Thank you, guys, for being here. Super excited to have Viatris Management join us. I think the last time we had you guys, Rajiv used to be a regular, and he would always fly in, and we would just go freestyle on so many different ANDAs with him. But excited to speak to you. And I feel like when Rajiv would come down every time, there were so many ANDAs that were so interesting. But I feel like this time around, I think it's much more the strategy and broader conversation on where the story is heading, both from the base business and financials. So, Scott, I'll let you kick things off, perhaps.
Sure. So when I think about Viatris, I think it's not one business, right? It's, for me, three separate businesses. It's a global generics footprint, which was a Mylan company. It's established products, some of the most iconic brands in the world: the Lipitor, the Norvasc, Xanax, Viagra, Celebrex, that came through the Upjohn acquisition. And then there's a growing innovative part of the business, right? So I think it's really three separate businesses, and all of them we want to continue to feed and grow as we move forward. This year has been, it's been kind of an interesting year, as we were talking before we started here, that there were some self-inflicted challenges with Idorsia and other things that we dealt with at the beginning of the year. There were external challenges from tariffs and policy changes and changes at FDA and other things.
We've sort of worked through a lot of that, and I'm really, really, really proud of where the company sits today. I think the commercial execution has been excellent in a multitude of geographies so far. I think we've advanced the pipeline significantly with five of six positive phase 3 readouts. We've returned capital to shareholders about $1 billion, over $1 billion this year in return through dividend share repurchases. We've done a lot of business development supporting mainly our global infrastructure. I think we've done 51 deals last I heard, supporting the infrastructure, a lot of them smaller deals. One of the bigger deals is Aculys, bringing assets into Japan, which is a very, very important market for us.
We've embarked on this enterprise-wide strategic review to take a look at the company, the structure of the company, the cost of the company, are we fit for purpose for today and tomorrow? All this work that we're doing in 2025 is to help set us up in 2026 and beyond for sustainable revenue and earnings growth as we move forward.
So sustained revenue and earnings growth, that's your expectation now, and this is not just limited to 2026.
No, that's our goal is to have sustained and predictable and revenue and earnings growth moving forward. Yeah, that's why we're doing a lot of hard work. There's this base business, which is really, again, a global generics business and established products business is strong. We've done a lot to reinforce it. We believe there's decent stability there, and on top of that, adding innovative assets, both from our own pipeline, but also externally, we can get to, I think, sustained, again, revenue and earnings growth over the next few years.
Got it. And Scott, when you say sustained revenue growth, maybe for Doretta, for you as well, Street looks at it as a couple hundred million year-over-year in additional revenues. Is that sort of how, on a $14 billion revenue, so is that how you guys look at it, or are the internal expectations to do a little better than that?
The internal expectation is to do better than that, for sure, right?
Okay.
I think when I look at the company, you see this base business again, which is a couple of businesses put together. I see $500 million approximately in new revenues every year, and you lose $300 million, and then price declines and other things in the business. You see, I think, a sustainable $200 million or so dollar growth from the base business every year. Then we want to start to invest our capital to bring in assets, support the base business, and bring in innovative new assets. We're investing in the pipeline to develop and bring in new innovative assets. I think the combination of a relatively stable, modestly growing base with adding on innovative revenue and innovative products gives us a larger, more sustainable growth profile.
Got it. And is it fair to say, Scott, as you think about sort of top line growing, let's say the number is higher, whatever the number is, top line grows X, operating income level growing even more than that?
Yeah, I mean, we would hope, and our goal would be to get some operating leverage, right, to be able to start to move from a 1% growth profile to a 3%, 4%, 5% growth profile and stabilize even and then eventually see some leverage on that as we work through the enterprise-wide plan and other things. So lots of work to do. I think we've got good goals here that will take the company in a little bit different direction than it's been in the past. And I think there's a bright future in 2026 and beyond.
Yeah. And I would say it's more of the increasing operating leverage is more of a mid. We're going to evolve to that over time. We're really excited about some of these pipeline assets that have read out that are really approaching launch, whether it's fast-acting meloxicam, Xulane, low dose, some of our assets in Japan. And so operating leverage, especially as you look at the margin profile on some of these assets and some of our more innovative assets, they will require some investment in order to launch those.
I see. Because there's major factories next year.
It'll come, that operating leverage will come over time.
I see. I see. I see. And could you just remind me, Doretta, the way I was envisioning it was you get some benefit on the OpEx from the cost cuts next year because of the enterprise review? I don't know if that might take some stage time over time.
Some of that will get reinvested into some of these new product launches, but on a net basis, you should see a net benefit to the P&L.
Okay.
And the benefit accrues over a sort of a three-year period, at least, we're thinking of it now. You don't get all the benefit of this in year one, right? You get all the benefit, the full benefit by the time you get to year three, but it's stepped up over a couple of years.
Got it. Scott, and I think you've sort of seen this dynamic in your sort of prior roles at Celgene too, where I remember Revlimid-related guidance would go up and operating income was just following it almost one-to-one, which is a very different business, obviously. I guess the question I get asked around the enterprise reviews often that, okay, let's say there is a meaningful cost cut, whatever that cost cut is, A, what percentage of that is actually realized on the income statement level is how investors see it? And B, if it's over three years, then could the annual impact of this be sub-$100 million for what the actual drop down to the income statement level is? And I realize numbers are not out there, but I just want to make sure we level set and know what to expect heading into sort of the updates coming up.
So yeah, we're not getting into exact numbers. I would expect the numbers to be more than you're talking about, right, without getting into exact numbers. I think there'll be more of an effect overall. Again, it's going to be stepped out over three years. We're going to get some, understand what that total number is. There'll be some reinvestment, but I think the majority of it we're looking to drop to the bottom line. And again, it's not just about cost savings. It's a little bit, for me, more about getting the company in the right place and position to be able to grow in the future and do the things it needs to do, execute on the base business, execute on the innovative portfolio and things.
So it's an exercise to make sure we have the right people in the right places to be successful today and tomorrow, net net. And again, it's the right time for it. From my perspective, you had a merger five years ago. We've divested four major businesses. It's the right time for us to take a look at that cost structure. And I think there'll be some significant cost savings coming out of it. And I don't want to get ahead of ourselves. We, in a relatively short period of time, I think we'll be in a position to talk to the specifics of exactly what the numbers are, what's the cadence of them, how much is reinvestment, how much is falling back.
What I want to do, though, is I want to make sure that what we do here is sticky, that it's not just, hey, we're putting out some number and we think we can maybe get it in some year. We want to be exact. We want to identify the exact things that we're going after. We want to be able to trace them. And we want to make sure what we do here is going to hold. We want to make sure, one, that we can get the cost that we say we're going to get over a three-year period, but also that it's sticky and stays and it's really creating a new base.
Got it. Scott, is it fair to say, and maybe this is a question for both of you, and Philippe, I have several for you coming, so stay tuned.
Don't worry. I'm good.
I'm warming you up. Is it fair to say that as you think about the direction the company is going, A, between the cost cuts, so I said, you know, some investors are nervous, it's only like $50 million additional per year in terms of saving, and you said it could be better than that. So we'll see when that comes out. But A, between the cost cut, and B, with some of the top line growth and whatever it could drop down on EBITDA level, do you see a realistic path from about $4 billion EBITDA right now to $4.5 billion? I'm not saying $5 billion, I'm saying $4 billion to $4.5 billion. Is there a very credible path that exists in the not-too-distant future to be able to get to something like that? Because I think that alone could be a very meaningful starting point for confidence building on the equity side.
That's very valuable to equity investors, obviously.
Absolutely, and so I do, again, I don't want to put numbers out that are exact, but what we see is wherever we're going to land on EBITDA for this year, we would expect on an operational basis that we're going to start to move forward and see real EBITDA growth over time, over the next three to five years. Our goal would be to have continuous earnings growth during that time.
Okay. And do you think that would happen regardless of how the Idorsia cards turn over on Selatogrel and Cenerimod?
Yeah, I mean, yes, I do. I think we're confident in those two products. I really like the way that the development plans have accelerated under Philippe and the team. The operationalization of those studies has been very, very good. You never know what the data is going to look like until you turn that card over, but we feel good about it. They're important components of the future. But again, this idea of a solid base business with capital to not only return to shareholders, right, but also to invest in business development and assets. And we were looking for, again, sort of in-market accretive assets to grow. We can grow earnings in EBITDA over time with or without Saneramod and SolataGrel hitting, but we certainly hope that they would.
In-market accretive assets to grow. How much sort of capital deployment ability do you guys have right now?
So again, we're allocating the capital that we're generating. We're looking to do approximately half and half, right, over a period of time. So we're generating free cash flow, $2 billion a year. We're deploying it relatively even. The way that I view this is that we're deploying our capital evenly over the next three to five years on things like continuing the dividend, buying back shares, and building a pipeline of growth assets for the company. That's what we want to do. Some years we're going to lean in a little bit to, and this was a year that we leaned into sort of shareholder return a little bit, given the uncertainty, particularly at the start of the year, the volatility in the markets, tariffs, other things, where the stock price was. Other years we may lean into the BV part of it.
But if you take a look over a three-, five-year period, that's substantial capital to deploy to continue to grow the business as well as return to shareholders.
Especially when you think about the types of assets that we've talked about, kind of accretive in market, those transactions also come with profitability and cash flows as well. So that also helps as you think about capacity.
Makes a lot of sense. JP, anything we missed on the broader base business or the financials before we go to pipeline? Yep, I hear you.
Okay. So basically, Doretta, I think that the recent Japanese acquisition is an example of that. Can you go forward?
Sure. We were really excited about the Aculys transaction. It was an acquisition structured more like a licensing transaction. It added two CNS assets to our overall franchise, Pitolisant and Speedia. These are approved. Speedia is already approved. Pitolisant is approved here in the U.S.. And we're really leveraging our Japanese infrastructure there. As Scott mentioned, Japan is a really important market for us, especially on the branded side. And when you include this, plus some of our other pipeline assets, we filed Effexor GAD there as well. And we have a number of other pipeline assets like Nefecon. We're really building a robust business to change the inflection growth in Japan over time.
Can I just jump on that a little bit too? We do have a substantial CNS business in Japan. Japan's a very difficult market for a company like ours, right, where you have mandated price decreases every year and an inability to change the size of your workforce because of labor laws and other things in Japan. And so it's a very tricky market for us. Two things you could do. You could sell off the entity, find somebody to take it, or build on the base that you have. And we decided to build off the base we have. We have a substantial CNS business there, and we added a couple of assets. And so turning that from declining revenues to growing revenues over a period of time was a really important strategic imperative for me. And I was really pleased to do that deal.
I think we're probably going to do some more in Japan as well as we move forward. And I'd really like to find high margin, good revenue, U.S.-focused as well. So those are the two markets that I was really focused on in terms of getting assets and building pipelines and creating growing revenue streams.
Great. Scott, I recall Bill and yourself, Doretta, you guys came into our offices several months ago, and we talked about the pain opportunity. And we also talked about the competitor product on the marketplace right now from Vertex. And you had a lot of questions around sort of where that truly fits, etc. And I think some of that has played out, which then makes me wonder, as you think about meloxicam yourself, the thesis looks like it's holding true both from the competitor and your side. So sitting here today, what type of opportunity are you seeing with the meloxicam?
Do you want to start with maybe the data?
Yeah, maybe I can just give you a sense. I mean, these are two very different assets with very different data set. I think our data set is very strong and is resonating with KOL and prescribers, particularly in the pain community.
For acute use?
For acute pain, yes. What they particularly like, moderate to severe acute pain is the way we believe the label will read out. But I think they particularly like the fast onset of action, 45 minutes versus four hours for Mobic. That's a significant difference. Also faster onset than Journavx as well. Now, cross trial comparison, so keep that in mind. But the data shows a faster onset for fast-acting meloxicam. And then the strength of the efficacy data particularly resonating versus placebo, but also versus the opioid comparator.
And also versus regular meloxicam. Do they see the incremental value?
Absolutely. They see them as two different molecules, and once we come out with a brand name also, that will further differentiate the asset, and then last is the opioid-sparing capabilities of the drug. We've spent lots of time with FDA defining what the program should look like for us to be able to get an opioid-sparing claim. We were able to hit on both endpoints that were pre-specified with the agency, so we feel strongly that we'll be able to get an opioid-sparing claim, which is, again, very different than what else is on the market, so very differentiated asset that I think will play out differently with an existing safety profile that is well characterized, which is also important.
Great. Scott, are you guys going to put a lot of sampling out there or free drug? Because that's the type of thing Vertex has done a ton of. I'm just trying to think about, do you want to have a big TRx number out there and then let sales follow, or do you want to focus on commercial? How are you managing those two dynamics? Because you can play the long game here. You don't have like a $5 billion sales number out there on the drug.
No, no. Yeah, so.
You may not even have a $500 million number.
But I think, so a couple of things. Just what you learned from the Journavx launch, I think, is the importance of access, right? And they've struggled a little bit, I think, with the right kind of access footprint. And when you struggle with the access footprint, uptake is slow. Where that drug eventually ends, we don't know. But again, I think there's a tremendous opportunity. When I take a look at the data, I view it, and a lot of other people who know more than I do about this space view it as differentiated data, and it provides us an opportunity to find a unique space for this asset. And we were really pleased when the data came out, and we do see it as differentiated. We need to really work now on, to me, the thing that drives your early numbers, right, is access, right?
Just what kind of access can you get? And in the U.S., you have to have a thoughtful strategy, and it's not just about pricing. It's about other things as well.
When is the launch again?
The filing will likely be.
So the launch is toward the end of next year?
End of next year.
This is a.
Toward the end of next year.
Okay, got it. Okay.
If anything, I will quickly FDA reviews, which is a discussion we're about to have with them.
So it seems like from a catalyst perspective, there's a lot of stuff in the back half of next year, A, the PDUFA date for this, but also cenerimod as well as selatogrel phase 3 readouts. Which one do you guys have higher POS on? The lupus trial with an S1P1 or with the antiplatelet for ACS prevention?
It's asking me which chart do I like the most, right? But I think generally speaking, you have a P2Y12 inhibitor mechanism of action well established.
More validated.
I think in the disease we're looking at, S1Ps are well established as well in other autoimmune diseases. But I mean, I would say maybe.
Philippe, I guess the question I'm always confused about is these are in your antiplatelet trial, you took patients that have had a heart attack, and so they know what it felt like. So now you're giving them this on-demand shot they can take if they feel like the symptoms are coming on.
Yeah.
Are they good at telling if the symptoms are of a heart attack, or could they be taking it at the wrong time and that induces bleeding episodes to happen? Do you know the bleeding data on a blended basis?
Right. So I think what's important is the fact that what we're seeing is patients are injecting, self-injecting, but there's also self-injecting early within or less than 30 minutes of onset of the symptoms.
You say you're seeing that based on phase three or prior?
Based on phase three. Yeah.
Oh.
Patients are self-injecting. They're self-injecting when they're supposed to do it, which is within 30 minutes. That gives the drug a lot of time to work and differentiate versus placebo between the time of injection and the time the patient ends up at the hospital and is being diagnosed with acute MI, right?
Interesting. You're not seeing on a blinded basis bleeding rate tracking higher than you would have thought?
So, blinded basis, we're not. And our DSMB is unblinded. And we've had 13 of them, and they've told us to continue as planned.
Got it. And also, if I may, from an event rate perspective, is it tracking like you would have thought?
Yeah. So we're both from an enrollment and event rate standpoint, we are exactly where we thought we would be at this point. We're nearing 1,000 patients per month right now in terms of enrollment. And we've significantly expanded both the number of sites globally that we're enrolling, but also have significantly increased our interaction with KOLs and PIs, which leads to renewed momentum for this study, I would say.
So if the bleeding's not higher and they're taking it within 30 minutes, we know the thing works. The earlier you take it, it just works. I guess what does that mean commercially then, Scott? What are your teams telling you? Is this an EpiPen for heart attack?
I mean, again, you see the data and see how it's utilized, but I think viewing it that way is sort of the way to.
That's the commercial positioning?
Yeah. And I think what better company in the world to commercialize something, right, which is an emergency use injectable product, right, for an acute issue. And so we look at it that way. We need to see how the data evolves. I think there is an unbelievable amount of opportunity here. The number of MIs that happen on a yearly basis. I've lost two family members myself to acute MI who both didn't survive their event. And when you take a look at just the actual demographic numbers of the people out there, it's incredible who suffer MI, the tremendous unmet need. And then there's also an opportunity to place these potentially in ambulances and other places, depending on how we expand the label, depending on what the data looks like. But it's not just the initial patient population. There is the potential.
Again, it depends on the discussion.
So it's not just patients, the system that you could sell it to.
Yes. Right.
The same way you for EpiPen, right?
Right.
So, hospices, well, in all types of nursing homes, emergency rooms.
Again, depending on what the label looks like, depending on what your interactions with FDA are, all that's going to, but I think there's the potential for this product to have that kind of impact, the kind of impact that EpiPen had on acute anaphylaxis, this could have on MI, without question.
Selatogrel gives you time, right? It gives you time to go and get proper PCI if that's what you need. It gives the patients time for proper treatment, which and time also to reduce the risk on the impact on muscle, right?
We're past time, but I do want to end on this because I've always been confused about it. So a patient had a heart attack before. They feel like they're having it again. They feel something in the arm. So they take the shot, and they just took it. They get to the hospital, and they find out more than one vessel was involved. So that needs CABG. If you need CABG, you need to be off the blood thinner. But by having taken the shot, didn't this put you at you can't get surgery for 12 hours now?
No, not 12 hours. You wouldn't be able to get surgery if, imagine, the patient gives the shot, takes a few hours to get to the hospital, typically, on average, and by the time they get to the hospital, they get the angio and they know they need PCI.
That's already been five, six hours.
You would be able to proceed with the PCI.
I see. I see. So it's not going to limit CABG up.
No.
Okay. Fantastic.
In 20 seconds, I think we went over cenerimod a little bit quickly. I think very highly of that asset. Philippe and I were looking to develop an S1P molecule in SLE in the past at Celgene before other things happened with the company and went different direction. We think there's proof of concept that this could work very well. And again, an early oral tolerable drug in the space, I think, could be game-changing.
But this would be the first oral for lupus, I believe, in a lot of.
That would be possibly, yeah, unless, for instance, JIC2 gets there before we do. But I mean, different proposition in terms of safety risks and tolerability, right? First new innovative oral drug, right? I mean, they use some oral background meds and stuff, and that's what I'm saying.
This single trial alone is enough for filing.
We have two trials.
Okay, two trials. Okay.
OPUS 1 and OPUS 2 is fully enrolled. OPUS 1 is about to be fully enrolled.
Fantastic. Thank you guys so much for making time.
Thank you.
Fantastic.
Thank you.