Okay, good morning, everyone, and let's get started. Welcome again to the 35th Annual Piper Sandler Healthcare Conference. I'm David Amsellem from the pharma team, and with us is Organon. We have Kevin Ali, CEO, and Matt Walsh, CFO. Thanks, gentlemen, for joining us, and certainly lots to talk about, so I'm gonna dive right in- Go ahead. with questions here. So, you know, I'll start at a high level and ask how you're thinking about balancing debt paydown and capital deployment to bolster the pipeline and/or commercial portfolio. So, maybe I'll start with you, Kevin. You're jumping right in the deep end first, huh? Right in the deep end. Right in the in the hot topics. Yeah. Yeah. So, look, I mean, as we go forward, a couple of things are happening. One is that we're getting to understand now and going into year three, in terms of what our real cost structure is required, in terms of what we need to do to be more efficient. We're winding down from some of the one-time costs to stand the company up. We've gotten past that horizon of, you know, what kind of structure, you know, the consultants told us we should spin out with, what we need more of and less of, and so I think you'll see more of a kind of a scrutiny on OpEx going forward. So I think we'll be able to look at more of a leveraged P&L as we move forward, as we've kind of passed this period of time of investing in terms of just standing up the company. That's good news. And so when we start to think about capital allocation for the years to come, look, we're always—we're focused on becoming a leader in women's health, but I want to, I want to be declarative on this. What that means is not only conditions unique to women, but that disproportionately impact women. Sure. That basically includes almost everything. Yep. So, that's why we have a very active business development group that reports to Matt, and we're constantly looking. Right now is not a bad time to be looking for assets, where we're more focused on either soon-to-be commercialized or recently commercialized assets in the market. There's some really interesting things out there we're looking at. But nevertheless, as we start to be able to generate more free cash flow, absent anything that's interesting in BD, we'll definitely put it to debt paydown. Yeah. I think you've talked about trying to get under four times- Yeah. net debt to EBITDA. And so I guess the question here is, what can you realistically do on the BD M&A front that would, you know, bolster the business, but- Yeah ... at the same time, not set you back too far in terms of getting under 4x? I think that is the question. Yeah. Absent anything, you can rest assured we'll be definitely migrating below four- Yeah. -next year. Okay. And that, that's our ambition. That's what we're focused on doing. If something comes along that's very interesting, that's commercialized, out there, that's generating revenue, that just in our hands, we're more of a better owner. Mm-hmm. We're more. Because we have an international footprint, we've got the same footprint as most big pharma does. So as a result of that, we can internationalize a product that, say, for example, is only in the U.S. That might be one reason that we might do something, that we ultimately can do more with it, maybe some synergies out of it. We would come and essentially might have. We would necessarily need to have a very strong narrative, very strong story- Mm-hmm. as to why we're doing this and why it is that we need another year to get to where we need to go. But absent that, that's where we're gonna be going. So to be clear, absent any M&A, you'll get under 4x- Yeah At some point next year. Yeah. As you think longer term, and I don't want to pin you down here on, you know, on targets, but do you have a steady state net debt to EBITDA that you want to get to? I mean, you know, I can name one of your peers that says, "You know, we want to be at 3x." Where do you want to be? You know, back around the time of the spin, my answer to that question would have been 3.5x, given how the business should cash flow, excluding any separation related items. Sure. You know, really sort of the binding constraint on that answer has really been how the stock trades. Operationally, the company can function quite easily at higher leverage levels than we think investors are comfortable with right now. Now, around the time of the spin, we would have said 3.5 x is a good place to land. And at that time, investors were nodding, like: Okay, we can defend that answer. I think our impression is now, just given the current macroeconomic climate, investors are roughly half a turn more sensitive to leverage than they were. Yeah. So if they were sensitive... If they were fine 3.5 x, the dialogue we have back and forth is now 3 x. And so we, running the company is one vector into what the leverage ratio is, but really what, you know, the interaction that we have with shareholders is another vector, and it's generally more conservative. Yeah. Okay. I want to talk about margins, EBITDA margins. So this year, lower than last year. And, with that in mind, what are you doing to, manage margins, prevent further margin degradation, or maybe I'll ask you differently: What is within your control? Yeah. So it's a great question, Dave. The answer to that question starts with discipline. Our operating expense at the time of the spin had very little reflection of any reinvestment in pipeline. And so, our costs have gone up to accommodate that. But as we, as capital has gotten more expensive, that reads through both on the BD side, right, the M&A side, as well as our own internal pipeline. Mm-hmm. So, you know, we have generally been seeking to balance debt reduction and external growth, and we've almost done that to the dollar since the spin. But that same discipline that we're now applying, where the hurdle is higher for M&A, and not only is it higher, it's slanted more towards income-producing assets. We have to apply that same discipline to our own internal pipeline. Yep. And I think you'll see that reflected in how we're thinking about next year. So OpEx is where we have hands down the most- Mm-hmm. The most ability to impact it. You've seen some of it in our last quarter Q. We announced a restructuring charge. We're incorporating more of that kind of discipline and planning into 2024. Gross margins just reflecting some of the latency effect of foreign exchange. And it's hard to have a conversation about Organon's financial performance and not talk about FX, just given that- Yep ... roughly 75% of our sales are outside the United States. So we will see a read-through next year on some of the margin pressures that we've been seeing in the second half of this year. On the upside, though, right, as we think about right size and leverage ratio, which is important to us- Mm-hmm. We have a lot of conversation with investors that just are anxious about Organon's leverage over 4x. So OpEx is one piece of it, but debt reduction is the other piece, and we are gonna see improved performance next year. We'll have lower cost of separation next year. It should be at least 40% lower. Mm-hmm. Most of the working capital build that we've had to do is done. We've put even a little more working capital in in support of an ERP rollout. That should moderate next year. So the ability for the business to delever, just naturally, given all those things, David, is, you know, it's at least a third of a turn and, you know, can be half a turn just within one calendar year, absent any BD. 'Cause as, as hard as we can tighten down the P&L, if we do that, and that looks great, the next question you're gonna ask is- Yeah. How are you guys gonna grow? Yeah. And so, you know, we do—we always have that in the back of our minds. It's just, if we're gonna do a growth deal anytime in the next 12 or 14 months, it's gonna be very easy to defend. People can draw straight lines to why that makes sense- Mm-hmm. for a company with our balance sheet to be doing it. And if we don't see them, we'll, you know, probably do like we did this year. We only announced one deal this year. Yeah. Yeah. All right. That's fair. So I wanna make sure we hit on specifics within the business, and I'll start with women's health. Sure. And there were some dynamics for Nexplanon that drove some of the weakness in 3Q. And I wanted to have a little bit of a refresher- Yeah ... on that and talk through the extent to which you think that's gonna be short-lived. Yeah. So Nexplanon is... Look, nothing has happened to Nexplanon at all over the last five years, excluding that you're seeing ex-U.S. business grow more because there was no investment in Nexplanon outside the U.S. And now that's something like around 35% of our, or 30% of our business is ex-U.S., and growing in contribution, and 70% of our business is in the U.S. In the U.S., what's happened is because we've taken it over, you start to see a tick-up of volume increases. Now, every year, Merck was getting, essentially where we came from- Mm-hmm. was getting their growth because of price. Mm-hmm. All right? So now we decided not to take price in this year. There's a very good reason for that. It's based on two important factors, and one, one that's important to both of us, but not important to all of you. Which is, number one is, when physicians are able to prescribe a product at the state level, they have to wait to basically, that the states update their list, their pricing list, every kind of beginning of the year, in the quarter. If you take price in the fourth quarter, there's a very high likelihood the physician that's prescribing Nexplanon is underwater- Right ... because the price is higher than what the reimbursement price is. So what we did is we equalized that, so that when we take price, it's along the same lines as in that, within that quarter, that the price will be updated in the state list, so that ultimately they're not underwater. Mm-hmm. Coincidentally, that's where all the other large take their prices, in the first quarter, not the fourth quarter. Sure. So we align to where the competition is, and we align to where states update their reimbursement lists and reimbursement pricing. That's number one. Number two, we got really a lot of questions in the two and a half years we've been here. What's going on with the fourth quarter? Why is it so high? Right. What's going on with the first quarter, why is it so low? Right. Well, obviously, people bought in to take advantage of the lower price, knowing that the price was gonna go up. Now, we take all of that noise out of the forecast by moving into the first quarter, so that in a calendar year, you actually see everything happening in that given period of time. And so as a result of that, that'll smoothen the overall volatility of that forecast line. Mm-hmm. So that you can say, "Oh, okay, I can see what's happening now. There's not all these violent swings in Q4 and Q1 that I need to try to make sense out of." So those are the, I think, the two most important reasons why we decided to not take price. So going forward in 2024, to put it mildly to you, it's gonna be a very strong year for Nexplanon- Yeah ... for two reasons in the U.S. One, our 340B business, which is a lower priced, federally mandated business- Mm-hmm has grown to about a 1/3 of our overall business, globally. And so that, Merck, the previous company used to actually give even additional discount on top of the 340B price. We've taken all that away. So we took that away. We removed that discount in September. So for next year, you'll see basically three quarters of overlap of benefit of that. Plus, we get the added price increase that we're taking next year. Mm-hmm. Plus, you get the incremental volume growth that we have. So we expect low double-digit growth of Nexplanon next year. So it's still our strongest product going forward. Nothing has changed dramatically. So when you say low double digits, how much of that is price and pricing dynamics, and how much of that- Low to mid-single, low to mid-single digits in the U.S., for volume. Mm-hmm. And the rest is all price. Yeah. I guess, and this is... I don't mean to ask this as a loaded question, but- Sure ... could it be, on volumes at least, could it be better? Just given the penetration of the LARC category? Yeah. Number one, and then number two, just the dynamics post Roe v. Wade. Yeah. I'm just wondering, you know, why wouldn't volumes, volume trajectory be higher? It's not a simple answer. Sure. But it's answerable. So I would say this to you, is that, first of all, the product's been in the U.S. for nearly 10 years, so you get a certain rote kind of prescription behavior from physicians that are essentially with this product. So it takes more time and effort to start to change that momentum so that you have, instead of low single digit, low to mid, you get mid to high single digit. Mm-hmm. that takes time to do- Mm. Number one. Number two is the fact that, when you think about this product, it takes... So when you think about the LARC segment, it's declining, the others in the LARC. We're the only ones actually increasing in the LARC segment. So LARCs in general, IUDs. Mm-hmm are starting to essentially flatten to go down, where we continue to grow. We're the growth driver of the LARC segment. And so as a result of that, you've got forces at play. It's not as if the LARC segment is just exploding and we're on that wave. We're actually carrying everybody else in terms of driving growth. Right. Finally, what I will tell you is the following: this takes a lot of effort around social media, a lot of effort in terms of being able to get people to understand that in the U.S., 40% of all pregnancies, even a little north of that, 45%, are unintended. Yep. Along with those comes the unintended consequences. Sure. I don't want to get into that, you know, but quite a number of things. 40% of those were on some form of contraception, most likely, pills. Mm-hmm. So when people ask me: So what happens if the over-the-counter pills start to come in line? Is that gonna hurt you? No, actually, the more we get all our business from the patients who are on pills. Mm-hmm. Women who are on pills. So the more pills that are actually being distributed, the more we actually get patient influx. So, that is the standard, and then ultimately, we go over to Nexplanon. So I believe it'll break through, and we have plenty of runway ahead of us before LOE- Mm-hmm ... to be able to create the kind of, as you say, volume uptick that we think this deserves. Yep. So you touched on R&D and spend overall in the beginning of our discussion. You know, one of the things that I think comes up a lot in my discussion is pipeline visibility. And so with that in mind, can you walk us through some of the key deliverables on the pipeline? Yeah. Not just women's health, but just broadly speaking, that we could expect over, say, the next 12-18 months. 12-18 months. So, remember, we're two and a half years old. Yep. We spent about $500 million in BD activities. We didn't spin out with a pipeline to speak of, obviously, from our previous company, and we spent about the other $500 million in terms of capital allocation and debt paydown over that two and a half years. So what we've been able to do is bring in about 8 assets in various stages. So for example, JADA, which we launched a couple of years ago, is starting to really do well. Sure. Starting to really contribute. We broke it out in the Q3 earnings. We'll break it out more in Q4. We have high expectations for that device going forward. And then when you talk about XACIATO, we just launched that. Mm-hmm. Soft launch right now. It will be full launch in 2024. That is a nice little business to get into. It's a unique product for bacterial vaginosis, one application, and basically very good efficacy, so there's a tremendous need in that space. Then the more earlier stage assets, like for example, 6219, which is our endometriosis product, is exciting. In that 12-18 month period, you'll see a report out of Phase II. Okay. Hopefully, knock on wood, if that's positive- Sure We'll actually be able to talk about something in terms of Phase III migration. Mm-hmm from a product that has a complete new mechanism of action, and an exciting type of delivery in terms of safety that you don't see with the GnRH class, as well as the efficacy that we're hopeful that we were able to see with the 6219. In another 12-18 months, you'll see a migration of 7191. This is a Forendo acquisition. Mm-hmm. That asset is for polycystic ovary syndrome. Mm-hmm. Now, that is an area, when you're talking about unmet need- Yeah ... it is absolutely screaming off the page for innovation. Yeah. For investment innovation. That one will be going into Phase I in 2024. Mm-hmm. You know, probably at the end of that 18-month period that you're talking about... if all things being equal, if things go well, we can potentially start the Phase II process- Yeah. at the end of that. Let's move on to the biosimilars. Sure. I think for a long time, it seems like that's all we talked about, even though- Yeah It's a small part. I'm so... Part of me actually is happy I'm not getting 6 million questions about biosimilars anymore. Well, you get a few here. So I guess I'll start with HADLIMA- Sure HUMIRA biosimilar, and just talk about market dynamics in the U.S. I guess maybe again, another somewhat loaded question is: Is the business of that market evolving differently than how you thought? Yes. Yeah. But having said that, when I first started to signal what the peak revenues of HADLIMA would be- Mm-hmm ... $200 million in the U.S. and globally. I think we'll still get there. It's just going to be a time continuum. This product is going to have a longer tail than originally anticipated, where I anticipated a faster uptake and a faster downgrade because of price. I think it's gonna slowly migrate up, and if you start to think about how our performance, HADLIMA's doing versus the competition- Yeah ... we've already passed AMJEVITA, which had a six-month head start on us in terms of, share, NRX share. Right. I think clearly the team has been able to differentiate itself in terms of not only the product, but also the way that we execute and the strategy that we took. Many of the other biosimilars took a dual pricing strategy. Mm-hmm. We took a low pricing strategy because I always had the feeling that why are we in this, if not to save money for the system and for patients? And if you're in a high WAC strategy, you're not saving money for the system or the patients. You're essentially potentially making more money for PBMs in the process. So there's 60% of the lives right now are PBM-driven, and 40% of the lives are what I would call more WAC-sensitive type of payers: Medicare, Medicaid, Blue Cross, Blue Shield, Prime, VAs, Kaisers, and so on and so forth. Mm-hmm. And so I think we're much more of a very, very compelling value proposition for that, and you could see it in the uptake. Now, hats off to AbbVie. I think they've been able to do a number of, let's say, negotiation tactics, if I can call it that, that has been able to hold on to a majority of their share that they've had. But, you know, they went from $20 billion in their peak now this year to $14 billion. Next year, they're saying to $7 billion, and it'll just keep, keep going down, because $7 billion is still far too much value that's, that's trapped there, that needs to come back to patients and, and providers. Yeah. So, I mean, to—if I'm thinking about it, as the, you know, as AbbVie backs off, there's... I don't—maybe this is a little harsh, but, you know, some of the crumbs, if you will, sort of come to the- Hey, listen, one man's garbage is another man's treasure. There you go. Is that the way they say it? No, the way I look at it is the following: if that market ends up being not $7 billion, but more like $2.5 billion- Mm-hmm ... and we're 10%-15% of that, we easily achieve the numbers I talked about in terms of the $700 million, several hundred million. Okay. All right, that makes sense. So we got a couple of minutes left. Yeah. I want to make sure we talk about China. Sure. So that was an interesting 3Q in terms of some. Yeah ... unique moving parts and, maybe talk to those moving parts briefly and then how you're thinking about the outlook in 2024 for China. Sure. So across the board, we faced, Organon faced a number of macroeconomic challenges during the year and a number of challenges, period. We had a recall at the beginning of the year. We've finally gotten through that. In China, specifically, at the beginning of the year, the first quarter, we had an overhang on COVID, which affected our ability to drive our... one of our fast-growing stars of our business over there, which is fertility. Mm-hmm. That has gone away. Then in the late second quarter, beginning of third quarter, we had this anti-corruption campaign. Now that's fading away. Then throughout the entire year, we had this, essentially, the economy's driving deflation as opposed to inflationary pressures over there. People weren't spending money, especially for fast-moving consumer goods, patients going to the pharmacy, which is a big part of our business, the retail section. That was a bit challenged. Now that's starting to soften up. So all the signals are pointing as we go forward and as we move through the volume-based procurement, we still have some volume-based procurement processes to go through next year, but as we move through that, we'll be in a much healthier state. Even with all of these headwinds, we're only like minus one, minus two this year versus last year in terms of performance. So the team is really good at executing and finding other opportunities. Next year, you'll see on a positive sign, we'll be growing, and then the following years, we're doing more BD, China for China BD. So we have opportunities to grow. How much VBP exposure do you have next year? It's mostly- Not a huge amount. I think, like I said, we got 25% of the business left. There's probably about 10% of the, or less, that is exposed to any volume-based procurement rounds next year. That's why essentially, instead of it being very high single digit, low double digit- Mm-hmm ... potential opportunity, it's more moderated because of the volume-based procurement office. How much of your business overall in China is retail versus non-retail? Oh, that's about 2/3 of our business now in the established brands business is retail. Is retail. Okay. One-third is non-retail. Okay. And then in the minute or so, 45 seconds we have left, established brands, just maybe tie a ribbon around the discussion as we think about, you know, the stability of the business. How are you thinking about pricing dynamics for established brands globally and just the extent to which you expect a continued stability? Not much pricing opportunities around the world. There's a few countries- Yeah ... that give us opportunity to price, to take price. But there's always volume opportunities everywhere. And, you know, we've got more than 40 products in the established brands franchise, 60%, 65% of our overall business. Everybody expected that product, those products to be declining, high single digit, low double digit. It's actually grown. Yeah. It's grown since we've taken it over. We still expect growth over the next coming years. Very small growth. Mm-hmm ... but that's a heck of a lot better than what people gave us credit for at the beginning. With limited pricing erosion, I would imagine. Limited. Well, look, yeah, you, you're gonna get more price. You're definitely gonna get price. We average, I would say, what? Mid-single digit on price erosion here. So, around the time of the spin, the CAGR on that would have been about a 3%-5% decline. Mm-hmm. This year, it's gonna be around 1% because the inflationary environment has enabled us to go back in and either limit price or even raise price in certain markets. So now you see more of the volume growth showing through. Yeah. Got it. Okay, well, we're out of time. Thanks, Kevin. Thank you, David.