily by lower demand and pricing dynamics outside of the United States. Hepcludex (bulevirtide) contributed $13 million in the fourth quarter 2022 as launch activities continued across Europe.
Cell Therapy product sales increased 75% to $419 million for the fourth quarter 2022 compared to the same period in 2021.
•Yescarta (axicabtagene ciloleucel) sales increased to $337 million in the fourth quarter 2022, primarily driven by increased demand in relapsed or refractory ("R/R") large B-cell lymphoma ("LBCL") in the United States and Europe.
•Tecartus (brexucabtagene autoleucel) sales increased to $82 million in the fourth quarter 2022, driven by increased demand in adult R/R B-cell precursor acute lymphoblastic leukemia ("ALL") and mantle cell lymphoma ("MCL") in the United States and Europe.
Trodelvy (sacituzumab govitecan-hziy) sales increased 65% to $195 million for the fourth quarter 2022 compared to the same period in 2021, reflecting continued adoption in metastatic triple-negative breast cancer ("TNBC") in the United States and Europe.
Veklury sales decreased 26% to $1.0 billion for the fourth quarter 2022 compared to the same period in 2021, primarily driven by lower rates of COVID-19 related hospitalizations. Veklury sales generally reflect COVID-19 related rates and severity of infections and hospitalizations, as well as the availability, uptake and effectiveness of vaccinations and alternative treatments for COVID-19.
Fourth Quarter 2022 Product Gross Margin, Operating Expenses and Tax
•Product gross margin was 81.0% for the fourth quarter 2022 compared to 63.3% in the same period in 2021. Non-GAAP product gross margin was 86.8% for the fourth quarter 2022 compared to 70.5% in the same period in 2021. Higher product gross margin in 2022 is primarily driven by a charge related to a legal settlement in the fourth quarter 2021 that did not repeat.

•R&D expenses for the fourth quarter 2022 were $1.5 billion compared to $1.4 billion(1) in the same period in 2021. Non-GAAP R&D expenses for the fourth quarter 2022 were $1.5 billion compared to $1.3 billion(1) in the same period in 2021. Higher R&D expenses primarily reflect increased clinical activities, mainly in Oncology.
•Acquired in-process research and development ("IPR&D") expenses for the fourth quarter 2022 were $158 million compared to $669 million(1) in the same period in 2021. Fourth quarter 2022 expenses primarily relate to the acquisition of GS-1811 from Jounce and the MacroGenics upfront payment. Fourth quarter 2021 expenses mostly relate to the charge for the Arcus collaboration opt-in.
•Selling, General and Administrative ("SG&A") expenses for the fourth quarter 2022 were $2.0 billion compared to $1.7 billion in the same period in 2021. Non-GAAP SG&A expenses for the fourth quarter 2022 were $2.0 billion compared to $1.6 billion in the same period in 2021. SG&A expenses increased primarily due to the charge of $406 million associated with the termination of the Trodelvy collaboration agreement with Everest, which had provided Everest with broad commercialization and development rights to Trodelvy in certain Asia territories. Gilead terminated the existing agreement and reacquired the Trodelvy rights in these territories.
•The effective tax rate ("ETR") and non-GAAP ETR for the fourth quarter 2022 were 19.6% and 16.8%, respectively, compared to 50.5% and 32.2%, respectively, for the same period in 2021. The lower ETR reflects discrete tax charges recorded in the fourth quarter of 2021 that did not repeat.
Full Year 2022 Financial Results
•Total full year 2022 revenue of $27.3 billion was flat compared to 2021, driven by increased sales in Oncology and HIV, offset by lower sales of Veklury.
•Diluted EPS decreased to $3.64 for the full year 2022 compared to $4.93 in 2021. The decrease in diluted EPS was driven by an IPR&D impairment charge in the first quarter 2022 related to assets acquired by Gilead from Immunomedics in 2020, as well as the termination of the Trodelvy collaboration agreement with Everest and higher R&D expenses. This was partially offset by charges in the fourth quarter of 2021 that did not repeat related to a legal settlement.
•Non-GAAP diluted EPS increased 1% to $7.26 for the full year 2022 compared to $7.18 in 2021. The increase in non-GAAP diluted EPS was primarily due to a legal settlement charge in the fourth quarter of 2021 that did not repeat. This was partially offset by an increase in SG&A expenses mostly associated with the termination of the Trodelvy collaboration agreement with Everest and higher R&D expenses.
Product Sales Performance for the Full Year 2022
Total full year 2022 product sales were $27.0 billion for the full year 2022 and remained flat compared to the same period in 2021, with growth in HIV, Cell Therapy and Trodelvy, offset by lower Veklury sales. Total product sales excluding Veklury increased 8% to $23.1 billion for the full year 2022 compared to 2021 primarily driven by increased sales in HIV, Cell Therapy and Trodelvy.
HIV product sales increased 5% to $17.2 billion for the full year 2022 compared to 2021, primarily reflecting higher demand and favorable pricing dynamics, partially offset by channel inventory dynamics and unfavorable foreign exchange rates.
•Biktarvy sales increased 20% to $10.4 billion for the full year 2022, primarily reflecting higher demand in addition to favorable pricing dynamics, partially offset by inventory dynamics.
(1) Beginning in the second quarter of 2022, expenses related to development milestones and other collaboration payments made prior to regulatory approval of a developed product were reclassified from R&D expenses to Acquired IPR&D expenses in the Condensed Consolidated Statements of Income. We believe this presentation assists users of the financial statements to better understand the total costs incurred to acquire IPR&D projects. Prior periods have been recast for both GAAP and Non-GAAP reporting to reflect this classification, resulting in a reduction of previously reported R&D expenses of $669 million and $762 million for the fourth quarter and full year 2021, respectively, and $8 million for the three months ended March 31, 2022.

•Descovy sales increased 10% to $1.9 billion for the full year 2022, primarily driven by favorable pricing dynamics and higher demand, partially offset by inventory dynamics.
HCV product sales decreased 4% to $1.8 billion for the full year 2022 compared to 2021, primarily due to unfavorable foreign exchange rates, as well as fewer patient starts and unfavorable pricing dynamics.
HBV and HDV product sales increased 2% to $988 million for the full year 2022 compared to 2021, driven primarily by higher demand for Vemlidy, mainly in the United States.
Cell Therapy product sales increased 68% to $1.5 billion for the full year 2022 compared to 2021, primarily due to higher demand for Yescarta in R/R LBCL, as well as Tecartus in R/R ALL and MCL.
Trodelvy sales increased 79% to $680 million for the full year 2022 compared to 2021, reflecting continued adoption in metastatic TNBC in the United States and Europe.
Veklury sales decreased 30% to $3.9 billion for the full year 2022 compared to 2021, primarily driven by lower rates of COVID-19 related hospitalizations.
Full Year 2022 Product Gross Margin, Operating Expenses and Tax
•Product gross margin was 79.0% for the full year 2022 compared to 75.6% in 2021. Non-GAAP product gross margin was 86.6% for the full year 2022 compared to 83.2% in 2021. Higher product gross margin is primarily driven by a charge related to a legal settlement in the fourth quarter 2021 that did not repeat, slightly offset by other year-over-year changes.
•R&D expenses for the full year 2022 were $5.0 billion compared to $4.6 billion(1) in 2021. Non-GAAP R&D expenses for the full year 2022 were $5.0 billion compared to $4.5 billion(1) in 2021. Higher R&D expenses primarily reflect increased clinical activities, mainly in Oncology, as well as inflationary increases.
•Acquired IPR&D expenses for the full year 2022 were $944 million compared to $939 million(1) in the same period in 2021.
•SG&A expenses for the full year 2022 were $5.7 billion compared to $5.2 billion in 2021. Non-GAAP SG&A expenses for full year 2022 were $5.6 billion compared to $5.0 billion in 2021. SG&A expenses increased primarily due to the charge of $406 million associated with the termination of the Trodelvy collaboration with Everest, increased promotional and marketing investment, mostly in Trodelvy and Cell Therapy, as well as higher corporate activities and inflationary increases. GAAP SG&A expenses were slightly offset by a decrease in donations to the Gilead Foundation in 2022 as compared to prior year.
•The ETR and non-GAAP ETR for the full year 2022 were 21.5% and 19.3%, respectively, compared to 25.1% and 20.4%, respectively, in 2021. Lower ETR is primarily due to a beneficial change in jurisdictional mix of income and lower state taxes in 2022.
Guidance and Outlook
Gilead is providing full-year 2023 guidance below:
•Total product sales between $26.0 billion and $26.5 billion.
•Total product sales, excluding Veklury, between $24.0 billion and $24.5 billion.
•Total Veklury sales of approximately $2.0 billion are expected to be highly variable, depending on the frequency and severity of surges, and our guidance will continue to be updated on a quarterly basis as necessary.
•Earnings per share between $5.30 and $5.70.
•Non-GAAP earnings per share between $6.60 and $7.00.

A reconciliation between GAAP and non-GAAP financial information for the 2023 guidance is provided in the accompanying tables. Also see the Forward-Looking Statements described below. The financial guidance is subject to a number of risks and uncertainties, including uncertainty around the duration and magnitude of the COVID-19 pandemic.
Key Updates Since Our Last Quarterly Release
Virology
•Announced FDA approval of Sunlenca (lenacapavir), in combination with other antiretroviral(s), for the treatment of HIV-1 infection in heavily treatment-experienced adults with multi-drug resistant HIV-1 infection.
•Announced the European Commission ("EC") authorized an extended indication and line extension for a low-dosage tablet form of Biktarvy (bictegravir 30mg/FTC 120mg/TAF 15mg) for the treatment of HIV in virologically suppressed children who are at least 2 years of age and weigh at least 14 kg.
•Announced FDA approval of Vemlidy for the treatment of chronic HBV infection in pediatric patients 12 years and older with compensated liver disease.
Oncology
•Announced that the European Medicines Agency has validated a Type II variation of the Marketing Authorization Application for Trodelvy for the treatment of adult patients with pre-treated HR+/HER2- metastatic breast cancer ("mBC").
•Presented post-hoc analysis from the Phase 3 TROPiCS-02 study of Trodelvy in HR+/HER2- mBC at the 2022 San Antonio Breast Cancer Symposium. In the analysis Trodelvy demonstrated consistent efficacy across Trop-2 expression levels in patients with pre-treated HR+/HER2- mBC with improvement across progression-free survival ("PFS"), overall survival and objective response rate as compared to standard chemotherapy. The safety profile for Trodelvy was consistent with prior studies, with no new safety signals identified in this population.
•Announced the transfer of the Marketing Authorization for Yescarta in Japan from Daiichi Sankyo Co., Ltd. ("Daiichi Sankyo") to Gilead K.K. in 2023.
•Received approval from the Ministry of Health, Labour and Welfare in Japan for Yescarta for the initial treatment of R/R LBCL.
•Entered into a strategic collaboration between Kite, a Gilead company, and Arcellx, Inc. ("Arcellx") to co-develop and co-commercialize CART-ddBMCA, a late-stage clinical asset in development for the treatment of multiple myeloma.
•Entered into an agreement to acquire Tmunity Therapeutics Inc. ("Tmunity"), a clinical stage private biotech company, which will provide Kite with preclinical and clinical programs, including an "armored" CAR T technology platform that has the potential to be applied to a variety of CAR Ts to enhance anti-tumor activity, as well as rapid manufacturing processes. The transaction is expected to close in the first quarter of 2023.
•Presented long-term data and real-world analysis of Yescarta and Tecartus at the American Society of Hematology (ASH) (Free ASH Whitepaper) 2022 meeting. Results showed that in a real-world analysis, shorter vein-to-vein times were associated with improved outcomes for patients treated with Yescarta for R/R LBCL. Additionally, in a three-year follow-up analysis of ZUMA-5 in R/R indolent non-Hodgkin lymphoma showed continued response in 52% of patients and prolonged duration of PFS. Three follow-up analyses were presented on Tecartus, including a two-year follow-up of ZUMA-3 compared to SCHOLAR-3 in R/R B-cell acute lymphoblastic leukemia and updated three-year results from ZUMA-2 study in R/R mantle cell lymphoma.

•Presented positive data, alongside Arcus, from the fourth interim analysis of the Phase 2 ARC-7 study at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Monthly Plenary Session. The study is evaluating the combinations of domvanalimab plus zimberelimab (doublet) and domvanalimab plus zimberelimab and etrumadenant (triplet), versus zimberelimab monotherapy in patients with first-line, metastatic PD-L1-high NSCLC. In the study, both the doublet and triplet combinations demonstrated clinically meaningful improvements in median PFS compared to zimberelimab monotherapy, with a 45% reduction in risk of disease progression or death for the doublet and 35% for the triplet.
•Acquired the remaining rights to GS-1811, an anti-CCR8 antibody, developed by Jounce for the treatment of solid tumors.
Inflammation
•Announced a collaboration and licensing agreement with EVOQ Therapeutics, Inc. ("EVOQ") to advance EVOQ’s proprietary NanoDisc technology for the treatment of rheumatoid arthritis and lupus.
Corporate
•Recognized as one of the most sustainable pharmaceutical companies according to the Dow Jones Sustainability World Index, reflecting Gilead’s ongoing commitment to corporate responsibility.
•Announced the U.S. Supreme Court denied Juno Therapeutics, Inc.’s appeal in the Juno v. Kite case, effectively ending this patent dispute.
Certain amounts and percentages in this press release may not sum or recalculate due to rounding.

Conference Call

At 1:30 p.m. Pacific Time today, Gilead will host a conference call to discuss Gilead’s results. A live webcast will be available on View Source and will be archived on www.gilead.com for one year.
Non-GAAP Financial Information

The information presented in this document has been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), unless otherwise noted as non-GAAP. Management believes non-GAAP information is useful for investors, when considered in conjunction with Gilead’s GAAP financial information, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead’s operating results as reported under GAAP. Non-GAAP financial information generally excludes acquisition-related expenses including amortization of acquired intangible assets and inventory step-up charges, and other items that are considered unusual or not representative of underlying trends of Gilead’s business, fair value adjustments of equity securities and discrete and related tax charges or benefits associated with changes in tax related laws and guidelines. Although Gilead consistently excludes the amortization of acquired intangible assets from the non-GAAP financial information, management believes that it is important for investors to understand that such intangible assets were recorded as part of acquisitions and contribute to ongoing revenue generation. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the accompanying tables.
Beginning in the first quarter of 2022, consistent with recent industry communications from the U.S. Securities and Exchange Commission ("SEC"), Gilead no longer excludes the initial costs of acquired IPR&D projects from its non-GAAP financial measures. Prior period non-GAAP financial measures are revised to conform to the new presentation.

FibroGen to Present at SVB Securities Global Biopharma Conference

On February 2, 2023 FibroGen, Inc. (NASDAQ: FGEN) reported that Enrique Conterno, Chief Executive Officer, will participate in a virtual fireside chat at the SVB Securities Global Biopharma Conference on Thursday, February 16 at 3:40 PM Eastern Time (Press release, FibroGen, FEB 2, 2023, View Source [SID1234626766]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The live audio webcast of the event will be available to investors and other interested parties on the "Events & Presentations" section of the FibroGen Investor webpage at www.fibrogen.com. A replay will be available for approximately 30 days.

Exelixis to Webcast Fireside Chats as Part of Investor Conferences in February

On February 2, 2023 Exelixis, Inc. (Nasdaq: EXEL) reported that members of the company’s management team will participate in fireside chats at the following investor conferences in February (Press release, Exelixis, FEB 2, 2023, View Source [SID1234626765]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Guggenheim Healthcare Talks Oncology Day 2023: Exelixis is scheduled to present at 11:20 am ET / 8:20 am PT on Thursday, February 9 in New York.
SVB Securities Global Biopharma Conference: Exelixis is scheduled to present virtually at 2:20 pm ET / 11:20 am PT on Wednesday, February 15.
To access the webcast links, log onto www.exelixis.com and proceed to the News & Events / Event Calendar page under the Investors & Media heading. Please connect to the company’s website at least 15 minutes prior to the presentations to ensure adequate time for any software download that may be required to listen to the webcasts. Replays will also be available at the same location for at least 30 days.

Lilly Reports Fourth-Quarter 2022 Financial Results, Core Business Growth and Pipeline Advancements Support Strong Long-Term Outlook

On February 2, 2023 Eli Lilly and Company (NYSE: LLY) reported its financial results for the fourth quarter of 2022 (Press release, Eli Lilly, FEB 2, 2023, View Source [SID1234626764]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"2023 is an inflection point for Lilly – a chance to expand our impact on patients and growth potential as an R&D-driven biopharma company," said David A. Ricks, Lilly’s chair and CEO. "Over the course of this critical year, we hope to launch as many as four new medicines for challenging diseases, while advancing our next generation of molecules currently in Phase 3."

Anat Ashkenazi, Lilly’s executive vice president and chief financial officer added: "As we closed out 2022, Lilly demonstrated strong growth and achieved meaningful pipeline progress that included the launch for Mounjaro in type 2 diabetes. We expect to capitalize on this momentum and deliver mid-teen revenue growth for our core business in 2023 while remaining committed to investing in innovation, late-stage opportunities, manufacturing capacity, and our people."

Lilly shared numerous updates recently on key regulatory, clinical, business development and other events, including:

The U.S. Food and Drug Administration (FDA) approval of Jaypirca (pirtobrutinib) for adults with relapsed or refractory mantle cell lymphoma after at least two lines of systemic therapy, including a BTK inhibitor, under the accelerated approval pathway;
FDA issuance of a complete response letter for the accelerated approval submission of donanemab for early Alzheimer’s disease;
FDA and European Medicines Agency acceptance of regulatory submissions for Jardiance for adults with chronic kidney disease based on results from the EMPA-KIDNEY Phase 3 trial;
The initiation of a rolling submission in the U.S. for tirzepatide in obesity and FDA Fast Track designation for tirzepatide in obstructive sleep apnea;
The announcement that Jardiance is the first SGLT2 inhibitor to show statistically significant reduction in blood sugar levels in children and adolescents with type 2 diabetes;
Positive donanemab data from the first Phase 3 active comparator study in early Alzheimer’s disease, TRAILBLAZER-ALZ 4;
Plans to invest an additional $450 million and create at least 100 new jobs to expand manufacturing capacity at the company’s Research Triangle Park facility;
The acquisition of Akouos, Inc., which expands Lilly’s efforts in genetic medicines to include Akouos’s potential first-in-class adeno-associated viral gene therapies;
The fifth consecutive 15% annual increase in Lilly’s quarterly dividend, doubling since 2018;
A collaboration with EVA Pharma to establish local manufacturing capabilities to supply low-cost insulin to at least 1 million people by 2030, mostly in Africa; and
An initiative with Direct Relief to expand cold chain capacity in Africa, Latin America, the Caribbean and Southeast Asia.
For additional information on these and other important public announcements, visit the news section of Lilly’s website.

Financial Results

$ in millions, except

per share data

Fourth Quarter

%

2022

2021

Change

Revenue

$7,301.8

$7,999.9

(9) %

Net Income – Reported

1,937.7

1,726.1

12 %

EPS – Reported

2.14

1.90

13 %

Net Income – Non-GAAP

1,893.1

1,970.5

(4) %

EPS – Non-GAAP

2.09

2.17

(4) %

A discussion of the non-GAAP financial measures is included under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)."

Fourth-Quarter Reported Results

In Q4 2022, worldwide revenue was $7.30 billion, a decrease of 9% compared with Q4 2021, driven by a 4% decrease from the unfavorable impact of foreign exchange rates, a 3% decrease due to lower realized prices, and a 2% decrease in volume. Excluding COVID-19 antibodies, revenue in Q4 2022 increased 5% and total worldwide volume increased 13%. Key growth products, consisting of Verzenio, Mounjaro, Jardiance, Taltz, Trulicity, Retevmo, Emgality, Cyramza, Tyvyt and Olumiant, grew 21% and represented 70% of revenue for Q4 2022.

Revenue in the U.S. decreased 10% to $4.66 billion, driven by a 10% decrease in volume with prices remaining relatively flat. Excluding revenue from COVID-19 antibodies, revenue in the U.S. increased by 11%, primarily driven by volume from key growth products.

Revenue outside the U.S. decreased 6% to $2.64 billion, driven by a 12% decrease from the unfavorable impact of foreign exchange rates and a 7% decrease due to lower realized prices, partially offset by a 12% increase in volume. The lower realized prices were primarily driven by the impact of government pricing in China from the volume-based procurement (VBP) for Humalog and the National Reimbursement Drug List (NRDL) formulary for certain products, particularly Verzenio and Tyvyt. The increase in volume outside the U.S. was largely driven by key growth products and approximately $130 million of one-time revenue associated with the sale of the company’s rights to Alimta in Korea and Taiwan.

Gross margin decreased 3% to $5.75 billion in Q4 2022 compared with Q4 2021. Gross margin as a percent of revenue was 78.8%, an increase of 4.4 percentage points compared with Q4 2021. The increase in gross margin percent was primarily driven by lower sales of COVID-19 antibodies, partially offset by lower realized prices and increased expenses due to inflation and logistics costs.

In Q4 2022, research and development expenses increased 5% to $2.00 billion, or 27% of revenue, driven by higher development expenses for late-stage assets, partially offset by the favorable impact of foreign exchange rates and lower development expenses for COVID-19 antibodies.

Marketing, selling and administrative expenses increased 3% to $1.64 billion in Q4 2022, primarily driven by costs associated with launches of new products and indications, partially offset by the favorable impact of foreign exchange rates.

In Q4 2022, the company recognized acquired in-process research and development (IPR&D) and development milestone charges of $240.1 million. In Q4 2021, the company recognized acquired IPR&D and development milestone charges of $437.7 million, primarily related to a business development transaction with Foghorn Therapeutics Inc.

In Q4 2022, the company recognized asset impairment, restructuring and other special charges of $38.1 million, primarily related to acquisition and integration costs associated with the closing of our acquisition of Akouos, Inc. In Q4 2021, the company recognized asset impairment, restructuring and other special charges of $104.5 million, primarily related to impairment of an intangible asset from our acquisition of Loxo Oncology.

Operating income in Q4 2022 was $1.84 billion compared with $1.92 billion in Q4 2021. Operating margin percent, defined as operating income as a percent of revenue, was 25.1%, which includes a negative impact of approximately 330 basis points attributed to acquired IPR&D and development milestone charges.

Other income (expense) was income of $260.0 million in Q4 2022 compared with expense of $77.3 million in Q4 2021. The increase in other income (expense) was primarily driven by net gains on investments in equity securities in Q4 2022 compared with net losses on investments in equity securities in Q4 2021.

The effective tax rate was 7.6% in Q4 2022 compared with 6.2% in Q4 2021. The effective tax rate in Q4 2022 reflects the favorable tax impact of the implementation of the provision in the Tax Cuts and Jobs Act (the 2017 Tax Act) that requires capitalization and amortization of research and development expenses for tax purposes starting in 2022 and a net discrete tax benefit, partially offset by the tax impact of the mix of earnings in higher tax jurisdictions. The effective tax rate in Q4 2021 reflected a net discrete tax benefit and the tax impact of acquired IPR&D and development milestone charges.

In Q4 2022, net income and earnings per share (EPS) were $1.94 billion and $2.14, respectively, compared with $1.73 billion and $1.90 in Q4 2021. Q4 2022 EPS was inclusive of $0.23 of acquired IPR&D and development milestone charges compared with $0.39 in Q4 2021.

Fourth-Quarter Non-GAAP Measures

On a non-GAAP basis, Q4 2022 gross margin decreased 3% to $5.88 billion compared with Q4 2021. Gross margin as a percent of revenue was 80.5%, an increase of 4.4 percentage points compared with Q4 2021. The increase in gross margin percent was primarily driven by lower sales of COVID-19 antibodies, partially offset by lower realized prices and increased expenses due to inflation and logistics costs.

Operating income on a non-GAAP basis decreased $160.5 million, or 7%, to $2.00 billion in Q4 2022 compared with Q4 2021. Operating margin percent was 27.4% on a non-GAAP basis, which includes a negative impact of approximately 330 basis points attributed to acquired IPR&D and development milestone charges.

The effective tax rate on a non-GAAP basis was 7.3% in Q4 2022 compared with 8.5% in Q4 2021. The lower effective tax rate for Q4 2022 reflects the favorable tax impact of the implementation of the 2017 Tax Act and a higher net discrete tax benefit compared to the same period in 2021, partially offset by the tax impact of the mix of earnings in higher tax jurisdictions.

On a non-GAAP basis, Q4 2022 net income and EPS were $1.89 billion and $2.09, respectively, compared with $1.97 billion and $2.17 in Q4 2021. Q4 2022 non-GAAP EPS was inclusive of $0.23 of acquired IPR&D and development milestone charges compared with $0.39 in Q4 2021.

For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release.

Fourth Quarter

2022

2021

% Change

Earnings per share (reported)

$ 2.14

$ 1.90

13 %

Amortization of intangible assets

.11

.19

Asset impairment, restructuring and other special charges

.03

.09

Net (gains) losses on investments in equity securities

(.19)

.06

Partial reversal of COVID-19 antibodies inventory charges

(.07)

Earnings per share (non-GAAP)

$ 2.09

$ 2.17

(4) %

Numbers may not add due to rounding.

Acquired IPR&D and development milestone charges

.23

.39

(41) %

Selected Revenue Highlights

(Dollars in millions)

Fourth Quarter

Full Year

Selected Products

2022

2021

% Change

2022

2021

% Change

Trulicity

$ 1,936.2

$ 1,883.7

3 %

$ 7,439.7

$ 6,471.9

15 %

Verzenio

808.0

404.1

100 %

2,483.5

1,349.9

84 %

Taltz

707.8

647.4

9 %

2,482.0

2,212.8

12 %

Jardiance(a)

612.3

431.9

42 %

2,066.0

1,490.8

39 %

Humalog(b)

548.3

601.7

(9) %

2,060.6

2,453.0

(16) %

COVID-19 antibodies(c)

38.0

1,063.1

(96) %

2,023.5

2,239.3

(10) %

Humulin

234.0

298.8

(22) %

1,019.4

1,222.6

(17) %

Cyramza

277.8

270.4

3 %

971.4

1,033.0

(6) %

Alimta

236.6

434.9

(46) %

927.7

2,061.4

(55) %

Olumiant(d)

205.8

306.0

(33) %

830.5

1,115.1

(26) %

Basaglar

201.7

242.4

(17) %

760.4

892.5

(15) %

Emgality

175.6

161.5

9 %

650.9

577.2

13 %

Forteo

160.0

184.0

(13) %

613.1

801.9

(24) %

Mounjaro

279.2

NM

482.5

NM

Tyvyt

57.5

77.8

(26) %

293.3

418.1

(30) %

Retevmo

64.6

38.6

67 %

191.9

114.7

67 %

Total Revenue

7,301.8

7,999.9

(9) %

28,541.4

28,318.4

1 %

(a) Jardiance includes Glyxambi, Synjardy and Trijardy XR

(b) Humalog includes Insulin Lispro

(c) COVID-19 antibodies include sales for bamlanivimab administered alone, for bamlanivimab and etesevimab
administered together, and for bebtelovimab, and were made pursuant to EUAs or similar regulatory authorizations

(d) Olumiant includes sales of baricitinib that were made pursuant to EUA or similar regulatory authorizations

NM – not meaningful

Trulicity

For Q4 2022, worldwide Trulicity revenue was $1.94 billion, an increase of 3% compared with Q4 2021. U.S. revenue increased 5% to $1.53 billion, driven by increased demand, partially offset by lower realized prices. Revenue outside the U.S. was $409.8 million, a decrease of 6%, driven by the unfavorable impact of foreign exchange rates and to a lesser extent, lower realized prices, partially offset by increased demand. On a constant currency basis, revenue outside the U.S. increased 8%. Lilly experienced intermittent delays in fulfilling certain U.S. Trulicity orders during Q4 2022. Actions to manage strong demand across the company’s incretin portfolio, including measures to minimize existing patient impact in international markets, also affected volume.

Verzenio

For Q4 2022, worldwide Verzenio revenue increased 100% compared with Q4 2021 to $808.0 million. U.S. revenue was $552.7 million, an increase of 119%, primarily driven by increased demand. Revenue outside the U.S. was $255.3 million, an increase of 69%, driven by increased demand, partially offset by the unfavorable impact of foreign exchange rates and lower realized prices primarily due to the impact of the NRDL formulary in China.

Taltz

For Q4 2022, worldwide Taltz revenue increased 9% compared with Q4 2021 to $707.8 million. U.S. revenue increased 9% to $512.0 million, driven by increased demand, partially offset by lower realized prices. Revenue outside the U.S. increased 11% to $195.8 million, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates and lower realized prices.

Jardiance

The company’s worldwide Jardiance revenue for Q4 2022 was $612.3 million, an increase of 42% compared with Q4 2021. U.S. revenue increased 51% to $363.1 million, primarily driven by increased demand and to a lesser extent, an increased Q4 2022 royalty from Boehringer Ingelheim for exceeding certain annual thresholds. Revenue outside the U.S. was $249.2 million, an increase of 30%, primarily driven by increased demand, partially offset by the unfavorable impact of foreign exchange rates.

Jardiance is part of the company’s alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance.

Humalog

For Q4 2022, worldwide Humalog revenue decreased 9% compared with Q4 2021 to $548.3 million. U.S. revenue increased 8% to $336.0 million, driven by higher realized prices due to changes in estimates for rebates and discounts in both periods. Revenue outside the U.S. decreased 27% to $212.3 million, driven by lower realized prices due to the impact of VBP in China and the unfavorable impact of foreign exchange rates.

Alimta

For Q4 2022, worldwide Alimta revenue decreased 46% compared with Q4 2021 to $236.6 million. U.S. revenue decreased 83% to $53.2 million, driven by decreased demand due to generic competition. Revenue outside the U.S. increased 63% to $183.4 million, driven by approximately $130 million of one-time revenue associated with the sale of the company’s rights to Alimta in Korea and Taiwan, partially offset by decreased demand due to generic competition, lower realized prices, and the unfavorable impact of foreign exchange rates.

The company expects continued volume and revenue decline for Alimta as a result of generic competition due to the loss of patent exclusivity in major markets.

Olumiant

For Q4 2022, worldwide Olumiant revenue decreased 33% compared with Q4 2021 to $205.8 million. U.S. revenue decreased 50% to $43.5 million, driven by a decline in utilization for COVID-19 treatment, partially offset by increased utilization for the treatment of alopecia areata. Revenue outside the U.S. was $162.3 million, a decrease of 26%, driven by the unfavorable impact of foreign exchange rates and a decline in utilization for COVID-19 treatment.

Emgality

For Q4 2022, Emgality generated worldwide revenue of $175.6 million, an increase of 9% compared with Q4 2021. U.S. revenue was $132.0 million, an increase of 9%, driven by increased demand and higher realized prices, partially offset by wholesaler buying patterns. Revenue outside the U.S. was $43.7 million, an increase of 8%, primarily driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates and lower realized prices.

Mounjaro

For Q4 2022, worldwide Mounjaro revenue was $279.2 million. U.S. revenue was $256.7 million. Mounjaro launched in the U.S. for the treatment of type 2 diabetes in June 2022.

Tyvyt

For Q4 2022, the company’s Tyvyt revenue in China was $57.5 million, a decrease of 26% compared with Q4 2021, driven by the impact of the NRDL formulary in China as well as increased competitive pressures and impacts from COVID-19 disruptions.

Tyvyt is part of the company’s alliance with Innovent. Lilly reports total sales of Tyvyt made by Lilly as revenue, with payments made to Innovent for its portion of the gross margin reported as cost of sales. Lilly also reports as revenue a portion of the gross margin for Tyvyt sales made by Innovent.

2023 Financial Guidance

The company has updated its tax rate and EPS guidance and reaffirmed all other elements of its 2023 financial guidance. The previous tax rate guidance of approximately 16% for 2023 assumed deferral or repeal of the 2017 Tax Act provision that requires capitalization of research and development expenses. Such a deferral or repeal did not occur in 2022. Given the uncertainty as to whether any change to this provision will be enacted in 2023, the company has updated the tax rate guidance to be approximately 13% and 2023 EPS guidance has been increased to the range of $7.90 to $8.10 on a reported basis and $8.35 to $8.55 on a non-GAAP basis. The company’s 2023 financial guidance reflects adjustments shown in the reconciliation table below.

2023

Expectations

Earnings per share (reported)

$7.90 to $8.10

Amortization of intangible assets

.45

Earnings per share (non-GAAP)

$8.35 to $8.55

Numbers may not add due to rounding

The company’s 2023 financial guidance does not include any acquired IPR&D and
development milestone charges either incurred or that may potentially be incurred in 2023.

The following table summarizes the company’s updated 2023 financial guidance:

2023 Guidance

Prior

Updated

Revenue

$30.3 to $30.8 billion

Unchanged

Gross Margin % of Revenue (reported)

Approx. 77%

Unchanged

Gross Margin % of Revenue (non-GAAP)

Approx. 79%

Unchanged

Marketing, Selling & Administrative

$6.9 to $7.1 billion

Unchanged

Research & Development

$8.2 to $8.4 billion

Unchanged

Other Income/(Expense)

$(200) to $(100) million

Unchanged

Tax Rate

Approx. 16%

Approx. 13%

Earnings per Share (reported)

$7.65 to $7.85

$7.90 to $8.10

Earnings per Share (non-GAAP)

$8.10 to $8.30

$8.35 to $8.55

Non-GAAP guidance reflects adjustments presented in the earnings per share table above.

Webcast of Conference Call

As previously announced, investors and the general public can access a live webcast of the Q4 2022 financial results conference call through a link on Lilly’s website at investor.lilly.com/webcasts-and-presentations. The conference call will begin at 10 a.m. Eastern time today and will be available for replay via the website.

Non-GAAP Financial Measures

Certain financial information for 2022 and 2021 is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the periods. Non-GAAP measures reflect adjustments for the items described in the reconciliation tables later in the release. This press release and related materials provide certain GAAP and non-GAAP figures excluding the impact of foreign exchange rates. Lilly recalculates current period figures on a constant currency basis by keeping constant the exchange rates from the base period. Beginning in 2022, presentations of non-GAAP financial measures do not include adjustments for upfront charges and development milestones related to acquired IPR&D. Non-GAAP financial measures for Q4 and fiscal year 2021 have been adjusted to reflect this updated presentation. The company’s 2023 financial guidance is being provided on both a reported and a non-GAAP basis. The non-GAAP measures are presented to provide additional insights into the underlying trends in the company’s business.

Deciphera Pharmaceuticals to Participate in Upcoming Investor Conferences

On February 2, 2023 Deciphera Pharmaceuticals, Inc. (NASDAQ: DCPH), a biopharmaceutical company focused on discovering, developing, and commercializing important new medicines to improve the lives of people with cancer, reported that members of the management team will participate in fireside chats at the following investor conferences (Press release, Deciphera Pharmaceuticals, FEB 2, 2023, View Source [SID1234626763]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Guggenheim Healthcare Talks Oncology Day on Thursday, February 9, 2023 at 10:45 AM ET in New York, NY
SVB Securities Global Biopharma Conference on Wednesday, February 15, 2023 at 3:00 PM ET (virtual)
A live webcast of both events will be available on the "Events and Presentations" page in the "Investors" section of the Company’s website at View Source A replay of both webcasts will be archived on the Company’s website for 90 days following the presentation.