Eli Lilly and Company (LLY) Q3 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. I'd now like to turn the conference over to our host, Mr. David Ricks. Please go ahead. David A. Ricks - Eli Lilly & Co.: Thank you and good morning. Thank you for joining us for Eli Lilly & Company's Q3 2018 Earnings Call. I'm Dave Ricks, Lilly's Chairman and CEO. Joining me on today's call are Josh Smiley, our Chief Financial Officer; Dr. Dan Skovronsky, the President of Lilly Research Labs and our Chief Scientific Officer; Enrique Conterno, the President of Lilly Diabetes and Lilly U.S.A.; Christi Shaw, the President of Lilly Bio Medicines; and Anne White, who is joining us for the first time as our new President of Lilly Oncology. We're also joined by Kristina Wright, Mike Suppar (1:09), Kevin Hern, and Phil Johnson of the IR team. Please note that Jeff Simmons is not on the call today, as Elanco is now having their own quarterly earnings calls, including their first call earlier this morning. Substantive questions regarding their business performance and outlook should be directed to Elanco's Investor Relations 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 a number of factors, including those listed on slide 3 and those outlined in our latest forms 10-K and 10-Q filed at the SEC. Information we provide about our products and our pipeline is for the benefit of the investment community. It is not intended to be promotional. And it is not sufficient for prescribing decisions. We continued our strong performance in 2018 with a third quarter revenue growth of 7% and non-GAAP operating income of 29% and non-GAAP EPS growth of 32%. New pharmaceutical products, which now represent 35% of human Pharma revenue in the quarter, continue to be the driver of our worldwide growth, led by Trulicity, Taltz, and Verzenio. New products continue to drive strong volume-based growth, highlighted by the 14% Pharma volume growth and the 30% U.S. diabetes volume growth. We continue to expand our margins this quarter. Excluding the effect of FX on international inventory sold, non-GAAP gross margin as a percent of revenue increased by nearly 110 basis points over Q3 2017. And non-GAAP operating income as a percent of revenue increased by over 380 basis points to 28.1%. We made significant progress with the pipeline this quarter, including the approval and launch of Emgality in the U.S., a positive CHMP opinion for Emgality in Europe, the submission of lasmiditan in the U.S., as well as positive Phase 3 readouts for Ultra Rapid Lispro in Type 1 and Type 2 diabetes patients, and a positive Phase 2 readout for GIP/GLP, which is now called tirzepatide, in Type 2 diabetes. And we announced yesterday that Trulicity demonstrated superiority in the reduction of major adverse cardiovascular events across a broad range of people with Type 2 diabetes in the precedent setting REWIND trial. These results are important for the millions of people with Type 2 diabetes who face a higher risk for CV disease. We will submit these data to regulatory authorities and plan to present the detailed data at ADA in 2019. These extensive data, along with Trulicity's proven powerful efficacy, simply delivered, further validate Trulicity as a well-established option for people with diabetes. In terms of capital deployment, Elanco Animal Health became a publicly-traded company via a well-received initial public offering. Through the IPO and the associated debt offering, Elanco raised over $4 billion in capital, the vast majority of which was provided to Lilly as partial consideration for the Animal Health business that Lilly transferred to Elanco in connection with the IPO. We announced several business development transactions, including a licensing agreement which Chugai Pharmaceuticals for an oral GLP-1 agonist; a licensing and research collaboration with Dicerna Pharmaceuticals, utilizing their RNAi technology platform; a collaboration with NextCure Inc., focused on discovery and development of novel immuno-oncology cancer therapies; and we purchased a priority review voucher. We returned nearly $600 million via the dividend. And we repurchased $1 billion of stock. Moving on to slides 5 and 6, you'll see more detail on key events since our July earnings call. Now I'll turn the call over to Josh to review our Q3 results and to provide an update on our financial guidance for 2018. Joshua L. Smiley - Eli Lilly & Co.: Thanks, Dave, and good morning. Slide 7 summarizes our presentation of GAAP results and non-GAAP measures, while slide 8 provides a summary of our GAAP results. I'll focus my comments on our non-GAAP adjusted measures to provide insights into the underlying trends in our business. So please refer to today's earnings press release for a detailed description of the year-on-year changes in our third quarter GAAP results. Looking at the non-GAAP measures on slide 9, you'll see the revenue increase of 7% that Dave mentioned earlier. Gross margin as a percent of revenue increased to 76.7%. Excluding the effect of foreign exchange rates on international inventory sold, gross margins as a percent of revenue increased nearly 110 basis points, primarily driven by manufacturing efficiencies and, to a lesser extent, the favorable impact of product mix, partially offset by the negative impact of price on our revenue. Total operating expense increased roughly 1%, with marketing, selling and administrative expense increasing 2%, while R&D expense remained relatively flat. Total operating expense as a percent of revenue compared to Q3 2017 declined 275 basis points to 48.8%, benefiting from previously announced actions taken to reduce the company's cost structure. Operating income increased 29% compared to Q3 2017, which put our operating margin at 27.9% for the quarter. And as Dave mentioned earlier, excluding the effect of FX on international inventory sold, our operating income was 28.1% of revenues, an improvement of over 380 basis points versus last year's quarter. Other income and expense was expense of $15.4 million this quarter, compared to income of $49.9 million in last year's quarter. Our tax rate was 15.1%, a decrease of 380 basis points compared with the same quarter last year, driven primarily by the impact of U.S. tax reform. At the bottom line, net income increased 29%, while earnings per share increased slightly faster at 32%, due to a reduction in shares outstanding from share repurchases. We achieved this significant earnings growth by delivering high single digit revenue growth, while carefully managing our operating expenses, significantly improving profitability again this quarter. Slide 10 details these same non-GAAP measures for September year to date, while slide 11 provides a reconciliation between reported and non-GAAP EPS. You will find additional details on these adjustments on slides 23 and 24. Moving to slide 12. Let's take a look at the effect of price rate and volume on revenue growth. This quarter, foreign exchange had a modest effect on revenue. Our worldwide revenue growth on a performance basis was 8%, driven by a 12% increase in volume, partially offset by price. Q3 represented the seventh straight quarter our human Pharma business delivered volume growth in each major geography. U.S. Pharma revenue increased 11%, driven by impressive volume growth of 17%, led by Trulicity, Basaglar, Taltz and Verzenio, partially offset by price. As Dave mentioned earlier, our U.S. diabetes business delivered 30% volume growth yet again this quarter. This performance affirms our volume based growth strategy is critical as we grow through an evolving U.S. pricing environment. You will see U.S. price declined 6% this quarter. Nearly 3 points of the U.S. price decline was driven by new access and corresponding volume for Basaglar in Medicare Part D, which we didn't have in last year's quarter. We also have approximately 2 points of decline associated with increases to our patient affordability and access programs for Taltz and Humalog, which also drove increased volumes. The remaining point of decline is the net effect of changes to estimates in rebates and discounts across segments, partially offset by the impact of price increases we took late last year and early this year. Moving to Europe, Pharma revenue grew 1%, driven by volume, largely offset by price. This volume growth was achieved despite the loss of exclusivity for Cialis. Excluding the impact of the Cialis LOE, volume grew over 15%. This robust volume growth was led by Olumiant, Trulicity, Taltz, Lartruvo, and Jardiance. In Japan, Pharma revenue decreased 2%, with volume growth more than offset by price from the impact of the biannual price cuts, which took effect in Q1. Volume growth was driven by new products, namely Trulicity, Olumiant, Taltz, and Jardiance, with a significant contribution also coming from Cymbalta. Our Pharma revenue in the rest of the world increased 15% on a performance basis this quarter, led by volume growth from new products, namely Trulicity, Cyramza, Jardiance, Lartruvo, Taltz, and Basaglar, as well as strong volume growth from Humalog. Turning to Animal Health. Total worldwide revenue grew 6% on a performance basis this quarter, driven by higher prices and higher volume. Higher sales of Companion Animal Disease Prevention, Ruminants and Swine, and Companion Animal Therapeutics products were partially offset by lower sales of products that are being exited, including the products which Lilly has retained control of after the Elanco IPO. Slide 13 outlines this same information for our September year-to-date results. Now let's take a look at the drivers of our 12% worldwide volume growth on slide 14. In total, our new products, including Trulicity, Taltz, Basaglar, Verzenio, Olumiant, Jardiance, Lartruvo, and Cyramza were the engine of our worldwide volume growth. You can see that these products drove 13.8 percentage points of volume growth this quarter. This robust Pharma volume growth represented our strongest quarterly volume performance this decade. The loss of exclusivity for Strattera, Effient, Zyprexa, Axiron, Evista, and Cymbalta provided a drag of 110 basis points, while Cialis accounted for 190 basis points of volume decline. At the end of September, generic versions of Cialis entered the U.S. market, which is expected to result in rapid erosion of sales. When excluding LOEs and Cialis, the rest of our products had volume growth of approximately 19%. Slide 15 provides a view of our new product updates. In total, these brands generated nearly $1.9 billion in revenue this quarter, representing 31% of our total worldwide revenue and 35% of our human Pharmaceutical revenue. With the launch of Emgality and the submission of lasmiditan, we look forward to adding a fourth leg to our new product growth story, joining recent launches in diabetes, oncology, and immunology, and demonstrating that Lilly is also building an innovative pain franchise. Moving to slide 16. Continuing with our non-GAAP explanations, this quarter, the effective FX had a relatively minimal impact on our income statement with a small negative impact on revenue and a small positive impact on earnings. Turning to our 2018 financial guidance on slide 17, you will see that we've updated our non-GAAP guidance to reflect our continued strong operational performance. We're narrowing the range for revenue to $24.3 billion to $24.5 billion; narrowing the range for SG&A expense to $6.3 billion to $6.5 billion; decreasing our tax rate from 17% to 16%, due primarily to recently issued guidance on elements of U.S. tax reform; and we're raising and narrowing our non-GAAP earnings per share range to $5.55 to $5.60. At the midpoint of the range, this represents an increase of 30% over 2017. I would note that this revised EPS range assumes a $0.02 to $0.03 negative impact from backing out the noncontrolling interest portion of Elanco profits in the fourth quarter, which had not been included in the prior guidance. Our updated guidance implies fourth quarter non-GAAP EPS of between $1.33 and $1.38, which exceeds current consensus. However, it is lower than our third quarter EPS due to the entry of generic competition for Cialis in the U.S. in late September; higher fourth quarter R&D expenses to support additional late stage investment, including mirikizumab, Olumiant, and Taltz NILEX, as well as pegilodecakin and GIP/GLP; and launch investments for Emgality; and finally the minority interest attributed to Elanco that I mentioned earlier. On a reported basis, earnings per share for 2018 is now expected to be in the range of $3.13 to $3.18 (sic) [$3.04 to $3.09] (14:22). In total, we expect strong full year performance led by volume gains in our new products, which allows for targeted investments in our long-term portfolio and positions us well to achieve our 2020 financial objectives. This robust performance, along with the capital raised from the Elanco transaction, provides strong cash flow, which we are deploying thoughtfully across our capital allocation priorities. As we move forward in line with our strategy, we will continue to prioritize funding our existing marketed products, new launches, lifecycle opportunities, and in replenishing our pipeline. In addition, we continue to leverage business development to upgrade our pipeline and future growth prospects, as you saw with several recent announcements of business development deals. Finally, we'll return excess cash to shareholders via increases to the dividend and share buybacks. Now I will turn the call back over to Dave to review the pipeline and key future events. David A. Ricks - Eli Lilly & Co.: Thanks, Josh. So Slide 18 shows select pipeline opportunities as of October 30. In my summary of the quarter at the beginning of the call, I mentioned the positive movements for Emgality and lasmiditan. Additional movements since our last earnings call includes, the start of a Phase 3 study for Olumiant in lupus; and the start of a Phase 2/3 adaptive study for Olumiant in alopecia areata; the attrition of Cyramza's second line bladder cancer indication from Phase 3; and the attrition of the N3pG plus BACE combo arm from the ongoing Phase 2. Please note, we are still studying N3pG as a monotherapy in Phase 2. On slide 19, we provide an update on expected key events for 2018. In addition to the pipeline movement and regulatory actions I have already noted, you will see that we've added a new line to reflect our expectation to submit Taltz for axial spondyloarthritis to regulatory authorities by the end of the year. In addition, the FDA has granted breakthrough designation to Emgality for the cluster headache indication. And you'll see that we've added a new line to reflect our plans to submit this indication by year end. Under regulatory action, you will see the approval of Verzenios in Europe and Verzenio in Japan and the approval of fruquintinib in China under the trade name Elunate. Under regulatory submissions, you'll see the submission of a new indication for Cyramza in Europe and Japan for second line liver cancer. In the Phase 3 data presentations and publications section, we reflect the presentations at EASD of the EASE 2 and 3 studies in type I diabetes for empagliflozin, as well as the CARMELINA CV outcome study for Tradjenta in collaboration with Boehringer Ingelheim. In addition to the presentations at ACR of the COAST-V and COAST-W axial spondyloarthritis studies for ixekizumab. And in Phase 3 top line data disclosure section, in addition to the Phase 3 readouts for Trulicity and Ultra Rapid Lispro, which I mentioned earlier, we also had a positive Phase 3 readout for flortaucipir, our tau imaging agent. This was another productive quarter, contributing to continued pipeline advancement in 2018. Before we go to the Q&A section, let me briefly sum up the progress we made this quarter. In Q3, we continued our strong operating performance in 2018, delivering 7% revenue growth and 12% volume growth, driven by our newest products. As Josh stated earlier, our Pharma volume growth was the strongest this decade. We continue to realize significant efficiencies in our cost structure, leading to operating margin expansion of over 380 basis points, excluding the impact of foreign exchange on international inventory sold. We have made excellent progress in our pipeline this quarter as well: The approval and launch of Emgality for migraine patients in the U.S., this is our 10th new product launch since 2014; the FDA submission of lasmiditan for acute migraine; positive Phase 3 data for Ultra Rapid Lispro; the presentation of exciting Phase 2 data for tirzepatide in type II diabetes; and just yesterday's news that Trulicity demonstrated superiority in the reduction of major adverse cardiovascular events across a broad range of people with type II diabetes in the precedent setting REWIND trial. We also returned $1.6 billion to shareholders via dividend and share repurchases. We completed the Elanco IPO and bolstered our early phase pipeline with the addition of an oral GLP-1, while completing several other business development deals. This concludes our prepared remarks. And now I'll turn the call over to Phil to moderate the Q&A session. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Dave. As in prior calls, we would like to take as many questions as possible during the Q&A session, so we do ask that you limit your questions to two or a single question with two parts. Also, given some scheduling issues on our side and the fact that in recent calls we have not exhausted the full 90 minutes we had scheduled, we do intend to conclude today's call at 10:15. So with that, Lola, if you could provide the instructions for the Q&A session. And then we're ready for the first caller.

Certainly. And first we'll go to the line of Chris Schott with JPMorgan.

Great. Thanks so much for the questions. My first one was on REWIND results. I think you referred to them as precedent setting. I know you're sharing the full data next summer. But any additional color you can provide, as we try to think about those results in context of prior GLP-1 CV outcome studies? As we get kind of this balance of healthier patients versus longer follow-up in that study. My second question, you touched a little bit on the prepared remarks. But the diabetes portfolio in 3Q, I think we had a few progs coming in a bit below expectations after some very strong first half results. Can you just talk about any color in terms of, was there any kind of one-time issues to speak about, Humalog or Basaglar, that affected this quarter's results? Thanks so much. Philip Johnson - Eli Lilly & Co.: Great. Thank you for the questions, Chris. Enrique, those are both for you. Enrique A. Conterno - Eli Lilly & Co.: Very good. REWIND is indeed a precedent setting trial. It included the majority of patients without – with Type 2 diabetes, but without cardiovascular disease. It also had the longest median follow-up, over five years, and a low A1C baseline of 7.3. I think what we can share at this stage is really what's on the press release. We will not be sharing more information on REWIND until our intended detailed presentation at ADA next year. We do intend to submit in 2019 for a new indication. Related to Humalog and Basaglar on the overall diabetes portfolio, first, I think we're very pleased with the overall volume growth when it comes to the diabetes portfolio. Clearly when it comes to Humalog, we did see a 14% price decline vis-a-vis Q3 of 2017. Just to provide maybe a little more color on this, we are seeing in a favorable segment mix about 8 points of that 14. Patient affordability is impacted in the insulin portfolio. That's another 4 points. And then we had a unfavorable property (22:24) adjustment as a comparator to last year's quarter. Maybe to provide and try to be a little more instructed, yes, we do see a lot of volatility with Humalog. It is better to look at this product on a year-to-date basis. And when we look at it on a year-to-date basis, I think the trend that we basically see is mid-single digit erosion on price. The dynamics on Basaglar are slightly different, in that Basaglar did not have any access in Part D, and that's access that we first gained this year. So when we look at the compare, we are comparing on a segment that is highly rebated. And that basically has an impact on price. Now when we look at Q2 of 2018 versus Q3 of 2018 for Basaglar, there is some price erosion but not the same magnitude that you see year on year. Philip Johnson - Eli Lilly & Co.: Great. Enrique, thank you for the answers. Lola, if we can go to the next caller, please.

Certainly. And next, we'll go to the line of Tim Anderson with Wolfe Research.

Thank you very much. A couple of questions. 2019, can you talk about tailwinds and headwinds? I know you won't be giving official guidance until December, but hoping there are at least some trends both on the revenue and spending side that you can maybe call out ahead of that official guidance. So for example, obviously Cialis is – will be LOE. If I think about R&D spend, you're going to be starting eight Phase 3 trials on your GIP/GLP-1 program. So any color on 2019 would be appreciated. And then a second question on insulin category. So at some point, FDA may deem biosimilar insulins as interchangeable and substitutable with brand. Do you think this is more likely than not to occur? And could that be something that happens as soon as 2019? And if not 2019, then when? Philip Johnson - Eli Lilly & Co.: Great. Tim, good to hear your voice again. Welcome back. Josh, if you would answer the first question on the 2019 tailwinds and headwinds. And then, Enrique, the question Tim had on interchangeability for insulins. Josh? Joshua L. Smiley - Eli Lilly & Co.: Yes. Thanks, Tim. And you started to answer the question. I think the main tailwinds – or the headwind that we'll see is the Cialis overhang in 2019, as we will experience the main erosion here in the fourth quarter in the U.S. So that certainly will be a headwind as we head in 2019. That being said, we're seeing great growth in the 10 new medicines we've launch since 2014. So we'd expect that the volume from those products to more than compensate for many of the tailwinds we've said we will see. So we will see a difficult compare. The other thing that we've talked about in terms of a headwind on the top line will be the change in the donut hole provision in Medicare Part D, the move from 50% to 70%. As Enrique mentioned, we've got Basaglar in our diabetes products, are in that segment strongly. So we'll see a little bit of a headwind there. But I think we're really pleased with the volume growth that we saw this quarter and expect that the main components of that will continue into 2019. On the R&D side, we do have a very robust set of Phase 3 opportunities ahead of us. You mentioned tirzepatide, which will be starting in mid-2019. In a broad sense we've got mirikizumab that we moved into Phase 3. As you know, those trials are expensive, so we'll have a cost there. And then we'll see data on our ARMO asset, the IL-10, in 2019. And we'd expect that, given positive data there, to continue to push that program. So we'll make targeted investments in R&D and should expect to see some growth there. I think we've been pretty clear on the SG&A line that a big component of our operating margin expansion will be to redirect the investments and resources that we have in products like Cialis and Forteo and others to our new launch opportunities we'll have. Certainly, we'll spend competitively to launch products like Emgality next year. But we'd look to manage that total base at a pretty flat level. All in all, we are excited about the prospects for midterm, 2019 and 2020. We're well on track we think to meet our 2020 midterm objectives, which are 5% compound annual, minimum 5% compound annual sales growth between 2015 and 2020 and operating margin minimum of 30%. So we feel good about where we are there. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Josh. Enrique? Enrique A. Conterno - Eli Lilly & Co.: When it comes to insulin interchangeability at the pharmacy level, we do not believe this is imminent. At best, it's likely a few years away. And it will require the appropriate studies for the FDA to provide such a designation. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Lola, next caller, please?

Certainly. Next will go to line of Jason Gerberry with Bank of America. Mr. Gerberry? Shall we move on? Philip Johnson - Eli Lilly & Co.: Yes, if you could. And then maybe put Jason into the next slot if he's able to reconnect? Thank you.

Certainly. And next we'll go to the line of Andrew Baum with Citi.

Thank you. Couple of questions for Enrique, please. Could you talk to the barriers prohibiting broader Jardiance usage? Whether it's education? Reimbursement copay? And then related to that, could you outline the Tier 2 formulary status within Medicare for Jardiance especially? And in particular, whether a second brand at a net price rather than the current list price may be helpful in increasing penetration by reducing the burden on the patients and preparing ground for a world of net pricing, which seems to be potentially upon us? Many thanks. Philip Johnson - Eli Lilly & Co.: Okay. Andrew, thank you for the questions. If I got them, first, Enrique, would be barriers that you see to Jardiance usage and ways to maybe change that, Tier 2 formulary status and Medicare, and the opportunity for a second brand to potentially address some of the issues that patients face in that book of business. Enrique A. Conterno - Eli Lilly & Co.: Yeah. I'm going to try to answer that question, Andrew, just by maybe a bit of color on how we see Jardiance, because I do see there are some barriers. But I see a number of dynamics that are very positive when I look at the overall class and Jardiance in particular. First, clearly one of the things that we look at is, how is the overall class evolving and developing? And the class right now is growing in single digits, high single digits. But more importantly, we are seeing new patient starts – the growth in new patient starts accelerate. We now see that in the 14%, 15% range. It reminds me a bit of the reacceleration of the GLP-1 class back when Trulicity was launched. Importantly, there are new guidelines that have been published by both ADA and EASD. We think those guidelines are a significant improvement. And that's going to be very helpful. That's an important tailwind. And finally, we have improved access for Jardiance. As you know, we were excluded from one of the major accounts. We are back as of January 1. And that's going to be a very important access for Jardiance. When it comes to coverage, now starting in January of 2019 is in the 90s. So that's an excellent foundation for us to capitalize on. And an additional point, which I emphasized in the GLP-1 class, but it's relevant for now, SGLT2s, is that we have basically additional data from competitors that are confirming the benefits when it comes to CV of the class. And importantly, investments from those competitors. Jardiance is in the best opportunity to capitalize on that. So I see an evolution. And there are a lot of signs and dynamics to be hopeful about the acceleration of the overall growth and the ability for Jardiance to capitalize on that. You asked about Medicare, and whether we would be launching a second brand with Jardiance. Honestly, that's not where I see the issue for Jardiance when it comes to the use of it. Clearly, we always assess all opportunities for our brands. But we are much more focused about – and I think as you implied on your question – continuing to educate health care professionals to ensure that they understand the full benefit that Jardiance can offer patients. And these new guidelines are going to be extremely helpful to do that. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Lola, if we can go to the next caller, please?

Certainly. And next we'll go to the line of Jason Gerberry with Bank of America.

Hi. Can you guys hear me? Philip Johnson - Eli Lilly & Co.: We certainly can. Yes.

Great. Sorry about that. Yeah, first question is just on Taltz. Can you talk about the outlook going into the next few years with a new competitor launching? And do you believe that as these market position with HUMIRA, which has been the leading product in some of these markets, do you think that confers any advantage as it pertains to access relative to the already on market interleukin agents? And then my second question. With oral GLP-1, can you talk a little bit about what you hope to accomplish here, especially with the great data on GIP/GLP? And as we think about Novo's [Novo Nordisk's] oral sema [semaglutide], there are obviously some challenges with that product in terms of dosing. So can you talk about sort of what you're looking for in terms of go, no-go profile? Philip Johnson - Eli Lilly & Co.: Great, Jason. Thank you for the questions. So, Christi, if you'll take question on the Taltz outlook going forward. And then over to you, Dan, for our goals for the oral GLP-1 program. Christi Shaw - Eli Lilly & Co.: Sure. So we're very excited with Taltz. I mean you probably saw that our year-over-year volume growth was significant. And specifically, our TRx grew 80% year over year. And over the quarter, continuing to grow the same. And we're just starting with Taltz. I mean we have a great position in the dermatology office. We just launched this year in the rheumatology office with psoriatic arthritis, which that launch is going well. And just coming off of the American College of Rheumatology, we also demonstrated our data in ankylosing spondylitis, which we will submit before the end of the year, as Dave said. So as we're looking and winning in dermatology, we're beefing up in rheumatology as well. And to your point about access. Right now, our access is about the same as COSENTYX, a little bit less due to the Optum [OptumRx] change in the beginning of the year. But with that, as you can see, the growth of Taltz – it hasn't prevented us from getting patients who need Taltz on Taltz. And we see that continuing in the future. Because in this marketplace, unfortunately, patients cycle through many different therapies. And what we're seeing from customers is that they would like a variety of therapies and different mechanisms to choose from. So you look at the entire portfolio that we have of newer agents coming out and IL-17 and IL-23, our JAK inhibitor, we're looking to be able to provide a broad portfolio to those customers, those patients, and broaden our access to payers with the advent of the newer agents. Philip Johnson - Eli Lilly & Co.: Great. Thanks, Christi, Dan? Daniel M. Skovronsky - Eli Lilly & Co.: Yeah, thank you for the question on our partnership with Chugai on this oral GLP-1 receptor agonist. This is still a pre-Phase 1 molecule, but moving quickly towards human trials. An important comment there is that this is a non-peptidic agonist. So this is – you should think of this very differently from an oral peptide. This is a small molecule approach. As such, we expect it to have in humans – and this is what we'll be testing – a much higher bioavailability than you would see for any kind of oral peptide approach. What does that mean for patients? We hope that will translate into a better experience, certainly in terms of how and when this molecule will be dosed for the people on the trials, and ultimately, in practice. But also that should translate into improved outcomes. So it's still very early, but we're excited about the potential here. And look forward to getting some human data.

Great. Thank you. Philip Johnson - Eli Lilly & Co.: Thank you, Dan. Lola, next caller, please?

Certainly. And next we'll go to the line of Geoff Meacham with Barclays.

Hey, guys. This is Olivia Brayer on for Geoff. Thanks for taking the question. Just two from me. First question is on your dual-receptor agonist. Can you provide us with any updates on that Phase 3 trial? We noticed yesterday that the SURPASS 4 was posted to ct.gov. So can you point to what steps you've taken to improve that overall tolerability in that Phase 3? Just curious how the design was influenced by the recently completed titration study that you previously talked about? And of course, the Phase 2 that we saw last month. And any expectations there on enrollment timelines? And then second question is just another on REWIND. Just curious on what your view is on the incremental opportunity here. Any thoughts on how it might change the treatment paradigm? And what the impact on the overall GLP-1 class might be? Thanks so much. Philip Johnson - Eli Lilly & Co.: Great. Thank you for the questions. So, Enrique, maybe we'll have you attack those. So the first one on GIP/GLP or tirzepatide, things that are being done for Phase 3 with titration, things we would have learned in our Phase 2 program, and then any comments on enrollment timing. And then how you see REWIND playing out going forward with the GLP-1 market. Enrique A. Conterno - Eli Lilly & Co.: Yeah. So as we've shared as part of tirzepatide's Phase 3 program, we are planning to study three maintenance doses at 5, 10 and 15 mg. I think what we've learned is that we should titrate in smaller increments and over time. As we've shared, we have a titration study that we intend to share the details next year. But clearly we've learned a lot from the study in terms of what are the optimal titration schedules. We are planning aggressively when it comes to starting this trial and starting enrollment. So you'll be hearing more when it comes to our trial for Type 2 diabetes soon. As far as REWIND, I don't want to speculate on the particular indication that we will get. But clearly, this is important for the class in that it confirms what other GLP-1s have shown when it comes to seeing benefit. And, I'm sorry, I cannot resist, but I heard Novo Nordisk's call. And they also mentioned that GLP-1s were not all the same, and I think we agree with them. Philip Johnson - Eli Lilly & Co.: Thank you, Enrique. So, Lola, if we can go to the next caller?

Yes. And next we'll go to the line of Steve Scala with Cowen. Steve Scala - Cowen & Co. LLC: Thank you. I have a couple questions. You mentioned the U.S. price hit from gaining access for Basaglar, Taltz, and Humalog. But was there a one-time volume gain from this reflected in the 17% U.S. volume increase? So that's the first question. The second question is to go back to the questions on REWIND. Is REWIND precedent setting because of the population studied? Or is it precedent setting because you have avoided the less than optimal outcomes of Novo's leader in SUSTAIN 6? Or perhaps both? I mean precedent setting is a big statement. So in the absence of any color, I guess we have to assume you hit all three components of the primary endpoint, which is something Novo was not able to accomplish. Thank you. Philip Johnson - Eli Lilly & Co.: Great, Steve. Thank you for the questions. So, Josh, if you'll take the comment on U.S. price, if there was also offsets there in the volumes that we're gaining. And then, Enrique, on what we mean by precedent setting for REWIND. Joshua L. Smiley - Eli Lilly & Co.: Thanks, Steve. Yes, if you look at volume for the third quarter in the U.S., it grew at 17%, which Dave and I both mentioned was the most significant volume growth we've seen this decade. And that Basaglar absolutely contributed to that growth. So the access that we got in Medicare Part D is contributing to the 17% growth, as are the other elements that we mentioned around patient access and all of the new launches. So it is a positive offset there. And you can see in total, even with that negative-6% growth, the U.S. business grew at 11% overall. Philip Johnson - Eli Lilly & Co.: Great. Thanks, Josh. Joshua L. Smiley - Eli Lilly & Co.: Yeah. Philip Johnson - Eli Lilly & Co.: Enrique? Enrique A. Conterno - Eli Lilly & Co.: As I mentioned when I first discussed REWIND as part of the first question, it is precedent setting because it includes some areas of patients without cardiovascular disease. It has the longest median follow-up and a low A1C baseline. We'll be sharing the detailed results at the ADA next year. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Lola, next caller?

Next we'll go to the line of Umer Raffat with Evercore.

Hi. Thanks so much for taking my questions. First, maybe on the oncology side, I noticed for your IL-10 you have decent monotherapy activity in the renal cell setting. But the randomized trials you're running are in lung and pancreatic. So I just wanted to get the thought process there. Is that a consideration? And also your confidence on those open-label lung trials that are coming out in the first half 2019. Second, on NGF it seems like the placebo adjusted efficacy definitely faded into the latest readout. And my question is, do you look at this current placebo adjusted efficacy from this latest trial as being clinically meaningful? And also just your thoughts on the joint replacements on that trial. Thank you. Philip Johnson - Eli Lilly & Co.: Great, Umer. Thank you for the questions. So, Dan, we'll go to you for those on the development strategy for the IL-10. And then also what we think about the efficacy results and any safety findings from the initial trial that's readout for our NGF. Daniel M. Skovronsky - Eli Lilly & Co.: Yeah, thanks, Umer, for those good questions. So starting with the pegilodecakin at IL-10. As you point out, the randomized trial that's ongoing at Phase 3 is in pancreas. We're excited about that and look forward to seeing data there in combination with FOLFOX. The two Phase 2 studies that you mentioned are randomized trials in non-small cell lung cancer. The first one is in the first line setting in PD-L1 high patients. And the second one is in the second line setting in the PD-L1 low setting, both in combination with I/O. We're absolutely excited to see data from those trials starting next year, which will inform our progress in that opportunity. As for RCC, you're right that we had the monotherapy activity there in that early Phase 1 study, which was exciting, and part of the basis of the back years, that this molecule is active in the monotherapy setting. I think in terms of that indication and other indications, we're still working through what our plan is. Some of that will depend on data that we get in these next couple of trials, as well as the data that we already have. We hope to be able to share more with you about our plans for full development of that molecule at our December R&D day. With respect to tanezumab, I think you had a question there on both the efficacy and the safety with respect to total joint replacements. On the efficacy, it's hard to make cross-trial comparisons. Of course, this is a different population, that's a more treatment resistant, more severe population than in those prior studies. Still, on balance, the efficacy looks quite comparable to what we would expect. Maybe some small differences in the placebo group from trial to trial. But this is a small trial. And we look forward to the full results coming. But all in all, I would say the efficacy data are where we expect them to be. And we're really, I think, excited as we said before about the potential of this molecule from an efficacy perspective. The question of course is, can we adequately discharge the safety risk? So the total joint replacement, there was an imbalance in this small study. We don't fully understand what drove that imbalance. I think there were a number of factors that we noticed about the imbalance in total joint replacements. One was that most of these events occurred in the follow-up period, rather than the on-treatment period. Another observation is that these events were generally in the patients who were most severe at enrollment. It was in their index joints, and it was not – in general, in most cases, it was not associated with any adverse event or any finding in the joint adjudication. So we'll keep our eye on that. And of course, the big readout for us with our partners, Pfizer, will be next year, when we get that large 56-week study. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Dan. Lola, if we can go to the next caller.

Certainly. And next it's Alex Arfaei with BMO Capital.

Great. Thank you. And congratulations on a positive REWIND readout. First on REWIND, Enrique, June 2019 seems like a long time to wait for the results. You mentioned you plan to file the indication in 2019. So when should we expect to see a new Trulicity label? Then I have a couple of questions on Verzenio, please. The market seems to have slowed down more than we expected. Just wondering if you could give us your thoughts there? You're gaining share, which is great, but what's going on with the overall market? And we noticed you moved up the timeline for the adjuvant study by one year on clinicaltrials.gov. Just wondering if you changed anything about the trial? Or is it just your expectations about, based on the powering of the study or expected benefits? Thank you very much. Philip Johnson - Eli Lilly & Co.: Great. Thank you for the questions, Alex. So timing for a potential label update on REWIND, Enrique, for you. And then, Anne, if you'd to handle what we're seeing for market growth with the CDK4/6 class and the change in timing on clinicaltrials.gov for the adjuvant study. Enrique? Enrique A. Conterno - Eli Lilly & Co.: Well, clearly, we are planning to pursue an indication under a submission in 2019 and a standard review. We will be looking at a label update in 2020. Of course, we are working as fast as we can to try to expedite that as much as possible. And we'll be working with the regulatory authorities. Unfortunately, we won't be able to share the REWIND data prior to ADA. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Anne? Anne E. White - Eli Lilly & Co.: Great. Well, thanks for the question on Verzenio. And, yes, we have seen some slowing in the growth of the CDK4/6 market, as others in the class have commented. However, we do still see potential growth, as more physicians trial this class and particularly as they trial Verzenio. So as you mentioned, our NBRx rate is in the high teens. And we continue to be pleased with its growth. And we are encouraged by a couple of specific factors. So first, as we continue to drive trial with Verzenio in the U.S., what we're seeing is that when physicians trial Verzenio, they have a really good experience. And they're likely to prescribe it again, so becoming adopters. And what seems to particularly resonate with physicians is the fact that patients with certain concerning clinical characteristics, that indicate a poorer prognosis, do well on Verzenio. So these are patients with liver metastases, a high tumor grade, visceral disease, or cancer that's not confined to the bone. And so we'll be publishing that additional data shortly. We're also very enthusiastic about the fact that we've received approval in Japan and Europe. So we see those markets as significant growth drivers. And then third, related your question around adjuvant, we do see potential future opportunity in the broader breast cancer market, following readouts in the HER2 positive population, our OS readout from the MONARCH 2 study. And then very importantly, the work, as you said, in adjuvant breast cancer. On adjuvant specifically, what we're seeing is that study is enrolling very well. It's more than 60% enrolled. So we're quite encouraged by that timeline. So we do expect results in 2021. And we really look forward to that market, because as you know, adjuvant is really twice the size of the metastatic breast cancer market. So a significant growth opportunity for Lilly in the future. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Anne. Lola, if we can go to the next caller.

Certainly. Next will be David Risinger with Morgan Stanley. Mr. Risinger? David R. Risinger - Morgan Stanley & Co. LLC: Yeah. Sorry. I was on mute. Can you hear me now? Philip Johnson - Eli Lilly & Co.: We can. Yes, Dave. David R. Risinger - Morgan Stanley & Co. LLC: Okay. Great. So Lilly's volume growth has been and is set to continue to be very strong. But could you please comment on three quick questions on pricing? First, the list price outlook for 2019 that you have in your planning assumptions? Second, your exposure to a step up in the donut hole fill in 2019? And third, your exposure to growth in co-pay accumulators in 2019? Thanks very much. Philip Johnson - Eli Lilly & Co.: Great, Dave. Thank you for the questions. Josh, if you'd like to answer those questions on expectations moving forward on price? Joshua L. Smiley - Eli Lilly & Co.: So, Dave, we'll do our guidance for 2019 in December, and we'll provide our pricing assumptions then. I can tell you for 2018 for the guidance that we gave, we're not assuming any additional price increases this year. In terms of exposure to the change in the donut hole provision, we've said before that when we look across our portfolio, it's about $200 million of incremental impact in 2019. And then on the co-pay accumulators piece, of course these impact the specialty drugs, particularly Taltz and Forteo for now. And we're – at least for where we are right now, we're comfortable that there is not a significant exposure here. David A. Ricks - Eli Lilly & Co.: Just maybe a follow on comment on that. I've seen notes from analysts as well as other industry commentators that, roughly in specialty segments, these are single-digit impacts in terms of patients actually exposed to the out-of-pocket costs of co-pay accumulators, net of industry actions and payer actions. And that's not really different for us with Taltz, which is the major product affected. So it's an issue, but it's not a huge driver of the overall picture. Philip Johnson - Eli Lilly & Co.: Great. Thank you. David R. Risinger - Morgan Stanley & Co. LLC: Thank you, guys. Philip Johnson - Eli Lilly & Co.: Thanks, Dave. Lola, if we can go to the next caller?

Certainly. And it will be Vamil Divan with Credit Suisse. Vamil K. Divan - Credit Suisse Securities (USA) LLC: Hi. Great. Thanks for taking my questions. So one just on Olumiant. Looks like still pretty good European uptake, but sort of limited uptake in the first few months on the market in the U.S. So maybe you can just talk about sort of access and sort of initial position interest in that product. And then the other one, I just – maybe a little bit of a different product we don't talk much about is Lartruvo. Obviously, still one of your newer medications. But I think it's asked about a little less. And I'm just trying to get a better sense of that market. I mean the growth is still there in the U.S. but slowing a little bit. And I'm just trying to get a better sense of how penetrated you think that product is into that market. And maybe a little bit more on the longer-term potential for that one to keep growing. Thanks so much. Philip Johnson - Eli Lilly & Co.: Great, Vamil. Thank you for the questions. So, Christi, if you'd like to talk about what we're seeing in terms of uptake access and physician experience here in the U.S. And then, Anne, over to you for what we're seeing with Lartruvo and the market opportunity there. Christi Shaw - Eli Lilly & Co.: Sure. So thank you for the question, Vamil. In terms of Olumiant, I will start with the EU as you suggested, or outside the U.S. The growth of Olumiant in volume in Europe in the last two quarters has actually been the fastest growing in volume for Lilly as a whole. And in Japan, we just were lifted in September on the two-week prescription. So we're seeing significant uptake now that that restriction is off. And in the U.S., we're getting a lot of usage. In terms of the uptake, we are giving samples in the office to physicians, so you won't see that on the uptake. But more importantly, what we're hearing from physicians is that their patients are having really positive feedback on our speed of onset. Just like we saw in Europe and the other 50 countries where we've launched, the efficacy continues to deliver. And really helping patients with the early onset of symptom relief, so they get back to the productive days of their life. which is significant. And as the physicians see those patients come back, it truly is changing. And then helps them obviously feel more comfortable in prescribing as well. And Olumiant is really key for us. It's not just in the U.S. RA, but we continue to evolve the indications for Olumiant. We have three Phase 3 studies, obviously, that we're recruiting for in atopic dermatitis, in lupus, and a Phase 2/3 adaptive study in alopecia areata. So as those readouts come out as well, we'll be looking for significant uptake of Olumiant in helping a lot of patients with high unmet need. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Christi. Anne? Anne E. White - Eli Lilly & Co.: Yes. So we are pleased with the uptake on Lartruvo, and it has been steadily increasing since launch. So as you saw the year to dates, we've had a 54% increase over last year and just a 41% increase in this quarter. And Lartruvo is the market leader now in the U.S. in first-line metastatic soft tissue sarcoma. It has about a 20% market share. And then we were excited see that it's now the market leader in the dox-eligible [doxorubicin-eligible] patients, passing [ph] dox focilfide (53:45) this year at a 36% share of market. And as you know well, Vamil, it's the only medicine in four decades that actually helps patient live longer when compared to dox alone. So we're also encouraged by the fact that we're seeing thought leaders fairly routinely refer to it as the standard of care. And growth in our top accounts, particularly, is very strong. In fact, 97% of the top 100 institutions have now posted sales since launch of Lartruvo. We are still seeing launch in Europe and still gaining access. So we still think there's potential for growth obviously in that market. Our major focus really is on driving awareness in the community and in the centers of excellence, where a lot of these key treatment decisions are made. So we do still see quite a bit of potential for growth at Lartruvo, though I will acknowledge it's an orphan disease population. And so at one point we will see penetration. But we don't see that yet. We still see a good potential growth and are pleased on how we're doing. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Anne. Lola, if we can go to the next caller, please?

Yes. It will be Louise Chen with Cantor Fitzgerald.

Hi. Thanks for taking my two questions. So my first question is on REWIND. Has this met your internal expectation for relative risk reduction? And have you historically talked about what kind of incremental sales opportunity it could mean for you? And then secondly, on the injectable CGRPs, how do you see this market landscape playing out with three approved products and more to come on the injectable and oral side? And do you think it will grow the entire market or take share from existing products? Thank you. Philip Johnson - Eli Lilly & Co.: Great. Louise, thank you for the questions. So, Enrique, another question on REWIND for you. And then, Christi, on the CGRP question, please. Enrique A. Conterno - Eli Lilly & Co.: On the expectations, of course. This is a positive trial. Trulicity is showing superiority in a broad range of patients with Type 2 diabetes. Philip Johnson - Eli Lilly & Co.: Great. Thank you. Christi? Christi Shaw - Eli Lilly & Co.: Yes. So we are extremely excited about the migraine marketplace. I mean you're seeing, as we've been discussing over the last year, the high unmet need with now tens of thousands of patients already being prescribed a preventive now. And I don't think I've talked to you since we actually received our label. So we're really happy with the label we received in terms of our differentiation. We have the 50%, 75%, and 100% migraine-free data that we're able to promote. Also our positive outcome for functional measures, which is unique for Emgality, is in the label. And we just presented data at the American Headache Society that Emgality works fast. Our induction dose, so patients can actually get the medication quickly, and they get it in the doctor's office where they teach them how to do the autoinjector. They do it themselves. And then they go and take it once a month then on. Lastly, the other differentiation is we got the breakthrough therapy designation in cluster. And we're very excited about that for patients who have had no treatment – no approved treatment – in that suicide headache population. So as we look at the marketplace, we see it continuing to grow. We like our chances in terms of being able to compete. And with the competitive agents and oral agents coming out next year, those right now are in a different class that will compete with lasmiditan and not the preventive therapies initially. So with the entire franchise we have in migraine of both preventative and acute, we think we're a leader. And we know we're a leader in pain and migraine and will continue to prove it out over time. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Christi. Lola, if we can go to the next caller?

And next we'll go the line of Seamus Fernandez with Guggenheim Securities.

Thanks very much for the question. So just a couple. Can you help us understand a little bit the opportunity for Emgality in cluster headache specifically? Is this a large new patient population that we should be thinking about? Or is it more an indication that will firm up and differentiate your market position? And then second, Enrique, can you talk more about the international growth opportunity for the GLP-1 class overall? When I look at the class, we're looking at about a third of sales relative to the U.S. And frankly, when we look at other large classes, the opportunity seems to be like it would be quite a bit greater. And I just would love to know what you see as the opportunity internationally? Or perhaps what the holdbacks are? Thanks so much. Philip Johnson - Eli Lilly & Co.: Great. Seamus, thank you for the questions, and welcome back to you as well. Good to hear your voice on the line. Christi, if you'll take the question on the opportunity for cluster for Emgality. And then, Enrique, for the international growth opportunity for the GLP-1 class. Christi Shaw - Eli Lilly & Co.: Thank you, Seamus, for the question. As I said earlier, we are so excited to help these patients with cluster. And although the number of patients who have cluster is obviously significantly less than the general moderate to severe migraine population, it is such a high unmet need that we're privileged to provide that for patients. And the second part of your question, I think it's good for that. But it's also obviously confirming again the efficacy of Emgality. As I stated before, Emgality is the only one who actually demonstrated efficacy in 100% of – being able to relieve 100% of migraines in any given month. And that efficacy, now coupled with cluster, which is significant and no one has ever showed efficacy, that halo effect across Emgality in migraine we expect will be a benefit. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Christi. Enrique? Enrique A. Conterno - Eli Lilly & Co.: So there is a significant opportunity, just like in the U.S., outside of the U.S. for the GLP-1 class. The GLP-1 class is growing in the mid-20s outside of the U.S. in most markets, so very healthy growth. Something unique when we look at the international markets is the size of the basal insulin market, which, as we know, represents a significant opportunity, as we see GLP-1s being the injectables of choice, first injectables prior to basal insulin. So a very significant opportunity, but we see that playing out over time. Philip Johnson - Eli Lilly & Co.: Thank you, Enrique. Appreciate it. If we can go to the next caller, please, Lola?

Certainly. It'll be Steve Scala with Cowen. Steve Scala - Cowen & Co. LLC: Thank you. A couple questions. Regarding dropping the N3pG-plus BACE in Alzheimer's disease, the early data was great. So what was the reason for dropping the product? And it was mentioned that monotherapy continues. But I thought the monotherapy was discontinued earlier this year. Or has the monotherapy restarted? So that's the first question. Second question is on Jardiance. Why are you not filing for type 1 diabetes as an insulin adjunct in 2018, given the positive data? I think that had been the expectation that you would file this year. Thank you. Philip Johnson - Eli Lilly & Co.: Great, Steve. Thank you for the questions. Dan, if you'd like to answer where we are with the N3pG and BACE combo, and N3pG more broadly. And then, Enrique, if you'd like to take the type 1 filing question. Dan? Daniel M. Skovronsky - Eli Lilly & Co.: Yeah, thanks, Steve. Sorry for the confusion there. So on the N3pG BACE, we've dropped the BACE arm of this trial, so N3pG does continue. The decision to drop BACE was based on a couple factors. One was what we've seen across the field with various BACE inhibitors, where these drugs don't have a benefit. And they actually cause some increased rate of cognitive worsening. With our particular BACE inhibitor, we did see some increases in psychiatric adverse events that gave us some pause, as well as changes on imaging, increased rate of brain shrinkage. So that was the basis for the decision to discontinue BACE, despite as you said great preclinical data, showing a combination of BACE inhibition and N3pG to be beneficial in mice. N3pG, however, which is our plaque-clearing antibody, which really shows, I think, deep and rapid clearance of amyloid plaque from the brain, continues on in this Phase 2 study. This is designed to demonstrate evidence of efficacy. And we're really excited about that. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Dan. Enrique? Enrique A. Conterno - Eli Lilly & Co.: Yes. On Jardiance and type 1, clearly, as part of the EASE studies, we showed that Jardiance as an adjunct to insulin in patient with type 1 can have additional level of glycemic control. And we saw this across all doses that we basically studied. At this point in time, we are working with BI [Boehringer Ingelheim] on the regulatory next steps. And we hope to be able to share more shortly. Philip Johnson - Eli Lilly & Co.: Thank you, Enrique. Lola, next caller, please?

And at this time, there's no one in queue. Philip Johnson - Eli Lilly & Co.: Fantastic. Dave, then if you'd like to go ahead and conclude the call with some final remarks. David A. Ricks - Eli Lilly & Co.: Great. Thanks, Phil. Well, we appreciate your participation in today's earnings call and your interest in Eli Lilly & Company. Our strong execution through the first nine months of 2018 highlights the continued progress towards and the increasing confidence in the delivery of our revenue and profitability goals for 2020. We have seen continued pipeline progression, including our 10th new product launch since 2014; compellingly stage opportunities for tirzepatide, mirikizumab and pegilodecakin; and superiority of Trulicity in the ambitious REWIND CV outcome study. This progress underscores the opportunities for growth beyond 2020. We look forward to providing a more detailed update on our pipeline during our December 19 Investor Meeting. Thanks again for dialing in. Please follow up with our IR team if you have questions we have not addressed on the call. Hope everyone has a great day.

And, ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and using AT&T Executive Teleconference. You may now disconnect.