Q1 2020 Earnings Call
Ladies and gentlemen is just the operator kitties conferences schedule. Once you begin momentarily until that time, you're aligned with the can be placed on user code. Thank you for your patients.
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Good day my name is Erica and I will be your conference operator today at this time I would like to welcome everyone to them. My line first quarter 2020 earnings conference call and webcast. All participants lines have been placed on mute to prevent any background noise.
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Would now like to turn the conference over to Melissa Trombetta head of Global Investor Relations. Please go ahead.
Thank you Erica good morning, everyone. Welcome to violence first quarter 2020, earning conference call as we begin or call today I would like to know that we are mindful of social distancing guidelines and as such are dial than to today's call remotely I would ask for your patients should we encounter any <unk> technical difficulties.
I knew me on a call from a separate location, albeit 62 feet apart from one another r. Marlins Executive Chairman, Robert Cory Chief Executive Officer, Heather Brash President regime in the Lake Chief Commercial Officer, Tony Morrow, and Chief Financial Officer, Ken Parks during today's call movie, making forward looking statements on a number of.
Matters, including our financial guidance for 2020, and the proposed transaction pursuant to which smiling book combined with Pfizer, Inc. Upjohn business in reverse Morris Trust transaction to create a new company that will be name to the actress.
These forward looking statements are subject to risk and uncertainties that could cause future result, or events to defer materially from today's projection. Please refer to the earning release, we furnished to the D.C. unformed eight k. earlier today as well as our supplemental earning flies all of which are posted on our website at investor Dot.
Marlon Dot com for Fuller explanation of those risks and uncertainty and the limits of clickable to forward looking statements.
<unk> routinely post information that may be important to investors on this website and we use this website address as a means of disclosing material information to the public any broad not exclusionary manner for purposes of the S.P.C.'s regulation fair disclosure.
In addition, we will be referring to certain actual and projected financial metrics of Marlin on and adjusted basis, which are non gap financial measures.
We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of our financial performance.
Non gas measures should not be considered a substitute for or superior to financial measures calculated in accordance with gap.
The most directly comparable gap measures as well as reconciliations of the non gap measures to those gas measures are available in our first quarter 2020 arrange release and supplemental are inside as well as any investor section of our website.
Please note that this call relates to violence first quarter 2020, earning and we will be limited in what we can speak about during kunaev regarding Beatrice and we will be not we will not be speaking about the uptown business.
He also remind you that the information discussed during the call except for the participant questions is the property of Milan and cannot be recorded or rebroadcast without violence Express written permission an archive copy of today's call will be available on our website and will remain available for limited time with that I'd like to turn the call over to Robert.
Thank you Melissa and good morning.
I'd like to welcome everyone in mind, it's first quarter earnings call, including or Marlin and future up Joan colleagues.
So I begin let me take a moment on behalf of mine went to extend or deepest appreciation to all the health care workers and first responders working tirelessly.
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It also like the sincerely think or Marlon employees worldwide and their families for the remarkable resilience of determination. They continue to show to help deliver on our mission Oh provided patients around the globe would continue to access to much needed high quality medicines.
I would be during the cold over to Heather and the management team in a moment to discuss the quarter out here.
But first.
Right, where a member of our management team will also take this opportunity to address some of the questions and things that I have received overturn from shareholders in analysts and I do really appreciate their inputs.
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Well management would cover the effects of covert 19 or business and operations.
Would like to share some high level observations regarding the pandemic as a whole.
Will be provided an update on the status of our excited in combination with bars yourself join business.
That's a covert 19 since our last earnings cold the global landscape is change significantly as a result of is being done.
We all remember events in our life turns out of left lasting impact on us as individuals or communities underworld disclosing pandemic is one of those moments.
Well the pandemic has brought significant challenges that would prefer finally impact the global community for years that Com. We are also witnessed seeing the critical examples of human ingenuity compassion extraordinarily talented efforts of health care professionals around the world and the critical importance like never before Oh, the former suitable industry.
During these unprecedented times.
I also believe that we could be at the beginning over resurgence of appreciation of the generic pharmaceutical industry in the critical value in in the industry delivers to the majority of the patient populations around the globe.
The cobin 19, Pandemics only magnifies healthcare needs that we must.
Me by delivery, both cost effective therapies and targeted innovation.
It is this unique and balance profile that characterize as Beatrice, which will be a leading role within the industry. Once we launch upon are closing later this year.
By one for his part is deeply committed to continuing to support public health efforts as a pandemic of balls.
I am extremely products that the one of a card global platform, we've built over the last decade.
Dust to do just that.
Anyway to deliver access to medicines around the world, even esupply change across multiple industries in countries are challenged more than ever.
Mommy and achieved these things because we continue to remain intently focused on controlling what we can control and running our business safely and efficiently.
It never ceases to Amaze me at how mine in our dedicated workforce mobilises to address challenges at hand.
Including those brought on by this pandemic.
There are a couple of examples that bring to life. Some of the unique value proposition of mine was powerful global platform, coupled with it's equally unique tilted global workforce.
For example.
Has already show.
It's ability to rapidly ramp up production to manufacture potential coping 19 treatments in response to request of governments.
Additionally, as many other innovative in biotech companies work to develop their own potential therapeutic treatments for coping 19, and given mine was rich experience in and start Retrovirals you could surely expect that mildly once again being a readiness position to do it's part to develop partner produce it soon.
Go up necessarily medications active ingredients in a matter of months not years.
Our ability to deliver all these unprecedented time frames is only possible as a result of mine was entrepreneurial spirit bass global manufacturing the scientific platform broad product portfolio cover nearly all therapeutic areas, including Retrovirals <unk>, what they brought scientific community.
Around the world, including China among others.
My didn't have the longest successful history of partnerships with other companies. For example, we partnered with Julia to help expand access to infectious disease medicines included H.I.V. in the market that they could not reach alone.
From this partnership we have license nine medicines and distributed to nearly 10 million patients annually in more than 100 countries.
These examples speak directly to the unique capabilities and nimbleness of my ones global diverse platform and the value we continue to bring to others by helping them expand their reach around the globe.
Without speaking for other industries I can certainly till you get into pharmaceutical industry, especially when needed to be global health needs for medications.
These kind of accomplishments.
Simply could not occur with just one company.
For one country alone approach.
This is exactly why Marlon build dot is global platform in the first place.
So that we can leverage our global resources and efficiently deliver high quality medicines, when and where needed.
No turned into a quick update on the status of our very exciting transaction with finds herself drawn business.
To start I think it's important to reiterate something with a clear fundamentals and substantial merits. This transaction has to offer.
More specifically one.
This combination with upjohn, well not only enhance our global scale when geographical reach.
But to this combination will also accelerate mileage own standalone business plan by at least three to five years.
Number three this combination will create and even stronger business models and operating platform with expanded commercial capabilities.
Enhance our eat, but but are able to margins as well and generate much greater free cash flows.
We also expect to garner estimated 1 billion in annual costs synergies by the fourth full year after close.
Same time pursuing more attractive revenue growth opportunities as well.
For this combination will also create a much stronger financial profile by further strengthening our balance sheet.
Financial flexibility.
Remained committed to rapidly deliver and work towards our goal of two and a half time to leverage ratio.
And finally five.
<unk> will provide a greater focus on total shareholder return by creating any more shareholder friendly capital allocation Mark starting with our commitment to institute a dividend policy.
After our first full quarter post close.
Of at least 25% of our free cash flow.
In addition.
Stated previously I continue to believe the 2021 will be a truck year from which Beatrice.
Establish a financial base wanting to grow from.
Well, we will not be giving guidance at this time.
I do think that many but not all analysts models on both revenue ASCII, but ah ranges or direction, we move in in the right place is consistent with.
<unk> I believe 2021, maybe coming together.
But once again official guidance will be given by the new Beatrice management team led by Michael regime in some g. at the appropriate time.
And when that occurs I mean, you'd been actually more excited about they're having the opportunity to rule out in present to to all of you Beatrice's, new and unique global health care Gateway.
Importantly, this new global health care Gateway will be powered by beatrice's unmatched global infrastructure and expertise well also offering others the ability to further to power their own assets to reach more patients worldwide.
By offering others access to Beatrice's Global Health care Gateway, which will include access to work global commercial reach across all channels or global supply chain or global expansive regulatory expertise and our global cost efficient manufacturing platform.
Via tourist we'll be able to serve a unique sweet spot. It's happened new reservoir value creation as a new pathway for partners, who would otherwise need to rely on either a fragmented or highly localized for regional expansion strategies of their own.
You will hear more about this and why we believe Beatrice will be the true partner of choice.
At the first Investor Day post close.
Turning to integration planning and although Heather and regime will provide your own comments from my own continued discussions efforts and working with the future management team a Beatrice I'm extremely pleased with their continued alignments and commitments to executing on the objectives that we have set forth in the road map to optimize total shareholder return.
We will also be finding an opportunity for Michael regime, and said Gee to speak with shareholders an analyst directly at the appropriate time and as we monitor the evolution of the cobin 19 precautions, but certainly before closing.
Oh, So you should know that are extraordinary general meeting E.G. for the minus your holder bowed to approve this transaction is currently scheduled to coincide with their annual General meeting our age you go on June 30th.
In addition to the shareholder approval at that meeting the only outstanding third party approvals at that point would require the close to to close the transaction will be from the remaining anti trust regulatory authorities.
Pets. This is why we feel very confident at this time that we'll be able to close this transaction and the second half of this year.
I look forward to answering your questions during the Q. and a session I'll now sort of the call over to Heather for comment at the quarter at hand.
Thank you Robert and good morning.
Everyone listening today is staying safe and healthy as we continue to navigate these unprecedented times together.
<unk>, our hearts and thoughts are with all of those have been personally affected by <unk>.
All of the health care workers and first responders to continue to go above and beyond to help save lives.
I'd also like to send a special message of gratitude to our entire my own family, especially our frontline workers.
<unk> is critically needed medicines, deploying our resources and expertise and the fight against Cobot 19, supporting that community communities in which we operate and maintaining the health of our overall business.
The world up around US has certainly changed our mission remains the same.
We've made extensive efforts to ensure supply continuity for critical medicines, ranging from maintenance treatments for chronic conditions to IC, you drugs or anti infectives in short supply due to the increased demand related to cobot 19.
We're also participating and clinical and prophylactic trials, there, which product innovation, including the World Health organizations Global Solidarity trial and are continuing to evaluate additional opportunities to meet unmet needs.
There's no doubt that cobot 19 has tested the strength of supply chains across multiple industries and countries.
We all rely on a very global economy, especially when it comes to the availability of medicine.
As the pandemic continues to evolve we have received a number of inquiries regarding governments increasingly urgent entrust and strengthening domestic pharmaceutical manufacturing and supply.
We haven't will continue to spend time with legislators and regulators around the world on this important topic to hopefully help find the right balance between strategic supply and global needs.
With all that said I'd now like to turn to our first quarter results.
Our performance came in with total revenues growing 5% or 8% on a constant currency basis.
In addition, adjusted EBITDA improved 6% over the prior year with strong adjusted free cash flow, especially for the first quarter coming in at 357 million.
Adjusted EPS DNA and capital expenditures came in lower than expectation and our EBITDA margins were ahead of what we normally see during Q1.
During the quarter, North America, and Europe's performance more than compensated for rest of World segment, where cobot 19 impacts hit sooner than other parts of the globe.
As we look forward, we're reaffirming our 2020 financial guidance as we continue to expect total revenues to be in the range of 11, and they have to 12 and a have billions absorbing approximately 200 million of foreign exchange headwinds versus our previous expectations and adjusted EBITDA to be in the range of 3.2 to 3.9 Bill.
In absorbing approximately 50 million, a foreign exchange headwind versus our previous expectation.
These ranges account for cobot 19 impact forecasted through Q2, and assume that health care systems around the world will begin to resume their normal functions and the second half of 2020.
This guidance also takes into account. The fact that we are absorbing a delay in some of the benefits of our business transformation program, because we paused certain restructuring elements of the plan due to co but.
Regarding the work we're doing to successfully closed the transaction when pfizer's up John business as Robert mentioned, we remain confident in our ability to achieve that milestone in the second half of 2020 to date, we have received antitrust regulatory clearances and 15 jurisdictions, including the recently announced conditional approval.
Well from the European Commission, and we continue to work collaboratively with regulatory agencies around the world on the remaining clearances.
I'm impressed everyday by the energy and motivation of the Mylan enough John teams bring to the integration planning while also meeting their day to day encoded related responsibilities.
I'm confident that the interest will be well position to be true partner of choice, especially as health system globally grapple with the realities of evolving patient needs and new health care paradigms.
With that I'll turn the call over to regime, Tony income to provide additional detail on the quarter at October 19 response efforts.
Thank you had there and good morning, everyone.
I would like to begin by equaling Robert.
And how does thanks, a lot pull there's a month lead although the war who have done above and beyond during this challenging time in support of for mission, especially our frontline workers, whose commitment and fuel has enabled mylan to continue its operation without missing a beat.
And the sponsor the need for certain critical medicines.
During this unprecedented time, we have different extra or does he may is to keep our operations Steve.
So we can ensure continued supply for medicines.
If you examples include.
Lamenting socially distancing within the blonde.
The increase any dilution of common area.
Budget and symptoms monitoring and staggering shifts.
I would like to do sometimes to address the inquiries that have gone from various stakeholders owns the impact of what were 19 on our supply chain.
Especially given our relatively large presence in India.
As you can see on slide five in our earnings presentation.
Mylan strategically has maintained its broad diverse and resilient month fracking footprint.
Our 44 month parking facilities across 12 countries.
Position us domains in proximity to the key mob groups and help us maintenance flight continuity, even when the environment around us changes separately.
Our top 50 products are supplied from 15 different countries and 30 different men fracking locations.
I mean, it be I'd point of view not only are we were deeply integrated for several key products.
We have also big strategic partnerships.
Without EPA splash and baked into the tendency is to mitigate disruption.
To date, approximately half of already be I come from India, and China and the other half from North America, Europe and vessel the war.
In India, we have nine demon fracking facilities located in five different states, which mitigates the risk of disruption in any given part of the country.
Similar to other countries all operations in India did not experience much disruption.
During the first week of Lockdown Wild rules regarding the essential workers were being flattish <unk> besides saw minimal disruption.
By the second to third week Indian operations were back to normal.
It's also worth noting that Mylan has not to date experienced any meaningful disruption from its more than 503rd bought the supply partners located on the war.
We are continuously monitoring or inventory levels of our raw materials and dosage forms and currently out in a strong position from a slave point of view to meet our customer needs across the globe.
Turning to our fourth quarter results, we delivered $2.6 billion in total revenues, which is an 8% constant currency growth versus the prior year.
These results reflect solid underlying business performance and execution on recent launches.
As you May expect we did see increased demand due to covert 19, which resulted in an increase in net was due consolidated revenues of approximately two barson, primarily coming from Europe.
For North America on next year's bar $956 million, which is up for parson compared to the same period last year.
Growth was largely driven by of Accella generic to address which as you may recall was launched in the first quarter of 29 Pete.
We're also pleased to see that Youve salaries are nebulized ones, Debbie Lama achieved 87 person share of Nebulized Lama market and at 13.7 fortson share of long acting Nebulized market.
In Europe. Our next is sort of $1 billion, which are up 18% on a constant currency basis compared to the same period last year.
Our strong quarterly performance was primarily driven by the higher next is and walliams of existing products.
For example for drugs, such as Korean Dymista, Roofers, and Julio which is our Biosimilar humira showed double digit growth due to the doctors investments in the key markets.
In addition to the estimated impact our fluid 19 increased volumes for driven by the resolution of the supply disruptions in the prior year period.
Moving onto the rest of the world our net sales were $611 million.
This is flat on a constant currency basis compared to the same period last year.
The estimated negative impact from forward 19, which resulted in a slightly weak performance in China, and Japan was largely offset by strong performance of our antiretroviral franchise and new product sales primarily in Australia.
I would now like to share some key pipeline updates.
I'll start with an update on our industry, leading comprehensive global Biosimilar portfolio.
Tony will later provides more detail from a commercial perspective.
To begin we remain on track with our expected approval of insulin glargine to support their midyear product launch.
This quarter Viacom's militia manufacturing facility this year after year pre approval.
With respect to the related better litigation, we received a favorable district court the season on March nine and further I agree our decisions remain pending.
We also continue to be engaged in active discussion with FDA on a viable phosphate to obtain and interchangeably designation.
In addition, we expect to launch our it cannot sub product, which is our biosimilar two m. growth in the second half of this year in Europe.
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Our BLE and marketing authorization for our Biosimilar to invest in is currently under review with the FDA and European authorities.
In addition, the development of our Biosimilar to as Bart and EIMEA remain on track.
Also as recently announced by the ramp we are continuing discussions with them regarding the development of a biosimilar to botox.
We plan to provide an update on the path forward by May 31st.
Now I will provide an update on some other pipeline products.
As I mentioned last quarter, we continue to deepen our pipeline with the high value.
Opportunities.
I'm pleased to inform you that we have filed in R&D application for our model one zero Seminary view to one which is being developed as a non narcotic oral and adjusting for the management of moderate to severe pain.
And we plan to initiate phase two clinical studies this year.
We also continue to progress the development of Amar 106, 50 to one which is a novel synthetic anti microbial peptide that's being developed as a topical product for barnwell treatments.
This product will enter clinical development later this year.
Lastly, the phase three study for our Glatiramer acetate once a month program was initiated loss of two books.
This is a pivotal clinical study for the USA Indeed.
To date, the study enrollment has been progressing well with more than 170 patients stores in the study across 56 sites.
Regarding mortgage loans, we have continued to make progress on our comprehensive and ongoing remediation efforts at the facility.
And I'm pleased to share that FDIC has determined the inspection classification of the site as voluntary action indicated we changed from oil.
We are awaiting the formal close out of the warning letter, which was issued in November 2018, and we expect to receive it at any time.
Before I hand, it over to Tony I would also like to express my excitement about our continued progress with up John on integration planning.
I look forward to continue to partner with Michael Cindy and the future reactors leaders as we planted integration and create a new champion for global health.
We are successfully managing the process virtually during the current environment and are taking advantage of the additional time to focus on executing a quality separation and integration planning program.
And with that I will now turn the call over to Tony.
Thank you regime and good morning, everyone.
In terms of my remarks today I'd like to elaborate on two topics.
First I'd like to provide a state of the union on our commercial efforts and share. Some further detail on how we're navigating our commercial business globally through the Coburn 19 pandemic.
Secondly, and also important I'd like to begin today by highlighting our biosimilars franchise and share our path from science to commercialization of one of the industry's deepens product pipelines.
To start with the current Coburn IP in situation. Our number one priority continues to be the safety of our employees, including our dedicated sales force and commercial team of 7500 people globally.
In most countries, we have moved through remote engagement model and I found new ways of doing business relying heavily on technology and focusing efforts on connecting with health care professionals to various virtual tools.
Through the impressive work of our sales team, we have completed nearly 200000 interactions with health care providers over the past eight weeks and continue to provide the same level valued support that our teams have always delivered.
I'd like to personally. Thank these dedicated teams for their continued efforts and hard work during these complex times.
Throughout this pandemic. We also continue to collaborate with pharmacies hospitals wholesalers government in health care providers to help address patient needs.
We remain focused on ensuring customer and patient access to needed medicines and are closely monitoring volumes of critical products.
Our service levels are currently strong.
Im pleased to report that to date, our customers have sufficient supply on hand in markets across geographies.
Turning to our bio Similars franchise, we have always viewed this as an investment for the long term and one made globally across many territories.
As we have invested in our pipeline and successfully demonstrated the science behind these products. We knew the next important step was the focus on the commercialization strategy.
We are in the beginning stages of this journey and most of the developed markets around the world.
And we know we have much work to do.
We are focusing on 2020 as the year of expansion as we've continued to increase our commercial footprint in the USA and abroad.
Our initial focus for this stage with the scale the organization and ensure we were methodically optimizing the opportunity to meet demand and maintain stock as we began to introduce bio similars two markets around the world.
Now with multiple global commercial launches underway and added learnings from our experiences in market. Our focus has shifted to execution and strategic performance and we continue to look to grow our business and capitalize on new global opportunities.
To provide a comprehensive block of where we are today, we offer one of the industry's largest and most diverse global bio similars franchises, which includes products either on the market or in development.
Focused on areas of oncology immunology, endocrinology ophthalmology and dermatology.
We have received more than 150 marketing authorizations for Biosimilar products and more than 85 countries worldwide.
In the U.S., we've launched fulfilling a biosimilar to neulasta and our Givry, a biosimilar to herceptin and.
And have strong confidence in our long term capabilities from physician payer and hospital standpoints to fully execute on both products throughout 2020, and the coming years.
As Rajiv mentioned, we look forward to the anticipated approval and launch assembling our insulin glargine as we continue to expand our portfolio in this market.
In Europe, we've launched Julio a biosimilar to Humira and we are beginning to launch process for Givry.
Secondly, and fulfill up in various markets as we broaden our biosimilar franchise offerings in many European countries.
In addition, as Rajiv noted, we're looking forward to launching the textile our biosimilar to enrol following anticipated regulatory approval in the coming months.
Other highlights include the recent lots of fulfill and Canada, which extends our oncology product portfolio, there along with of Givry.
Additionally, in Australia after being first to offer Biosimilar Trastuzumab, we recently launch of pillow, there as well and are encouraged by the early market response.
Overall, we continue to believe that our experience and ability to develop complex products and successfully commercialize these products on a global basis have positioned us to be a worldwide leader in the biosimilar space over the long term.
We remain enthusiastic about this franchise and continue to look for opportunities to invest as well as expand our portfolio.
With that I'll now turn the call over to Ken.
Thanks, Tony and good morning, everyone.
I will take a few minutes to provide a summary of our financial results for the first quarter.
Q1, 2020 total revenues of $2.6 billion were 5% higher than the prior year and 8% higher on a constant currency basis.
The consolidated results were favorably impacted by approximately 2% due to increased customer buying patterns and patient prescription trends, resulting from the covert night team pandemic.
The majority of this impact was realized in Europe.
In addition, total revenue growth reflects higher volumes of existing products and to a lesser extent new products sales of approximately $70 million, partially offset by lower pricing.
In the first quarter, our adjusted gross margins were approximately 53% compared to approximately 54% in the same period last year.
The decline is primarily the result of lower gross margin on sales of existing products and the rest of world as well as North America, partially offset by higher gross margin on sales of existing products in Europe, along with sales of new products in all three regions.
From a segment profitability standpoint, North America increased 9% in the quarter, excluding cost associated with the Morgantown restructuring and remediation program.
This increase reflects contributions from new product sales higher volumes and favorable product mix, partially offset by impacts from lower pricing on existing products due to changes in the competitive environment, including we both our Roxanne.
Europe segment profitability also expanded up 35% in the quarter, primarily driven by the favorable impact of higher sales volumes, along with lower SGN a spending.
Conversely rest of World segment profitability declined in the quarter down 27% as a result of lower pricing on existing products, primarily due to growth governmental pricing reductions in Australia, and Japan, and unfavorable product mix, which was partially offset by.
Benefits from new product sales, along with higher a RV volumes.
Both Europe and rest of World segment profitability results were negatively impacted by foreign currency translation.
In Q1, adjusted R&D of $112 million was 19% lower compared to 2019 due to higher payments in the prior year period related to clinical activities for products and development.
During the quarter adjusted SGN, a spending was lower than our expectations and essentially flat year over year, reflecting lower travel and promotional activities, primarily resulting from cobot 19 related travel restrictions and lower legal expenses, primarily offset by higher payroll related expenses.
In Q1, we reported adjusted net earnings of $467 million and adjusted EBITDA of $751 million, an increase of 11% and 6% respectively.
These increases versus the prior year, primarily reflect the impact of the increase in our revenues and lower R&D spending partially offset by negative foreign currency translation impacts.
For the three months ended March 30, Onest 2020, adjusted free cash flow was strong at $357 million, an increase of $330 million over the prior year.
The year over year increase was primarily driven by improvements in working capital velocity and timing of certain other payments.
For the remainder of the year, we expect adjusted free cash flow to benefit from seasonally increasing profitability, coupled with the resulting reductions in networking capital from first quarter levels.
At the end of Q1 2020, our debt to adjusted EBITDA leverage ratio was 3.6 times inline with our expectation and our covenant requirements.
We anticipate full year adjusted free cash flow generation, consistent with 2019 levels and continue to target approximately $1 billion of debt repayments in 2020, starting with the scheduled maturity of 500 million Euro of bonds later this month.
While we don't presently see any negative liquidity trends related to the covert 19, Pandemics. We will certainly continue to monitor those trends very closely.
We currently believe our positive cash flow from operations, along with our existing borrowing facilities, providing liquidity up to $2.6 billion will allow us to meet our liquidity needs for the remainder of the year.
We remain fully committed to our investment grade credit rating and to further reducing leverage.
Finally, as you heard earlier, we're reaffirming our full year 2020 guidance that we provided this past February total revenues are expected to be in the range of 11.5 billion to $12.5 billion absorbing an estimated $200 million of foreign exchange headwind beyond our previous.
Patients.
Full year adjusted EBITDA is expected to be in the range of 3.2 billion to 3.9 billion absorbing it $50 million of foreign exchange headwinds beyond our previous expectations.
It's important to note that both of these ranges reflect our current expectations for operational and commercial performance as well as estimated covert related impacts continuing through the second quarter.
Before I close I would be remiss, if I didn't take a moment to express my thanks to our incredible teams around the world, who worked and continue to work tirelessly to deliver on our mission and our commitments, while keeping themselves their families and their co workers safe and healthy.
With that we'll now open the call up for your questions.
Erica.
At this time, if he would like to ask your question. Please press star one on your Touchtone phone if you wish to remove yourself from the Q you may do still by pressing the pound team. We remind you to please pick up your handset and please limit yourself to one question.
Well take our first question from Ronny Gal Bernstein.
Hi, Good morning, Thanks for taking my question and I guess on first I want to just thank all your staff all the hard work you guys are doing and making sure. We all have the drugs we need in this difficult time.
Question about back similar first you highlighted debt as the key driver for the year.
Could you share with us roughly what is your current run rate fell by are similar in the first quarter and how much do you think it'll grow till the end of the you're obviously, if you said it yourself with the key goal with great to be able to track your performance against that any related you mentioned they tend to the ability for lab.
I guess my question is are we looking for the launch off both violent panel at the same time and you expect interchangeability potentially in both or just spot.
Okay. Thanks, Ronny and first of all I, just want to reiterate I could not be more excited and more confident about our bias silvers franchises are not just here in the U.S., but around the world globally.
As we continue to launch these products.
Not just the run rate, we're seeing in the quarter or the year for 2020, but for the long term. These products are products that.
Our sticky they add long term value and re truly look forward to not just launching we have at launching other products as we outlined.
Either late last year only beginning of this year, we had $3 billion in revenues from products were going to be launching up through 2023 and with that being said, although we're not giving guidance. You can continue to expect a bio similars will be a very good portion of that value moving forward.
And I think the next question was got Atlanta, and Ronnie regarding Lantus, we remain on track to launch show for wireless and the change as we have you had said in the second half of the year and.
As far as the into tend to produce concern we have now science to support data capability and we are seeking either getting ready for both the dosage form sciences very late open their FDA guidance and Thats, where we are trying to negotiate that you know.
Is it adaptability status and I would the only add Ronnie.
And.
Thanks for your expression at the beginning of your question, we do we really do appreciate it.
I would only thank you, yes, we highlighted the bio similar franchise, because that's really what it is a franchise for quite some time shareholders and analysts alike have been really focusing on our portfolio. When we first started to build in the portfolio. Obviously, we were in unknown.
In the space.
And in and the first thing we need to do was demonstrate our sites now that that's done we are shifting completely to a commercial.
What I have to be very honest unclear. Yes, we have starts and stops this is not and I do think it would be a mistake for the investment community to look at this as a short term measurement because we didn't invest in this franchise nine or 10 years for the next nine months we invested.
Because as Tony said this is a very sticky product in and also to be Frank I think you guys have hurt in the past we did not get into this biosimilar franchise actually for the United States. We didn't even think that the United States would come online. So quickly we thought it would come on afterwards, so we were very fortunate to be here first but we do.
Your next question is from Chris Schott with JP Morgan.
The delay the timing close this was just recent business trends, you're seeing just any any updates there would be appreciated and if I can slip into the second quick question was just on the rest of world performance in the quarter.
Elaborate a little bit more on the co vid impact that business in Q1 versus how much pricing in Australia, and Japan or back to me results Im just trying to get a sense of what growth would have looked like X coded for it for that part of the business. Thanks, So much.
Yes, you take the second one first and then I'll do the first.
Yep.
As you would expect Chris.
China and Japan was the first two countries impacted from the quarter point of view, where we saw there.
Especially the backbone sales force not being in the field and all that so we did see some impact over there.
Which was not significant and go.
If I put in the dollar terms because maybe.
10, 15 million and the same was offset by a very strong performance in.
Our entered into a wild franchise as less new launches in Australia.
And Chris.
I would say if there is any change and the via tourists.
2021 trough year, I would probably say that that change is I'm, probably a lot more confident and how im feeling about going into 2021, and making sure that that baseline is set low enough to give management an opportunity to meet and exceed because.
At the very minimum meet or exceed quarter after quarter in order to restore confidence.
Back in the sentiment of this very strong and powerful platforms ability to generate substantial and durable cash flows.
I will tell you. This pandemic is perverse is what I'm going to say.
There are silver linings, I, we can't control, what we can't control and Unfortunately this pandemic was thrown at us So I am constantly trying to find silver linings.
And pick those silver linings out a couple of them is one I believe that confidence that I am conveying to you has been in large part because of that the delay and the as a result of this pandemic Im Sienna a higher quality integration process Im seeing enough.
Very strong alignment with management I'm seeing much more clarity.
So I would say that the only change is my.
Absolute increase confidence in where I think thats starting points going to be and the fact that we're going to be able to grow from that starting point.
You like further away from.
Yes. Your next question is from Randall Stanicky with RBC capital markets.
Great. Thanks, Hey, Robert earlier this year, you talked about picking a couple of therapeutic areas and focusing on those which areas are you thinking about how opportunistic can you be and still bounce. It soon enough times leverage target and has that changed with the pandemic at all thanks.
Actually great question.
Randall and.
It that the the approach has not changed the final answer I don't have exactly yet because it's not just at a balanced for that nothing is going to stand in a way of the two and a half I think that thats critical.
We believe that that is the right level to ensure that we can deliver.
No.
How we want to disseminate capital allocation going forward and part of that is to make sure that that dividend is sticky okay.
What we are doing and we actually have a process well underway and I'm actually looking forward to Michael and Rajiv.
You know work is going to be done specifically in the therapeutic areas. We are doing a very deep.
Dive analysis on Mylans core competencies on upjohn's core competencies and really determining you know after that dividend what free cash flows that we have to make for investments and what therapeutic areas make sense to leverage what we already have versus versus those areas that we can complement.
With the talents that were that we're bringing together so I do believe we're going to need a little bit of time I can I can probably promise you that at closing now that we've been extended and when Michael Sanjeev and Rajiv come up and make the presentation. We will have those therapeutic categories for you in terms of.
Directionally, where this company wants to put.
Its investments.
Your next question is from in Morass that with Evercore.
Hi, Thanks, much for taking my question.
Robert Theres been a lot investor questions on whether you guys will have a dividend at all and with the size of the dividend maybe it'd be really helpful. If you could give us some color and perspective on that and Rajiv, perhaps you could speak to pharmacy visit trends in Europe in light of co Ed and I asked because it seems like you're Uh huh.
You're not seeing any demand impact I'm trying to late in the context of what's happening because it could social separation as well as in particular, where the impact of Meddata and Abbott PD business could look like in Europe.
Turning to go go you go first okay them or thank you I think whether it's in the USA in Europe in particular, we've seen in a physician visits down based on Acumedia data down 75% plus in certainly as we work through the end of Q1 pharmacy sales were strong in Europe as we outlined today.
And we continue to monitor and watch those trends on a weekly basis to ensure not just what we've captured but looking ahead looking forward, we're always ensuring that we've got the right product in the right place at the right time for our for our customers and for our patients.
And some are in terms of the dividend I honestly I'm trying to figure out how big the.
The question in the mind of.
Some investors or what was said to give any.
You know any thought that we are not committed to this dividend. There. There are two things that I want to point out.
One in my beginning an opening remarks.
I can't make it any more clearer that once we come together with Pfizer's up joint business and create via trust we are completely.
The change in the emphasis of our business model to total shareholder return and a huge part of that especially I must respect the pfizer shareholders as well because part of what.
His was in our thinking is to make sure that that dividend is not only are we committed to it but I hope that we can.
Grow that dividend overtime that is our strategy. We are deeply committed to this dividend as part of our you know are more friendly shareholder allocation of capital going forward and so I I will.
So I hope I think between that change of business model and the fact that we're going to be taken and 57% of a pfizer shareholders. We're very very committed in terms of a mild or you know we don't give a dollar amount boomer, but that 25% of free cash flows is a commitment of ours and.
I think what you'll need to do is take the EBITDA I think I've kind of sort of Directionally, giving you guys, where I think the right. Starting point is and I think it's you know I do believe it's substantially higher than the 500 million that you.
Our referencing but I don't want to give a specific dollar because we're basing it off of our free cash flows.
Your next question is from a cash to worry what Wolfe research.
Hey, guys. So I wanted to go back in the 4 billion pro forma gap free cash flow that was I guess not guided but at least directionally guided for Beatrice when the deal was originally and now can you walk us through the bridge between roughly 7.5 billion and pro forma EBITDA in the 4 billion in free cash flow there seems like there is.
As impairment charge and given the tweaks on the business are you comfortable with that 4 billion free cash flow number on a go forward basis and secondly on gross margins. We noted both in the U.S. and E margins are up year.
Year over year, but overall gross margins were slightly down can you give us some color on what's driving that gap between the interest segment margins going up but the overall gross margins going down thanks a lot.
Uh huh.
So Tim yes, so [laughter] costs. Thanks for the question on the difference between the E. The cash flow in the EBITDA number you know, it's the typical items that run through there its depreciation and amortization.
Added back right. So then you get down to cash flow you actually have to take that Backout you get your tax rate applied to it you have interest and there is clearly going to be interest on the not only the existing mylan debt, which is about half a billion dollars theres going to be interest on the $12 billion of financing that you can.
Called out about the same amount, depending on where rates land.
When you do that Youre going to end up you should in a very much right out of 4 billion dollar number that you're trying to calculate too. So it's the typical items that would take you from EBITDA write down I don't see and I don't think there is anything related to I know, there's nothing related to anticipated impairment charges and that math.
So.
On the gross margins.
The gross margins the gross margins overall.
The the business the business gross margins are in I think both North America and Europe. The operating margins of those businesses, which are somewhat reflective are both increasing year over year, whereas in the rest of world segment, the operating margins in that business and that's shown on the chart.
Thats included in our earnings material declined a bit I think about 300 basis points year over year, driven by that the details that we called out including stronger volumes are they RV, which tends to be a lower gross margin part of the business combined with the pricing changes the governmental pricing changes in Australia.
And Japan, so not all three businesses are showing expanding operating margins, which is reflective of the gross margin trends and that should get you to about a point of overall consolidated gross margin deterioration.
Your next question is from Greg Gilbert with Suntrust.
Thank you are 10, I was hoping you could talk about the inventory levels of Mylan products. It at key customers at the end of March versus the end of December and for Tony on Biosimilars I get that your comments are about the long term franchise value, but I was hoping to ask more specifically whether anything has changed in either your approach or your supply situation.
And in the new last the market in the U.S. and any early comments you have on the herceptin market, well, albeit early pros and cons or anything different about that market. Thanks.
So Greg.
On inventory levels, you know I'll make a comment Tony may have more to add to it because we're all following this very very closely and one of the things that we are pleased with is is that with the sales levels that we've seen including with the.
The cobot impact that we called out primarily in Europe equivalent to about 2% of our total consolidated revenues inventory levels consistently by market by category have been relatively consistent with what we saw December 31st going to March and we measure those based.
Upon looking at you know the sales numbers and the anticipated sale out over a period of time and taking into account some of the step up and the sell sell into the channel even with that we are seeing inventory levels that are solid, but very consistent with what we saw in December.
Yeah, and can I think the only thing I'd add to the inventories around customers is this this is consistent even as we see certain therapeutic Africa category surging.
Sequentially in the months like products in the respiratory therapy that we have a large percentage of products and so we're monitoring these on a monthly basis, ensuring patients and customers have ample supply I think Greg as it relates to buy similar is just going back to this this is really a long term play for us one that not just the U.S. centric, but global.
And as we see these launches happening throughout the world and any use products like of Gibbering fulfill up we walked through kind of where we saw fulfill up at the end of 19 in terms of water supply ceiling was we're seeing that open up we're concentrating on building that commercial infrastructure, how we built that foundation and we're starting to see greenspan.
You know give read shares up the almost 3% this year in the U.S., we're seeing these kind of optimistic.
Things happening and we look forward to just growing them in 2020 in the years beyond.
Your next question is from Jason Gerberry would be really.
Hi, good morning, and thanks for taking my question.
This is just a follow up.
Talking about selfies consensus estimates for the interest combination going into right direction, but we only have access with the aggregators to Mylan Standalone forecasts. So can you comment at all 2020, what you're seeing in terms of the mean level of the consensus is it in the same ballpark as.
You commented in the fourth quarter call about 18 million $18 billion as a number that.
Wasn't directionally off so just sort of curious if you can help for us characterize which you see for the consensus for the Beatrice combination, which sounds like a number that you want to come in conservative again based on some of the earlier commentary. Thanks.
Yeah, So again I want to be careful here, but you're exactly right because I'm not actually given guidance and.
I'm trying to signal to all of you that what I see in 2021 is really not a surprise to me. It's what we've seen very early on as we were out way in front of some of the changes that were happening in China, and we obviously, we're well aware of the eloise going into this transaction that's why.
You look at the transaction you look at the pricing of the transaction.
You'll see that we fully incorporated a lot of what we see in front of us. So we didn't really have the opportunity to jump up front and really articulate you know directionally, where the business is gone and everybody started off by looking at Upjohn.
2020, and that is why I will also given comments in the past to try to help the street understand that you know it's not a simple it's taken us fours and added them together and it looking out into the future theirs as you bring companies together there are many other moving pieces and I think that the eight.
Team billion I, Yes, I was a directionally very comfortable and I I also think that you know the EBITDA I don't see EBITDA.
Coming down as much only because there's a number of offsets that that I can see so were really thinking hard and this is where this extra time has really helped how we will be bringing the businesses back together.
And then when we take a look at the transformation work that we're doing that was already well underway at Mylan and now underway at you know up John and again I just feel that Directionally. You are correct one of things I I have to make sure uninsured and pressure test with managed.
That is making sure the dash starting point is a true baseline.
To grow from where management. This new management has the best chance of Covenant I mean, you can see by the roadmap that we have out there we have very explicit plants. When it comes to execution what is it that we need to execute on and how we're going to deliver.
You know that total shareholder return.
For our investors, so I think that the.
That 18 7 billion range roughly in that right that kind of an area that kind of is I think the right and I haven't changed on that even with what I see today I haven't changed if anything I'm a little more confident.
As I continue to see things come together, but look if you will just be a little bit patient and let management come forth with very specific guidance with a lot of detail behind the guidance and then also I want to live up to the promises of the expectations that would management does come forth I do think that date okay.
To the investment community to share how exactly they're thinking about this global business to do a walk around around each of the geographical territories do Swat analysis for you and as they speak about how they're thinking about the business than the next steps should be you know that should have.
Hope you guys begin to build your models and then I think there needs to be a discussion between management and the sell side analysts and shareholders, who are building models to make sure. How we're thinking about the business what disclosures and how transparent we can be because we absolutely want to be as transparent as we could without Uh huh.
During our competitive landscape.
So please expect that we're still going to go through that process and it's just the process, but it's an exciting process and one that we're looking forward to.
Two working together with you want.
Your next question is from Elliot Wilbur with Raymond James.
Thanks, Good morning.
Maybe just one question for Rajiv specifically talked about the company's ability to mitigate any negative impact on its supply chain via.
The vertical integration and the diversification of your your manufacturing base, but maybe just tell us a little bit more about what you're seeing in on the cost side.
Hi, Thanks, a lot of companies about significant price spikes or increases in Apiay originator meet it should then global shipping cost one occasion kind of go through the roof as well. So I don't know if those are significant enough in the aggregate were actually noticing an impact on overall margins, but maybe just some commentary there and I also wanted to ask about FNF rent.
And supply chain dynamics, there where are you currently stand in terms of inventory and how you're thinking about that product as we kind of gear up for the key back to school season, particularly since it may be an asset that you can have a lot more control over going forward. Thanks.
Actually.
No.
It has been some fluctuations from the cost perspective, there's been some in peace costs offset been.
Intermediates thats been definitely something piece cost, which we have a dog on the logistics from freight point of view.
Spin.
In fact on from the absorption of the old has offset in France, but it's not at the point that.
It has come to a blinded it's going to adversely we don't we don't see some of these trends continue at the way we have at where we are we see freight basically getting normalize as we go along with getting used to this this.
This whole new nom, but as we go along with keeping a very close watch on death and will be confident about what's coming from what bucket, how it's being impacted up we more waterborne dealer focus has been on the continuity of flight supply of the critical products play of the important.
How can we meet the search.
Some some IC used vehicle protocol their demands have been beach. So we have kept our focus on that so thats I think go up from the up.
Spike in point of view that second from mapping Efrain, we added a strong position from flight at this point of time, we are ready for the full season, we don't see any hiccups at this part of time Elliot.
Operator, if I may.
I would ask that the rest of the analyst your questions I. We asked for one question because I did promise that we would extend our time a bit.
And I do want to give all analysts and opportunity to ask questions. If I could so if you can limit your questions. The one I would greatly appreciate that just given the time constraints.
And your next question is from Gary Nachman with BMO capital markets.
Okay.
Hi, Thanks, good morning, <unk>, how much additional flexibility with expenses do you have to manage through cobot 19 in the near term or will you just wait for the upturn deal to close since the restructuring program is on hold for now we'll see covert pandemic. Thank you.
So Gary Thanks for the question and it is something that we've been watching for the last several months. There is a portion of our cost clearly that is less flexible, especially since we have incidence in this in the prepared remarks that certain parts of our restructuring programs will be placed.
On hold for a period of time.
We will not be addressing certain programs that require impact on employees for all the reasons that you would want us to to support those on hold there are parts of our restructuring program that can continue.
Preparatory phases looking at.
Certain parts of our supply chain and our operational changed so those who will continue.
On the question of cost besides the payroll cost we do have buckets of costs that are variable in nature, whether it be travel, which I called out.
Advertising and promotions meeting expenses.
Things such as that along with other parts of our our spend to that is discretionary or I would say more discretionary and flexible in nature.
With what's going on some of that naturally reduces.
I'm sure you see the same thing just like we do people are not traveling people are not getting on airplanes people are doing much more by conferencing and tele calls and things such as that so we have a no measurable bucket of cost in this business that will move favourably with US I would also remind you that you know our business transformation.
Activities are anticipated and that extends beyond our restructuring program, but it is a part of our our restructuring program. Those will continue to occur as we move throughout the year those parts of the business transformation that relates to products and evaluation of products that remain in the portfolio. So I think with the mix of all that.
Without giving specific numbers on that we believe that there is plenty of room to kind of manage with what we see with Covance and our current outlook extending through the second quarter to manage our cost base in relation to the the.
The.
The current environment.
Your next question is from any Phadia with SVB Leerink.
Hi, This show to now for on the thanks for taking my question.
Maybe just one on about similar now that the Neulasta and herceptin similar market Thats, becoming.
More crowded it's been more players coming in or what's your overall strategy of differentiation yet it's market.
Thanks.
Let me try to address the best my ability.
I mean, I would say that.
The first thing I would you say.
Our competitors would love to hear exactly that what is our strategy. It's a real dynamic marketplace and there's actually a lot more players then I think any of us really anticipated.
That would be in the field. So it's all that all the strategy. This market is still in the infancy of evolving.
And there's still a number of moving pieces that everyone. I think is assessing so with that Tony can do the best you can but I do want to be sensitive about just that for sure. It and I think as Robert said, you know not going to walk through strategy, but I think we view. These biosimilar is a franchise and franchises could be in certain therapeutic categories.
Like oncology like you mentioned fulfill up and it will give rate.
Yes, we're used to competing and in markets, where there theres many competitors and we look forward to continue to do that that's not something we backed away from something we look forward to in something I feel very confident and very excited about doing and growing over not just the quarters, but the years yes.
Again on the bio similars because it is really important to a lot of investors, we are going to measure our overall portfolio and not focused at this juncture to any one particular launched or I believe there are some launches.
You know for example, the launches that you've seen here in the United States, you're not really following the ones you know overseas as much but yes, we had starts and stops we had pushes and pulls but theres also learnings that come with that as well and that's why I think your questions appropriate about strategy you also need to adjust that strategy along the way as well.
Your next question is from David Risinger with Morgan Stanley.
Yes, thanks, very much and.
Congrats on the performance we thank you for all the detailed updates so Robert My question is.
[noise] back on the last call you talked about a trough in 2021, but that you also maybe take a hard look at 2022 could you just please provide an update on.
Your thoughts and any additional commentary on the pushes and pulls thank you.
Thank you David.
And it's a great question because.
Without at least me.
Projecting or in my own mine.
Going out to 2022, how would I ever ensure that 2021 is going to be that trough year.
I think that David what I'm trying to focus on is one I think that the company is going to go through two stages for a potential re rate I.
I think one we have to get the closing that's the very first thing we need to do.
You know you can talk about paying the dividend, but until you actually are in a position and start paying it I think there's that way.
So I want to be very clear about our commitment and I'm glad that Boomer asked a question that you did and and I think people are much closer when it comes to the dividend, even though I'm not going to give an exact number from at the 25% of free cash flows I actually think people are much closer to what they have anticipated then.
Then then the number that.
Or put out that some people are thinking about but I think once we close and we're actually a form via tourists.
And we have that right starting point and people actually can see the new financial profile. I mean, we are already stronger from a financial profile that any one of our anyone in our sector right now.
Imagine when we bring mylan together with the Pfizer up John business. When you take a look at that balance sheet and you take a look at our cash generation and you take a look at our friendly shareholder capital allocation.
I'm, just telling you right off the bat I do think that will be the first time, we'll get the first three right.
But the second re rate will come and the one I think it's going to be most impactful.
Is when management can outlined a three to five year K guar offer that 21 trough number.
And put lakes behind underneath that three to five year CAGR be very explicit about how youre going to hit those growth rates. Both in three to five years, what do we already have in house, what do we relying upon and then I think once the investment community really gets comfortable.
So with the stabilization and the consistency quarter after quarter of the the baseline profile and then they start to see some vision, where theres actually they can actually see how we're going to get the growth then I really think that the multiple that our company really deserves woman.
Serialized, but it has to happen in steps, that's not going to happen overnight.
Certainly not going to happen over our looks but I want to thank you for that question because.
I can only say that I'm looking at 2022, but more so.
To ensure that 2021 is really going to be that troughed here.
Thank you.
Okay.
Your next question is from David Dullum with Piper Sandler.
Thanks, So just a high level question.
And I realize that asking a question about M&A and business development and when you're trying to close something transformational.
Might be tricky, but as you're thinking about.
The continued evolution of the new the new organization.
Can you give us a window into your thinking on bolt on acquisitions.
Additional.
Areas of interest in terms of.
The acquisitions, and particularly asset acquisitions, and how should we think about.
Focus on brands versus generics in terms of your shopping list over the long term. Thank you.
Thank you for the question I think really to be fair to your answer to really be fair to your answer I think when the new management comes forth.
And speaks about our new global health care Gateway.
And really outlines how we intend to.
Put to use the excess free cash flows after the dividend is paid.
I do think you're going to get a very concise response and I do think it would be a combination between what we already have in the pipeline.
Between what we think we should supplement our pipeline with and that'll come with.
Two randles question I think Randall is spot on and how he's thinking.
About the way, we're we should be thinking about going forward. So I think the therapeutic category, you're going to get I think deal I think they're really will be some opportunities for some tuck ins I don't believe you should ever be thinking about major M&A I do think that we need to really begin to start returning capital back she.
Your holders. So there you know we are in the process of really thinking about an extraordinarily disciplined approach about allocation of capital on a going forward basis.
And I think it would be only fair one to the answer to your question into to the new management team.
Theres a tremendous amount of work that's being done and I like the let Michael in regime.
In Sungy, let them present to the board of directors. This is something that we're expecting we'd like to get their thoughts that we'd like to get the rationale behind our thoughts we'd like to absolutely a pine on them and then let them come forth and I really believed that the real concise answer to your question will be forthcoming.
Our next question is from Louise Chen with Cantor.
Hi, Thanks for taking my question here. So I just have a very simple question. What are the next steps that need to be completed an order for this up John deal to close is there any time you can give around this next steps and if they could be impeded at all by the covert 90 pandemic. Thank you.
Well the first thing is to get to our shareholder vote and you saw that we.
Moved into June Thirtyth, and kind of sort of worked out well because we can now have it at the same time as our annual general meeting so to put the two together actually kind of worked out well.
I'm, hoping I can land in the Netherlands by then to actually conducted meeting.
If if if need be i. I did see that the Netherlands.
Pass some emergency legislation to actually postponed to give people an extension up until October.
Actually have their annual general meeting on a kind of the cobot. So im looking at different ways of you know working through that I don't think thats going to be a problem. We'll we'll look at other alternatives. If we have two but right now it's my intention to absolutely.
Be there in person and to.
Conduct that that meetings I actually think thats not a difficult one but you asked about how cobot 19 could play in.
I would say I would say that.
I would say that the other one is the only other one is the remaining regulatory agencies for the antitrust and I can tell you I I'm feeling very comfortable with the work. That's been done you know just where we are I mean, obviously when DC closed on you know they themselves the agency themselves. The FTC asked for an issue.
Attention. So you know we've absolutely a pint on their request I don't know how you can't but there is nothing I see that's going to get in a way of our ability to close it you know at the second half of of this year. There. There's nothing I see Theres no impediments I think we have plenty of time to accommodate both.
Kobin 19, and Andy antitrust regulators in terms of what needs to get done.
Thank you.
This does conclude today's my line first quarter 2020 earnings call and webcast. Please disconnect. Your lines at this time and have a wonderful day.
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