Organon & (OGN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2024, revenue was $1.6 billion, reflecting a 5% growth rate at constant currency [5] - Adjusted EBITDA was$ 459 million, representing a 29% adjusted EBITDA margin [5] - Year-to-date free cash flow generated was nearly $700 million, with a target of approximately$ 1 billion for 2024 [6][8] - Adjusted net income was $226 million or$ 0.87 per diluted share, nearly equal to the previous year's $223 million [27] Business Line Data and Key Metrics Changes - Women's health franchise grew 6%, driven by an 11% increase in Nexplanon [5][18] - Biosimilars franchise grew 17%, with expectations for low teens growth for the full year 2024 [20] - Established brands grew 3% in Q3, with expectations for flat to slightly better performance for the full year [21] Market Data and Key Metrics Changes - Nexplanon in the US grew 18% in Q3, with strong demand and pricing strategies contributing to growth [18] - The biosimilars market is expected to see continued uptake of Hadlima in the US, contributing to growth [20] - The established brands segment is facing challenges from the loss of exclusivity of Atozet and pricing revisions in Japan [21][31] Company Strategy and Development Direction - The acquisition of Dermavant and its key asset VTAMA is seen as a strategic move to address the atopic dermatitis market, which has significant unmet needs [9][15] - The company plans to leverage its existing dermatology expertise and expand its presence in the US market [16] - Future growth is expected to be supported by organic growth drivers and contributions from recent business developments [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving$ 1 billion in revenue for Nexplanon next year, indicating strong market positioning [40] - The company anticipates continued revenue growth in 2025, driven by organic growth and contributions from the Dermavant acquisition [8][35] - Management acknowledged challenges from pricing pressures and competitive dynamics in the market but remains optimistic about long-term growth prospects [31] Other Important Information - The company revised its full-year 2024 adjusted EBITDA margin range to 30% to 31% [8] - The impact of foreign exchange translation was approximately $20 million, reflecting a stronger US dollar [25] - The company expects to achieve at least$ 150 million in sales of VTAMA in 2025, with potential growth to $0.5 billion over the next three to five years [15] Q&A Session Summary Question: Current profitability or EBITDA contribution from Dermavant - Management indicated a revenue run rate of approximately$ 6 million per month for VTAMA, with similar levels of dilution expected for 2024 [39] Question: Current political climate regarding LARCs and Nexplanon growth drivers - Management noted strong bipartisan support for access to contraception and expressed confidence in Nexplanon's growth trajectory [40] Question: Leveraging medical derm commercial infrastructure for future acquisitions - Management expressed enthusiasm for the opportunities presented by the Dermavant acquisition and indicated plans to explore additional assets in the dermatology space [42] Question: Incremental selling and marketing costs for Dermavant - Management clarified that the $180 million OpEx for 2025 includes onboarding costs for sales and marketing capabilities, with a focus on successful product launch [45] Question: Ex-US spend included in the$ 180 million OpEx - Management confirmed that the $180 million OpEx is primarily US-focused, with minimal significant spending planned outside the US [49]