The New Valeant: Delivering on Our Commitments - J.P. Morgan Healthcare Conference - Bausch Health Companies Inc.
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The New Valeant: Delivering on Our Commitments J.P. Morgan Healthcare Conference January 10, 2017
Forward-Looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding expected future performance of Valeant Pharmaceuticals International, Inc. (“Valeant” or the “Company”), including statements reiterating guidance, the anticipated growth of and plans for the Company’s operating and reportable segments, the anticipated timing of the closing of certain of the Company’s recent divestitures and the anticipated use of proceeds from such divestitures, the anticipated receipt of clinical data for certain of our pipeline products and the expected timing of such data, the anticipated steps and phases for certain of our R&D projects and the expected timing of such steps and phases, the anticipated submission, approval and launch dates for certain of our pipeline products and R&D programs, the expected timing of the loss of exclusivity of certain of our products and the estimated impact of such loss of exclusivity, anticipated debt reduction and repayment (including our ability to pay down debt and the availability of cash flow and asset sales proceeds for such purpose), and the Company’s mission and the plans, goals and strategies related thereto. Forward-looking statements may generally be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management 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 and quarterly reports and detailed from time to time in Valeant’s other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Valeant 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. 2
Non-GAAP Information To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures including EBITDA. Management uses non-GAAP measures as key metrics in the evaluation of Company performance and the consolidated financial results. The Company believes these non-GAAP measures are useful to investors in their assessment of our operating performance and the valuation of our Company. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data, the Company has determined that it is appropriate to make this data available to all investors. However, non-GAAP financial measures are not prepared in accordance with GAAP, as they exclude certain items as described herein. 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. 3
We Have Stabilized - Reiterating 2016 Guidance
OUR MISSION
To Improve People’s Lives With Our Healthcare Products
STABILIZE TURNAROUND TRANSFORM
2016 2017-2018 2018+
Focus on specialty driven markets
w/above average growth rates Lead in our
Paid down debt
Invest in pipeline/quality/product categories
Attracted new talent
launches Launch new
New Product Approvals
Strengthen balance sheet products
Derm Recovery
Salix Growth Reallocate spending on high ROI Balance organic and
programs inorganic growth
Launched new segments
Improve gross profit
4 Address legacy Issues
Significant Progress in 2016 / Delivering on Commitments
Streamlined Portfolio – Divested (or agreed to divest) 3 Skincare Brands, Dendreon, Delta
(Brazil), Vietnam/Indonesia, Brodalumab EU Rights, Ruconest, OEM Business, Other
Built New Leadership Team
Launched New Prior Authorization Program for Dermatology/Dermatology Rx Recovery
Continued Consistent Growth in Consumer Business
Partnered with Wilson’s Disease Association
Initiated Xifaxan New Formulation Activities/PCP Strategy
Stabilized Salesforce
Launched Relistor® Oral Tablets
Won 18-0 Vote from Brodalumab FDA Advisory Committee
Licensed Novel Bowel Cleansing Product Candidate
Introduced PreserVision® AREDS 2 Formula + Multivitamin
Launched Bausch + Lomb ULTRA® for Presbyopia contact lenses
Reduced Permanent Debt – Paid down ~$1.84B in full year 2016; $294M in Q4 (exceeded
$1.7B commitment for 2016)
5
Delivering on Commitments: Divestitures
• Upon completion of the transactions announced today, we will have generated
asset sale proceeds of ~$2.35B (upfront) and future milestones of ~$0.35B, or
total potential proceeds of $2.7B
• We have simplified our operating model by divesting or agreeing to divest:
CeraVe, AcneFree & AMBI Delta (Brazil)
Dendreon Euvipharm (Vietnam)
Synergetics OEM Armoxindo (Indonesia)
Ruconest Paragon
Brodalumab EU Rights Cosmederme (Canada)
6
Delivering on Commitments: Divestitures
• Announced sale of CeraVe, AcneFree and
DIVESTITURE AMBI skincare brands to L’Oreal for $1.3B in
cash
• Reshaping consumer product portfolio in
STRATEGIC RATIONALE response to compelling in-bound interest from
global beauty company
• Substantial return on investment
PURCHASE PRICE
• +20x annualized earnings contribution to VRX
TIMING • Expected to close in Q1 2017
USE OF PROCEEDS • Pay down term loan debt
7
Delivering on Commitments: Divestitures
• Announced sale of Dendreon to Sanpower
DIVESTITURE Group for $819.9M in cash
• Exiting non-core oncology business in U.S.
STRATEGIC RATIONALE
Diversified Products segment
• Premium to purchase price in February 2015
PURCHASE PRICE
• ~7x multiple of EBITDA
TIMING • Expected to close in Q2 2017
USE OF PROCEEDS • Pay down term loan debt
8
Delivering on Commitments: New Leadership Team
New Leadership Hires
Paul Herendeen Christina Ackermann Bill Humphries
Executive Vice President, Finance Executive Vice President Executive Vice President,
Chief Financial Officer General Counsel Dermatology
Scott Hirsch Louis Yu Sam Eldessouky
Senior Vice President, Business Chief Quality Officer Senior Vice President
Strategy Corporate Controller
Expanded Roles
Tom Appio Tracy Valorie Dennis Asharin Mark McKenna
Senior Vice President,
Executive Vice Senior Vice President Senior Vice President,
Manufacturing and Supply
President/President, Int’l Bausch + Lomb GI
Chain
Joe Gordon Barb Purcell Kelly Webber
Chuck Hess Senior Vice President
Senior Vice President/General
Senior Vice President,
GM, Surgical Manager, Neurology,
Bausch + Lomb Generics and Obagi
Human Resources
+ Primary Care Sales Force Expansion
9
Delivering on Commitments: Stabilized Valeant Sales Force
Quarterly Sales Force Retention
94.0%
93.6%
91.1%
89.2%
1Q 2016 2Q 2016 3Q 2016 4Q 2016Delivering on Commitments: Strengthened Balance Sheet
Commitment Result
• Repay $1.7B permanent debt in 2016 Achieved $1.84B
• Complete all 2017 scheduled amortization
Achieved
payments by year-end
• Evaluate/complete asset sales within 6 months Achieved/Continuing
We continue to expect free cash flow and non-core asset sales to reduce
debt by more than $5B within 18 months from Aug. 9th 2016
11Delivering on Commitments: Grew GI/Salix Business
• Promoted brands in the portfolio grew +10% YoY with 4% growth from H1 to H2 2016
• Successfully stabilized sales force in H2 compared to H1 with 45% reduction in voluntary turnover
• Initiated primary care salesforce expansion in Q4
• Xifaxan continues to drive performance of Salix business with projected +17% Y/Y growth and 4% growth in
H2 v. H1
GI Promoted Brands TRx Growth
2014 2015 2016
1,331,032
+10%
1,207,401
+16%
1,041,332
Annual TRxCreating the “New Valeant”
OUR MISSION
To Improve People’s Lives With Our Healthcare Products
STABILIZE TURNAROUND TRANSFORM
2016 2017-2018 2018+
Focus on specialty driven markets
Paid down debt w/above average growth rates Lead in our
categories
Attracted new talent Invest in pipeline/quality/product
New Product Approvals launches Launch new
products
Derm Recovery Strengthen balance sheet
Salix Growth Balance organic and
Reallocate spending on high ROI
inorganic growth
Launched new segments programs
Improve gross profit
13 Address legacy IssuesInvest in R&D/Quality/New Product Launches
R&D PROGRAM HIGHLIGHTS Launch Timeframe
% of R&D
Programs
43 R&D Facilities 2017-2019 ~80%
2020-beyond ~20%
1,000+ # R&D/Quality
Employees
Derm,
38% Y/Y Increase in
R&D Spending
Other,
23
20
GI, 16
~135 Total Company
active R&D projects
B+L,
76
Expected new product
50+ launches
in 2017
14R&D Catalysts in 2017
• SAN-300 (Rheumatoid Arthritis) Phase II data read out H1
• enVista® Trifocal (Intraocular Lens) Initiate IDE study in H1
• New Material (Ophthalmic Viscosurgical Device); Initiate IDE in H1
• Loteprednol Gel 0.38% (Ocular Inflammation) Complete Phase III enrollment
• IDP-120 (Acne) Initiate Phase III in H2
LATE PHASE
• IDP-123 (Psoriasis) Initiate Phase III in H2
• New Xifaxan® Formulation (New Indication) Initiate Phase III in H2
• IDP-126 (Acne Combination) Initiate Phase I in H2
• Teneo (Excimer laser); Initiate IDE study in H2
• Bausch + Lomb ULTRA® Extended Wear Indication – H1
• Luminesse (Eye Brightener) – H1
• IDP-118 (Psoriasis) – H2
SUBMISSIONS
• IDP-121 (Acne Lotion) – H2
• IDP-122 (Psoriasis) – H2
• Stellaris Elite™ – H1
• Next Generation Thermage – H1
• Vitesse – H1
LAUNCHES • Brodalumab for Psoriasis – H2
• Latanoprostene Bunod (Vyzulta™*) for reduction of IOP in ocular hypertension or
glaucoma – H2
15 *Provisionally • Bausch + Lomb ULTRA® and Biotrue® ONEday toric lenses
approved nameBrodalumab: PDUFA Date - February 16, 2017
• Biologic for treatment of severe psoriasis
• Total Psoriasis Market: ~$10B
• 2Q17 Anticipated Launch1
• Mechanism of Action: works closer to receptor
(blocker) than other biologics
• Suicidal Ideation Labeling
PASI 100 (NRI): Brodalumab 210 Q2W
Superior to Ustekinumab
IL-17 Receptor
Blocker
1 Subject to US FDA regulatory approval
16IDP-118: First Half of 2017 Filing Opportunity
• Potential Indication: moderate to severe plaque psoriasis in adults
• Unique Topical Combination - 1st corticosteroid-retinoid combination for psoriasis
• Studied in over 1900 subjects in a comprehensive clinical program comprising 11 studies
– This combination with its dual mechanism of action will potentially allow for expanded use of these well-known active
ingredients - use for longer than all approved potent and super potent steroids and with considerably reduced irritation
due to our novel formulation.
• Two Positive Phase 3 Trials, Long Term Safety Trial near completion
• Patient Population: Adults with moderate to severe plaque psoriasis
• Treatment duration: 8 weeks ; primary endpoint of Investigator Global Assessment (IGA) of Clear (0) to
Almost Clear (1)
Phase 3 % Treatment Success (IGA of 0/1)
IDP-118 Vehicle P-value
Study 301 35.76 6.98 P < 0.001
Study 302 45.33 12.51 P < 0.001
17Latanoprostene Bunod (Vyzulta™*): A Novel Monotherapy IOP Lowering Agent
• ~3M Americans affected by glaucoma • Latanoprostene bunod (LBN) ophthalmic solution 0.024%
• 17M Prostaglandin Rx’s written annually (LBN) is a nitric oxide-donating prostaglandin analog being
– ~70% latanoprost molecule
evaluated for the reduction of intraocular pressure (IOP)
• Total Glaucoma Market ~$3B • LBN is thought to lower IOP by increasing outflow through
both the trabecular meshwork and uveoscleral pathways
– Prostaglandin Market valued at $1.6B
CLINICAL RESULTS
• In a Phase 2b dose ranging study, LBN demonstrated greater
IOP reduction compared with Xalatan (latanoprost
ophthalmic solution 0.005%), with the differences reaching
more than 1 mm Hg (p2017 Vision Care Product Launches
Completing the Full Family of Contact Lenses
• Soft contact lens toric for astigmatism market valued over $700M
• Category growth of 5% with significant growth in daily disposable segment
• Bausch + Lomb US share of segment is in low single digits presenting large opportunity for
growth
BIOTRUE® ONEDAY FOR ASTIGMATISM BAUSCH + LOMB ULTRA® FOR ASTIGMATISM
19B+L / International: Continue to Lead Growth in China 2017
EFFECTIVE CHANNEL
LOCAL PORTFOLIO TO DEDICATED & STABLE
MANAGEMENT TO
CAPTURE DIVERSE NEEDS TEAM PROMISES & DELIVERS
MAXIMIZE GROWTH
• Protect base • Channel segmentation • 30- year anniversary to
• Drive global innovation • Leverage ecommerce generate excitement
• Maximize Bescon • Flagship store online
20B+L / International: Gain Momentum in Japan in 2017
LAUNCH W/ EXCELLENCE TO RE-ENTER COSMETIC LENS STRENGTHEN CUSTOMER
RE-ENGAGE KOL & ECP SEGMENT WITH BESCON RELATIONSHIPS
• Aqualox • Tailor made for Japanese • Gain distribution of Biotrue
• Biotrue for Astigmatism young consumers platform at Hoya (#1 volume
• Biotrue MF (2nd year) chain)
• Engage ecommerce
customers with Soflens daily
& Starry
• Active management of
distributors
• Re-allocate sales force based
on business trends
21Valeant Consumer Healthcare 2016 Performance
Top Us Consumer Healthcare Companies1
• Biotrue is #1 multi-purpose solution brand with
highest loyalty metrics
7.1% • PreserVision AREDS 2 Formula 120ct is #1 selling
6.7%
vitamin item in the U.S.
5.0% • Soothe is the fastest growing OTC Dry Eye brand
4.0% 3.8%
2.0% 1.7%
0.8%
-0.5%
-1.1%
-1.8% -1.9%
-2.4% -2.6%
VALEANT PHARMA INTL GLAXOSMITHKLINE PHARMAVITE LLC SANOFI AVENTIS US LLC JOHNSON & JOHNSON ABBOTT LABS INC CHURCH & DWIGHT CO INC PFIZER INC PRESTIGE BRANDS KAO CORP OF JAPAN PROCTER & GAMBLE RECKITT BENCKISER INC ALCON BAYER AG
HOLDINGS INC
$
MM $796 $2,604 $833 $1,410 $6,224 $1,189 $1,288 $2,100 $805 $624 $14,887 $1,633 $3,313 $632
1 YTD 12-25-16. Based on IRI Definition of Manufacturers in Healthcare with >$500MM in Annual Sales. Excludes private Label.
22 Source: IRI Market Advantage – Total US MULO - Valeant Includes CostcoBranded Rx: GI (Relistor)
• Since the launch of
Relistor tablet, the
franchise has seen
a 26% growth in
writers.
• Relistor tablet has
averaged 11% week
over week NRx
growth since
launch in
September.
• Relistor has 84%
commercial access
entering 2017
• New sales force
expansion New Development Opportunities???
announced to focus
on potential PCP
prescribers of
Xifaxan for IBS-D
and Relistor for OIC
23U.S. Diversified Products
Despite potential pending losses of exclusivity in the coming years:
Potential
2016 2017
LOE Risk
Products Ziana Lotemax Gel
Zirgan Macugen
Visudyne Deflux
Glumetza Solesta
Zegerid Isuprel
Virazole Mephyton
Nitropress Syprine
Edecrin
Ammonul
Est. Impact on 2017 ~$800M
There are several promotable product opportunities in this portfolio, including:
Diastat, Librax, Migranal and Wellbutrin.
24Summary: Fiction v. Fact
Fiction Fact
VRX has ~135 active R&D programs and is poised to
“VRX doesn’t do R&D”
launch 50+ new products in 2017
VRX has committed to single digit price increases in
“VRX just buys companies and raises prices”
US Branded Rx
VRX has hired 250+ salespeople in the US over the
“Difficult to recruit and retain people at Valeant” last 6 months and recruited and installed a new
leadership team
“VRX can’t generate enough cash to meet its VRX has paid down $1.84 B of permanent debt and
obligations” made all scheduled 2017 amortization payments
VRX has agreed to sell Dendreon for 7x and 3
“Valeant has to sell assets at distressed prices”
skincare brands for +20x earnings contribution
“Valeant relies on US prescription market pricing ~87% of all B+L/International EBITDA is
alone for its earnings” independent of US prescription pricing model
25We Have Stabilized – Beginning Turnaround
OUR MISSION
To Improve People’s Lives With Our Healthcare Products
STABILIZE TURNAROUND TRANSFORM
2016 2017-2018 2018+
Focus on specialty driven markets
w/above average growth rates Lead in our
Paid down debt
Invest in pipeline/quality/product categories
Attracted new talent
launches Launch new
New Product Approvals
Strengthen balance sheet products
Derm Recovery
Salix Growth Reallocate spending on high ROI Balance organic and
programs inorganic growth
Launched new segments
Improve gross profit
26 Address legacy IssuesYou can also read
