NEW YORK (Map) - NEW YORK, Dec. 6 /PRNewswire-FirstCall/ -- At its annual meeting with the investment community, Eli Lilly and Company (NYSE: LLY) today highlighted the progress on its expanding pipeline of innovative molecules and marketed products, provided investors with sales and earnings guidance for 2008, and reviewed the transformation efforts that the company is making to succeed in an increasingly challenging healthcare environment.

Transforming Lilly to Deliver Better Patient Outcomes

"We are changing our business model to provide a better value proposition to our customers," said Sidney Taurel, chairman and chief executive officer. "The Lilly we are evolving to will be a patient-centered enterprise that leverages the increasing role of tailored therapeutics. More specifically, we will focus our business on optimizing individual patient outcomes by providing patients with the right drug at the right dose at the right time. We are already seeing this concept put into action, most recently as we complete the submission package for prasugrel, where a tailored dose may provide a more favorable outcome for specific patient subpopulations."

Taurel then laid out a forward-looking transformation plan for the company. "We will also create greater value by fundamentally transforming the way we are organized and the way we work. Our goal is to build out a fully integrated pharmaceutical network, leveraging talent, expertise and resources on a global scale. This new way of doing work expands our capacity and our reach, reduces our fixed infrastructure, increases our flexibility and lowers our costs and risks. It is one part of our broader productivity strategy, which also includes reducing on-board headcount and using Six Sigma to continuously improve performance."

Lilly reconfirmed its 2007 financial guidance. Pro forma sales are expected to grow in the low double digits and reported sales are expected to grow in the mid-teens. Pro forma adjusted earnings per share are still expected to be in the range of $3.50 to $3.55 while reported earnings per share are still expected to be in the range of $2.74 to $2.79. Pro forma adjusted results exclude items described in the reconciliation tables later in this press release and also assume the ICOS acquisition was completed January 1, 2006. For 2008, Lilly anticipates sales growth in the mid- to high-single digits and earnings per share within the range of $3.85 to $4.00. Through 2011, the company expects to deliver low double-digit compound annual earnings per share growth.

Leveraging Operational Success to Drive 2008 Performance

Lilly's operational performance in 2007 has been exceptionally strong and positions the company to succeed in 2008 and beyond. Through the first three quarters of 2007, sales have grown 13 percent on a pro forma adjusted basis, or 17 percent on a reported basis. The company has raised its earnings per share guidance three times and expects to deliver full-year EPS growth of 16 to 17 percent on a pro forma adjusted basis, or 12 to 14 percent on a reported basis. The company expects 2008 sales to grow in the mid- to high-single digits, driven primarily by increased volume and strong sales growth for Cymbalta(R), Cialis(R), Byetta(R), Alimta(R) and Humalog(R). For 2008, the company projects that seven products will reach $1 billion or more in sales.

According to John Lechleiter, Ph.D., Lilly president and chief operating officer, "Our strong results reflect improved execution across all aspects of our business. The majority of our sales growth has been volume-driven, while at the same time we are generating positive leverage by improving our gross margin and growing sales faster than operating expenses. In addition, Lilly continues to focus on securing pricing, reimbursement and access for our products from public and private payers by demonstrating the value these products deliver. As a result of our sales and marketing efforts in the U.S. and Europe, every one of our five key growth brands is outgrowing the market in which it competes. Our performance is encouraging not only in the U.S., Europe and Japan, but also in China, an important growth market where Lilly continues to make significant financial investments."

Lechleiter then highlighted the market potential for many of Lilly's key growth products, including many with new indications and line extensions under development.

Cymbalta

In the U.S., Cymbalta is outgrowing all branded competitors in total prescription share in the primary care, psychiatry and long-term care segments. The strong performance reflects Cymbalta's ability to address important unmet needs, strong formulary access, quality sales force interactions and effective advertising campaigns. In 2008, Lilly expects Cymbalta to become its top-selling product in the U.S., overtaking Zyprexa(R). Internationally, Cymbalta continues to gain share in most major markets and is poised to launch in both France and Canada in 2008 and Australia in 2009. In addition to Cymbalta's three current U.S. indications for major depressive disorder, diabetic peripheral neuropathic pain and generalized anxiety disorder, the company has already filed for a fibromyalgia indication in the U.S. and is pursuing a possible submission in 2008 for a chronic pain indication.

Zyprexa

In the near term, Zyprexa is expected to remain Lilly's top product, as measured by worldwide sales. However, given the overall growth trends of Lilly's product portfolio, the dependence on Zyprexa will continue to diminish gradually. More than half of Zyprexa's revenue is now derived from international markets, and the company will continue to invest in the product in those areas where it maintains patent exclusivity. In the U.S., Zyprexa's performance in both the hospital and community mental health center settings has shown encouraging trends. A long-acting injectable formulation of Zyprexa was submitted for regulatory review in 2007.

Byetta

Byetta continues to gain new prescription share in the U.S., with over four million total prescriptions written since launch. A branded direct-to- consumer campaign was recently launched in the U.S. to increase awareness of the product. In addition, Byetta's favorable U.S. formulary placement continues to improve in managed care, as well as Medicare Part D and Medicaid. International launch plans for Byetta include up to 60 international markets by the end of 2008. In response to an earlier approvable letter, Lilly, along with its partner Amylin Pharmaceuticals, Inc., plans to submit additional data to the FDA in the first half of 2008 for a monotherapy indication for Byetta.

Cialis

Cialis continues to show strong growth in the U.S. and internationally, and will exceed $1 billion in annual sales in 2007. In the U.S., Cialis achieved 12 percent volume growth in the first nine months of 2007, compared with a 1 percent growth in the overall erectile dysfunction market. Outside the U.S., Cialis is now available in more than 100 countries, and is now the market leader in more than 20 of them. Cialis for once-a-day use was approved by the European Commission earlier this year, and U.S. FDA action is expected in 2008. Development of two new Cialis indications, for pulmonary arterial hypertension (PAH) and benign prostatic hyperplasia (BPH), is underway. A Phase III study for PAH was recently completed and the company intends to file in the U.S., Europe and Japan in the third quarter of 2008. A Phase IIb study for BPH is ongoing, with a Phase III program expected to begin in 2008.

Forteo(R)

Forteo continues to generate robust sales growth, both in the U.S. and internationally. The company is focusing on initiatives in the U.S. targeted at improving patient outcomes through better adherence to Forteo treatment regimes. Forteo is also currently under review in the U.S. and European Union for a new indication for glucocorticoid induced osteoporosis, or GIOP.

Evista(R)

The FDA recently approved Evista for a new use to reduce the risk of invasive breast cancer in two populations: postmenopausal women with osteoporosis and postmenopausal women at high risk for invasive breast cancer.

Alimta

Alimta has achieved the most successful launch in history for any cytotoxic agent. It is now approved in 86 countries and is the worldwide market leader in second-line treatment of non-small cell lung cancer (NSCLC). In the U.S. and Europe, the company has submitted Alimta, with cisplatin, for the first-line treatment of non-small cell lung cancer. The company also announced today that a Phase III trial for a maintenance indication in NSCLC met its primary endpoint of superior progression-free survival. Lilly is also pursuing a number of other indications for multiple tumor types for Alimta.

Elanco

The company's animal health business is expected to continue to be a solid performer, in both its core food animal business and the fast-growing companion animal market. Elanco launched two companion animal products in 2007, Reconcile(TM) and Comfortis(TM), and is on track to launch six companion animal products within four years.

Accelerating Pipeline Development to Prepare for the Next Decade

Steven M. Paul, M.D., executive vice president, science and technology for Lilly, reviewed the progress of the company's research and development efforts. Over the past several years, the company has substantially elevated the number of new molecular entities (NME's) and new biologics entering clinical development. In 2007, 16 new candidates are projected to enter the clinic, expanding the company's clinical portfolio to 44 new compounds and 35 new indications or line extensions. Between 2007 and 2008, the company continues to expect a total of 30 new candidates to enter initial clinical testing.

"We continue to generate new drug candidates at a rate not only unparalleled in Lilly's history, but competitive with even our much larger pharma competitors," commented Paul. "This is a reflection of the success we've had at building our R&D capacity in both the small molecule and biotech arenas, as well as substantially improving our R&D productivity."

Paul reiterated for analysts that the company's focus on innovation will enable it to meet the challenge of patent expirations on several key products during the next decade. "We have made it our mission to expedite launches of the mid- and late-stage pipeline. Between 2008 and 2011, we hope to launch up to 6 NME or NME-like molecules. By the end of 2011, our Phase III pipeline should be re-stocked with at least 10 new promising molecules. The progression of our pipeline is the catalyst behind our goal to launch on average two new compounds per year beginning in 2011, increasing to three per year by 2014. "

Key late-stage molecules and select early- and mid-stage compounds were then reviewed for each of the company's core therapeutic areas.

Paul first reviewed the results of the TRITON TIMI-38 Phase III head-to- head study of prasugrel versus clopidogrel that were initially presented November 4, 2007 at an American Heart Association conference. "In TRITON, prasugrel showed superior efficacy to clopidogrel. On a number of fronts, these efficacy results were particularly striking. Patients on prasugrel had a 19 percent relative risk reduction compared with clopidogrel in the composite endpoint of cardiovascular death, heart attack, and stroke. In addition, patients on prasugrel experienced a 52 percent reduction in stent thrombosis compared with clopidogrel." Paul continued, "As with earlier advances in antiplatelet therapy, prasugrel's increased efficacy came with an additional risk of bleeding. We have compelling data on patients for whom the benefits of prasugrel clearly outweigh the risks, and data on a small subgroup of patients who do not appear to benefit from prasugrel. In addition, our data also strongly suggests that elderly or low body-weight patients might benefit from a lower maintenance dose to decrease the risk of bleeding. The key has been, and will remain, understanding the benefit to risk ratio, and determining the patient populations for which new medicines, like prasugrel, are best suited. This is a prime example of our tailored therapies strategy in action."

According to Paul, "Considering the compelling results, Daiichi Sankyo and Lilly are finalizing the submission package for prasugrel and are still planning to submit to the FDA by year-end and to European regulators during the first quarter of 2008."

Select Late-Stage Pipeline Developments -- Exenatide once-weekly - Lilly and its partners, Amylin Pharmaceuticals, Inc. and Alkermes, Inc., recently completed a promising 30-week comparator study of once-weekly exenatide injection and twice-daily Byetta injection in patients with type 2 diabetes. The companies anticipate regulatory submission to the FDA before the end of the first half of 2009. -- Olanzapine long-acting injection - In the second quarter of 2007, Lilly submitted new drug applications to the U.S. Food and Drug Ad ministration and the European Medicines Agency (EMEA) for approval of olanzapine long-acting injection. -- AIR(R) Inhaled Insulin - Lilly and its partner, Alkermes, Inc., remain committed to their inhaled insulin program. A two-year safety trial and other studies are ongoing for both the inhaled insulin formulation and device. Lilly and Alkermes currently expect regulatory submission to the FDA in 2009. -- Arzoxifene - A Phase III osteoporosis prevention trial that enrolled over 300 patients was recently completed. An additional five-year Phase III study, fully enrolled with more than 9,300 patients, examines arzoxifene's potential in vertebral fractures and breast cancer risk reduction. Lilly expects regulatory submission to the FDA in 2009. -- Enzastaurin - A Phase III trial is under way for the use of en zastaurin in the treatment of non-Hodgkin's lymphoma, with regulatory submission expected in late 2010 or early 2011.

"Our pipeline is well-diversified across our core therapeutic areas and includes both small molecule and biotech candidates," commented Paul. "To meet the goal of launching on average two new compounds per year beginning in 2011 and growing to three per year by 2014, the company will focus its research and development resources to accelerate promising early- and mid-stage compounds, as well as aggressively in-license promising candidates to bolster its pipeline."

Select Early-to Mid-Stage Pipeline Developments -- Diabetes Care - Lilly's diabetes care pipeline reflects the company's longstanding commitment to this core therapeutic area. Two recent business development transactions strengthened Lilly's position. The company recently announced an alliance with MacroGenics to develop and commercialize the humanized anti-CD3 monoclonal antibody teplizumab for type 1 diabetes. Teplizumab is currently being studied in a combined Phase II/III trial. Earlier this year, Lilly acquired the exclusive rights to OSI's Glucokinase Activator (GKA) program, including the lead compound LY2599506. This compound, currently in Phase I, represents a novel approach in addressing type 2 diabetes. -- Cardiovascular - Development is ongoing for the company's oral Factor Xa inhibitor for thrombotic disorders, with Phase 3 trials in VTE prophylaxis expected to begin in 2009. Two other indications for Factor Xa are also being pursued. -- Oncology - Phase II trials are ongoing for ASAP, an oncology molecule being studied for non-small-cell lung cancer and melanoma, with new Phase II studies now initiated for ovarian cancer and soft-tissue sarcoma. Phase II trials are set to begin for survivin ASO, an antisense molecule targeted at solid tumors that Lilly is developing with its partner, ISIS Pharmaceuticals; a second antisense molecule targeted at solid tumors, eIF-4E ASO, is also set to begin Phase II studies in 2008. The company's early-stage oncology pipeline includes an additional five agents that progressed into Phase I clinical testing in 2007. -- Neuroscience - In the area of Alzheimer's disease, Lilly continues to successfully develop two different but complementary Phase II molecules, a gamma-secretase inhibitor and an A-beta antibody. In 2008, another promising neuroscience molecule, NERI, is set to begin Phase III testing for depression and Phase II testing for ADHD. Phase II testing continues for the mGlu2/3 receptor agonist for schizophrenia, while LY2624803, the lead insomnia molecule obtained in the Hypnion acquisition, is slated to begin additional Phase II trials in 2008. GRC 6211, part of a portfolio of TRPV1 antagonists acquired from Glenmark Pharmaceuticals, is currently in early Phase II development for various pain conditions, including osteoarthritic pain. The early-stage neuroscience pipeline also includes molecules targeted for Parkinson's disease, alcoholism, migraine and chronic pain. -- Anti-inflammatory - Lilly's mid-stage pipeline includes two promising molecules targeting rheumatoid arthritis currently in Phase II.

2007 Financial Guidance

Derica Rice, chief financial officer, reconfirmed the company's 2007 financial guidance. Pro forma sales are expected to grow in the low double digits and reported sales are expected to grow in the mid-teens. The company continues to expect gross margin as a percent of sales to improve slightly compared with 2006. In addition, the company expects operating expenses on a pro forma adjusted basis to grow in the low double digits, albeit at a slower rate than sales. Operating expense growth is expected to be driven primarily by increased investment in research and development and ongoing expenditures for marketing and selling efforts in support of Cymbalta and the diabetes care products. The company expects other income to be approximately $100 million. The company also anticipates the pro forma adjusted effective tax rate to be approximately 22 percent. The company expects a continuation of strong cash flow trends in 2007, with capital expenditures of approximately $1.1 billion.

Pro forma adjusted earnings per share are still expected to be in the range of $3.50 to $3.55 per share for 2007, representing growth of 16 to 17 percent compared with full-year 2006 pro forma adjusted results. Full-year pro forma adjusted earnings per share results and guidance exclude the charges noted in the table below and assume the ICOS acquisition was completed January 1, 2006. Including the charges in the table below, 2007 reported earnings per share are still expected to be in the range of $2.74 to $2.79. See the reconciliation below for further detail.

Reconciliation of 2007 Earnings Per Share Expectations: 2007 2006 Expectations Results % Growth -------------- ------- ---------- E.P.S. (reported) $2.74 to $2.79 $2.45 12% to 14% Eliminate product liability charge - .42 Eliminate asset impairments and restructuring charges associated with previously announced manufacturing decisions .08 .31 Eliminate special charges related to adjustment to insurance recoverable .06 - Eliminate in-process research & development charges associated with ICOS, Hypnion, and Ivy acquisitions and OSI, Glenmark and MacroGenics in-licensing transactions .63 - Include pro forma as if the ICOS acquisition was completed (.01) (.15) on January 1, 2006 -------------- ------- E.P.S. (pro forma adjusted) $3.50 to $3.55 $3.03 16% to 17% -------------- -------

2008 Financial Guidance

Rice also detailed the company's 2008 pro forma guidance, which assumes the ICOS acquisition was completed on January 1, 2006. "For 2008, the company expects pro forma sales to grow in the mid- to high-single digits, driven primarily by increased volume and strong sales growth for Cymbalta, Cialis, Byetta, Alimta and Humalog. The company expects modest improvement in gross margin as a percent of sales, driven primarily by manufacturing expenses growing more slowly than sales. In addition to generating operating leverage at the gross margin line, we also forecast total operating expenses to grow more slowly than sales in 2008, with growth in the mid-single digits. Selling and marketing expenses are expected to grow in the low-single digits, driven by investments in prasugrel, Cymbalta, Evista for invasive breast cancer risk reduction, Humalog and Byetta. Research and development expenses are expected to grow in the high-single to low-double digits, reflecting Lilly's commitment to deliver increasing numbers of first in class or best in class molecules. Other income is expected to contribute less than $100 million. The effective tax rate is expected to be approximately 23 percent. Capital expenditures are projected to be approximately $1.1 billion. The company expects 2008 pro forma adjusted earnings per share to be within the range of $3.85 to $4.00."

Looking ahead to the next several years, Rice announced that through 2011, the company expects to deliver low double-digit compound annual earnings per share growth. During this period, sales growth will be driven by volume and the company will continue to generate operating leverage through increased productivity and reduced headcount.

Reconciliation of 2008 Earnings Per Share Expectations: 2008 2007 Expectations Expectations % Growth -------------- -------------- ---------- E.P.S. (reported) $3.85 to $4.00 $2.74 to $2.79 12% to 14% Eliminate asset impairments and restructuring charges associated with previously announced manufacturing decisions - .08 Eliminate special charges related to adjustment to insurance recoverable - .06 Eliminate in-process research & development charges associated with ICOS, Hypnion, and Ivy acquisitions and OSI, Glenmark and MacroGenics in-licensing transactions - .63 Include pro forma as if the ICOS acquisition was completed - (.01) on January 1, 2006 -------------- -------------- E.P.S. (pro forma adjusted) $3.85 to $4.00 $3.50 to $3.55 8% to 14% -------------- --------------

Webcast of Investment Community Meeting

A live webcast of the Lilly Investment Community meeting, along with presentation slides, is available through a link on Lilly's web site at www.lilly.com. The meeting will start today at 8:30 a.m. Eastern Time and last until approximately 12:30 p.m. The webcast will be available for replay through January 4, 2008.

Lilly, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers - through medicines and information - for some of the world's most urgent medical needs. More information about Lilly is available at www.lilly.com. F-LLY

This press release contains forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. There are significant risks and uncertainties in pharmaceutical research and development. There can be no guarantees with respect to pipeline products that the products will receive the necessary clinical and manufacturing regulatory approvals or that they will prove to be commercially successful. The company's results may also be affected by such factors as competitive developments affecting current products; rate of sales growth of recently launched products; the timing of anticipated regulatory approvals and launches of new products; other regulatory developments and government investigations; patent disputes and other litigation involving current and future products; the impact of governmental actions regarding pricing, importation, and reimbursement for pharmaceuticals; changes in tax law; asset impairments and restructuring charges and the impact of exchange rates. For additional information about the factors that affect the company's business, please see the company's latest Form 10-K, filed March 2007, and Form 10-Q filed November 2007. The company undertakes no duty to update forward-looking statements.

AIR(R) (Alkermes, Inc.) Alimta(R) (pemetrexed disodium, Lilly) Byetta(R) (exenatide injection, Amylin Pharmaceuticals) Cialis(R) (tadalafil, Lilly) Comfortis(TM) (spinosad, Lilly) Cymbalta(R) (duloxetine hydrochloride, Lilly) Evista(R) (raloxifene hydrochloride, Lilly) Forteo(R) (teriparatide of recombinant DNA origin, Lilly) Humalog(R) (insulin lispro injection of recombinant DNA origin, Lilly) Reconcile(TM) (fluoxetine hydrochloride, Lilly) Zyprexa(R) (olanzapine, Lilly) (Logo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20031219/LLYLOGO )