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Valeant Pharmaceutical
International, Inc.
November 19, 20141
Jefferies 2014 Global Healthcare Conference
Forward-Looking StatementsThis 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 offer to acquire Allergan, its financing of the proposed transaction, its expected future
performance (including expected results of operations and financial guidance), 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 the company’s most recent annual or quarterly report filed with 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 the offer and the second-step merger, including the ultimate removal or the failure to render inapplicable the obstacles to consummation of the
offer and the second-step merger described in the offer to exchange;
• 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 proposed 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 transactions;
• the ability to obtain regulatory approvals and meet other conditions to the offer, including the necessary stockholder approval, on a timely basis;
• Valeant’s 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.
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Who We Are
Focused, multinational specialty pharmaceutical company
$45B+ Market Cap
Headquartered in Laval, Quebec, Canada (NYSE/TSX: VRX)
What makes Valeant different?
Unique decentralized operating model
Geographical and product diversity
Track record of value-added M&A
Significant cash pay component / low exposure to government reimbursement
Limited patent risk
Substantial emerging market presence
Proven track record of delivering industry leading returns to
shareholders
Based on projected 2014 revenues excluding Aesthetic Injectables
Public Pay25%
1 Includes contact lens, and surgical devices
75
Asia
Latin
America
Central &
Eastern
Europe/
Middle East/
Africa
United
States
Canada /
Australia
By Geography By Business
47%
21%11%
7%
7%
17%
19%
43%
17%
Devices 1
Gx/BGx
OTC /
Solutions
Rx11%
Western
Europe
Emerging Markets = ~27%
Highly Diversified Business Portfolio
4
Strong Growth Platforms
Developed Markets Emerging Markets
Derm Rx
Consumer
Eye Health
Dental
Latin America
Brazil
Mexico
EMEA
Russia/ CIS
Poland
Turkey
Middle East
Asia/South Africa
China
Vietnam
Indonesia
South Africa
Aesthetics
Neuro & Other
5
Valeant Operating Principles
Put patients and our customers first by maintaining the highest ethical standards in the
industry
Select high-growth business segments (therapeutic areas and geographies) where the
healthcare professional is still the primary decision maker
Maintain a bias toward durable products that are largely cash pay, or are reimbursed
through private insurance
Focus our resources on bringing new products to the market (output), not R&D spend
(input)
Maintain a decentralized operating model to ensure decisions are made close to the
customer
Focus our promotional spending on customer-facing activities
Measure all of our operating units on organic growth and cash flow generation
Require Internal Rates of Return (IRR) significantly above our cost of capital, coupled
with short-term cash paybacks for all of our deals
Directly link senior management compensation to long-term stockholder returns
Ensure tight controls and rigorous compliance standards while avoiding overspending
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Valeant’s Decentralized Model has Delivered Strong
Organic Growth Performance
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Great people who care about patients and doctors
Decisions made closer to the customer rather than
by centralized functions
A different operating model:
Committed to R&D, focused on “outputs” not
“inputs”
Lean cost structure
Decentralized organization
“International” not “global”
Durable products
High-growth markets
Therapeutic areas/geographies where
physician-patient relationships matter
Capital allocation decisions through
shareholder filter
Relentless focus on organic growth and creating
shareholder value
Shareholder friendly governance and
compensation program
Major institutional shareholder on the board
(ValueAct)
Stock based compensation tied to multi-year
returns in excess of cost of equity
~ 2,000%+ price adjusted increase in Valeant
share price since 2008 (1)
Organic growth of 7% on average since 2010
Aggregate growth of 49% in emerging markets
from 2011-2013
20 new product launches in 2014 – significantly
more than our competitors and Allergan
Maintained or accelerated revenue growth for
every platform acquisition
Bausch + Lomb’s organic growth has
accelerated from 4% to 10%+ since acquisition,
almost exclusively through volume growth
Attractive product and payor mix (85% durable
products portfolio; 75% cash/privately
reimbursed)
Valeant’s Strategy & Operating Model Proof Points
Note
(1) Total return analysis per Bloomberg based on a start date of 2 January 2008 to unaffected share prices of Valeant as of 10 April 2014 the day before Pershing
Square crossed the 5% schedule 13D ownership level
Valeant 2014 U.S. Launch Products –Peak Sales of $1.3 - $2.3 Billion
Product Description Source Est. peak sales ($M)
Bensal HP® Dermatitis, wound healing Partnered from SMG 25-75
Luzu®Topical antifungal for athlete’s
footMedicis 50-75
Neotensil™Topical product for under-eye
bagsPartnered from Living Proof 80-100
Obagi360™ SystemSkincare kit for women in their
30’sIn-house 10-30
Retin-A Micro® .08% Topical treatment for acne In-house 20-30
Jublia®Topical antifungal for
onychomycosisIn-house 300-800
Ideal Implants Breast implant Partnered from Ideal Implant 25-75
Hyaluronic acid for lips Small particle filler Medicis 20-30
Onexton™ Topical treatment for acne In-house 50-75
enVista™ inserter (lens) Further enhancements Bausch + Lomb 40-50
PureVision2 for Presbyopia Daily contact lens Bausch + Lomb 20-30
Victus™ enhancements Multiple enhancements Bausch + Lomb 100-200
Ultra™ Silicone hydrogel monthly lens Bausch + Lomb 300-400
BioTrue® multifocal Daily contact lens Bausch + Lomb 60-80
Trulign™ expanded ranges
(lens)Broader range of powers Bausch + Lomb 40-60
CeraVe® baby line OTC moisturizer In-house 15-20
Peroxiclear™Peroxide based contact lens
solution Bausch + Lomb 50-70
Ossix® Plus Dental membrane Partnered from Datum Dental 10-20
Onset® Dental analgesic Acquired from Onset 40-50
Total $1,255M-2,270M
Source: Valeant management estimates 8
9
asd
Physician Website
Physician
eBlast/BannersPhysician Journal Ads
Speaker Programs
Webinars
Medical Education
Ad Boards
Consumer Website Consumer Banners Consumer Print
Physician Campaign
JUBLIA Growth Accelerating by Comprehensive Campaign
Print and digital advertising rolled out 2H Q3
TV advertising materials recently began to air
Salesforce focused on Jublia
U.S.: ~60 person podiatry and ~90 dermatology reps; Canada: ~ 25 dermatology reps
Decision to shift spend from a contracted primary care sales force to additional dermatology reps
and consumer advertising
Consumer Campaign
Update on Other U.S. Product Launches
Bausch + Lomb Ultra
Expanding sales force by 50% to reach peak distribution
Lines 1 and 2 being installed; lines 3 and 4 ordered
Commercial quantities from line 1 expected Q2 2015
Selling to capacity (pilot line)
BioTrue ONEday – contact lens
2nd consecutive quarter with greater than 90% growth
BioTrue Multi-purpose Solution
Grew 56% Q/Q pro forma
TrulignTM Toric IOL
213% Q/Q pro forma growth
Victus
28 Victus machines expected to be installed in 2014, compared
with 14 installed in 2013
CeraVe BabyTM (Q1), Peroxiclear (Q2) ® and SootheXPTM (Q3)
Continue to promote to and gain recommendations from
dermatologists and eye care professionals
Sales and market share building
Focusing on R&D Output Rather than Input
Traditional Big Pharma input-driven
approach
▪ Focus on shots on goal
▪ Higher spend levels assumed to
generate more new products
▪ Incentives linked to investment levels
▪ High fixed cost/in-house model
– All capabilities in-house
– Staff for peak workloads
Valeant’s output focused approach
▪ Focus on productivity – outputs
measured against inputs
– Lower risk projects
– Decentralization helps ensure right
products for right markets
– Focus on line extensions and new
indications
▪ Portfolio prioritization via rigorous,
unbiased peer scientific review
▪ Leveraging industry capacity
– Outsourcing commodity services
– Staff for base needs, outsource for
peak workloads
With overall industry R&D
productivity steadily declining,
traditional bets on R&D are unlikely
to pay off
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Valeant Late Stage R&D Portfolio
Product Category Description Expected launch year
Cirle 3D Navigation Eye HealthCataract and refractory surgical
navigations2015
EnVista Toric Eye Health Toric IOL 2015/2016
Brimonidine Eye Health Eye Whitening OTC 2016
Vesneo Eye Health Glaucoma 2016
Lotemax Gel Nex Gen (.38) Eye HealthPost-Operative Inflammation and
Pain2016
Ultra Multi Focal, Toric, and Plus
PowersEye Health Contact Lens 2015/2016
IDP-118 Derm Psoriasis 2017
Emerade Allergy Anaphylaxis 2016
Ocuvite Gummy ConsumerGummy formulation of leading
vitamin2015
CeraVe Consumer Cleansing bar 2015
CeraVe Consumer
SA Cleanser, Baby Cream, Baby
Sunscreen SPF 45, Night
Cream, Anti-Itch
2015-2016
Source: Valeant management estimates 12
Q3 2014 Results
Q3 2014 Q3 2013 % Growth
Total Revenue $2.1 B $1.5 B 33%
Cash EPS $2.11 $1.43 48%
GAAP Cash Flow from Operations $619 M $202 M 207%
Adjusted Cash Flow from Operations $771 M $408 M 89%
Cash Conversion 107% 84%
Q3 2014 Organic Growth Including All Generic Impact
(a) As reported.
(b) Excludes injectables for Q1 in YTD organic growth.
Same Store Sales – YoY growth rates for businesses that have been owned for one year or more
Q1 2014(a) Q2 2014(a) Q3 2014 YTD 2014(b)
Total U.S. 2% 5% 29% 15%
Total Developed 1% 2% 22% 11%
Total Emerging Markets 3% 8% 12% 9%
Total Company 1% 4% 19% 11%
Pro Forma – YoY growth rates for entire business, including those that have been acquired within the last year
Q1 2014(a) Q2 2014 (a) Q3 2014 YTD 2014 (b)
Total U.S. 3% 9% 24% 13%
Total Developed 3% 7% 18% 10%
Total Emerging Markets 4% 10% 9% 8%
Total Company 4% 8% 16% 10%
Bausch + Lomb Organic Growth
(adjusted for only FX)
Country/Region Q3 2014
Product
Sales
Y/Y% Since
Ownership
(8/5/13)
CAGR
United States $369M 18% 12%
Consumer $104M 17% 13%
Rx Pharma $107M 25% 9%
Surgical $53M 10% 12%
Contact Lens $45M 23% 14%
Generics $60M 12% 17%
Other Developed
Markets
$256M 5% 5%
Emerging Markets $217M 11% 13%
Total $843M 12% 10%
Valeant Standalone Projections (1/2)
2013 2014
Midpoint
2015
Midpoint
2016
Revenue
Growth$5.8B
~$8.2B
41%
~$9.6B
17%
~$12.0B
25%
Cash EPS $6.24 ~$8.27 ~$10.35 ~$13.30
Growth 33% 25% 29%
Adj. Cash Flow from
Operations$1.8B ~$2.5B ~$3.2B ~$4.2B
We reviewed two cases: 1) Debt Repayment and 2) Acquisition
1) Debt Repayment Case:
2015/2016 high single-digit / low double-digit organic growth
Cash EPS growth of >20% in 2015 and 2016
90% of free cash flow used to pay down debt
Leverage decreases to 2.7x in 2015 and 1.8x in 2016
2) Acquisition Case:
Assumes acquisitions of ~$6B in 2015, ~$11B in 2016
Leverage stays at ~4.0x or below
Businesses acquired at ~3.0x sales, mid-year
Cash EPS growth of ~30% in 2015 and > 35% in 2016
Below shows the midpoint of the two cases
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Valeant Standalone Projections (2/2)
2013 2014 2015 2016
Debt Repayment Case
Revenue
Growth
$5.8B ~$8.2B
41%
~$9.1B
11%
~$9.9B
9%
Cash EPS $6.24 ~$8.27 ~$10.00 ~$12.05
Growth 33% 21% 21%
Adj. Cash Flow from
Operations$1.8B ~$2.5B ~$3.1B ~$3.8B
Net Debt $17.0B ~$15.4B ~$12.9B ~$9.4B
Acquisition Case
Acquisitions ~$6.3B ~$11.3B
Revenue
Growth$5.8B
~$8.2B
41%
~$10.1B
23%
~$14.0B
39%
Cash EPS $6.24 ~$8.27 ~$10.70 ~$14.50
Growth 33% 29% 36%
Adj. Cash Flow from
Operations$1.8B ~$2.5B ~$3.2B ~$4.5B
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$0
$20
$40
$60
$80
$100
$120
$140
1-Feb-08 1-Feb-09 1-Feb-10 1-Feb-11 1-Feb-12 1-Feb-13 1-Feb-14
VRX
Valeant’s Execution Track Record
Valeant Management Team Performance*
USD
>2,000% price
adjusted increase in
VRX share price
(Feb 2008 to today)
Consistently
exceeded
expectations
*Adjusted for Valeant/Biovail merger.
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