| Filed by Valeant Pharmaceuticals International, Inc. (Commission File No. 001-14956) pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934
Subject Company: Allergan, Inc. Commission File No.: 001-10269 |
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Filed by Valeant Pharmaceuticals International, Inc.
(Commission File No. 001-14956) pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934
Second Quarter 2014 Financial Results Conference Call
July 31, 2014
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Forward-looking Statements
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Canadian securities laws. These forward-looking statements include, but are not limited to, statements regarding Valeant Pharmaceuticals International, Inc.’s (“Valeant”) business development activities, including the timing of closing of pending transactions and timing of expected cash payback on completed transactions, plans for commercial investment, clinical results and timing of development products, timing of expected product launches and Valeant’s expected future performance (including expected results of operations, revenue expectations, outlook and financial guidance), and Valeant’s offer to acquire Allergan, Inc. (“Allergan”) and the combined company’s future financial condition, operating results, strategy and plans. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” “seek,” “ongoing,” “upside,” “increases” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results to differ materially from those described in the forward-looking statements. These assumptions, risks and uncertainties include, but are not limited to, assumptions, risks and uncertainties discussed in Valeant’s most recent annual and quarterly report filed with the Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (the “CSA”) and assumptions, risks and uncertainties relating to the proposed merger, as detailed from time to time in Valeant’s filings with the SEC and the CSA, which factors are incorporated herein by reference. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in other reports or documents that we file from time to time with the SEC and the CSA, and include, but are not limited to: the ultimate outcome of any possible transaction between Valeant and Allergan including the possibilities that Valeant will not continue to pursue a transaction with Allergan and that Allergan will reject a transaction with Valeant; if a transaction between Valeant and Allergan were to occur, the ultimate outcome and results of integrating the operations of Valeant and Allergan, the ultimate outcome of Valeant’s pricing and operating strategy applied to Allergan and the ultimate ability to realize synergies; the effects of the business combination of Valeant and Allergan, including the combined company’s future financial condition, operating results, strategy and plans; the effects of governmental regulation on our business or potential business combination transaction; ability to obtain regulatory approvals and meet other closing conditions to the transaction, including all necessary stockholder approvals, on a timely basis; our ability to sustain and grow revenues and cash flow from operations in our markets and to maintain and grow our customer base, the need for innovation and the related capital expenditures and the unpredictable economic conditions in the United States and other markets; the impact of competition from other market participants; the development and commercialization of new products; the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions; and the risks and uncertainties detailed by Allergan with respect to its business as described in its reports and documents filed with the SEC.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this communication or to reflect actual outcomes, expected as required by applicable law.
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More Information
ADDITIONAL INFORMATION
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This communication relates, in part, to the exchange offer which Valeant has made to Allergan stockholders. The exchange offer is being made pursuant to a tender offer statement on Schedule TO (including the offer to exchange, the letter of election and transmittal and other related offer materials) and a registration statement on Form S-4 filed by Valeant with the SEC on June 18, 2014 and with the CSA, as each may be amended from time to time. These materials, as they may be further amended from time to time, contain important information, including the terms and conditions of the offer. In addition, Valeant has filed a preliminary proxy statement with the SEC on June 24, 2014, as may be amended from time to time, Pershing Square Capital Management, L.P. (“Pershing Square”) has filed a definitive solicitation statement with the SEC on July 11, 2014, and a preliminary proxy statement on July 23, 2014, and Valeant and Pershing Square (and, if a negotiated transaction is agreed, Allergan) may file one or more additional proxy statements or other documents with the SEC. This communication is not a substitute for any proxy statement, registration statement, prospectus or other document Valeant, Pershing Square and/or Allergan may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF VALEANT AND ALLERGAN ARE URGED TO READ THE TENDER OFFER STATEMENT, REGISTRATION STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders of Allergan and/or Valeant, as applicable. Investors and security holders will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by Valeant and/or Pershing Square through the web site maintained by the SEC at http://www.sec.gov.
Information regarding the names and interests in Allergan and Valeant of Valeant and persons related to Valeant who may be deemed participants in any solicitation of Allergan or Valeant shareholders in respect of a Valeant proposal for a business combination with Allergan is available in the additional definitive proxy soliciting material in respect of Allergan filed with the SEC by Valeant on April 21, 2014 and May 28, 2014. Information regarding the names and interests in Allergan and Valeant of Pershing Square and persons related to Pershing Square who may be deemed participants in any solicitation of Allergan or Valeant shareholders in respect of a Valeant proposal for a business combination with Allergan is available in additional definitive proxy soliciting material in respect of Allergan filed with the SEC by Pershing Square. The additional definitive proxy soliciting material referred to in this paragraph can be obtained free of charge from the sources indicated above.
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), Valeant uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, In-process research and development, impairments and other charges, (“IPR&D”), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization including intangible asset impairments and other non-cash charges, amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets sold/held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of Valeant’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP reconciliations can be found in our press tables under the Investor Relations tab on www.valeant.com.
Note 1: The guidance in this presentation is only effective as of the date given, July 31, 2014, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance.
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Agenda
1. Second Quarter 2014 Results
2. Outlook for Remainder of 2014
3. Outlook for 2015 and 2016
4. Allergan Update
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Q2 2014 Highlights
Q2 2014 continues to demonstrate the fundamental strength of our base business
Organic growth is accelerating - significantly improved from the first quarter, as expected
Bausch + Lomb has continued its double-digit organic growth trend
17 new products launched in the U.S. year to date
Completed sale of facial injectable assets to Galderma S.A. for $1.4B; recognized a gain of $300M+ in Q3 Capital will be used for Allergan and/or other future business development Received FDA approval for Jublia earlier than expected; stronger than anticipated label Extremely high physician and patient interest since launch Signed three small but critical business development deals in Indonesia, the Middle East and Northern Africa, and colored contact lenses in Asia
Reached agreement with Irish Government and Unions to successfully restructure the Bausch + Lomb contact lens plant in Ireland – much earlier than expected
Waterford cost structure now in line with Rochester
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Q2 2014 Results
Q2 2014 Q/Q%
Total Revenue $2.041 B 86%
Cash EPS $1.91 43%
Adjusted Cash Flow from Operations $500 M 18%
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Q2 2014 Organic Growth
Same Store Sales – Growth rates for businesses that have been owned for one
year or more
Q1 2014 Q2 2014(a) Q2 2014 Ex Generics(a)(b)
Total U.S. 2% 5% 15%
Total Developed 1% 2% 11%
Total Emerging Markets 3% 8% 8%
Total Company 1% 4% 10%
Pro Forma – YoY growth rates for entire business, including those that have
been acquired within the last year
Total U.S. 3% 9% 15%
Total Developed 3% 7% 12%
Total Emerging Markets 4% 10% 10%
Total Company 4% 8% 11%
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Excludes assets held for sale (facial injectables, which declined by $33.7M in Q2). |
(b) Generics excluded are Retin-A Micro® franchise, Vanos® franchise and Wellbutrin® XL (Canada). Although Zovirax® franchise continues to decline, no longer excluded.
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Medicis Overview
Acquired Medicis for ~$2.6B in December 2012
Two main businesses, Medical Dermatology and Aesthetics
Aesthetics
Owned for 1.5 years and sold business for $1.4B1; recognized a gain of $300M+ in Q3
Accelerated growth performance through Q1 2014 versus prior owners Sales in Q2 2014 dropped, as expected, due to:
Publically disclosed business was to be sold, leading to significant uncertainty among physician community (e.g., MVP program) and lower productivity from reps and aesthetics management team Competitors took aggressive pricing actions against business Medical Dermatology Weak performance in 2013 due to: sales force disruption from integration and significant channel inventories (i.e., 6 months of Solodyn in channel) Business has stabilized in 2014 with new management team, with branded market shares increasing across key products:
Jan 1, 2014 July 18, 2014
Solodyn 49% 55% Ziana 60% 62% Zyclara 37% 45%
In addition to existing brands, launched Luzu in 2014; Metronidazole 1.3%, expected to be launched in 2H 2014, combined peak sales of these products are $100M+
Despite early challenges, we expect significant return to shareholders and payback in less than 6 years
1 includes Sculptra
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Q2 2014 Top 20 Global Brands (1/3)
($ in M)
Top 20 products YTD revenue of $1.2B, representing 31% of total revenue
Top 20 products grew 22% Q2 year over year and 14% YTD
>45% of Q2 growth from volume for top 20 products, excluding declining products
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Q2 2014 Top 20 Global Brands (2/3)
($ in M)
Product (a) Q2 2014 Primary Growth Q2 2014 YTD
Revenue Driver Revenue
1) Ocuvite®/PreserVision® $ 65 Volume $125
2) Wellbutrin® $ 64 Price $124
3) Xenazine® US $ 54 Price + Volume $104
4) ReNu Multiplus® $ 49 Flat $104
5) Lotemax® Franchise $ 45 Volume $71
6) Solodyn® $ 43 Declined $95
7) Arestin® $ 30 Price $45
8) Targretin® Capsules $ 29 Price + Volume $44
9) BioTrue® Solution $ 27 Volume $51
10) ArtelacTM $ 27 Volume $51
(a) Excludes products held for sale (e.g., facial injectables)
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Q2 2014 Top 20 Global Brands (3/3)
($ in M)
Product(a) Q2 2014 Primary Growth Q2 2014 YTD
Revenue Driver Revenue
11) CeraVe® $ 26 Price + Volume $ 48
12) Elidel® $ 25 Price $ 51
13) Thermage® Tips $ 21 Volume $ 30
14) Boston Solutions $ 20 Flat $ 39
15) Zovirax Franchise $ 19 Declined $ 59
16) Syprine® $ 18 Price $ 37
17) Acanya® $ 18 Price $ 35
18) Duromine® $ 15 Flat $ 28
19) Excimer $ 15 Volume $ 25
20) Prolensa® $ 13 Volume $ 30
(a) Excludes products held for sale (e.g., facial injectables)
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Q2 Business Highlights – Developed Markets Excluding Bausch + Lomb
U.S. Dermatology +7% growth
YTD market share gains for Acanya, Elidel, Solodyn, Ziana, Zyclara Continued growth of Acanya, Elidel, Targretin Launch of Luzu After four months, Luzu has over 12% share of branded market Includes impact of generics
U.S. VRX Consumer +6% growth
Driven by an exceptionally strong quarter for CeraVe, greater than 20% growth
Dental +15% growth
Growth driven by expanded sales force and new launches
U.S. Neuro and Other +24% growth
Growth supported by promoted brands – Xenazine, Wellbutrin XL® and Syprine Both price and volume
Canada / Australia (13)% growth
Decline in Canada mainly attributable to Wellbutrin XL generic
Australia growth affected by loss of exclusivity for Tambocor ® and Aldara ®
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Q2 Business Highlights – Emerging Markets Excluding Bausch + Lomb
EMENA +12% growth
Rebound in Russia and Poland
Ukraine continues to be challenged – YTD decline in revenues of 22%
Southeast Asia / South Africa +17% growth
Strong growth in all Southeast Asian countries
Flat growth in South Africa, expected to rebound to historical mid teens growth in second half of year
Latin America (3%) growth
Brazil impacted by economic slowdown and increased competition for nutritionals business Temporary decline in Mexico, expected to rebound in second half Delayed regulatory approvals of Atlantis products, which have been moved to Valeant plant Lower sales in Venezuela due to government-imposed currency restrictions
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Bausch + Lomb Q2 – 90% of Growth from Volume
County/Region Q2 2014 Q/Q% Growth Drivers
Product
Sales
United States 14%
Consumer $120M 12% Continued growth in vitamins, and ~35% growth in
BioTrue Multipurpose Solution
Rx Pharma $105M 16% (a) Continued growth in launch products: ~90% Prolensa,
~30% Lotemax
Surgical $56M 12% Strong sales of premium IOLs; new management team
Contact Lens $42M 37%(a) Ultra selling to capacity, strong sales in Biotrue
ONEday (99% growth); new management team
Generics $46M 3%
Other Developed $294M 8% Decentralized model: Japan / Western Europe
Markets
Emerging Markets $228M 13%(a) Decentralized model: China and Middle East
Leveraging VRX large commercial infrastructure:
Russia and Brazil
Total $891M 12%
(a) These growth rates are slightly lower than the preliminary rates presented in the July 18th ISS presentation due to the recording of final gross to net entries.
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Business Development Update
Completed PreCision acquisition in early July
Approximately $100M run-rate sales at time of acquisition
Lost revenue ~ $15M in expected 2014 Sales—due to regulatory process, deal closed two months later than anticipated Lost revenue ~ $10M in expected 2H 2014 Sales—required to divest Tretin-X® and Generic Tretinoin products
Expanding emerging market platform – small but important
South Africa – Protea – closed in July OTC products, primarily women’s health Indonesia – Satu – expected to close Q3 Branded generics
Establishes direct presence in Indonesia, including manufacturing Asia – Bescon – expected to close Q3 Contact lenses, full range of modalities for both clear and color Immediate opportunities in Japan, Korea, China and Southeast Asia Potential to sell colored lenses on global basis
Longer term potential in developed markets, including U.S., for silicone hydrogel daily Middle East – MedPharma – expected to close Q3 Branded generics Expands country coverage, including Saudi Arabia, Egypt, and Jordan Establishes direct presence, including manufacturing
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2014 Product Launch Update (1/3)
Launched 17 products year to date
Dermatology/Aesthetics
Launched Bensal HP®(Q1) Luzu(Q1) Neotensil® (Q1)
Obagi 360™ System (Q1) Jublia (Q3) Retin-A Micro® .08% (Q3)
Planned Launches Ideal Implant® (Q4) Onexton ® (Q4)
Highlights
Strong reception to Jublia; plan to substantially increase launch spend given significant market opportunity 1,325 TRx in third week of launch (ending July 18th) Only package insert being promoted at this time Sales forces in process of being trained Awaiting approval for marketing materials by the FDA
After four months, Luzu has over 12% share of branded market
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2014 Product Launch Update (2/3)
Eye Health
Launched enVista® BLIS™ lens inserter(Q1) PureVision ® 2 for Presbyopia (Q1) Bausch + Lomb Ultra (Q2) Biotrue® ONEday for Presbyopia(Q3) Trulign™ expanded ranges (lens) (Q3) Victus Lens Fragmentation (Q3)
Planned Launches
Additional Victus enhancements (Q3/Q4)
Highlights
Successful start for Ultra Selling to capacity Accelerating delivery and installation of additional lines Biotrue ONEday Strong response to commercial pilots Growth is accelerating Trulign growing premium lens platform Recently launched expanded ranges Strong physician reception to Victus™ Lens Fragmentation
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2014 Product Launch Update (3/3)
Consumer/Oral Health
Launched
CeraVe Baby line (Q1) Peroxiclear (Q2) Soothe XP (Q3) Ossix Plus® (Q1) Onset® (Q1)
Highlights
After 3 months, Peroxiclear has 9% market share in the peroxide segment Strong acceptance of Onset lidocaine pen; over 400 new accounts in last three months Relaunched Soothe XP (OTC) New and improved formulation for dry eye Eye care professionals excited to recommend product again Will be on all major retailer shelves by August Continue to expand CeraVe brand: CeraVe Baby
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Investing for Growth: ~$80M in 2H 2014
Jublia opportunity – larger than expected
Sooner than expected launch with stronger than anticipated label FDA approval received earlier than expected
Partnered with Kaken on manufacturing: greater capacity and better bottle/delivery than original partner Accelerating spend given pending competitor launch Significant opportunity to achieve greater market share and expand market size Stronger than expected interest from physicians and patients Significant opportunity to attract untreated patients Early uptake on Jublia and Luzu well above forecasts
Jublia and Luzu growth investments
Expanding sales forces covering Jublia and Luzu for greater reach and frequency
Building ~60 person podiatry salesforce and ~100 person primary care salesforce, with an additional ~60 dermatology reps selling Jublia and Luzu Major DTC campaign for Jublia, including digital, print and TV
Additional DTC support for Luzu
Early uptake on Jublia and Luzu well above forecasts
Significant increase in professional education, advisory boards, presence at major professional meetings coupled with expansion of medical affairs capabilities
Ultra investments for growth
Addition of ~60 sales reps covering Ultra and BioTrue ONEday
Significant increase in professional education, advisory boards, presence at major professional meetings coupled with expansion of medical affairs capabilities
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Near-Term Pipeline Update (1/2)
Expected
Product Description Update
Launch Date
3D Surgical Navigation Cataract and Refractive Working prototype presented at American
System Surgery 2015 Society of Cataract and Refractive Surgery in
April
CeraVe Hydrating Cleansing Bar 2015 Begins production in November
CeraVe Anti-Itch Cream 2015 All testing completed, ready for production
scale-up
Under eye bag topical, extra
Neotensil Extra Strength strength version of existing 2015 New Formulation
Neotensil
Hair care system including
Living Proof Professional shampoo, conditioner, 2015 New formulation with Living Proof
Hair Care overnight treatment and
mousse
Ultra MultiFocal and Ultra for FDA clearance received; on schedule to meet
Contact Lens 2015 / 2016
Astigmatism expected launch dates
EnVista® Toric Intraocular Lens 2015 / 2016 Premarket and Approval study enrolling
Brimonidine Eye Whitening 2016 Recent completion of Phase 3 studies,
planned NDA submission Q1 2015
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Near-Term Pipeline Update (2/2)
Expected
Product Description Update
Launch Date
Post-Operative Inflammation Recent completion of positive Phase 3 study;
Lotemax Next Gen 2016
and Pain 2nd Phase 3 study on track to start in 2014
Latanaprostene bunod Glaucoma 2016 Phase 3 enrollment complete; expected data
by late Q3 / early Q4
North American development program
Emerade® Anaphylaxis 2016 underway; launched in UK, Sweden and
Germany
Vitrectomy System Vitrectomy Surgery 2016 Prototype design work ongoing, planning proof
of concept for Q4
New Multi-Purpose Solution Contact Lens Solution 2016 New formulation under development; clinical
study to be initiated in 2015
IDP-118 Psoriasis 2017 Phase 2b trial currently enrolling; completed
enrollment expected Q4 2014
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Early Thoughts on Allergan Integration
Apply the Bausch + Lomb Blueprint for the Allergan integration
Learning from our experiences in Medicis and Bausch + Lomb integrations, we will focus on maintaining customer relationships Global Aesthetics team will be largely retained Dry eye and Glaucoma commercial team will be largely retained Neurology & Urology team will be largely retained; will merge Valeant’s neurology business into Allergan’s as we largely use 3rd parties for promotion Dermatology team will be thoughtfully integrated to minimize disturbances to customers Key R&D people (e.g., Botox, Glaucoma) will be retained for high-value R&D programs Synergies will focus on expense reduction and non-customer facing personnel, specifically targeting: Corporate Global functions Regional functions Outside the US, organization will be integrated into our decentralized model
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Financial Outlook
Howard Schiller
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Financial Summary
Product Sales
Ongoing Service/Alliance Revenue
Total Revenue
Cost of Goods Sold% (% of product sales) SG&A% (% of total revenue)
R&D Expense
Operating Margin (% of total revenue)
(excluding amortization) Cash EPS (Reported) Adjusted Cash Flow from Operations Fully Diluted Share Count
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014
$1,064M $1,506M $2,032M $1,851M $1,994M
$32M $35M $32M $35M $47M
$1,096M $1,542M $2,064M $1,886M $2,041M
23% 27% 26% 26% 28%
22% 23% 22% 26% 25%
$24M $49M $60M $61M $66M
52% 47% 49% 45% 44%
$1.34 $1.43 $2.15 $1.76 $1.91
$423M $408M $607M $636M $500
314 M 340 M 341 M 342 M 341M
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Restructuring and Integration Update
Excluding the restructuring of the Waterford, Ireland plant, restructuring and integration costs of $87M for Q2, 36% lower than Q1
$53M for Bausch + Lomb plus $34M of other transactions
Successful completion of labor union contract restructuring at Bausch + Lomb Waterford, Ireland contact lens facility, at end of June, sooner than anticipated
An additional $56M included in Q2 for Waterford
Achieved savings of $29M off total cost base of $132M Waterford cost structure now in line with Rochester
Restructuring costs are expected to continue to decline sequentially in Q3 and Q4, absent any large transactions
Q3 Q4 Q1 Q2 Q3 Q4
Restructuring / $304M $128M $135M $143M < $70M < $50M Integration $87M Pre-Waterford Expense $56M Waterford
There will continue to be timing differences between P&L charges and cash payments, mainly due to timing of severance payments
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Cash Flow from Operations
$M Q1 Q2 1H
Adjusted Net Income 600 651 1,250
Adjusted Cash Flow from Operations 636 500 1,137
Cash Conversion 1.1 0.8 0.9
Working Capital Change (43) (166) (208)
On a YTD basis, cash conversion is in line with guidance of ~90%
Cash conversion in Q1 favorably impacted by increase in accounts payable and accrued liabilities of ~$53M
Cash conversion in Q2 unfavorably impacted by decrease in accounts payable and accrued liabilities of ~$125M
This change was driven by the timing of payments, including the prepayment of
~$50M for a managed care rebate that will reverse in Q3 A/R increase of $55M reflects sales growth from Q1
Days sales outstanding decreased to 66 days from 72 days using quarterly sales and decreased to 60 days from 66 days using monthly sales Investment in inventory decreased to $12M from $69M in Q1, reflecting working capital rationalization efforts at manufacturing and distribution facilities
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Revenue Expectations for Second Half 2014
High single-digit organic growth in second half, including impact of all generics
Total company same store organic growth: Second half of year high single-digit Full year same store growth > 6% Bausch + Lomb organic growth:
Second half of year and full year double-digit growth
Total company same store organic growth, excluding generics, for the 2nd half of the year and full year >10%
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Second Half 2014 Guidance Assumptions
Sold injectables on July 10th , expected $230M in revenues and $.50 Cash EPS in 2H 2014
Closed PreCision two months later than expected and divested two products; combined the delay and divestitures represented a loss of $25M in revenues and $.05 Cash EPS
Early launch of Jublia and other products, ~$80M incremental cost or $.25 Cash EPS in 2H 2014
Exchange rates are based on current spot rates Gross margins in the 73% range SG&A ~ mid 20% of net revenues R&D less than $125M
Tax rate < 5%
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2014 Guidance Adjusted for Recent Events
Q3 and Q4 Revenue Cash EPS Adjusted Cash Flow
from Operations
Current Guidance (4/22/14) $8.3B – $8.7B $8.55 – $8.80 $2.7B – $2.8B
Less: Facial Injectables($230M)($0.50) —
Less: PreCision Delay /($25M)($0.05) —
Divested Products
Less: Incremental —($0.25) —
Investment in New Products
Adjusted 2014 Guidance $8.0B – $8.3B $7.90 – $8.10 $2.3B – $2.6B
Q3 Guidance $1.9B – $2.1B $1.90 – $2.00 —
Q4 Guidance $2.1B – $2.3B $2.35 – $2.45 —
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Outlook for 2015 and 2016 (1/4)
Projected Projected Organic Growth 2015 / 2016 Assumptions
Revenue 2015 (%) 2016 (%)
2014 ($ M)
United States
Dermatology ~ $940 ~ 25-30% ~ 15-20% • Base business ~5% growth
• New/recent product launches:
• Jublia: 2015 ($150M), 2016 ($300M)
• Luzu: 2015 ($50M), 2016 ($70M)
• Onexton, RAM .08%: 2015 ($35M),
2016 ($75M)
• Generic impacts:
• Targretin generic enters mid 2015
• Carac generic enters Q4 2015
• Ziana generic enters mid 2016
• Not included in 2016 forecast:
• IDP-118 (up to ~$100M) for psoriasis
Consumer ~ $600 ~ 10% ~ 10% • Consistent with 2014 growth
Opthalmology Rx ~ $ 450 ~ 10% ~ 20% • 2015 and 2016 base business consistent
with 2014 growth
• 2016 incremental growth reflects launch of
Brimonidine ($50-75M)
• Not included in 2016 forecast:
• Latanoprostene bunod (up to~$100M)
Includes impact of expected generics; assumes no acquisitions
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Outlook for 2015 and 2016 (2/4)
Projected Projected Organic Growth 2015 / 2016 Assumptions
Revenue 2015 (%) 2016 (%)
2014 ($M)
United States
Contact Lenses ~ $175 ~ 15% ~ 20% • Benefit of additional Ultra lines in 2015
and 2016 accelerates organic growth
Surgical ~ $225 ~ 10% ~ 10% • Growth consistent with 2014
• Continued growth of premium IOLs
Neuro & Other / ~ $1,485 ~ 5% ~ 5% • Growth reflects genericization of
Generics Xenazine
Dental ~ $135 ~ 15% ~ 10% • Above trend line growth in 2015 due to
recent sales force expansion
• Trend line growth in 2016
Aesthetics ~ $160 ~ 5-10% ~ 5-10% • Market growth
Includes impact of expected generics; assumes no acquisitions
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Outlook for 2015 and 2016 (3/4)
Projected Projected Organic 2015 / 2016 Assumptions
Revenue Growth
2014 ($M) 2015 (%) 2016 (%)
Other Developed
Western Europe Western Europe/Japan
• Current growth trends
Japan
~$1,780 ~3-5% ~3-5%
Australia Australia/Canada
• Return to historic growth trend pre-
Canada generic impact
Emerging Markets
EMENA ~ $1,150 ~8-10% ~8-10
Asia / South ~$600 ~10-15% ~10-15% Reflects history and expected 2014
Africa growth
Latin America ~$450 ~6-8% ~6-8%
Includes impact of expected generics; assumes no acquisitions
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Outlook for 2015 and 2016 (4/4)
Gross Margin
74% 2015 Reflects impact of cost
75% 2016 improvement initiatives, improved
mix and declining Xenazine revenue
SG&A
Low-mid 20% as percentage of revenue
R&D
~$200 - 250M annual spend
Cash Taxes
5 – 6% Adjusted Net Income
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Valeant Standalone Projections (1/2)
We reviewed two cases: 1) Debt Repayment and 2) Acquisition
1) Debt Repayment Case:
2015/2016 high single-digit organic growth
Cash EPS growth of > 15% in 2015 and ~20% in 2016 90% of free cash flow used to pay down debt Leverage decreases to 2.9x in 2015 and 1.9x in 2016
2) Acquisition Case:
Assumes acquisitions of ~$5B in 2015, ~$10B in 2016 Leverage stays at ~4.0x or below Businesses acquired at ~3.0x sales, mid-year Cash EPS growth of > 20% in 2015 and > 30% in 2016
Below shows the midpoint of the two cases
Midpoint Midpoint
2013 2014 2015 2016
Revenue ~$8.1B ~$9.3B ~$11.4B
$ 5.8B
Growth 40% 15% 23%
Cash EPS $6.24 ~$8.00 ~$9.65 ~$12.30
Growth 28% 21% 27%
Adj. Cash Flow from $ 1.8B ~$2.4B ~$3.0B ~$3.8B
Operations
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Valeant Standalone Projections (2/2)
2013 2014 2015 2016
Debt Repayment Case
Revenue $5.8B ~$8.1B ~$8.9B ~$9.7B
Growth 40% 9% 9%
Cash EPS $6.24 ~$8.00 ~$9.40 ~$11.25
Growth 28% 17% 20%
Adj. Cash Flow from $1.8B ~$2.4B ~$2.9B ~$3.5B
Operations
Net Debt $17.0B ~$15.4B ~$13.0B ~$9.9B
Acquisition Case
Acquisitions ~$5.0B ~$10.0B
Revenue ~$8.1B ~$9.7B ~$13.1B
$5.8B
Growth 40% 19% 35%
Cash EPS $6.24 ~$8.00 ~$9.90 ~$13.35
Growth 28% 24% 35%
Adj. Cash Flow from $1.8B ~$2.4B ~$3.0B ~$4.0B
Operations
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Valeant + Allergan Projections
Valeant’s Assumptions for Allergan
Deal closes December 31, 2014
Assumes midpoint of Allergan’s 7/21/14 guidance for 2014, but does not reflect Allergan guidance for 2015 and 2016 Assumes high single-digit Allergan organic growth in 2015 and 2016 $2.7B in annual cost synergies, with ~80% achieved in first six months
Debt Repayment Case(a)
Cash EPS growth > 20% in 2016
Leverage decreases to 2.9x in 2015 and 1.8x in 2016
2013 2014 2015 2016
Revenue $5.8B ~$8.1B ~$16.6B ~$18.0B
Growth 40% 104% 9%
Cash EPS $6.24 ~$8.00 ~$11.55 ~$14.00
Growth 28% 45% 21%
Adj. Cash Flow from
Operations $1.8B ~$2.4B ~$7.1B ~$8.6B
Net Debt $17.0B ~$34.0B(b) ~$28.2B ~$20.5B
(a) Assumes 90% of free cash flow used to pay down debt. (b) Pro Forma net debt at transaction close on December 31, 2014.
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Valeant + Allergan Projections
Acquisition Case
Reflects Valeant’s same Allergan assumptions as Debt Repayment Case Assumes acquisitions of ~$8B in 2015, ~$10B in 2016 Businesses acquired at ~3.0x sales, mid-year Leverage of ~3.4x year-end 2015, ~2.8x year-end 2016 Cash EPS growth of > 25% in 2016
2013 2014 2015 2016
Acquisitions ~$8.3B ~$10.0B
Revenue $ 5.8B ~$8.1B ~$18.0B ~$22.7B
Growth 40% 121% 26%
Cash EPS $6.24 ~$8.00 ~$12.10 ~$15.65
Growth 28% 51% 29%
Adj. Cash Flow from $ 1.8B ~$2.4B ~$7.3B ~$9.5B
Operations
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Combination Creates Significant Earnings Accretion for Allergan Shareholders
% Accretion from 0.83
exchange and cash
reinvestment
Allergan 2013 EPS $4.77 314%
2016 EPS – Research Earnings
Models as of 4/21/14 (1) $7.27 172%
2016 EPS – Allergan Guidance(2) $10.00 98%
2016 EPS – 0.83 Exchange(3) +$72 per share in cash $11.62
2016 EPS – 0.83 Exchange and $19.77
$72 Cash Reinvestment(3)(4)
(1) Based on Goldman Sachs, Bank of America and Bank of Montreal earnings models as of 4/21/14. (2) Based on Allergan guidance as of 7/21/14.
(3) Valeant + Allergan (combined company) debt repayment case (which does not reflect Allergan’s 7/21/14 guidance for 2015 and 2016), multiplied by 0.83 exchange ratio.
(4) Assumes reinvestment of $72 in Valeant stock at $123.70 share price as of July 29 close.
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Allergan Update
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Allergan Update
Proxy Solicitation for Special Meeting underway
Anticipate requests for Special Meeting to be presented to Allergan in August If requests for Special Meeting greater than 25%, Allergan required to call a Special Meeting within 10 to 120 days At Special Meeting, Allergan stockholders will be requested to pass resolutions to: Remove six members of Allergan’s current board of directors Request the Allergan board of directors appoint a slate of 6 new independent directors Amend Allergan’s bylaws to provide for, among other things, simplified mechanics to call a special meeting Request that the Allergan board of directors promptly engage in good faith discussions with Valeant We remain focused on completing the Allergan transaction
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Second Quarter 2014 Financial Results Conference Call
July 31, 2014
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Appendix: Dermatology Rx
Branded Share Among Dermatologists
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Solodyn Branded Market Share Among Dermatologists
Branded Market Share
DORYX
MINOCIN
MONODOX
SOLODYN
49%
55%
60% 50% 40% 30% 20% 10%
0%
1/10/2014 1/17/2014 1/24/2014 1/31/2014 2/7/2014 2/14/2014 2/21/2014 2/28/2014 3/7/2014 3/14/2014 3/21/2014 3/28/2014 4/4/2014 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 6/20/2014 6/27/2014 7/4/2014 7/11/2014 7/18/2014
Source: PHAST Prescription Weekly & AF Data
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Acanya Branded Market Share Among Dermatologists
Branded Market Share
ACANYA
BENZACLIN DUAC
82% 89%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1/10/2014 1/17/2014 1/24/ 2014 1/31/2014 2/7/2014 2/14/2014 2/21/2014 2/28/2014 3/7/2014 3/14/2014 3/21/2014 3/28/2014 4/4/2014 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 6/20/2014 6/27/2014 7/4/2014 7/11/2014 7/18/2014
9% 2%
Source: PHAST Prescription Weekly & AF Data
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Ziana Branded Market Share Among Dermatologists
Branded Market Share
18% 62% 20% 11% 5% 3%
70% 60% 50% 40% 30% 20% 10% 10% 0%
ZIANA EPIDUO ATRALIN VELTIN TRETIN-X
1/10/2014 1/17/2014 1/24/2014 1/31/2014 2/7/2014 2/14/2014 2/21/2014 2/28/2014 3/7/2014 3/14/2014 3/21/2014 3/28/2014 4/4/2014 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 6/20/2014 6/27/2014 7/4/2014 7/11/2014 7/18/2014
Source: PHAST Prescription Weekly & AF Data
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Elidel Branded Market Share Among Dermatologists
ELIDEL PROTOPIC
Branded Market Share
46% 51% 49%
56% 54% 52% 50% 48% 46% 44% 42% 40%
1/10/2014 1/17/2014 1/24/2014 1/31/2014 2/7/2014 2/14/2014 2/21/2014 2/28/2014 3/7/2014 3/14/2014 3/21/2014 3/28/2014 4/4/2014 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 6/20/2014 6/27/2014 7/4/2014 7/11/2014 7/18/2014
Source: PHAST Prescription Weekly & AF Data
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Zyclara Branded Market Share Among Dermatologists
ZYCLARA ALDARA PICATO
Branded Market Share
37% 54% 45%
70% 60% 50% 40% 30% 20% 10% 0% 1/10/2014 1/17/2014 1/24/2014 1/31/2014 2/7/2014 2/14/2014 2/21/2014 2/28/2014 3/7/2014 3/14/2014 3/21/2014 3/28/2014 4/4/2014 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 6/20/2014 6/27/2014 7/4/2014 7/11/2014 7/18/2014
Source: PHAST Prescription Weekly & AF Data
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