I had one for Joe and one for Paul, if I may. Joe, would you be open to a large cash flow deal
`even if it's not exactly a growing asset, perhaps a bunch of assets in China, et cetera? Would
`you be open to something like that? And while you're added, can you quantify for us the size
`of your China business today and what percentage is RX? And Paul, I don't know how to
`ask, but I should ask anyway, the question is, I've kept getting questions on whether you may
`possibly consider retirement near term. So I was curious have you looked into renewing your
`contract beyond August? Do you like still Joe? Do you still like Scott?
`
`Joseph Papa
`
`We like Paul too much. That's a good one. Let me start with the first question and Paul will
`give you time to contemplate your comment back. So Umer, on the question on large cash
`flow deal, I think the best way I can answer that is we are driven to drive long-term
`shareholder value. We'll continue to think at all options that will drive that long-term
`shareholder value. So if it's a cash flow or other things, that's clearly something we always
`look at relative to anything that can help, especially if it's a large cash flow that would allow
`us to improve our overall leverage and the business as we would grow EBITDA. So anything
`that we think has the opportunity to drive shareholder value, we would do that. On the
`question of China, ballpark our China business is approximately $400 million of sales. The
`majority of it is in obviously the eye care business. I remind you that we are the number one
`player in contact lenses. We are the number one player in eyedrops in China. That's the two
`primary areas of our importance there. Paul, do you want to answer to your comment?
`
`Paul Herendeen
`
`Yes, sure. Thanks for putting me on the spot there. When I joined, I mean, it was the
`question I'd say, well, we want to contract and we settle on a three year contract, correct me
`if I'm looking at Christine, our General Counsel, I think it automatically renews and keeps
`right on going. The last couple of years the comp committee has seen fit to provide me with
`incremental incentives to stick around in terms of equity. So as long as I'm having fun, I feel
`like I'm adding value. I'm intending to stick around.
`
`Operator
`
`The next question comes from Annabel Samimy of Stifel.
`
`Annabel Samimy
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 17 of 26
`Slayback v. Eye Therapies - IPR2022-00142
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`

`I want to ask about dermatology. DUOBRII clearly seems to be launching more rapidly than
`the others. Is it coming at the expense of the other psoriasis products? Are these launch now
`enough to offset some of the sizable pressure that you saw in this new dermatology
`environment? Do we get to see growth at the business again? And then if you could help us
`with Dermatology.com. With the addition of Walgreens, do you expect to see these increased
`volumes offset by pricing? Or do you now give the benefit of both volume and better pricing?
`If you could just help us understand the dynamic there between the volume and the pricing?
`
`Joseph Papa
`
`Okay. A lot of good questions there. First and foremost, we are very pleased with DUOBRI I
`and we are seeing over approximately 150 prescriptions per week. And if you see what we
`are able to do here, during the quarter, we were able to grow SILIQ versus a year ago. SILIQ
`was up approximately 267% versus last year. Sales have essentially doubled. So that's
`clearly going in the right direction during the quarter. DUOBRII prescriptions are right around
`that 1,700 level. So it's still holding its own. So it's not coming, just simply replacing.
`DUOBRII is not simply replacing BRYHALI. We're still able to hold BRYHALI as well.
`
`So we think that overall dermatology business is going in the right direction. We absolutely
`had some LOEs as I mentioned on the call that we had to work our way through. But overall,
`probably the best thing I can say about our dermatology business is, this strength of
`DUOBRI I and what it's doing for psoriasis patients, for the patient, for the physicians and the
`prescribing gives them new alternatives for Topical, which is most of them are looking for the
`treatment of psoriasis, and then importantly, our ability to help lower the cost to manage care,
`if patients can delay the needs for biologics, are all the reasons why we think this is going to
`truly transform the business model for us and dermatology. And you're seeing it. You're
`seeing it when I put this slide together that showed how the new products plus the growth in
`Salta are today somewhere in that 45% to 50% of our overall business. That's truly
`transformation as clearly as we can show it.
`
`On the second part of the Dermatology.com, having an additional 9,500 stores to be
`representing the Dermatology.com and have a place where we can have a situation where
`there is no issues of cash pay is what is going to happen there, number one, number two, it
`gets a very predictable price for the patient. So there's no variations on that. They all got a
`very predictable price. There is no prior authorizations for the physician requires. That's
`clearly another important part of what we're trying to accomplish with our Dermatology.com.
`And, of course, as we have these additional outlets, because that's even more places where
`the patient is more convenient for patient. So predictable access for patients, predictable
`price for patients, physicians get the formation they prescribe, the formation they prescribe,
`we think it's a winning combination and we're adding most products to it for the future.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
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`

`Paul Herendeen
`
`It's Paul. I want to jump in on this as well. I want to recognize Bill Humphries and his team
`because this is something new. This is not something we said, well, look, somebody else did
`it and we're going to go out and do it. I think that the progress that we are making, it's coming
`step-by-step-by-step. But at this point, we currently have nine brands that we have in the
`cash we're targeting 13 to 15 by year-end and a bunch more coming at some point beyond
`that. We've products like [indiscernible] I am not going to get them all because I can't
`remember them from just from memory. But Bill and his team, they've done a great job of
`conceiving this, putting in place the way that we can have a cash model, that's effective,
`using it with Dermatology.com. And the addition of all those with doors with Walgreens is
`absolutely helping us making progress on this side. I think it's change the way some of these
`drugs are delivered to patients with the benefit of everybody.
`
`Operator
`
`The next question comes from line of Greg Gilbert of SunTrust.
`
`Gregory Gilbert
`
`I have a few. Paul, I want to make sure I understand the growth to net benefit on the facts
`and what you're suggesting going forward. Should we expect another 7 percentage point
`benefit in third quarter, something less in 4Q and then nothing thereafter? That's the first
`question. Secondly, on DUOBRII, Joe, obviously, you got a label that you're wishing for. But
`our prayers in anyway trying to limit refills or duration or we do not know yet. And then lastly,
`going back to China question, are there any sort of dynamics that you would like to highlight,
`of course, in terms of the structure inside your business and good things and bad things
`going on in China that we should be aware of?
`
`Paul Herendeen
`
`It's Paul. I'll take that first one. With respect to sets on rifaximin, I'm not going to guide and
`say, we have 700 basis points in Q2 versus Q2 of 2018 and say what it will be in Q3. But I
`think it will continue to be a strong benefit to the brand in Q3 and then significantly, less in Q4
`and beyond as we kind of put all of the improvements where we're lapping the improvements
`and it kind of goes away as a growth driver, and will then we be limited to what can we
`generate in terms of unit growth, I mean, that TRx growth is still high single digits, and the
`team Mark and his group are doing a great job there. And secondarily, there may be the
`opportunity for a little bit of price as well.
`
`Joseph Papa
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 19 of 26
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`

`

`On the question on DUOBRII, first and foremost, thank you for coming on the label. I
`absolutely agree, the label is truly outstanding. I'd invite everyone on the call, just to take a
`look at the label and especially comparing to other previous [indiscernible] steroid labels. The
`most important comment I can say on the label, which I think is critical is that for the first
`time, physician can use a high potency corticosteroid product in the combination with the
`retinoid that allows the physician to tree -- to clearance rather than being limited by a certain
`duration. We think that's a very important comment. The second comment I'd offer on the
`question of managed care, we did a budget impact model in managed care that shows that
`for every million lives that are in the health regional plan, by putting DUOBRII on formulary,
`they can save between $1 million to $1 million to $5 million per year by putting DUOBRII on
`the formulary.
`
`And essentially what the simplistic way I would say that, it allows the patient to use a topical
`product for a longer duration to potentially delay the need to go to a high-priced biologic,
`which may be in $50,000 per patient per year type of range. So that's clearly, we think the
`real benefit. We haven't seen any limitations on refills at this time. I wouldn't expect that
`because the reality is, for every time managed care plan keeps the patient on DUOBRII,
`that's one less patient potentially that would extend or go towards a biologic, which some
`patients are going to need biologic but clearly, we think often we'll be able to keep patients at
`a much lower cost of therapy. We are talking in the range of $50,000 for the biologic, less
`than one tenth of that for the DUOBRII.
`
`On the question of China dynamics, I think I would simply say that, China clearly is the
`biggest -- the number one player in the overall contact lenses business. Ballpark, looking at
`the Vision Care business and contact lenses, it's about a quarter of the business for us, it's
`coming out of China as a percentage of our overall Vision Care business. So clearly, it's
`important to us. But I think relative to our eyedrops, that's the other place we are number one
`in China. So we feel very good about both of them. And we don't see any real big -- it's not
`exactly part of your question, but I will say, we don't see any major constraints that's
`happening at this time based on all of our production for the eyedrops is based in China, so
`we are producing locally in China.
`
`Paul Herendeen
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 20 of 26
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`

`So you mean, probably-- Greg, it's Paul again. You probably saw the [indiscernible] recently
`and just point out, that's all taken into account. In our guidance, it certainly was not helpful to
`us. But it's all baked into our guidance as well. And the other thing I would say that's good is
`when people think about tariffs and in the trade situation is a good chunk of, again, to the
`point, good chunk of our lenses are manufactured in Ireland and we have our consumer
`facility, assisted facility to another facility in the U.S., we have in Milan, so can supply product
`to China so well. We are impacted. It's all taken into account within our guidance and it's
`been manageable so far. I guess, we can't forecast how much worse it could get, but so far
`so good.
`
`Operator
`
`The next question comes from Jason Gerberry of Bank of America.
`
`Jason Gerberry
`
`A couple here. Just first maybe Joe, what's the -- I realized it's early. But what's the general
`opportunity in your mind for amiselimod in the S1 P space just given there are number of
`competitors ahead of you aiming to improve upon the CB safety profile of different drugs in
`that class? And then my second question, just thinking about the Significant Seven sales and
`guidance for the full year, can you talk a little bit -- it looks like $100 million in the first half
`revenues generated by Sig Seven products. How do you think about that second half step
`up? Is it mainly just DUOBRII or you are expecting good revenue conversion on DUOBRII in
`the back half?
`
`Joseph Papa
`
`Okay. So a couple of good questions here. Amiselimod, we think it's an important opportunity
`for us. We absolutely understand that there is a cardiovascular question that we're going to
`address. We are going to address it with a study that we are going to start and get
`accomplished by approximately end of the year. So we'll get that either positive or negative.
`We'll get that question the answers very quickly and get that behind us so that we can go
`forward. On the area of what we view in terms of benefit of amiselimod, we clearly believe
`that it has a longer half-life, which could be better dozing. But we obviously got to do the
`Phase II trials that we talked about to try to find out what exactly the opportunity is for us
`there. On the question of Significant Seven in 2019 guidance, we feel very good about where
`we are. First half, approximately $120 million of thereabouts, but more importantly,
`accelerating 76% versus the first half of 2018. So we think we're on the right track to be
`approximately $300 million. So we need to grow a little faster but clearly, we are right on
`track with what we expect for the launch especially now that we've got DUOBRI I in the
`marketplace, the AQUALOX product in Japan. So all of them are now launched and going in
`the Fi.gtJ!sGimJaij,Qr:boM91i¥e{aleasaduw.ittmfue~t&.c-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 21 of 26
`Slayback v. Eye Therapies - IPR2022-00142
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`

`

`Operator
`
`The next question comes from David Risinger of Morgan Stanley.
`
`Zhu Shen
`
`It's Zhu Shen on for David Risinger. Two quick question today. Could you please discuss the
`Vision Care business momentum going into the second half including key drivers ahead?
`And could you also talk about some of the cash flow impact to know in the second half?
`
`Joseph Papa
`
`Okay. I'll take the first Vision Care and probably do the cash flow. Clearly, what's happening
`in our Vision Care business, we have very strong growth with our Biotrue, with our ULTRA,
`so it's new products generated. But if you look at the data that we presented in the chart; you
`can see quickly that we are outgrowing the market. If you look at our performance in the
`U.S., Bausch+ Lomb contact lenses being up approximately 13%, market being up about
`8%. It is a globally being up about 8% versus market 5%. So clearly, we are taking share,
`mostly behind the success of our new product as being number one factor. Longer-term, I've
`got to repeat this because I think it's truly environmentally a big issue. There's a mega-trend
`that the incidents of myopia is continuing to climb.
`
`Unfortunately, we all spent too much time on those four screens in front of you right now and
`looking at your phone and computers. We're spending a lot of time on screens and even kids
`are spending time on computers, iPads, et cetera. That is we believe one of the problems
`less time outside. This myopia epidemic is something that is real. You can't see a doubling of
`myopia in 40, 50 years and call it genetic. It has to be environmental and we think it's
`supreme time and time kids spent in doors with video games versus outdoors playing with
`sporting activities. So we think it's real. We think it's going to be a mega trend, that's going to
`continue to drive it. And I am delighted to say that, as we look at myopia and our work, we
`have over $100 million of product sales, not including the lenses, directed towards helping to
`try to improve the lives of patients with myopia. So we are very excited about what we think
`the opportunity for us with the most integrated eye care platform we have and how we can
`help these patients. Paul, do you want to take the second part about cash flow?
`
`Paul Herendeen
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 22 of 26
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`

`Sure. As I mentioned, we have our guidance that we expect to have cash flow from -(cid:173)
`generate from operations in the range of 1.5 to 1.6 for the year. If you're thinking about the
`second half of the year, call your attention to couple of other slides, it's the other financial
`information you look at it year-to-date and compare that back to the guidance couple of
`things to point out. The contingent consideration of milestones year-to-date were 22. Full
`year is expected to be 50. The restructuring other is 32. So far year-to-date is expected to be
`50. So little bit more to come. CapEx is actually weighted towards the second half of the
`year. We are 1 0 9 through June 30. The guidance was for 2 75. So that's a fair amount
`more. And that is reflective of our -- us continuing to ramp up the activities for the production
`of daily silicone hydrogel lenses for launch in the U.S. and also in other markets as well. So
`those are the ones I would call out. I'll say it again, though remember that Q3 is should be a
`stronger cash flow quarter because of less interest that settles during Q3, and then Q4 is a
`little weaker because of interest that settles in Q4. So those are the things I point out from a
`cash flow perspective.
`
`Arthur Shannon
`
`Probably we have a time for just about two more questions.
`
`Operator
`
`The next question comes from David Amsellem of Piper Jaffray.
`
`David Amsellem
`
`I have a question from a consumer eye care. So on LUMIFY, nice growth in market share. I
`wanted to get your thoughts on where you think peak share can go here? I mean, there is
`several other competitors. There is also private label. So where does this product in your
`view go in terms of [indiscernible] and also if I may miss this, can you give us what the net
`sales were on LUM I FY for the second quarter? And then second part of the question is just
`on e-commerce. You cited e-commerce growth for the product. I am wondering if you can
`elaborate on how you're thinking about e-commerce probably for the consumer eye care
`portfolio? And how much of that is factored into your expectations for growth over the next
`few years?
`
`Joseph Papa
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
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`

`So you got a lot of questions there and I'll try to him them all. But where do I think LUMIFY is
`going, I'd start with a very simple metric. We believe we have the best product for patients
`that need a product like LUM I FY for readiness relief to lead the release. In that we deal with
`from a patient point of view, product that does not restrict arterial blood flow to the eye, it's
`deals with venous blood flow, which I don't know how you feel, but if I had member friend, I'd
`always not want to restrict arterial blood flow to someone's eye. So we think we have a better
`way to treating this any other product out there. That's why we think we're getting the number
`one recommendation from physicians to use LUMIFY. So that we think is going to be an
`important driver of our future success. The revenue in the quarter, ballpark of over $11 million
`was the revenue from LUMIFY in the quarter. So we're very pleased with where that's going
`in the direction of the growth there for us on LUM I FY. On the question of e-commerce
`broadly.
`
`We think the team led by Joe Gordon is just doing an outstanding job and also Tom
`internationally on what we're doing with our overall consumer business. The two of them
`have come up with programs and initiatives both and I globally to help drive our business. I
`mean if you look at the performance of PreserVision, Ocuvite, those vitamins are doing very
`strong. And we think that's how a large part of it is tied to this need for better products for
`Ocuvite health. So that's what we are planning to do. We are planning to launch this line
`extensions to be absolutely, clear. We launched Luma fiber look to us, to look at not just
`readiness and I but also putting a combination product out there with class either on other
`product to make sure. That we apparently have the right now but also the allergy guys. Look
`to us as more things in the future that help expand this category and help us to grow it
`beyond where it is today.
`
`Paul Herendeen
`
`It's Paul. A couple of factoids on the consumer business. I mean, that consumer business is
`if you take a bigger bite in relation to for our entire business, it's like 17%, 18% of our total
`business. It is the largest contributor to the B + L/lnternational segment, very important
`segment to us, and I think being really well run by Tom internationally and in the U.S. So
`we're really doing well.
`
`Arthur Shannon
`
`Operator, we have time for the last question.
`
`Operator
`
`Yes. The last question for today will come from Louise Chen of Cantor.
`
`Louise Chen
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
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`

`So first question I had with respect to capital allocation. I was wondering if you could give us
`an update on what you're thickening there? And then second question was just on the timing
`of new opportunities versus facts. I know you've talked about it earlier. But just curious if you
`give us some timing. And the last one is on TRULANCE. When you see this increased
`promotional hitting its stride? What do you think peak sales for this product could be?
`
`Paul Herendeen
`
`Joe, you want to take the capital allocation portion, first?
`
`Joseph Papa
`
`Sure. I'll start on the capital allocation. I mean, first, you see it in our results. I mean, we are
`spending more in R&D and that's a function of us. And now that we have our legs ensuring
`drive organic growth here into the future. So we're increasing our spend in R&D. We are
`increasing our spend in CapEx, which in the Vision Care business is kind of another form of
`R&D. If you think about what's left over after when you have free cash flow, the waterfall is
`prioritize that reduction of debt, owing to our high leverage. And then secondarily, if there are
`opportunities where we can tuck-in acquisitions that fit right within our core businesses, we
`would very seriously entertain that. I think you saw that with the TRULANCE acquisition
`earlier this year. But it's pretty straightforward. We're investing in our business and to the
`extent that we generate cash. We're using that to repay debt. And then, if we see great
`opportunity, we will go ahead and take advantage of that for business development in our
`core areas.
`
`Paul Herendeen
`
`And then to the second part of your question, the timing for the new opportunities on
`XIFAXAN or we looked at the study in the end of this year, in terms of getting data from that. I
`remind you that is approximately 156,000 [indiscernible] hospitalizations that been growing
`numbers. So clearly, it's an important opportunity. But most important, that also just give us
`some good indications for dosing on the SSD opportunity. Beyond that, we talked about
`patient enrollment beginning in the first quarter of 2020. That's always and there are good
`opportunity for us. That's going to be predominantly Phase II trial to give us some more
`information on dose ranging. But we expect that couple of years away, two, three years
`away, for actual clinical trial results in terms of actually being able to have an opportunity to
`get an approval or something like trial.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
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`

`But remind you that the big opportunity with trail is there is 17 million patients in the United
`States with IBS-C. There's actually, when you think about it's just an important opportunity in
`terms of total number of patients out there. And then we also have a trial for postoperative
`Crohn's. That's about 780,000 patients with Crohn's disease. About 75% of them will need
`surgery in their lifetime. And unfortunately, about 70% will have recurrence of symptoms
`within one year. We view that as a trial that we will start in the first half of 2020. We think
`that's approximately a three year duration to get to something like approval, approximately in
`terms of time frame. So we're really excited about where we're going with the XIFAXAN trials.
`We think there's some great opportunities for us. On the final question on TRULANCE, I
`always say that for any new sales to take up a new product, they have usually, 3 to 6-month
`hit the ground running. But I will say for us what we believe we now have is the best IBS
`platform. If it's IBS-C, IBS-D, together with what we have with XIFAXAN plux TRULANCE, we
`believe the sales reps going to hit the ground very quickly. These are the sales reps that
`have just done an outstanding job in primary care in the growth of IBS-D. So I would always
`say three to six months to gain traction, but between us, I'm excited to see this is a great
`team. They've done great things in the past. I look forward to seeing the results in the future.
`
`Operator, that concludes our comments for today. I thank you, everyone, for joining us today,
`and look forward to hearing any additional questions that you may have in the near future.
`But thank you for joining us. Having a great day, everyone.
`
`Operator
`
`The conference has now concluded. Thank you for attending today's presentation. You may
`now disconnect.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
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