Q3 2020 Teva Pharmaceutical Industries Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Teva Pharmaceuticals third quarter Twentytwenty School.
All participants I know they said they'd be mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session. You. When did you press star one on your telephone when it got to be skewed should limit yourself to one question and one follow up Beach I must advise you that this conference is being recorded today.
I would now like to hand, the call should show that you'll say speakeasy, Kevin Mannix Senior Vice President Investor Relations. Please go ahead.
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Thank you Valerie and thank you everyone for joining us today to discuss Tevas third quarter 2020 financial results on the call with me our core Schultz Tevas, Chief Executive Officer Ali Khalifa, Chief Financial Officer, Brendan No Grady Tevas head of North America commercial we hope you've had an opportunity to review our earnings press release, which was issued earlier this morning.
A copy of the release as well as a copy of the slides being presented on this call can be found on our website at www Dot terraform dot com as well as through our Teva Investor Relations App.
Please note that the discussion on today's call includes certain non-GAAP measures as defined by the FCC management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company's operations and to better understand its business further.
Further management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information and facilitates analysis by investors in evaluating the company's financial performance results of operations and trends.
A reconciliation of GAAP to non-GAAP measures is available in our earnings release and in today's presentation.
To begin todays call Coronelli will provide an overview of the third quarter performance recent events financial outlook and priorities going forward. This will be followed by a question and answer session today's call, which will run for one hour is being webcast live and recorded you'll be able to replay the call as well as view the transcript later today on that.
<unk> Investor Relations website, and with that I'll now turn the call over to Tevas CEO Korschelt core if you would please.
Thanks, Kevin well control you and thanks for joining this call and thanks for your interest in China.
We had a solid.
Third quarter, we sold revenues of 4 billion, that's slightly below our expectations. The reasoning was that we saw overall, though total script volume in both U.S. in Europe, It's a consequent to cope with 19 and slightly less patients actually go each doctors and enter hospitals for therapy.
When we look at the EBITDA in the non-GAAP EBITDA came in at 1.2 billion, which is completely in line with our expectations should compensate for the slightly lower revenues by cost savings, we had a GAAP loss per share up $3.97 and that includes a 4.6 billion goodwill impairment.
We had a non-GAAP EPS of 58 cents, which was completely in line with our expectations. The free cash flow was also in line with expectations at 0.5 billion.
We are very happy to see a continued reduction in our debt and the net debt as of the end of the third quarter now stands at 23.8 billion.
<unk> business use and use we had it so interesting things happening third quarter. The first one I mentioned he actually happened at the very end of the quarter. The last day of the quarter that was the very successful launch of generic versions of the HIV medications to bottom and a trip lucky in the U.S. The sales all booked in the fourth quarter, but we actually did.
It had that sort of physical launch on the very last day of the core. We're also very happy that we continue to see the strong penetration of Tresiba and we also very happy about the development of a joby and the fact that we are now looking forward to getting approved.
Japan since it has been.
Sales into the authorities filed partner to get in July.
In a very interesting move we now complement our portfolio of inhalers digital when he was in the U.S. asthma space and we now have launched also the dual did you hail and the omni agila, which basically means that we offer a full therapeutic opportunity for people to treat the asthma without did you hear us.
Which is a new and very advanced way of treating EPS no way you get direct feedback from.
On the device and where your device communicates with your smartphone direct you you can't give us so.
We are having high expectations for this going forward.
Last but not least I'd like you just touched very briefly on the fact that despite cold 19, which is affecting the whole world and of course, the fix all the countries in which we have a whole operations, we were able to resilience of our organization to mean full operational capacity everywhere and serve to roughly 200 million patients we serve on a daily basis with our sales.
Medicines next slide please.
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Today, I actually celebrate that I've been three years with the company as CEO and one of the key things, which I'm proud of is this debt reduction you're seeing here in the three years that a posture since I joined we've reduced the debt.
4 billion tons, a 23.8, so more than 10 billion reduction and as you know each on ambitions keep on doing this coming years. So I'm sure that in the next three years. We will also see a significant reduction in the old days and that's of course important because the debt. Following the Actavis acquisition has reached a level which was not.
Before the financials of the company long term. So it's a really good and nice improvement plan that we announced down below five times net debt to EBITDA, let's move to the next slide please.
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Now in terms of revenue development you could see the last three years, we've seen a significant reduction in revenue as a consequence of the patent expiry of Capex in the U.S. in Europe.
And now we actually reached a level, where we had sort of flat, but chose stabilized revenue and we're now looking forward to marginal increases in revenues going forward there.
There's a couple more quarters here, where we have once off and we always have that once in a while that's the nature of our business. One was one we knew about that was that fourth quarter in 2019, well be beta launch of Sydney calcium that boost as you can see the north American sales that generic launch and.
Then there was the first quarter of 2020, well in Europe, we saw a patient level holding all kind of products generics.
All kinds of products, which happened just the arrival of cold 19, before the locked down and that's why you see the European sales jump in the first quarter of this year. Then there was the reverse of that jump in the second quarter. So do you see the European sales go down from 1.4 billion in the first quarter to 1 billion in the second quarter and now you're seeing more of a.
Normalized station and I would say the European and US sales in the third quarter. They are probably around 5% below the normal run rate that our market share what Carrie we've not lost any market share. So it's really that the volume in the market is still somewhat negatively affected by koby nine gene.
Hope of course that in the coming quarters, we will see a normalization so that we get back to the normal total market size and then of course in the fourth quarter. We will do we will see the benefit of that so far very successful launch of Truvada and a AAA in North America, So a little.
They are in North America in Q4, it moves to the next slide please.
So as you know we have three main drivers that will drive our revenue and then we have one very stable element and then the three drivers that will drive our ramp up.
They are two key products. The first one is the one you're looking at now steadily Bastedo has had a really good track record since its launch at the end of 2017, which is actually executives three years ago. And then you can see still keeps growing strongly also hear that some ups and downs per quarter. That's just random moves in.
The pipeline so to speak in the value chain. The main thing is it keeps increasing its 64% versus the same quarter a year ago, and we're now above 10000 patients and they I know I mentioned this before but it really is important to realize that the 10000 patients. It's a combination of huntington's disease.
He's in tardive dyskinesia and the potential for tardive dyskinesia in the us is huge.
Roughly 500000 patient suffering from Todd just can you show us and of course, not everybody will all get therapy, but I'm sure that in the following years, we'll see more patients on therapy, and we have right now so I'm very optimistic that we will see a continued strong growth although state in the coming quarters.
If we move to the next slide please.
Now the second element that needs to drive our growth worldwide is a joke.
And yes, we have actually quite an interesting development first of all let's start with a negative the negative pieces of the sales were 35 million and we would like to see them higher and that's partly because our trx share is a little bit low amount due to the fact that we lost in Texas, We lost track.
And in the market in the beginning of this year basically due to the fact that we did not have an auto injector and the two competing products. Both had no jacked up now we have launched the Olson Jake begging me and what you see here is.
Something that I've only seen nothing once before in my 30 years in pharmaceuticals, It's a really successful relaunch in this case driven by device and what you see is that the capture rate sort of has more than doubled in a few months from being close to 11% to now being nearly 25% and you can see now that his thoughts.
Carry through to the generics count so I'm very optimistic that we will continue to see it you already growing nicely and I can tell you. It's not on this slide but in Europe, we see the same very nice development in a big markets, such as Germany, where we also launched the ultra injector. We also see a constantly growing market share also to this.
Same level of sort of the 20 some percent and I expect that this market share will continue to grow throughout next year, both in us and in Europe. So.
Not the high revenue number we would have liked to see but some really really good indicators here that you are we will show strong growth next year, both in the us and Europe.
Next slide please.
Another element in our strategy and.
Yeah, I referred to our R&D strategy that we disclosed sometime ago is biosimilars and those of you will follow the company know that I've been saying before we launched two years ago that we wanted to prove that the us market is really overbuy seamless and if you had the right commercial set up you can actually pay.
Great nicely and then there's a new situation in U.S., where it's plausible to make a good business and give get nice market shares with Biosimilars.
And I think I promise from the beginning that the success criteria would be that we needed to get a double digit market share within a year at what we see here is that we have double digit market share which is good it's.
Just around 20% right now I believe it will keep on increasing in the coming quarters, and we had very very satisfied with the launch of Cima and this is of course important because it's a good launch, but it's also important because as you know we have more than 10 biosimilar products in our pipeline now for North America for the us market and.
This is just validating the commercial model that this is a business, which is a really good supplement to traditional old generics and we're looking forward to launching many more seamless going forward one of the reasons why we think that.
Cima, we'll keep on growing is really that it's the only and biosimilar reduction that I assume that has already indication.
Pardon me sleep.
Next slide please.
So we are looking into hopefully a marginally growing revenue in the coming periods as a consequence of these growth drivers I just described and of course combined with the fact that copaxone keeps declining but keeps declining less than these three elements have grown.
But that's not the only thing which goes into our sort of.
Optimization of the business. We are also working very hard on improving the operating margin both to the gross margin improved total improvement in our business model.
And you see how we bottomed out at 24.5% in 2019, how the guidance that easy we'll go through it later, we narrowed the band on the upper end of the earnings guidance here.
And you can see how that band for the operating margin is now somewhere between 25.5 and 26% and you also see our long term financial targets of 28% in 2023 and this is a target that we said more than two years ago, just ASI joint Teva and this is targeting we have firmly committed.
Two and all our optimization of the business is driving towards achieving these targets, which is very very doable now this takes us through the next slide.
And here I have.
The same side as you see many times and this is basically a site thats been unchanged for a couple of years and I think it will stay unchanged hopefully for the next three years until we get to the point, where we actually realized the numbers, which will be at the end of 2023, which is three years from now first of all we are committed to the 28.
Sales operating income margin, we're committed to cash earnings of 80, and we are committed to getting the net debt to EBITDA below three times and of course as a way to do so as to utilizing our cash flows to pay down debt and we do not plan to raise equity and on this slide I would like to actually reflect that.
It'll be it on the last three years with Teva because it has been a phenomenal journey operationally together with my management team and all the employees I think everybody has done a fantastic job in.
Optimizing the company restructuring the company securing a healthy margin. Despite a revenue loss of around $5 billion on a yearly basis getting good control on the cash flow and keeping on paying down the debt.
I would like.
I'd like to share with all our shareholders who are listening. It is of course frustrating that when you operational plan actually is executed completely clothing to plan and you see your whole organization doing a great job that you then have legal situations litigation situation in the us which are related to events way before you.
He joined the company.
Litigation situation is that it's worse than what you saw before he joined the company three years ago now that is something I think I shared with everybody is that both the opioids. The price fixing has developed to be especially the opioid is more complex than was foreseen maybe three four years ago and it is the fact that if we look.
The share price and the market value of the company then it is actually a good safety.
Increased or held down by the overhang from the litigations and of course, we would love to solve these modifications we are still in a constructive positive dialogue with the state agencies on the opioids and as you know we are going to trial with few Jay on the price fixing. So we believe that in both these cases, we will eventually.
Good settlement of the situations, but it is of course, the frustration that right now we do see the market cap being held down by these legal situations now on that note I will hand over to illegally.
Thank you Paula and good morning, and apparent to everyone.
As always we start with a review of the GAAP performance on slide 13.
Revenue in the third quarter of 2020 Bucks.
Let me 4 billion a decrease of 3% in both US dollar in local currency terms.
For the third quarter of 2019, mainly due to a lower revenue from generic LTC and cut back on in all region at lower revenue from Q var, and Bendeka trend in our North America segment as well as the demand for certain products, resulting from the impact of COVID-19 pandemic.
Partially offset by higher revenue from that and the joke.
The posted the quarterly GAAP loss of 4.5 billion loss per share on a GAAP basis of $3.97 for the third quarter of 2020.
Significant year over year decline was mainly due to a 4.6 billion goodwill impairment, which I will discuss on the next slide.
On slide 14.
You can see the impairment restructuring and other non-GAAP adjustment, which total approximately $5 billion for the quarter.
The majority of this amount was the result of a 4.6 billion goodwill impairment that was booked for the North America reporting unit in connection with current market capitalization influenced by uncertainty regarding the time frame for the notion of certain litigation.
The company is committed to its projected cash flow target and management view on the litigation exposure has not changed however, recent developments indicate the timeframe for resolution will take significantly longer than previously expected as such for accounting purposes management has incorporated this fact.
Income tax valuation of the North America.
Resulting in a charge of 4.6 billion.
Amortization with 451 million for the third quarter in line with the range of 35.
52.5%.
Operating income and the quarter declined by 3% compared to the same period of 2019.
While our operating margin of 25, 8% for the sales quarter was in line with the queue treatment in 19.
Still our year to date operating margin was $26, 6% versus 24 participants in the full year 2019.
And the first nine months of 2020 operating expenses were $201 million less than the center last year as part of our long term financial targets. The company continues to manage expenses and fundamentally repositioned to overall operating expenses structure with a view the disciplined cost Dr.
<unk> can provide incremental earning liberation as revenue subtilize and begin to growth again.
Looking at Q4, and a full year, we expect our operating margin to be stable at the level of $25, 5% to 26% as score notified earlier.
Non-GAAP earnings per share in the first quarter, where 58 cents.
In line with the same period last year, and bringing our year to date.
Non-GAAP earnings per share to one dollar navi's versus wonder 78 cents last year.
Starting to slide 16.
I would like to touch briefly on our spending.
Despite the quarterly fluctuation in the top line this year due to the COVID-19 pandemic would have done a good job managing our overall fenby.
Or spend based in the first nine months of the year was just under 9 billion a decrease of 381 million versus the same third in 2019.
The reduction you to spend base is a reflection of both the active management of our operating expenses and the ongoing efforts to improve our gross margin to the transformation of our network, which we outline at the start of the year.
Overall, if we had together a extension of the both growth and operating margin in 2020 compared to 2019, we can see the progress and the Maine five key levers we introduced earlier this year.
Procurement cost excellent network optimization and restructuring operational and quality excellent.
And two and supply chain integration and agile operating model and organization.
Turning to slide 17.
We see our free cash flow for the quarter came even at 506 million compare to $551 million in Q3 2019.
It's a question on decree declined from Q2 2020 was mainly the result of an increase in inventory.
This is bring our total free cash flow generation for the first nine months of 2022 more than one 6 billion benefiting from stronger than unusual start of the year.
Based on the first dream quarters, and our outlook 40 reminder of the year, we're maintaining our guidance for 2020, which is one 8 billion to 2.2 billion.
And I'll turn into our that development on slide 18.
As you all know our account and long term focus continues to be on debt reduction in July the company repaid 1.2 billion immaturity, bringing the total debt repaid this year to 1.9 billion.
Unfortunately due to translation differences, we only so and modest situational decline in our net debt pesto and a slight uptick in our net debt to EBITDA, Rachel which was four nine to turn.
To continue to expect this wretched to remain on there five times going forward and declined each year.
Reaching under <unk> by year and 2023.
As we have noted throughout the year, we have the liquidity and cash flow to cover bond repayments for the year 2021, and 2022 before looking to refinance of 2023 majorities.
So turning to the financial outlook for 2020 on slide 19.
This year has proven to be most unique here in deep with.
With a global pandemic, presenting our operation and all three regions of the world with the challenges that has made it difficult to accurately forecast this offline.
We need to remember that you are still operating in a very dynamic and highly volatile environment. We're working everyday to ensure the health and wellbeing of our employees worldwide was managing toy frequently changing the local condition.
Patients worldwide.
Financial outlook is therefore based on our current visibility and information that is available today and does not reflect any unexpected impact of COVID-19 on our businesses.
12 year, we have seen a significant effects.
On the purchasing pattern of our large global customers, an overall utilization by patient and.
In Q1, we experienced stronger than expected revenue of pandemic related products and customer sucking. This effect was offset in queue too and we so ah continuing decline in queue tree.
As a result of these and based on the performance of the first nine months today, we're adjusting our guidance range or full year revenue from the original range of 66 billion to 17 bedroom to the new range of 65 to 68 billion.
This toward the midpoint of our range by $150 million.
The new range include adjustments to a full year expectation for global sales of Copaxone and the Jovi.
Copaxone, we're raising our guidance by one in a million to approximately 1.3 billion try Jovi.
Our guidance by 60 million to $200 million for the reasons call mentioned described.
Or other financial target for 2020 operating income EBITDA and earnings per share where to I think the range by bringing up the lower end for each one reflecting the reduction can spend base, but they just outlined a few minutes ago.
Free cash flow guidance as I already mentioned remain unchanged.
Where we end up within each of these range will be determined mainly by the rate of recovery in purchasing button and overall utilization by station.
Which has been impacted by the ongoing pandemic as well as our product snakes in our generic business for the rest of the year.
And the conclusion, a review of the third quarter results and 2020 financial guidance.
We will now open to call for questions and answer operator would you. Please open to call for question. Thank you very much 10, 80, henschen lemon related I'm thinking the question and answer session. If you wish to ask a question. Please first star one on your telephone and wait for your name to be announced issue weeks to Kansas City request. Please.
The husky.
We will remind you to limit yourself to one question on Wednesday.
Once again.
I wanted to ask a question and you also this question comes on the line of collect cabinet of Trust Securities. Please go ahead.
Thank you good morning core as you pointed out in your prepared remarks, the companies executing well against the the targets that you and the team have laid out that you're.
Equity continues to be held back by liabilities that you inherited so I was hoping you could comment or update us on those liabilities on opioids, it looks like Jane J and the distributors of very recently update.
Updated their financials to reflect where it could be a near term settlement. So on that perhaps you could weigh in on whether cover is linked into that or not or on your own and then on price fixing you previously expressed in our view open mindedness and settling with the Doj, even with a reasonable DPA and a penalty.
Has that ship sailed given your comments about going to trial.
Any other color you can offer would be great. Thank you.
Or just check your mute button. Please.
So thankful that they're very good question. So on the opioids, we're still in a very positive dialogue would be a G and that's the same group of ages of course that we did the framework settlement with and it is hopefully so that we will see a firm settlement within the foreseeable future.
You know the problems I've said that before and then I'm also due to the fact that one of the triggering points for getting the actual settlement done where everybody signs because there's a lot of parties and involved in this none of the states none of the plaintiff lawyers and so on so one one of the triggering points for.
Getting settlements like this done is when there is the pressure from an actual trial they'd all the parties that go into and I was very optimistic I guess about a year ago that the new trial. It was scheduled originally for January then March the January then got even spoon hasn't happened yet.
And then there was a west Virginia trial that got postponed so all the trials that could trigger that people sign on the dotted line have been postponed it's.
Quite obvious that there's been ongoing negotiations between Austin the agee's in between the fall of the company's name.
She is repeated in the framework <unk>.
And then I.
I would say that they.
They may be more progressed in terms of the fact that they had reach enough financial number then they started out with all of them. It seems like but it's important to mention that from the beginning we were five individual companies that when negotiating at the same time with the a G 's, but we didn't negotiate a you would say come behind.
Deal, it's five deals so to speak each company hitting deal with with the a G. As in the please laws. So I'm still very optimistic that we will have a chance.
See that whole thing come to a solution, where we see a settlement where we will be supplying the box on to all of the U S and that is really the best solution because in doing so we will be able to help people to wean off the misuse of opioids. So that's really what's the situation.
<unk> on opioids on price fixing I'm always ohms a settlement if it's a settlement that is reasonable so a reasonable DPA with a reasonable fine. They didn't see something of course that I can live with I can't live with him to admit to criminal acts that the company did it.
<unk> assessment not do so so that's really why it's moving towards a trial, sometimes you know in these cases, we saw it last week.
Extra stations on speaker programs, which we settled not so long ago. So sometimes once you get really close to the trial date, you have new people involved in this new negotiation and it does get settled some time it actually goes to trial, but it's not that I'm against sibling I'm, just saying that we believe that the hello.
Say body of evidence is so weak that it makes it a lot of things for us to go to trial.
I hope that clarifies your question.
Thank you court.
Thank you and your next question.
Okay and in Europe and of course, we have these beliefs in North America. When we have you know we launched the first to file and we makes it makes for $100 million and a quarter and then the next quarterly make some and then not so much but if you look at it underlying in terms of volume in terms of sales then I would say a very stable business and no.
America, and a patient that keeps growing to come years low single digit in Europe stable pricing environment in Europe, and a renewed focus from some customers on the supply chain and on you received the reliability of the supply chain and as you know we have probably the most U S U.
<unk> centric supply chain of any generic supply. So that's really the basis not a lot of growth, but stability in North America and some growth in the rest of the world on generics.
Then on the Biosimilars I'm optimistic as I just went through that in the coming years, we will see growth in our chosen by assume a business I think it's relatively sustainable due to the fact that there will be less competition in the full amount.
There will be several competitors for each product, but there won't be 10 competitors and there's a higher hurdle investment to get in there, which means that prices will most likely be more stable than they on traditional generics. So I also think that biosimilars will contribute to growth and then of course, yeah. The two growth drive is that you just saw so.
So here that in the.
The third.
Third quarter, if we combine state Oh, and a Joe we we probably did something like like 200 million total and this is growing fast. So so next year. If you do the math combined they will be a billion and they will keep on growing so they will they will attract a lot of growth and that will go.
<unk> and I think the foreseeable future and then of course, you have the sort of the the.
The what should we call it a possible positive surprise in the shape up to sit them at because casino, Matt. That's actually finished it's three three figures trials. This one read out on long term safety that we are getting in the first quarter.
You know to companies or not we actually for companies, but two products in development for this.
Action and modality.
<unk> and medication and then the ones ahead of us Faiza Neely with their <unk>. They have just gotten a at come with F. D. A I think it's scheduled for March and that basically means that by March we will get a good indication of whether their product has a chance of getting approved now.
Out the mechanism of action is similar to our product and you can't compare really from trial to trial I know that but if you look at it it doesn't look that there's any significant difference in secrecy or safety. If you just look at it from an overall point of view, so if vacated positive opinion and eventually a regulatory P.
<unk> by F D. A and then there's a high likelihood that for cinema can get the same.
And we just talked about all the negative elements of the opioid situation in the U S. It does of course have the positive side to it if there's a huge unmet medical need for non addictive pain medications and if assuming that could be one of those so if that's you know what makes it then we will fall.
The next many years have not two but three and main specialty products driving our top line after that as I say it also before the broad range small intend biosimilars, we have in the pipeline for the U S. And then the the all the exciting things we don't talk about so much but actually we just had.
The end of our phase three program for a long and Ping antipsychotic based on a new.
The questions.
And your next question comes from the line of <unk> of Bernstein. Please go ahead.
Good morning, and thank you for taking my question.
I'd like to to talk a little bit of a biosimilar because like you I think this is really interesting growth drivers I guess of the 10 products.
Start with a 10 products you have in the pipeline could you share with us any any named products before 2025 and out of those stand how many are yours only versus how many are you sourcing from from from sales tree on or in other partners that is kind of like what you're sure of the margins here and then specific area rug Humira Biosimilars you May may have finished on this one is specifically.
The Humira Biosimilars I haven't seen a settlement for you with.
With Abbvie, so I have no good idea, but when you're going to come in and it seems you are doing it to interchange ability trial. If you can.
Comment on that tells when do you expect those results and how do you think it positions you in the marketplace.
Yeah. So first of all out of the let's say roughly 10, plus seamless we have.
That mix there is this a function of heighten rebate pressure or were there other onetime factors leading to the flattish sequential top line. Thank you.
Thank you. So so your math on the topline is absolutely correct and the 150 million.
Talk about here is basically related to the lower total script volume in the us on a lot of different products, including generics and the same thing in Europe. What we saw was we saw first increase in volumes in the first quarter.
With India Rex getting back ups around 25% the trh will of course be climbing nicely here and also in the fourth quarter. The only other factor which has affected it is really the fact that some of these neutral brand scripts that we're seeing now they do get a buy-down support.
Court.
The initial phase and that means that if you have a high volume increase in N. P. R X versus a stable trh volume then you get slightly less knit sales out of that due to your buy-down coupons, we have not seen any changes in the contracting environment. So we've not seen in.
Increases in the rebates given under the various contracts I.
I hope that answers your question.
Yes. Thank you.
Thank you. Your next question comes from the line of cash Chihuahua of Porkfish search. Please go ahead.
Hey, thanks, so much.
So you guys did a pretty significant goodwill impairment charge regarding uncertainty on resolution have certain mitigation for your North American business can you talk about what that does it have anything to do with generic recommended is there any comment on when that product is getting on the market and then is it fair.
To stay there wasn't an ongoing civil liability crisis inside you would've more strongly considered a settlement with the Doj what are the legal ramifications of long term of admitting guilt.
In regards to the civil liability and is there a time frame for it.
J resolution and then the civil liability resolution on price fixed thank you.
Okay. Thank you okay. The first question.
Question to Brendan then I'll just take the price fixing now so on the price itching is correct. There's of course, the criminal side to Doj and a civil side to Doj and then we also have a legal situation with the state Ags on on price fixing and you're absolutely correct. If if we as a company where to admit.
<unk> to a criminal act on price fixing, which we did not commit then you would sort of take away your own defense on the civil side, whether it's with the Doj or whether it's with the eighties and typically you will often be able to reach a solution with a D O J that from a financial point of view.
Something that you can accept giving you the circumstances and the hassle of going to trial, but it's more uncertain, how it looks with the trial that the.
Comment on them on the dates of particular launches. So I'll just leave revlimid at that and leave it with course answer.
Thank you next question.
Thank you. Your next question comes from the line of David Amsellem Piper Sandler. Please go ahead.
Thanks, just a couple so wanted to get your thoughts on the longer term trajectory of us that it was as.
You know as we all know Neurocrine is running a study of L. benzene and Huntingtons chorea, which should read out next year. I mean, do you think that's something that to the extent that they get a label expansion could prove to stone to the growth of our stereo over the.
The long term that's number one and then number two.
For the next for the next many years with regard to the high value launches and you can say of course it always.
Gives a little positive bleep, we I just showed you cinacalcet 19, and we're going to have to Nevada, and a triple a here in the fourth quarter of 20.
20, and and most likely every year, we get one of these key more complex high value drops approved we still have independent and so on so I don't think it's going to play a major difference to what we see in terms of earnings and revenue next year, but maybe I don't know Brandon if you want to give it a specific comments or some of these high value.
<unk>.
Sure I'd be happy to so we have numerous potential high value launches that are always possible next year.
Five or six of them.
Predicts thanks.
Thanks, so much.
The first question you are of course overall.
Spot on there.
We will probably have a cash flow you know 2 billion 2 billion plus.
Per year, and we will allocate the cash flow to debt reduction so that means in the next years will will take some 6 billion plus our debt and that of course means that the math is quite straightforward that EBITDA should be around 6 billion and the good and the way to get to that EBITDA is also pretty straight forward because weve.
Already sort of explain.
And anybody who you would want to share data with you can do in that way.
And by following the patterns, we believe that both short term by people being.
More aware of what's going on in their therapy and longer term through artificial intelligence, we will be able to improve the predictability of major estimate text and avoid them and that's a major value driver for the hospital systems and of course quality of life for patients. So we're very happy about this we think we have a great system, where the first and the <unk>.
So just Barclays. Please go ahead.
Yeah, Hi, this is Steven on for Bob Thanks for the questions. Maybe if you could talk more about the outlook.
Outlook for Adobe I guess could you just provide a little bit more color on what exactly has changed from the outlook provided in August.
And then how do you view the additional competition coming into the migraine prevention market over the next one to two years.
Thank you.
Yes. Thank you very much so so what really changed.
Has been that the total market growth has not been exactly as we hoped for so so therefore reallocating a higher.
Hi, or to your EPS numbers you. So we are getting a higher empiric shares so youre getting higher share of the market, which is good but the total market has continued to be held back in its growth compared to what we hope for and plan for.
Most likely due to cope with and the fact that new therapies simply grow slower when people go lives to the Doctor and that's the key driver. The other element that factor is that we probably see more you could say new scripts coming where we will use where we ended up using.
Co pay card Paydowns and that has led to a slower you could say ramp up of the revenue per script compared to what we were planning for now next year, we expect to see a continuous growth in the MB or X rate and as a follow on from that the trx rate and as people get on more regular therapy.