Organon & Co.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Organon fourth quarter and full year 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. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Jennifer Halchick, Vice President, Investor Relations. Please begin your conference.

Thank you, Dennis. Good morning, everyone. Thank you for joining Organon's fourth quarter and full year 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 will 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 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 including 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 to today's call, where we'll talk about our fourth quarter and full year 2022 results. To begin with, I'm exceptionally proud of Organoz's performance in our first full year as a standalone company. For the full year 2022, we delivered a 4% increase in total company revenue at constant currency. We also demonstrated strong profitability, generating an adjusted EBITDA of $2.1 billion, representing a 33.8% margin. We delivered strong growth in our women's health and biosimilars portfolios, as well as we grew our established brand business. Starting with women's health. For the full year 2022, the women's health franchise delivered 7% growth on a constant currency basis. This includes $834 million of revenue from Nexplanon, which grew 11% in 2022 at constant currency. This marks Nexplanon's second consecutive year of double-digit growth. That is a significant achievement for a product that has been around for over a decade and relies on continually attracting new patients to the product. We are seeing particular strength outside the U.S. where Nexplanon grew 17% in 2022, especially in our Lamera region where improved access is helping to drive demand. In the U.S., Nexplanon grew 8% in 2022 and continues to gain share in the LARC, or the long-acting reversible contraceptive market. In 2022, we also trained more than 20,000 healthcare providers to insert Nexplanon, and we will continue to train more providers in 2023. Importantly, we continue to hone our go-to-market strategy, emphasizing follow-on reviews with healthcare providers, actively prescribing Nexplanon, for whom additional training may strengthen their comfort in prescribing Nexplanon. We continue to monitor the impact of the overturn of Roe v. Wade on the contraception market. Since July 2022, we have seen demand growth for Nexplanon in the most restricted states as well as protected and semi-restricted states. This speaks to the need, now more than ever, for highly efficacious forms of contraception. In real-world use, Nexplanon is over 99% effective in preventing pregnancies compared with some forms of short-acting contraceptives where efficacy is less than 80%. That is in part because when women use a long-acting contraceptive like Nexplanon, it takes the patient-dependent aspect out of it. Nexplanon is inserted within minutes and currently provides efficacious, continuous efficacy for up to three years. We also believe we will be successful in demonstrating the five-year efficacy through our ongoing study. But importantly, it wasn't just Nexmon that continued the growth in women's health in 2022. We continue to see good contributions from the fertility portfolio, which in 2022 grew approximately 9% in cost and currency, despite the impact of COVID in China, which limits patients' ability to begin or continue treatment at fertility clinics. The U.S. and China are large fertility markets and together represent more than half of our current fertility business. China is a particularly important fertility market for us with the potential to grow to more than a million IVF cycles a year over the next decade. The number of cycles in China is already three times the number of cycles in the U.S. And as we have discussed many times before, fertility is a therapy area with strong demographic tailings. Women are waiting longer. to start their families resulting in higher prevalence of infertility and more governments are realizing that they need to take action to address the associated low birth rates. More than 100 countries around the world have a fertility rate or the number of births per woman that is significantly below the replacement rate that is required to sustain a population and its GDP growth. Countries are offering more monetary incentives for households to expand their families and many are offering better fertility access and benefits. Organon is one of the few companies with a portfolio to help serve this growing market. The women's health franchise is also benefiting from our business development activities. As we think about business development, we are striving for balance between commercialized assets and earlier stage assets that could become significant growth catalysts for Organon in the longer term. Since SPIN, through business development, We have added three assets to our Women's Health portfolio that are already contributing or will soon be contributing to revenue growth. You will recall that last year we reacquired the rights to Marvalon and Mersalon, which are combined oral contraceptives in selected territories in Asia, including China and Vietnam. Together, Marvalon and Mersalon grew 20% in 2022. The success from the repatriation of these assets is just another example of how Organon is applying its own methodologies to maximize the performance of assets that may have been under-prioritized in other companies in the past. We are also very excited about the Jada system, which we added to our portfolio in 2021 with the acquisition of Olivia Health. Jada is a device indicated to provide control and treatment of abnormal postpartum uterine bleeding or hemorrhage. And postpartum hemorrhage is one of the most common complications of birth requiring pharmacologic treatment in up to 10% of mothers. At last week's annual meeting for the Society for Maternal Fetal Medicine, researchers unveiled the results of the Ruby Study, which examined Jada's efficacy and safety in real-world use. In the Ruby Study, researchers analyzed a large population of 800 women who were treated with the device from October 2020 to April 2022 at 16 hospitals across the United States. Researchers concluded that Jada worked quickly and was highly effective in controlling postpartum hemorrhage after both vaginal and cesarean births. Researchers also found that the device successfully treated postpartum hemorrhage in 92.5% of vaginal births and 83.7% of cesarean births. In addition, the device was safe and only had to remain in place for a few hours after placement, allowing for a more efficient postpartum care experience. Our goals in acquiring JADA included the opportunity to speed up access to this innovation in the U.S., and to leverage our global capability to bring this product to markets around the world. We continue to add accounts and are now at about 1,000 hospitals in the US with more than 15,000 mothers having been treated with Jada. Additionally, in 2022, we made our first XUS shipments and have also submitted to the EU for approval. We're also pursuing earlier stage assets that address the areas of highest unmet medical needs and have the potential to expand our portfolio in women's health. Since SPIN, we've added four earlier stage assets in the women's health portfolio at different stages of development. The farthest along is OG6219, a unique new mechanism of action, which is a candidate to treat endometriosis locally instead of systemically. In October 2022, we enrolled the first patient in our Phase II Elena study, which is expected to be completed by the end of 2024. Turning to biosimilars. Our biosimilars franchise grew 17% on a constant currency basis in 2022, marking its second consecutive year of double-digit growth. Biosimilars are an important growth driver for the company, and in 2022, we underscored our commitment to the business by adding a second R&D partner with Shanghai Henleus. All five of our biosimilars contributed to the strong performance in 2022, Renflexis, our largest selling biosimilar, grew 22% last year, driven by solid performance in the US and Canada, despite already being on the market for five plus years. Entrezant, our second largest biosimilar, grew more than 40% in the US, but that growth was offset by competitive pressures in Europe. Hadlima, our biosimilar for Humira, had a very strong performance in 2022, reflecting its successful 2021 launch in Canada and Australia. We expect that our success in those markets will help with provider confidence when we launch Hedlima in the US in July of this year. Because Humira is the largest biologic to face biosimilar competition in the US, we are frequently asked about the competitive position with Hedlima. To reiterate our messaging, we believe that the best position biosimilars will be those that share the same attributes as the originator. That includes the option for high concentration citrate pre-formulation, as well as a low concentration formulation, and we expect to have both at launch. We also believe that real-world evidence and experience in other markets will be something that providers will appreciate. We have that data through our collaborator, Samsung BioWeb, as from their experience with Hadlema in the EU, as well as from our own successful launches in Canada and Australia. And finally, we believe our pen design can be a differentiator for patients. Samsung is an expert in device design and manufacturing and has designed a pen with the aim of providing a frictionless experience for new patients and those transitioning from Humira. That said, with multiple parties launching mid-year, we have also conveyed our belief that 2023 will be a modest ramp-up year with the market for biosimilars really forming in 2024 and 2025 and beyond. Finally, let's talk about established brands, which currently represents about two-thirds of our overall business and generates significant free cash flow. The portfolio continues to demonstrate the sustainability and untapped potential of these brands. Over the longer term, given the maturity of the portfolio, we expect close to flat performance for our established brands business. In 2022, we benefited from some one-time events, as well as from delayed VBP implementation that helped the franchise deliver growth of 3% at constant currency for the full year. In the near term, as we think about 2023, we believe we will be able to offset the expected impact from round seven of VPP with continued focus on maximizing the potential of these well-known brands through continuous demand generation. And we expect the established brands to act to achieve generally flat performance in 2023 on a constant currency basis. Briefly turning to geographic performance, there are two important takeaways here. Geographic risk in our revenue is well distributed, and two, each of these geographic regions grew in 2022. That includes China, which faced significant challenges related to COVID in 2022. As we think about 2023, we believe that strength in the retail channel, growth in fertility, as well as the benefits from the reacquisition of Marvalon and Mersalon will together offset the expected VBP impact to our China business in 2023. We are extremely proud of our 2022 achievements, and I want to thank our 10,000 founders worldwide for rising together, for living our purpose, and for delivering the success Organon had in our first full year as a standalone company. I'd like to now turn the call over to Matt. Thank you.