AGN
#<UNK>, do you want to talk about our dry eye pipeline.
(Inaudible) for any gaps.
Sure.
In dry eye, it is an underserved market at the moment.
There's Restasis out there and a couple of other things in development, but there are not many product offerings for dry eye.
And a relatively low proportion of patients suffering from dry eye actually receive treatment at the moment.
And I think with Restasis, obviously we have the leading product.
Oculeve is a very interesting device.
I used it myself recently.
I can assure you it works and it's really adding to our product line.
In addition to the anti-inflammatory agents like Restasis, there are some other opportunities in the biotech pipeline with different mechanisms of action.
I think in the future we are going to see other opportunities out there, which are going to be effective approaches in dry eye.
<UNK>, anything to add.
Yes, I would just say, right now we have the waterfront largely covered.
We have an OTC, or artificial tear.
Oculeve essentially is a natural tear option and then Restasis is an anti-inflammatory.
So, we offer a more complete product line for the eye care community than any company in the sector.
And I agree with <UNK> that there are a few opportunities out there but we have most of the market covered.
I think also people underestimate the importance of the multi-dose preservative-free, which we intend to file in September.
Having worked in this space before, one of the biggest issues with chronic eyedrops, particularly Restasis because of its single-dose applicator, is dosage and compliance because it's very hard to get that little single-dose in the eye.
So, for patient convenience and patient compliance and dosing, the multi-dose applicator is a huge innovation and something that we're very excited about bringing to market next year.
And then keep in mind we also have four other development programs of both Restasis and novel mechanisms earlier in our pipeline.
On Bystolic and cardio, I think the way I think about it ---+ and <UNK> can certainly chime in ---+ is Bystolic, while certainly a cardio drug, is managed a bit more like a primary care drug.
About 80% of its volume comes from our primary care field force.
We do have a partnership with Trevena for an earlier-stage product so we're not completely walking away from cardio but it's not one of our core focus therapeutic areas.
<UNK> or <UNK>, anything you'd add.
That's exactly right.
The exclusivity period on Bystolic extends out for many years.
It's a big primary care product.
We're going to increase detailing in the second half of the year.
We have great formulary coverage and it's got a terrific following in cardiology and primary care.
I always hear anecdotal, but I hear from doctors all the time about it being their favorite beta blocker to prescribe, so long as they can get it through managed care.
Maybe I'll ask <UNK> to talk about his and then, <UNK>, maybe you could chime in on a few of the key aesthetic products.
I'll start with Botox therapeutic.
We're focused on two high-growth areas which is migraine and overactive bladder.
Our priorities right now are to increase injector productivity and expand our injector user base.
And we have complete focus on that.
We think the trends in the second quarter look terrific.
And I think the outlook for the rest of the year is the same.
I don't see anything that would disrupt the reliability of that sales stream.
As it relates to Restasis, we're focused on a large OTC artificial tear market.
There are millions of patients over using artificial tears.
We have an effort to increase the diagnosis rate through in-office screenings for dry eye, which have been linked to blurred vision, adverse post-op outcomes.
So, there's an educational efforts there.
And then, finally, we launched a primary care effort for Restasis.
And the formulary coverage on the drug is rock solid.
And then I'd just probably add Linzess in there.
We have our foot on the gas.
The response to our second wave of direct-to-consumer advertising is exceeding industry norms.
We just launched an effort into long-term care for the first time since Linzess was approved, and that's about 25% of the market.
Our relationship with Ironwood is excellent.
And we're waiting to launch a low-dose version of Linzess.
So, I feel very good about our top products.
And as <UNK> mentioned in his opening remarks, 12 of our 15 products are increasing ---+ if you look at the US business, 12 of the 15 products are increasing at a double-digit rate.
And we've had virtually, in my opinion, no disruption due to the integration in this total focus on customers.
<UNK>, do you have some thoughts.
Sure.
On the facial business, grew by 13.5% versus the prior year for the quarter, and year to date we grew by 13%.
Very strong growth also in Botox which grew by 12.5%.
All this growth is mostly linked to our strong DTC campaign.
And you might have seen our Botox ad and our Voluma ad.
And on Voluma you can see that brand awareness increased by 42% from 27% in Q1.
So, a very strong business and linked to very strong advertising during the second quarter.
<UNK>, do you want to take the first question.
On an overall basis, ex currency, we grew about 11%.
Think about it this way.
Most of our aesthetics products are mostly US products.
There are products sold internationally but it's not significant as it relates to the portfolio, so a good amount of them does not have any currency impact given they're US-based.
Yes.
And as it relates to the mesalamine product line, as you know, <UNK>, you win some and you lose some.
We got a big win with Linzess on that same formulary at the expense of AMITIZA.
But as it related to the mesalamine product line they excluded it.
We view it as a mature business.
It is promoted behind Linzess.
We have a core group of users.
We're managing volume and of course taking price increases when and where appropriate.
And that's how I would think about it, as an established business.
<UNK> can certainly add her two cents.
<UNK>, I think it's not that simple.
And that's the issue we were trying to highlight with the earlier comments around it being very tough for you guys.
And our apologies in advance for that for the next couple quarters because what's in that business, as we report it today, isn't necessarily what's being sold to Teva down a straight line.
Also, as you do GAAP reporting and reporting around discontinued operations what gets assigned to what part of each business is also not intuitive and not necessarily straightforward to reality either.
So, it's going to make for some difficult quarters ahead.
Again, we are committed to as much transparency as we can possibly provide around product sales, and perhaps cash flow may be a good way to look at the business.
But it's not as straightforward or as intuitive as you would hope or want it to be, just in fairness.
I don't know, <UNK> ---+.
If I may just add to that, just to give a little of context.
You have to remember that we were really managing the business on a consolidated basis.
We weren't managing the business separately as solely a generic business and a branded business.
We didn't have the holding company approach.
We actually were managing the business on a consolidated basis.
And from a segment reporting basis even today, in international brands or generic products and in global generics, there's also branded products.
The other thing to note, which you also highlighted is from a balance sheet perspective it's really all intermingled as it relates to debt and the tax rate, some of the things that are not necessarily operationally related.
So, I just wanted to give context as to why it's not as difficult to strip out and do a percentage of cash flow and say that's what's attributable to generics.
<UNK>, it's a great question.
I think we have rationalized our sales force for our acquisitions and for the market as we see it over the next few years.
So, we don't anticipate any additional cuts in the field.
And, in fact, we would selectively add if we thought the opportunity paid back.
As an example, with the acquisition of Kythera, we will increase our facial aesthetics sales force by roughly 75 positions, making us the strongest field force in aesthetics by a large margin.
So, I think you'll see us continue to look for ways so long as we are increasing our tight strategy of product flow, either through our R&D engine or through licensing and acquisition, of building and making sure we maintain strong leadership positions commercially in each of our therapeutic areas.
With respect to spending on DTC and otherwise, we always look at the return on investment.
To the extent we think we can add more money to Botox or Restasis or Linzess, or even Namzaric, which will kick off in the fall in DTC, we're always monitoring the situation, looking at both response and return on those investments, and have no issue making them so long as we see a strong ROI.
Yes.
It's a slower build but big opportunity over time.
Look at the approvals, for example, of Juvederm in China this quarter.
That gives us a great opportunity to build on Botox in that market.
I'll be down in Brazil next week with our team looking at how we can leverage our infrastructure in Latin America and grow.
Clearly the divestiture of the Teva business has some drawbacks in mid markets like Eastern Europe and Russia in that we were going to leverage the old legacy Actavis infrastructure in those markets.
But I think we can compensate for those and continue to grow and build in emerging markets.
Sure.
<UNK>, do you want to take DARPin and I'll come back to the transformational M&A question.
Sure.
For DARPin in Japan, we actually want Japan to join in our global Phase III program.
In order to do that we needed to complete a small study in Japan and compare it to an additional small study in the United States.
We're in the process of finalizing those studies prior to including Japanese sites in the Phase III trials sometime next year.
So, yes, there will be some updates on that going forward.
To your second point, <UNK>, around transformational M&A with companies with lower growth profiles or the like, I think, in fairness, it would be very difficult for us to do a transformational deal with a company with a higher growth rate because I think, based on at least today's measure, the only one with a higher growth rate is Celgene.
So, that would really limit the universe.
That being said, I think that the issue for us is we want to be in growth pharma.
Would we be willing to go from, let's say, roughly 10% to a 9% top-line growth rate to do a highly accretive bottom-line deal.
The answer is absolutely.
Would we be willing to go from 10% to 3% or 4% top-line growth to do a highly accretive deal.
I would say highly unlikely.
We want to go out and make sure that we can acquire something that we believe has a growth orientation to it, that has longer duration assets.
And I think you should also keep in mind we're pretty, as I use the word, bold in our thinking.
I think a lot of people look at the universe of transformational deals and say---+ well, you can't touch this because it's got this particular product drag or this particular issue.
We've been known to be very creative in solving for those things in the past.
Albeit a very small deal, I would point to Furiex as just an illustration where they had two assets.
They had the NDA for eluxadoline and they had a royalty stream from Takeda.
We divested the royalty stream to Takeda to Royalty Pharma at the time we announced the deal.
We had that pre-wired.
So, we kept what we wanted and we sold something that was valuable to somebody else to help pay for the deal.
So, to the extent we look at companies or opportunities that have things we like, and some things perhaps we don't like, there are always potential solutions for solving for those issues.
<UNK>, I think you're right.
It would have to be a bold offer.
Second, I think Paul and I always would debate and talk to our Board about the best long-term interest of our shareholders.
I think as you step back and look at what I think is so special about this Company, a lot of it goes to the depth and quality of our management team.
To the extent someone would be open to thinking about cultural change and change and balance to leadership and talent and management, I think that would be more helpful for us.
I think clearly our commitment to R&D and the way we think about R&D is also very special.
And I think our ability to be nimble and move quickly and do what we believe is always in the shareholders' best interest is also a bit unique.
Those are the types of discussions that we would have.
It's not limited to that, but that would be, I think, at least top of mind for debate.
I see Paul shaking his head so I know he's in agreement.
I'll ask <UNK> to comment.
I'll just give you my quick take of why I was so excited to do the deal with Naurex, is that this is an area, a huge market with huge white space for unmet need.
You can debate the numbers but very few patients, in fact, a minority of patients, are adequately served by SSRI or SNRI.
And then they have to live with, in some cases, very difficult side effects from those medicines, as well as the long onset of action for those with acute issues that need to be dealt with more quickly.
And I think, <UNK>, you mentioned this in your earlier remarks, there's been no real novel breakthrough in depression in about 20 years.
So, for us to be able to be at the forefront of potentially revolutionizing the treatment of this very large and horrific disease is something I think that's very exciting for us given our commitment to leading in CNS and in particular psychiatry.
<UNK>, your two cents.
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Certainly we'd like to close a deal but then we'll move pretty aggressively into doing that.
<UNK>, if I understand the question, I think the differences are between what we have and what Teva had on their slide deck.
And it would be very difficult for us to comment on the differences between what we have and what another company has.
If I recall, we've provided the generics business EBITDA for 2015 and they provided a number for 2016.
That was the difference.
And obviously we can't comment on their ---+.
And, just to be fair, it's their number for 2016 not our number for 2016, just to be clear.
We can address that.
Hi <UNK>, it's <UNK>.
In the top global branded product highlights slide, the ex-US branded products from Forest, Warner Chilcott and Aptalis are not counted as generic products.
They're counted in the brand total.
When you look at our global generics segment, our global generics segment still counts those, as per accounting rules, as part of the global generics business.
That's the difference.
That's what we gave you as the ---+ well, the global generics segment itself grew 17% on a constant currency basis quarter over quarter.
That's not a clean ---+ that's the point I was trying to make earlier about why it's so difficult to model.
That's not apples to apples of what's being sold and what's staying.
There are puts and takes from the segments versus what was actually being sold.
And that's what makes it so complicated.
That would be the total Namenda business including brands and generics.
And the way we think about it is we launched Namzaric only two-and-a-half weeks ago.
A DTC campaign starts in September.
We expect exceptional formulary coverage by January 1 and the incremental sales from Namzaric by essentially taking advantage of an untapped combination market, especially in moderate Alzheimer's disease, effectively is going to get us to our target conversion rate.
As I said earlier, if the formulary coverage had not developed like it has, we might have a different situation right here.
But as it relates to 2016, Namzaric is going to be highly economical, XR already is, and I think the majority of patients are going to have an opportunity to get it.
Thanks, everybody.
<UNK>, would you like to make some closing remarks.
Yes.
I would just like to thank everyone for joining the call today, and, in closing, just summarize.
I think we had a very strong and well-executed quarter.
I think our plans are in motion to continue to focus on operational excellence and driving our growth agenda and our focus on our key therapeutic categories, and establishing long-duration leadership in those categories.
I think our leading pipeline, our reloaded capital structure, and our now focus on branded pharmaceuticals and willingness to take bold and decisive actions make us the most dynamic company in growth pharma.
I thank you for your time and look forward to updating you later again in September.
Thanks, everyone.
I know we didn't get to quite a few people in the Q&A, so we'll follow-up with you shortly.
Thanks.
