Organon & Co.

Good day and thank you for standing by. Welcome to the Oregon and Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Jennifer Halczak, Vice President of Investor Relations. Please go ahead.

Thank you, Rain. Good morning, everyone. Thank you for joining our second quarter 2021 earnings call. With me today are Kevin Ali, Organon's Chief Executive Officer, and Matt Walsh, our Chief Financial Officer. Today we'll be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call on the events and presentation section of our Organon Investor Relations website at www.organon.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our Form 10 and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our CEO, Kevin Ali.

Good morning, everyone, and thank you, Jen. Welcome and thank you for joining us today. As you may know, after several years in the making, Organon officially spun for Merck on June 2nd and began trading as a public company on June 3rd. So today marks our first earnings call as a standalone public company, and I'm very pleased to be here. Organon's vision is to create a better and healthier everyday for everyone. We have seen how our vision and purpose has connected with so many and continues to motivate thousands of our employees who've been hard at work standing up Organon and at the same time have been focused on driving our business. In the second quarter, Organon generated $1.6 billion of revenue, $627 million of adjusted EBITDA, and $1.72 in adjusted earnings per share. Year to date, all three of our franchises are delivering on their objectives, each playing their role in driving our vision of improving the health of women. Accordingly, today we affirmed the full year 2021 guidance we provided at our May Investor Day. Looking out past 2021, we remain confident in our ability to grow revenue low to mid-single digits on an organic basis. as LOE risk will largely be behind us, and the women's health and biosimilar franchises are positioned to deliver double-digit growth. Today, we also announced an important milestone for Organon. Our board of directors has declared a quarterly dividend of $0.28 per share, which speaks to the cash-generating power and sustainability of our business. Turning to slide five now. Bonu is a standalone company. The 64 products that came to Organon from Merck are trusted, well-recognized medicines, many of them household names. We operate in three franchises. Women's Health and Biosimilar are two growth engines, and Established Brands, which is a portfolio of 49 products that generates sizable and stable cash flows, even though most have already lost exclusivity. Organon endeavors to be a different kind of company, one focused on advancing the health of women. In order to do that, we are broadening our portfolio beyond our already market-leading positions in contraception and fertility. We have already begun to execute on this vision, already completing two transactions in important areas of unmet needs for women. In June, we completed our acquisition of Olivia Health, which is a commercial stage medical device company that received a 510K clearance from the FDA in 2020 for the Jada system, a product intended to control abnormal postpartum bleeding or hemorrhage. We plan to use our global commercial footprint in reproductive health and experience in creating affordable access and to further develop and bring the Jada system to more women around the world. We recently also announced a licensing agreement with Opsiva for the global development, manufacturing, and commercial rights to an investigational agent, Ibuprofen, currently being studied as a potential first-in-class innovation for the treatment of preterm labor. To remind everyone, every year, 15 million babies are born preterm. And although preterm birth rates are on the rise, there are currently no other known compounds in development and no approved therapies for the acute treatment of preterm labor in the United States. As our first development stage asset, Organon intends to leverage its considerable expertise and work with the scientific and medical communities and regulatory authorities in major markets, including the United States, to advance the clinical development and registration of ibuprofen Both of these opportunities fall squarely in line with our business development strategy in size, scale, market opportunity, and to our focus on helping address the most serious unmet needs of women. Our early progress demonstrates how serious we are about our commitment to becoming the leader in women's health and expanding our portfolio beyond contraception and fertility. Turning to slide six now. We can't talk about our women's health portfolio without talking about Nexplanon, the number two contraceptive worldwide by revenue, and a product we believe has blockbuster potential. Nexplanon plays in the LARC market, or otherwise known as the long-acting reversible contraception segment. Globally, the hormonal contraception market continues to see usage shift away from the daily combined oral contraceptive segment towards LARCs. LARCs are highly efficacious and considered to be one of the most effective forms of hormonal contraception available. Nexplanon, or Implanon Next T, as it's known in some markets, is differentiated even within the LARC segment, as it's the only single rod, subdermal, long-acting, reversible contraceptive. It is a progesterone-only rod that is inserted in a woman's upper arm. Average insertion time takes about a minute. and it is conducted in the healthcare provider's office. NexPlanon has exclusivity in the U.S. until 2027 and until 2025 in markets outside of the U.S. Currently, Nexplanon is approved for three years of efficacy, but in November 2020, we began a registration study to evaluate the use of Nexplanon for up to five years. If successful, we believe this will make Nexplanon an attractive contraception option for many more women, including those who are family complete. During the quarter, our fertility portfolio also showed particular strength. We're very encouraged by the early traction, especially in China, where fertility demand is very close to being back to pre-COVID levels. Governments around the world are becoming increasingly active in addressing the fertility issues families can face. Recently, the Chinese government introduced the three-child policy, and next year, Japan will introduce reimbursement for IVF treatments in an attempt to address declining birth rates. The French government also recently passed a bill to allow egg freezing and for same-sex couples to seek IVF treatment. Outside of women's health, we're also encouraged by the growing support for biosimilars. The U.S. biosimilar market continues to grow with increases in physician and payer comfort with biosimilars. Both of the therapeutic areas we compete in, namely immunology and oncology, are seeing increased biosimilar utilization. Though oncology conversion from originator to biosimilars has been faster, for example, trastuzumab, which is where Entrezon plays, has some of the highest adoption rates among biosimilars. We currently see nearly 70% of the trastuzumab market converted to biosimilars. We're well-positioned in the biosimilar market as a commercial collaborator with Samsung Bioweapons. We have a good balance in terms of geographic contribution, so we're not levered to the particular dynamics of any single market. We have balance with the lifecycle of our portfolio, and we have marketed products that are growing, like Renflexus and Entrezant. We have launch assets, like Hadlema in Australia and Canada, which are performing very well. And we have what we believe will be a major pipeline opportunity with our anticipated HEDLIMA launch in the U.S. in 2023. We also continue to evaluate other potential pipeline opportunities with Samsung as well as other partners. And as we think about our established brand portfolio, part of the strategic timing of the spin is that 2021 is an inflection year. It is the last year during which the portfolio is subject to significant new LOE risk. Beyond 2021, the impact from the LOEs dissipates. Further, we have opportunities to soften the erosion curve with continued growth of AttaZ, launches of certain products in selected markets, and other lifecycle management opportunities. We continue to take an entrepreneurial view with regards to the established brands portfolio. And all three franchises are global businesses, as you'll see on the next slide. Asia Pacific was the only geographic region that was down in the quarter, and that was driven by Zetsu's loss of exclusivity in Japan. Our largest region, Europe and Canada, is showing strong double-digit growth, given not only by COVID recovery, but also by volume growth in biosimilars and infertility. The U.S., particularly in Esplanade, benefited from lapping the significant COVID impacts in the second quarter of last year. but also from growth and fertility. The U.S. also showed solid performance in biosimilars, where we offered both Renflexus and Entrezond. In China, we had several positive areas of momentum that more than offset the impact from four of our products being included in the volume-based procurement process in the fourth quarter of last year. We also saw the respiratory market recovering from the negative COVID impact in 2020. Our fertility portfolio outpaced the market in Q2, and the contribution from the retail channel continued to grow. We're actively monitoring the impact of COVID and its variants across the world, but overall, we are very encouraged by how the portfolio is performing. And now, I will turn it over to Matt to discuss our second quarter performance in more detail. Matt?