Mayne Pharma Group Ltd. · ASX:MYX
Mayne Pharma — Investor Presentation (February 2018)
27 slides from Mayne Pharma's investor presentation, Feb 23, 2018
Slide 1: Mayne Pharma Group Limited 1HFY18 Results Presentation
Mayne Pharma Group Limited 1HFY18 Results Presentation 23 February 2018 Scott Richards, Chief Executive Officer Nick Freeman, Group Chief Financial Officer 1
Slide 2: Disclaimer
Disclaimer ● The information provided is general in nature and is in summary form only. It is not complete and should be read in conjunction with the company’s audited Financial Statements and market disclosures. This material is not intended to be relied upon as advice to investors or potential inv
Slide 3: Executive summary
Executive summary ● Reported EBITDA of A$23m and adjusted EBITDA of A$70 million ● Reported net loss after tax of A$174m driven by asset impairments, abnormal Doryx® returns and stock Financial obsolescence, restructuring expenses and restatement of deferred tax assets and liabilities following the
Slide 4: 2018 half-year results
2018 half-year results 1HFY18 results (attributable to members) ● Reduced revenue and gross profit reflects GPD price deflation Reported results Adjusted results1 and a number of abnormal one-off items including extraordinary stock obsolescence, abnormal Doryx® returns A$million 1HFY18 1HFY172 1HFY1
Slide 5: Adjustments to earnings 1 – 1HFY18
Adjustments to earnings1 – 1HFY18 EBITDA NPAT A$million Comments adjustments adjustments Earnings post 23.0 (174.2) adjustments Intangible asset impairments (A$184m pre-tax) relating to the change in the market dynamics for the US Impairment - 139.8 generic portfolio (GPD goodwill A$38m, GPD Women’s
Slide 6: Q1 and Q2 performance
Q1 and Q2 performance Reported Adjusted1 A$million 1QFY18 2QFY18 Change (%) 1QFY18 2QFY18 Change (%) GPD 78.6 102.3 30% 78.6 102.3 30% MCS 14.2 15.5 10% 14.2 15.5 10% SBD 9.6 4.3 (55%) 10.5 15.7 49% MPI 9.4 9.3 (1%) 9.4 9.3 (1%) Revenue 111.8 131.4 18% 112.8 142.8 27% GPD 27.1 36.5 34% 34.0 50.1 47%
Slide 7: Key products & overview: Mayne Pharma business units
Mayne Pharma business units US Business Units Rest of World Generic Products Division Specialty Brands Division Metrics Contract Services Mayne Pharma (GPD) (SBD) (MCS) International (MPI) ● Develops, markets and ● Develops, markets and ● Provides contract ● Develops, markets and distributes generic
Slide 8: US generic industry dynamics update
US generic industry dynamics update ● US generic market appears to be stabilising Y/Y Average Price Change Ex New Launches - By NDC - Barclays research shows 13% deflation year on year and in increase of 3% month on month in 0% December 2017 -5% - Mayne Pharma price deflation low single digits in -1
Slide 9: Generic Products Division (GPD)
Generic Products Division (GPD) ● GPD USD revenue was US$141m down 16% on pcp Change and down 5% on 2HFY17 A$million 1HFY18 1HFY17 1HFY18 v 1HFY17 ● Gross profit margin impacted by A$20m of one–off abnormal stock adjustments and restructuring costs Revenue 180.9 222.6 (19%) - Adjusted GM of 46% excl
Slide 10: Metrics Contract Services (MCS)
Metrics Contract Services (MCS) ● MCS revenue was US$23.2m, up 9% on pcp Change A$million 1HFY18 1HFY17 1HFY18 v ● Growth in revenue and gross profit has been driven by 1HFY17 repeat business with existing clients and increased late-stage development work Revenue 29.7 28.1 6% - Facility expansion an
Slide 11: Specialty Brands Division (SBD)
Specialty Brands Division (SBD) ● SBD revenue negatively impacted by A$12m of Change abnormal Doryx® returns including provision for future A$million 1HFY18 1HFY17 1HFY18 v returns 1HFY17 ● Adjusted 2QFY18 revenue and gross profit up 49% on Revenue 13.8 26.8 (48%) 1QFY18 Adj Revenue1 26.2 26.8 (2%)
Slide 12: Expanded sales team expected to drive prescription demand growth
Expanded sales team expected to drive prescription demand growth Weekly prescriptions (TRx) 6,000 Second sales Launch of Fabior team in the field and Sorilux 5,000 4,000 3,000 2,000 1,000 - Sorilux Fabior Doryx MPC Source: IQVIA, weekly TRx as at 9 February 2018 12
Slide 13: Mayne Pharma International (MPI)
Mayne Pharma International (MPI) ● Aspirin, itraconazole and the injectables portfolio grew Change strongly A$million 1HFY18 1HFY17 1HFY18 v 1HFY17 ● Stronger gross profit reflects improving business mix and renegotiation of supply contracts Revenue 18.8 17.3 8% ● Monurol® (fosfomycin) granules and
Slide 14: R&D update
R&D update ● R&D spend was A$23.2m as the Company focused on higher Pipeline – filed and development by dosage form value and differentiated product opportunities in the US (IQVIA US$ market size) Other ● A$22m impairment of pipeline assets Hormonal 3% IR tablet 14% device - A$135m R&D spend since a
Slide 15: Multiple generic opportunities to drive future growth
Multiple generic opportunities to drive future growth Potential Generic name Brand US market size1 Comments launch Doxycycline monohydrate Monodox® US$30m 2H18 Approved 1H18 – launch imminent capsule Levonorgestrel / ethinyl Quartette® US$10m 2H18 Approved 1H18 – launch imminent estradiol tablets Li
Slide 16: Branded portfolio expansion through internal development, co-development and acquisition
Branded portfolio expansion through internal development, co-development and acquisition Product Therapeutic Area US market size1 Status Dermatology Doryx® MPC Acne US$700m (oral antibiotics) Marketed Doryx® US$1.3b Doryx® MPC Fabior® Acne Marketed (topical retinoids) Fabior® US$300m Sorilux® Sorilu
Slide 17: New Greenville facility to begin production in next month
New Greenville facility to begin production in next month 17
Slide 18: Committed to key strategic priorities
Committed to key strategic priorities ● Multichannel product distribution strategy ● Expansion of generics pipeline through strategic to diversify earnings (specialty pharmacy, alliances and other business development government, telesales) Commercial execution ● Optimise manufacturing network to dr
Slide 19: Outlook
Outlook ● Positive trading momentum in 2QFY18 which has continued into January 2018 ● Growth in the 2HFY18 driven by product launches, expanding channels to market, portfolio optimisation and market share gains Generic Products ● US$12m of expected cost savings from optimising supply network by FY20
Slide 20: 1HFY18 financial information
1HFY18 financial information
Slide 21: Reported to adjusted reconciliation attributable to members
Reported to adjusted reconciliation attributable to members REPORTED SBD – GPD – ATTRIBUTABLE ABNORMAL ABNORMAL HPPI – TO MEMBERS DORYX STOCK RESTRUCTURING ASSET MAYNE’S ADJUSTED SALES AND PROFIT (A$M) DEC 2017 RETURNS (1) ADJUSTMENTS (2) EXPENSES (3) IMPAIRMENTS (4) SHARE (5) US TAX ITEMS(6) DEC 20
Slide 22: Profit and Loss – attributable to members
Profit and Loss – attributable to members Half year ending Change A$million 31 Dec 17 31 Dec 16 $m Revenue 243.3 294.8 (51.5) Gross profit 95.9 171.2 (75.3) Gross profit % 39% 58% EBITDA - adjusted 70.2 109.9 (39.7) Adjustments (47.2) 19.3 (66.5) EBITDA – reported 23.0 129.2 (106.2) Depreciation / a
Slide 23: Operating expenses
Operating expenses Operating expenses1 (A$m) ● Operating expenses have remained consistent 1HFY18 versus pcp with marketing expense increasing due to the expanded Specialty Brands sales team and other 70.0 14.0% admin expenses decreasing largely due to reduced legal costs 60.0 12.0% 50.0 10.0% 34.3
Slide 24: Consolidated Balance Sheet Position
Consolidated Balance Sheet Position As at As at Change A$million 31 Dec 17 30 Jun 17 $m Cash 56.0 63.0 (7.0) Inventory 88.6 106.4 (17.8) Receivables 238.0 232.7 5.3 PP&E 212.2 189.3 22.9 Intangibles & goodwill 1,018.6 1,235.4 (216.8) Other assets 116.7 88.1 28.6 Total assets 1,730.0 1,914.9 (184.9)
Slide 25: Consolidated Cash Flow
Consolidated Cash Flow Half year ending Change A$million 31 Dec 17 31 Dec 16 $m Net operating cash flow pre tax, interest, 53.8 112.7 (58.2) working capital and one-off items WC movements1 8.8 (174.9) 183.7 Net interest paid (6.9) (4.1) (2.8) Net tax paid (6.8) (22.7) 15.9 Patent settlement - 26.2 (
Slide 26: Debt profile
Debt profile ● Dual currency debt facility - US$150m, 3 year bullet facility, matures July 2019 - US$250m 5 year revolving facility, matures July 2021 - US$20m 2 year working capital facility - A$10m, 2 year working capital facility ● Liquidity - Total liquidity A$235m - US$140m undrawn debt - Cash
Slide 27: US tax reform
US tax reform ● US Federal Corporate tax rate will fall from 35% to 21% - FY18 rate dropped from 35.0% to 28.1% - FY19 rate will drop to 21.0% ● Rate restatement expense (net DTA) in 1H18 of A$11m (consolidated) and further adjustment expected at June 2018 ● Expected underlying effective tax rate <2
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