Ladies and gentlemen, thank you for standing by. And welcome to the Q3 2016 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, today's conference call is being recorded. I would now like to turn the conference over to your host, Dr. John Lechleiter. Please go ahead, sir. John C. Lechleiter - Eli Lilly & Co.: Thank you. Good morning, everybody. Thanks for joining us for Eli Lilly & Company's third quarter 2016 earnings call. I'm John Lechleiter, Lilly's Chairman, President and CEO. Joining me here in Indianapolis on today's call are Derica Rice, our Chief Financial Officer; Dr. Jan Lundberg, President of Lilly Research Laboratories; Dr. Sue Mahoney, President of Lilly Oncology; Enrique Conterno, President of Lilly Diabetes; Dave Ricks, President of Lilly Biomedicines; Chito Zulueta, President of Emerging Markets; Jeff Simmons, President of Elanco Animal Health; and Kristina Wright, Brad Robling, Chris Ogden, and Phil Johnson of Lilly's IR 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 three and those outlined in our latest Forms 10-K and 10-Q filed with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions. Before discussing key events for the quarter, I'll start, as usual, with a summary of our progress since the second quarter earnings call in late July and I'll use our strategic objectives framework for this discussion. Our first strategic objective, grow revenue. Q3 revenue increased 4% on a constant currency…

Certainly, sir. We'll go to our first question from the line of Jami Rubin from Goldman Sachs. Please go ahead. Jami Rubin - Goldman Sachs & Co.: Wow. First time I've been asked first. Anyway, question. Couple questions on Jardiance. My first question is, why did the FDA require three more months for review? Is this a positive? Is this a negative? And, Enrique, how are you feeling about getting the superior label in Jardiance? And are what are the options? Is the option to get a superior label, i.e., an indication for CV risk reduction? Or is the other alternative to get no mention of that in the indication section but the EMPA-REG trial mentioned in the label somewhere? If you can talk about those two possible scenarios and what they mean in terms of consensus expectations. Secondly, just curious to know what's happening with pricing in diabetes because it does seem to be getting worse. You talked about rebates and discounts with Humalog, but it also seems that we're seeing some price discounting in SGLT-2 just based on INVOKANA's recent performance and their weakness due to discounting. So if you could talk about that as well. Thanks very much. Philip Johnson - Eli Lilly & Co.: Great. Thank you for the questions, Jami. Enrique, those are all yours. Enrique A. Conterno - Eli Lilly & Co.: Very good. So when it comes to the Jardiance review by the FDA, we did get this three-month extension on the action date. The new action date is now December 4 of this year. It's difficult to say always what drives that, but the FDA considers some additional information analysis that we had provided, basically a major amendment, and they basically have the right to do so. I would highlight that this…

Thank you. We'll take our next question from the line of Tim Anderson from Bernstein. Please go ahead. Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC: Thank you. A couple of questions. On solanezumab, I know, obviously, everyone's expecting and watching the results of EXPEDITION3. But if that trial is a total fail, what happens to the prodromal trial? Would that completely continue unchanged? Or could it potentially get scrapped? The second question was on baricitinib. I know there's a fair amount of excitement around the upcoming launch and the profile has looked promising. But I can't help but think that it's going get meaningfully sidelined by payers in the U.S., given how crowded this market is. And if that happens, then it would be a very slow launch curve like we've seen with a lot of other products. I'm wondering if you can comment on this assessment. Philip Johnson - Eli Lilly & Co.: Great, Tim. Thank you for the questions. Dave, we'll move over to you for these two. David A. Ricks - Eli Lilly & Co.: Great. Thanks, Tim. I think we've talked about the various scenarios with sola before. We continue to characterize it as a high-risk, high-reward program. The scenario you paint is what we think is the least probable, but it certainly could happen. In this scenario, sola would really not separate at all from placebo. I think we would be re-evaluating all of the sola programs, frankly, Tim. And the way we've set up the prodromal program, which we've just begun, is there's a recruitment start with a special cohort that we can also evaluate more information on. We're doing this for a couple reasons. But one of the reasons is the ability to stop the trial should EXPEDITION3 be negative.…

Thank you. The next question from the line of Tony Butler from Guggenheim Partners. Please go ahead.

Yes, thank you very much. Dave, a question on Taltz and the anti-IL-17 class. I understand the commentary around the growing class. And clearly, if we listen to Novartis, they'll be quite enthusiastic. I'm just wondering, though, as we look quarter-to-quarter at the U.S. sales, while the rate's nice, the absolute numbers I guess one could say it's rather anemic. And so the real question is around payers, I guess, and whether or not the full channel opportunity is being utilized by Lilly and, more importantly, how you think you might be able to address that relative to Cosentyx or others that may enter that market in psoriasis. Thank you for your time. Philip Johnson - Eli Lilly & Co.: Great, Tony. Thank you for the question. Dave? David A. Ricks - Eli Lilly & Co.: Yeah, Tony. Thanks for the question. We are both excited about the uptake of the IL-17 class and Taltz within it. In fact, as we exited Q3, we're seeing Taltz new-to-brand share in dermatology, which is really our key leading indicator for performance, as peaking over 10% already, ahead of Enbrel, for instance, and at least at par with Cosentyx in that setting. So we're happy with the initial adoption and the breadth of trial and usage which are other key indicators for us. At this point in the launch cycle, I'm not sure net sales should be the absolute marker we'd be looking at, although of course we're looking forward to growing that quarter-on-quarter going forward. And you did see growth from Q2, which was, reminding everyone, just a few weeks of shipments in Q2. It wasn't a full quarter. Also, vis-a-vis Cosentyx, which enjoys three indications, we can only have the one in psoriasis, as was mentioned in the call text earlier. We do plan submissions now for PSA in the U.S. shortly. And we have an (45:40) program ongoing. So net-net, I think we're happy with where we are. Global rollouts are beginning in the second half of the year as well in Europe and Japan, which are also significant opportunities. We've got a lifecycle coming. And where we are head-to-head against the incumbents of TNF, STELARA, and even Cosentyx within the class, which is the U.S. derm market, I think the early performance indicators are quite strong. Philip Johnson - Eli Lilly & Co.: Great. Thanks, Dave. Mary Beth, if we can go to the next caller.

Certainly. Next question from the line of Steve Scala from Cowen. Please go ahead. Steve Scala - Cowen & Co. LLC: Thank you. I have a couple. Assuming solanezumab data is tracking toward CTAD presentation, would there be a top-line release? And, if so, when would that be issued? And externally, of course, we know nothing about what was seen in EXPEDITION3. Does Lilly also know absolutely nothing about what was seen in EXPEDITION3, or is some data being analyzed or already has been analyzed? So that's the first question. Second question is, Lilly seems to have done some opportunistic spending in Q3. Companies typically do this for various reasons, one of which is anticipation of positive upcoming developments. Certainly it would not be done when delay or disappointment is expected. So how should we interpret your opportunistic spending in the third quarter? Thank you. Philip Johnson - Eli Lilly & Co.: Great, Steve. Thanks for the questions. It's always an exciting moment waiting to hear you give them. If we can go Dave for the sola questions on the CTAD and potential timing for a top-line press release issuance, as well as whether or not people have seen anything at Lilly on EXPEDITION3 to-date. And then, Derica, if you'd like to handle the spending question, that would be great. Dave? David A. Ricks - Eli Lilly & Co.: Yeah, let me answer the second – sola question first. Steve, we have seen nothing on EXPEDITION3. And that will remain true until literally a few days before your second question, which is a top-line press release, which we'll do with absolute urgency after management's had a chance to look at the data coming in. Reminding everyone that the period between last patient visit and that management review involves a lot…

Thank you. The line of Mr. Chris Schott from JPMorgan. Please go ahead.

Great. Thanks very much for the questions. The first one was on Basaglar. You've had a few big formula wins for 2017. Can you help us just understand the dynamics of that product in the U.S. next year? I guess specifically, what percent of market do you have access to? And how should we think about Lilly prioritizing that product relative to other assets in the diabetes portfolio? My second question was on abemaciclib. Just helping us put a little bit the continuation of the MONARCH 2 study into context. Do you still believe you can differentiate that asset from IBRANCE, even though the product didn't achieve its interim efficacy criteria? Thank you. Philip Johnson - Eli Lilly & Co.: Great, Chris. Thank you for the questions. We'll go to Enrique for your Basaglar questions and then to Sue for abemaciclib. Enrique? Enrique A. Conterno - Eli Lilly & Co.: So we've had a successful contracting season with Basaglar. So we feel good about our commercial access in particular. Clearly, contracting is not done yet. And just to remind everyone, we expect to launch on December 15 of this year. So I won't be able to provide specific numbers at this stage, but we are very pleased with the access that we will have. In terms of the priority that we will basically have on Basaglar, clearly is a newly launched product. And we need to make this product relevant in the basal insulin space, really a new segment for us. So from that perspective, it's important. And it's important because also it really fully completes the diabetes portfolio that we can offer our customers. We now have a complete portfolio, a full range of insulins, a GLP-1 with Trulicity, and then great oral products. As we look at our…

We'll go to line of Mr. Gregg Gilbert from Deutsche Bank. Please go ahead.

Thanks. First on CTAD, is there other data you plan to present there? If not, EXPEDITION3, or with or without EXPEDITION3? What longer-term strategic and financial and possibly R&D decisions are tied to the outcome of EXPEDITION3? I think you already touched on the R&D piece, but maybe strategic and financial longer term. Then, Enrique, what can you say about the launch of Basaglar in the U.S.? It's somewhat imminent. I'm sure you have a pretty good sense of demand and what price you're willing to part with the product. So whatever you can help us understand heading into that, that would be very helpful. Thanks. Philip Johnson - Eli Lilly & Co.: Okay, Gregg. Thank you for the questions. Dave, if you could answer question on the CTAD data being presented, anything other than EXPEDITION3, and maybe at least within the overall Alzheimer's disease portfolio and (54:35) portfolio, what that might mean for investment perspective. Derica or John, feel free to chime in from a corporate perspective, if you'd like. And then we'll go over to Enrique for the Basaglar launch question. Dave? David A. Ricks - Eli Lilly & Co.: Yeah, thanks, Gregg. Yeah, CTAD is an important Alzheimer's meeting. It's not a large meeting, but it's one where top experts who do clinical research around the globe in Alzheimer's all come. As a result, we are consistently at that meeting with posters, other presentations. As you know, Lilly's done a lot of work, whether it be in diagnosis work with our PET scanning business. We have some data reading out in that area, as well as other supportive data looking at disease modification, et cetera, in different populations. So there are other presentations. I don't have a list in front of me, but we can provide that…

We'll go to the line of John Boris with SunTrust. Please go ahead.

Thanks for taking the questions. First question just has to do with the pricing risk and election cycle. If you look at most of the election cycles historically, it would seem as though that if investors actually owned the group coming out of an election cycle, they'd be rewarded pretty handsomely. However, you do have some things that are being tossed about, most notably Proposition 61 that'll be on the ballot November 8, on the California ballot, proposing a statute which could create a price ceiling on prescription drug costs by state programs. Just your thoughts about this election cycle and what might be different, and is there any silver lining on pricing coming out of that? The second question just has to do with Trulicity. Just an update on REWIND and thoughts around the upcoming interim analysis and stoppage of that trial? Philip Johnson - Eli Lilly & Co.: Great, John. Thank you for the questions. John Lechleiter, if you'll take the first part of that question. And then we'll come over to Enrique for the REWIND question. John? John C. Lechleiter - Eli Lilly & Co.: Yeah. Thanks, John. Prop 61, we're fighting that tooth-and-nail in California. It's not only bad legislation, it's bad for your health. And we're trying to impress that on the voters. What we've found is that the more people become aware of what's at stake here and what's the likely outcomes of Proposition 61, the more they're prone to vote against it and vote it down. So we have a pretty big campaign underway in California right now to increase that level of awareness and hopefully to continue to shift voters toward a position of being against it for a whole variety of reasons. It's difficult to say on the larger – are…

Thank you. That would be the line of Marc Goodman from UBS. Please go ahead.

Yes. (1:03:00). Philip Johnson - Eli Lilly & Co.: Hey, Marc. If you can hear us, it sounds like we lost you.

Hello? Philip Johnson - Eli Lilly & Co.: Yes. We can hear you know.

Thanks, Phil. Enrique, first, can you help explain why GLYXAMBI is not doing better? We look at the prescription trends, and I would have thought that this product would have taken off much better. Second question is, can we get a little more color on Animal Health and just what happened in the quarter and what's going on there? And third, you mentioned the CGRP headache cluster. Can you just talk about the timeline change there and what happened and if there's been any other timeline changes to that program? Thanks. Philip Johnson - Eli Lilly & Co.: Great, Marc. Thank you for the questions. We'll go around the table here. We'll start with Enrique on the GLYXAMBI question. Over to Jeff for more color on what's going on with the Animal Health business. And then back over to Dave for the CGRP timeline question. Enrique? Enrique A. Conterno - Eli Lilly & Co.: Sure. So the strategy we had for GLYXAMBI was a different one prior to the readout of the EMPA-REG OUTCOME trial. As we see it today, we need to make sure that we are positioned in Jardiance as standard of care and we need the new indication to truly do so and really reinvigorate the growth of the SGLT2 class. We believe that GLYXAMBI will have very significant benefit once this happens. But investing today in a really big way in GLYXAMBI really doesn't make sense, whether it's access or promotional investment. GLYXAMBI has today fairly low access. We are in the 20s when we look at commercial access, and it's even lower than that in Part D. We need to retake that once we get the new label for Jardiance. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Jeff? Jeffrey N. Simmons…

That line will be Vamil Divan from Credit Suisse. Please go ahead. Vamil K. Divan - Credit Suisse Securities (USA) LLC (Broker): Great. Thanks for taking my questions. So first just on the diabetes side for Trulicity, Jardiance. Can you provide a little more color in terms of how much of the sales is coming for, I guess, the classes as a whole, and also your products from specialists versus generalists? Just trying to see if they're getting better traction with the primary care physicians. And then second on Taltz, you mentioned psoriatic arthritis and also ankylosing spondylitis. Can you just give us a better sense there in terms of how you view the commercial opportunity for those two indications relative to the psoriasis indication? Thanks. Philip Johnson - Eli Lilly & Co.: Great. Thanks, Vamil. Enrique, we'll go to you for the Trulicity and Jardiance question on specialist used versus PCP prescribing. And over to Dave for the psoriatic arthritis and ankylosing spondylitis opportunity. Enrique? Enrique A. Conterno - Eli Lilly & Co.: So I don't have the numbers in front of me, but when we think about specialists versus primary care, for this product to be successful we have to be relevant when it comes to primary care. We expect long term that over 80% of the volume will basically come from primary care as we think about these two products. Now, something that is encouraging about the uptick of both of these products is that our share with specialists, it is indeed higher with endocrinologists than with primary care physicians. This is important as a leading indicator as we look at the future and a great prognosticator of what is to come ahead. Philip Johnson - Eli Lilly & Co.: Great. Thank you, Enrique. Dave? David A.…

That line of Mr. Jeff Holford from Jefferies. Please go ahead.

Hi. Thanks for taking my call. The first one just very quickly on Effient. Assuming that the exclusivity wouldn't be based on the 2023 patent, could you just give us what the more conservative timeline to think about for loss of exclusivity in the U.S. would be? And then secondly, just thinking about going into next year post-election, just thinking about some of the rebating you've already mentioned on Humalog. With the LIS and duals rebating changes that have been kicked around a few times and are being kicked around again during this election cycle, could you just talk a little bit about your exposure to the LIS and dual-eligible population, what you think the probability of any rebating changes could be there and any ways the firm could potentially mitigate those? Thanks very much. Philip Johnson - Eli Lilly & Co.: Great, Jeff. Thank you for the questions. Dave, if you'd like to go ahead and comment first on the Effient question. And then maybe, John, if you want to comment just generally on the size of impact of the dual LIS. And then maybe, Enrique or Dave, Sue, if you want to comment on any specific impacts or mitigation that you see with your particular areas of the business that would be great. Dave? David A. Ricks - Eli Lilly & Co.: Yeah, I'll be brief. We've been consistent through time in saying the IP that we are counting on for our own plans as sort of being quite firm is the compound patent which expires naturally in Q2 of next year and then as extended with pediatric work, which we have confirmed would take us into early Q4. The other IP, we're disappointed and we plan to continue to fight on those. But I think we've been…

Thank you. That will be the line of Alex Arfaei from BMO Capital. Please go ahead.

Good morning, folks. My apologies if these were addressed. I was disconnected briefly. How should we think about pricing for Humalog? Obviously, significant impact here. I'm just wondering if we could get your longer-term thoughts there. And then on sola, have you had any updated conversations with regulators or just updated general thoughts regarding you changing your primary end points in EXPEDITION3. Thank you. Philip Johnson - Eli Lilly & Co.: Alex, thanks for the question. Enrique, if you could touch briefly on Humalog pricing as you're seeing it. And then we'll go over to Dave for any discussions we've had with regulators related to the change in end point that we announced for (1:16:55). Enrique? Enrique A. Conterno - Eli Lilly & Co.: Sure. So I've commented on some of the dynamics of the quarter and some of the mix changes as we look at the increases in Medicare, Medicaid chargebacks as a percentage of the overall business. Clearly, we expect some of those dynamics to continue. For the most part, now as we look at the different formularies, all of the large formularies have gone exclusive. So whether it's on the Part D side or on the commercial side, as of 2017, I think we basically have a situation where Humalog will be exclusive in a certain number of formularies and a competitor in some others. Clearly, there could be switches back and forth that would deteriorate prices even further. But we have not seen that because there's a very high disruption cost at the patient level to be able to switch 100% of the business now for more incremental gains. It's difficult to say what the pricing dynamics would be. But net prices when it comes to Humalog are pretty low already. Philip Johnson - Eli Lilly…

Will be the line of Colin Bristow from Bank of America. Please go ahead.

Morning, and thanks for taking the questions. Just on Jardiance, sales still light again versus what's implied from script volumes. Can you give color on what's driving this? I know you said last quarter it was a mix of gross to net adjustments and high use of copay cards. I'm just wondering, should we assume that the current net pricing is like a reasonable baseline or is there a negative pricing dynamic that could dissipate? And second, on Animal Health, just a follow-up, it seems like your comments suggest these are just one-time occurrences that are impacting performance. And so should we anticipate a rebound in sales strength in 4Q? And then just lastly on abema, can you confirm we should expect the MONARCH 3 interim before year end? And sorry if I missed this. Thanks. Philip Johnson - Eli Lilly & Co.: Great, Colin. Thank you for the questions. So we'll start with Enrique for the Jardiance question. Over to you, Jeff, then for the Animal Health and what you see with dynamics heading into next quarter. And then Sue on the timing for MONARCH 3, which we did actually update back in August, but we're happy to go ahead and provide you that updated language so everyone's on the call's got that. So we start out with Enrique. Enrique A. Conterno - Eli Lilly & Co.: In my view, the most relevant factor to look at when we think about Jardiance overall is class growth. And as we look at class growth, we have shared and we have been concerned with the overall growth that we are seeing in the SGLT2 class in the U.S. The class, as we look at the last four weeks relative the same four weeks of last year, is only growing about 20%.…

Certainly. That would be the line of Andrew Baum from Citi. Please go ahead.

Feeling the pressure. Could you talk to the CDK4/6 category? Firstly, in relation to the competitive adverse event profiles of the particular drugs. I'm interested, obviously, in the commission feedback about the low-grade diarrhea versus the monitoring requirement that Novartis is going to face. And then second, should we expect that formularies are going to exercise pressure in this segment as well given LB-3 drugs with very similar profiles in the way they're pulled to signal off the formularies that CVS in CML as well as other small molecular drugs, such as XTANDI. Is this the way the world will work within small molecule oncology drugs going forward? Philip Johnson - Eli Lilly & Co.: Andrew, thank you for the questions. Sue? Susan Mahony - Eli Lilly & Co.: Yeah, okay. So with regards to abemaciclib. I can't comment on the safety profiles of the other products. But if we look at abemaciclib, I think we've seen that we've got a very tolerable drug that we can continuously dose. With regards to the diarrhea, if you again saw the newer MONARCH data, if you could give over-the-counter loperamide, we saw very little diarrhea and very manageable and feel good about the safety profile there. Again, I think formularies, it will depend what the data shows and how they differentiate it as to what happens with regards to payers and formularies. Philip Johnson - Eli Lilly & Co.: Great. Thank you very much, Sue, for the quick response. Now we'll go over to Dave Ricks to close our call this morning. David A. Ricks - Eli Lilly & Co.: Thanks, Phil. For those of you listening live or to the replay, we appreciate your interest in our company and your participation in today's call. Should you have any questions we didn't address, please contact our IR team and they'd be happy to help, as usual. This is Brad Robling's last earnings call, and we thank him for his support of our investors and wish him all the best in new business development assignment. Thanks, Brad. And finally, I'd like to take the opportunity to thank John for his steady leadership during one of the most difficult periods of our company's 140-year history. Spurred on by John's vision and his commitment to innovation, Lilly is today in the midst of one of our most productive periods of new product launches and we've achieved great progress building an R&D engine that has the potential to launch 20 new products in 10 years, beginning in 2014. John, many analysts and portfolio managers I've met with in recent weeks have expressed their sincere appreciation for your contributions to the company and to the sector. You've earned their praise. And we all owe you a debt of attitude and we wish you all the best in the next chapter of your life. Thanks, everyone. And look forward to talking to you in the near future.

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