Organon & Co.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Organon First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Jennifer Halchuk, Vice President, Investor Relations. Please begin your conference.

Thank you, Mary, and good morning, everyone. Thank you for joining Organon's first quarter 2022 earnings call. With me today are Kevin Ali, Organon's Chief Executive Officer, who will cover strategy and operational highlights, and Matt Walsh, our Chief Financial Officer, who will review performance, guidance, and capital allocations. Dr. Sandra Milligan, Organon's head of R&D, will also be joining us for the Q&A portion of this call. 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 10-K and subsequent periodic filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered as 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'd now like to turn the call over to our CEO, Kevin Ali.

Good morning, everyone, and thank you, Jen. Welcome to today's call, where we will talk about our first quarter 2022 results. For the first quarter of 2022, revenue came in at $1.6 billion, up 8%. at constant currency. And adjusted EBITDA was $647 million, representing a 41.3 adjusted EBITDA margin. We had a strong first quarter. The year is off to a great start. And we are reaffirming the full-year guidance ranges we provided back in February. Since our launch almost a year ago, all three of our franchises, Women's Health, BioSimilars, and Established Brands, have been delivering on their objectives, each playing their important role in creating a sustainable company driving forward our vision of improving the health of women. Let's start with fertility and biosimilars, two of our growth pillars. They continue to grow double digits in the quarter, and we expect both to deliver double-digit performance for the full year. We're also very confident in the demand trends we are seeing for Nexplanon that support our view that for the full year 2022, Nexplanon will perform at least as strongly as the 12% growth of constant currency that we saw in 2021. As we've said in prior calls, some of our products, especially in women's health and biosimilars, are subject to the buying patterns of our institutional customers and will vary quarter to quarter. This was evident in the first quarter with Nexplanon in the U.S. We had a price increase go into effect in December 2021. And as you may recall, we had a very strong Q4 of last year, and some volume was pulled forward ahead of that price increase. But demand exiting the first quarter was very strong, and Nexplanon is off to a healthy start in the second quarter and on track to deliver our expected full-year performance. Organon is continuing to bring renewed focus to Nexplanon. This includes our digital marketing efforts aimed at raising awareness among consumers and motivating conversations with healthcare providers, all of which are gaining traction and resulting in increased product demand. Other initiatives include unique social media projects and the recent ability to have a telehealth conversation where women can connect with an independent healthcare provider to discuss Nexplanon and other contraception options. We also continue to evolve our clinical training program offering. In the first quarter, we trained 6,700 new healthcare professionals to perform the one-minute insertion and two-minute removal for Nexplanon. This is more than triple the number trained in the first quarter of last year and well ahead of our pre-pandemic activity. We're also very encouraged about Nexplanon's growth outside of the U.S. Next went on, grew over 30% XFX outside the U.S., driven by performance in Latin America, which benefited from tender phasing but also increased demand. We are seeing very strong demand in important markets like Brazil, which had a record month in March of this year. Continuing our discussion on women's health, fertility both in China and the U.S., two very important markets, grew double digits in the quarter. With women waiting until later in life to have children, the use of assistive reproductive technologies like in vitro fertilization are growing about 5% to 10% annually. It is a large market impacting an estimated 190 million people. It is also an industry with significant brand loyalty. Our products, Follistim, Orgalutron, and Elanver, are well-established and foundational to the patient-friendly GnRH antagonist treatment protocol, which requires fewer injections and is favored in conjunction with egg and embryo freezing. Now let's turn to biosimilars, another growth engine for the company. With about half of our biosimilar business outside of the U.S. and subject to tenders, we will see growth rates vary quarter to quarter. but we expect biosimilars to continue to deliver double-digit performance on an annualized basis. In the U.S., our two offerings are Renflexis, our Infliximab biosimilar, and Entrezant, our Trastuzumab biosimilar. The Infliximab market continues to grow every year, and Renflexis has benefited from that tailwind, with sales still growing even five years after launch. The tristuzumab market has some of the highest adoption rates, about 70% among biosimilars, and the uptake of Entrezon in the U.S. continues to show growth since its launch in 2020. We remain very well positioned as a commercial collaborator with Samsung, and we are particularly encouraged by the planned U.S. launch of our Humira biosimilar in mid-2023, for which we will be undertaking an interchangeability study. We remain committed to pursuing the sizable biosimilar opportunity presented by an estimated $100 billion plus of Blockbuster Biologics going off patent over the next decade. We will evaluate these pipeline opportunities with Samsung as well as other biosimilar developers. Equally important to our growth pillars is the stabilization that we are seeing in our established brand business. This is a basket of 49 important medicines with significant brand loyalty covering multiple therapeutic areas globally. The potential for this sizable part of Organon's business to stabilize was evident to us well before the spin. And that's what we're seeing now. The LOE risk in this portfolio is now behind us. In addition, by maximizing commercial and lifecycle management opportunities, often at a country level, we believe we can manage this business at a sustained, very low single-digit erosion rate over the intermediate term. Matt will walk you through some of the favorable one-time items that contributed to the double-digit growth with established brands in the first quarter. Beneath the one-time favorability, the underlying business performed well. And in light of the outperformance in the first quarter, we expect established brands to deliver close to flat performance for the full year 2022 on a constant currency basis. Critical to our success in established brands is our approach to managing our business in China. Since 2017, we've been focusing our growth strategies on the retail channel, which has been growing double digits and now represents about half of our established brands business in China. There's also strong demand for our products in the hospital channel for those products not yet subject to volume-based procurement. And those products have been growing double digits as well. China represents a very important market for us, and we're well positioned there with a solid retail strategy and good revenue diversification. Overall, there was very solid operating performance from the franchises in the quarter. and I'd like to now provide an update on our external growth initiatives. Consistent with our stated commitment to deliver healthcare interventions that address unmet and undermet needs in women's health, we continue to be active on the business development front, expanding our women's health portfolio beyond contraception and fertility. TODAY, WE'VE BEEN ACTIVE IN CLINICAL STAGE ASSETS LIKE OUR LICENSING OF THE INVESTIGATIONAL EVO PIPPRINT FOR PRETERM LABOR AND OUR COLLABORATION WITH OUR COLLABORATION PARTNER OF SEVA AND THE ACQUISITION OF FORENDO WITH ASSETS IN DEVELOPMENT FOR ENDOMETRIOSIS AND PCOS. THIS IS BALANCED AGAINST OUR NEW COMMERCIAL STAGE PRODUCTS LIKE JADA FOR PPH, MARVALON AND MERCILON AND MOST RECENTLY OUR GLOBAL LICENSING AGREEMENT WITH DARE BIOSCIENCE Now, bacterial vaginosis is the most common cause of vaginitis worldwide. It is estimated to affect 21 million women in the U.S. and can have disruptive symptoms and potentially pose serious health risks. Today, approximately half of the women treated for bacterial vaginosis experience multiple episodes of BV within 12 months of treatment. As evidence of our commitment to the unmet and undermet needs of women, we are licensing DARE Zosciato, which is an FDA-approved medication for the treatment of bacterial vaginosis in women 12 years of age and older. In a phase three clinical trial, Zosciato demonstrated improved clinical cure rates as compared to placebo in a one-time dose. We're looking forward to potential Q4 launch of this product in the U.S. The opportunity with DARE is emblematic of our approach to business development. Our goal is to assemble a suite of options that advance women's health with assets that address unmet needs, including those that may have been overlooked because of patient populations or therapeutic area. Further, we're looking to build a portfolio of assets in various phases of development from clinical stage with blockbuster potential to already commercialized products. Overall, 2022 is off to a very solid start. And at this point, I'd like to turn it over to Matt to review the quarter in more detail. Thank you, Kevin.