Transcript View the Presentation - Valeant Pharmaceuticals

Valeant Pharmaceutical
International, Inc.
2016 J.P. Morgan
Healthcare Conference
Howard Schiller
Interim CEO
Dr. Ari Kellen
EVP, Company Group Chairman
January 13, 2016
Robert Rosiello
EVP, Chief Financial Officer
Forward-looking Statements
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 ability 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.
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.
1
Howard Schiller
Interim CEO
January 13, 2016
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
3
A collection of great brands in a breadth
of therapeutic areas
Valeant 2016 forecast revenues
Total: $12.5 – 12.7 B
Ex-U.S. Developed Markets
(including Ophthalmology,
Dermatology, and GI sales)
U.S. Gastrointestinal
(GI)
~10%
~20%
Emerging Markets
(including Ophthalmology, ~20%
Dermatology, and GI sales)
U.S.
Revenue:
~70%
~15%
~10%
~5%
~20%
U.S. Oncology, Dentistry,
Women’s Health, Neuro and Other
U.S. Dermatology
(Includes Solta
and Obagi)
U.S. Ophthalmology
and Eye Care (B+L)
U.S. Consumer
4
Strong Growth Platforms
U.S. Gastrointestinal
U.S. Dermatology
Emerging markets
U.S. Ophthalmology
and Eye Care (B+L)
(1)
~10%
~15%
~20%
(2)
~20%
(1) Including Solta and Obagi
(2) Including Ophthalmology, Dermatology, and GI sales
% 2016 Est. revenue
Ex-U.S. developed markets
~10%
5
(2)
U.S. Consumer
~5%
U.S. Oncology, Dentistry,
Women’s Health,
Neuro/Other
~20%
Potential Exclusivity Risk
Products
2015
2016
2017
2018
2019
2020
Xenazine
Targretin
Atralin
Tasmar
Ziana
Zirgan
Visudyne
Glumetza
Zegerid
Virazole
Nitropress
Lotemax Gel
Macugen
Deflux
Solesta
Isuprel
Acanya
Solodyn
Istalol
Elidel
Moviprep
Zyclara
Luzu
Tiazac (CAD)
Annual 2015
~$300 million ~$750 million ~$350 million ~$450 million ~$50 million
Sales
Limited risk relative to expected 2016 revenues of $12.5-$12.7B
6
~$50 million
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
7
Dr. Ari Kellen
EVP, Company Group
Chairman
Key facts on our R&D approach
▪ 6 NDAs approved in last 3 years
▪ 200+ active US programs
8%
Rx R&D spend
as a % of
branded Rx
sales
▪ 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
9
Valeant R&D at a glance
6
NDAs approved
in last three
years
13
200
510K and PMA
approvals in
last three years
+ active
US programs
43
10
1,000
+
R&D and quality
employees
R&D
facilities
100
+
MD, PHD, PharmD, JD
and DMD degrees
How our R&D pipeline was built
Internal
Inherited
In-licensed /
purchased
In Dermatology, we
have built capabilities
from discovery to
commercialization
We have acquired
new platforms and
capabilities in
attractive TAs
We continue to invest
in TAs with attractive
assets
We are building similar
capabilities in
Ophthalmology and GI
Post-acquisition, we
have supplemented
the pipeline where
required and de-risked
where possible
Our selection and
portfolio de-risking
give us an advantage
Brodalumab
11
Early and late assets across TAs
Early1
Late2
Significant active US programs as of Dec. 2015
8
Dermatology
22
1
6
7
6
Contact lenses
Others3
26
12
Surgical
GI
15
4
Consumer
Opthalmology
7
4
20
3
9
2 6
5
12
40
early
72
late
17
1 Prior to Phase III for Pharma, 2018+ expected launch for others
3 Includes aesthetics, women’s health, and generics
112
total
2 Includes Phase III and FDA submitted products
12
32
US branded and generic
drugs pipeline
Dermatology
GI
Early stage
(Pre Ph. III)
Ophthalmology
Women’s health
Generics
In-house development
Late stage
(Ph. III - submission)
SAL-020: HAE
IDP-120: Acne
IDP-118: Psoriasis
Relistor Oral: Opioid
induced constipation
SAL-021: RA
IDP-125: Actinic
keratosis
IDP-121: Acne
SAL-024: Crohn’s
SAL-022: Diabetes
IDP-131: Psoriasis
IDP-124: Atopic
dermatitis
Brinzolamide Gx: OAG
SAL-023: Cirrhosis
IDP-126: Acne
IDP-122: Psoriasis
BLG020: Disclosing
agent
BLO-020: Inflammation
IDP-127: Anti-fungal
IDP-123: Acne
BLG021: Anti-infective
SPT-201: HSDD
IDP-128: Actinic
keratosis
VAL-BRO-03: Psoriatic
arthritis
BLG022: Anesthetic
IDP-129: Acne
Brodalumab: Psoriasis
BLG023: Anti-infective
IDP-130: Acne
BLO-021: Cystoid
Macular edema
EGP-437: Anterior uveitis
Latanoprostene Bunod:
OAG
BLO-022: Post-operative
inflammation
13
US Devices pipeline
Early stage
Aesthetics
Contact lenses
Surgical
In-house development
Late stage
SOF-010: Skin resurfacing
BLC-001: SVS
SOM-010 Vascular Lesions
BLS-021: Retina
SOT-011: Fine Lines & wrinkles
BLC-002: SVS
BLC-007: MF
BLS-022: Retina
SOT-010: Fine Lines & wrinkles
BLC-003: SVS/MF/fA
BLC-008: Astigmatism
BLS-023: Retina
BLS-001: Cataract
BLC-004: Toric
BLC-009: Astigmatism
BLS-024: Retina
BLS-002: Cataract
BLC-005: SVS/MF
BLS-014: Refractive
BLS-025: Retina
BLS-003: Cataract
BLC-006: SVS
BLS-015: Cataract
BLS-026: Retina
BLS-004: Cataract
BLS-008: Cataract
BLS-016: Cataract
BLS-027: Retina
BLS-006: Cataract
BLS-009: Retina
BLS-017: Therapeutics
BLS-028: Retina
BLS-007: Cataract
BLS-010: Cataract
BLS-018: Retina
BLS-029: Retina
BLS-011: Cataract
BLS-019: Retina
BLS-030: Retina
BLS-012: Retina
BLS-020: Retina
BLS-031: Retina
BLS-013: Retina
BLS-005: Retina
BLS-032: OEM
14
Select pipeline opportunities
US
Prevalence
Expected
launch
Opioid induced
constipation (OIC)
with chronic noncancer pain
~3.7M
2016 (PDUFA
Date April 19th)
Latanoprostene
Bunod (LBN)
Reduction of
Intraocular
pressure in patients
with Open Angle
Glaucoma (OAG)
and Ocular
hypertension
~3.0M
2016 ((PDUFA
Date July 21st)
Brodalumab
Moderate to
severe plaque
psoriasis
~9.5M
2016
IDP118
Moderate to
severe plaque
psoriasis
~9.5M
2017/18
Drug1
Indication
Relistor Oral
1 Product candidates, not yet approved by the FDA
Source: Decision Resources, BioMed Tracker
15
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.
16
Two distinct programs
U.S. Branded Access Program
(Phase 1 (derm) on Jan 15th)
U.S. Brand for Generic Program
(Expected Mid-2016)
▪
Patient access and co-pay
program to ensure affordable
access to branded products
▪
For selected products, make
branded product available at
generic price
▪
25+ brands across Dermatology,
Ophthalmology Rx, and Addyi
▪
▪
10% WAC price reduction
(weighted average) across Derm
and Ophth Rx
Currently Valeant has sub 5%
market-share creating a meaningful
volume opportunity
▪
In process of building a
complementary network of
independent pharmacies
Common program features
▪
▪
Products on consignment, Walgreens does not take title
Walgreens to be paid fee-for-service for distribution and fulfillment
services
17
Valeant’s new branded access program
▪ Ensure affordable access to Valeant products
that doctors choose to prescribe (for eligible
patients)1
2
▪ 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
18
Robert Rosiello
EVP, Chief Financial Officer
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


20
Latest 2015 guidance vs. 2014 actual
Latest 2015
Guidance
(12/16/15)
2014 Actual
Latest 2015
Guidance vs
2014 Actual
Revenue
$10.4 - $10.5B
$8.29B
26%
Adj. EPS*
$10.23 - $10.33
per share
$8.36
per share
23%
>$2.95B
$2.5B
18%
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
21
2016 guidance vs. latest 2015 guidance
2016
Guidance
Latest 2015
Guidance
(12/16/15)
2016 Guidance
vs Latest 2015
Guidance
Revenue
~$12.5B – 12.7B
$10.4B – 10.5B
~21%
Adj. EPS*
~$13.25 – 13.75
per share
$10.23 – 10.33
per share
~31%
$6.9 – 7.1B
>$5.4B
~30%
Adj. EBITDA*
* Non-GAAP, for Non-GAAP definition – See December 16, 2015 Presentation:
Valeant: An Enduring Engine for Growth, Pages 131 and 132
See Note 1
22
Bridge from 2016 Adjusted EBITDA* to 2016
Debt Paydown (detail to 12/16/15 presentation)
(US$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 (Yearend 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
23
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
24