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Organon & Co. (OGN) Q3 Earnings call transcript Oct 31, 2024

AInvestSaturday, Nov 2, 2024 11:11 am ET
2min read

Organon's third-quarter earnings call for 2024 showcased a company in a strong position, with revenue growth across multiple franchises and a clear focus on innovation and expansion. Here are the key takeaways from the call.

Financial Performance

Organon reported a revenue of $1.6 billion for the third quarter of 2024, representing a 5% growth rate at constant currency. The company's Women's Health franchise grew by 6%, Biosimilars by 17%, and Established Brands by 3%. The adjusted EBITDA was $459 million, representing a 29% adjusted EBITDA margin. Organon has generated nearly $700 million of free cash flow year-to-date and is on track to deliver approximately $1 billion of free cash flow before onetime costs in 2024.

Strategic Acquisitions and Expansion

Organon announced the acquisition of Dermavant Sciences, which includes the nonsteroidal topical cream VTAMA. This acquisition is expected to significantly enhance Organon's presence in the dermatology space, particularly in the treatment of atopic dermatitis. VTAMA has shown promising results and is awaiting FDA approval for a new indication, the topical treatment of atopic dermatitis in adults and pediatric patients. Organon believes that VTAMA will be much better positioned in the atopic dermatitis market than in the psoriasis market due to its unique clinical profile and significant unmet need in the atopic dermatitis market.

Innovation and Growth Drivers

Organon's Women's Health franchise, led by NEXPLANON, continues to perform well, with an 11% growth ex FX in the third quarter. The company plans to submit a 5-year indication for NEXPLANON, which could position it for even stronger growth in the future. Organon's Biosimilars franchise, led by RENFLEXIS and ONTRUZANT, is expected to deliver low teens growth for the full year 2024. The company also expects to launch new assets, such as the denosumab and pertuzumab biosimilars, in late 2025 and beyond.

Challenges and Future Outlook

Organon faces challenges, including the loss of exclusivity for certain products and mandatory pricing reductions in Japan. However, the company remains optimistic about its future prospects, with a focus on integrating the Dermavant acquisition and leveraging its existing therapeutic expertise in dermatology. Organon expects to achieve at least $150 million of sales of VTAMA in 2025 and grow to $0.5 billion over the next 3 to 5 years. The company is well positioned to deliver on its financial commitments for the full year 2024, including approximately $1 billion of free cash flow before onetime charges.

Conclusion

Organon's third-quarter earnings call highlighted a company in a strong financial position, with a focus on innovation and expansion. The acquisition of Dermavant Sciences and the potential approval of VTAMA for atopic dermatitis is an exciting development that could significantly enhance Organon's presence in the dermatology space. The company's commitment to delivering on its financial commitments and its focus on integrating the Dermavant acquisition bodes well for its future prospects. Overall, Organon is well positioned for continued growth and success in the years ahead.

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