Q3 2024 Bausch Health Co Inc Earnings Call
Greetings. Welcome to the Bouch Health, 3rd quarter 2024 earnings call.
At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Please note this conference is being recorded.
I would now like to turn the conference over to your host, Garen Sarafian, Investor Relations at Bouse, you may begin.
Speaker Change: Good afternoon and welcome to Bouchals 3rd Quarter 2024 earnings conference call. By participating in today's call, our Thomas Appio, Chief Executive Officer of Bouchals and Jay Jay Sharone, Chief Financial Officer.
Garen Sarafian: Before we begin, I'd like to remind you that our presentation today contains forward-looking information.
We ask you to take a moment to read the forward-looking statements disclaimer at the beginning of the pages that a company is presentation as a contains important information.
Garen Sarafian: Our actual results may vary materially from those expressed or implied in our forward-looking statements and you should not place undue reliance on any forward-looking statements.
Please refer to our SEC filings and our filings with the Canadian Securities and Ministersators for a list of some of the risk factors that could cause our actual results to differ materially from our expectation.
We use non-gap financial measures to help investors understand or operating performance.
Now, on-gap financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to measures calculated in accordance with gap.
Garen Sarafian: We will find reconfigulations toward non-gap measures in the appendix of the pages that accompany this presentation, which are available on BALS Child's Investor Relations website.
Finally, the financial guidance and this presentation is effective as of today only. We do not undertake any obligation to update guidance.
Our discussion today, Wednesday, October 30th, will focus on Bosch Hospital, including Bosch Alumni. However, we will briefly comment on Bosch Alumni's results announced this morning. We will refer to you over your comparisons with the same period last year, unless otherwise noted.
Speaker Change: Thank you, Garen, and welcome to everyone joining our earnings call today. In the third quarter, we continued a momentum that we started in early 2023. Executing against our strategic priorities while maintaining our focus on patient-centered outcomes.
I am pleased to share that we delivered a sixth consecutive quarter of year over year growth in revenue and in adjusted EBITDA.
Speaker Change: Well, JJ will talk in more detail about our financial results. I will touch briefly on our performance.
Revenues for Bouch Health, excluding Bouch in Lomb, increased 7% on a reported basis and 8% on an organic basis when compared to the third quarter of 2023 with organic growth in all segments.
Speaker Change: A justic EBITDA for Bouch Health, excluding Bouch and Long, increased by our approximately 9% compared to the prior year period.
Therefore, we are raising Bouch Hell's full year 2024 guidance, excluding Bouch and Long across multiple matrix including revenue, adjusted EBITDA and adjusted operating cash flow.
Speaker Change: Moving on to page 6, we had a strong quarter, underscoring the success of the Strategic Initiatives. We not only delivered strong financial outcomes, but we made significant strides in meeting our 2024 objective.
The Stain Growth remains one of our key strategic priorities and we are pleased to continue to deliver in this area of co-a segment and geography.
Speaker Change: All segments delivered revenue growth on both reported and organic faces.
Speaker Change: Within our saylet segment, Zyfaxen had a strong performance with 7% growth over the third quarter of 2023, and we continue to see further opportunities for growth.
This past Monday, I attended the annual conference held by the American College of Gastroenterology.
A new abstract was presented based on results of two randomized disayfacts and trials which concluded as disayfacts in monotherapy.
is more effective than L'Axelo's monotherapy for reducing the risk oververt and patent-conceptal property, OHE, recurrent and all cause mortality.
These insights, reinforced our commitment to ensuring that thy facts and is prescribed for all patients that meet the criteria for treatment.
Speaker Change: Our broad portfolio in our international segment continues to deliver with 8% organic growth this quarter.
For example, in Canada we have seen broad and sustained growth trends, particularly in our promoted portfolio products, including the contract, which competes in the chronic weight management market by reducing hunger cravings for adults and achieved strong double digit growth.
Regarding our diversified segment, the launch of CapTrio has delivered to our expectations and we continue to see the benefits of our strategy to improve profitability of well-butron and a pleasant even at lower script volumes.
Sulta delivered another strong quarter with 36% organic growth year over year with particular strength and South Korea and China.
We are continuing to capitalize on Korea's growth momentum by investing in additional sales and marketing resources. We saw a specially-strung consumer demand in South Korea this year generated by our investment in direct consumer marketing.
We also launched clear and brilliant touch.
which is a fraction of laser device for skin rejuvenation and the Philippines during the quarter. This is now our third new market outside the United States that clear and brilliant touch as entered this year. With additional new markets targeted for upcoming quarters.
Speaker Change: In addition to growth, another strategic priority is innovation for R&D efforts are well underway.
Speaker Change: Over the past several years, Bouch Health has been a leader in the liver space.
Through our extensive work with multidisciplinary thought leaders, limmer experts and patients we have learned as many as 4.5 million people are diagnosed with cirrhosis in the United States and many more worldwide.
There are no therapies approved in serotic patients to prevent the most serious form of the disease, decompensated cirrhosis.
Hospitalizations due to this disease caused the healthcare system billions of dollars each year with H.E. as one of the biggest drivers of hospitalizations.
Our Red Sea program for our solid, valuable dispersion, SSD, refaxment and product continues as planned.
The Red Sea Program is studying a unique form of refaxment, inclusive of different dosing and different delivery into a unique patient population, compensated cirrhosis.
Both global starlies are fully enrolled and progressing on track. We have begun building our internal commercial team that will prepare us to bring this important innovation to market if or when the product is approved.
Let me remind you that this is a global opportunity for Bouchelles and may enable us to address an unmet need through a novel therapy through serotic patients around the globe.
So this is an exciting opportunity and I will be providing updates on future calls.
Speaker Change: We also continue to promote operational innovation within our organization. You may recall that in the third quarter of last year we discussed the launch of an AI-driven customer engagement initiative for Zayfaxen.
to maximize sales effectiveness within our GI business, Felix.
Since the launch over 12 months ago, we have transformed our approach to sales force planning for Zyfaxing through dynamic, healthcare provider targeting and messaging.
This AI enabled customer insights engine is helping our representatives deliver the right message to the right healthcare provider at the right time to further accelerate XI facts and growth.
Our sales teams has embraced our AI engine with adoption rates maximizing our investment.
Speaker Change: Improved efficiency and operational execution is another strategic priority to ensure that the process behind other priorities growth and innovation are sustainable.
A core, bouch health capability is our agile pharmaceutical manufacturing process in supply chain management.
Speaker Change: In the third quarter, we demonstrated this capability by opportunistically fulfilling short-term market supply needs with Cardiom in the United States and Will Butrin in Canada.
Speaker Change: Of course, none of this can be achieved without our prioritization of the people who make up our organization.
Speaker Change: with a result-oriented culture of accountability.
JJ and I have had the opportunity recently to visit with our talented and dedicated teams across the United States.
Latin America, Europe, and the Asia Pacific region, where there is a clear sense of excitement and opportunity for bowsheld.
This engagement allows us to reinforce our values and visions, while fostering the culture of collaboration rooms, employees, regardless of location feel heard and connected.
Most importantly, on-site visits allow me to better understand regional challenges and market specific dynamics and provide a platform to align on our objectives and where I can help the teams to achieve our goals.
We look forward to updating you on further progress towards our strategic priorities in the quarters to come.
Now, turning to update on the litigation front. A trial date was set for September 4th, in one of the remaining federal securities opt-outs cases.
However, prior to the commencement of the trial, the parties reached a mutually acceptable settlement for the trial did not proceed. There are currently no other trial dates pending.
Regarding Zay Faxon, the Hatch Waxman's litigation continues against end up filing for generic refaxment 550 Nogram tablets.
We received three new paragraph for certifications against a fax and 550 milligrams since we last provided an update, which is not unexpected.
Notably, the patents we now assert and intend to assert against, like facts and enders, are different from those adjudicated in earlier litigation. We will continue to vigorously defend our intellectual property.
on the Granite Frost Matter.
We continue to expect the settlement with the IRS to be finalized in the coming months. All the process has taken longer than anticipated. We have not changed our expectation that the anticipated settlement outcome will not have the material impact on the company's overall financial result or cash flows.
I want to touch on recent market speculation that has attracted some attention.
As JJ will elaborate in his prepared remarks, we have levers for value creation. This quarter demonstrated our ability to continue during value from a portfolio that has touched on earlier.
Speaker Change: We have also consistently stated that the full separation of boushen-long continues to be a strategic priority. We continue to evaluate strategies with the objective of ensuring that any transaction results in two appropriately capitalized companies.
This remains the same today, while we are unable to comment on any speculation, is important to note that maximizing the value of our boush-in-law ownership stake has been, is, and will remain a priority.
Once again, Fowshel's third quarter results reflect our continued execution on our growth strategies.
Speaker Change: as we make targeted investment and expand the breath.
of our patient solutions to advancing our pipeline and leveraging our commercial assets.
and to further emphasize people as a strategic priority, I am very pleased to welcome our new Chief Financial Officer.
J. Sharon, through the Bouch Help Team, he is a seasoned executive who we are very excited to have on board and we will now provide additional commentary on our financial results. JJ?
Thank you, Tom. I'm excited to meet parts of the Bouch Health Leadership Team and the journey that lies ahead for the company.
Before we review our Consulate Results and Segment Performance, let me share some additional headlines of our Q3 performance at Bouch Health, excluding Bouch and Lomb.
Speaker Change: Assault noted, this is our 6th consecutive quarter of your year-of-year growth for both revenue and adjusted EBITDA.
Speaker Change: Revenue growth in the quarter with 7% and adjusted EBITDA Guru 9% demonstrating continued operating leverage of our diversified portfolio of businesses.
Even more importantly, we generated $343 million of adjusted cash flow from operations, which is a 75% increase versus the same period a year ago.
Speaker Change: This was well ahead of expectations, even one adjusted for the benefit associated with timing of certain uploads.
Speaker Change: Our strong performance over the last nine months has not translated into raising our full-year guidance for revenue, adjusted EBITDA and adjusted operating cash flow. More specific on that whole bit later.
Speaker Change: Moving now to our Consolates, Non-Gap Financial Results for the third quarter which you will find on page 9.
Revenue was $2 billion and $510 million. Up to 12% versus the prior year.
Adjustments Gorsh margin was 73.1% 80 basis points higher than the same period a year ago.
For our health, excluding Vouch and Lone, a trusted growth margin for the third quarter was 82.5% approximately 130 basis points higher when compared to the same period a year ago.
Thanks to favorable net pricing and to a left-air extent product and channel mix.
Abbao Shalom, adjusted growth margin with 63% for the third quarter. Compared to 61% for the third quarter of 2023.
Speaker Change: This improvement was driven primarily by product mix including the impact of Zydra.
Speaker Change: Consolated adjusted operating expenses for a third quarter were $983 million, an increase of $150 million from the same period last year.
Provouch Health, excluding Bouch and Lomb, adjusted operating expenses increased by $35 million, compared to the third quarter of 2023.
Bouchen Lomb report an increase of 115 million dollars in adjusted operating expenses due primarily to increase selling NAMP driven by investment behind Zydra and Mybo.
Consolidated adjusted R&D expense for the quarter was 146 million dollars or 5.8% of revenue, which was a decrease of 4% compared to Q3 of last year.
Speaker Change: For Bosch Health, excluding the NL, R&D expenses of $62 million were approximately $10 million lower than last year at 3rd quarter, driven primarily by timing of plant spend.
Third quarter, consolidated Joseph Ebeda, a treatable to Bouch Health was $999,000, an increase of $79,000,000, or 10% as compared to the same quarter last year.
are just at EBITDA for Bosch Health, excluding Bosch and Lomb with 723 million dollars, a 9% increase from the 3rd quarter of 2023.
Burning now to cashflow on a consolidated basis, Bouchel generated $405 million of operating cashflow and $503 million of adjusted operating cashflow into three.
Boboch Health, excluding Barron Lomb, adjusted operating cash flow with 343 million dollars, up 148 million dollars when compared to the third quarter of 2023.
These exceptional deformments reflect the strength of operating results across all of our segments.
Moving now to our performance by segment, starting with our Sailing Business on page 11.
To Alex Revenews in the third quarter were $642 million, an increase of $28 million or 5% growth year over year.
Our three major brands, namely the Factson, Ready Store and True Lands all grew at least 7%.
Speaker Change: So I've actually continued to drive most of the Célic Seminole revenues bolstered by strong growth in underlying demand for existing patients as well as new patients.
Polo scripts, group 3%, we new script growth at 4%.
Extend Units, Group 5%, and includes not retail settings, such as hospital and outpatient clinics, which solve double digit growth.
Speaker Change: Although the man and net pricing dynamics were strong, Zyfax and revenue were partly impacted by a 15% reduction in wholesale or channel inventory compared to last year.
Now moving to the International segment on page 12.
Speaker Change: Revenue is worth 291 million dollars during the quarter, and increase of 6% on a report basis and 8% on the
Canada, the MIA and Latsam also are getting growth during the quarter.
In Latin America, our revenue was fueled by our private channel, which proved double digit, particularly thanks to our local flagship brand Beto Iecta.
In Canada, our growth was balanced between our promoted brands such as realtrace and country and some opportunistic volume of well-buttri.
Speaker Change: Now moving to page 13 to review our Sulta Medical Segment, which had a terrific order in two three.
Revenue, where 112 million dollars during the third quarter, an increase of 35% on reported basis.
The Asia Pacific region, which represents about 80% of sulta global revenue continues to be the primary contributor of sultas growth engine with particular strong performance in China, South Korea and Taiwan.
In China, the relaunch of Tormash FLX as a medical device during the second quarter is broadening our market relevance for new channels to chest clinics and hospitals.
Since then, all performance has exceeded expectations.
In South Korea, our market coverage expansion has produced outstanding results.
Speaker Change: We're on now on track for growing our Korean business by more than 80% in 2024 when compared to 2023.
Burning our focus now to the performance of Ideverteeth Five segments which you will find on page 14
Speaker Change: Revenue is worth $269 million during the third quarter, an increase of 4% on reported basis and 7% on the lower-gannies basis compared to the same period of year ago.
Growth in the quarter was driven by our neurology business. Thanks for a merrily to well-viewed train and a plans in which grew respectively 22 and 26%.
Separately, like we didn't encounter for World Beauty and our highly flexible manufacturing and supply chain capabilities, allowed us to take advantage of supply shortages of generate suppliers. In Q3, we recorded $20 million of cards as a mortar we were not expecting.
Speaker Change: Finally, let me wrap up the performance by segment by summarizing the box and loan top line results which are on page 15.
Speaker Change: Revenue is worth $1.2 billion in the third quarter, up 19% on the reported basis and 10% on the no organic basis compared to the same period last year.
Important note that growth was well balanced across all businesses and geography.
Speaker Change: Burting now to our balance sheet.
As some indicated earlier, we continue to part as liquidity management and evaluate alternatives to reduce overall debt leverage while also focusing on our upcoming maturity is obligation.
Speaker Change: As you will see on page 17, in the third quarter, we'll reduce our death.
Natapkash for Bosch Health, excluding Bosch and Alon by approximately $110 million, including the impact of payments for legacy legal settlements of $216 million.
Speaker Change: On a year today basis, our net debt reduction amounts to $555 million in principle value of 2025 and 2026 maturitys, capturing approximately $25 million of discounts.
We also repaid 94 million dollars towards mandatory term loan and marginalization and a portion under our AR facility.
This round-depth are currently performance, which was excellence, on many fronts.
Let's not move to our full year guidance for barresi health excluding BNL which you will find on page 19.
As indicated earlier, the strength of our profit and cash with performance over the first nine months of 2024 as allow us to increase our full year guidance as follows.
We now expect revenue to be in the range of 4 billion 775 million dollars to 4 billion 860 million dollars in line with our previous outlook.
Speaker Change: Separately, we just 1 quarter to go. We have narrowed the range of our revenue guidance by $75 million and increased the midpoint by approximately $40 million.
are getting growth guidance now stands between 4 and 6% up 100 basis points when compared to our prior guidance.
We are also increasing guidance for just a growth margin to approximately 81% up 100 basis points from our prior guidance.
For just an EBDF, we are increasing our guidance while also narrowing our range to between $2,425,000,000, $2,475,000. And increase of $40,000 at the midpoint.
Finally, for Jessica Shula from Operation, we are increasing our guidance to arrange between $975 million and $1 billion and $25 million an increase of $200 million versus all prior guidance.
The progress we have made in Q3 on several fronts illustrates how we think about value creation framework as outlined on page 20.
Our focus is divided equally among three vectors. First, increasing the value of Bosch Health Operational Acid, which include innovation, as well as continuing to optimize the growth of all wide portfolio of brands across the globe.
Speaker Change: Second, evaluating all options for maximizing the value of BNF equity stake for Bosch Health shareholders.
Speaker Change: and third, but not least, optimizing our capital structure which includes reducing our dead leverage and extending our materialies.
While it is our policy to not comment on any specific process or project, now yet concluded, these three vectors of value creation represents our primary focus today and will continue to be so in the foreseeable future.
I will now handy back to Tom Futter App up.
Thank you, JJ. Welcome on board. It is great to have you on a bow shelf team.
I would like to finish where I started, which is our focus on strategic priorities, turning your attention to page 21.
We are delivering against each of the strategic priorities we set forth at the beginning of this year.
We are driving an action now culture with a sense of urgency, accountability and compliance, along with the strengthening of our talent and organizational capabilities.
For the past six quarters, we have consistently grown the top and bottom line.
Speaker Change: We are embracing innovations through R&D that we remain excited about as well as the application of new technologies like AI to further enhance our capabilities and drive new efficiencies.
We are executing with operational excellence, which allows us to be opportunistic in capturing market placements, others are not able to meet.
and we are keenly focused on all levers to drive value creation, both in the short and the long term.
Of course none of this could happen without having the right people and the right culture.
Speaker Change: This is very important to me. So I again want to thank the entire global Bouch Helping for their hard work and dedication.
Speaker Change: in growing our company and continuing to deliver on our commitment.
Our Executions thus far in 2024 provides us with a strong foundation for continued momentum across our business.
Speaker Change: With that, we will now turn to questions. Operator, please open the line for Q&A.
Speaker Change: Thank you.
Ladies and gentlemen, the floor is now open for questions. If you would like to join the Q to ask a question at this time.
Speaker Change: Please press star one.
on your telephone feedback.
We do ask if listening on speaker phone today that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one at this time on your keypad if you wish to join the queue to ask a question, please hold a moment while we pull for questions.
Speaker Change: And the first question today is coming from Jason Gerberry from Bank of America. Jason, your line is live, please go ahead.
Hey, this is Garen for Jason. Thanks for taking a question.
I guess the first one, I wanted to touch on satisfaction. I'm curious, can you frame Wissing Stamworth Deligo Dispule Process with No A Witch? Have they made any efforts to get the 30 months?
The Expertite
or what's your understanding what they would need to prevail in that effort. And you have mentioned that, you know, for the new and the rest that will...
Speaker Change: and that, for Syfax and you're looking to a certain new patterns against these new and these new patterns or existing patterns that you then assert in the prior litigation. And then I'll follow up after that. Thank you.
Speaker Change: Thanks, Chief, for the question. I can take those for you. What I like to say firstly is the state of play is, you know, nor which cannot launch.
a generic before until 2029. So we take a look at the ongoing litigation, and clearly as we talked about it in my prepared remarks, we had three new and the filings.
Now, in those new litigation, we have new IBSD departments, as you asked about those or new, and also the new patent, the other patents we're going to assert is polymorph patents for not in the previous litigation.
So, you know, as we look at it, you know, it's difficult to speculate on timing, but, you know, we intend to vigorously defend our zifax and IP and of course, you know, believe that we have the 30-month stake.
and I understand that you are unable to come in any speculation but we like to think hypothetically scenario. So I'm curious.
If you were the hypothetically speaking, divers, balco, how would it be taxed? Would it be under a public tax rate?
Yeah, I don't want to speculate on Apple. I'll give it to JJ to maybe add to that.
Yeah, so we don't speculate specifically on any process of project that haven't concluded.
The one thing that I would say is we carry a significant amount of care.
and the NOL's basically at a Canadian level. So any large divestiture of our BLCO ownership would not be associated with significant tax leakage.
Got it, thanks so much.
Pop where your next question.
Certainly, your next question is from Nik, Nik, Nik, Nettel Covich from Cowan. Mike, your line is live, please go ahead.
Speaker Change: Thank you for the question. I'm curious when we begin to contemplate a post-Size Facts and World, likely in 2028.
Speaker Change: Do you feel that you have what you need in terms of the remaining business and the pipeline and the balance sheet? To both address that L-O-E and continue to service the remaining debt, or do you feel that you need to make additional changes prior to 28?
Speaker Change: You might thanks for the question, you know, right now as you saw in the performance strong quarter, so really trying to...
Drive performance through out this entire company, both with our Zayfax and the other great products that we have.
Speaker Change: So as we work towards 2028, I talked about in my prepared remarks the great opportunity we have with Red Sea. This is a really interesting...
Speaker Change: Programme that we're running and really excited about it. What I would say is as we look at, you know, as JJ said in his prepared remarks, the levers that we have to create value, you know, post 28 and he can comment on that as we, as we look past the L.O.E.
Let me give you a kind of an overview on how we're thinking about it. Obviously, they're all a number of variables that we're working between now and the time life action will lose its exclusivity.
Speaker Change: and we intend to continue to grow a number of our very strong assets and platforms like the Verify International segments but also of the Soltem.
Speaker Change: That will determine the kind of a level of EBITDA run rate that will indicate the quantum of net deaths that we need to care on balance sheet to have.
Speaker Change: A fit for purpose capital structure.
Speaker Change: There is no doubt that...
Our debt needs to come down, will come down as a result of the very strong operating cash flow.
that we're continuing to generate between now and when Zyxan.
basically comes off pattern and we will have to think about capital allocation to really bring that leverage to the right level.
Speaker Change: Operator next question.
Certainly, your next question is coming from less saluesky from truest securities. Less your line is live, please go ahead.
Good evening, thank you for taking my questions, congrats on the progress, guys.
Speaker Change: This is when we're starting to think about 20, 25. Can you just walk us through some of the puts and takes for...
Speaker Change: you know, grow opportunities, crush each segment, whether it's pricing, dynamics, the script, trans, or market access across the city of the international. And then a second follow up on that is Tom and JJ appears, you know, you mentioned that on a number of sites visits, can you?
Speaker Change: Hi, ladies, specific takeaways that you may be seeing as shift in strategy and that you did not foresee prior to some of these visits. Thank you.
Thanks, Les. Thank you for the question. Let's just talk about the overall company in terms of the product portfolio that we have.
Speaker Change: So when we started thinking about 2025, we just, you know, as I said, had gone around the world visiting the sites, and, of course, talking to the team here in the United States.
We think we have a really broad portfolio of assets that we can continue to grow. So firstly,
Speaker Change: on the sailic side, specifically Zifaxon, we see.
Speaker Change: Room, a lot of room for growth there. When we also look at just the acceleration that we have seen since we...
Since this new management team took over really starting to focus on investing behind Zifax in our DTC efforts in empathic and cephalopathy. If our AI engine has really the team has done a wonderful job getting that engine in quickly and then of course the field force.
Exigen Cuting, against it, and really following it, really exceeding our expectations. So we've seen an acceleration of the extended unit growth.
Speaker Change: So really pleased with that. We continue to believe that there is room to grow here. I've said on previous calls that we just take a look at OHE. We're treating approximately 100,000 patients.
There's 200,000 patients out there, so a lot of room for growth. When we look at IBSD, we're treating about 185,000 patients to 0.2 million patients in the United States.
Another area for growth. If we look at what the new to brand was in the quarter, new patient starts on the facts in therapy in the third quarter, 65,000 patients.
Speaker Change: So...
We are excited about where we are and being able to drive further growth. On the international side, as I have spoken on many other calls, we have a really good business here.
Speaker Change: If you take a look at where we are in Europe, Latin America and Canada, broad portfolio of products as we reported this quarter growing very nicely. We continue to focus to do business development in those respective geographies.
So the excitement is really building as the growth that we have and what we can bring in.
Then Salta, as I've said also on previous calls, love the Salta business, you saw the growth that we've had this quarter and in previous quarters.
Korea Outstanding Performance in the Quarter.
China outstanding performance in the quarter. As you know we have had the thermage approved now in China.
Speaker Change: and we are working strategies there to really drive value creation in China with our team. We have a new GM on board who will be leading that effort.
Speaker Change: So...
Excited of what we can do in 2025. If I talk about, you know, when I made the trips around the world, talking to the teens.
We have great momentum, we have wonderful teams around the world who are excited to be at Bouchelf and to promise and deliver on our commitments.
and a lot of energy, a lot of discussion of what we can do, a lot of discussion on business development of things that they're all working on, I'm not going to speculate on the various things that are going on around the world from a business development standpoint, but the team is focused.
Business Development, we talk about our Soul to Franchise, the teams are very excited about what we have in China, what's going to come with our new Fraxel, and our Clarem Brilliant Touch.
So we believe we have the assets for to continue to grow and have a really good 2025. What I would say is I talked about this earlier about Red Sea, we will continue to look.
for assets that we can bring into this portfolio around the world to create value. You never can have a pipeline full enough. We continue to look for assets.
Speaker Change: that we can beef up our pipeline and continue to promise and deliver now and in the future.
JJab, go hand it over to you, you were with me on these trips and went through all the budget reviews. Maybe you like to add something to it? Yeah, the two things that I would just...
Court of Enterprise, I think you mentioned that is that.
There is a significant runway still available for a number of our segments. I would mention specifically Sulta and the International segments. And we have some very strong and resilient brands, I think.
I certainly didn't appreciate the diversity of our portfolio and the diversification of our
I would also like to add less when you look at the sulta franchise and the split between our capital business and our consumer business. That is a durable business.
that has room for growth. You look at comparison to our competitors. You know, that consumable franchise being able to grow it. You mentioned about pricing, you know, having the ability to be flexible.
and to look for ways to grow our business or having a durable business on the consumable side really isn't advantage for our sole parent franchise.
Speaker Change: Operator next question.
Your next question is coming from Umar Rafaat from Evercore ISI. Umar your line is live. Please go ahead.
Hi guys, thanks for taking my question. I have three here, if I may, first since the Faxon generic entry could be so material to the company and its possibilities.
Speaker Change: and it's impact on the entirety of your figure cash flows.
Speaker Change: Can you help us understand why wouldn't a summary judgment be granted in the Norwich NMEL cases? That's first. Because if it goes to full trial, that in and of itself could be a win from atomic perspective.
Speaker Change: Second.
Regarding any potential dividend to your equity holders, which is widespread market expectation.
Speaker Change: In a scenario, you do want to go forward with that for possible proceeds from BLCO. My question is, will you make that decision unilaterally? Or will you look to establish consensus with your debt holders or equity holders, as well as other stakeholders involved?
And finally, I noticed you were still discussing phase 3 commitments for a sort of kaleidosch trial for your S1P1, which is several years behind. And I'm curious what learnings that you're taking from Pfizer that's on P1 launch date and you see. Thank you.
Thank you, Mr. For the question, I'll take the first part of the question regarding Zyfax in generic. As you know, the standard...
Not going to discuss litigation strategies. What I would say is, there are new patents that stay here with a Norwich and of course different patents with some of the other filings.
So we are vigorously going to defend our intellectual property and the team is highly focused on that and working diligently on it.
Regarding the potential of the dividend in terms of, have JJ Tech that point of the question.
Speaker Change: Hi, I'm Merin, nice meeting you.
First of all, you know, this is a hypothetical question, but I'll try to answer it the best way I can.
Speaker Change: All parties when it comes to dealing with liquidities and doing capital allocation is first of all to obviously meet our debt maturity and obligation. That's, you know, first and foremost.
Speaker Change: The second one is reinvestment into the business and then if there is anything left, then there'll be a number of conversations around how we best deployed the capital remaining for increasing shareholder value and there'll be a number of considerations.
Speaker Change: Return to shareholders could be one of it.
They might be other options that would be considered. And of course, you know, risk associated with those different strategies will be evaluated when compared to the benefit, but ultimately it's to drive shareholder value.
Yeah, and when we're all taking the last part of the question on UC and I'm a solo mod. We believe that when we look at the UC market and you see where it is today growing at a degree of probably about 8%.
By the time we can bring out Miss Hill to market at the end of the decade, the market probably is around 12 billion. We believe we can take a share of that.
Despite the availability of proof therapies, you know, respond to, to therapies today is variable and changes over time.
If you look at the data that we had on our Phase 2, we like the data as you know the study was designed from mild to moderate.
So we're really pleased with that data and we are continuing, you know, we submitted the draft protocol on phase 3.
To the FDA, we are working with the PNDA later in November to finalize that and the team is put together a plan to move it forward into Phase 3.
So we're excited about it, the data is good and we think we can take a piece of a 12 billion dollar market by the end of the decade.
Speaker Change: Operator next question.
The next question is from David and Selam from Piper Chandler. David, your line is live, please go ahead. Thank you. I wanted to visit an earlier question about the business.
in a post-safax in the world. Maybe I'll sort of come at it for a different angle, which is what is the extent to which you can.
I'm addressed the car side of the business once
and the effects of the activity, whether that is cuts to the sales infrastructure.
and James on the AR&D. But just in general, help us understand how you're thinking about the cost structure once the taxing loses its vicinity in the 28th, 28th time current. Thank you.
Thanks David for the question. I'll start it off and then JJ can add his thoughts as well. As you know, since I took over the CEO, the idea that we have been...
You know, putting and a culture we've been putting in this company is a fit for purpose model. So every day...
We are looking at the opportunities we have where we can reduce costs and where we can invest that back into the business and I can give you a series of things that we have done over the last two years of taking that and investing it back into our franchises.
As we start looking to the LOA on Zyfaction, I've already spoken about the Red Sea program and the excitement we have behind it and the unmet need there.
and that as we work this through trying to get Red Sea approved prior to the L-O-E on diffaxing will be the goal. As we look...
Speaker Change: You know, into the future we will always be looking at a fit for purpose model and how we model that. Also, when you look at our businesses,
Speaker Change: The International Business is not affected by L.O.E.'s and the investments that can be made there to grow. And we are fit for purpose there. If you look at the opportunities to grow with our Sulta franchise, we have to continue to invest behind that.
So we look at the US business and we look at what we generate out of our neuro franchise. It's a fit for purpose model today and we continue to evaluate that as I've said in...
in my prepared remarks, you know, looking for profitable scripts and growth and we have made changes there.
So, you know, overall as we move and we'll see what business development opportunities there are some really interesting things that we're looking at that can be brought into the franchise as we are the liver experts in OHE. We have a great opportunity there and there's some really nice assets. So, we will be looking and continuing to be guided by the principle of fit for purpose model as we move to an LOE on Zyfaxon. JJ, you want to comment any further on that?
JJ: I think you've covered it, there are two separate decisions.
That need to be taken the first one is what is your appropriate level of expenses associated with the business line that we are looking at.
Speaker Change: and then a reinvestment of savings that might be generated, depending on the outlook that we're seeing for that other business or end franchise. And of course, they are on number of variables, which...
Speaker Change: One of them being our on-dem program and whether Red Sea will turn into a profitable asset for us. All cost of our ability is just a madreff.
Speaker Change: Looking at a long enough timeline and we are managing this constantly. We're not waiting for the effects and to come up pattern. The productivity mindset is something that we apply to every business every day and of course.
Before we take out capability in the business, we want to make sure that that capability is not useful elsewhere in our portfolio.
Speaker Change: Operator next question.
Certainly the next question is from Glenn Santanzelo from Jeffries. Glenn, your line is live. Please go ahead.
Oh yeah, thanks for taking my question. Hey Thomas, just go make sure I'm clear in what you're saying with respect to the timing with respect as I facts and I mean if we go back and we look at the amnile and norm which findings
Speaker Change: If we consider the 30 months thing, which you seem to be pretty convinced on, does that take us to 1 Q 27? And then, if we assume you have some additional patent that you'd like to enforce or some type of an appeals process. I mean, it's all the sort of pointing to your confidence in 1 Q 20 28, with respect to the extent that we do. I have that timeline correct.
at the beginning of the year. Yes, Glenn, sure, thanks for the question. As I said on the previous question is, you know, the current state of play with Norwich where it stands, what I would say is, you know,
Speaker Change: Remember, Teva still has the, you know, has first file or status.
So, you know, that's, you know, that's out there as well and you know, I don't want to speculate on our strategies of what we think.
But, you know, clearly we believe and we're going to vigorously defend our patents.
and Phil January 1 of 2028. But we have to, as I said, you know, Teva is out there and that is still something that we continue to pursue.
Speaker Change: Next question, maybe, yeah, sir, sure, go ahead.
Yeah, I just can maybe ask one question on the legal side. I mean, I, you know, obviously a lot of news floating around there on BLCO and I, I fully appreciate you can't comment at all on that. But I just want to ask with respect to the co-op and maybe the fraudulent conveyance loss. And we don't really talk about that as much anymore. Would you sort of classify those situations as kind of dormant until maybe those stakeholders ultimately see if and when anything happens to BLCO?
Yeah, so what I would say is, you know, the cases are, you know, indiscouvery, you know, at the present time. So beyond that, I can't comment, you know, more than that.
Speaker Change: Okay, thanks.
Next question.
The last question will come from Michael Freeman from Raymond James. Michael, your line is live, please go ahead.
Michael Freeman: Hey Thomas JJ, thanks for taking the question and congrats on some good growth disorder.
You mentioned looking at a specific or more specific indication for the Red Sea program and I wonder if you could outline some of your action offers selecting this specific population as a first AT prevention target for Red Sea and maybe describe how.
It will best situate you to sort of tackle this vacation and quick and pretty potent way.
Speaker Change: Sure Mike, thanks for the question.
When we looked at it and if you look at OH and what we've been able to do with a faxon
You know, the only treatment approved for OH.
You know what we did, you know, really looked at how we could maximize the value of this great product, you could create asset, of course, developing.
You know, our new formulation, the SSD formulation, you know, and how that can work within the loom and but if you look at 4.5 million people or diagnosed with cirrhosis in the United States
with probably over 112 million worldwide. So hospitalizations do this disease.
you know, cause the healthcare you know systems.
Billions of dollars each year.
Speaker Change: So with that, with this great product, with, you know, what, how we can help patients here. And there's no therapy approved today to prevent, you know, cirrhosis patients from, you know, moving from compensated cirrhosis to the most serious, which is decomposition.
So we believe we can help patients here.
and we also are able to help the healthcare systems as well. So if you look at, we have...
Speaker Change: This study is over a thousand patients globally to studies. You know, we have a primary endpoint and we have some very interesting secondary endpoints.
and believe that the secondary influence, when we take a look at it, you know, time to all close hospitalization or time to first the Van of OHE, the requires hospitalization, we believe we can really help patients here and also be able to create value for health providers, you know, hospitalization and the cost of what an OHE patient costs.
The System. So it is a real interesting program as I said in my prepare remarks. I was just at the meeting in Philadelphia. A lot of excitement around it and discussions around as we perceive with the trial.
So, we're looking forward to bringing you and others updates in the future on this great program.
and the next one.
Yes, sorry, go ahead and might you have another question.
is very quickly. I noticed that there were $96 million mental acquisitions this quarter. I wonder if you could describe the content of the acquisitions.
Yeah, this is a BLTO, it's nothing to do with the BHC XBLC.
Call it, thank you.
Okay, so with that, there's no further questions. I just would like to conclude the call. What I would like to say is we appreciate everyone joining the call this afternoon and we thank you for your questions.
You know, we had our sixth consecutive quarter of year over year growth with strong execution that allowed us to raise our full year guidance.
We are focused on our strategic priorities and delivering against our commitments promising and delivering. We intend to build on this momentum to close the year, continuing to position our business for excellence.
Look, I really look forward to keeping you up to date and thanking you for your interest in and support of our company. Have a good evening.
Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.