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Organon & Co.'s (OGN) CEO Kevin Ali on JPMorgan 40th Annual Healthcare Conference (Transcript)
OGNOrganon & (OGN)2022-01-11 00:13

Summary of Organon & Co. Conference Call Company Overview - Company: Organon & Co. (NYSE: OGN) - Event: JPMorgan 40th Annual Healthcare Conference Call - Date: January 10, 2022 Key Points Company Positioning and Spin-off - Organon spun out from Merck on June 3, 2021, and has achieved significant milestones in a short period [6][10] - The company is focused on women's health, with a strong emphasis on its key product, NEXPLANON, which is expected to be a 1billionblockbusterwithpatentprotectionuntil2027,extendableto2030[6][10]ProductPerformance−NEXPLANONshowedarobustperformanceinQ42021,indicatingastrongreboundandgrowthpotentialdespiteCOVID−19impacts[6][34]−Thecompanyhasmadethreestrategicacquisitionstoaddressunmetneedsinwomen′shealth,including:−∗∗AlydiaHealth∗∗:Deviceforpostpartumhemorrhage[7]−∗∗ObsEva∗∗:Collaborationforpretermlabortreatment[8]−∗∗Forendo∗∗:Acquisitionforendometriosistreatment[8]FinancialOutlook−Organonexpectslowtomid−single−digitrevenuegrowthinthenearterm,withafocusonmaintainingstablegrossmarginsdespitepotentialpricingpressuresandinflation[10][12]−Thecompanyplanstoprovide2022earningsguidanceinmid−February,withexpectationsofa361 billion blockbuster with patent protection until 2027, extendable to 2030 [6][10] Product Performance - NEXPLANON showed a robust performance in Q4 2021, indicating a strong rebound and growth potential despite COVID-19 impacts [6][34] - The company has made three strategic acquisitions to address unmet needs in women's health, including: - **Alydia Health**: Device for postpartum hemorrhage [7] - **ObsEva**: Collaboration for preterm labor treatment [8] - **Forendo**: Acquisition for endometriosis treatment [8] Financial Outlook - Organon expects low to mid-single-digit revenue growth in the near term, with a focus on maintaining stable gross margins despite potential pricing pressures and inflation [10][12] - The company plans to provide 2022 earnings guidance in mid-February, with expectations of a 36% to 38% adjusted EBITDA margin for the year [12][16] - Approximately 75% of revenues are generated outside the U.S., making foreign exchange rates a significant factor in revenue guidance [17] R&D and Operational Efficiency - Increased R&D expenses are anticipated due to recent acquisitions and investments in product development [14][21] - The company is working to streamline operations and expects to see efficiencies post-2023 as it exits transitional service agreements with Merck [23][24] Women's Health Focus - Women's health was previously a low-priority area for Merck, representing only 3% of its revenue. Organon aims to significantly enhance investment and focus in this sector [29][30] - The company is actively investing in marketing and education for NEXPLANON and fertility products, with expectations of double-digit growth in the fertility market [40] Biosimilars Strategy - Organon is focused on expanding its biosimilars portfolio, particularly with the upcoming launch of its Humira biosimilar, HADLIMA, expected in the second half of 2022 [46] - The company is exploring additional biosimilar opportunities in immunology and oncology, with ongoing discussions for potential partnerships [47] Market Dynamics and Challenges - The company anticipates a 400 million headwind from COVID-19 in 2021, primarily affecting NEXPLANON sales, but expects normalization in 2022 [57][58] - In China, the Established Brands business is transitioning to retail, which is expected to grow double digits, while facing some headwinds from public sector procurement processes [61][62] Capital Deployment and Business Development - Organon is open to pursuing strategic acquisitions and partnerships without being constrained by current debt levels, indicating flexibility in capital deployment [66][67] Additional Insights - The company is optimistic about the growth potential in women's health and biosimilars, with a clear strategy to address unmet needs and expand its product offerings [10][40][46] - Organon is committed to maintaining operational efficiency and leveraging its established brands to generate cash flow for reinvestment [11][24]