Organon & Co.

withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Jennifer Holchuk, Head of Investor Relations. You may begin.

Thank you, Operator. Good morning, everyone. Thank you for joining Organon's second quarter 2024 earnings call. With me today are Kevin Ali, Organon's Chief Executive Officer, and Matt Walsh, our Chief Financial Officer. Also joining us for the Q&A portion of this call is Organon's head of R&D, Juan Camilo Arjona-Ferrera. 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 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 to today's call, where we'll talk about our second quarter results. For the second quarter of 2024, revenue was $1.6 billion, representing a 2% growth rate at constant currency. The women's health franchise grew 3%. Our biosimilars franchise grew 22%. And our established brands franchise was down 1%. In the second quarter, adjusted EBITDA was $513 million, representing a 31.9% adjusted EBITDA margin. which includes $15 million of IPR&D expense. Adjusted diluted EPS was $1.12. We have had solid revenue growth in the first half of the year of 4% of constant currency, and we're on track to deliver our third consecutive year of constant currency revenue growth. Given year-to-date performance and our view into the rest of the year, we have narrowed our range for full-year 2024 revenue around the midpoint to $6.25 billion to $6.45 billion. The guidance represents constant currency revenue growth of 2% to 4.7% ex-exchange for the full year. Year-to-date adjusted EBITDA margin was 32.5%, which includes $30 million of IPR&D and milestone expense incurred in the first six months of the year. We are running at the high end of our full year adjusted EBITDA margin range of 31 to 33%, whether you look at it with or without the impact of IPR&D. Year-to-date EBITDA margin performance reflects actions we have taken to contain operating expenses, and the first half of the year also benefited from favorable timing of spend. We expect SG&A expense to pick up in the second half of the year due to planned expenditures related to rolling out new products like the migraine medicines and further investment in Nexplanon. Given that timing, we're holding to our 31% to 33% adjusted EBITDA margin range for the full year. From a capital allocation standpoint, year to date, we're tracking well to our commitment to deliver $1 billion of free cash flow before one-time spin-related costs in 2024. That strong cash flow will provide financial flexibility to comfortably service our dividend, which is our number one capital allocation priority. It also gives us optionality to make discretionary debt repayments and to continue to pursue sensible business development. Let's move now to discuss our franchise performance. Growth in women's health was driven by continued strength in Nexpanon, which is up 13% XFX in the second quarter. Last year, we took action to position Nexpanon for a strong 2024, and that is showing up in year-to-date constant currency growth of 22%. In the U.S., Nexplanon grew 8% in the second quarter. We benefited from Nexplanon's leadership in the U.S. contraception market, our pricing strategy, including management of the 340B discount program, as well as continued physician demand growth. Outside the U.S., Nexplanon grew 27% XFX in the second quarter, primarily driven by our expansion and supply capabilities, and so we are now able to better meet the demand in our access markets which we cited as a priority for us in 2024. But we also benefited from increased demand in countries in the UCAN region. Given strength in performance year to date, we expect Nexplanon can achieve constant currency full-year revenue growth in the low teens. This would be our best year in Nexplanon, and also puts us closer to the $1 billion mark for next year. With regard to the Nexplanon five-year study, the study met its primary endpoints, showing contraceptive effectiveness and no new safety signals. Based on this data, we are beginning to prepare for regulatory submission in the US, EU, and UK. We continue to believe that would put us on track for a potential US launch of the Nexplanon five-year indication in 2026, pending FDA approval. We see this launch as an important event because it would mean that we would have data exclusivity on the five-year claim for three years. That means between 2026 and 2029, no generic with five-year duration could come to the US market. And further, any generic would need to have a different insertion device until our device patent expires in 2030. We remain very optimistic about Nexplanon's future prospects and the expanding potential of the brand. Moving on to other women's health, our global fertility business was down 8% XFX in the second quarter. In the US, we are seeing patient volume in the self-pay market level off. Our business has been shifting towards the reimbursed market, which is largely dominated by PBMs, and we've had good success here. In fact, You may recall that in the fourth quarter of last year, we secured broad access to the largest PBM in the country. Also weighing on U.S. fertility results is that we had a very strong buy-in of Follistim in the fourth quarter of last year that was related to both the onboarding of the large customer as well as to the exit of a spin-related interim operating model. In China, our second largest fertility market, We're seeing a slower than expected rollout of the province-by-province effort to expand reimbursement of procedures using assisted reproductive technology, or ART. But going forward, we remain very optimistic about this initiative expanding to other provinces. We have seen strong double-digit growth in some of the larger provinces where reimbursement has already been implemented, for example, in Beijing. Given year-to-date performance, we believe global fertility performance for the full year will be flat compared to our initial expectations of a high single-digit increase. Still, that guide implies good growth in the second half, which will be coming from gradual uptake of ART reimbursement in China, coupled with lapping a weaker fertility market in China in the second half of last year. We also will benefit from footprint expansion in other international markets. We see 2025 as a rebound year with very strong growth for fertility underpinned by continued ART expanded reimbursement in China, international expansion, and performance in the U.S. that won't have the noise of the IOM exit. Let's move now to our biosimilars franchise, which grew 22% at constant currency in the second quarter and 33% year to date. The exceptionally strong first half performance was driven by continued uptake of Hadlema in the U.S. following the launch in July of last year, along with the timing of an international tender for Entrezant. For the full year, we expect the biosimilar franchise to deliver strong growth in the low teens XFX. U.S. Hadlema sales were $20 million in the second quarter. Throughout the second quarter, Hadlema was a leading Humira biosimilar with regard to total prescriptions, pointing to prescriber preferences for our product. From the first quarter to the second quarter, total prescriptions for Hadlema grew over 60%, consistent with the TRX trend since launch. We are having success because our strategy is focused on stakeholders who want to lower net costs and improve patient affordability. That strategy is paying off, and we are building on our momentum. Regarding the interchangeability status of hadlema, in the U.S., the designation was approved on the low concentration formulation for the pre-filled syringe and single dose file presentations. SAMSUNG continues to navigate the approval of the other presentations, and we continue to expect to have interchangeability on those presentations in the middle of next year as planned as pending FDA approval. On the pipeline side of things, our other partner, Shanghai Henleus Biotech, already filed in the EU for the denosumab biosimilar candidate we licensed in from them. And they plan to file in the US later this year. They anticipate making filings for pertuzumab biosimilar candidate later this year and in 2025. Organon will have exclusive global commercialization rights to these assets outside of mainland China, Hong Kong, Macau, and Taiwan regions. And then rounding out the discussion with established brands, which declined 1% XFX in the second quarter and has grown 1% XFX year to date. So far in the first half of the year, the $40 million contribution from the recent commercialization agreement with Eli Lilly for the two migraine drugs led by Emgality are off to a good start. Also, the recovery in certain injectable steroid products following last year's market action have more than offset expected impacts from VVP, LOE, and mandatory price revisions in Japan. Performance in those products also compensated for unfavorable timing of shipments related to our ERP implementation, which was completed in April. The pushes and pulls on the established brands portfolio tend to be different in every quarter, but since the spin, we have shown that the diversity of our products, geographic span, An entrepreneurial focus leads to very steady results. Entrepreneurial focus encompasses business development opportunities like the migraine assets. We continue to look for those type of transactions where the assets are launch ready, complementary to our existing portfolio, and can enhance the overall growth profile of the company. Moving now to slide six, where we take a look at revenue by geography. UCAN was down 1% XFX in the quarter, though this region benefited the most from the addition of the two migraine assets and the recovery of injectable steroids. It was also the region most affected by unfavorable phasing of sales related to the ERP implementation. The U.S. was up 5% in the quarter, driven by solid performance of Nexplanon, as well as uptake of both Hadlima and Jada. These factors offset price pressure and the channel dynamics in fertility. as well as performance of Entrezon and Renflexis, which are in decline after more than five years on the market in the U.S. The APJ region was up 5% to XFX in the quarter, mostly due to the recovery of injectable steroids and some favorable timing in Singular. We expect it to be a challenging year in Japan as we face national price revisions for some products and work through LOEs of Adizet and Rosazet in that market. The Lamera region, which has been a significant contributor to Organon's growth since the spin had 8% XFX growth in the second quarter, which was primarily driven by volume associated with the Entrezon tender in Brazil, as well as strong growth in Nexplanon across certain access markets and Mexico. China was down 4% XFX in the quarter, but we expect the second half of the year to be stronger than the first, driven by fertility and the continued performance in the retail and hospital channels. Overall, we're very pleased with the results of the first half of the year, and we feel confident in our ability to deliver our third consecutive year of constant currency revenue growth in 2024 and higher year-over-year adjusted EBITDA. EBITDA growth underpins strong cash flow, which accelerates our ability to deliver and to play offense when it comes to executing on business development and driving revenue growth. So optimizing our cost structure and implementing efficiency initiatives across the enterprise is ever critical in creating shareholder value. Now let's turn the call over to Matt, who will go into our financial results in more detail.