Q3 2024 Amneal Pharmaceuticals Inc Earnings Call
Hello, everyone and thank you for your patience melt pharmaceuticals third quarter 'twenty 'twenty four and it was cool will begin shortly.
In the meantime, if he would like to pre registered to ask a question today. Please do so by pressing star followed by one on your telephone keypad. If you change your mind toothbrush thoughtful by two thank.
Keith.
[music].
Okay.
Good morning, and welcome to the email Pharmaceuticals third quarter 'twenty 'twenty four earnings call.
Now ill turn the call over to him now head of Investor Relations Tony to May I. Please go ahead.
Tony: Good morning, and thank you for joining annual Pharmaceuticals third quarter 2024 earnings call.
Tony: Today, we issued a press release reporting Q3 results.
Tony: The earnings press release and presentation are available at <unk> Dot com.
Tony: Statements made on this call regarding matters that are not historical facts.
Tony: But not limited to management's outlook or predictions are forward looking statements that are based solely on information that is now available to us.
Tony: Please see the section entitled cautionary statements on forward looking statements for factors that may impact future performance.
Tony: Also discuss non-GAAP measures.
Tony: Information on use of these measures and reconciliations to GAAP are in the earnings release and presentation.
Tony: On the call today are <unk> <unk> co founders and co Ceos toughest <unk> CFO, our commercial leaders Andy Boyer for generic Joe Randell for specialty and Jason Daly, Chief Legal Officer, I will now hand, the call over to Sharon.
Sharon: Thank you Tony good morning to everyone.
Sharon: We're excited to talk about our strong Q3 results.
Sharon: Our entry into obesity and metabolic disease space with met set of collaboration.
Sharon: Our recent launch of <unk> for <unk> disease Q.
Sharon: Q3 was an excellent quarter as we continue to drive sustainable growth.
Sharon: Actions to solve unify our long term growth profile.
Sharon: First I will discuss our recently announced collaboration and entry into the global obesity.
Sharon: <unk>.
Sharon: The <unk> one market is Brian put innovation and expanding access to this novel class of therapies.
Sharon: And with Med Center, we are poised to deliver new high quality medicines at scale.
Sharon: <unk> is a clinical stage biotech company purpose build for advancing the next generation of weight loss medicines, there rich proprietary library of peptides with a pipeline of innovative injectable and oral therapies.
Sharon: The new high quality manufacturing and operational expertise as complementary to match set as drug discovery capabilities. This collaboration is an important milestone for a meal and underscores the strength of our capabilities.
Sharon: And our reputation as an industry leader.
Sharon: And Neil is matched set us preferred global supplier in the United States Europe and.
Sharon: And other markets and has been granted a license to commercialize med setup products.
Sharon: Select emerging markets, including India.
Sharon: And certain countries in Southeast Asia Africa, and the Middle East.
Sharon: We will leverage our existing infrastructure and build two new world class manufacturing facilities in India to support this initiative.
Sharon: Importantly, this collaboration creates a new high growth vector for our mills with multiple avenues for value creation.
Sharon: Rapidly growing space.
Sharon: That is estimated to reach over $100 billion by 2030.
Sharon: It is a logical extension of our strategy deep expertise in complex pharmaceutical manufacturing.
Sharon: <unk> track record of delivering high quality innovation at scale.
Sharon: Second.
Sharon: We are incredibly excited about the recent launch of <unk>, which is an important achievement for the company.
Sharon: This new and innovative treatment advances the standard of care for patients with Parkinson's disease, providing a longer duration of good on time with less frequent dosing.
Sharon: Jim and I met with key opinion leaders and prescribers at the movement disorder Society Congress recently, and there is a tremendous excitement for intrexon.
Sharon: As an organization.
Sharon: We have a deep expertise working with in Parkinsons space.
Sharon: For over 10 years, as we had commercialize rytary.
Sharon: The <unk> launch is off to a strong start.
Sharon: We are confident in our ability to further expand our specialty segment, including the potential to add branded opportunities over time.
Next in the affordable medicines business, which is all generics segment, we continue to expand portfolio with new products that are driving continued growth.
Sharon: Year to date revenue growth is 12%.
Sharon: The first growth area is retail.
Sharon: And particularly complex generics and Neil has been number one in the United States complex genetic therapy innovation since 2018.
Sharon: We have launched on average 30 or more new products each year.
Sharon: This is doing tremendous diversification with oral solid generics decreasing from over half of total company revenue in 2019 to less than a quarter. This year.
Sharon: Our affordable medicines business is foundational to our new and we will continue to drive meaningful value for the company.
Sharon: The second growth area is injectables or a portfolio of over 40 products continue to expand with over 10, new launches expected each year in 2024, we launched our first <unk> products, which are differentiated ready to use solution that can improve hospital pharmacy.
Sharon: The efficiencies by eliminating medication preparations steps overall, the U S injectable market continues to face supply disruptions.
Neil: And Neil is addressing head on.
Neil: Today and mill provides 13 Injectables currently on the shortage list.
Neil: And we are proactively working to help.
Neil: Other market shortages.
Neil: The third growth area and affordable medicines as Biosimilars.
Neil: We have built a strong foundation with our <unk> III commercial Biosimilars also we have planted the seeds for long term growth by in licensing find more pipeline biosimilars all expected to launch by 2027.
Neil: In Q3, we took an important step in in licensing in licensing and Omalizumab Biosimilar.
Neil: For a brand name Xolair tour pipeline another high value therapeutic this product.
Neil: This is roughly 4 billion plus the global market that expands our portfolio beyond oncology to LNG.
Neil: Overall biosimilars the next wave of affordable medicines in the United States as about 60% of upcoming pharmaceuticals Eloise by value.
Neil: Biologics.
Neil: Accordingly, the U S. Biosimilar market is estimated to grow from $4 billion to $5 billion today to $20 billion to $30 billion by 2032.
Neil: Our manufacturers net sales perspective.
Neil: Biosimilars provide enhanced access affordability and value for our patients. We are building a significant biosimilar portfolio and will be vertically integrated over time as we see biosimilars as a key growth factor for them in the long run.
Neil: Next internationally expansion is a long term growth area for us in India. We are building a customized portfolio of products.
Neil: Other markets, we are registering select products with our partners to start supplying in Q4.
Neil: We expect international will be adding $50 million to $100 million revenues by 2027.
Neil: Finally, the healthcare distribution business continues to deliver double digit growth.
Neil: Given by all three channels distribution government and unit dose and now we expect over $700 million in revenue in 2025.
Neil: Overall.
Neil: We cannot be more excited with how well.
Neil: <unk> list to drive continued growth.
Neil: De <unk> is a diversified global pharmaceutical company that provides access to high quality affordable and essential medicines for patients providers and payers.
Speaker Change: We have purposefully and strategically expanded our business and added new vectors for growth I will now pass it to Chengdu.
Chengdu: Good morning, everyone.
And thank you to the global M&A, primarily <unk>.
Chengdu: Wakes up every day with energy and passion to make held in Boston Globe.
Chengdu: Because of our core strengths in operations innovation and portfolio.
Chengdu: <unk> continues to side, then I will share how we will utilize our vast experience and capability in the <unk> space, which is the new growth record for revenue.
Chengdu: Cost of operations quality is at the center of everything we do our World class Global operations.
Chengdu: And industry, leading quality track record and we had multiple successful inspection.
Chengdu: Our sites over the last quarter across our organization, we are investing in automation Digitization and AI technologies to advance our global infrastructure, we are driving operational excellence and cost.
Chengdu: Cost improvements and skill development programs to enable our next generation of capabilities and growth.
Chengdu: <unk> operational excellence high levels of customer fulfillment and robust supply chain as the key competitive advantages for us.
Chengdu: As the recent storms in the U S remind us drug shortages, particularly for Injectables remains the U S supply challenge and we are working hard to be part of the solution.
Speaker Change: Banking innovation, we launched crack salt in September, which is a remarkable new treatment for Parkinson's disease, which will benefit many patients.
patient.
that crack sound is changing their daily lives.
Speaker Change: Our next specialty R&D program is <unk> auto injector for migraine and cluster headache, which can save patients from having to make emergency room visits. During this very painful episodes. We are on track for our NDA response in Q4, which would put us in a good position.
Speaker Change: Launch in Q2 of next year once approved next I will touch on our complex generics portfolio.
Speaker Change: With over 20 product launches so far this year, we are on track to launch 13, new launches again in 2024, we expect this cadence of innovation to continue with 79, new products pending approval, 63% of which are non oral solids and 15.
Speaker Change: Seven pipeline programs in development, 93% of recharge non oral solid breathing.
Speaker Change: Our R&D organization via enhanced efficiency and capabilities to dialogue more complex products on plastic timeline at lower costs. As a result, we are there.
Speaker Change: Adding more investment towards external R&D over time, especially in Biosimilars and specialty.
Jack tables, we have launched 11, new products, so far this year, including our first firefight two products, but I'm ready for the treatment of non small cell lung cancer for cinryze for nausea associated with oncology treatment and potash and phosphate a ready to use IV bags.
Speaker Change: We have developed our firefighter to injectable portfolio based on stakeholder feedback and we have built a pipeline of injectable presentations with our 15 firefight to injectables in development or.
Speaker Change: Our other complex injectable R&D programs continue to advance our pipeline, including microspheres, Likewise, almost and drug device combination.
Speaker Change: Next.
Speaker Change: Emulation is a new growth vector.
Speaker Change: Emil.
Speaker Change: We have a series of high value launches planned over the next several years that we've utilized our ready and approved Ireland manufacturing site.
Speaker Change: In relation programs across the major device categories, including dry powder and metered dose inhalers and <unk> platform. We are excited about our emulation pipeline retailer first inhalation product pending approval was stone and many more to come in the years ahead next in Biosimilars.
Speaker Change: We are strategically focused on expanding our portfolio.
Speaker Change: Building on the success of our first three commercial products.
Speaker Change: Have in licensed biodiesel Biosimilar pipeline candidates, we are filing our BLA for <unk> <unk>.
Speaker Change: Humira Biosimilars for Prolia in ex Java in Q4.
Speaker Change: Next we expect to file the backfill interesting on body injector Prefilled auto injector products in Q1 after that we expect to file the BLA for Omalizumab, a biosimilar for Xolair.
Speaker Change: End of 2025, we will add more molecules store pipeline to expand our biosimilars portfolio and we'll look to be vertically integrated over time, we remain very excited.
Speaker Change: About biosimilars as a key vector of growth.
Speaker Change: Many biologic products alone in the coming years.
Speaker Change: Internationally.
Speaker Change: We have distribution partners in place for key developed and emerging markets, we are registering products globally, including in Europe and emerging markets International expansion remains a key area of focus for us as we look to significant growth opportunities ahead.
Speaker Change: Sure.
Speaker Change: Let me now turn to our entry into the DLP one space today, Emily has existing infrastructure and capabilities for developing peptides and finished product as part of the mass set of collaboration we will build two new state of the art DLP one manufacturing facilities.
Speaker Change: One facility will be fall producing drug.
Speaker Change: And the second for Edwards.
Speaker Change: I'll fill finish manufacturing capabilities are producing high volumes of finished product.
Speaker Change: We will provide expertise and infrastructure for formulation development and other CMC activities and also serve as Matt said as preferred global supplier. As we look ahead, we plan to utilize our leading innovation and operational capabilities and quality track record in developing.
Speaker Change: And manufacturing complex borrowers who are equal in these new fast growth category in summary, when <unk> and I returned as co Ceos in 2019, we laid out our strategy for diversification and growth and then we have executed on that plan, we are deeply purposes even come.
Speaker Change: On a mission to provide access to affordable innovation today Emil is growing in key areas of managing specialty branded Biosimilars Injectables complex generics and now DLP ones and extending access to our distribution and international.
Speaker Change: <unk>.
Speaker Change: As we celebrate our success over these last five years, we are focused on execution and so excited for the next five years.
Speaker Change: Now pass it over to <unk>.
Speaker Change: Thank you, Tim and good morning, everyone.
Speaker Change: We're very pleased to report another terrific quarter with strong revenue and adjusted EBITDA growth roadmap.
Speaker Change: The robust cash generation and continued debt reduction.
Speaker Change: I'll first discuss our third quarter and year to date results, then move on to cash and capital allocation priorities.
Speaker Change: In the third quarter.
Speaker Change: Revenues grew 13% to $702 million with continued growth across all our three business segments.
Speaker Change: Generics or we also call our affordable medicines business.
Speaker Change: Grew 9% to $427 million.
This terrific performance was driven by the strength of new product launches, which in turn helped improve shortages and provide exceptional value to our customers payers and patients.
Speaker Change: New products launched in 2023, and 2024 contributed 35 million Q3 revenue growth.
Speaker Change: And also biosimilars generated $31 million in revenue.
Speaker Change: Npls continued R&D innovation superb quality track record and consistency of supplier to competitive advantages driving sustainable value creation and diversification.
Speaker Change: Let me now move to our specialty segment, where revenues grew 19% to $116 million driven by our branded products.
Speaker Change: Our <unk> franchise, which now includes correct, some rytary and <unk>.
Speaker Change: Levered $61 million in revenue and contributed $17 billion to Q3 revenue growth.
Speaker Change: Corrections quarterly revenue was $3 million due to the initial stocking.
Speaker Change: One month post launch we're pleased with the early indicators of commercial uptake inclusive of prescription trends physician and patient testimonials as well as insurance providers interest in making this new therapy available to their patients.
Speaker Change: In the third quarter, our Africa business grew 21% to $159 million, reflecting continued growth across both the distribution and government channels.
Speaker Change: New product launches and continued strong execution by the team are key drivers of the strong performance.
Speaker Change: <unk> overall gross margin of 44% in the third quarter was up 30 basis points compared to the same quarter last year, reflecting our new product launches as well as our teams efforts to manage costs and improve efficiencies in a sustainable way.
Speaker Change: Moving down the P&L Q3, adjusted EBITDA of $158 million reflects robust revenue growth SG&A expense leverage and includes $20 million related to the licensing of our proposed biosimilar to shoulder that we announced last July.
Speaker Change: Excluding this milestone payment adjusted EBITDA growth in Q3 was approximately 15%.
Speaker Change: From an EPS perspective, Q3, adjusted EPS of <unk> 16.
Speaker Change: Declined three.
Speaker Change: As higher adjusted EBITDA was offset by interest expense.
Speaker Change: Looking at our performance during the first nine months of the year, we're pleased by the quality of execution by all our teams.
Speaker Change: Total company revenues of $2 1 billion are up 16%, while adjusted EBITDA of $472 million.
Speaker Change: Is up 13%.
Speaker Change: Worth, noting that all our business segments have contributed to this growth and we have thoughtfully increased our investments in R&D and commercial teams as we build a durable high growth company for many years to come.
Speaker Change: Turning now to cash flow and the balance sheet.
Speaker Change: Our strong financial performance and disciplined is translating into higher cash generation and continued delevering.
Speaker Change: Consequently over the last three quarters, we have paid down $127 million in gross debt.
Speaker Change: And reduced our net leverage to four two times at the end of September 2024.
Speaker Change: Compared to four eight times in December 2023.
Speaker Change: Furthermore, I'm pleased to report that we now expect to finish this year at a net leverage of about four times one year ahead of our original target.
Speaker Change: We continue to intend to drive further delevering towards three times in the next few years.
Speaker Change: From a capital allocation perspective, we continue to prioritize investments to further diversify our business and drive sustainable growth we.
Speaker Change: You can expect us to continue making targeted investments in areas, such as Parkinson's Biosimilars Injectables and inhalation.
Speaker Change: Within R&D as Tito mentioned, we are reallocating spend towards higher growth areas, while maintaining the yearly productivity of our R&D pipeline.
Speaker Change: We're very excited about our recent <unk> collaboration given its growth potential and our ability to properly supported well within our cash flow profile.
In summary, we're laser focused on delivering near term consistent financial performance, while taking strategic actions to further solidify our long term growth.
Chuck: Let me now turn the call back to Chuck.
Chuck: Okay.
Chuck: Thank you Tassos.
Speaker Change: Bold strategic vision for a meal is becoming a reality more and more each day.
Over the past five years of the journey, we focused on transforming and diversifying the business.
Speaker Change: In retail generics, we shifted our portfolio focus to complex products starting back in 2019 in 2020, we acquired distribution business to add new channels to drive access to our products than in 2021, we started expanding our injectable business by adding new products capable.
Speaker Change: <unk> and capacity in 2020 to realize Youre, plus biosimilars and build our initial pipeline from there internationally, we have laid a strong foundation for long term growth.
Speaker Change: The launch of <unk> and our entry into the <unk> space in Q3.
Very significant milestones for the company.
Speaker Change: As we execute our strategy closer to diversify and drive sustainable growth. We are building a meal as a leading diversified global pharmaceutical company.
Speaker Change: Let's now open the call for Q&A Tony.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you. Please ask a question. Please press star followed by one on your telephone keypad now.
Speaker Change: Change your mind, Please press star for my team.
Speaker Change: To ask a question. Please ensure your device is on mute.
Speaker Change: Our first question comes from David <unk> from Piper Sandler Your line is now open.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thanks, So just have a few wanted to start with <unk> and I know early days regarding.
Speaker Change: The rollout, but can you talk about the reimbursement landscape, particularly part D.
Speaker Change: And how we should think about access.
And regarding <unk>.
Speaker Change: Adoption, how are you thinking about that in the context of the eventual loss of exclusivity.
Speaker Change: For Rytary. So that's number one number two is on your injectable business I know you've talked about shortage products and you've also lean into more complex products trying to get a better sense of the mix.
Speaker Change: Top line mix for Injectables.
With respect to shortage products and more complex products and how do you think that mix will evolve over time as you continue to build that part of the business.
Speaker Change: And then lastly, a product specific question I believe you had been developing an intranasal epinephrine product any updates on that would be helpful. Thank you.
Speaker Change: Good morning, David.
Speaker Change: So Craig <unk> off to a great start.
Speaker Change: We had actually.
Speaker Change: Pleasantly surprised by ourselves how the product is doing it like cracks aren't as marketing tech.
Speaker Change: Excellent.
Speaker Change: And access so far.
Speaker Change: Good initial coverage, it's just been a few months and Greg discussion with the rest of the payers, we expect to get more coverage than rytary, because what product is doing so that's the answer to your first question <unk>.
Speaker Change: Rytary, which is August <unk> 2025, we should not have much of an impact at all because this is we're expanding the market, we're going to pretty much all <unk>.
Speaker Change: Qualified or people, who should be taking CD LD and converting the market from IR.
Speaker Change: Have the naive patient labeling.
Speaker Change: And proprietary or other small portion of the XR all of them to <unk>, which is the most advanced product today available for Parkinson's patients. There is no excuse why are they not all should be on it so where we're going for a massive market share for this product and this is why our pricing.
Affordability, we had done extensive work to set it up properly and we are receiving the feedback we had expected for the market excess so no impact on alloy obviously will.
Speaker Change: We lose alloy in August plus but cracks on.
Speaker Change: Agendas and the other growth drivers of the company.
Speaker Change: Continue to drive growth for 2025 and beyond tremendous growth for EMEA.
Speaker Change: Your second question on injectable complex.
Speaker Change: Ill hand, it to my brother, but we're doing both the shortages and complex products continue to provide both and also we are converting.
Speaker Change: The compounded products, which always gets into the.
Speaker Change: FDA is cross sell for the GMP and other reliability.
Speaker Change: Had our first launch of potash and phosphate.
Speaker Change: Just recently and it is when received really well in the market.
Speaker Change: Pretty much everybody wants to use FDA approved.
Speaker Change: Rather than compounded products and we're working on few more but Jim do can shed a little bit more.
Speaker Change: Color on it.
Speaker Change: And.
Speaker Change: I think it was.
Speaker Change: Oh Nafie that allows our team to cover the Murphy with <unk>.
Speaker Change: Brother.
David: Hey, David Good morning.
David: So on Injectables, we are very excited with our pipeline and infrastructure in.
David: The time, we spend over the last four years.
David: Creating this so we have a very good mix of complex products.
David: And strategies are very hard to predict but we do have the capabilities and capacity and the mix of the product and we are always working.
FDA drug shortage group.
David: To proactively work as and when we get a request we can keep island. The drugstore business. We are ready for question one when it comes to shortages and how we can help alleviate the shortage. So our portfolio is very nicely balanced.
David: In a different categories of injectable, we have L. B bags some of them always goes on a shortage and we have excess capacity.
David: We have the right capabilities PFS, we have the imagine line like for a product like pro for fall.
Plenty of capacity, so we'll be able to cater to the shortages as Enron headwind. We are already good complex portfolio also in micro spheres, and we would expect to receive approval in next quarter or so part of our first microspheres product.
David: We have LIBOR XOMA, we have the suspension based product. So I think as a ready mix revenue perspective of course complex will drive a lot more on a revenue on the top line than the shortage.
David: And we have the right size infrastructure, so thats, a really good mix and we have the scientific capabilities of developing even the next generation of complex injectable as we announced with DLP one drug device combination in auto injectors.
David: Very nicely balanced portfolio.
David: And we have about 30 or so pending.
David: It was at FDA. So an injectable is it's a very good mix really hard to say, which one.
David: From the percentage because shortage is not known regarding Nancy.
David: We are very excited about our own product of our <unk> auto injector is doing really well.
David: This is an emergency drugs and.
David: We are not expecting any challenges to our current business actually is growing.
David: It's the preferred route.
David: Because of the emergency for the balance.
David: Our nephew also at <unk>, we have the capabilities are.
David: Our unit dose nasal spray so as of today.
David: <unk> seen a move.
David: In fact, or we don't expect to see any impact going forward on our current.
Product and so.
David: So far we have not seen any.
David: <unk> uptake of.
David: Anything in the market and we will provide more highlight into our plan going forward on.
Our unit dose nasal spray of epinephrine.
David: Thank you David.
Speaker Change: Thank you. The next question is from <unk> Prasad. Your line is now open.
Speaker Change: Hi, good morning, everyone and firstly congratulations on the <unk> deal looking at <unk>. It seems to have the potential to redefine omni load along the time. So my first question is on that can you provide a bit more financials around the deal what does this mean in terms of incremental capex for <unk>.
Speaker Change: The coming years and the balance sheet back in.
Speaker Change: And maybe also discuss the longer term goals that you have that would just steel that's one.
Speaker Change: Two maybe for a follow up on <unk> could.
Speaker Change: Could you describe in detail a bit more around the feedback with the.
Speaker Change: Product know how as a protocol in March for our converting from.
Speaker Change: Existing drugs like <unk> to.
Speaker Change: <unk>, <unk> or <unk> and competition from other products too.
Speaker Change: Thanks.
Speaker Change: Hey, biology, good morning.
Speaker Change: So you're correct, Matt Ceta deal puts us into the <unk>.
Speaker Change: Next generation of growth and it is very its next next level of partnership as well.
Speaker Change: And this isn't the peptides and biologics and expect us to do more announcement in a similar line. So first of all.
Speaker Change: Create a massive capacity and capabilities to supply that.
Speaker Change: <unk> based product, which is starting with on a best obesity and metabolic disease.
Speaker Change: And then continue to do more partnership beyond met Sarah or even approach.
Speaker Change: Big players like Lilly Novo Roche too.
Speaker Change: CMO work for them so that is why.
Speaker Change: Very strategically how we have set it up and.
Speaker Change: On top of it obviously allows us to get ready for the Gx entry.
Speaker Change: Grid power.
Speaker Change: Power.
Speaker Change: Big capacity.
There could be 10 pilots, but who could really supply globally.
Speaker Change: At a high quality products and that is where we are.
Speaker Change: We're being.
Speaker Change: Setting it up both on auto on Injectables.
Speaker Change: Financial terms as we disclosed them et cetera.
Speaker Change: Is providing $100 million.
Speaker Change: Towards the Capex and our net expense over the next four to five years is about $350 million to $200 million.
Speaker Change: So well within our budget so not a big deal and this is why we are putting these phosphates in India in the future. Obviously, we'll always like some portion to be produced in the United States, both Motorola and Injectables, which will we will do so.
Speaker Change: Going forward.
In the United States as well.
Speaker Change: Moving on to correct sawn.
As I just explained <unk>.
Speaker Change: Is very novel, it's the best in the class right now it doesn't too much compete with more even though the results could be same as a continuous pump that every launch and that is for more advanced patient at $120000 whack.
Speaker Change: This is.
Speaker Change: <unk> is a daily use now.
Speaker Change: <unk> patient all the way to the advanced patient can use this.
Speaker Change: The universe is so big on it just in the United States market number of patient.
Speaker Change: And our marketing strategy is we're going after all of that business from nine to Rytary to cinema to Abbvie doesn't matter to us.
Speaker Change: Because what the product does and what we have seen so far in the.
Speaker Change: The affordability of oil product that it can have a wider market access and this is why we set it up this way because we really wanted to reach many patients. What's your use of innovation if it cannot reach the patients and that the <unk> philosophy and Thats, how we have launched it.
Joe: Joe would you like to add velocity.
Chuck: <unk>. Thanks for the question around <unk> and I would just add to what Chuck said is that.
Chuck: Our goal has always been to demonstrate the fact that we're the number one company in the Parkinsons space.
Chuck: The addition of cracks on absolutely allows us to do that.
Chuck: And there were really three key aspects to our strategy around your question Juan.
Chuck: One was ensuring that patients.
Chuck: This product is one that they had accessibility to and were excited about and we are very pleased with the response, we got from the Parkinson's community. The second which is kind of goes to your question around conversion and dosage.
Chuck: <unk>, we're a critical aspect of our second part of our strategy, which was ensuring that the hcp's or health care providers <unk> as a differentiation clinically different than what they saw and other products in the market and the good news is the feedback we've heard is that the health care providers, absolutely see cracks aren't as any clinical differentiator.
And their response and feedback has been that the dosing is very easy for them to convert whether it be a rytary patient or a patient on <unk> LD.
Chuck: Or a naive patient tissue ox point and then last question you had.
It was asked earlier by David which is the market access strategy, which are which was our third strategy component was ensuring we got access comparable if not broader than what we saw with Rytary, which had about a 70% national average access with <unk>. We're very pleased with the response from the payers. So.
Chuck: <unk>, we've already papered, a few deals and we're looking to go at least 50% coverage by next year.
Chuck: And the trend that we're on now with some of the deals that were in conversations with it looks like we'll probably be able to get that if not more next year. So.
Chuck: Access response from the payers has also been very positive so.
Chuck: Hopefully that gets to some of the questions you had about cracks on as well.
Speaker Change: That's very helpful. Thanks, and if I could just add in a follow up question here.
Chad: Chad you want to add.
Speaker Change: Making America on multiple five times in the past.
Lastly, as a CEO panel and so with the change in administration coming can you talk about the implications of then and now.
Speaker Change: Concentrate manufacturing for generates in Biosimilars, and how that would influence <unk> growth strategy over the coming years.
Speaker Change: Yes, Thanks biology so.
Speaker Change: Rehab issue as a country.
Speaker Change: In case of emergencies, we need to build a zillion supply chain and what I mean by resilient as having multiple.
Speaker Change: <unk> locations countries supplying the friends showing.
Speaker Change: And onshoring.
Speaker Change: Because sometimes it will be hard to in the cases of hopefully what happens like wars or.
Speaker Change: Some kind of pandemics or natural disaster, we could have issues importing antibiotics, the critical 40 or 50 products.
Speaker Change: We've been.
Speaker Change: Lobbying.
Locating.
In Congress and the White house and both sides of the aisle are completely receptive rehab.
Speaker Change: We have advanced the agenda for those products the starting material API and finished dosage for the Medicare portion, which is about 45% to 50% market share.
Speaker Change: Caregiving.
Speaker Change: Sure.
Different reimbursement for those products.
Speaker Change: Legislatively fast so it's a law.
Speaker Change: And it creates opens market for anybody to invest in America build these plants to supply. These critical medicines. So I think we get that done at this time.
Speaker Change: Thank you next question please.
Speaker Change: The next question is from Zack Lewis from mature Securities. Your line is now.
Zack Lewis: Good morning. Thank you for taking my questions just wanted to focus on the GOP line that partnership. So after that announcement has this raised awareness of your own manufacturing capability and have you been approached by other clinical stage peptide biotechs for similar partnerships.
And then remind us what is your current capacity is sterile injectable peptides and how much additional volume would you anticipate from the new facilities and what percentage of that increase capacity would.
Zack Lewis: Would you anticipate the allocated to med <unk> product versus capacity to capture other brands, including Lily. Our novel as you mentioned also is there a path for you to capture the generic side of some of these blockbuster.
Zack Lewis: <unk> <unk> <unk> and then lastly.
Speaker Change: What do you expect a response will be from some of your manufacturing competitors in the space. Thank you.
Speaker Change: Less good morning.
Speaker Change: So let me start with our current capacity on a PFS countries, we can make up to 5 million units.
Very small capacity for peptides API as of today.
Speaker Change: In the next few years three years or so we would increase our capacity to make five to 10 tons of API.
Speaker Change: With drug substance.
Speaker Change: And $100 million of combination of PFS, and cartridges, which erode or with client chooses to use with full assembly.
Speaker Change: So that's the the face for next three years on the capacity wise.
Speaker Change: We would yes, we have been approached by a big guys as well so.
Speaker Change: We will obviously work with them and see how we can help them.
Speaker Change: Two.
Speaker Change: Produce these.
Speaker Change: These very important drug globally and create excess to other countries as well affordable access so.
Speaker Change: We have that opportunity as well with us.
Speaker Change: And.
Speaker Change: On as far as <unk> is concerned we would be ready.
Speaker Change: Low happens and we will have full capacity to supply gx products at that time, if we need to add another 100 million units. We can because we have the infrastructure will be there and if we have to expand API, we will because we have all the capabilities.
Speaker Change: <unk> already built in and then just extending the site. So that is the strategy for us to play in that.
Speaker Change: <unk>, one or all peptides within the obesity and metabolic space.
Speaker Change: And that could further expand to other peptides enzyme driven.
Speaker Change: <unk> as well.
Speaker Change: Okay.
Speaker Change: Very helpful and just lastly on that.
Speaker Change: Competitors are response have you seen anything.
Out there yet.
Speaker Change: No no. This is a very unique partnership.
Speaker Change: Took us a year and ready.
Speaker Change: All partnership knowing it's a trusted partnership.
And we're doing beyond CDM will work here.
Speaker Change: We're co.
Speaker Change: Co developing the products, helping them on CMC.
Speaker Change: Cynical.
Speaker Change: In production, so both oral and injectable side the formulation enhancement. So this is this is very unique.
Speaker Change: And we havent seen anybody else doing that well I'm sure.
Speaker Change: People may follow this model.
Speaker Change: Got it. Thank you so much for that color.
Speaker Change: Thanks. Thank you. The next question is from Chris Schott from J P. Morgan. Please go ahead.
Alright, great. Thanks, so much and congrats on the progress on the business just three for me.
Speaker Change: Maybe first on business development can you just talk about the landscape for deals here and it just it seems like the business is growing you've got more.
Speaker Change: Capabilities for investing behind assets, maybe a little bit more color on kind of a size and stage of assets you are most interested in.
Speaker Change: The second question Biosimilars, the layer, just talk a little bit about the opportunity and competitive landscape youre thinking about them in that market and then finally just on 2025 just any initial color you can provide in terms of just thinking about pushes and pulls as we think about the outlook for next year. Thank you.
Speaker Change: Thank you Chris good morning.
Speaker Change: So the business development front as we continue to obviously, we wanted to de lever. So we have that in mind, but we do generate 300 plus million operating cash flow. So we do have.
Certain capabilities and we're very very focused on getting down into the threes as far as the leverage is concerned.
Speaker Change: And the deals we're looking at.
Speaker Change: And we'll be adding as two areas specialty products.
Speaker Change: And it's very smart additions because.
Speaker Change: We have limited R&D budget and limited cash, but there are so many opportunities that we see in using <unk> capabilities and our meals.
Speaker Change: <unk> thousand scientist and all the CMC and other capabilities clinical.
Speaker Change: We could have a unique partnership on the specialty assets, we could take some of the commercial asset oncology as our new focus on the specialty.
Speaker Change: So far we've been focus on CNS and we have our key products in endocrinology, we're now going in on coal because of the Biosimilars, we have a whole pipeline of oncology products and the same touch points, so why not introduce.
Speaker Change: The branded products as well within the same community, we hear them the need for it.
Speaker Change: Specialty products, so we're not competing with big guys.
Speaker Change: But there are opportunities. So you will see us doing those deals and bringing those into our specialty pipeline the second would be biosimilars.
Speaker Change: We would love to.
Speaker Change: Integrate.
Speaker Change: Completely and head on compete with Sandoz sell three on.
Speaker Change: Amgen. So we will have we would like to have a full capacity development add on another eight to 10 programs, which are done over four.
Speaker Change: For five years.
Speaker Change: Manufacturing capacity, so full R&D capacity manufacturing at scale like 30%, 40% 50000 liter scale.
Speaker Change: We already so.
Speaker Change: And and keep expanding partnership within Biosimilars, we want we see this as a big market. It is.
Speaker Change: In only seven eight competitors would pretty much sure most of the revenue between a little broad range I'm, giving $20 billion to $30 billion produces manufacturers net sales ikea could be $50 $60. So.
Speaker Change: That is large and you can see seven or so company biochar on Sandoz, Emil Taiwan May Plains integrated play with alloy TEG cell to Jan is there.
Speaker Change: A couple more.
Speaker Change: It will show up but we received very prudent to take the leadership role there.
Among the leading companies for Biosimilars enter global play there's a huge demand for these products globally.
Speaker Change: No.
It could have a split of 60% revenue coming from U S. 40% from the rest of the world, which will partner for this asset so integration of Biosimilar on the BD side as the key priority in 2005.
Speaker Change: <unk>.
Speaker Change: <unk> is a great business, but we are keeping it at such a great business, it's growing double digits huge growth opportunity there as we expand into.
Speaker Change: Government distribution partnership with government, we love that business.
Speaker Change: And certain direct distribution to hospitals.
And consumer like California for Naloxone were distributing directly so it allows us to do direct distribution, which is a niche other competitors may not hiring our friend.
Speaker Change: As we build a mill to last for a long time.
Speaker Change: <unk>.
Speaker Change: And then on the Biosimilar Xolair.
Speaker Change: Three competitors known competitors or the <unk>.
Speaker Change: Stage, we already sell to Jan.
Speaker Change: I believe file the product.
Speaker Change: With our tower and us.
Speaker Change: With Kashi.
Speaker Change: <unk>.
Speaker Change: We expect to file in the second half next year get the approval and pretty much.
And then 10 months and the.
Speaker Change: We have a manufacturing would be our partner is doing it in Piscataway New Jersey.
Speaker Change: And <unk>.
Speaker Change: Based on IP or.
Speaker Change: We expect to launch this in January one 2007.
Speaker Change: Pending IP.
Speaker Change: Settlement.
Speaker Change: Howard ran Edward onshore market.
Speaker Change: Okay.
Speaker Change: Just wanted to add on Xolair also our partner is uniquely positioned to have all of the.
Speaker Change: The strength of both the Eva newly launched strengths of 175, $1 50, and 300, plus the auto injector device. So while they are growing upon the approval of <unk> and.
Speaker Change: Enjoyed it.
A range of <unk>.
Speaker Change: Our differentiated auto injector PFS with different strengths so.
Speaker Change: And a very strong IP position vote, so that will be uniquely differentiate us than our competitors.
Speaker Change: And any shifts or timeframe.
Speaker Change: Yes.
Speaker Change: And Chris 25 looks very strong I'll pass it to tassos for pushing pools, but we are very excited about 25.
Thanks.
Speaker Change: So I think the question was early early view into 2025 crease in any pools.
Speaker Change: <unk>.
Speaker Change: Or detractors, so I'll take a couple of things so.
Speaker Change: We'll give you guidance for next year.
Speaker Change: At the end at the end of February, but we feel we feel great about next year. Our company is built for growth.
Speaker Change: That's how the management team is thinking about the business, who have driven growth for the last five years throughout COVID-19 and kind of engineering. These spectacular financial turnaround and we're not going to stop after five years or so next year, we expect another year of growth from both the top line.
Combined and cash generation, that's kind of point number one.
Speaker Change: When we think about kind of.
Speaker Change: Kind of tailwind and headwinds is the obvious headwind is the is the rytary low now.
Speaker Change: Now.
Speaker Change: The vast majority of that will be compensated by the launch of correction. So that's kind of point number one so I think that becomes.
Speaker Change: More of a speed bump right.
Speaker Change: Hello.
Speaker Change: In addition, our Biosimilars will continue to grow.
Speaker Change: Our institutional bid.
Speaker Change: Business of injectable products, we've been talking about those we will continue to grow substantially next year and beyond.
Speaker Change: And Novocure will just continue the growth that he has been known for the last five six years and at the same time, when you think about cash generation.
Speaker Change: The pinnacle of interest of interest expense. So as we think about next year, we will expect about $30 million of reduced interest expense and thats a function of two things number one is.
Speaker Change: Just reflect the fact this year most likely we will have paid down about $180 million.
Speaker Change: Gross debt, we have already paid $127 million.
Speaker Change: Probably we will pay another $50 million to $60 million of gross debt in Q4, So we're cutting essentially a couple hundred million dollars.
Speaker Change: Less of interest of gross debt and then as you know interest interest rates have been.
Beginning to slowly creep down so combination of all these.
Speaker Change: Biosimilars of care in <unk>.
Speaker Change: <unk>.
Speaker Change: Craig Zone.
And interests less interest expense was more than offset.
Speaker Change: Whatever we lose on the right, we all know and put the company in another year of growth does that help.
Speaker Change: That's super helpful. I appreciate all the color maybe just one really quick clarification. If I just look at the Parkinson's franchise as a whole I guess when we combined the very strong launch so far with the retiree generics is that a franchise. We should expect to grow next year, obviously over time it grows but specifically in 'twenty five do you think you can still grow.
Speaker Change: The franchise between those two assets.
Speaker Change: Yes.
Speaker Change: Yes, that's a great question and I have a tendency of driving my friend Joe here Crazy about this I would say, it's a little bit it's a little bit earlier, we're only only a couple of months.
Speaker Change: Until the launch obviously that will be that will be obviously that would be our objective.
Speaker Change: Frankly, even if we don't kind of completely offset.
Speaker Change: The low loss next year right by a few million dollars in the Grand scheme of the.
Speaker Change: Almost $3 billion revenue company.
Speaker Change: It will be more of them more than able to offset that.
Speaker Change: Perfect and we have also added Ungentleness, Chris which is growing.
Speaker Change: As part of the franchise.
Speaker Change: Perfect. Thank you so much.
Speaker Change: Thank you Craig Thanks, Chris.
Speaker Change: We have no further questions so I'd like to hand.
Speaker Change: Back to <unk> to conclude.
Speaker Change: Well, thank you everybody and wish you a great weekend. Thank you.
Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your line.
Speaker Change: [music].