Endo Inc

Thank you for standing by. Welcome to the earnings conference call for Endo, Inc. This call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Lori Park, Senior Vice President, Investor Relations and Corporate Affairs. You may begin.

Thank you, Emily. Good morning, and thank you all for joining us to discuss Endo, Inc.' 's third quarter 2024 financial results. Joining me on today's call are Scott French, interim CEO, and member of the Board of Directors, Mark Bradley, Executive Vice President and CFO, and Patrick Berry, Executive Vice President and President, Global Commercial Operations. We have prepared a slide presentation to accompany today's webcast, and that presentation, as well as other materials, are posted online in the investor section at endo.com. Later this morning, a copy of our prepared comments will also be posted to the webcast. I would like to remind you that any forward-looking statements made by management on today's call are covered under the U.S. Private Securities Litigation Reform Act of 1995 and are subject to significant changes, risks, and uncertainties described in our earnings release and other press releases and in our SEC filings. Actual results may differ materially from those set forth in any forward-looking statements. As previously disclosed, substantially all of Endo International's assets were acquired by Endo, Inc. on April 23rd, 2024, pursuant to Endo International's plan of reorganization. Endo, Inc.' 's third quarter 2024 results reflect the effects of the plan of reorganization and the application of Fresh Start accounting. So to clarify, during the call, all references to third quarter 2024 results refer to Endo, Inc., All references to third quarter 2023 results refer to NO International PLC. In addition, during today's call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and may differ from non-GAAP financial measures used by other companies. Investors are encouraged to review our current report on Form 8K, furnished with the SEC, for our reasons for including those non-GAAP financial measures in our earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release issued earlier this morning unless otherwise noted therein. I would now like to turn the call over to Scott.

Thank you, Lori, and thank you to everyone joining us this morning. Starting with slide five. During today's call, I will provide a third quarter performance and business update, including some thoughts on the company's opportunities given my 60 days inside. Mark Bradley will then walk you through the financial results and outlook, and then I will return with some closing comments before we open it up to your Q&A. Slide 7 provides our third quarter operating performance and recent business highlights. Third quarter 2024 total revenues of $427 million. and adjusted EBITDA of $151 million were just above our preannounced result estimates from two weeks ago, which were issued as part of our term loan repricing. Compared to prior year, third quarter revenues decreased 6%, primarily attributable to the competitive pressures across the generic and sterile segments, partially offset by solid revenue growth from our branded pharmaceutical segment. This is sequential improvement in performance compared to prior quarters, as the competitive impact of losing exclusivity of key products, including Vasostrict and Vareniclin, had begun to stabilize. Importantly, we are on track to deliver our full year 2024 revenue in EBITDA expectations, as well as transition to growth. Our performance in the third quarter was anchored by Zyaflex, with total revenue growth of 13%, and strong performances across both on-market indications. We also advanced our sterile injectable capabilities, including launching adrenaline ready-to-use bags during the first week of October. In addition, we saw the cash generation strength of the business. Adjusted EBITDA grew 6%. Our net leverage was reduced to 3.3 times from 3.5 times last quarter, and we successfully completed the repricing of our $1.5 billion term loan, which I would like to thank our credit holders for their continued confidence. Moving to slide 8 and driving into the segment level performance, starting with the branded pharmaceutical segment, which represents about 50% of company revenues. Segment revenues grew 7% versus third quarter 2023. This increase was primarily driven by strong Zyaflex performance. Zyaflex revenues were $128 million in the quarter, an increase of 13% compared to prior year. This increase was driven by strong underlying demand and increased average net selling price. Volume increased approximately 7%, and average net selling price increased by approximately 6% compared to the prior year. During the quarter, Zyaflex demand improved across both indications. Peroni's disease revenues grew a very strong 16%, and Dupuytren's contractual revenues grew 8% compared to the prior year. This performance reflects our continued focus on increasing patient and physician awareness, as well as improving the HCP experience. The remainder of the branded segment, including the established products, generated $89 million in the quarter, which was minus 1% relative to the previous year. Third quarter 2024 sterile injectable revenues of $80 million were below prior year revenues of $95 million. This change was primarily attributable to the year-over-year competitive pressure related to vasostrict as well as temporary supply disruptions in several products. Importantly, we expect to see substantial resolution of the supply disruptions by the end of the year, as well as overall moderation in the impact from vasostrict competition as we lap the erosion from loss of exclusivity. Turning to slide nine. Third quarter 2024 generic pharmaceutical segment revenues were $111 million, a decrease of 18% compared to prior year, This decrease was primarily due to competition for varenicline tablets and dexlanzoprazole delayed-release capsules. It was partially offset by revenue upside from lidocaine patch, the generic version of lidoderm. Importantly, excluding varenicline and dexlanzoprazole, the generic segment grew 6%, and gross margin improvements drove approximately 200 basis points of benefit relative to the prior year. Third quarter 2024 revenues from the international pharmaceutical segment were $18 million, which was essentially unchanged compared to the prior year. Looking forward, I would like to highlight some of the future performance levers the business is utilizing within our branded and sterile growth pillars. Turning to slide 10, Zyaflex is the only FDA-approved non-surgical therapeutic option for patients with Peyronie's disease and Dupuytren's contracture. Both conditions have low diagnosis and treatment rates and a small increase in those diagnosis rates can have a significant impact for patients who prefer non-surgical options. We are increasing our investment in a combination of branded and unbranded direct-to-consumer awareness campaigns focused on motivating potential patients to both seek a diagnosis and inquire about non-surgical treatment options. We continue to be pleased by the patient activation across both indications including the overall increase in visits to our websites and physician locators where disease-related education and tailored access to a local trained specialist increases patient adoption. Increasing patient knowledge and adoption is critical for both our business and that of our healthcare practitioners. Five years ago, Pro Football Hall of Famer John Elway helped to increase awareness of Dupuytren's contracture by telling his Zyoslex treatment story. In the coming weeks, we plan to launch a new BP Trends Contracture PR campaign sharing a patient's Zyaflex experience. We believe that a high-touch provider approach focused on education and a seamless Zyaflex acquisition experience will increase physician loyalty and support the preferential use of Zyaflex as a non-surgical treatment option. Accordingly, last month at the annual meeting of the American Society for Surgery of the Hand, We unveiled our mixed reality injection simulator to over 300 hand specialists. The simulator provides an immersive physician learning experience to help hand specialists refine their technique by allowing them to interact with physical and digital objects simultaneously. We believe this technology will support injection training and help build injector confidence. It is also important that we continue to advance real-world studies and provide information to help HCPs better support their patients. At the recent Sexual Medicine Society of America annual meeting, there were seven presentations related to Peyronie's disease in Zyaflex. Turning to slide 11, in addition to the growth potential for Zyaflex on market indications, we have been exploring the potential to drive Zyaflex growth by expanding into new musculoskeletal and neurological indications. This morning, we provided an update from our early phase two plantar fasciitis clinical study. While study participants receiving one treatment of Zyaflex 0.6 milligrams showed numerical improvement from baseline on the pain intensity numeric rating scale compared to placebo, the difference was not statistically significant. However, an initial post hoc analysis indicates that the results were clinically meaningful for a subpopulation of patients with moderate to severe pain at baseline. We will now evaluate the data in more detail to determine if further clinical work in this moderate to severe patient population is warranted. Alongside Dupuytren's contraction, the plantar indications are opportunities to expand our orthopedic platform, specifically to garner incremental presence in the sports medicine category, which is a high-growth subspecialty within orthopedics, and to do so with a synergistic utility of our ortho sales force. Our other musculoskeletal and neurological indications provide similarly attractive life cycle opportunities. This was a logical, clinical, R&D shot on goal with very capitated risk for substantial upside and with a biologic that has long durability. As I noted, we will look at the best next steps for the plantar fasciitis program and also use this opportunity to take a fresh look at our full range of future indications for Xiflex as well as assess both organic and inorganic capital allocation opportunities for the entire business. Turning to slide 12. Sterile, injectable, and acute care capabilities are the second critical pillar of our future growth. Over the past several years, we have evolved and expanded our pipeline and manufacturing capabilities to support the introduction of more unique products that meet the evolving needs of our customers. Recently, we received the Establishment Inspection Report for our indoor sterile site, and we are hopeful to receive final FDA approval by year end. The potential in this segment and the long-term pipeline of over 50 projects is something that I've been digging into over the last several weeks. And in my view, it is a very exciting opportunity. So I wanted to take a brief moment to outline several thoughts. Currently, greater than 95% of U.S. hospitals use an endo product, and that foundation is a critical factor in our future pipeline success. The opportunity in front of our sterile injectables business is to leverage our hospital footprint along with our commercial and manufacturing capabilities to provide a unique offering within the acute care segment, meaning hospital ORs, ERs, and surgical centers. While the U.S. has arguably the best hospitals in the world, the operating environment within the acute care setting is subject to an ever-growing demand. This translates into greater patient volumes and expanding treatment protocols. Hospitals further operate under DRG procedure-based reimbursement, which means it is ultimately up to the hospital to manage both quality of patient outcome and costs under these capitated procedure rates. This is where our sterile injectable business comes into play. With the provision of medications in final and finished form, such as pre-filled syringes, pre-dosed bags that are ready to use, accurately measured, and most importantly, our FDA-approved medications manufactured in FDA-approved facilities. Not only does this offering provide a step function improvement in the simplicity to a hospital environment, which if you've ever been to an ER, you know is subject to a great deal of complexity and time constraint, but also has the potential to reduce error rates, reduce pharmacy tech, nursing staff, and hospital labor costs, as well as product waste. This creates an opportunity for a hospital to achieve better patient outcomes with faster, more accurate patient dosing, along with less waste for multi-dose vials, and hence higher profitability. under their reimbursement codes. Approximately 60% of our sterile injectable pipeline projects are planned and ready-to-use formulations that help to meet this need. We recently launched adrenaline ready-to-use bags in early October, and we are pleased with the early demand for the product. Our bag is the first and only FDA-approved epinephrine IV bag prepared by a manufacturer and allows for improved time to treatment and workflow efficiencies. We expect to launch two more sterile injectable products before the end of 2024 and plan to continue progressing our sterile injectable development pipeline. Moving to slide 13. Following the financial restructuring that was completed earlier this year, Endo now has a healthy balance sheet and is free of legacy overhangs. Specifically, the company has significantly lower funded debt and lowered interest payments. including the impact of the term loan repricing last week. Net leverage is now approximately 3.3 times, a significant improvement from prior to emergence and even decreasing quickly with a reduction from three and a half times at the end of just last quarter. In addition, the company has significantly improved both its freedom to operate and its focus on value creation, having now alleviated litigation, tax, and other overhangs with legacy matters. With that, Let me turn the call to Mark, who will take us through the rest of the financial discussion. Mark?