Dave Ricks

One of the most transformative drugs on the market today are anti obesity drugs. One of the leaders in producing those drugs is Eli Lilly. It has transformed itself over the last five years to accompany that's now the most valuable pharmaceutical company in the world. I sat down with Dave Rix recently to talk about it's anti obesity phenomenon and how it is transforming America. Let's talk about these phenomenon that's changed the world to some extent. Which is the anti obesity drug?

Now? To make sure everybody's on the.

Same page links, what is the name of your anti obesity drug?

Okay, so the name is zep bound. The active ingredients called their zepetide.

So, by the way, who comes up with these names? Where do you raise names? Not me, David me.

We can't have names that are similar to each other because doctors make prescribing hers. We can't have names that make claims about what the drug does, and we can't have names that only work in English.

So we end up with these sounding names.

When was that discovered and is that ever the intention when the drug was being developed?

Yeah, pretty early on. So we launched the first GLP one medication in the world.

In two thousand and five. It was called exendotide.

It was a twice daily injection and it was indicated for people with diabetes. But that was the first effort. On the cover of our the next year, our annual report is a woman who was using the drug and she said, my diabetes is under control, and I noticed I'm losing a little weight. Actually two thousand and six, it's a cover of our anal report. But we had to improve the medicines to really make them effective for weight loss. One big improvement was to make them weekly.

Action of the.

Medicine flatter, meaning more consistent through the day and night. When we had it twice a day, there were ups and downs, and one effect of GLP one medications is they cause nausea and other gi distress. That's a function of the up and down in your system. So when we made weekly, it was flatter and we could dose higher to see.

More weight loss.

So that was sort of an accidental breakthrough of trying to make a more convenient form.

Now there's another company that is sort of in the same business.

No Vote Nor it is Yes.

Which is in Denmark, and they have a similar product, and they have a product that does the same thing. One is for obesity anti obesity, and one is for.

Diabetes and correct. Is there really any difference in terms of the drugs.

There are.

There's no difference really between the name the drug that's named for diabetes versus name for obesity for either company. We do that for insurance reasons we could talk about. But tre Zeppetide is the latest version. It has two modes of action. So right now, because you just ate lunch, your GI track is communicating with the rest of your body.

But what the drug does is what it tells your body you're full. When you're maybe not as full as you used to be.

It tells your body you're full, and it does that to the brain sense of saiety. Probably we've learned over time our sense of fullness becomes conditional. So as people eat more habitually, that signal kicks in later and later, and that's a cause and consequence of obesity.

It does other things too.

It actually makes your stomach fuller because it slows gastric motility, so it slows down your nutrients, which seems counterintuitive, but when you eat in when our ancestors were alive ten thousand years ago, meals were rare and you want to absorb all the nutrients out of it. So that signal said, absorb the nutrients all right.

I don't want to confuse people, but there are four different names that people should know for these drugs. Now you have an ANTIBCD drug which is called what zepounepbound, and then you have a diabetes drug which is.

Called manjarro, same medicine, suferent names.

There was a study that was just came out a couple of days ago. I think that said one on one comparing the two. Your drug anti OBEs drug loses weight more rapidly for people than the other product.

Is that right?

Rapidly?

And more so forty seven percent more so After a year and a half, roughly, people on our drug loss seventeen more pounds.

Then on we go.

Why do people need to lose so much weight in this country? Our country has, as I got it right, seventy five percent of the people are overweight and forty two percent are obese. When it all of a sudden we become so obese?

Yeah, if you look at the epidemiology charts, it really seems to started in the sixties growth in overweight and obesity in the country, and really accelerated in the eighties and nineties.

What are the reasons?

How we live certainly is one of them, and energy expenditure has to be part of the story. What we eat, though, is probably a more important reason, not just the quantity which has risen modestly through that period of time, but actually what's in our food has changed, and I think that's also attributed to this.

All right, So back to the drug. When you realized they could lose weight. Did you get the FDA to say, yes, it can be prescribed for losing weight, or it's still you can't get that prescribed for you.

No.

No. As of last year, we have found launched it's for weight loss.

And do insurance companies reimburse people for the cost of these drugs?

Some do, more should so as of today, the federal government actually has a prohibition on reimbursing any of these drugs, which.

Is a problem.

I think although the Biden administration just as advanced rulemaking to change that. That's good news, and we hope the next administration will continue that process.

So if losing weight makes you healthier, why would people who care about insurance reimbursement medicare and not insist on paying for this because it would make you healthier and therefore you don't have other diseases yet that they have to reimburse you for.

I think in four or five years we'll look back and say, yeah, that's what should have happened, and it's silly that we don't pay for what is already known to be a primary contributor to poor health, which is excess body weight. But you know, do people have different motives and incentives. Maybe your employer has a stronger interest in your long term health. That's probably why many have stepped forward.

And then evidence.

Our job is to make the evidence produce the evidence that we're not just having people lose weight, but losing weight with our medicine causes improved health. And we have many studies out this year that are demonstrating that.

So to take this medicine, you have to inject yourself for less.

Yeah, well why not just go to a pill?

A great idea. Yeah, we're working on that.

The injection you have to inject because it's a protein and if we orally take proteins, your body thinks it's food and it breaks up proteins. So you cannot really take these drugs oily. You have to bypass the GI track even though it's affecting, and go right to the bloodstream. But we are working on a pill. We'll have some data actually as early as next year. It's a GLP one only it's a single acting It's not going to

Some people say that if you go on this drug, you have side effects that are not completely desirable.

Is that true?

All drugs that work have side effects and sometimes on twitter effects, and we have to warn against both of those. That's why we do controlled studies and measure them carefully. Many people have mild to moderate GI distress when they start. That's why we ty trate. We started a low dose. We recommend a low dose and go up slowly. Almost everybody stays on the dr and goes through that and by the third or fourth month really don't have any effects any more of.

That at all.

Let's suppose you take the drug and say, I've lost weight, I'm very happy with my body.

Now I'm going to get off the drug.

Some people say that there are it's very difficult to not regain the weight.

That's right, and science tells us that there's a reason for that. Some people do maintain the weight reduction or stay in that range. They have to change a lot about how they live, burn more energy, eat different foods.

So we can all try that.

I think we should all try that, actually, but some people cannot. And there's a recent paper in Nature that actually told us why, which is that once you have become obese, your fat sales learned that that's their new state and they defend that state, and so they're actually wanting more energy and that sends signals to your brain and so forth. So once we as adults gain weight and have that on for a while, it's very very difficult to reset your thermostat if you would to reset

Let's talk about Eli Lilly itself. When was his company started.

Eighteen seventy six, So started by a Colonel Eli Lilly who.

Served in the Civil War.

He was a pharmacist by training, led an infantry and artillery company, and was a prisoner of war in Alabama actually, and he saw firsthand the atrocities of medical care in the Civil War. So he started a company with a pledge to say everything that's in this is.

On the label. If it's in there, you know about it. Transparency.

And that then evolved into a company that embraced the scientific method and began to really adopt the methods that the modern industry has, which is then taking natural products, which is what most medicines were in eighteen seventy six, and refining them into what we think of as a medicine. Now.

When Eli Lilly evolved over the years in the twentieth century, what were its big product?

Yeah, so insulin really was the birth of the modern company. And this was obviously a terrible condition, type one diabetes and a breakthrough, and we were part of commercializing that around the world, invented the manufacturing method and created that

And of course, now manjar O.

And zep bound, what are the human problems you're working on in the future. Alzheimer's, I assume is one of them.

Absolutely, Yeah, So we think about our company. Of course, we use scientific methods to create medicines to solve tough problems. We're not really interested in niche problems. We think we're here because we're a big company to do hard problems that are scalable. That's sort of where makes our business work, but also is the most human impact. So we select these diseases that are common and tough. So you mentioned Alzheimer's,

Are you concerned about the new administration coming into power? Have you met with President electromp talk about your issues.

Healthcare is always a topic and so then our role in it and medicine affordability is a key area.

I think everyone would like.

The US have a strong biopharma industry that have beens amazing medicines like setbound and makes them here like Lily does. But at the same time, we want our things to be cheap and.

Accessible to all.

Okay, that's hard to solve for all those things, but we can make progress. Like one example is we were known for the insulin pricing challenges we had, and insulin was overpriced in the US, according to the critics, and we were able to bring that price down. I think there are solutions and by engaging we can find them.

Have you met with anybody in the new administration yet?

Yeah?

I think it was reported last week we had a dinner down in Florida.

How was that, Like, did they serve up fattening food or they don't do that with you?

Probably shouldn't say too much about it, but it was all you could imagine and a little bit more.

Yeah.

Well, let's talk about your own background. Where were you born?

Yeah?

I was born in Bloomington, Indiana, So who's your by birth? But my dad was a grad student at IU at the time, and we quickly left.

And moved to California.

My mom was from California and I grew up in the Bay Area and then followed in their footsteps and went to Purdue University back in Indiana.

And what did you study there?

So I started studying business and engineering, ended up with a degree industrial management, which combines those two. I went to work for IBM in New York. I joined the stock wasn't an all time hime when I left, it was an all time low. They had a tough time in the early nineties.

She went to join ELI Lilly in what year?

So I left IBM to follow my girlfriend who's now my wife, who was going to medical school at Indiana University. So again back to Indiana, and I needed somebody to do there, so I decided to enroll in their MBA program and I got an MBA. Of course, medicine's a four year degree, NBA's two. So I still needed somebody to do in Indiana, so I joined Lily.

What was your position at the beginning?

Yeah, I was in the department that looked at M and A transactions in the finance and Business Development group and the great introduction to.

The Did you ever say I'm going to be the CEO someday or something like that?

Not?

Then I actually really was thinking I'll be here for two years and then we'll be off to Chicago or San Francisco and do something different.

But I fell in love with the company.

I mean, it's an amazing place. It's a very humanistic culture, but yet very rigorous and scientific, so it's demanding smart people, but people are nice.

To each other.

It's the Midwest, and I fell in love with the mission, which is what could be better than making medicine for people. I worked on a medicine to collaborate and bring into the company for diabetes, and right as I was leaving that job, my mother was diagnosed with diabetes and she was put on that medicine, and so the sort of the point of what we do just became super salient for me, and I said, this is not a bad way to spend my time.

And I said to my wife, let's stay here.

When did you realize that you were on a track to be the CEO?

Was it five years post? For later?

Well?

So I worked in that job, and then I had some jobs running markets. I ran our Canadian business and then went to China for two and a half years and ran our Chinese business. And I was suddenly called back from China by the CEO who was a new CEO, and he said you need to come run our US business. And said, John, do't you want me to finish the job? He said, you need to come back. I think that was the point where I was sort of being cultivated for big something bigger.

You now have three children, Yeah, for a while.

I've had three children. Yea, Yes, they're young adults.

Now, okay, all right, But are any of them interested in weight reduction programs or things like.

That or not really?

Well, so my son, he's an AI consultant, so not so much. My daughter is actually getting master's in sell biology and interested in med school, so she's thinking about medicine and medical science. And we talk a lot about the weight loss drugs. And my youngest son is a geology student that produe, so we'll see what he does.

So what do you do for relaxation to stay in shape? You're not on one of these drugs? I think because you look very fit and exercise a lot.

Yeah I'm not, but I would never hesitate to be on one if I needed it. But the best medicine is prevention, and so you know, paying attention to exercise is something I've always cared about It's a way I reduce stress too. So I loved running, and now I don't run anymore, but I do other things like hiking. I love backcountry skiing and the outdoors, play golf. Being outside is where I find both fitness and peace.

You've had an astounding success at ELI, Lelly. Suppose a president of the United States said you should be the secretary of HHS or something like that, what would you say.

You know, the company, as you've pointed out graciously, is really doing well, but you know, we really have a strong desire to do even more, and we're just at the beginning of this weight loss story. You know, right now there's six or seven million Americans who are taking these medicines. There are one hundred and ten million with obesity. We need to build more plants and develop more data, get in better insurance coverage, and then there's the whole

When you have drugs that are very, very popular that you often have people that make counterfeit or copycat drugs. What about for this do you have to worry about counterfeit drugs coming in that are trying to say the same thing.

It's a terrible problem right now, actually, because I think consumers don't really know.

The dangers or the difference.

Today, the FDA and the government has allowed this to sort of grow.

And of course a weight.

Loss medication that's effected would be a popular thing for people to go around the healthcare system and seek treatment on their own. But the data we have is that eighty percent of these medicines are coming out of China from unapproved and unregulated sources. We recently with Borders and Customs seized a big batch that was shipped in dog food. People then reformulate them and sell them locally in medspas

You do not want to be using.

But how much more expensive are your drugs than the counterfeit ones? In other words, if somebody wants to use your product zep bound, how much does it cost a month?

You can buy zepbound direct from Lily for three ninety nine for the starter do.

Eight dollars and ninety nine cents.

No, this is a valuable innovation, David. Three hundred and ninety nine. Three hundred and ninety nine dollars a month, all right, which is about one hundred dollars a week. And I know that's a sacrifice for many, but that's without insurance. With insurance, most people pay twenty five dollars a month. So that's the importance of insurance. That's why we buy insurance to shield this from our health costs. The online ones, you know, are as cheap as one

So let's talk about the company today. How many employees do you have?

Forty four thousand.

And you're headquartered in Indianapolis, yes, correct? And where do you manufacture your drugs? Are the most in the US or mostly overseas.

Mostly in the US, a large majority in Europe as well, So those are our two big bases for production. And in the US we're building lots of plants right now, mostly to support zep bound.

I'm Mancharro.

When did you all realize this is so transformative that you're going to become the most valuable pharmaceutical company in the world by a factor of four or five times.

It's hard to know exactly what the scale of something is, but I will The story of churs epetit or zepbound for me is this. In twenty sixteen, I was named as the incoming CEO. In that fall, one of our scientists in the diabetes group called me about some early results they were receiving from singaporean site we had that was doing a phase one study with churzepetite, the ingredient and zepbound, and we had to stop the study because people were losing too much weight to stay in it.

We disclosed those results later.

That year, and you could probably argue a lot of the run up in Lily was just execution from that moment forward.

Did you take the credit for this? Are you the person responsible for this happening or not?

Of course, as a CEO of a role in all this, but it would be way overstating the role if I took credit. So the credit goes to the scientists to begin with. We have a lot of incumbent capabilities, like how do you take a protein like GLP one, which in the natural body lasts only a few seconds and

Where do you want to take your company now you can't find any drug it's going to be more successful than one you have is you're just going to keep promoting this drug.

First of all, within the obesity metabolic health space, I think there's two things I'm very excited about. One is we have tzepetide modros that found on the market. We have eleven other pipeline projects aimed at the same problem but in different ways.

So we have a triple.

Acting medicine that's in phase three for those that have even higher body weight or more severe health problems. We have the Oral Project, nine others Beyond that, we think this is going to be a very large segment with many different types of medicines for different conditions and different situations people might find themselves in.

We're going to exploit that fully.

The second thing is we've talked a lot about like cardivascer health, diabetes, these conditions that wants to think about with being overweight. But these medicines, we think and we aim to prove, can be useful for other things we don't think about connected to weight. These are often called anti hedonic, so they are reducing that desire cycle. So next year you'll see Lily start large studies and alcohol

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