Eli Lilly and : Q2 2022 Lilly Press Release

Aug. 4, 2022

For Release: Immediately

Refer to: Jordan Bishop; [e-mail]; [phone] (Media) Kevin Hern; [e-mail]; [phone] (Investors)

Lilly Reports Second-Quarter Financial Results, Highlights Momentum of New Medicines

and Pipeline Advancements

• Lilly's revenue in Q2 2022 decreased 4%. On a constant currency basis, revenue decreased 1% as lower realized prices and lower Alimta revenue following the entry of generics more than offset volume growth from key growth products. Total revenue grew 6% excluding revenue from Alimta, the sale of the company's rights to Cialis in China in Q2 2021, and COVID-19 antibodies.
• The company continued to advance its pipeline with the U.S. approval and launch of Mounjaro for type 2 diabetes, approval in the U.S., EU and Japan of Olumiant for alopecia areata, and FDA acceptance with Priority Review designations of donanemab for Alzheimer's disease and pirtobrutinib for mantle cell lymphoma for patients previously treated with a BTK inhibitor, both for review under accelerated approval pathways.
• Key growth products - consisting of Trulicity, Verzenio, Jardiance, Taltz, Retevmo, Mounjaro, Emgality, Olumiant, Tyvyt and Cyramza - grew 20% and represented 67% of revenue in Q2 2022, excluding revenue from COVID-19 antibodies.
• Q2 2022 EPS decreased 31% to $1.05 on a reported basis and decreased 32% to $1.25 on a non-GAAP basis. Q2 2022 reported and non-GAAP EPS are both inclusive of $0.46 of acquired IPR&D and development milestone charges.
• 2022 EPS guidance updated to be in the range of $6.96 to $7.11 on a reported basis and $7.90 to $8.05 on a non-GAAP basis, both inclusive of $0.61 of acquired IPR&D and development milestone charges.

INDIANAPOLIS, Aug. 4, 2022 - Eli Lilly and Company (NYSE: LLY) today announced its financial results for the second quarter of 2022.

"We had an exciting quarter with the highly anticipated U.S. launch of Mounjaro, the first of potentially five new medicines we intend to launch by the end of 2023," said David A. Ricks, Lilly's chair and CEO. "We are pleased with the underlying strength of our core business, and we expect our new medicines will add to our growth through the rest of the decade. We are entering a

Eli Lilly and Company | Lilly Corporate Center | Indianapolis, Indiana 46285 | U.S.A.

compelling era in our company's history, as we continue our efforts to expand the number of people our medicines can help."

Lilly Senior Vice President and Chief Financial Officer Anat Ashkenazi provided further commentary on the quarter.

"Excluding revenue from the Alimta loss of exclusivity in major markets, the sale of rights to Cialis in China in the base period, and COVID-19 antibodies, Lilly experienced 6% revenue growth in our core business led by strong performance from key products such as Trulicity, Verzenio and Jardiance," said Ashkenazi. "While we expect that our financial results will continue to be negatively impacted by foreign exchange rates, our revenue guidance for 2022 remains unchanged. Importantly, the inclusion of acquired in-process research and development and development milestone charges in our non-GAAP results will continue to impact comparisons to prior years."

Today, the company is sharing new notable announcements:

• The U.S. Food and Drug Administration (FDA) accepted, with Priority Review designation, donanemab for Alzheimer's disease for review under the accelerated approval pathway.
• The FDA also accepted, with Priority Review designation, pirtobrutinib for mantle cell lymphoma for patients previously treated with a BTK inhibitor for review under the accelerated approval pathway.
• In collaboration with the U.S. government, Lilly intends to make bebtelovimab commercially available for purchase by U.S. states/territories, hospitals and a broad set of other providers through a sole distributor beginning the week of Aug. 15, which is prior to the anticipated depletion of the U.S. government's currently available supply.

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

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events, including:

• Mounjaro® (tirzepatide) for adults with type 2 diabetes was approved by the FDA and received a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use.
• Lilly and Incyte's Olumiant® (baricitinib) for adults with severe alopecia areata received approval in the U.S., EU and Japan.
• The FDA approved Olumiant for the treatment of certain hospitalized patients with COVID-19.
• The company announced positive topline results from Phase 3 clinical trials of lebrikizumab for the treatment of patients with moderate-to-severe atopic dermatitis.
• Lilly supplied additional doses of bebtelovimab to the U.S. government in an ongoing effort to provide COVID-19 treatment options for patients.
• The company announced plans to invest $2.1 billion in two new Indiana manufacturing sites.

For additional information on these and other important public announcements, visit the news section of Lilly's website.

Financial Results

$ in millions, except	Second Quarter	%
per share data
	2022	2021	Change
Revenue	$6,488.0	$6,740.1	(4)%
Net Income - Reported	952.5	1,390.2	(31)%
EPS - Reported	1.05	1.53	(31)%
Net Income - Non-GAAP	1,131.3	1,683.5	(33)%
EPS - Non-GAAP	1.25	1.85	(32)%

A discussion of the non-GAAP financial measures is included under "Reconciliation of GAAP

Reported to Selected Non-GAAP Adjusted Information (Unaudited)."

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Second-Quarter Reported Results

In Q2 2022, worldwide revenue was $6.49 billion, a decrease of 4% compared with Q2 2021, driven by an 11% decrease due to lower realized prices and a 3% decrease from the unfavorable impact of foreign exchange rates, partially offset by a 10% increase in volume. Key growth products, consisting of Trulicity®, Verzenio®, Jardiance®, Taltz®, Retevmo®, Mounjaro, Emgality®, Olumiant, Tyvyt® and Cyramza®, grew 20% and represented 67% of revenue for Q2 2022, excluding revenue from COVID-19 antibodies. Excluding revenue from Alimta®, which lost exclusivity in major markets, the sale of the company's rights to Cialis® in China in Q2 2021, and COVID-19 antibodies, worldwide revenue increased 6% in Q2 2022.

Revenue in the U.S. increased 6%, to $3.93 billion, primarily driven by a 14% increase in volume, partially offset by an 8% decrease due to lower realized prices. Excluding revenue from Alimta and COVID-19 antibodies, revenue in the U.S. increased by 11% driven by key growth products. The lower realized prices in the U.S. were driven by Humalog®, due to unfavorable segment mix, as more highly rebated segments made up a larger portion of the business and a list price reduction of Insulin Lispro injection; Alimta and Forteo®, due to higher contracted rebates and unfavorable segment mix; and Taltz, due to changes to estimates for rebates and discounts and unfavorable segment mix.

Revenue outside the U.S. decreased 16%, to $2.55 billion, driven by a 14% decrease due to lower realized prices and a 6% decrease from the unfavorable impact of foreign exchange rates, partially offset by a 5% increase in volume. The lower realized prices were primarily driven by the impact of government pricing in China from the National Reimbursement Drug List (NRDL) formulary for certain products, particularly Verzenio and Tyvyt, and volume-based procurement (VBP) for Humalog. The increase in volume outside the U.S. was largely driven by key growth products as well as the NRDL in China, partially offset by decreased volume for Alimta and Cymbalta® resulting from the entry of generic competition, the sale of the company's rights to Cialis in China in Q2 2021, as well as decreased volume for COVID-19 antibodies. Excluding revenue from Alimta, the sale of

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the company's rights to Cialis, and COVID-19 antibodies, revenue outside the U.S. decreased by 2%, or an increase of 6% on a constant currency basis.

Gross margin increased 6%, to $5.06 billion, in Q2 2022 compared with Q2 2021. Gross margin as a percent of revenue was 78.0%, an increase of 6.9 percentage points compared with Q2 2021. The increase in gross margin percent was primarily driven by an excess inventory charge of $423.0 million recognized in Q2 2021 related to COVID-19 antibodies and, to a lesser extent, favorable product mix and the effect of foreign exchange rates on international inventories sold, partially offset by lower realized prices.

In Q2 2022, research and development expenses increased 8% to $1.78 billion, or 27% of revenue, driven by higher development expenses for late-stage assets, partially offset by lower development expenses for COVID-19 antibodies.

Marketing, selling and administrative expenses decreased 4% to $1.63 billion in Q2 2022, primarily driven by the favorable impact of foreign exchange rates as well as reduced marketing costs.

In Q2 2022, the company recognized acquired in-process research and development (IPR&D) and development milestone charges of $440.4 million, primarily related to a charge associated with the buy-out of substantially all future obligations that were contingent upon the development, regulatory and commercial successes of the company's mutant-selective PI3kα inhibitor. In Q2 2021, the company recognized acquired IPR&D and development milestone charges of $42.8 million.

Operating income in Q2 2022 was $1.21 billion, compared to $1.40 billion in Q2 2021. Operating margin percent, defined as operating income as a percent of revenue, was 18.7%, which includes a negative impact of approximately 680 basis points attributed to acquired IPR&D and development milestone charges.

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