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Valeant Pharmaceutical International, Inc. 2016 J.P. Morgan Healthcare Conference
January 13, 2016
Howard Schiller
Interim CEO
Dr. Ari Kellen EVP, Company Group Chairman
Robert Rosiello
EVP, Chief Financial Officer
1
Forward-Looking Statements
Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding the
expected future performance of Valeant Pharmaceuticals International, Inc. (the “Company”), including 2016 forecast revenues and guidance
with respect to revenue, adjusted EPS, adjusted cash flow from operations and adjusted EBITDA, potential exclusivity risk to certain of the
Company’s products, anticipated product approvals and product launches of the Company’s pipeline products, the Company’s abil ity to
reduce leverage, the anticipated launch date of the Valeant Access Program with Walgreens and the expected impact of such program, and
the Company’s short-term priorities and ability to achieve such priorities. Forward-looking statements may be identified by the use of the words
“anticipates,” “expects,” “intends,” “plans,” “could,” “should,” “would,” “may,” “will,” “believes,” “estimates,” “seeks,” “potential,” or “continue”
and variations or similar expressions. These statements are based upon the current expectations and beliefs of management, and depend on
assumptions, data or methods that may be incorrect or imprecise and are subject to certain risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks
and uncertainties discussed in the Company's most recent annual or quarterly report filed with the Securities and Exchange Commission ("SEC")
and other risks and uncertainties detailed from time to time in the Company's filings with the SEC and the Canadian Securities Administrators
("CSA"), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking
statements. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after
the date of this presentation or to reflect actual outcomes, except as required by law.
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses
the following non-GAAP financial measures: Adjusted EPS and Adjusted Cash Flow from Operations. Reconciliations of these non-GAAP financial
measures to their most directly comparable GAAP financial measure can be found in documents posted on the “Investors” section of the
Valeant.com website. In addition, Adjusted EBITDA is a non-GAAP financial measure that will be provided in our earnings materials going forward.
The Company does not provide guidance with respect to GAAP financial measures other than revenues or provide reconciliations to GAAP of its
forward-looking non-GAAP financial measures due to the inherent difficulty in quantifying certain amounts that would be required to be included
in the GAAP measure of earnings per share due to their unknown effect, timing and potential significance. Examples of these items include
impairments of assets, gains and losses from the extinguishment of debt, legal settlements, purchases of in-process research and development
assets, and gains and losses from asset sales.
By disclosing the non-GAAP financial measures referenced above, management intends to provide investors with a meaningful, consistent
comparison of the Company’s baseline operating results and trends for the periods presented by excluding items that are considered by the
Company not to be reflective of the Company’s ongoing results. Management uses all of the above named non-GAAP financial measures
internally for strategic decision making, forecasting future results and evaluating current performance. Non-GAAP financial measures are not
prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as
a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Forward-looking Statements
Note 1: The guidance in this presentation is only effective as of the date originally given, namely December 16,
2015, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed
guidance.
Howard Schiller
Interim CEO
January 13, 2016
3
Valeant today
Collection of great healthcare franchises and
brands around the world
Deep bench of talented people
Exciting pipeline of new products
Relentless focus on providing easy and
affordable access for physicians and patients
Remain committed to our strategy with a
relentless focus on execution
4
A collection of great brands in a breadth
of therapeutic areas Valeant 2016 forecast revenues
Total: $12.5 – 12.7 B
~20%
~15%
~10%
~5% ~20%
~20%
~10%
U.S. Gastrointestinal
(GI)
U.S. Dermatology
(Includes Solta
and Obagi)
Emerging Markets
(including Ophthalmology,
Dermatology, and GI sales)
Ex-U.S. Developed Markets
(including Ophthalmology,
Dermatology, and GI sales)
U.S. Ophthalmology
and Eye Care (B+L)
U.S. Consumer
U.S. Oncology, Dentistry,
Women’s Health, Neuro and Other
U.S.
Revenue:
~70%
5
Strong Growth Platforms
Emerging markets (2) U.S. Oncology, Dentistry,
Women’s Health,
Neuro/Other
% 2016 Est. revenue
(1) Including Solta and Obagi
(2) Including Ophthalmology, Dermatology, and GI sales
~15%
U.S. Dermatology (1) U.S. Ophthalmology
and Eye Care (B+L)
~10%
U.S. Gastrointestinal
~20%
U.S. Consumer
~5%
~20% ~20%
Ex-U.S. developed markets (2)
~10%
6
2015 2016 2017 2018 2019 2020Xenazine Ziana Lotemax Gel Acanya Zyclara Luzu
Targretin Zirgan Macugen Solodyn Tiazac (CAD)
Atralin Visudyne Deflux Istalol
Tasmar Glumetza Solesta Elidel
Zegerid Isuprel Moviprep
Virazole
Nitropress
Annual 2015
Sales
~$50 million~$50 million
Products
~$300 million ~$750 million ~$350 million ~$450 million
Potential Exclusivity Risk
Limited risk relative to expected 2016 revenues of $12.5-$12.7B
7
How you can measure our progress in 2016
▪ Retained all key management talent and added
new key hires
▪ Dermatology returned to growth
▪ Maximized Xifaxan – created our first $1B+ brand
▪ Got approval and successfully launched
– Brodalumab
– Latanoprostene Bunod
– Relistor Oral
▪ Delivered $100-150M in addyi sales in 2016
▪ Brought leverage to ~4.0x by end of 2016
Dr. Ari Kellen
EVP, Company Group
Chairman
9
Key facts on our R&D approach
Rx R&D spend
as a % of
branded Rx
sales 8%
▪ 6 NDAs approved in last 3 years
▪ 200+ active US programs
▪ Dermatology Phase II and Phase III success rates 3-5x
better than industry averages
▪ Highest 5 year output1 on R&D spend in the industry
1 Number of NMEs/BLAs approved 2009-'14 for each $1 billion spent;
peer set is 15 companies with the highest number of NME/BLA approvals
10
Valeant R&D at a glance
200 + active
US programs
+
+
6 NDAs approved
in last three
years
43 R&D
facilities 13 510K and PMA
approvals in
last three years 100 MD, PHD, PharmD, JD
and DMD degrees
1,000 R&D and quality
employees
11
How our R&D pipeline was built
We continue to invest
in TAs with attractive
assets
We have acquired
new platforms and
capabilities in
attractive TAs
In Dermatology, we
have built capabilities
from discovery to
commercialization
Our selection and
portfolio de-risking
give us an advantage
Post-acquisition, we
have supplemented
the pipeline where
required and de-risked
where possible
We are building similar
capabilities in
Ophthalmology and GI
Internal Inherited In-licensed /
purchased
Brodalumab
12
Early and late assets across TAs
1 Prior to Phase III for Pharma, 2018+ expected launch for others 2 Includes Phase III and FDA submitted products
3 Includes aesthetics, women’s health, and generics
8
4
12
6
4
5
7
22
6
20
3
2
12
1Opthalmology 7
Contact lenses 9
GI 6
Others3 17
Surgical
Dermatology 15
26 Consumer
32
40
early 72
late 112
total
Early1 Late2
Significant active US programs as of Dec. 2015
13
US branded and generic
drugs pipeline Ophthalmology Generics Dermatology
GI In-house development Women’s health
Early stage (Pre Ph. III)
Late stage (Ph. III - submission)
Latanoprostene Bunod:
OAG
IDP-118: Psoriasis SAL-020: HAE IDP-120: Acne
IDP-121: Acne SAL-021: RA IDP-125: Actinic keratosis
Relistor Oral: Opioid induced constipation
IDP-124: Atopic dermatitis
IDP-131: Psoriasis SAL-022: Diabetes
IDP-126: Acne IDP-122: Psoriasis
SAL-024: Crohn’s
SAL-023: Cirrhosis
BLG023: Anti-infective
IDP-127: Anti-fungal IDP-123: Acne
Brinzolamide Gx: OAG
BLO-020: Inflammation
IDP-128: Actinic keratosis
VAL-BRO-03: Psoriatic arthritis
SPT-201: HSDD
BLG020: Disclosing agent
IDP-129: Acne Brodalumab: Psoriasis
BLG021: Anti-infective
IDP-130: Acne BLO-021: Cystoid
Macular edema
BLG022: Anesthetic
EGP-437: Anterior uveitis
BLO-022: Post-operative
inflammation
14
US Devices pipeline Aesthetics Contact lenses
Surgical In-house development
Late stage Early stage
BLS-021: Retina
BLS-023: Retina
BLS-022: Retina
BLS-024: Retina
BLS-026: Retina
BLS-027: Retina
BLS-028: Retina
BLS-029: Retina
BLS-030: Retina
BLS-031: Retina
BLS-025: Retina
BLS-032: OEM
SOF-010: Skin resurfacing
SOT-010: Fine Lines & wrinkles
SOT-011: Fine Lines & wrinkles
BLS-002: Cataract
BLS-003: Cataract
BLS-004: Cataract
BLS-005: Retina
BLS-006: Cataract
BLS-007: Cataract
BLS-001: Cataract
SOM-010 Vascular Lesions
BLC-008: Astigmatism
BLC-007: MF
BLC-009: Astigmatism
BLS-015: Cataract
BLS-016: Cataract
BLS-017: Therapeutics
BLS-018: Retina
BLS-019: Retina
BLS-020: Retina
BLS-014: Refractive
BLC-001: SVS
BLC-003: SVS/MF/fA
BLC-002: SVS
BLC-004: Toric
BLC-006: SVS
BLS-012: Retina
BLS-008: Cataract
BLS-009: Retina
BLS-010: Cataract
BLS-011: Cataract
BLC-005: SVS/MF
BLS-013: Retina
15
Select pipeline opportunities
Relistor Oral
Latanoprostene
Bunod (LBN)
Drug1 Indication
Expected
launch
US
Prevalence
Opioid induced
constipation (OIC)
with chronic non-
cancer pain
Reduction of
Intraocular
pressure in patients
with Open Angle
Glaucoma (OAG)
and Ocular
hypertension
2016 (PDUFA
Date April 19th)
2016 ((PDUFA
Date July 21st)
2017/18 IDP118 Moderate to
severe plaque
psoriasis
~9.5M
~3.7M
~3.0M
Source: Decision Resources, BioMed Tracker
Brodalumab 2016 Moderate to
severe plaque
psoriasis
~9.5M
1 Product candidates, not yet approved by the FDA
16
Valeant Access Program with Walgreens
▪ Objectives:
– Ensure affordable access to Valeant products that doctors
choose to prescribe (for eligible patients)
– Jointly take costs out the healthcare system
▪ Status
– Signed December 14th 2015: 20 year partnership
▫ Strong ongoing momentum and collaboration between
Walgreens/Valeant teams
– Two distinct programs
▫ U.S. Brands Program: first phase (dermatology) operational
January 15, 2016, with ophthalmology products and Addyi to
follow shortly thereafter
▫ U.S. Brand for Generic program: expected to be operational
Mid 2016
– Exploring additional collaborations beyond the U.S.
17
Two distinct programs
▪ Patient access and co-pay
program to ensure affordable
access to branded products
▪ 25+ brands across Dermatology,
Ophthalmology Rx, and Addyi
▪ 10% WAC price reduction
(weighted average) across Derm
and Ophth Rx
▪ In process of building a
complementary network of
independent pharmacies
U.S. Branded Access Program
(Phase 1 (derm) on Jan 15th)
▪ For selected products, make
branded product available at
generic price
▪ Currently Valeant has sub 5%
market-share creating a meaningful
volume opportunity
U.S. Brand for Generic Program
(Expected Mid-2016)
Common program features
▪ Products on consignment, Walgreens does not take title
▪ Walgreens to be paid fee-for-service for distribution and fulfillment
services
18
Valeant’s new branded access program
▪ Ensure affordable access to Valeant products that doctors choose to prescribe (for eligible patients)1
▪ Take costs out the healthcare system
▪ Allow caregivers to focus their efforts on patient care
▪ Walgreens and Valeant teams prepared for Jan 15th launch of Dermatology brands; Ophthalmology Rx and Addyi to follow
1 Commercial insured and uninsured only – no government plans
2
Robert Rosiello
EVP, Chief Financial Officer
20
Q4 highlights
Confirming Q4 and 2015 full-year guidance
Strong continued momentum across business units
Strong year-over-year dermatology script growth
even with disruption (retained approximately 80% of
dermatology scripts)
Continued strong GI growth driven by double-digit
Xifaxan script growth and strong script growth in other
key products (Relistor, Apriso, Ruconest)
Expect ~10% same store organic sales growth for full
year, despite negative Q4 organic growth
Preparing for launch of new Branded Access Program
with Walgreens
21
Latest 2015
Guidance
(12/16/15)
2014 Actual
Latest 2015
Guidance vs
2014 Actual
$10.4 - $10.5B $8.29B 26%
$10.23 - $10.33
per share
$8.36
per share 23%
>$2.95B $2.5B 18%
Revenue
Adj. EPS*
Adj. Cash
Flow from
Operations*
* Non-GAAP, for Non-GAAP definition – See December 16, 2015 Presentation:
Valeant: An Enduring Engine for Growth, Pages 131 and 132
See Note 1
Latest 2015 guidance vs. 2014 actual
22
2016
Guidance
Latest 2015
Guidance
(12/16/15)
2016 Guidance
vs Latest 2015
Guidance
~$12.5B – 12.7B $10.4B – 10.5B ~21%
~$13.25 – 13.75
per share
$10.23 – 10.33
per share ~31%
$6.9 – 7.1B >$5.4B ~30%
Revenue
Adj. EPS*
Adj. EBITDA*
* Non-GAAP, for Non-GAAP definition – See December 16, 2015 Presentation:
Valeant: An Enduring Engine for Growth, Pages 131 and 132
See Note 1
2016 guidance vs. latest 2015 guidance
23
Bridge from 2016 Adjusted EBITDA* to 2016
Debt Paydown (detail to 12/16/15 presentation)
(US$M)
Adjusted EBITDA* (midpoint)
~$7,000
Cash Interest ~$1,600
Cash Taxes (~5% rate) ~$250
Increase in Working Capital ~$600
Cash Restructuring ~$200
Contingent Consideration/Milestones/Payments
(e.g., Sprout, brodalumab)
~$925
Capital Expenditure ~$350
Repayment of outstanding revolver balance (Year-
end 2015) plus discretionary cash
~$825
Debt Paydown >$2,250
* Non-GAAP, for Non-GAAP definition – See December 16, 2015 Presentation:
Valeant: An Enduring Engine for Growth, Pages 131 and 132
24
Clear short-term priorities
Continue to deliver strong performance across businesses
Keep organization focused
Drive disciplined execution through decentralized model
Return dermatology to growth
Launch Walgreens Branded Access Program
Prepare for Walgreens Branded Generics Access Program
Continue growth momentum in Salix
Driven by Xifaxan HE and IBS-D
Successfully launch key R&D products
Focus on debt pay down