Lilly(Eli) & Company (LLY) — Q1 2021 Earnings Call Transcript

Good morning. Thank you for joining us for Eli Lilly and Company's Q1 2021 Earnings Call. I'm Kevin Hern, Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chairman and CEO; Anat Ashkenazi, Chief Financial Officer; Dan Skovronsky, Chief Scientific Officer; Anne White, President of Lilly Oncology; Ilya Yuffa, President of Lilly Bio-Medicines; Mike Mason, President of Lilly Diabetes. We would also like to welcome Jake Van Naarden, CEO of Loxo Oncology at Lilly, who will be joining us today and in the future to answer your questions about the discovery and early-stage oncology efforts he's leading. Now I'll turn the call over to Dave. We're also joined by Sara Smith and Lauren Zierke of the Investor Relations team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to various factors, including those listed on Slide 3. Additional information regarding factors that could cause actual results to differ materially is included in our latest Forms 10-K and subsequent Forms 10-Q and 8-K filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is intended for the benefit of the investment community. It is not intended to be promotional and should not be considered sufficient for prescribing decisions. As we move to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures. Now I'll turn the call over to Dave for a summary of our results from the first quarter of 2021.

Thank you, Kevin. Lilly began 2021 with the aim of reaching over 45 million patients by growing our key brands globally, advancing our pipeline after a successful 2020, and improving efficiency in our SG&A while investing in research for sustainable long-term growth. We are satisfied with the progress we've made in these goals during our first quarter while also providing hundreds of thousands of COVID-19 antibody doses to aid in the ongoing fight against COVID-19. As we discuss this quarter's results, we will strive to clarify the underlying trends in our core business. We understand this quarter has complexities due to increased consumer stock from Q1 2020 in our quarterly comparison and heightened R&D spending on COVID-19 therapies in 2021. These factors, along with fluctuations in foreign exchange rates and various changes to U.S. government purchase agreements for COVID-19 antibodies throughout the quarter, contribute to a more detailed earnings call and press release. We recognize that those monitoring sell-side model performance may experience some disappointment. However, beneath these factors lies a robust and expanding core business for Lilly, with numerous positive pipeline readouts supporting long-term growth across our key therapy areas. We continue to anticipate that our top line growth and margin expansion will accelerate throughout this year. In this quarter, revenue increased by 16% compared to Q1 2020, or 13% when adjusted for constant currency. This growth was driven entirely by volume, which rose by 17 percentage points. As mentioned in Q1 2020, we had approximately a $250 million COVID-19-related inventory build that affects the year-over-year comparison. Excluding revenue from COVID-19 antibodies and the Q1 2020 inventory build, our core business grew by 7% this quarter. Key growth products continued to generate volume and revenue growth, now accounting for 52% of our core business this quarter. Our non-GAAP gross margin stood at 75.4% in Q1, and 78% if we exclude foreign exchange impacts on international inventory sold. Our non-GAAP operating margin was 27.5% for the quarter and 30.1% after accounting for foreign exchange. While foreign exchange on international inventories sold had a minor effect on our results in 2019 and 2020, the first quarter of 2021 saw over 250 basis points of negative impact on our gross margin and operating margin, which is solely a noncash accounting item. On the pipeline side, we reached several milestones since our Q4 earnings call, including the initiation of Phase III trials for pirtobrutinib and more obesity studies in tirzepatide's SURMOUNT program; the FDA granted Emergency Use Authorization for administering bamlanivimab and etesevimab together as COVID-19 treatment; positive Phase III results from tirzepatide's SURPASS-2, 3, and 5 trials in type 2 diabetes; and encouraging Phase III results for mirikizumab in ulcerative colitis and baricitinib in alopecia areata. A decade ago, Lilly decided to invest in immunology with the initiation of Phase III for ixekizumab, now known as Taltz. Since then, we've included Olumiant in rheumatoid arthritis and several new indications with first or best-in-category data for Taltz and Olumiant in rheumatology and dermatology. This year, we aim to expand our immunology strategy with the successful completion of Phase III studies for mirikizumab in ulcerative colitis, marking the first IL-23p19 antibody to show results in this context. We are also optimistic about lebrikizumab's potential to stand out from Dupixent regarding itch, sleep, and safety, primarily in conjunctivitis, in a growing class with significant unmet medical needs. We expect multiple Phase III results for lebrikizumab later this year, both as a monotherapy and in combination with corticosteroids. We look forward to reaching more patients with challenging immunology conditions in the future. Additionally, we entered multiple business development agreements, including in-licensing a RIPK1 inhibitor from Rigel Pharmaceuticals and divesting QBREXZA, which, along with lebrikizumab, was part of the Dermira acquisition last year. We also distributed nearly $800 million in dividends this quarter, with a 15% increase in dividends per share compared to last year. Moving on to key events since our last earnings call, we announced plans for a webinar to detail our commitment to environmental, social, and governance issues for the investment community, media, and the public on May 4, 2021. We also disclosed two planned retirements of long-tenured executives and several additions to our leadership team. I would like to express gratitude to Myles O'Neill, our President of Lilly Manufacturing, and Melissa Barnes, our Chief Ethics and Compliance Officer, for their leadership and service. We warmly welcome Edgardo Hernandez, who will succeed Myles; Alonzo Weems, who will take over for Melissa; and Diogo Rau, who will join Lilly next month as Chief Information and Digital Officer, succeeding Aarti Shah, whose retirement was announced last fall. Lastly, we are pleased to announce the appointment of Anat Ashkenazi as our CFO. Anat brings extensive experience, having served as the CFO across every part of our value chain. For the past four years, she has led a significant portion of our finance organization, working closely with me, our Executive Committee, and our Board to develop and implement our annual business and long-term strategic plans. I am confident that Anat will excel as CFO of Lilly, and I expect continuity in our priorities, strategy, and execution due to her deep involvement in these areas. Anat, welcome to our leadership team, and I will now turn the call over to you for our Q1 results.

Thank you, Dave. Slide 7 provides an overview of our non-GAAP financial performance for the first quarter. As Dave noted, we experienced a 16% revenue increase this quarter compared to Q1 of 2020, or 7% when excluding COVID-19 antibody revenue and the Q1 2020 benefits related to COVID stocking, indicating positive momentum for our core business. Last year, prioritizing the health and safety of our employees, patients, and providers, we transitioned from in-person to mainly virtual interactions, beginning 2021 with fewer sales reps active in the U.S. We are confident in our ability to engage with providers virtually and are pleased to report that by the end of Q1 2021, most U.S. reps were back in the field. As we navigate this initial recovery phase, our focus is on operational excellence in both virtual and in-person settings, and we are encouraged by the growth in volume and market share for key brands despite ongoing pandemic-related challenges for several product categories. Looking at gross margins, they fell by 490 basis points to 75.4% of revenue. When adjusting for foreign exchange effects on international inventory sold, gross margin was 78%, a decline of 260 basis points mainly due to an unfavorable product mix influenced by COVID-19 antibody sales, as well as lower realized prices and revenue. Regarding operating costs, they rose by 11% compared to the same quarter last year, with marketing, selling, and administrative expenses increasing by 2%, while R&D expenses surged by 21%, primarily due to $220 million in investments in COVID-19 therapies. Excluding COVID-related expenses, R&D grew by 5%, reflecting ongoing investments in our late-stage pipeline. Total operating expense growth was under 3% compared to Q1 2020 when excluding investments in COVID-19 therapies. Our operating income increased by 6% from Q1 2020, while operating income as a percentage of revenue was 27.5% for the quarter, a decline of 250 basis points compared to the previous year, entirely attributed to foreign exchange impacts on international inventories sold. In terms of other income and expense, we reported income of $35 million this quarter, a significant improvement from an expense of $73 million in Q1 2020, primarily due to a favorable European patent settlement for Alimta. As noted earlier, starting in 2021, we are excluding gains or losses from equity investments in our non-GAAP metrics and have revised our 2020 figures in the investor workbook for year-over-year comparison consistency. Our effective tax rate stood at 10.8%, down 210 basis points from the same quarter last year, reflecting net discrete tax benefits, notably a larger net benefit in Q1 2021. At a high level, net income and earnings per share rose by 16%. On Slide 8, we analyze the contributions of price, rate, and volume to our revenue growth globally. U.S. revenue increased by 18% compared to the first quarter of 2020, although there was a slight revenue decline when excluding COVID-19 antibodies. Adjusting for Q1 2020 stocking benefits, our core business in the U.S. grew by 5%. This growth was driven solely by volume, led by Trulicity and Taltz, somewhat offset by a modest decline in pricing. The price impact reduced U.S. revenue growth by 6% this quarter, primarily due to Taltz's improved access and higher contracted rates, even with a slight list price increase. Without considering Taltz's recent success at ESI, we faced a low single-digit net price decline in Q1 2021. We previously anticipated that Taltz would face price pressures in Q1 due to enhanced access, which included adjustments in prices for existing patients and new patient updates. We believe volume growth from this enhanced access will outpace pricing pressures, supporting a return to sales growth for Taltz in the coming quarters. In Europe, revenue grew by 15% in constant currency. Excluding COVID-19 antibody revenue and the impact of Q1 2020 stocking, revenue rose by 5% in constant currency, driven entirely by volume increases for Alimta, Trulicity, and Taltz, despite various lockdowns across Europe. In Japan, revenue dropped by 8% in constant currency due to decreased volume for Cialis and Forteo, although Japan's overall performance improved by 5% when excluding these post-patent products. In China, we saw a 26% revenue growth in constant currency, largely driven by a 32% volume increase, especially in Tyvyt and our diabetes portfolio. As highlighted on Slide 9, our key growth products are significantly driving volume growth, despite the Q1 2020 stocking impact. These newer products contributed over 9 percentage points of growth this quarter while COVID antibodies added around 14 percentage points. This robust volume growth was partially balanced by declines in post-LOE products and insulin, which were also affected by the previous year's stocking impact. Slide 10 showcases the contributions of our key growth products, which generated approximately $3.1 billion in revenue this quarter, accounting for 52% of our core business revenue. We are particularly optimistic about Trulicity’s performance, which has transformed into the most prescribed GLP-1 in the U.S., capturing a 48% market share of injectables. Its weekly script volume has risen significantly, and Trulicity continues to show the highest adherence among diabetes medications. The introduction of new dosage options has allowed it to attract both existing patients and new ones. As 2021 begins, we are encouraged by Trulicity’s growth trajectory in the injectable class and overall market share. As for capital allocation, Slide 11 details our investments in Q1, totaling nearly $3 billion aimed at future growth through business development, capital expenditures, and R&D investments after tax. Additionally, we returned nearly $800 million to shareholders in dividends. We are committed to leveraging our strong cash flow to support the development of new medicines through both internal and external channels, as demonstrated by a recent licensing agreement for a RIP kinase 1 inhibitor from Rigel Pharmaceuticals. We will continue to explore additional licensing opportunities and acquisitions that could generate shareholder value and enhance our growth potential.

Thank you, Anat. 2021 has begun positively for R&D at Lilly with significant pipeline progress and additional potential catalysts on the horizon. Before updating on the broader portfolio, I want to take a moment to highlight the results from tirzepatide's initial readouts in the Phase III SURPASS program, particularly the strong outcomes from SURPASS-2, the head-to-head trial against semaglutide 1 milligram. This program is well-named, as we have seen tirzepatide exceed our expectations in these early results, showing a significantly greater reduction in hemoglobin A1C, weight loss, and a higher percentage of patients achieving normal glucose levels compared to any GLP-1 available. The efficacy analysis shows tirzepatide displaying superior performance across various patient populations, comparators, and background medications. Notably, the 5-milligram dose has demonstrated impressive A1C reductions across all patient segments, while higher doses offer even further glucose control with reductions exceeding 2.5% in A1C levels. Moving forward, we observe how tirzepatide performs at all doses in terms of patients attaining HbA1c levels below 5.7%, the standard for normal glycemic control in non-diabetic individuals. This finding could reshape expectations around the impact of diabetes medications. According to the efficacy analysis from SURPASS-1, 2, and 3, around half of patients on the 15-milligram dose attained this remarkable level of A1C control. In SURPASS-5, involving patients treated with background insulin glargine, 62% of those receiving 15-milligram tirzepatide reached this A1C level compared to just 3% in the placebo group. This is significant, considering these patients have an average diabetes duration of over 13 years. Achieving such glucose control in this population was previously unthinkable before the introduction of GIP/GLP-1 agonists like tirzepatide. Our analysis of weight reduction across these studies further reveals efficacy levels that were once considered unattainable with incretin therapy for type 2 diabetes. Studies like AWARD-11 and SUSTAIN FORTE highlight the limitations of solely utilizing the GLP-1 mechanism for weight loss and A1C reduction, as the effectiveness appears to dissipate with increasing GLP-1 doses. Significantly, data from SURPASS-2 indicates that the dual GIP/GLP-1 receptor agonist display performance beyond the plateauing seen in GLP-1 responses, which we believe underscores the benefits of integrating GIP mechanisms. The 15-milligram dose achieved a 14% weight reduction in SURPASS-3, with the insulin degludec comparator showing a 3% weight increase, while it nearly doubled the weight loss of 1-milligram semaglutide in SURPASS-2. The 5 and 10-milligram dosages delivered statistically superior weight reductions, hitting as much as 11% on the 10-milligram dose compared to placebo or active comparators. It's encouraging that we haven't seen a plateau in weight loss curves over the 40 and 52-week duration of these studies at the higher doses. We are excited about the potential outcomes when tirzepatide is used over a longer treatment period in future studies. We had strong confidence in the efficacy data from Phase II, although we lacked comprehensive insights regarding safety and tolerability. The initial Phase II trial involved only about 200 patients over 26 weeks on therapy. Upon reviewing slides from our SURPASS readouts, we are pleased to report that the overall safety profile aligns with that of established GLP-1 receptor agonists, with mild to moderate gastrointestinal adverse events being the most frequently reported. We are particularly encouraged by the response to the optimized dose escalation scheme, which has shown significant improvements in tolerability compared to Phase II, including lower rates of nausea, diarrhea, and vomiting, aligning with findings from well-tolerated incretin therapies like Trulicity. The discontinuation rates due to adverse events ranged from 3% to 11% across doses in these trials. Looking at the data more broadly, we are excited about the overall safety and efficacy results, particularly for the 5-milligram dose, which has consistently outperformed semaglutide 1 milligram in both A1C reduction and weight loss in SURPASS-2. This data suggests that the 5-milligram dose could serve as an effective first incretin therapy, providing best-in-class efficacy with comparable or superior tolerability to other leading incretins. If approved, this low maintenance dose may be suitable for many patients, knowing that higher doses are available for ongoing disease management. Tirzepatide could empower patients to achieve treatment goals that perhaps weren't thought achievable before in type 2 diabetes, aiding in normal glucose control and substantial weight loss, with the highest dose yielding nearly double the weight loss of semaglutide 1 milligram in SURPASS-2. In today's landscape of type 2 diabetes management, characterized largely as treat-to-fail, tirzepatide could offer physicians new options for early glucose and weight control. This has real potential to enhance organ protection and significantly reduce disease complications. We will continue to explore this potential through ongoing and planned studies in diabetes, obesity, heart failure, and NASH. We have also initiated SURMOUNTs-2, 3, and 4 for tirzepatide in obesity, with top line results from SURMOUNT-1 expected next year. Regarding diabetes, we anticipate a top line readout from SURPASS-4, targeting a high cardiovascular risk population, which is pivotal for our cardiovascular safety assessment and essential for global submissions in type 2 diabetes. The completion of this trial was contingent on achieving a specified number of cardiovascular events, and we have met this requirement, allowing us to proceed to finalize patient treatments and safety visits before concluding the trial. We expect to report topline results by mid-year. We look forward to presenting the results from SURPASS-1, 2, 3, and 5 at the ADA 2021 Virtual Meeting, with a 90-minute symposium scheduled for the morning of June 29. While we are thrilled by tirzepatide's progress, we also believe that innovation in the incretin area continues. At ADA, we will share preclinical and Phase I data for our glucagon/GLP/GIP triagonist, or GGG, which we plan to advance into Phase II later this quarter. We have set a high standard for advancing molecules in this area, recently elevated by tirzepatide's results. While still early in development, we believe GGG has the potential to surpass the advantages seen with tirzepatide, with expectations for greater weight loss while maintaining glucose-lowering effectiveness. Additionally, due to glucagon's direct effect on the liver, we anticipate benefits for NASH. Our ambitious Phase II program aims to assess GGG for obesity, type 2 diabetes, and NASH. Alongside our next-generation incretins, we are enthusiastic about our innovative weekly insulin, basal insulin-Fc. Through the development of Trulicity, Lilly has established weekly incretin therapy as the norm in the GLP-1 field. With tirzepatide, we strive to position incretin-based therapies as the standard in the first injectable treatment for type 2 diabetes. For patients needing basal insulin alongside their incretin therapy, our goal is to make weekly insulin therapy feasible, aiming to eliminate the need for daily injections. We will provide an update at ADA on our new weekly basal insulin. We plan to hold an investor call on July 1 to discuss the data presentations at ADA regarding tirzepatide, GGG, and our weekly basal insulin. While the advancement in our diabetes portfolio is impressive, Lilly has continued to progress our overall pipeline this quarter. Recent developments since our last earnings call include notable advancements with donanemab. At AD/PD, we detailed results indicating that donanemab met its primary endpoint by significantly slowing cognitive decline relative to placebo, as measured on the integrated Alzheimer's disease rating scale in early symptomatic Alzheimer's disease patients. Secondary analyses showed that donanemab consistently slowed cognitive and functional decline, with improvements ranging from 20% to 40% at various time points compared to placebo, achieving nominal statistical significance. On the clinical side, as mentioned during our last call, we expanded TRAILBLAZER-ALZ 2 into a Phase III study, which is now enrolling rapidly. Today, we announce the initiation of a new Phase III study, TRAILBLAZER-ALZ 3, focused on asymptomatic Alzheimer's disease. This trial aims to enroll patients with Alzheimer's brain pathology who do not yet exhibit clinical symptoms, with the primary endpoint designed to assess the development and progression of Alzheimer's symptoms. We expect the enrollment process to take approximately three years to collect a sufficient number of events. The trial will explore whether a brief treatment course of donanemab at the outset can prevent symptom progression over the following years. These trials are technically challenging to enroll and conduct; however, we are optimistic due to our expertise in biomarkers, which includes both PET imaging and our plasma P-tau217 assay. On the regulatory front, based on current FDA feedback, we do not foresee a near-term submission or approval pathway based solely on the first TRAILBLAZER-ALZ study. The unmet need in Alzheimer's disease remains substantial, and while we are focused on expediting enrollment and completion of our second pivotal study, TRAILBLAZER-ALZ 2, we are also actively pursuing opportunities for early submission through engagement with the FDA.

Thanks, Dan. Before we go to Q&A, let me briefly sum up the progress we've made to start the year. Amid several moving pieces in a challenging health care environment, we are excited by the momentum we are seeing. Our business grew 16% in the first quarter with the core business growing 7%, adjusted for COVID-19 antibody revenue and last year's COVID-19-related inventory stocking benefit. Our top line growth continues to be strong, driven primarily by volume across our key growth products, which account for more than half of our core business. Net of the significant impact from foreign exchange on international inventories sold, our operating margin was in line with our expectations as we continue to expect operating margin expansion throughout the year and further expansion in years to come. We made significant progress developing new medicines with many more data readouts expected this year. Advances for tirzepatide, donanemab, pirtobrutinib, Verzenio, mirikizumab, Retevmo, and Olumiant serve as a reminder of the breadth and depth of opportunities we have to sustain robust long-term growth. We returned nearly $800 million to shareholders, being increased dividend, reflecting confidence in the ongoing strength of our business. I want to say thank you to my Lilly teammates, whose commitment to excellence and dedication to our purpose of bringing innovative new medicines to patients is inspiring and drove these accomplishments amidst ongoing pandemic headwinds. While our people, health care providers, and patients continue to face near-term challenges associated with COVID-19, our long-term outlook is as bright as ever. This concludes our prepared remarks. And now I'll turn the call over to Kevin to moderate the Q&A session.

Thanks, Dave. Toni, can you please provide the instructions for the Q&A session? We're ready for the first caller.

I have two questions regarding the pipeline. First, on Verzenio, did I understand correctly that the FDA is requesting updated overall survival data as part of their review? When do you expect to have that data, and does this change the approval timelines in any significant way that we should consider? Secondly, regarding tirzepatide, based on the data from the SURPASS studies, has this influenced your perspective on which patient populations to target commercially or your go-to-market strategy? Additionally, as tirzepatide approaches market entry, do you anticipate significant switches from Trulicity, or is the growth of tirzepatide primarily about attracting new patients and expanding the overall market?

Well, thanks, Chris, for the question on Verzenio. So we will be delivering this data set to the FDA without delaying our standard review timing. We can't really comment on what the FDA will do with the data or the application, but these discussions are progressing as planned. Important to note, as the data matures, I think, as Dan said, given the strength of the DRFS hazard ratio, remember, it was a 0.687 hazard ratio with a very strong p-value, we are highly confident that the OS will trend in favor of Verzenio. So really, what we believe we're discussing is when that will occur. So obviously, as I said, we can't comment on the discussion with FDA, but we do look forward to working with them on bringing this medicine to patients. And maybe just a comment to reference how immature this data is. At the time of the interim analysis that we published in JCO late last year, there were 39 deaths in the abema arm and 37 in the control arm. So that makes it really challenging to interpret this data when there's over 5,000 patients in the study. Thanks for the question.

Chris, thank you for your question. The tirzepatide results have not altered our strategy for positioning it in the marketplace. We are very pleased with these outcomes and feel fortunate to have both Trulicity and tirzepatide in our portfolio. Our aim is to optimize our entire incretin offering. Trulicity has a solid market presence, as demonstrated by our market share growth despite competition from Ozempic and Rybelsus. This strong position will continue. Regarding tirzepatide, its dual incretin mechanism, particularly the GIP component, is a significant advancement. While we haven't seen a way to restore individuals with type 2 diabetes back to normal A1C levels, we've successfully helped 50% to 60% of those affected, which is remarkable. Additionally, with the highest dose, we've observed weight loss of up to 14%. Considering that 90% of those living with type 2 diabetes are overweight or obese, early treatment is crucial. This raises the question of why we would prescribe anything else initially or delay the benefits. We believe tirzepatide could revolutionize the market, promoting earlier incretin use, specifically its dual mechanism, and significantly grow the incretin market. Tirzepatide will likely attract new patients who might have chosen Trulicity instead, including those who require greater efficacy. Our primary focus will be to fundamentally change and disrupt the type 2 diabetes landscape by encouraging earlier incretin usage with tirzepatide.

Also have two pipeline ones. Just want to get your perspective on mirikizumab, the decision to focus on just IBD. You have good head-to-head data in psoriasis. So is it more of a commercial focus? Or is it that you want to focus more on Taltz and psoriasis? And then in Alzheimer's, you'll have zagotenemab data in the second half of this year. How are you thinking about the opportunity to combine potentially with donanemab? I wasn't sure what steps need to happen prior to thinking about that type of trial? And maybe from a regulatory perspective, what do you think would be a gating factor?

Great. Geoff, thank you for the question. On mirikizumab, really as we see the greatest opportunity for unmet need for patients and we've said all along, we believe that mirikizumab has the greatest opportunity in GI, in IBD, in ulcerative colitis, and Crohn's disease. We were pleased with the LUCENT-1 results. And so we're looking forward to seeing the maintenance data at the early part of next year. In terms of psoriasis, as we take a look at the market and unmet need, we do continue to believe that Taltz is the gold standard and best in disease and believe that really is a market well served. And so the decision from a portfolio standpoint is to focus our efforts in places where we believe we can have the greatest unmet need. And GI is where we're focused for mirikizumab.

Yes. Thanks, Geoff, for the question on zagotenemab, our anti-tau antibody. Before I come to combinations, maybe I'd just handicap this Phase II trial quickly. The pro here in favor of tau is clearly genetic validation and pathologic validation of the target. It's a great target for Alzheimer's disease. The cons here that we have to acknowledge is data from other companies' tau antibodies, which hasn't been particularly promising, and the difficulty in hitting the tau target in the brain. Now we have a differentiated antibody here that binds just aggregated tau, so perhaps there's reason to think we could get different results. We're certainly eagerly awaiting those data in the second half of the year. And you're exactly right, if we see efficacy, combination would be an important consideration here. For sure, the general theme of combining an anti-amyloid drug with an anti-tau drug is a good one, particularly when you have a drug like donanemab, where you can completely clear amyloid plaques with a limited duration of therapy and then perhaps at that moment, intervene with an anti-tau drug. I do think that's the future. It's something we're actively considering, pending, of course, data on the tau antibody.

Sure. So on Taltz, first, let me just say we're really pleased about the progress we're making on Taltz and the growth that we're seeing with the step-up in access upgrades, ESI and beyond. And so as we take a look, even though that we've had some price impact in Q1, there are some elements there where we have a number of patients that were on medical exception that are now in the rebated contract that we have with ESI. Of course, we're also seeing an increase in overall volumes with ESI. What's encouraging is that we're not only seeing improvements in overall volume based on switches, we're also seeing significant improvement in our new therapy starts. And so we're, in dermatology, now the leading share in dermatology with over 19% share. And then in rheumatology, we're almost doubling our share from the previous year. And so as we think about the year in terms of growth, we do believe we'll get to net sales growth in Q2, and we'll continue to accelerate that volume growth throughout the year. The contracting that we have for Taltz goes beyond 1 year. And so we're encouraged about the volume growth of over 20% now, and we continue to see encouraging signs in the market.

Thank you, Vamil, for your question regarding TRAILBLAZER-3 and our enrollment objectives. While we won't delve into extensive details, we anticipate this to be a large trial with thousands of participants, and we have set ambitious enrollment targets. Although we don't yet have all the specifics on how to reach these targets, our aim is to complete enrollment within approximately a year, which is quite exciting. Conducting an Alzheimer's prevention trial is logical, considering what we know about the science and biology behind the disease and its relationship with amyloid plaque accumulation in the brain. However, there have been two major challenges that have made these trials less feasible. The first challenge is patient recruitment, which has shifted from being nearly impossible before the introduction of amyloid PET scans to being very difficult with those scans, as we experienced during the A4 trial. Now, the introduction of the plasma tau-phospho-tau217 assay makes recruitment very feasible, representing a significant advancement for this trial. The second challenge relates to the target population, which is younger and asymptomatic compared to typical Alzheimer's patients, and involves introducing a long-term therapy likely requiring lifelong infusions. We believe we have mitigated this concern with donanemab, allowing for a limited treatment duration that provides effective plaque clearance. We are therefore enthusiastic about the TRAILBLAZER-3 trial.

Okay. Thanks, Kevin. We appreciate your participation in today's call and your interest in Eli Lilly and Company. 2021 has begun with good momentum in our underlying business. We remain focused on executing our innovation-based strategy to bring new medicines to patients and create value for all our stakeholders. As we continue to scale our diverse commercial portfolio, complemented by a pipeline of industry-leading opportunities, we believe Lilly continues to be a compelling investment. Thanks again for dialing in today. Please follow up with our IR team if you have any questions we have not addressed on today's call. Hope everyone has a great day.