Eli Lilly and Company Strategic Diabetes Alliance with Boehringer Ingelheim January 11 th, 2011
Safe Harbor Provision This presentation contains forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. The company's results may be affected by such factors as the risks and uncertainties in pharmaceutical research and development, competitive developments, regulatory actions, litigation and investigations, business development transactions, economic conditions, and changes in laws and regulations. For additional information about the factors that affect the company's business, please see the company's latest Form 10-Q and Form 10-K filed with the Securities and Exchange Commission. The company undertakes no duty to update forward-looking statements. 2
Deal Overview Global co-development and co-commercialization Boehringer Ingelheim (BI) assets: Linagliptin, a novel DPP-4 inhibitor under regulatory review in the U.S., EU and Japan BI 10773, an SGLT-2 inhibitor in Phase 3 Lilly assets: LY2605541, a novel basal analog insulin to enter Phase 3 in 2011 LY2963016, a new insulin glargine product to enter Phase 3 in 2011 Upon successful completion of Phase 2 development, if BI opts-in, an anti-tgf beta antibody, which recently began Phase 2 3
Deal Rationale These assets are worth more managed together as a portfolio, drawing upon the complementary capabilities of Lilly and BI Combined drug development and medical expertise enhances development of all compounds in clinical development Allows the companies to build, and efficiently utilize, a larger commercial infrastructure Creates an innovative, balanced portfolio Companies could offer patients and physicians treatment options spanning from early disease onset to later complications Provides Lilly greater access to large oral diabetes market in two attractive classes, DPP-4 and SGLT-2 inhibitors Potentially contributes two launches in Years YZ of products with long revenue streams Linagliptin, could launch in 2011 and has IP into mid-2020s BI 10773, could launch in 2014 and has IP into late-2020s 4
Summary of Key Deal Terms Up-front payment of 300 million from Lilly to BI BI eligible for total of 625 million in success-based regulatory milestone payments Lilly eligible for total of $650 million in success-based regulatory milestone payments on its basal analog insulins If BI opts-in to anti-tgf beta antibody, Lilly eligible for up to $525 million in opt-in and success-based regulatory milestone payments Lilly and BI to share equally in: On-going and future development expenses Commercialization expenses Gross margin Each innovator company eligible for performance payments tied to sales of products it originally developed 5
Linagliptin Overview Highly potent and highly selective DPP-4 inhibitor 5 mg once-daily dose; IC50=1nM >10,000x more selective for DPP-4 than for DPP-8 and DPP-9 Approximately 5% excreted via the kidneys; mainly excreted unchanged via the enterohepatic system Submitted in the U.S., EU and Japan for use in adult patients with type 2 diabetes as: Monotherapy Add-on to metformin, sulfonylurea, thiazolidinediones or metformin/sulfonylurea 6
Linagliptin Phase 3 Clinical Trials Status Trial # Duration # Patients Description Completed 1218.15 24 week 389 vs placebo in combination with pioglitazone 1218.16 24 week 503 vs placebo 1218.17 24 week 702 vs placebo in combination with metformin 1218.18 24 week 1,058 vs placebo in combination with metformin+sulfonylurea 1218.23 12/26 week 561 vs placebo and vs voglibose (Japanese patients) 1218.35 18 week 245 vs placebo in combination with sulfonylurea 1218.50 18/52 week 227 vs placebo in patients for whom metformin is inappropriate Fully Enrolled 1218.20 104 week 1,560 vs glimepiride both in combination with metformin 1218.36 24/130 week 1,130 vs placebo in combination with basal insulin 1218.40 78 week 2,124 open label extension of 1218.15-18 1218.43 12/52 week 130 vs placebo in patients with chronic severe renal impairment Enrolling 1218.61 24 week 290 vs placebo in combination with metformin+pioglitazone 1218.63 24 week 240 vs placebo in elderly patients 1218.64 12/52 week 240 vs placebo and glimepiride in patients with moderate to severe renal impairment 1218.65 24 week 285 vs placebo in combination with metformin 1218.66 24 week 440 vs placebo (Chinese patients) 1218.74 3 years 6,000 CV safety study vs glimepiride in high-risk patients 1218.75 24 week 260 vs placebo (Black/African-American patients) 1218.78 52 week 512 vs metformin (safety study) Note: Information from clinicaltrials.gov as of January 9, 2011. 7
Linagliptin Efficacy Summary Placebo-corrected, adjusted mean change from baseline HbA1c mean change from baseline (%) Linagliptin -0.51 Linagliptin + pioglitazone -1.06-0.69-0.64-0.62 vs. placebo (week 12) -0.87 vs. voglibose (week 26) -0.32-0.47-0.57 1218.15 Initial comb + TZD 1218.16 Monotherapy 1218.17 Add-on to metformin 1218.18 Add-on to Met+SU 1218.23 Japanese study 1218.35 Add-on to SU 1218.50 Metformin ineligible patients 8
Linagliptin Safety Summary Cardiovascular event risk: Prospective, pre-defined meta-analysis of CV events from eight Phase 3 studies in over 5,000 type 2 diabetes patients showed linagliptin was not associated with an increase in CV risk CV safety trial initiated in 2010 Tolerability In completed clinical trials, adverse events and serious adverse events observed at comparable rates for linagliptin and placebo Pooled analysis of 12 placebo-controlled trials showed incidence of hypoglycemia with linagliptin was low and similar to placebo, unless linagliptin was administered on a background of sulfonylurea A commonly reported adverse event with linagliptin treatment was nasopharyngitis (5.9%) vs placebo (5.1%) 9
Linagliptin Development Program Regulatory submissions completed in the U.S., Europe and Japan in the second half of 2010 Future regulatory submissions: Fixed-dose combination with metformin o U.S. and EU in 2011; Japan in 2014 Fixed-dose combination with pioglitazone o tbd 10
BI 10773 Overview Potent and selective SGLT-2 inhibitor BI 10773 is potent (3.1 nm) and selective (~2700x vs. SGLT-1) SGLT-2 acts as a conduit for re-absorption of glucose Inhibition of SGLT-2 reduces the amount of glucose in the bloodstream Mechanism of action is insulin-independent Mechanistically possible for this class of drugs to reduce glucose levels without weight gain and with a low risk of hypoglycemia Phase 3 clinical testing began in mid-2010 Phase 3 clinical program evaluates BI 10773 at 10 mg and 25 mg doses In total, the Phase 3 program will enroll approximately 10,000 patients, including a cardiovascular safety trial 11
BI 10773 Phase 3 Clinical Trials Status/Phase Trial # Duration # Patients Description Enrolling 1245.19 24 week 468 vs placebo in combination with pioglitazone or with pioglitazone + metformin 1245.20 24 week 920 vs placebo and sitagliptin 1245.23 24 week 1,390 vs placebo in combination with metformin or with metformin + sulfonylurea 1245.25 4 years 4,000 CV safety study in T2DM patients with high cardiovascular risk 1245.28 104 week 1,400 vs glimepiride both in combination with metformin 1245.36 24/52 week 682 vs placebo in patients with renal impairment Note: Information from clinicaltrials.gov as of January 9, 2011. 12
BI 10773 Efficacy Summary Phase 2b Study 1245.9 presented at EASD 2010 Objectives: Evaluated safety, tolerability, PK and PD of BI 10773 vs. placebo and vs. metformin in T2D after 12 weeks Population: T2D patients (one or no pretreatment, washed out) Dose groups: 10, 25, 50 mg q.d., placebo, metformin Patients randomized 408, ~80 per treatment group BI 10773 PBO 5mg 10mg 25mg PBO Metformin HbA1c (%) 0.09-0.43* -0.48* -0.63* 0.07-0.75* HbA1c vs PBO (%) -0.52* -0.57* -0.72* -0.82* FPG (mg/dl) 0.8-23.3* -28.9* -31.1* 1.0-29.7* BW (kg) -0.75-1.81* -2.33* -2.03* -0.75-1.32 * p<0.001 vs PBO 13
BI 10773 Efficacy Summary Phase 1c Phase 1c presented at ADA 2010 4-week clinical study Study in 80 patients with type 2 diabetes Objective: Assessed safety, tolerability and PK/PD Doses: 10 mg, 25 mg, and 100 mg once daily Results showed: Peak plasma concentrations at ~1.5 hours after dosing Mean terminal half life at steady-state ranged from 13 to 17 hours Increase in urinary glucose excretion Glucose excreted in the urine was similar for all BI 10773 treatment arms Increased urinary glucose excretion resulted in proportional reductions in FPG and MDG levels 14
BI 10773 Safety Summary In the Phase 2b study 1245.9 (disclosed at EASD 2010) Reported adverse events were comparable among treatment groups Most frequently reported AEs (BI 10773 groups): o frequent urination, thirst, and nasopharyngitis. Urinary tract infection frequency was low (1.2%) and comparable to placebo (1.2%) and metformin (1.3%) Incidence of genital infections was low: mycosis (0.8%) and pruritis (1.2%) with BI 10773 versus none with metformin or placebo Rates of hypoglycemia were similar between groups 15
BI 10773 Development Program Depending upon patient enrollment, regulatory submissions targeted: BI 10773 o U.S. and Europe by 2013 o Japan tbd BI 10773 fixed-dose combinations with metformin and with linagliptin: o tbd 16
Basal Analog Insulin LY2605541 Glucodynamic Response Data generated to date have shown: Flat steady-state profile 3.0 Long half-life and duration of action Glucose Infusion Rate (mg/min/kg) 2.5 2.0 1.5 1.0 0.5 0.0 0 3 6 9 12 15 18 21 24 27 30 33 36 Time (hr) Insulin Glargine LY Modeled From Phase 1 Data Low within patient variability Acceptable safety profile; as expected, most common reported adverse event was hypoglycemia Development status: Two Phase 2 trials initiated early 2010; results expected Q2 2011 Phase 3 slated to begin H2 2011 Potential regulatory submissions in 2014 17
Basal Analog Insulin LY2963016 Lilly s new insulin glargine product Compound will be extensively studied to generate a robust data package Well positioned to compete effectively in this space, given Lilly s: knowledge of the diabetes market manufacturing know-how and infrastructure deep understanding of patient/physician needs capabilities/experience with insulin delivery devices Registration studies slated to begin in 2011 with a goal of regulatory submissions in 2014 18
Anti-TGF beta Antibody Monoclonal antibody that selectively inhibits TGF-beta 1 isoform, a cytokine shown in pre-clinical experiments to contribute to renal fibrosis Properties of molecule support development as onceweekly subcutaneous injection Phase 2 began in late 2010 BI may opt-in upon successful completion of Phase 2 19
Financial Impact Economic perspective deal is value enhancing Accounting perspective: Near-term dilution due to up-front payment, launch expenses for linagliptin and Phase 3 development costs for BI 10773, partially offset by funding from BI for development of our basal insulins Greatest amount of dilution in 2011 due largely to up-front payment; total EPS impact estimated at $0.45-$0.50 per share Assuming successful launch of linagliption, progressively and significantly less dilution in 2012 and 2013, no dilution to slight accretion in 2014 and more significant accretion in 2015 and beyond 20
Summary Deal creates one of the most robust diabetes pipelines in the industry Provides Lilly enhanced access to large and growing oral diabetes market in two exciting product classes Supports increased reach of commercial organization Provides two potential product launches in Years YZ 21
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