Par Pharmaceutical Companies Inc
Par Pharmaceutical Companies — Investor Day (December 2009)
68 slides from Par Pharmaceutical Companies's investor day presentation, Dec 3, 2009
Slide 1: Par Pharmaceutical Companies, Inc. Analyst Day
Par Pharmaceutical Companies, Inc. (NYSE: PRX) Analyst Day December 3, 2009
Slide 2: Forward-Looking Statements
a Forward-Looking Statements Certain statements in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this presentation contain information that is not historical, these statements
Slide 3: Patrick G. LePore
Patrick G. LePore : Chairman, Chief Executive Officer and President
Slide 4: Agenda
Agenda * Introduction - Patrick G. LePore Chairman, Chief Executive Officer, and President * Generics Business Overview - Paul V. Campanelli Executive Vice President and President, Par Pharmaceutical * Q&A Session #1 * Short Break * Strativa Pharmaceuticals Overview - John A. MacPhee Executive Vice
Slide 5: Par positioned to drive significant increase in shareholder value
nt, ¢ Par is well-positioned to drive a significant increase in shareholder value over the next several years * Two complementary businesses to provide growth and sustainability — Strativa has come of age — Continued strong performance of Par Pharmaceutical * Strong commercialization and operational
Slide 6: Mission and what we stand for
4 To play an important role in the healthcare system by developing, marketing and distributing safe, innovative and cost-effective pharmaceuticals that help to improve the quality of life of patients * What we stand for: —Uncompromised quality for patients and reliability for customers. -Highly entr
Slide 7: One Company, Two Growth Engines
— Strative Supportive care leader with three marketed products ‘Two product launches in 2010 Demonstrated launch and commercialization capabilities Significant business development capabilities fully deployed Consistent revenue growth since its founding in 2005 a One Company, Two Growth Engines PAR
Slide 8: 2009 State of the Business Update
* a 2009 State of the Business Update Primary Drivers of 2009 Success: Par Strativa Corporate * Metoprolol * Acquisition and * Realigned + Sumatriptan Launch of Nascobal® Management Team * Meclizine . Megace® ES * Restructuring Success + Clonidine Stabilization * Proactive Investor * Progress on Ora
Slide 9: Core competencies and primary growth drivers
, Funding Capital Allocation ‘& Financial Management oot SPAR Bea PHARMACEUTICAL Business Effectiveness ee ara Core Strativa Primary Growth Competencies Drivers Commercialization Intelligent Product Excellence Selection
Slide 10: Paul Campanelli
Paul Campanelli: President, Par Pharmaceutical
Slide 11: Agenda: Par Pharmaceutical
a Agenda: Par Pharmaceutical * Introduction of the team * Sustainability * Par Pharmaceutical Today * Intelligent Product Selection ¢ Entrepreneurial Business Development * Commercialization Excellence * Operational Excellence * Summary * What to look for in 2010-2012 and beyond 10
Slide 12: Four Cornerstones to Sustainability and Growth
Four Cornerstones to Sustainability and Growth Commercialization Excellence Intelligent Product Selection Sales and Marketing R&D Capabilities Leading Market Shares Focused and Efficient Team Diverse Skill Sets Appropriate Investment Levels Exceptional Product Launches Strong Trade Presence Entrepre
Slide 13: Par Pharmaceutical today
A ¢ Nine months net sales of approximately $840M — Ranked No 5 by Sales* * Portfolio includes ~50 product families and ~180 SKUs * We have 12 confirmed FTF and 2 FTM opportunities * Investing approximately 40% of operating expenses into R&D/BD * Ongoing significant investment in Quality Assurance *
Slide 14: Intelligent Product Selection
he a Intelligent Product Selecti * Our strategy - Focus on First to File and First to Market Opportunities - High barrier to entry products + Less competition up front + Longer revenue tails later on * Our resources - Business Development - Regulatory Affairs - Product Management - Legal - R&D 1B
Slide 15: Intelligent Product Selection
1“ Intelligent Product Selection Brand Values $100M-8400M Therapies, mlodipine- Benazepri API Challenges Dronabinol DHA Selection Criteria Technology Modified Barri Release Clonidine Fluvastatin Tramadol ER
Slide 16: Product Case Studies: Tramadol ER and Nateglinide
* 4a Product Case Studies: Tramadol ER and Nateglinide 16 Tramadol ER: What Made Par Successful? Judgment entered in favor of Par on invalidity on 8/14/09 Concerted efforts to achieve TA within 30 months, maintaining exclusivity status Difficult to manufacture: fewer competitors Internally developed
Slide 17: Entrepreneurial BD: Sustaining the Growth
Entrepreneurial BD: Sustaining the Growth Internal Capabilities Business Development Capsules Partnerships: Tablets Par Pipeline Patches Oral Suspensions Investment Injectables Nasal Sprays Dollars Gels Cll Narcotics Authorized Generics Solvent Capabilities 16
Slide 18: Key Pipeline Opportunities
Key Pipeline Opportunities (WAT LTM 913008) Amlodipine /Benazepril Caps’ Lotrel® 6/40 & 10/40mg $377,000 v 5/160, 10/160 & Amlodipine/Valsartan Exforge® EDI $257,000 v Diazepam Rectal Gel’ Diastat® All $90,000 vv Fluvastatin Sod. ER Tabs Lescol XL® 80 mg $111,000 v Omega 3 Softgel Cap Lovaza® 1 gram
Slide 19: BD/R&D Opportunities
he a Eo | BD/R&D Opportunities Beyond our disclosed pipeline: * In-Process or Contracted Products (undisclosed) — Internal: 6 products selected for development * 6 potential FTF — External: 10 products under contract * 7 potential FTF * Over 20 products under evaluation * M&A support and due diligen
Slide 20: Patent Challenges: Leading Success
he a Patent Challenges: I Leading Success ee) 91% ing Pipeline Vi: Par 88% Sandoz 87% - Lotrel’ Tablets Impax 85% - Rythmol® SR Tablets Watson 82% + Risperdal® ODT Teva 72% ete Mylan 65% + Imitrex Injection - Tramadol” ER Ranbaxy 56% Dr. Reddy’s 42% Apotex 35% *Source: RBC Capita reports 19
Slide 21: Summary: Building the Pipeline of the Future
* a Summary: B ing the Pipeline of the Future TotalANDAs TotalP-IVs TotalConfirmed Potential Future Development Filed Filed FTF FTM Products Targeting P-IV *Excludes AGs under contract 20
Slide 22: Commercialization Excellence
* 4a Commercialization Excellence ¢ Reputation for high quality * Dependable supplier with trade service levels >97% * Dominant market shares in key products * Ability to maximize IP value using a broad array of options —Launch — Settlements — Divestiture Recent Par Launches |___Products | Generic M
Slide 23: A Sustainable Base Business
* a A Sustainable Base Business + Base Business - “Other” Category - Increased profitability with price stability - Mix constantly changes - Product additions —- Portfolio optimization: Culled for most profitable products - Gaining market share by being a dependable manufacturer — Improved plant uti
Slide 24: Operational Excellence: Keys to Success
A Operational Excellen i's Keys to Success * Significant investment in QA/QC * Process Flexibility - Capability for both solvent and aqueous processing allowing maximum flexibility in formulating especially for sustained release products + Responsiveness - Strong Coordination Between Production, Sup
Slide 25: Summary: Strategic Focus
Action b yf a Summ ategic Focu: ¢ Intelligent product selection: — Strong pipeline of high barrier-to-entry FTF, FTM P-IV products with BV totaling $6.3 billion ¢ Entrepreneurial business development: — Experienced team with successful partnering track record * Commercialization excellence: — Impres
Slide 26: What to Look For in 2010-2012 and Beyond
25 . Par Pharmaceutical: A What to Look For in 2010-2012 and Beyond 2010 to 2012 Organic Growth Drivers: - Key products continue to add value - 5-7 ANDAs per year - Date certain launches - Continue to improve upon the sustainability of our base business - Longer revenue tails = Optimize portfolio -
Slide 27: Q&A
Slide 28: Break
Slide 29: John A. MacPhee
John A. MacPhee: President, Strativa Pharmaceuticals
Slide 30: Strativa agenda
29 Pres Introduction of the team Strategic Focus Strativa Today Intelligent Product Selection Entrepreneurial Business Development Commercialization Excellence, including Product Reviews Operational Excellence What to look for in 2010-2012 and beyond
Slide 31: Four Cornerstones to Sustainability
Four Cornerstones to Sustainability Strativa excels at finding, enhancing and bringing to market prescription drugs that improve patient care Intelligent Product Entrepreneurial Selection Business Development Commercial Excellence Effectiveness 30
Slide 32: Strativa organic growth platform
un Organic growth platform with Nascobal and 2010 launches of Zuplenz and Oravig - Multiple growth drivers - Diversifies Strativa Solid foundation with Megace ES, Nascobal & AndroGel Intellectual property protection for all products Experienced commercial team Fertile business development environmen
Slide 33: Product selection criteria
nt, * Product selection criteria: — Patient-centric innovations — Promotion sensitive products with significant growth potential — Relatively lower risk development programs * Late stage ICEs and NCEs (Phase Ill or Phase Ill ready) * New formulations or delivery systems * Established markets with co
Slide 34: Intelligent Product Selection: Nascobal Nasal Spray
t pf a Intelligent Product Selection: Nascobal Nasal Spray Nascobal Nasal Spra’ Nascobal RXs (4 week moving average)" ~$15M in annualized * Only once-weekly Rx vitamin B12 1800 Launch net sales & growing alternative to monthly injections * Owned by small pharmaceutical company, QOL Medical 1400 *Ann
Slide 35: Entrepreneurial Business Development: Building the Future
t Entrepreneurial Business Developmen' he a Building the Future Strativa, through licensing and acquisition: — Finds, enhances and brings to market products that apply innovative technologies, reformulation techniques and delivery systems to proven and new molecules resulting in improved medications
Slide 36: Pipeline Review: Zuplenz oral soluble film
Entrepreneurial Business Development pl 4 Pipeline Review: Zuplenz (ondansetron) oral soluble film 35 Product Description *Oral soluble film strip containing ondansetron, the most prescribed anti- emetic * 4 mg and 8 mg (individually foil packaged) * Dissolves quickly without the need to swallow a p
Slide 37: CINV, RINV and PONV are a significant health issue
4a CINV, RINV and PONV are a sig health issue * Nausea and vomiting are highly prevalent (CINV can be over 90% for some compounds’, RINV up to 80%2, and PONV up to 30%°) and greatly distressing outcomes of chemotherapy, radiotherapy, and surgery nf - CINV is consistently reported as the most unpleas
Slide 38: Target Product Profile
Target Product Profile Comment Fast dissolution v Dissolves in about 10 seconds Delivers ondansetron in a quick- Ease of use in patients with trouble swallowing dissolving film strip Taken with or without water v Provides proven efficacy and safety of ondansetron Equivalent dosing options to Zofran
Slide 39: Zuplenz (ondansetron) oral soluble film
4 Zuplenz (ondansetron) oral soluble film Ondanestron Molecule Oral Solids Zuplenz: (Thousands of Prescriptions) *Action date 1Q 2010 5000 sLarge & fast growing market. Strong 5000 growth expected to continue. 000 2.900 *To be priced at a modest premium to 2000 co-pay to facilitate 3* tier formulary
Slide 40: Oravig pipeline review
39 Entrepreneurial Business Development Product Description *Once-daily muco-adhesive tablet that is applied to the upper gum providing an extended local release of miconazole (active ingredient) at the site of infection - the oral cavity and pharynx Proposed Indication *Treatment of Oropharyngeal C
Slide 41: OPC occurs in a diverse spectrum of patients
A OPC occurs in a diverse spectrum of patients ‘Most common oral lesion in HIV-infected patients, recurs frequently jents'2 20% HIV patients: 12-20% Untreated OPC can contribute significantly to morbidity in these patients ; ~ Variations in incidence due to differences across diagnostic eriteria Ast
Slide 42: OPC: Clinical Significance
4a OPC: Clinical Significance OPC symptoms may vary according to severity and include any of the following:12 — Painful mouth — Odynophagia — Burning sensation - Altered taste — Soreness - Inflammation — Xerostomia - Erythema Patients suffering from OPC symptoms experience:12 — Marked reduction in f
Slide 43: Current treatment for OPC
Current treatment for OPC is dominated by two local products and one systemic product Indication Administration Nystatin? ope Liquid (swish and | 4 times per day for 14 (nystatin) swallow) days Therapies Meco ope Troche (dissolving | 5 times per day for 14 (clotrimazole) lozenge) days OPC, esophagea
Slide 44: US Prescriptions per Year for Adult OPC
Us Prescriptions per Year for Adult OPC (000’s) Fluconazole Tae Clotrimazole Treche a Oravig (miconazole) muco-adhesive tablets Oravig: *US Action Date Q2 2010 +Established treatment market valued at ~$400M in annual sales (at $225 per RX value) *To be priced at premium, yet priced modestly for a no
Slide 45: Productive and experienced sales team
ne, * Productive and experienced sales team — 164 person sales force * 143 sales representatives * 21 field-based sales management team — Average >8 physician calls per day per representative * Experienced and successful Managed Markets team — 10 person team including trade relations ¢ Marketing, Ma
Slide 46: Megace ES concentrated suspension
Megace ES (megestrol acetate) concentrated suspension Megace ES TRXs by Quarter Net Sales: Q209 = $17.1M, Q309 = $19.1M 40,000 in 30,000 20,00 oil FE EEE SESH SIH HFS H ESI S S TRX growth in 2009 due to several new managed care contracts and sales force pull through Average selling price declining a
Slide 47: Nascobal Nasal Spray
pf 4 Nascobal (cyanocobalamin) Nasal Spray Nascobal RXs (4 week moving average)" Nascobal Growth Drivers: 1000 ~$15M in annualized _| « Large market (45M annual B12 injections) Launch | net sales & growing _| 9"wing at 10%+ (MAT 09 vs 08) "400 + Demonstrated promotion responsiveness 1200 + Sales for
Slide 48: Operational Excellence
4a Operational Excellence ¢ Leverage Par Pharmaceutical capabilities — Dependable, high quality manufacturing * Par manufactures Megace ES and Nascobal * Advisory role to Monosol Rx and BioAlliance on the manufacture of Zuplenz and Oravig — Distribution and supply chain capabilities via Par Pharmace
Slide 49: Strativa: What to Look For in 2010-2012 and Beyond
4a Strativa: What to Look For in 2010-2012 and Beyond 2010 to 2012 Organic Growth Drivers: - Continued growth of Nascobal: keeping pace to achieve peak sales potential - FDA approval and launches of Zuplenz and Oravig - Prescription growth of Zuplenz and Oravig on pace to achieve peak sales potentia
Slide 50: Q&A
Slide 51: Lawrence A. Kenyon
Lawrence A. Kenyon: EVP and CFO
Slide 52: Finance review agenda
ne ¢ Introduction of Team Members * Current State of the Business * 2010 Perspective ¢ Long Term Financial Outlook 5
Slide 53: Current State of the Business: Operating Results
a Current State of the Business Operating Results (000s, except per share amounts) Three Months Ended, Nine Months Ended, Oct 3.2009 Sept27,2008 Oct3,2009 Sept 27. 2008 Revenues $294,802 $148,967 $902,838 $416,832 Gross Margin $92,138 $51,462 $242,615 $126,091 Operating Expenses R&D $6,458 $13,784 $
Slide 54: Current State of the Business: Balance Sheet Items
nf a Current State of the Business Balance Sheet Items ($000s) Oct 3, December 31, 2009 2008 ASSETS Current Assets ‘Cash, equivalents and available for sale securities $210,453 $263,726 Accounts receivable, net 104,851 83,408 Inventories 75,361 42,504 Other 378 108.497 Total Current Assets ‘$460,043
Slide 55: Delivering Sustainable Earnings Growth for PRX
Delivering Sustainable Earnings Growth for PRX Capital Allocation & Financial Management Pipeline Expansion Product Launches Operational Effectiveness. Development Optimized Assets = Diverse Product Portfolio _— Reliable, Quality Manufacturing Strativa Rational Expenditures Sustainable Earnings Grow
Slide 56: Our Model Assumptions for 2010-2012
b pf a Our Model Assumptions for 2010-2012 * Impact of excess cash flow reinvestment not captured — Operating expenses do include continued spending for generic R&D, legal and Strativa sales and marketing — At least $250 million free cash to be generated for potential reinvestment, BD and M&A * Real
Slide 57: 2010: Another Solid Year for PRX
pe, 2010: Another Solid Year for PRX ¢ Performance driven by: — Continued success with key generic products — Base generic erosion rate 10-12% — Nascobal growth in addition to launch of two Strativa products — Cash generation of ~ $100 million — Operating expenses in line with current annualized run
Slide 58: Expected Gross Margin Contributions
Expected Gross Margin Contributions Strativa mGRx 80% 68% 57% 53% 2009 2010 2011 2012 87
Slide 59: Expected Pre-Tax Operating Profit Contributions
he a Expected Pre-Tax Operating Profit Contributions* 4% 30% 39% © Strativa mos 96% BGRx 70% a 61% 2009 2010 2011 2012 58 * Before corporate allocations
Slide 60: Expected Gross Margin
a Expected Gross M 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 59
Slide 61: Operating Expenses Under Control
a Operating Expenses Under Control $220,000 » $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 - $80,000 $60,000 $40,000 $20,000 $0 eR&D ESGRA 2009* 2010 2011 2012 Numbers in thousands, * Annualized off of 3209
Slide 62: Expected Net Cash Balances
a Expected Net Cash Balances $ in millions, $450 $400 $350 $300 $250 - $200 $150 - $100 $50 - $0 2009 2010 2011 2012 6
Slide 63: Both businesses providing significant contributions
, * Both businesses providing significant contributions * 2010 - 2012 Total EPS at least $6.00 — YOY EPS Growth — EPS CAGR > 20% * Total operating expense run rate of approximately $210 million annually * Generate > $250 million in free cash 2010 - 2012 * Ample resources to pursue additional BD and/
Slide 64: Q&A
Slide 65: Patrick G. LePore
Patrick G. LePore : Chairman, Chief Executive Officer and President
Slide 66: Why Invest in PRX Today?
4a Why Invest in PRX Today? * PRX is one company with two businesses positioned to deliver pf consistent and sustainable long term EPS growth * Recent success provides foundation for at least $6.00 of total EPS in the 2010 — 2012 period, which does not include: — potential acquisitions in either or
Slide 67: Q&A
Slide 68: Trademarks Mentioned
Trademarks Mentioned Trade Mark | | Trade Mark | AndroGel® Solvay Pharmaceuticals Mycelex® Bayer Pharmaceuticals Crestor® AstraZeneca Nascobal® Par Pharmaceutical Companies Diastat® Valeant Pharmaceuticals Oravig® Par Pharmaceutical Companies Diflucan® Pfizer Risperdal © Johnson Johnson Eloxatin® Sa
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