Douglas Miehm

Douglas Miehm asked how Bausch + Lomb plans to resolve the float situation to improve its valuation and multiple expansion, acknowledging the company's strong operational performance.

Answer

Chairman and CEO Brent Saunders agreed on the importance of addressing the float issue but stated it is a decision controlled by Bausch Health Companies (BHC), not Bausch + Lomb. He noted BHC's stated intention to sell shares in time but could not provide a specific timeline.

Douglas Miehm asked about the company's valuation and potential multiple expansion, specifically addressing the float issue as a likely constraint despite strong operational performance and future margin increases, and how the company plans to resolve this situation.

Answer

Chairman and CEO Brent Saunders agreed that the float is a concern for investors and needs to be resolved. He clarified that it is a BHC issue, not within Bausch + Lomb's control, but noted that BHC plans to sell shares eventually, though no specific timeline can be provided. He reiterated that the R&D pipeline is strategically built to leverage existing markets and selling infrastructure for efficient scaling and bottom-line impact.

Doug Miehm asked about the potential for MIEBO's profitability timeline to shift earlier than 2026, given its recent strong performance. He also inquired about the company's capital allocation strategy as it becomes more successful, specifically regarding debt paydown versus reinvestment in the business.

Answer

CFO and EVP Sam Eldessouky explained that MIEBO is transitioning from a launch to a growth phase, with deliberate, high-ROI investments contributing to overall P&L leverage and margin expansion, with more details for 2026 to be shared at Investor Day. Chairman and CEO Brent Saunders and Sam Eldessouky emphasized that deleveraging to achieve investment grade is a high priority, alongside opportunistic tuck-in M&A and R&D investments, all aimed at increasing shareholder value.

Doug Miehm inquired about the potential for MIEBO's profitability timeline to shift earlier than the guided 2026, given its recent strength, and asked about the company's capital allocation strategy for incremental cash over the next one to two years, specifically regarding debt paydown versus reinvestment.

Answer

CFO and EVP Sam Eldessouky explained that MIEBO is transitioning from a launch to a growth phase, and while investments will continue, they will be deliberate, with more details on 2026 profitability to be shared at Investor Day. Regarding capital allocation, Chairman and CEO Brent Saunders emphasized a strong commitment to deleveraging through EBITDA growth and debt paydown, while also seeking smaller, profitable tuck-in M&A and investing in R&D/IP, with lowering debt ratios being a high priority.

Douglas Miehm from RBC Capital Markets inquired if Bausch + Lomb was making new pricing or gross-to-net investments for MIBO ahead of new competition. He also asked about the future outlook for the generics business, questioning if it could return to growth.

Answer

CEO & Chairman Brent Saunders clarified that significant gross-to-net investments for MIBO have already been made to secure broad managed care coverage (74% commercial, 71% Medicare), which now serves as a competitive advantage. Regarding generics, he acknowledged the business is cyclical but highlighted B+L's strength in its US-based manufacturing. EVP & CFO Sam Eldessouky added that the business grew 10% in the prior year and is positioned to capitalize on market opportunities as they arise.

Douglas Miehm asked about the potential impact of pharmaceutical tariffs, specifically concerning the location of intellectual property for key drugs like Miebo and Xiidra. He also requested more details on the new glaucoma product in the pipeline and its expected introduction timeline.

Answer

Chairman and CEO Brenton L. Saunders stated the company is well-insulated from potential pharma tariffs, as products sold in the U.S., including Miebo and Xiidra, are manufactured in the U.S. CFO Osama Eldessouky added that the majority of the company's IP is held in Ireland. Head of R&D Yehia Hashad detailed the glaucoma product, a new chemical entity that reduces IOP and has shown positive functional outcomes. He said a confirmatory Phase 2 study is planned to start around November.

Douglas Miehm asked for an update on Miebo's managed care contracting and coverage status. He also inquired about the product's path to profitability, questioning if it would be profitable by the end of 2025 or if that was expected in 2026-2027, given the extended DTC campaign.

Answer

Chairman and CEO Brenton L. Saunders reported that Miebo coverage is strong, at 74% commercial and 64% Medicare, which is nearing full coverage and justifies the DTC investment. He stated that, following a customary path for pharmaceutical launches, Miebo is expected to begin driving real profitability starting next year (2026), after two initial investment years. He expressed confidence in Miebo's potential to continue outperforming.

Douglas Miehm questioned how investors should view the prescription business, given its lower valuation multiples, and asked if the full-year gross margin guidance of 62.5% was conservative.

Answer

CEO Brenton L. Saunders contextualized that Pharmaceuticals is only 25% of the business and highlighted significant growth and margin opportunities in the Surgical and Vision Care segments, positioning Bausch + Lomb as a broad eye health company. CFO Osama Eldessouky described the 62.5% gross margin guidance as a balanced view, emphasizing that the key trend is the successful strategic shift toward higher-margin products.

Douglas Miehm of RBC Capital Markets asked for clarification on why the increased revenue and EPS guidance did not reflect greater operating leverage and questioned if Merck had approached Ligand to acquire the O2Ver royalty.

Answer

CFO Tavo Espinoza explained the dynamic was due to cautiousness around the Pylphos spin-off, investments in business development, a higher effective tax rate from foreign income, and an increased diluted share count. CEO Todd Davis stated that Merck has not approached them to buy the royalty and affirmed Ligand's strategy is to be a long-term holder of its royalty assets.

Douglas Miehm inquired about the current biopharmaceutical financing environment, asking if Ligand is observing an increase in 'special situations' and what the implications are for the company.

Answer

CEO Todd Davis confirmed a rise in special situations driven by difficult financing markets, viewing it as a significant opportunity for Ligand to acquire high-quality assets from distressed companies. He noted that while a healthy biotech market is needed long-term, Ligand's strategy is to focus on assets with high clinical value. Davis also mentioned that the current administration's focus on deregulation could be a long-term positive for the industry and Ligand's investment strategy.

Douglas Miehm questioned how the D-Fi therapy would be used in combination with the existing Krystal product and asked about the proportion of future deals that might be synthetic royalties versus acquisitions, as well as the status of the Pelthos strategic transaction.

Answer

SVP Paul Hadden detailed that D-Fi's injectable format and different dosing frequency would be complementary to Krystal's topical product. CEO Todd Davis stated they don't favor any deal type, estimating a historical mix of 40% royalty monetizations, 40% project finance, and 20% special situations, with the key factor being high unmet clinical need.

Douglas Miehm asked for more detail on the potential investments Ligand is evaluating, specifically regarding their size and the mix between royalties, structured deals, and acquisitions. He also inquired about the competitive landscape for FILSPARI.

Answer

CEO Todd Davis detailed the investment pipeline, stating about half are project finance deals, with another third being passive royalties from academic or corporate institutions. He noted a target deal size of $30-$40 million per development-stage asset. Dr. Karen Reeves, SVP of Investments, added that FILSPARI is positioned to be a foundational therapy in IgAN, with strong potential for use in combination therapies and in the FSGS indication where there is a significant unmet need.

Douglas Miehm of RBC Capital Markets questioned the rationale for tightening the full-year revenue guidance, asking what factors changed since Q1. He also asked where Johnson & Johnson is expected to add the most value to the ZILRETTA franchise in 2026.

Answer

CEO Frank Lee explained that the guidance was narrowed due to having greater certainty on the pace of commercial payer adoption following the NOPAIN Act, noting the midpoint of the range was unchanged. CCO Brendan Teehan stated the J&J partnership effectively doubles their sales reach and provides access to a broader customer base, including sports medicine and rheumatology specialists.

Douglas Miehm of RBC Capital Markets asked for an update on any Paragraph IV filings and potential changes to Lupkynis's exclusivity period. He also questioned if the aggressive share buyback program might be scaled back after 2025 due to anticipated increases in R&D spending.

Answer

President and CEO Peter Greenleaf confirmed there were no changes to the IP situation and that defending patents is a top priority. Regarding capital allocation, he stated that the growing cash flow from Lupkynis provides the unique ability to fund the pipeline, maintain a strong balance sheet, and continue returning capital to shareholders, though future buybacks are at the Board's discretion.

Douglas Miehm asked for updates on any Paragraph IV patent challenges and the LUPKYNIS exclusivity period. He also questioned if the aggressive share buyback program might be scaled back in the future to accommodate rising R&D expenses for the pipeline.

Answer

President and CEO Peter Greenleaf confirmed there were no new updates on patent litigation and that defending the company's IP, with patents out to 2037, is a top priority. Regarding the buyback, Greenleaf emphasized that growing cash flow from LUPKYNIS provides the unique ability to both fund the pipeline and return capital to shareholders, with deployment at the Board's discretion.

Douglas Miehm asked for an update on the status of Paragraph IV filers for LUPKYNIS and whether there were any changes to its exclusivity period, including the potential for a pediatric extension. He also questioned the aggressive share repurchase strategy in light of anticipated increases in R&D spending.

Answer

CEO Peter Greenleaf confirmed no changes regarding patent litigation or the exclusivity timeline, clarifying the current pediatric trial was not for a six-month extension. He reiterated that defending the IP out to 2037 is a top priority. Regarding the buyback, Greenleaf emphasized that growing LUPKYNIS cash flows provide the unique ability to fund operations, pipeline development, and return capital to shareholders.

Douglas Miehm requested an update on Paragraph IV filers and LUPKYNIS exclusivity, and questioned the rationale for the aggressive share buyback given increasing R&D expenses for the pipeline.

Answer

President and CEO Peter Greenleaf stated there were no changes to the Paragraph IV situation and reiterated that defending the company's IP is a top priority. He clarified that the pediatric trial does not add a six-month exclusivity extension. He justified the buyback by highlighting that strong cash flow from LUPKYNIS allows the company to fund operations, develop its pipeline, and return capital to shareholders simultaneously.

Douglas Miehm from RBC Capital Markets inquired about potential IRA headwinds for XIFAXAN in 2027, the reason for the discrepancy between revenue and prescription growth for RELISTOR and TRULANCE, and asked for more details on the Direct Corporation acquisition opportunity.

Answer

CEO Thomas Appio stated that IRA negotiations are ongoing and the company is exploring multiple levers to mitigate any impact. CFO Jean-Jacques Charhon attributed the revenue and script growth discrepancy for RELISTOR and TRULANCE to favorable gross-to-net accrual releases. Regarding the Direct acquisition, CEO Appio expressed enthusiasm for the asset's potential in hepatology but noted he was limited in what he could share until the deal closes.

Douglas Miehm asked about the sustainability of Solta's exceptional growth, the potential impact of the IRA on Xifaxan in 2027, the jurisdiction of Xifaxan's intellectual property, and specifics of its regional manufacturing.

Answer

CEO Thomas Appio explained that Solta's strong growth, particularly in Korea, was driven by prior-year capital equipment sales and is expected to moderate but remain strong, supported by growth in China and the U.S. He noted that IRA negotiations for Xifaxan are in the early stages. CFO JJ Charhon clarified that the Xifaxan IP is held in the U.S. and licensed to an Irish entity, while manufacturing for the U.S. market occurs in Canada, making it an Italian import for customs purposes.

Douglas Miehm asked for clarification on the amount of Bausch + Lomb (BLCO) shares that would be pledged for the new $700 million credit facility, the expected contribution from Xifaxan to the 2025 growth guidance, and an update on potential settlements with Granite Trust.

Answer

CFO JJ Charhon clarified that of the 38% of BLCO shares held in one entity, only 30% are fully encumbered, with the other 8% available to be used as collateral along with the remaining 50% stake. He confirmed that Salix (Xifaxan) and Solta will be the two biggest growth contributors in 2025, with Xifaxan's recent momentum expected to continue. Regarding Granite Trust, Charhon stated there is no meaningful update and no significant negative cash flow is expected from a settlement.

Douglas Miehm of RBC Capital Markets inquired about specific areas of interest for potential M&A and requested the exact revenue contribution from the full consolidation of MedReleaf Australia.

Answer

CEO Miguel Martin and CFO Simona King replied. Martin reiterated that their M&A strategy is patient and opportunistic, focused on profitable global medical cannabis, using the MedReleaf Australia deal as a template for acquiring familiar assets in high-growth markets. Regarding MedReleaf's contribution, King explained that full revenue recognition in Q2 and Q3 2025 drove year-over-year growth, but Martin confirmed the company does not break out revenue by individual international markets.