Mallinckrodt - Earnings Call - Q3 2025

Transcript

Operator (participant)

Today, and thank you for standing by. Welcome to the Keenova Q3 2025 earnings announcements conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Gerard Meuchner. Please go ahead, sir.

Gerard Meuchner (Head of Communications)

Thank you, operator, and welcome, everyone. Before we begin, let me remind you that we will make forward-looking statements on this call, and it's possible that actual results could be materially different from our stated expectations. Please note these forward-looking statements are made as of today, November 10th, 2025, and we assume no obligation to update them, even in the event of new information or if actual results or future expectations change materially, except as required by law. We encourage you to refer to the cautionary statements contained in our SEC filings for a more in-depth explanation of the inherent limitations of such forward-looking statements. Additionally, we note that this call does not constitute an offer to sell or the solicitation of an offer to buy any securities, and any such offering would be made pursuant to a registration statement to be filed with the SEC.

We will also provide select non-GAAP adjusted measures related to our financial performance on this call. A reconciliation of these non-GAAP measures is included in our earnings release and in this presentation, which can be found on our website, keenova.com. We use our website as a channel to distribute important and time-critical company information, and you should look to the investor relations page of the website for this information. As noted in our earnings release, the third quarter for Mallinckrodt ended on September 26th, 2025. Mallinckrodt's third quarter earnings report includes combined business results since the completion of our merger with Endo on July 31, 2025. Joining me on today's call are Siggi Olafsson, our President and Chief Executive Officer, and Christiana Stamoulis, our President and Chief Financial Officer.

Siggy and Christiana will provide an overview of our new company, Keenova Therapeutics, and review our performance for the third quarter in detail. I'll now turn the call over to Siggy.

Sigurdur Olafsson (President and CEO)

Thanks, Gerard, and good morning, everyone. This year has been nothing short of transformative for us. First, we brought together two pharmaceutical leaders with the merger of Mallinckrodt and Endo. Then, we combined our generics and sterile injectable businesses under the name Power Health and announced today that we completed the spinoff of that business as a separate private company. This is an exciting day for our teams, and we are proud to introduce you to Keenova Therapeutics, a new company with a new identity and new future. Keenova strives to develop therapeutics that help patients with rare and unaddressed conditions live happier and healthier lives. The name Keenova evokes two complementary attributes of our company: the keen focus on helping patients receive the care they deserve and the innovation required to develop our therapeutics.

Our new tagline, "Keen to solve, keen to serve," reflects our commitment to help solve the challenges our patients face and to serve them with integrity. Our diversified portfolio serves areas of significant and unmet medical need with focus on rheumatology, ophthalmology, nephrology, pulmonology, neurology, urology, orthopedics, and neonatal respiratory critical care. We have a strong platform in place with two key brands, Acthar Gel and XIAFLEX, a U.S.-focused footprint and strong commercial capabilities. Following the merger with Endo, we have greater financial flexibility to build a robust pipeline by expanding the approved indications of existing assets and pursuing business development opportunities. The merger also created meaningful synergy opportunities. Keenova is on track to realize and benefit from approximately $75 million of pre-tax run-rate synergies in the first 12 months post-merger and at least $150 million of annual pre-tax run-rate synergies by year three post-merger.

In the third quarter, we were pleased to welcome new leadership to add to the existing strength of our executive team at such an important moment for the business. That includes our President and Chief Financial Officer, Christiana Stamoulis, who has an exceptional record of achievement in strategy, finance, corporate development, and execution. She is with us on today's call and will review our financials shortly. Executive Vice President and Chief Scientific Officer, Dr. Marek Honczarenko, was another impressive addition to the team. Marek has a successful track record of launching name-brand products at some of the world's largest and most accomplished pharmaceutical companies, and his leadership will be key to building a more robust pipeline as well as a world-class R&D organization at Keenova.

Looking ahead, we currently intend to pursue a listing of Keenova's ordinary shares on the New York Stock Exchange in 2026, subject to approval by Keenova's Board of Directors and other considerations and conditions. We expect to conduct a public offering of Keenova's ordinary shares to facilitate the listing at that time. In short, we have a strong foundation in place, and we are eager to keep building and delivering meaningful benefits for our patients and value for our shareholders and partners. Our results for the third quarter reflect that Keenova is off to a great start. While we operated as a combined business in the third quarter, we will focus our comments today on results related to the brand business, where we delivered a 10% top-line growth on a pro forma basis versus the prior year quarter.

Let's take a closer look at some key products and drivers from the portfolio. Starting with Acthar Gel, net sales in the third quarter increased 44% compared to the prior year quarter, making another quarter of significant growth. We are now in the second year of rolling out our self-dip device, and its strong effect continues to play a pivotal role in Acthar Gel's growth. On the back of growing demand and broadening prescriber base and self-dip consistently exceeding expectation, we now expect Acthar Gel's net sales growth of 30%-35% for the full year. Next, XIAFLEX. Net sales growth in the third quarter was 2% versus the prior year quarter, as we experienced certain unexpected shipment delays. We are also making important progress in our XIAFLEX pipeline for new indications.

I'm pleased to share that we have initiated a clinical program evaluating XIAFLEX for hammer toe, and we have already recruited over 30 patients. We are also on track to complete patient enrollment in our phase III clinical program evaluating XIAFLEX for plantar fibromatosis by the end of the year, and we now expect top-line data to be available in the second quarter of 2026. Lastly, on INOmax, we are pleased to see continued growth outside the U.S. with strong performance in Japan. We also continued to advance our multi-year rollout of the EVOLVE DS delivery system into U.S. hospitals. As of the end of third quarter, we have more than 900 devices placed in over 100 hospitals nationwide. Our excellent execution this quarter positioned us to have a strong finish to the year.

Before Christiana discusses the financial results in more detail, I would like to take a moment to acknowledge our teams. As I mentioned, this year has been transformative, and our employees have navigated many significant challenges, primarily the work of bringing together two companies and executing a spinoff. Their unwavering focus on advancing our strategic priorities and dedication to serving patients have put us in a position for continued success. Our people are why I have every confidence in a bright future for Keenova. Now, I'll turn the call over to Christiana.

Christiana Stamoulis (President and CFO)

Thank you for the introduction, Siggy. I'm excited to be speaking here for the first time as President and CFO of Keenova. Since starting my new role in September, I have been deeply impressed by the team here and the commitment to making the most of the unique opportunity we have to reinvent our company. It's a promising time for all of us and an honor for me to be part of the Keenova team. Before discussing the financial results for the quarter, it is worth noting that as a result of the merger with Endo, the company operated in three reportable segments during the third quarter of 2025: specialty brands, generics, and sterile injectables. Going forward, Keenova comprises only the specialty brand segment, while Par Health comprises the generics and sterile injectable segment.

I would like to also point out that the company's third-quarter earnings report reflects only two months of combined business results since the merger of Endo closed on July 31st. To support year-over-year comparability, in our presentation slides, we have provided pro forma financial results as if the companies were combined for the entirety of the corresponding period presented. Therefore, this information is in addition to the information included in this morning's earnings release, which we encourage you to also review. The pro forma results also exclude Mallinckrodt's pharmacos business and Endo's international pharmaceuticals business and do not reflect the impact of potential synergies, or in the case of Par Health, the additional costs required to operate the business on a standalone basis. Since the Par Health spinoff was completed today, the primary focus of our discussion will be on the Keenova results.

Par Health has separately published its third-quarter results this morning. Turning to slide seven and the third-quarter financial highlights, pro forma net total net sales for the company in the third quarter of 2025 were $869 million, an increase of 3% compared to $845 million in the third quarter of 2024. Pro forma net sales for Keenova in the third quarter of 2025 were $480 million, an increase of 10% compared to $435 million in the third quarter of 2024, primarily driven by the strong performance of Acthar Gel. Pro forma net sales for Par Health in the third quarter of 2025 were $389 million, a decrease of 5% compared to $410 million in the third quarter of 2024. Pro forma adjusted EBITDA for the company in the third quarter of 2025 was $129 million compared to $268 million in the third quarter of 2024.

Pro forma adjusted EBITDA for Keenova in the third quarter of 2025 was $62 million compared to $143 million in the third quarter of 2024. This decrease was primarily due to $123 million in compensation expenses in the quarter related to the merger of Mallinckrodt and Endo, partially offset by growth in Acthar. Excluding compensation expenses, pro forma adjusted EBITDA increased by $25 million. Pro forma adjusted EBITDA for Par Health in the third quarter of 2025 was $77 million compared to $125 million in the third quarter of 2024. Now, let's take a closer look at Keenova's performance. Net sales of Acthar Gel in the third quarter of 2025 were $181 million, an increase of 44% compared to $126 million in the third quarter of 2024.

This growth is reflective of strong category expansion, a broader and deeper prescriber base as 30% of the Acthar prescriber base was new to the category, accelerated adoption of the self-dip device, with self-dip accounting for 84% of all new referrals in the quarter, and enhanced patient affordability. Turning to XIAFLEX, net sales in the third quarter of 2025 were $130 million, an increase of 2% compared to $128 million in the third quarter of 2024. As Siggy mentioned, third quarter 2025, XIAFLEX growth was negatively impacted by an unexpected delay in certain shipments, which shifted from the third quarter to the fourth quarter. With respect to the remaining portfolio, we note that in the third quarter of 2025, net sales of INOmax were $59 million, a decrease of 8% compared to the prior year quarter, driven by competitive pressures in the U.S., partially offset by 19% growth in Japan.

Net sales of PERCOCET were $15 million, a decrease of 37% versus the prior year quarter that was largely due to a formula status change in the quarter by a major player. Turning to guidance, as a result of Acthar Gel's continued strong performance in Q3, we are raising 2025 full-year net sales growth guidance for Acthar from a 20%-30% range to a 30%-35% range. In addition, we are updating net sales growth guidance for XIAFLEX from a high single-digit range to a mid-single-digit range. We are raising full-year 2025 pro forma net sales and adjusted EBITDA guidance for Keenova compared to the implied guidance for the branded business previously provided back in August. The updated guidance excludes Par Health's results.

We now expect pro forma net sales to be between $1.87 billion and $1.89 billion, and pro forma adjusted EBITDA to be between $505 million and $515 million, inclusive of approximately $135 million in compensation expenses related to the merger of Mallinckrodt and Endo expected for the full year. This updated full-year guidance reflects expected fourth quarter 2025 net sales of $485 million-$505 million and adjusted EBITDA of $155 million-$165 million, inclusive of approximately $10 million of expected transaction-related compensation expenses in the fourth quarter. Lastly, as Siggy noted, we remain on track to realize approximately $75 million of pre-tax run-rate synergies in the first 12 months post-merger and at least $150 million of annual pre-tax run-rate synergies by year three post-merger, primarily driven by the integration of business functions and savings from economies of scale, among other areas.

I'll now hand the call back to Siggy for closing remarks.

Sigurdur Olafsson (President and CEO)

Thank you, Christiana. As we introduce Keenova to the investor community, I want to say that I'm deeply proud of our teams and the incredible work they have done this year. We have a tremendous opportunity ahead, and we look forward to keeping you informed of our progress. I will now open it up for Q&A.

Operator (participant)

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. I'm showing no questions at this time, and I would like to hand the conference back over to Gerard Meuchner for closing remarks.

Gerard Meuchner (Head of Communications)

Thank you. Thanks, Siggy and Christiana, and thank you all again for joining us today. We look forward to engaging with you in the days and weeks ahead. If you have any questions, the best way to contact us will be via email, and we will work to get back to you as soon as possible. Thank you.

Operator (participant)

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.