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`THOMSON REUTERS STREETEVENTS
`EDITED TRANSCRIPT
`VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings
`Call
`
`EVENT DATE/TIME: JUNE 07, 2016 / 12:00PM GMT
`
`OVERVIEW:
`Co. reported 1Q16 total revenues of $2.4b and GAAP loss per share of $1.08. Expects
`full-year 2016 revenues to be $9.9-10.1b and adjusted non-GAAP EPS to be
`$6.60-7.00.
`
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`companies.
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`ACRUX DDS PTY LTD. et al.
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`EXHIBIT 1582
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`IPR Petition for
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`U.S. Patent No. 7,214,506
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`Page 1 of 31
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Client Id: 43
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`C O R P O R A T E P A R T I C I P A N T S
`Laurie Little Valeant Pharmaceuticals International Inc - Head of IR
`
`Joe Papa Valeant Pharmaceuticals International Inc - CEO
`
`Rob Rosiello Valeant Pharmaceuticals International Inc - CFO
`
`Linda LaGorga Valeant Pharmaceuticals International Inc - Treasurer
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`Tage Ramakrishna Valeant Pharmaceuticals International Inc - Chief Medical Officer
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`Anne Whitaker Valeant Pharmaceuticals International Inc - Company Group Chairman
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`Ari Kellen Valeant Pharmaceuticals International Inc - Company Group Chairman
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`Jeremy Lipshy Valeant Pharmaceuticals International Inc - Director of Tax Planning
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`C O N F E R E N C E C A L L P A R T I C I P A N T S
`Louise Chen Guggenheim Securities LLC - Analyst
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`Tim Chiang BTIG - Analyst
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`Gregg Gilbert Deutsche Bank - Analyst
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`Wendy Lin JPMorgan - Analyst
`
`Annabel Samimy Stifel Nicolaus - Analyst
`
`Andrew Finkelstein Susquehanna Financial Group / SIG - Analyst
`
`Umer Raffat Evercore ISI - Analyst
`
`David Risinger Morgan Stanley - Analyst
`
`David Amsellem Piper Jaffray & Company - Analyst
`
`Cindy Guan Goldman Sachs - Analyst
`
`David Maris Wells Fargo Securities - Analyst
`
`Irina Koffler Mizuho Securities USA - Analyst
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`Morgan Williams Barclays Capital - Analyst
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`Doug Miehm RBC Capital Markets - Analyst
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`Alan Ridgeway Scotiabank - Analyst
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`David Common JPMorgan - Analyst
`
`P R E S E N T A T I O N
`Operator
`
`Good morning. My name is Jonathan and I will be your conference operator today. At this time, I would like to welcome everyone to the Valeant
`first-quarter 2016 results conference call.
`
`(Operator Instructions)
`
`Ms. Laurie Little, Head of Investor Relations, you may begin your conference.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Laurie Little - Valeant Pharmaceuticals International Inc - Head of IR
`
`Thanks, Jonathan, and good morning, everyone, and welcome to Valeant's investor conference call where we will be discussing our first-quarter
`2016 financial results. Participating on today's call are Joe Papa, Chief Executive Officer; Rob Rosiello, Chief Financial Officer; Dr. Tage Ramakrishna,
`Chief Medical Officer; Dr. Ari Kellen, Company Group Chairman; Anne Whitaker, Company Group Chairman; and Linda LaGorga, our Treasurer. In
`addition to the live webcast, a copy of today's slide presentation can be found on our website under the Investor Relations section.
`
`Before we begin, our presentation today contains forward-looking information. We've asked that you take a moment to read the forward-looking
`statement legend at the beginning of our presentation, as it contains important information.
`
`In addition, this presentation contains non-GAAP financial measures. For more information about the non-GAAP financial measures, please refer
`to slide 1. Non-GAAP reconciliations can also be found in the press release issued earlier today and posted on our website.
`
`Finally, the financial guidance in this presentation is effective only as of today. It is our policy to update our firm guidance only through broadly
`disseminated public disclosure. With that, I will turn the call over to Joe.
`
`Joe Papa - Valeant Pharmaceuticals International Inc - CEO
`
`Thank you, Laurie, and good morning, everyone, and thank you for joining us. Today we'd like to cover the following topics: First, I'd like to share
`some thoughts following my first month at Valeant then we'll cover the results of the first quarter. Next, I'll walk you through our plans for stabilizing
`Valeant in 2016, including updating our 2016 guidance. Then we will address the areas of improvement, as well as areas of opportunity. And finally
`I'd like to tell you why I'm confident in Valeant's future.
`
`In addition to today's prepared remarks we have several slides at the end of the deck in the appendix that we will not cover in today's presentation.
`Beyond the prepared agenda on slide 3, what I want to do today is really simple. I want to answer four questions: Why did I join Valeant? What is
`the current situation I found, both the good and the bad? What is our position related to our debt, our liquidity, and the regulatory filings? And
`why I believe Valeant will be successful in the future.
`
`Now, let me comment first on that question about debt, liquidity and regulatory filings. We'll have more to say about this later but let me spend a
`few minutes now. Based on our guidance, we have a solid position with our liquidity. And I expect to be in compliance with the debt covenants
`throughout 2016 and beyond.
`
`Also, we are now planning to file our quarterly information in a timely fashion for the regulatory SEC filings. Time will be our friend at Valeant as
`we work to improve the Valeant business and, importantly, to pay down debt.
`
`Now, let me start about Valeant and what I found as I was doing my due diligence and joining the Company. I believe that Valeant has a diverse
`collection of leading healthcare franchises and brands such as Bausch & Lomb, CeraVe and Salix.
`
`As I did my due diligence I discovered Valeant had a very broad geographic global footprint. I believe that our commitment to bring innovative
`products to the market through an exciting new product pipeline continues to be under-valued and misunderstood and I hope to change that
`perception.
`
`Finally, in my 30-plus years in the pharma business in both branded, generic and OTC parts of the business, I knew many of the Valeant employees
`before I joined. And now I know even more. In my first 30 days, I've also had the pleasure of meeting many of the talented and dedicated employees
`that work at Valeant.
`
`Globally, we have 22,000 Valeant employees that drive to work every day to focus on improving people's lives. I'm delighted to join the team that
`focuses on improving people's lives on this mission.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Like those of you on the phone today, I've also read many of the articles on Valeant. Some have not been favorable. I know it's been a difficult nine
`months for the team, but I also know we have dedicated leaders who know what is right and necessary to turn this Company around. We'll re-engage
`our workforce, we'll rebuild our relationships with providers, payers and regain the trust of our debt holders and shareholders.
`
`And during the 30 days that I've been with Valeant, I've done just that, met with employees at all levels of the Company, sales leadership, key
`opinion leaders, many of our key trade partners, prescribers, managed care, GPO. And I've even had a chance to have a couple trips to meet with
`Congress. In summary for today, my hope is I can capture some of the excitement that I see in Valeant as I walk through today's first quarter but
`also some of the challenges and the opportunities in front of us.
`
`Now, turning to slide 4. We have the Q1 2016 summary, the first-quarter results. Our total revenue was $2.4 billion versus our guidance of $2.3
`billion to $2.4 billion. GAAP EPS was a loss of $1.08.
`
`Adjusted non-GAAP EPS was $1.27 which falls within the guidance range. GAAP cash flow from operations was $558 million and adjusted EBITDA
`non-GAAP was just over $1 billion.
`
`Now, let me turn the call over to our CFO, Rob, to discuss the quarter in greater detail. Rob?
`
`Rob Rosiello - Valeant Pharmaceuticals International Inc - CFO
`
`Beginning on slide 5 is a financial summary of our GAAP results. As Joe stated, we had a net loss of $1.08 per share for the quarter while GAAP cash
`flow from operations was $558 million.
`
`COGS was 27% in the quarter with SG&A at 34% and R&D investment was just over $100 million, a record for Valeant. I want to point out that SG&A
`included $37 million of incremental cost related to Valeant's former CEO of which $25.3 million was for share-based compensation. However, since
`the performance threshold was not met, no value or shares were ultimately received by the former CEO. SG&A also included $29 million of legal
`and professional fees in connection with various investigations and related activities.
`
`Turning to slide 6 and following our GAAP presentation, I'd also like to provide a non-GAAP summary. We reported adjusted non-GAAP EPS of
`$1.27 for the first quarter and you can see the historical adjusted non-GAAP EPS numbers for the past five quarters all under our new tax presentation.
`
`Compared to Q1 2015, revenue increased just over $200 million or 9%. The impact of 2015 acquisitions provided $572 million of growth in the
`quarter. This came from Salix, Marathon, Dendreon and Amoun. This growth was offset by the negative revenue impact of FX of just over $50
`million and divestitures of approximately $20 million.
`
`The base business in Q1 declined by $289 million, driven by dermatology including the genericization of Targretin and the transition to Walgreens,
`the continued decline in our neuro business and declines in our ophthalmology Rx business. COGS increased 3 percentage points, primarily driven
`by lower derm revenues and the unfavorable impact of gross margins from FX in emerging markets. SG&A increased from 26% to 31%, driven by
`revenue declines described above as well as an increase in advertising and promotion, for example, DTC advertising, and employee retention of
`$20 million.
`
`On slide 7, as you know, Valeant currently reports under two segments, developed and emerging markets. Revenues in the developed market were
`$1.9 billion, an increase of 11% year over year, while operating income declined 8%. While the increase was largely due to acquisitions completed
`in 2015, we experienced slower uptake in the dermatology recovery than expected. Revenue for US dermatology, and I'm including Obagi and
`Solta, was $229 million as compared to $399 million in the prior year.
`
`Following the launch of the Walgreens program in January, we saw volume flattening and ASPs declining post launch. Overall volume challenges
`were exacerbated by the loss of refills following the shut down at the end of January of our previous specialty pharmacy relationship, as well as
`the negative external narrative and some internal disruptions which Joe will cover in more detail later in the presentation.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Revenues for the US GI business were $343 million for the quarter, with gross margins at 85%. Revenues for Xifaxan, the largest Salix product, were
`$207 million for the quarter which corresponded to a retail TRx increase of 32% over the prior year.
`
`Other established brands also showed growth in the quarter and we're pleased the channel inventories for the Salix business have been reduced
`to 1.5 months and we are now selling to demand. Other areas of note in this segment included continued growth in our US contact lens with Ultra,
`which was up 58% year over year, aided by a national TV campaign and the launch of Ultra for presbyopia.
`
`Our US consumer division was awarded the supplier of the year by Walmart, an achievement not easy to attain, while also launching several new
`products, surveys, ointment and preservation eras MV. Overall vision care was up 9% versus market growth of 1%.
`
`Several units achieved strong organic growth, including Provenge, which grew 6% over the prior year and our generics portfolio which grew 14%
`year over year. There was strong growth in France and the UK, particularly in sales of B&L surgical. We also saw positive momentum from Jublia in
`Canada which currently enjoys roughly a 60% share.
`
`On slide 8, revenues for the emerging market were $442 million for the quarter. This increase in revenue was driven by the 2015 Amoun acquisition,
`offset by unfavorable foreign exchange of $44 million. The fall in gross margins was driven by FX in countries where the purchasing or manufacturing
`of goods are in a different currency than where products are sold.
`
`Same store organic growth was 2% but would have been nearly 10% if not for the $30 million inventory draw-down in Russia and Poland. Several
`countries delivered strong organic growth such as Mexico at 8%, China at 19%, and India in double-digits. We did see inventory levels successfully
`decline in Russia and Poland to approximately 3.5 months from the 4 to 5 months seen throughout 2015.
`
`With that, I will turn the call back over to Joe.
`
`Joe Papa - Valeant Pharmaceuticals International Inc - CEO
`
`Thank you, Rob. On slide number 9 what I'd like to do is try to quickly summarize Valeant's current state. We have leading dermatology brands and
`GI brands and a strong pipeline. We've got great global Bausch & Lomb platform.
`
`We've got a durable, sustainable business model in both consumer, ophthalmic and branded generics and we have strong cash flow. But we have
`experienced some significant challenges in our dermatology business as we transition to our access program with Walgreens. We continue to
`strongly believe in the program and both Walgreens and Valeant are working diligently to correct the issues.
`
`Our Salix business is currently running below original expectations but we continue to believe that there remains a sizable opportunity and
`significant unmet medical need in this area. Unfortunately, negative external attention continues to adversely impact the business and our reputation
`with patients, physicians and all of you, our shareholders, as well as our distracted organization.
`
`On slide 10, to further emphasize how the business is performing, the following chart illustrates that nearly all of our businesses are performing at
`our expectation, with the exception of the US dermatology and the Salix business.
`
`On slide 11 we are confident we have a plan to go forward. We have to be realistic as to the impact all this has had on our operations and our
`financial expectations for the year.
`
`Our new full-year 2016 guidance as compared to what we previously reported is $9.9 billion to $10.1 billion and adjusted non-GAAP EPS of $6.60
`to $7. We expect an adjusted EBITDA number of $4.8 billion to $4.95 billion for 2016. Assumptions surrounding this guidance can be found in the
`appendix of the presentation posted on the website.
`
`Now, I'll turn the call back to Rob.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Rob Rosiello - Valeant Pharmaceuticals International Inc - CFO
`
`Slide number 12 shows where the change is taking place. It is primarily US dermatology and GI with other various small changes attributed to other
`factors.
`
`Let me start with dermatology. The current budget represents a $410 million take-down of revenue. This reduction is driven by lower script volume,
`lower fill rates, speed bumps in the access program, combined with lower ASPs and overall higher managed care rebates.
`
`For Xifaxan, it represents a $390 million reduction, relative to our previous expectations. Xifaxan has delivered strong growth but it is less than our
`expectations and, we believe, the potential. Disruption, sales force turnover, changes in leadership, shifts in strategy, an increase in enrollments in
`high deductible plans which we believe for the first time extended into the second quarter, have contributed to our lower forecast. The third bucket
`of roughly $300 million includes other units, additional pricing reductions, such as the GPO rebates for Nitropress and Isuprel.
`
`Slide 13 shows what drives the ramp to the mid-point of our guidance. Let me walk through it. So the first is today we're announcing $1.27 in Q1.
`The second would be assuming a Q1 run rate performance for the rest of the year, pure math, would add $3.81. If we add to that the historic
`seasonality and typical second-half ramp characteristic in our business, what we might call the typical 40/60, that would add an additional $1.25
`and we net out the GPO rebate that we recently announced for Isuprel and Nitropress.
`
`The fixing derm and Salix and growth acceleration would provide additional $0.50. Again, that would net out the new managed care contracts.
`Other markets, particularly emerging growth, which we feel very good about, would deliver an additional $0.17. And then we would net out of
`that subtraction of generic erosion, for example Zegerid, and other potential pricing actions that we might take.
`
`Take this together, this would deliver the mid-point of our guidance. And we see upsides in improving the ASPs in volumes, particularly in our
`dermatology business through engagement with independent pharmacies, adjustments to co-pays and buy-downs and improvement in the prior
`off process.
`
`Now I'd like to turn the call over to Linda, our Treasurer, to discuss our debt and liquidity position.
`
`Linda LaGorga - Valeant Pharmaceuticals International Inc - Treasurer
`
`Thanks, Rob. First, focusing on our liquidity. While we have revised our guidance for 2016, our current and forecasted liquidity position remains
`solid. As of March 31, we had $1.3 billion of cash and as of today we have approximately $1.2 billion of cash.
`
`We remain focused on reducing our permanent debt which includes our term loans and bonds. Year to date, we have repaid $730 million in term
`loans through various maturity payments, amortization payments and payments using asset sale proceeds. We have $273 million in mandatory
`payments remaining in 2016 with minimal amortization requirements in 2017.
`
`Our credit agreement includes two maintenance covenants, a secured leverage ratio and an interest coverage ratio. We are in compliance with
`both financial maintenance covenants in the first quarter and we continue to expect that we will remain in compliance with both financial
`maintenance covenants throughout 2016. There are no financial maintenance covenants in our indentures governing our bonds.
`
`Reducing our total leverage is one of our priorities. Based on our revised 2016 guidance, we expect our net leverage ratio to be approximately 6
`times or less by year-end 2016.
`
`Moving to slide 15. We remain committed to using the vast majority of our cash flow to pay down debt. Based on our revised guidance, our cash
`flow available for debt repayment and other purposes has decreased by $500 million from the $2.2 billion in our March investor call and is now
`$1.7 billion.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`The reduction in our cash available for debt payment and other purposes is less than the reduction in adjusted EBITDA, primarily due to a reduction
`in the use of cash for working cap. In the first quarter, our working capital was a source of cash. Based on our revised guidance, we are projecting
`working capital to be approximately neutral to cash flow for the year.
`
`The projected cash flow for debt payment is weighted towards Q2, Q3 and Q4, as we completed the Sprout payment of $500 million in the first
`quarter. In our March investor call, we said we expected to pay down at least $1.7 billion of permanent debt which is our term loans and bonds.
`We remain committed to repaying $1.7 billion of permanent debt through our cash flow and proceeds from potential non-core asset sales.
`
`Based on debt repaid to date and our upcoming yet-to-be-paid mandatory Q3 and Q4 amortization payments under our credit agreement, we will
`have paid over $1 billion of term loans, leaving an incremental $700 million of permanent debt repayment to meet our goal. We continuously
`monitor the market and will remain opportunistic across our bank debt and senior notes to pursue the best approach to meet our goals. As we
`look forward into 2017, our cash flow available for debt repayment will improve, as we would expect it to be greater than $2 billion, as we do not
`expect to have payments similar to the Sprout payment as we focus on our existing operations and reducing our leverage.
`
`With that, I will turn the call back over to Joe.
`
`Joe Papa - Valeant Pharmaceuticals International Inc - CEO
`
`Thank you, Linda. On slide 16 you see Valeant's stabilization plan. I've been at Valeant for approximately one month now and I'd like to outline on
`this page the areas that we need to address and improve.
`
`I believe it's a three-step process, to be clear. First, the stabilization process of Valeant which I think will take three to six months. That would be
`followed by a turnaround stage and ultimately a transformation stage that will take a multi-year process for Valeant. Today's discussion's really
`going to be limited the stabilization plan and what we think are the important elements of that stabilization plan.
`
`Number one. We need to drive engagement in the Company. We need to re-recruit Valeant employees back to the Company. We need to add
`some additional outside talent. And we're going to work very hard to re-engage with our partners, the patients, the prescribers, the payers and
`investors.
`
`Number two. We want to reallocate strategic resources at Valeant to fix the dermatology business, accelerate Salix growth which is already quite
`good, as Rob mentioned, but I just want to clearly reaccelerate that growth.
`
`Number three, we want to refocus R&D dollars into investment for core assets of ophthalmology, dermatology, GI and consumer. We want to
`manage the neuro and other business for cash generation and to pay down debt.
`
`Finally, we want to execute on the priorities that we already know to exist. We want to improve patient access and address pricing issues. We want
`to execute on non-core asset sales to help reduce the complexity of Valeant business. We want to focus on debt reduction and intend to cooperate
`with all government inquiries and seek expedited resolution.
`
`On slide 17 we have identified an action plan and begun its implementation for dermatology. First, we must repair our corporate reputation and
`regain trust with all of our stakeholders. This will be done through a number of initiatives, including CEO actions of customer engagement and
`overall pricing and access. We also will reiterate our support to the fields of dermatology and podiatry, both R&D and corporate investment.
`
`We also must rebuild the access with the Walgreen program and the independent pharmacy. We've been launching a new coupon program with
`independent pharmacies in June and we will continue working with Walgreens to improve the patient and prescriber experiences.
`
`We must restore profitability at Walgreens through the implementation of reimbursement and prior authorization support via qualified third
`parties. We have contracted with a third-party vendor that will take over this process in June.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`With respect to dermatology, I want to make sure that you're aware a significant portion of our Walgreens prescriptions have profitability significantly
`below our internal projections and meaningfully below non-Walgreen prescriptions. In some instances, these prescriptions actually have a negative
`average selling price. The vast majority of the revenue shortfall in dermatology in our revised guidance relates to this average selling price shortfall.
`
`The good news is that we believe this problem is fixable and we are working collaboratively with our partners to address these issues. It is in
`Walgreens' and Valeant's interest to fix this problem. If we are successful in improving the Walgreens ASP there will be an additional upside to our
`current derm latest estimate. We will continue to advance our rich pipeline and demonstrate our commitment to the field of dermatology also in
`terms of the action plans for dermatology.
`
`Now, on slide 18 there are some early indications of recovery. We've begun to see the process to stabilize this business and see some early indications
`of recovery. We've seen an uptick in prescriptions in May, which obviously is an encouraging sign but we still have a lot more to do. We are just
`about to launch an access program for independent pharmacies that will improve the patient experience.
`
`On slide 19, as with dermatology, we have a plan to accelerate the Salix franchise. The problem with the Salix franchise, we had significant sales
`turnover with the Salix integration over the last 12 months. We have appointed a new leader to stabilize the organization and accelerate growth.
`
`We have also launched a new hepatic encephalopathy education and sales material to both doctors and patients. And we have also deployed an
`additional 67% incremental sales reps for hepatic encephalopathy to drive growth. We have also reached out to 12 major teaching institutions and
`launched a new educational program about HE. In addition to education, we are improving patient access and adherence through the optimization
`of our reimbursement hub and other patient assistance programs.
`
`On slide 20 you can see that Xifaxan retail TRx was growing 32% versus last year. But we see tremendous opportunity for the brand given the new
`indication and the continued potential with HE. There remains a significant unmet medical need in HE patients, as experts estimate that up to 5.5
`million patients in the US have cirrhosis. Of this population, it's estimated that up to 2.2 million are at the risk of developing overt HE.
`
`Annually, over 600,000 patients are discharged from the hospital with HE being the primary diagnosis. We estimate the total market revenue
`opportunity in the US for HE is at over $5 billion.
`
`On the IBSD opportunity, roughly 10% to 15% of the US adult patient population suffers from IBS and 65% of these have a diarrheal component.
`Despite new treatment options, many of them are undiagnosed and are not treated. This represents another Xifaxan growth opportunity.
`
`On slide 21 we continue to see steady growth in Xifaxan scripts on a year-over-year basis but to be clear, they are below our previous expectations.
`The performance of the new sales team should accelerate the franchise in other Salix brands to continue to show additional growth. Finally, we
`continue to invest in the pipeline opportunities to sustain long-term growth, including oral Relistor.
`
`Moving to slide 22. Although Valeant has areas that need stabilization and improvement, I believe that we have a solid future ahead. We have a
`strong global portfolio of brands. We have a plan to fix dermatology and drive momentum in Salix.
`
`We have a steady performance in consumer, contact lens, dentistry, oncology, generics and in Asia. We have an attractive R&D pipeline that will
`drive future growth. We have improved our US market access and a strong cash flow generation.
`
`Let me talk about a few of those. Slide 23 provides a brief view of our numerous Valeant brands and the magnitude of our franchises.
`
`On slide 24 we summarize we have approximately $3.5 billion of consumer-oriented durable products that collectively have operating margins at
`roughly 37% and growing in the mid single-digits. This would include the Bausch & Lomb products, lens, solutions, as well as CeraVe and other
`topical products. I will let others speculate on the value of this part of our Valeant business but a durable global growing business with a 37%
`EBITDA margin is certainly a very valuable asset.
`
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`JUNE 07, 2016 / 12:00PM, VRX.TO - Q1 2016 Valeant Pharmaceuticals International Inc Earnings Call
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`Slide 25, Dendreon's another valuable but under-appreciated business within our portfolio. Provenge delivers a statistically significant benefit, a
`38% improvement in three-year survival rate versus control. Over the past year, the team has turned the business to a profitable, growing business
`by targeting the right prescribers and improving the gross margin by more than 10%. We expect to see this business continue to grow nicely as
`urologists now make up 49% of the business and have increased their enrollments for Provenge infusions by 22% year over year in Q1.
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`On slide 26, over the past few months there has been much discussion about managed care access across our portfolio. We have made significant
`progress in forging new relationships with our partners and feel that things are stable for our products. We are improving our commercial access
`with several key brands, as well as improving our Medicare Part D coverage in the second half of 2016.
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`Beginning June 1, Jublia is now covered on AARP without a prior authorization and the Lotemax family of products moved to a preferred brand
`on the Aetna Medicare Saver Rx plan. Finally, our managed care team is now focusing their efforts to maximize formulary access for our upcoming
`launch of products.
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`In summary, from a US market access perspective, we are well positioned for 2016, 2017 and beyond. Now I'm going to turn the call over to Tage
`who heads up our R&D operations. Tage?
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`Tage Ramakrishna - Valeant