Organon & Co. Q3 FY2024 earnings call

• Acquired Dermavant and its key asset VTAMA, which has a Q4 PDUFA date for atopic dermatitis indication. VTAMA has potential in atopic dermatitis due to larger market and unmet need. - Third quarter revenue was $1.6 billion, 5% growth at constant currency. Adjusted EBITDA was $459 million with 29% margin. - Raised midpoint of revenue guidance by $50 million for full year 2024, revised adjusted EBITDA margin range to 30%-31%. - Women's health franchise growth driven by Nexplanon; biosimilars growth from Hadlima; established brands affected by LOE and pricing revisions.

For the third quarter of 2024, revenue was $1.6 billion. The women's health franchise grew 6%, with Nexplanon up 11% ex-FX in Q3 and fertility having inventory adjustments. The biosimilars franchise grew 17% at constant currency, expected to have low teens growth in 2024 with Hadlima driving growth in 2025. The established brands franchise grew 3% ex-FX in Q3 and is expected to be flat to slightly better full year. Revenue contribution details: women's health, biosimilars, and established brands each had their respective growth rates and contributions.

• Raised midpoint of 2024 revenue guidance by $50 million, with nominal growth 1.8%-2.6% and constant currency growth 3.1%-3.8%. - Revised 2024 adjusted EBITDA margin range to 30%-31%. - Believes 2025 will have constant currency revenue growth due to organic drivers and business development. - Dermavant's VTAMA expected to have at least $150 million sales in 2025, dilutive to EBITDA margin in 2025 but accretive in 2026 and beyond.

• Competitive pressures in the US within mature products like Dulera, Renflexis, and NuvaRing. - LOE impacts such as Atozet LOE in Japan and Europe. - FX fluctuations affecting revenue, as seen with the strengthening US dollar versus certain foreign currencies.

Q: Please comment on the current profitability or EBITDA contribution from Dermavant and split of OpEx for VTAMA between atopic dermatitis and psoriasis?

A: Two months of VTAMA included in 2024 rest-of-year guidance with revenue run rate ~$6 million per month, and for 2025 OpEx of $180 million, ~a third is sales and marketing costs for onboarding derm sales and marketing expertise, with remainder being other costs.

Q: Comment on current political climate vis-a-vis LARCs and business growth drivers for Nexplanon?

A: Political climate not a threat to access to LARCs and contraception; Nexplanon is market leader in contraception space, growing in US with 340B business and on track to reach $1 billion revenue next year.

Q: How are you thinking about leveraging medical derm commercial infrastructure for additional assets, and change in capital deployment post-Dermavant acquisition?

A: VTAMA opens new opportunities in US derm space, with plans to internationalize VTAMA, and focus for 2025 is integrating and driving VTAMA performance, with capital allocation for BD to be considered later.

Q: Clarify OpEx for VTAMA in 2025, inclusive of ex-US spend and impact of underperformance?

A: $180 million OpEx for 2025 is US focused; if VTAMA underperforms, can cut back on promotional spend beyond 2025, but focus in 2025 is on successful launch of VTAMA.

Q: Comment on Nexplanon citizens petition filed and backstory?

A: Petition is pending; Nexplanon has patent protection on applicator device until 2030, and FDA is sensitive to new applicator designs, with runway ahead for Nexplanon considering infrastructure investments needed for sales and training.