Q2 2024 Earnings Summary
- Viatris is focusing on disciplined business development to acquire innovative, patent-protected assets that can drive future growth, such as selatogrel and cenerimod, which are considered important potential assets. The company plans to continue to add assets to their pipeline in 2025 and beyond to accelerate growth. , ,
- Viatris is investing in developing multiple GLP-1 products, including semaglutide, liraglutide, and Mounjaro, having secured API supply and invested in manufacturing capabilities. They anticipate a significant role in the GLP-1 market, which is rapidly growing.
- Strong new product revenue momentum with $210 million in Q2, adding to $154 million in Q1, totaling $354 million year-to-date, leading to an increased full-year guidance of $500 million to $600 million. This growth is driven by products already launched and a broad pipeline, indicating continued confidence in the company's growth prospects.
- Viatris is facing ongoing government price declines in key markets like Japan and Australia, which could negatively impact revenues. The CFO acknowledged that these declines are "driven by the ongoing price normal government price declines that we're seeing in Japan and Australia."
- Supply chain constraints for GLP-1 APIs may hinder Viatris's ability to enter the GLP-1 market as anticipated. While the company is developing multiple GLP-1s, they admit that "as you know, supply chain can be a little tight" and that they have "secured supply of API for all these assets," indicating potential risks.
- Uncertainty about the timing and success of key pipeline assets like cenerimod and selatogrel, especially given competition from groundbreaking therapies, could impact future growth. The CEO stated, "I don't have a specific update for you on the date... we'll be able to be in a better position to give you sort of specifics on where we think those time lines are going." Additionally, there are concerns about competition from CD19 CAR-Ts and bispecifics in lupus treatment.
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2025 EBITDA Guidance
Q: Are you comfortable with 2025 EBITDA of $4.5 to $4.6 billion?
A: Management acknowledged the $2.3 billion free cash flow guidance for 2025 but stated it's still too early to discuss specific EBITDA figures for that year. They feel good about the momentum in 2024 and will continue to focus on EBITDA conversion going forward. -
New Product Revenue Drivers
Q: What's driving the raised guidance for new product revenues?
A: The company reported strong new product revenue of $210 million this quarter and $354 million year-to-date, expecting $500 million to $600 million for the full year. Growth is broad-based across products and regions, including Breyna, lisdexamfetamine, and other generics in North America, Europe, emerging markets, and JANZ. -
Business Development Strategy
Q: How are you approaching business development and growth opportunities?
A: Management is engaged in numerous discussions and will take a disciplined approach to business development. After completing divestitures, they aim to pay down debt and are committed to returning at least $2.3 billion in free cash flow to shareholders through dividends and share buybacks. They are looking for assets to supercharge growth in 2025 and beyond, focusing on derisked innovative assets with unmet medical needs and long runways, as well as strengthening the base business. -
GLP-1 Aspirations
Q: What are your GLP-1 aspirations and investment plans?
A: The company is developing multiple GLP-1 products, including semaglutide, liraglutide, and Mounjaro. They have secured API supply and invested in manufacturing capabilities, anticipating a significant role in the GLP-1 market. -
Complex Generics Pipeline
Q: What are your expectations for complex generic launches in 2025?
A: With over 250 products in the pipeline under development or regulatory review, the company expects a steady flow of complex generics launching in 2025 and beyond. They are confident in their complex generic pipeline but did not highlight specific products. -
Investment in Cenerimod
Q: How does cenerimod fit into the lupus treatment landscape?
A: Management believes cenerimod offers high efficacy with a differentiated safety profile compared to CAR-T therapies and bispecifics, which have significant safety concerns. As an oral drug, cenerimod provides convenience and is expected to be positioned prior to biologics or CAR-Ts in the treatment sequence. -
Base Business Erosion
Q: What's the impact of government price regulations in Japan and Australia?
A: The ongoing normal government price declines in Japan and Australia are impacting the base business, but this is being offset by better volume in Japan. The JANZ region is performing better than expectations for the year. -
R&D Investment Allocation
Q: How will you balance R&D spend between innovative and non-innovative pipelines?
A: The company will continue to invest in both the base business and innovative pipeline. As they bring in more innovative assets like selatogrel and cenerimod, there may be some shift in R&D allocation, but they will invest in all components to drive growth. -
Divestitures Impact on EBITDA
Q: Can you approximate the full-year 2024 EBITDA contribution from divestitures?
A: Management has adjusted guidance and actuals to reflect divestitures as they close. They will provide additional detail as they move into 2025 but feel good about the stability of EBITDA margins as they continue to invest in growth. -
Selatogrel Development Timeline
Q: What's the timeline update for the selatogrel Phase III SOS-AMI trial?
A: The company is making significant progress to accelerate the development of selatogrel and plans to update timelines in 2025. They are opening new sites and investing in development to move the timelines forward.