Organon & Co. · NYSE:OGN
Organon & — Debt Investor Presentation (March 2021)
40 slides from Organon &'s debt investor presentation, Mar 24, 2021
Slide 1: Lender Presentation
Lender Presentation March 2021 1
Slide 2: Forward-looking statement
Forward-looking statement This presentation of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include
Slide 3: Introduction to Today's Presenters
Introduction to Today’s Presenters Kevin Ali Matt Walsh Chief Executive Officer Chief Financial Officer • Previously served as SVP of Merck, leading the • Previously served as EVP and CFO of Allergan enterprise portfolio strategy • Has over 15 years of public company CFO • Has three decades of pharm
Slide 4: Transaction Overview
Transaction Overview -if ORGANON
Slide 5: Sources & Uses and Capitalization at Spin
Sources & Uses and Capitalization at Spin Sources & Uses Sources ($Bn) Uses ($Bn) New Debt $9.5 Cash on Balance Sheet $0.5 Cash Distribution to Merck 9.0 Total Sources $9.5 Total Uses $9.5 Capitalization at Spin $Bn Amount x2020 EBITDA $1.0B Revolver $- - Term Loan A $2.0 0.7x Term Loan B (USD) 2.0
Slide 6: Summary Term Sheet – Senior Secured Credit Facilities
Summary Term Sheet – Senior Secured Credit Facilities Borrowers: Organon & Co., a Delaware corporation (the “Lead Borrower”) and [ ], a newly-formed Dutch BV (the “Co-borrower) Certain of the Company’s direct and indirect wholly-owned subsidiaries organized in the US (subject to customary exceptions
Slide 7: Pro forma organization chart & guarantor structure
Pro forma organization chart & guarantor structure Legend 1 Term Loan guarantors Organon & Non-guarantors Co (“Lead Borrower”) Organon [ ] (Dutch Other US Other foreign Pharma BV; the “Co- subsidiaries subsidiaries Holdings LLC Borrower”)2 Organon Organon International International Holdings BV 9
Slide 8: Syndication Timeline
Syndication Timeline March April May June M T W Th F M T W Th F M T W Th F M T W Th F 1 2 3 4 5 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 5 6 7 8 9 10 11 12 13 14 7 8 9 10 11 15 16 17 18 19 12 13 14 15 16 17 18 19 20 21 14 15 16 17 18 22 23 24 25 26 19 20 21 22 23 24 25 26 27 28 21 22 23 24 25 29 30 31 26
Slide 9: Strategic Rationale for Organon Separation
Strategic Rationale for Organon Separation Maximize opportunities in Women’s Health while realizing full potential of trusted Established Brands and growing Biosimilars Full management focus to realize substantial growth potential in Women’s Health portfolio, with NEXPLANON 1 as its anchor, and to c
Slide 10: Business Overview
Business Overview -if ORGANON
Slide 11: Our strategic priorities
Our vision is a better and healthier every day for every woman Our strategic priorities To be the global leader in Women’s Health, become a commercial leader in Biosimilars and deliver on the full potential of our Established Brands portfolio Building on the proud heritage of the Organon name and ho
Slide 12: Portfolio of recognizable brands across three complementary segments
Portfolio of recognizable brands serving patient needs across three complementary segments Women’s Health Biosimilars Established Brands 1 Number of products 10 5 49 2020 Revenue 2 $1.6Bn $0.3Bn $4.5Bn 12 Notes: 1. Cardiovascular, Non-Opioid Pain, Dermatology, Respiratory, Bone, Other; 2. Based on p
Slide 13: Differentiated product diversification, commercial capabilities and scale
Differentiated product diversification, commercial capabilities and financial and geographic scale Revenue generated outside ~$6.6Bn Pro Forma Revenue in 2020 1 64 Products across three portfolios ~79% the U.S. in 2020, representing over 140 countries 2 Internally owned Pro Forma Employees focused ~
Slide 14: Well-positioned to achieve targeted low to mid-single digit organic revenue growth
Well-positioned to achieve targeted low to mid-single digit organic revenue growth Contribution to Targeted Organic Growth Drivers Geographic breakdown1 US EU, Middle East & Africa Latin America • NEXPLANON, a leading LARC, targeting >$1Bn of China Japan Other APAC Canada Women’s Growth sales potent
Slide 15: Numerous attributes drive strong credit profile
Numerous attributes drive strong credit profile Global scale, diversified product portfolio and focused strategy for growth with limited LOE risk, with 1 compelling geographic footprint that limits pricing risk 2 Leading presence in Women's Health market with NEXPLANON as its anchor Emerging portfol
Slide 16: Credit Highlights
Credit Highlights -if ORGANON
Slide 17: Global scale, diversified product portfolio and focused strategy for growth
1| Global scale, diversified product portfolio and focused strategy for growth with limited pricing and LOE risk Revenue by Revenue by geography 1 portfolio 2 Established Brands revenue 3 • No single product 9% United States represents more than 21% United States 11% of Established Europe, Middle Ea
Slide 18: Women's Health offering scaled portfolio of leading brands
Women’s Health offering scaled portfolio of leading 2| contraception and fertility brands with growth potential Scaled business with ~$1.6Bn of 2020 revenues ~$1.6Bn • #1 implantable hormonal contraceptive, # 2 LARC 1 $0.7Bn, 44% • Targeting $1Bn+ in revenue • 12% year-over-year growth in 2019 (pre-
Slide 19: Contraception commercial strategy focused on expanding global access
Contraception commercial strategy focused on expanding 2| global access and increasing education for NEXPLANON Global market trends How Organon plans to capture growth • Sustained shift from daily oral to • Focus on NEXPLANON longer acting products • Expand patient access through • LARCs offer conve
Slide 20: NEXPLANON is a differentiated, patented contraceptive
2| NEXPLANON is a differentiated, patented contraceptive offering convenience and reliability to women Differentiating attributes for women NEXPLANON objectives • Single implant, long acting, • Target sales of $1Bn+ reversible hormonal • Accelerate long-term contraceptive growth • # 1 implantable 1
Slide 21: Fertility commercial strategy focused on increased investment
Fertility commercial strategy focused on increased 2| investment, communication and education Global market trends How Organon plans to capture growth • Growing rates of infertility, particularly in USA • Increase education about antagonist and China protocols to expand market opportunity for • Incr
Slide 22: Women's Health represents a significant opportunity for business development
2| Women’s Health represents a significant opportunity for business development Core Women’s Health Market Conditions disproportionately impacting Reproductive health1 Conditions unique to women2 women3 • Contraception • Menopause • Osteoporosis • Fertility • Endometriosis • Urinary tract infections
Slide 23: Biosimilars are alleviating healthcare cost pressures globally
3| Biosimilars are alleviating healthcare cost pressures globally Biosimilar sales (2019) 1 Mature RoW 10% U.S. • Well established pathways for biosimilar approvals 34% • Country-specific commercial expertise increasingly important for Supportive policy emerges globally commercial launches • “Sticki
Slide 24: Steady cadence of successful product and market launches
3| Steady cadence of successful product and market launches drive momentum for future success Initial 2020 Global Reference Launch Sales of Product Product Territories Year1 Reference Product Key Commentary Favorable order of entry launch Humira WW rights outside of EU, Korea, 2021 $19.8Bn position
Slide 25: Established Brands revenue has been relatively stable excluding LOEs and COVID-19
Established Brands revenue has been relatively stable 4| excluding the impact of LOEs and COVID-19 LOEs (backed out): LOEs (backed out): LOEs (backed out): LOEs (backed out): 12,000 SINGULAIR ZETIA/VYORIN (US) ZETIA/VYORIN (EU) ZETIA/VYORIN (JAPAN) ARCOXIA (EU) (JAPAN) NASONEX (US) NASONEX (JAPAN) 1
Slide 26: Renewed management focus and new go-to-market strategies
Renewed management focus and new go-to-market strategies 4| intended to drive increased operating profit Iconic, trusted brands – How Organon plans to deliver stable revenue and limited LOE risk increased profitability • Increase management focus and selective investment • Selectively increase comme
Slide 27: Differentiated portfolio, approach and opportunity in China
4| Differentiated portfolio, approach and opportunity in China China market facts China market characteristics Revenue by product 1 Other • Portfolio breadth with no single product representing more than 20% of sales in China • Established position in retail channel helps to mitigate Volume-Based Pr
Slide 28: Experienced management team with track record of successful performance
5| Experienced management team with track record of successful performance Kevin Ali Aaron Falcione Susi Fiedler Sandy Milligan Joe Morrissey Chief Executive Officer Chief Human Chief Commercial Officer Head of Research & Head of Manufacturing Resources Officer Development & Supply Vic Nisita Geraly
Slide 29: Seasoned, independent Board of Directors
5| Seasoned, independent Board of Directors Carrie Cox Kevin Ali Robert Essner Alan Ezekowitz, M.D., Fatima de Vera Helene Gayle, M.D. Shelly Lazarus Chairman, Organon; Executive Chief Executive Officer, Former Chairman, President Ph.D. Chairman Emeritus, Francisco President and Chairman and former
Slide 30: Financial Performance
Financial Performance -if ORGANON
Slide 31: Compelling financial and business profile
6| Compelling financial and business profile Market leader in fragmented Women's Health market, leveraging scale, experience and geographic reach to grow revenue for contraception and fertility brands Diversified product Emerging portfolio of biosimilars positioned to capitalize on the significa
Slide 32: Financial policy and capital allocation
6| Financial policy and capital allocation Commitment to Ba2 / BB company rating Active working capital management and disciplined capital expenditures Targeted dividend payout ratio in the low twenties (as a percentage of non-GAAP net Capital Allocation income); comfortably supported by stron
Slide 33: Despite negative financial impact from COVID-19, strong underlying demand remains
6| Despite negative financial impact from COVID-19, strong underlying demand remains across portfolio 2020 preliminary COVID revenue impact of ~$400mm across Established Brands and Women’s Health Temporary portfolio impacts Ongoing recovery and enhanced growth • A significant amount of revenue is co
Slide 34: Pro forma revenue bridge – base business experiencing growth
6| Pro forma revenue bridge – base business experiencing growth Values in $Bn (1) LOE impact COVID-19 impact Base business $7.8 Established Brands: ($0.2) NEXPLANON: ($0.2) Other Women’s Health: ($0.1) (1) $0.3 $6.6 ($1.0) ($0.4) Nuvaring: ($0.5) Singulair: ($0.2) Zetia / Vytorin: ($0.2) Nasonex: ($
Slide 35: Historical financial performance
6| Historical financial performance 2020 pro forma financial performance ($Bn) 1,2 • We believe we are well-positioned for low-to-mid $6.6 single digit organic revenue growth off of 2021 base • After resetting at a new 2021 base as an independent company, targeting EBITDA margins to return to 2020 l
Slide 36: Numerous attributes drive strong credit profile
Numerous attributes drive strong credit profile Global scale, diversified product portfolio and focused strategy for growth with limited LOE risk, with 1 compelling geographic footprint that limits pricing risk 2 Leading presence in Women's Health market with NEXPLANON as its anchor Emerging portfol
Slide 37: Form 10 2020 pro forma carve out bridge to deal basis
Form 10 2020 pro forma carve out bridge to deal basis ($mm) 2020PF1 Notes Pro Forma Adjusted EBITDA (Form 10 Carve Out pro-forma) 2 $2,636 Proforma carve out reflects actual costs incurred in 2020 and 12 months of costs expected Incremental One-Time non-GAAP costs 95 to be incurred post separation 3
Slide 38: Appendix
Appendix -if ORGANON
Slide 39: Long-standing relationship with Samsung Bioepis since 2013
Long-standing relationship with Samsung Bioepis since 2013 as commercial partner of choice o Product development o Commercialization o Clinical Studies Joint o Market Strategy Steering o Manufacturing Committee o Access o Marketing Authorization Holder o Pricing Strong commercial capabilities across
Slide 40: Distinctive capabilities across functions to enable commercialization of Organon's portfolio
Distinctive capabilities across functions to enable the commercialization of Organon’s portfolio Commercial Manufacturing & Supply Chain Research & Development • 58 markets with direct commercial • Global supply chains that reach more than 140 markets • To be 720-person organization – strong presenc