Q2 2020 Mylan NV Earnings Call
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At this time I would like took wherever you want to them Island second quarter 2020 earnings conference call and webcast.
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Thank you I went out you know call Ritu, Melissa Trombetta head of global Investor Relations. Please go ahead.
Thank you Brandy good morning, everyone welcome to Mylan second quarter 2020 earnings Conference call.
Joining me today, our Mylans executive Chairman, Robert Corey Chief Executive Officer, Heather Bresch, President <unk>, Chief Commercial Officer, Tony Mauro and Chief Financial Officer, Ken Parks. During today's call believes making forward looking statements on a number of matters.
Including financial guidance for 2020, and the proposed transaction pursuant to which Mylan will combine with Pfizer Inc. Upjohn business in a reverse Morris trust transaction to creating new company that will be named via truck.
These forward looking statements are subject to risks and uncertainties that could cause future results were events to differ materially from today's projection.
Please refer to the earnings release me furnished to the FCC on form 8-K earlier today as well as our supplemental or inside all of which are posted on our web site at Investor Day, Mylan Dot com for a fuller explanation of those risks and uncertainties and the limits applicable to forward looking statements.
Mylan routinely post information that may be important to investors on this web site and we use this website address as a means of disclosing material information to the public in abroad, not exclusionary manner for purposes of Fccs regulation Fair disclosure. In addition, we'll be referring to certain actual and projected financial metrics of Mylan and adjusted base.
Basis, which are non-GAAP financial measures.
We refer to these measures as adjusted at present them in order to supplement your understanding and assessment of our financial performance.
Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with gap.
Most directly comparable GAAP measures as well as reconciliations of the non-GAAP measures to those GAAP measures are available in our second quarter 2020 earnings release, and supplemental earnings side as well as an investor section of our website. Please note that this whole relates to Mylan second quarter 2020, earning and it will be limited in what we can speak during Q1 name.
Regarding the interest and we will not be speaking about the up John business. Let me also remind you that the information discussed during the call except for the participants question is the property is mylan and cannot be recorded or rebroadcast without mylans expressed written permission.
Archive copy of today's call will be available on our website and will remain available for a limited time with that I'd like to turn the call over to Heather.
Thank you Melissa good morning, and thank you for joining us on what could be Marlins last earnings call.
We know all good things must come to an end the team is ready to turn the page and is looking forward to Beatrice, becoming a reality on a global leader in the healthcare sector I.
I'm going to start today by giving a brief overview of our performance to date cobot impact an updated guidance for the year Rajiv and Tony will elaborate on the performance of our regions key products as well as an integration planning update and Ken will review the detailed financial results for Q2 in the first half of the year Lastly, Robert Robert will provide.
Perspective on the progress we continue to make towards becoming Beatrice.
Before we dive into results I first would like to reiterate that Marlin remains committed to the health and safety of our employees are patients and the global health care community at large cobot pandemic has forced all of us to acknowledge and grapple with difficult uncertainty in our heartfelt sympathies goes out to all of those who have been direct.
We impacted.
At the same time I continued to be inspired by our employees around the world, especially our central workers, who have allowed us to continue to deliver important medicines. During these unprecedented times.
Thanks to their efforts our plants remain operational and our supply chain and customer service levels continue unabated.
Additionally, we continue to leverage our resources and expertise and the fight against Cobot 19 through potential prevention and treatment effort.
Now turning to our results we believe our results from the first half of the year better represent the underlying performance of the business due to the fact that any cobot 19 related gains in Q1 were more than offset by the negative impact of the pandemic in Q2.
During the first six months of the year, we delivered a solid performance that demonstrates the strong fundamentals of our business and our continued ability to actively and successfully managed through this time.
The favorable results for the first six months or in line with our expectation.
We achieved 5.35 billion of total revenues up 3% year over year on a constant currency basis, and adjusted EBITDA of 1.63 billion up 5% year over year.
While we experienced a decrease in adjusted as DNA in the first six months of the year, partly due to cope with our proactive business transformation efforts targeted at aligning investments with top line returns represent a more important example of our ability to focus on not only maintaining our margins for 2020, but.
Also continuing to drive sustainable long term benefits for the business.
On a year to date basis, our adjusted free cash flows up 17% over the same period in 2019, and we expect sequential growth in the second part of the year, which speaks to the durable cash flow portfolio of our business.
Looking forward to the remainder of the year, we're tightening our full year guidance within the ranges of our original expectations for both adjusted EBITDA and total revenues on adjusted EBITDA, we expect to be able to substantially maintain our original target for the full year ball tightening the range to between 3.3 3.7 billion.
And on revenue, we're tightening our full year range to between 11.5 and 12 billion.
Our outlook for the rest of the year include some important data point.
First it's clear that overall Tobin 19 recovery efforts are occurring slower than anticipated and they continue at least through the end of this year.
As a result, we expect that our total revenues, which absorbed a 2% net decline in the first half of the year to have an overall similar negative impact of 2% in the second half of the year.
And on EBITDA, while we are seeing savings in Austria, and they do to cope with these are being partially offset by the previously announced delay in the implementation of the restructuring portion of our business transformation initiative.
Also due to cope.
With all of that said, it's important to note that we do not anticipate significant change to overall demand and our underlying base business.
Before I turn the call over and on behalf of the management team I would like to take a minute and thank him for his service and partnership over the years.
We wish him all the best in his next venture.
I look forward to partnering closely with Paul Campbell, our controller and Chief Accounting officer. During this interim transition period with that I'll now turn the call over to Richie for further commentary.
Thank you had there.
Good morning, everyone.
I would like to extend a warm welcome my fellow Mylan Cody.
And future you actually physically joining todays call.
As we continue to come from Gordon 19 brand dummy.
Yeah, and see if deal for workforce remains our number one priority.
I would like to act will happen tomorrow and pair our frontline workers, who are keeping our operations running.
You did see gossip did air force that we have been able to maintenance like continue be and strong customer service levels girlfriend Blue belt any meaningful disruption during the first off of 20 to 40.
I would also like to tech or she is force repertoire to continuing support to meet the needs of health care professionals and the patients there so.
We do recognize the important role we play in a fighting to spend on me and couldn't do you need to seek opportunities to effectively deploy resources and expertise.
For example, during this quarter, we signed a global collaboration agreement with Gideon.
Scientists to commercialize Jim just to be <unk> hundred 47, no and middle income countries.
In less than 90 days off signing the agreement, we jumped up or sign.
Production.
<unk> drug or do you brought in India and Stockard commercially speaking the upper end up Walker, reflecting the central horse trying to pick up a pretty decent global operation.
We look forward to four then expanding access to this critical medicine in other countries.
As I've walked through a flawless cop, one I should dessert and explains I backed off what would 92 or performance.
We delivered $5.4 billion in Golden revenues in the first off of the Ya.
Two to three portion constant currency growth, which is a friday it.
The durability and diversity of our portfolio.
And just rental for underlying business allowed us to absorb it to force at negative revenue impact or that is onboard 90.
For North America, or net sales were $2 billion you the for six months we.
We generally see person on a constant currency basis compared to the same feared loftier.
We continue to benefit from implementing awful or business transformation program.
The U.S. do says helped us the ship or not to be more to be Oldham sawdust portfolio to a more diversified portfolio of complex generics biosimilar and brand for looks.
I would do mean Brook drivers. This all four of Accella genetic Greg here and you probably I would never like once beauty level.
Got it works Sheila we had excited that we have been able to grow our market share from 24 front. During the first off of 2090 grew 33 parts into the first off of this year.
Also you better be achieved in 92, four since year off Nebulized Lama market and its 16, but since year long acting never life market.
Overall core were 19 had a very minimal net impact in the region.
In Europe or next install them $2 billion is a first off of the yet.
Diesel so auto up seven portion on a constant currency basis compared to the same period last year.
Due to the higher volumes off existing products and new launches.
Im not to U.S.C., we gotta, realizing the benefits of applying your highly disciplined financial and do what are you would've been business as it is an adult business transformation.
We have not only to rightsize our portfolio by eliminating set the Nic do contribution margin for books.
Hello also have full because all the investments and selling and marketing.
I just looked up is we have seen strong through the whole keep events such as I missed a friend upkeep and beyond.
I'm going to do she has cooled off a deal or boxes or do we don't.
Do you don't drivers headsets absolved in there to see Parsons revenues for the European segment due to the coordinating and it isn't all loan demand also didn't bran and what do you see products.
And that's the war on that she is doing for $1.3 billion for the first half a year.
Is it three person decline on a constant currency basis compared to the same period last year.
Why no yeah I read business performed strongly go wouldn't 19, how did see person negative revenue impact.
I'm, leading <unk> lower than anticipated recovery in Brazil, Russia, China, and some other emerging markets.
I am excited now to share some key pipeline updates.
Our scientists.
What are you sports IP legal team working Lubys or development partners have made tremendous strides in advancing key programs.
The same to be flat from we have been is a divorce you fighter cross dosage form delivery systems and canopy together, yes, we do focus on moving up to find spectrum.
Oh Global Boston or franchise is one of four key long term growth opportunities.
Tony would walk you through the more should progress we have made for the last year in several of our key market wide I will provide updates on I'll.
The government programs.
Before doing near diaper white old respective up there I would like to acknowledge our strong partnership with the bark on biology to execute on or try and programs.
Beginning with separately or incident Lucky we do see you go after the approval in June and we're excited to launch it in the coming weeks and expand access for the millions of Americans living with diabetes.
While also reducing the cost burden the U.S. jumped gets system.
Additionally, we have submitted to agency on necessity documentation to seek Biosimilar interchangeability.
Given the complexity in the bringing this type of product to the market. We believe seven believe we'll have a long revenue stream, we just launched ramp up.
Continuing with our commitment to developing more affordable insulin.
We have progress or incident as spot program.
Our B. Riley and mopping up one addition for a biosimilar to know law is now under review would they have to you and the European have photography.
Oh really four or five to go to investing is under review with the FDA and is expected to be approved by the end up this year.
Oh marketing authorization remains under the view with the European have the authorities.
Our phase three clinical trial for our Biosimilar to idea remain on track to school to be a live filing for the fourth quarter of 2021.
Our why shouldn't look to Ambrose Netbacks to received European marketing authorization in June and is on track to launch in Germany. This month.
Followed by additional European markets by the end of the year.
Our boss didn't look to me at all.
You received after you everyone last month export or beaten that sounds like we might have a darby will be able to launch will you in U.S. into life when equally to the.
Also we couldn't formed in June that we are advancing our development program. It's a van for a biosimilar to bought all.
At this stage, we had in the process of scaling up really did exactly correct realization and performing preclinical work, we the Gordon stock or clinical program. We just been but do you need we'd have to you. Our goal is to bring this brought to the market by 2025.
I would not provide you an update on some other pipeline products beginning with died metallic humidity.
In better I wouldn't be door. So you can do grungy was just stick or been invested in ready getting barges Dexter data quite one for Peyton we have been working closely with after you do expedite and find I sort of you all four indeed, we believe.
I guess he is prioritizing did a view to complete it before the target action date.
We continue to invest in already industry, leading infectious disease portfolio.
Very decent be European Commission, and D. I in India granted marketing authorization for people money Inovalon come phone developed by a nonprofit DB aligned for use in a new regimen for treating Heidi drug resistant formal.
Well Im wondering tuberculosis.
Mylan is proud to be a TV less global commercialization partner for predominantly as a part of this treatment.
Moving onto our respiratory portfolio, we remain on track to received tentative approval from after you bought or forced to find genetic symbicort by end up this year. Our 30 months did indeed, it's macho 21.
All reflected somewhat as you did once a month program is progressing well.
We announced in team.
And additional investment in memory pharma to support continued or draftsman onto a feed to the clinical studies.
To further strengthen our most people's lives this offering in U.S.
Since the approval off.
Platform and if you did injection, we have been steadily strengthening our development pipeline of complex injectables.
We currently have.
And does under active review.
After you gave for genetic self victoza.
In regard to that Invega sustenna.
We know fair.
Injectafer and do football.
We haven't reached by my off long acting and complex injectable products in development using once people technologies, such as Depo, Joe's microspheres like Muslims and peptides.
And is actual continued expansion into high value product opportunities. We remain on track to initiate a phase two clinical study will end up this year.
For all and loved ones Ito seven easy to one program, which is being developed as a non narcotic oral and I've just before many mental moderate to severe pain.
We also remain on track to progress a developed burned off and loved ones Ito seeks easy to one which is a novel synthetic anti microbial peptide that is being developed as a topical product for one won't seatmates.
Our pipeline also includes a focus on key future growth markets.
Like China.
We are finding that miss stuff ought to bring this quarter.
And we'll initiate clinical programs for your battery and perform it later this year.
Yes, we couldn't even to explore more opportunities to expand our presence in China.
Lastly, while Robert good color certain aspects of the up John transaction I would like to take a moment to share how excited I am a vote. The progress we have made on the integration planning.
Well, the loftier mine and end up John teams have been working together as we prepare for the D. Cool the focus on a quantity separation and integration.
Everyone's hard work is building a strong foundation for reactors and setting us up for success on B, one and beyond and we look forward shooting, though we actually story more with analysts and investors over the coming month.
And with that I was not on the call or to doing thanks.
Thank you regime and good morning, everyone.
First I want to Echo Heather and Rajiv sentiments that we were pleased with the overall performance of our business and are proud of the portfolio. We have built that can withstand the short term impacts we are experiencing and the current environment.
Before I get into that our commercial performance for the quarter I want to address our continued efforts to keep our salesforce and customers safe and healthy in the midst of the cobot 19 pandemic.
Since the beginning of this pandemic, we have equipped our sales team with virtual tools to allow them to provide the same level of service their customers are used to receiving.
With these tools, we've been able to provide continued support and service to health care providers, including hosting more than 2500, webinars and conducting more than half a million video calls.
At the same time, our product service levels the customers across the markets remain strong and at the highest rates we've had in many years.
We were incredibly grateful to our Salesforce and commercial teams for their strong performance flexibility and continued dedication throughout the quarter and it Kobin 19 pandemic.
Which have allowed us to continue setting new standards in health care and advance our mission.
We have begun to return some of our field force the face to face interactions, while adhering to health officials guidelines.
And we will continue to monitor market conditions in all regions in which we operate to ensure that we are bringing our sales force back to the field in a way that a challenge there and our customers safety, while meeting the needs of health care providers and patients around the world.
Turning to our commercial results for the quarter.
Our ability to perform and what has continued to be a dynamic and challenging environment underscores the strength and resilience of our commercial platform.
We're very proud of our first half performance, we've seen positive growth in many of our key markets, including in North America, specifically with growth in two of our key respiratory products with Cilla, which had grown 62% and you pillory, which is run more than 600% in the first half of 2020 versus the prior year.
We also had a positive growth in Europe, which help upset rest of world business declined largely due to more significant impact of Copel 19 and expansion in emerging markets.
Moving onto a vital part of our long term strategy.
I would now like to take a deep dive into our bio similars business.
We continue to be pleased with the initial growth in pockets of success in our global Biosimilars franchise. As we are approaching the 1 billion dollar milestone and expected cumulative sales with 90% of this value coming over the last two years.
We have built one of the largest and most diverse franchises in the industry, including products across multiple therapeutic categories as.
As we've stated in the past the bio Similars franchises, one with long term growth opportunities with more than 100 launches spanning across more than 60 unique markets across the world.
As a result, I remain confident in our ability to continue to develop and globally commercialize our bio similars franchise with the potential of becoming a cornerstone of our business over the long term.
We are seeing many positive signs in the markets, which why will expand upon.
Turning to highlights of our Biosimilar his business by region.
We continue to expand or bio similars franchise in the U.S. and we're pleased to receive FDA approvals. This quarter for secondly, a biosimilar to lantus and for Julio a biosimilar to Humira.
As we have commented before.
This is a long term franchise strategy that will reap the rewards in the years to come.
And although we know we have much work to do in these initial phases. We continue to be encouraged by the performance of products like go give read a biosimilar to herceptin, where marketshare as more than tripled in the past three month to nearly 6%.
As well as the renewed growth in fulfill up a bio similar to last up increasing our share to nearly 16% of the prefilled syringe market in the U.S.
In addition.
So given Canada has captured 23% of the entire market.
It is the number one rank bio similar to trust who's a map in both value and volume.
In Europe, we continue to be encouraged by the opportunities that lie ahead and many of the markets.
Our givry has double digit share and nine markets in the region and is advancing share and the crystal reticle markets like France and Sweden.
Julio has also found success in markets like Germany, France in Finland.
In Germany, we're seeing more than 13% share of the entire market and share of the bio similars market exceeding 20% for the first time.
We have double digits biosimilar share on Julio and 10 markets in Europe.
We see significant opportunities ahead and are projecting nearly 100% growth in the early stages of the bio similars business in Europe in 2020 over the prior year.
For the rest of World segment.
We have seen more than 40% growth year over year, and now offer biosimilar products and more than 40 countries.
We have been very pleased with our performance in markets like Tunisia, Morocco, and the Philippines, well, we have retained a market leadership position for her trust our biosimilar to herceptin.
As well and it isn't Australia.
What were your now but number one biosimilar to trust who's a map representing 75% of the bio Similars markets.
In closing as we've mentioned our Biosimilar strategy has been and continues to be about developing and executing on this long term global franchise, focusing on market relevance and global leadership as it relate to this extremely important area for patient access and payer savings around the world.
We are beginning to see signs of our hard work and efforts materialize in the market and are pleased with the early trajectory of our bio Similars business.
We remain confident that our experience scientific capabilities and commercial platform position us to expand this business and be a leader in the Biosimilar space.
With that let me turn it over to Ken to discuss our financial results in more detail.
Thanks, Tony and good morning, everyone as you've seen in our press release this morning, and I've heard throughout this call. Our first half 2020 results showcase mylans ability to perform in a challenging environment and underscore the resiliency as well as the durability of the platform we've built over the last.
Good.
Embedded in our strong first half results was a more pronounced impact from cobot in the second quarter.
Q2 revenues of $2.7 billion were 4% lower than the prior year and 2% lower on a constant currency basis.
Consolidated revenues were negatively impacted approximately 5% as a result of the covert pandemic.
A portion of this was the reversal of the accelerated buying we saw the ended the first quarter as customers and patients primarily in Europe began to react to the early signs of the ramp in the pandemic.
As disclosed in our first quarter conference call. We estimated this accelerated buying to be approximately $50 million or 2% of first quarter sales.
As the pandemic continued to take hold globally, we saw second quarter revenues negatively impacted by lower retail pharmacy demand lower patient hospital visits and a materially lower number up in person meetings with prescribers and payers, mostly in Europe, and the rest of world segments that.
Said first half revenues were flat year over year end up approximately 3%, excluding the impact of currency exchange.
Pricing declines remained relatively consistent at down low to mid single digits overall and volumes of existing products grew 5%, including the negative impact of Covance.
New product launch revenues contributed $163 million in the first half of the year and we expect an additional $450 million of new product launches in the second half.
Moving to gross margins in the second quarter, our adjusted gross margins remained strong at 54.3% that's up 50 basis points from the same period last year, reflecting higher gross profit from sales of existing products in North America, primarily driven by sales of work so.
As well as the contribution of new products.
This impact was partially offset by lower gross margins on sales of existing products and the rest of world segment, including China and other expansion markets.
From a segment profitability standpoint, North America increased 3% in the quarter, excluding cost associated with the Morgantown restructuring and remediation program.
This increase reflects contributions from new product sales higher volumes of sales from existing products, partially offset by impacts from lower pricing on existing products driven by changes in the competitive it competitive environment, including leaving that Iraq, saying.
Europe segment profitability also expanded up 28% in the quarter, partially driven by favorable product mix.
Conversely rest of World segment profitability declined down 22%, mainly due to the negative impact of coven, 19, and lower pricing on existing products, primarily due to government pricing reductions in Japan.
In addition, all segments benefited from lower selling and marketing costs and both Europe and rest of world segment's profitability results were negatively impacted by foreign currency translation.
Second quarter, adjusted R&D was down 4% compared to 29 team due to reprioritization of global programs as well as certain timing impacts in response to the pandemic.
During the quarter adjusted EPS, DNA spending declined 11% year over year, reflecting lower than anticipated selling and marketing investments lower travel and entertainment activities and lower legal expenses, primarily in response to the cobot pandemic along with the ongoing active management of the Bill.
Business.
For Q2, we reported adjusted net earnings of $574 million and adjusted EBITDA of $879 million, an increase of 8% and 4% respectively.
For the first six months or the year adjusted net earnings on adjusted EBITDA grew a healthy 9% and 5% on revenues that grew 3% on a constant currency basis.
Turning to cash flow for the first three months of the ended June Thirtyth 2020, adjusted free cash flow was $522 million, bringing first half adjusted free cash flow to $879 million, that's up 17% and up.
Hundred $29 million over the same period in 2019.
Well, we don't presently see any negative liquidity trends related to the pandemic. We do continue to monitor those trends very closely.
We expect adjusted free cash flow to increase in the second half of the year in line with seasonally increasing profitability, coupled with ongoing realization of working capital velocity initiatives.
During the second quarter, we repaid 500 million euros of scheduled debt maturities and reduced our debt to adjusted EBITDA leverage ratio to 3.4 times inline with our expectations and well below our covenant requirements.
We continue to anticipate full year adjusted free cash flow generation, consistent with 2019 levels, which will support achievement of our 1 billion dollar debt repayment target for the full year.
We expect our cash flow from operations, along with our existing borrowing facilities, which provide liquidity up to $2.6 billion will be more than sufficient to meet all possible liquidity needs in the near term.
As always we remain fully committed to our investment grade credit ratings and to further reducing leverage.
Finally, as you've heard earlier, we're narrowing our full year 2020 guidance ranges revenues are now expected to be in the range of 11, and a half billion to $12 billion absorbing the ongoing headwinds from the cobot pandemic.
And while we're seeing savings in SGN eight due to co bid. These savings are being partially offset by the delayed implementation of the restructuring portion of our business transformation plans also due to covert.
As a result, we now expect full year adjusted EBITDA in the range of 3.3 billion to $3.7 billion also tightening that previous range and raising the low end of the range.
At the midpoint of this range $3.5 billion. This implies slightly less than $1.9 billion of adjusted EBITDA for the second half of the year and as usual, we expect the fourth quarter to contribute relatively more adjusted EBITDA than the third quarter.
We also continue to expect a full year adjusted effective tax rate between 18% of 19% and a full year average diluted share count between 516 million and 520 million shares consistent with our earlier guidance.
Before I wrap up my comments I must take a minute to express my sincere. Thanks for the honor to have had the opportunity to serve this company its stake holders and most importantly, this team for the last four years.
The unwavering dedication by all 35000 employees to the company's mission is truly unparalleled.
Well I'm extremely excited for my next opportunity I will always be watching my Mylan and Beatrice colleagues cheering them on as they continue to reshape the global healthcare landscape, ensuring access to affordable them medications for the world's population.
With that let me now I'll turn the call over to Robert.
Thanks, Ken and good morning.
On behalf of the board of directors, we sincerely appreciate all your contributions and accomplishments for Mylan and do wish you all the best in the next phase of your career.
I would like to take a moment to offer my sincere gratitude to all the moving employees worldwide and their families for the remarkable resilience and determination.
As we continue to deliver on our mission of providing patients around the globe with continued access to needed medicines, even though the global cobot 19 pandemic.
I also would like to welcome all of our future Upjohn colleagues listening to this call.
I am proud of our management teams leadership and always putting the safety of our colleagues around the world first.
Well focus on safety remains Paramount as you heard from Heather and the management team. What is also truly impressive is mylans employees continues and how they can just continue to deliver on the solid performance and especially in the second quarter.
While the management team provides an update on the year to date I would now like to turn my attention to where we stand with respect to our pending transaction with Pfizer is up John and how I continue to see 2021 shaping up directionally.
With official guidance to follow directly from Beatrice's management team following the close.
As many of you know we held an extraordinary general meeting on June Thirtyth for shareholders to vote on the V. interest transaction.
We are extremely pleased with the overwhelming support we received which was demonstrated by the fact that 99.6% of the shares voting were in favor of the transaction.
With the approval of our shareholders. The only remaining external requirements to close the transaction or a few regulatory approvals and we are still on track to close in the fourth quarter.
While we have continued to work towards closing the Beatrice management team recently began the process of meeting virtually with many of our top mylan shareholders and covering sell side analyst as we previously promised.
During these meetings, Michael regime, and sanjiv, not only demonstrated their cohesive alignment passion and excitement to lead this great new organization, but they also conveyed their confidence in being able to deliver significant long term value to shareholders.
We expect those conversations to continue as we expand our shareholder engagement activities, including with the Pfizer shareholders, who will become Beatrice shareholders through the closing and beyond.
I will soon be personally reaching out to the Pfizer shareholders to set up their own meet in grades with the future via Trust management team.
With that said I.
I would like to sincerely. Thank all those who have participated in these meat and greet sessions to date.
In addition to all the milestones achieved to date as we look forward to closing I would now like to lay out a number of key next steps of interest to the to the future Beatrice investment community.
[noise] step one first and foremost is to close this transaction, which we are on track to do in the fourth quarter.
Without speaking for Pfizer I can certainly tell you that both organizations remain highly focused on bringing this transaction to a successful close.
Step too.
It is for the Beatrice Board of directors to Dan immediately initiate our new business model focused on total shareholder return and more show in a more shareholder friendly capital allocation program.
Beginning with the initiation of a meaningful and attractive dividend after the first full quarter following closing.
While also rapidly beginning to pay down debt to meet our stated target of two and a half times leverage ratio.
Step three.
At the end of February or early March when features reports its fourth quarter earnings you can expect and hoping interests management team to provide the opening guidance for via interest is first full year, 2021, which I often refer to as the trough year donate life Investor day.
It is expected that the guidance delivered will take all relevant country specific headwinds into consideration.
For example, and among others China's VBP.
Japan lyric LLC.
And any other potential headwinds that will be known at the time.
Including any effects as a result of the continuing cobot 19 pandemic.
Step for.
The interest is management must demonstrate its ability to deliver consistent at transparent results and a predictable and measurable way at the same time, while integrating both businesses and achieving our targets of at least 1 billion in synergies over the first four years of operations.
Step five.
We will launch via interest as new global Health care Gateway.
Which will be the house of disciplined responsible for all future capital investments to fuel future says future growth.
With that said I will answer.
I will try to answer any remaining questions of interest regarding via interest during the QNX session.
But before I conclude.
I would like to state.
That given the interest is vast global profile.
With now 70% of its business outside the United States.
And diverse global reach as well as our commitment to total shareholder return and corporate social responsibility.
We believe that the interest will be perfectly situated to attract even a broader shareholder base.
Around the world.
Therefore.
We intend to explore ways to unlock value beyond our current U.S. centric shareholder base by exploring additional potential listings on other international strength exchange trading platforms.
In closing.
Before turning the call over to the operator, I would like to conclude.
By underscore and held very excited we are to launch via trust and its mission to empower people around the world to live healthier at every stage of life.
As we anticipate this to be our last mile its quarterly earnings call.
And although Heather will remain with us until we close I would also like to thank Heather in this form.
[noise] Heather on behalf of bar Board of directors and all of our modeling employees.
For your exempt or exemplary true leadership and lasting contributions that you have made to mylan, our industry and patients around the world. Thank you.
And now as we start to QNX session I would ask that you. Please limit yourself to one question and the spirit of time and respect for others on the call I'll now turn the call over to the operator.
Thank you at this time.
I will open up the call for questions.
Thank you Jesse question. Please press star one on your Touchtone phone fishermen herself from the Q you may decide pushing the town key remind you of having a hand, Sam please limit yourself to one question.
Well take our first question from the line of Chris Schott of JP Morgan.
Great. Thanks, so much for all the details today I should one just elaborating a little bit more on on via tourists and capital deployment priorities beyond the dividend I guess could give more color of how you think about deploying the cash flow up the company as we think it'll business developments kind of where where should we think about this efforts being most focused.
And and as part of that is BD and kind of partnerships that you've talked about the past.
Is that what we should think about as the primary drivers of growth of the business over time or do you think that the organic portfolio itself.
Can generate growth once we get passed that 2021 trough year. Thanks, so much.
Thanks, Chris I would say, 100%, both I would say all the above.
And especially as what we've been producing out of our own organic R&D you can definitely expect more of that but equally because of what we created business development and attracting partners around the globe.
All of that will reside in the global health care Gateway I simply see the future of interest being represented on really two platforms.
One it'll be the to 60 plus year olds companies coming together and really executing on on what that what that base business is.
And then after the right I see the global health care Gateway to the real engine, we call. It the house of discipline, because that's where all capital investments will reside and that's where you will see all excess cash flow and capital being placed to compete.
Whether it's the in it organic R&D, whether its business development, whether its collaborations or joint ventures.
All of it will be competing in the global health care Gateway I envision that the street after if you envision future.
The conference calls with the New management team I expect the report on the based platform and I don't really expect that to be very much. We will report the results because we have very experienced.
Management team that will execute deliver on the numbers, but I do expect a great majority of time being spent with Michael Rajiv, especially on the global health care gateway for each new opportunity that we.
Put inside there and I really believe thats, how youre going to be able to fold the company on a going forward basis.
Thank you. Your next question comes from Randall Stanicky Stanicky of RBC capital markets.
Great. Thanks, Robert the presses reporting their president Trump is going to announce an executive order tickled by Americans attract the U.S. gets five drugs from from U.S. factories as it's been in the press quite a bit recently is that an opportunity per mile. In the review Tricep. How do you think about how that could impact the generic landscape. Thanks.
Weather.
Yes, Thanks, Randall I guess first I'd say that.
It needs to be sustainable and not political I think that certainly we would participate in something that is over the longer term and sustainable for the U.S. I think probably as you're aware by American Act actually passed in 1933. So there is that a longstanding act in place that over the years has applied to the pharmaceutical.
Industry in such ways that truly has dis incentivized manufacturing here in the United States and I think there would need to be very significant structural changes into the market dynamics in pricing in the U.S. health care system to incentivize <unk> and or drug manufacturing in this country.
But I'd only add to I really believe Randall.
Because of what we created I believe every single country is going to really focus inwardly on where they want their priorities, but as we stated in the past still be no one country.
Or no one company that could ever really manufacturer and develop all that they need to serve 100% their population.
What I envision via trust being able to do is to serve as the really the next natural second theory source that all countries are going to need.
I do see potential upside opportunity just like we were approached on rubbed does severe hydrochloric win or any other needs that I see arise.
And in the World and it's not just limited into the United States I I think Rajiv you can comment on but how the Indian government and other governments are approaching though so I do think that had been a global supply chain, especially in the healthcare industry, especially in pharmaceuticals, just given the global supplies we need.
Right, it's not going to become an on unwound did so to speak there's going to be a big need for I think our global platform and I do see some potential opportunity.
Great. Thanks Grandly next question.
Thank you. Your next question no sign of Inmarsat of Evercore.
Hi, Thanks, so much for taking my question I wanted to focus on the interest Robert but the two parts. If I mean first as we think about many the licensing deals that are happening in China recently I've tried to.
Aggregate, then look at look through them and the one thing that stands out as John has not been lending any and all of them are going to Chinese players. So how should we thinking about future. So the partner of choice on China going forward and do you think that could partially because of deals not done yet and maybe there's a bit also [noise].
Standstill and secondly, Robert I know you guys do extensive legal diligence and one of the key sticking points and pro forma numbers is lyric of Japan and there's some.
Element of mix feedback coming up on the recent Japanese patent office ruling on whether the upheld claims do support exclusivity through 2022 or the claims that were not upheld today in short the generics getting I'd be very curious on your take on these thank you very much.
Thank you Homer.
First on China, 100% I'm going to put on the deal hasn't closed at 100%, but but that doesn't mean, just because you haven't hurting us doesn't mean that you know we're not at work that I can tell you.
And the reason why I am so in fact about the 100% because the last thing we need right now is for the China up John Pfizer up John operation to tickets I off the ball because remember they needed to finish separate and up John from Pfizer and that that work is coming along very very well done.
Actually quite complete or almost done.
And then I think the other thing that we've been focusing on in China is really what is the new business model going forward I think the base that we're gonna be starting from and in China.
Is quite enviable and quite frankly, but let me be clear I think that we're going to be able to compete and I'm I'm watching as well I think was a very observant a comment that you have because I'm watching as well as some of the deals that are getting done with the Chinese nationalist.
I think that I think that the via trust is not going to be considered as a a traditional multinational I think beatrice's in China is being viewed as a.
As a Chinese nationalist entrepreneur as well so I do think we represent a hybrid I think we bring the multinational mindset, but I think we bring the entrepreneurial.
Very quick and nimble boutique Chinese entrepreneurial style and I do think it's going to have its advantages. So I'm quite excited about the opportunity in China and I'll be teaming up as you know with Michael doing a actually a lot of the work in China.
And looking forward to reporting on more opportunities that we see as we go forward.
In terms of lyric up I think another you know very insightful question and the way you parsed. It I think is a fair so I'm going to try to be fair in response by telling you that.
I I do think that you know, it's a complicated legal.
Issue.
I think it's a complicated.
Breakdown of deconstruction claims around the patent.
And then I think it's also complicated when you look at the momentum about where Japan has.
Andy and W. Ell, h. and kind of sort of what they've been thinking about so I'd, rather not like any other legal case not try to handicap it but what I do think to be fair to the street at least from my perspective.
What I would say and what I would be strongly recommended management to do I think it would be wholly air responsible in my opinion and just my opinion to include the Japan lyric and numbers and what I would call the trough year in 2021.
I think if we are successful with the Japan lyric in Japan, which I'm hopeful and confident or certainly I think we've come a long way we could have had an outright loss no. We didn't get an outright when I think that that the courts split.
The decision and I think it's only going to be a matter time before we know.
But the numbers that you should expect in 2021, what I think investors need to appreciate unlike the United States is we will not lose 100% of lyric in Japan.
What will be included in the numbers is a certain percentage that we know we will hold onto just because of the way that marketplace works. So it's actually a fairly nice base I wouldn't take all the numbers out, but what we would do assuming even if we have generically Erika as a win I.
I believe the responsible thing to do would be to separate what is all included in our base.
And anything access that we get from generic lyric a in Japan.
Or that we get from Leerink, a in Japan before it goes generics.
I would ask investors to more look look at it almost like how they used to model of 180 day exclusivity here in the United States, it's going to be much more of a cash bullish but I don't think as a going concern and add that that should be included in our.
This and ER and also as part of our base as we project pro forma on a going forward basis. That's what you can expect I hope that was helpful humor.
Your next question comes sign of Elliot Wilbur of Raymond James.
Thanks, Good morning, and thank you Ken Parks seems like we just got to know one another but pretty much appreciate your your time and insights provided over over the years.
Question for I guess your shelf Robert in today's release, you talk about proceeding with the up John transaction absent the Meridian platform, which I always thought was a business that my when historically had coveted it seems underdeveloped undercapitalized with while long term potential.
Hi, trapped in the Pfizer platform, some sort of curious if you could provide some perspective on sort of why that is not going to be part of the combined entity going forward. Thanks.
You know I I want to be sensitive I don't know Elliott, how you might be parsing.
That the two quite frankly for quite some time, we've had we actually been some pretty intense discussions with Pfizer, we actually believed that we reached the exact right place in terms of where we need to be.
You know meridian doesn't have a many other products meridian does serve some government contracts.
I think were meridian is that staying with Pfizer is absolutely the proper place I.
I do think that or you know, we will we I I fully expect it and I. You know you should all know that and the numbers that I was the softer numbers I've been throwing out there directionally a 2021.
I've always felt confident to include our business of Epee pad with Pfizer in those numbers.
I fully expect that we're going to continue to work with Pfizer on hopefully improved formulations.
Sure I believe is well underway and I think that we'll let the future talk about you know.
How and where we see our new formulations being developed and I, Let me leave it at that but I'm very very pleased Elliot that we will continue this relationship with Pfizer and ER and continue to work with them on our new formulations for this very important product.
In order to serve the patient needs and have you have anything you want to add onto that I think you said I said the partnership you know to your point. It is an important product and and partnership and we'll continue to be that I think for years to calm and I think Pfizer announced we'll both collectively bring our strength an expert.
Piece to the table around the product.
And thanks for the nice comments Elliot Elliot I'm sure that are pads will cross again.
Your next question comes to line of Gregg Gilbert of Trust Securities Your Trust Securities.
[noise]. Thank you I have 100 questions about via Tris, Rob So I'll I'll keep this to Mylan.
For cheap on text era. It sounds like you expect approval soon or ahead of your data can you confirm.
Ah that you plan to launch a without an appeal or launch immediately and do you think this can be a meaningful opportunity. Despite the number of filers and then on Glargine just wanted to <unk> to see if you could confirm whether you have.
Confirmation from the FDA what is required for interchangeability. Thanks a lot.
[noise] handle the stack that a second one is I started the second one yes, we have a complete clarity and understanding with that FDA that what they need from the interchangeability point of view and that has been submitted.
Greg as you know that would be considered a launch at risk. It's always been our stated policy until we have all the data at the time and we're ready to launch that's when the company will evaluate.
Whether or not it will launch at risk what I can't point to the Stoppel hearing I think that is up in New Jersey I believe in the next week or so I think is gonna be a pretty pivotal decision I think if they uphold the stoppel.
And take the decision.
That was handed down in West Virginia.
Look I think there I think it could be.
A an opportunity or in a pretty meaningful opportunity or there could be plenty of generic players out there I I think we should focus first focus on what happens in New Jersey, and I think that should probably give you the answer.
That you'll be looking for Greg. Thank you.
Your next question comes I know, Jason Gerberry <unk> Bank of America.
Hey, good morning, Thanks for taking my questions just a follow up on Greg's question for Ricky So.
During the past we heard you guys kind of quotes are near some products like Axtone understates the cement.
Lot of time transpiring, so curious confidence level, what are the key impediments to getting their approval.
Irrespective read on the regulatory situation.
I have been <unk>, there's no comparison, but what we had we had been a contracts on deck for data out there was a lot of complexity and season, but nations like doing that's death is passed let's come back. So Jason. This one is though you know we had checked all the boxes that there was this the facility which has been.
Okay and knowledge the administrative book, we jumped easily.
And we've been pretty confident that we'll be able to get it over the blend pretty soon.
Next question. Please your next question comes from David Risinger at Morgan Stanley.
Yes, thanks very much so.
I'm just hoping.
Robert that you could provide a little bit more color on how we should be thinking about the trough in 2021.
So is there any way to provide a framework for standup comedy costs as you stand up upjohn within Oh, Mylan Slash Beatrice.
And also the Pfizer Trent transition service agreement costs.
Basically I'm just trying to understand how significant those are and how that will be reflected in the Beatrice EBITDA in 2021, thanks very much.
Thanks, David Let me try to at least walk you through.
Let me start with the trough and then let me walk you through what I envision the cadence to be.
Over the next three to four years and what I expect post.
The fourth year years, five six and beyond.
I think the numbers that we're going to give you are going to fully incorporate all the standup cost.
Therefore, we're going to take the numbers down low enough.
That will fully absorb all these cost.
That T.S.A.M. essays and any other standup cost at in order to.
Start vigorous off on the right foot.
When you think about those t. assays nm essays.
Oh, you should also note that we have all the incentive in the world to get off of those T. assays in M. essays as we continue to build out our own infrastructure.
That is what we're banking on as you know a part of our upside as we see the cadence rolling forward.
You know David there's been a lot of questions. You know when we first announced the deal people were concerned about whether or not this was a declining business.
Today, we don't hear anybody discussing.
But this is a declining business.
Everybody wants to talk about how are we going to return back to growth.
No one is talking about it's a declining business because we quickly jumped in front as quickly as we could we're not relying on 2020, we never did because we believe the 2021 is going to represent the best first starting point for Beatrice as a brand new company.
We have all the opportunity in a world to reset these numbers, especially given our current.
Market multiple.
To make sure that this new Beatrice management team is set up for success quarter after quarter after quarter, not just to meet but hopefully exceed.
And so you should expect that that's the way, we're thinking and so to get to to get to 2020. Once trop, we'll take a quick look at a couple of years out and ensure that the numbers we start with the 2021.
Taking all the headwinds that everybody has been discussing.
Out of the baseline business and even to the rumors question around June Japan's lyric, you're going to see we're going to set that aside as well because anything that is not sustainable that doesn't really have a strong tail to it. We don't believe belongs in the base business those are.
Temporary and what we want to demonstrate is the door ability in the sustainability of this new based black platform when we pull this together.
And in that based platform I think I think what will be a pleasant full surprise.
We don't see any one meaningful catalysts that will cause the type of volatility that I think that the mylan investors have experienced especially in North America. So we really have not just diversified but de risked our entire business model by really take.
I cannot hold that noise and really addressing all that the headwinds that we can envision right upfront.
The cadence over the first three four years would I think you should expect.
Is it you know it this is going to be an EBITDA.
Free cash flow and earnings growth story.
You know David earnings growth can come in many ways.
And the first three to four years, what we were trying to convey and I think what management was conveying at its meeting agrees with you and to some of our shareholders was you should exceed or you can get earnings growth by adding to your topline.
Or you can get earnings growth like we are potentially see our ability to drive earnings growth EBITDA growth free cash flow growth.
By launch in the pipeline that we already have and most importantly, garnering the synergies over the first three to four years. When you look at what we have to work with I think that the v. interest shareholders should expect.
An extraordinarily stable.
Topline.
Revenue business and the early years with gross and EBITDA free cash flow in earnings so you're going to see an earnings growth story right away.
Because the dividend or the synergies will allow us to do that in the meantime, you're going to also want to pay attention to what we load up and the global health care Gateway.
And how we're using how we're placing our capital investments in years 123 and four.
And as the synergies roll off at the end of year for.
You're going to start to see where topline growth that we're going to be able to maintain earnings growth and EBITDA growth free cash flow growth by what we add to that top line.
And that's a simple as I can lay it out for you and that's exactly what management of signing up for it's exactly the roadmap that we put in all of our presentations and I do look forward for the new management team to really give you even more color. Once they have at once you have a chance to close they have a chance to get together and really die.
Deep.
Into their new combined organization to deliver on exactly what I laid out for you David.
Thank you.
Brandy on a color.
Our next question comes sign of Ronny Gal Bernstein.
Good good morning, and when I say, thanks, Ken and Heather as well. If this is Andy the last meeting for for many years to fast support.
Thank you both on the question I have is about the company. The Standalone revenue for the first half the year was 5 billion 350. So if you just translate to the second half it looks like you need an extra $800 million I to meet the bottom if your guidance on the revenue side can you just kind of give us the elements of the crossover.
That's how we get from here there and then I can fill one on you highlighted the Biosimilar business would you care to share with US Cockerell revenue this quarter for new global by similar business.
So let me take the first part of that running and thank you for the comments.
I've enjoyed working with you as well.
As we look at the first half the second half I think just takes really two things into account. We are typically seasonally weighted to the second half of the year at B. Penn is a larger quarter in the third quarter as well as many of our products in Europe, including and flew back our bigger products in the third and.
Finally, the fourth quarter. So you've got the typical seasonal step up to get to that growth from the 5.3 to the higher number that you calculate to get to the midpoint, but then I'll also point out one other comment in my scripted comments, which is in the first half of the our new product launch revenues were about $163 million.
We're expecting another 425 to 430 million of that so that's also backend weighted those are the largest variables in the move.
Got it additional launches so just the same launches that already are in the market just continuing to expand.
So part of it is the continued expansion of those launches we did in the first half of the year, but we certainly have additional new launches in the second half of the year.
Okay and droney regarding the Biosimilar.
It's sort of quarter I would tell you that this year, our approximates revenues from the Biosimilar that'll be close to half a billion dollars.
Thank you next question please.
Next question comes sign of Gary Nachman of BMO capital markets.
Hi, Good morning, just to follow on that maybe broadly on the bio Similars will provide some color on what you've been doing to continue to gain share.
All those categories, how you'd been evolving in those markets in terms of promotional efforts and how is pricing Ben relative to your expectations.
And then maybe just for Roberts, how much do you think Beatrice that's going to help with the effort in biosimilar since it's so important so the growth story going forward. Thank you.
Thanks, Thanks, Gary and I I appreciate your acknowledgement on some of the Biosimilar share gains we've seen Tonight I tried to articulate you know we view this not just as the U.S. business, but a long term global franchise, and one where you're seeing pasta success in many markets and each of those markets.
Is unique and different and one of the great things about our infrastructure. It allows you to compete both at a tender level. It a pharmacy level ended the physician level and I think that your second question around Beatrice and some of the infrastructure an additive natures of the businesses and the in the sales forces will have a come in the combined company I do.
I think it'll help us a it'll help us outside the U.S. in many markets expand upon this very very important opportunity. We haven't been similar Gee why don't you add because I mean, specifically to his question we have already identified where those opportunities maybe John I would say look that three basic things you need Photofrin building a franchise portfolio between.
No. It's play which we are continued work on and we have and cost of goods and then Tony talked about the commercial channels, whether it's done deal hospital tenders.
Vendors are you don't other avenues, we got available now.
<unk> up John brings a lot of digital and other marketing assets, which will further strengthen our you know skill sets on that and more importantly, the medical skill sets, we come along with that.
And let's not the you know we have tried full because he thought is on the U.S. and I'm glad that we have started giving you a little bit collette about what we're doing into other markets for example.
The rest of the world markets of growth markets, we sort of model. We don't have much competition or did and we have oh, we have a lot of demand for these products. For example give me the market size and these mark to markets is about a billion dollar as toys vested. So this is how we for us it's not a one.
Burma.
Play not a one marketplace, it's a portfolio blame for across multiple markets and we believe we are very well position to leverage this platform for the years problem and I think the only thing I would I would add Gary is Ah.
I mean at <unk> again, I think where we got off I think let's just say on the wrong foot.
We have always plant we've said this many many times publicly.
When we did our deal with Biocon and created something I think very very special.
In which we were we were way behind when we first started in 2009.
But not only did we catch up we went way ahead, what we've planned for always was for more of a global launch and our biologics because back then we did not see the pathway.
To a U.S. biologics market that happen, rather quickly and it happened over the last few years.
One of the things that we had and why we're doing so well.
In other parts X U.S., it's because we've already had the proper infrastructure already in place we were ready for those markets to be very honest with you I don't believe we had the right commercial infrastructure.
As well as I believe we could have had in the United States I.
I've seen that when a company like Coherus can come in nobody knows the name coheres everybody knows the name of Amgen's sales reps.
Coherus is amgen sales reps. So when you when you understand the market in the United States and understand the importance of that well established relationship between those reps the hospitals and the you know within that within that particular franchise and that food chain I would say absolutely that.
Was part because it's not just the cost it is about some of those relationships and that's an opportunity for us to improve.
You know going forward here in the United States, but I'm, hoping now that when people look at our franchise our global franchise they'll start to appreciate how well, we're doing X U.S. as well.
Your next question comes from the line of Kevin Kellyanne W.P.S.
Hi, Thanks for taking my call. So do I had a question around the cash flows and you know morgantown. The remediation cost has been a drag on free cash flow versus the sort of the delta between GAAP and adjusted.
So my question is how much it's still budgeted there and do you think that you'll start to see gap.
Operating cash flow move closer to the adjusted cash flow going forward and I guess my endpoint here as well the dividend policy.
Via trust the based on adjusted free cash flows are DAP free cash flows when you think about a percentage payout.
Yeah. So Kevin this is Ken let me start out by entering part of it and I'll get regime to weigh in as well on Morgantown, you're absolutely correct that right now as we're talking about adjusted free cash flows we are adding back.
The cost as we're going through the Morgantown remediation restructuring program, but also point out that Theres also this bucket now called manufacturing variances and the reason I called that out as because as we've continued to operate the factory in the cobot situation that has generated some inefficiencies. So as you asked the question about how far.
This goes out we certainly and consistent with what we told you in the first quarter expect that while the warning letter husband lifted we have some commitments to the FDA that will take remediation and restructuring to continue through periods of the balance of this year as of the covert pandemic continues we will also have manufacture.
During variances that we'll continue to to occur as long as we're operating in this environment with that I'll turn it over to review.
Yeah, Let me give you a little clarity over here given also warning letters lifted but the wanting this bucket included some remediation costs, which was some commitments. We did have four after you to deliver and then it had de stocking costs related to market Dom.
Including some in fracking related to these talk but as you said we did he recently on the last call. We said we have lost everything related to restructuring because of the globally. So thats why we are getting that cost for the time biegler here now as we go into the VAT. This I'm pretty sure. We have already stated that will be belief.
The GAAP cash flow Inox up I've, just got you can good yeah. That's it that's exactly right Kevin with everything that we've talked about and we've been very clear as we put together the via trust modeling, we made a point of saying that when we when mylan forms together with up John It becomes via trust or.
All the all the cash flow numbers will be GAAP cash flow numbers going forward at that point.
Great.
So the dividend policy will be based on that thank you.
Yes.
Your final question have a sign of Mason Retune Goldman Sachs.
Great. Thanks. Thanks for the question just wanted to follow up on the topline outlook for for via trip.
Can you kind of help with pile together kind of all the details that you gave on the pipeline and how we should be thinking about.
The cadence the contribution from new products in the first few years for via truck.
Then just maybe a small follow up to that can you talk about your commercialization plans for assembly in the U.S. now that you have approval. Thank you.
Let me just knock out the first one we have not give an official guidance and I would I've thrown out a.
The soft numbers that I think that ought to be the proper starting point.
To consider and we have not talked about you know how much of the pipeline roles in I do believe that when we come together on the Investor day, we fully intend on breaking down that in Rajiv I know when we started in ER and when we not the transaction we had a proximity.
Only three 3 billion to launch that was July of 2019, you know we we've we've already began to launch a a large portion of that portfolio. We also are continuing to load up into our research and development. So we'll need to update those numbers and be more sustained when you know we get.
To you on Investor day.
And maybe to your second question Nathan around simply launch preparedness, certainly we are extremely excited to to get ready to launch you heard Rajiv mentioned in the coming weeks.
It's a competitive market one that I think you know we've stated its going to be a slow ramp, but we do see this is a very good long term opportunity. The diabetes population that demographics are growing and this is one where you think of payer healthcare professional and pharmacy that triangulation will be critical and long term success.
So we're ready, but like I said, I think it'll be a slow ramp and the initial phases of the launch.
How do you want to close.
No. Thank you and thank you everyone and I appreciate the comments I think this wraps up my 60 a.
Quarterly conference call. Thank you and thank you Robert free or.
Mentioned on the board and the team then my pleasure. Thank you.
And thank you that definitely changed my Islands second quarter 2020 earnings Hong webcast. Please just can't <unk> at this time and have a wonderful day.
[noise].