Mar 27, 2014 - company's sales; the impact of competitive products and pricing, including generic competition, drug ...
Investor Presentation
Creating Two Separate Leading Global Healthcare Companies
March 27, 2014
Safe Harbor Statement This presentation includes forward-looking statements concerning the planned separation of Baxter’s biopharmaceuticals and medical products businesses and the expected financial results, business prospects and capital structure of the two resulting companies after the separation, as well as Baxter’s long range plan, R&D pipeline, business development and other growth strategies, capital structure and the integration of Gambro AB. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; U.S. healthcare reform and other global austerity measures; reimbursement and rebate policies of government agencies and private payers; product development risks; accurate identification of business development and R&D opportunities and realization of anticipated benefits, including the ability to successfully integrate the Gambro business and achieve anticipated efficiencies; timely submission and approval of regulatory filings; inventory reductions or fluctuations in buying patterns; the impact of geographic and product mix on the company's sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; the availability of acceptable raw materials and component supply; fluctuations in supply and demand and the pricing of plasma-based therapies; the ability to enforce company patents; patents of third parties preventing or restricting the company's manufacture, sale or use of affected products or technology; the impact of global economic conditions on Baxter and its customers, including foreign governments; foreign currency fluctuations and other risks identified in Baxter’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements.
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Baxter Investor Conference Call Agenda Item Strategic Rationale
Overview of Medical Products
3
Speaker Bob Parkinson Chairman & Chief Executive Officer
Bob Parkinson Chairman & Chief Executive Officer
Overview of Biopharmaceuticals Company
Ludwig Hantson, Ph.D.
Transaction Details and Financial Implications
Bob Hombach
Questions & Answers
Baxter Management Team
President, BioScience
Chief Financial Officer
Compelling Strategic Rationale Executing a number of successful spinoffs over time Responding to diverging business dynamics and rapidly changing macro-environment Underscoring Baxter’s commitment to ensuring longterm strategic priorities remain aligned with shareholders’ best interests Improving competitive position and performance; enhancing operational, commercial and scientific effectiveness Enhancing value for patients, healthcare providers and other key stakeholders
Creating Two Separate Leading Global Healthcare Companies In Medical Products And Biopharmaceuticals 4
Positioning Both Businesses To Be Successful, Profitable And Sustainable Companies Operating in distinct markets with corresponding, evolving underlying fundamentals Possessing unique and compelling growth prospects, investment requirements and risk profiles -
Well-capitalized
-
Strong balance sheets and investment grade profiles
-
Disciplined approaches to capital allocation
Commercializing new and existing product offerings more effectively Driving innovation within respective franchises; allocating and prioritizing resources to areas presenting the highest growth potential Pursuing respective growth and investment strategies, resulting in revenue acceleration, improved profitability and enhanced returns
Resulting In Material Benefits To Both Companies 5
Providing Greater Focus While Leveraging Key Strengths Medical Products (New Baxter)
Biopharmaceuticals (To Be Named)
Global Presence
2013 Revenues = $9.4 Billion1 ~60% of sales are OUS ~25% of sales in Emerging Markets
2013 Revenues = $5.8 Billion2 ~50% of sales are OUS ~15% of sales in Emerging Markets
Market Leadership
Leveraging extensive global channel and presence in hospitals and alternate sites of care
Increasing penetration of existing therapies and improving treatment standards; launching new products
Portfolio & Innovation
Actively managing product portfolio; enhancing focus on higher-margin specialty products
Building innovative pipeline; investing in SG&A to drive new product launch excellence
Profitability & Returns
Driving meaningful leverage in infrastructure costs; realizing significant Gambro synergies
Enhancing margins with new product offerings; optimizing international commercial focus
Company Leadership
Robert L. Parkinson, Jr. CEO & Chairman
Ludwig N. Hantson, Ph.D. - CEO Wayne T. Hockmeyer, Ph.D. Chairman
Driving Accelerated Sales, Improving Profitability & Returns And Enhancing Innovation 6
1. Sales include BioSurgey revenues; 2. Sales exclude BioSurgery revenues
Participating In Large And Growing Global Markets Across Both Businesses Medical Products
$40
Biopharmaceuticals
2017 Market Potential = ~$50B
2017 Market Potential = ~$65B ~10% CAGR
($ in Billions)
$30 2012 2017
~5% CAGR
~8% CAGR
$20 ~6% CAGR
~5% CAGR 25%+ CAGR
~7% CAGR
$10 ~4% CAGR
$0
Specialty BioSurgery Pharmaceuticals1
Dialysis
Fluid Systems
BioSimilars2 Hemophilia
BioHematology/ Therapeutics Oncology
Positioning Both Businesses As Successful, Sustainable And Profitable Stand-Alone Companies 7
1. Includes Anesthesia & Nutrition Products; 2. Represents estimated off-patent value of branded biopharmaceuticals
Investor Presentation
Overview of Medical Products Bob Parkinson Chairman & CEO Baxter International Inc.
March 27, 2014 8
Medical Products: Providing Integrated Solutions Reinvigorating renal franchise globally and improving access to care Strengthening leadership through geographic expansion and increased penetration Developing solutions to improve patient outcomes, drive efficiency and enhance safety Extending product and service offering beyond acute care setting to alternate sites of care
2013 Sales = $9.4 Billion* Renal* 2013 Sales = $3.1B
Specialty Pharma 2013 Sales = $1.5B
Fluid Systems 2013 Sales = $3.1B
BioPharma Solutions BioSurgery 2013 Sales = $1.0B 2013 Sales = $0.7B
Enhancing profitability through a more streamlined and flexible cost structure
Advancing Patient Care As Global Provider Of Solutions For Our Customers & Their Patients 9 *Sales include 4 months of revenues from Gambro AB acquisition
Building A Strong Global Presence In BioSurgery Market BioSurgery 2017 Market Potential = ~$8B
Leveraging significant hospital presence and sales channel allowing for greater access to surgeons Focusing on key market segments and surgical specialties with highest growth potential Facilitating growth through differentiation, geographic expansion and new products Augmenting portfolio through business development initiatives
Driving Innovation And Enhancing Global Position With Broad BioSurgery Portfolio 10
Increasing Penetration Of Higher-Margin Specialty Pharmaceuticals Anesthesia 2017 Market Potential = $1.2B
Offering all three modern inhaled anesthetics creates competitive advantage Investing in clinical data that optimizes patients outcomes and supports appropriate use of inhalation agents Driving better commercial execution, expanding sales footprint and increasing penetration Exploring new care settings, improved packaging and new product offerings
Offering A Unique Competitive Advantage By Providing Broadest Portfolio Of Inhaled Anesthesia Therapies 11
Increasing Penetration Of Higher-Margin Specialty Pharmaceuticals Nutritional Therapies 2017 Market Potential = $3.5B
Offering comprehensive parenteral nutrition portfolio with clinically-differentiated products Addressing unmet clinical needs with data demonstrating nutritional therapies improve patient outcomes Enhancing safety and administration of fluid medications, reducing medication errors, and minimizing cost Strengthening portfolio with innovative solutions that improve workflow and regulatory compliance
Advancing Patient Care Globally With Diverse Portfolio Offerings 12
Bolstering The Medical Products Portfolio With The Gambro Acquisition Strategy & Portfolio Benefits
Financial Consideration & Impact
Aligns with Baxter’s strategy, growth vectors and mission of saving and sustaining lives
Purchase price of ~$4.0B; financed with $1.0B offshore cash & ~$3.0B new debt
Creates a comprehensive dialysis portfolio for both chronic and acute kidney disease patients
Driving commercial synergies through:
Complements Baxter’s legacy of leadership in renal home therapies
– Expanding presence in dialyzers & acute care
Positions Baxter to address the evolving needs of patients and healthcare providers in a growing area of demand
– Complementary geographic footprint – Existing sales channels & relationships
Deriving annual cost synergies of ~$300M by 2017 (80% achieved by the end of 2015) – ~60% COGS (Manufacturing, sourcing, supply chain & logistics) – ~40% SG&A
Establishing A Diversified, Global Provider Of Renal Therapies 13
Improving Patient Outcomes With High Dose Hemodialysis Growing evidence supports more frequent or extended dialysis, which results in: – Better patient outcomes
– Improved health-related quality of life
– Improved blood pressure
– Reduced medication usage
Vivia is designed as an integrated system: – Designed for patients as primary operator; fewer steps and unique safety system (automated needle disconnect) – Provides enhanced clearances (similar to in-center) – Utilizes physiological bi-carbonate solutions that improves blood pressure – Incorporates wireless connectivity for remote monitoring, fully integrated water system and extended-use consumables – Reduces storage and disposal needs
Received European CE Marking in 2013
Innovating Across The Continuum Of Care With New Home Hemodialysis Therapy 14
Enhancing Growth With Acquisitions And Collaborations Acquisitions & Collaborations
Actively managing the product portfolio Leveraging market-leading channel and presence in hospital and alternate sites of care Improving product mix with key, highmargin specialty product acquisitions Enhancing product and business model innovation to deliver better outcomes for patients and providers
Leveraging Extensive Global Channel & Focusing On Business Development Initiatives 15
Investor Presentation
Overview of Biopharmaceuticals Company Ludwig N. Hantson, Ph.D. President, BioScience
March 27, 2014 16
Biopharmaceuticals Company: Establishing An Innovative Leader Building on leadership in Hemophilia with ADVATE, BAX855 and new therapies for the treatment of bleeding disorders
2013 Sales = $5.8 Billion* Hemophilia 2013 Sales = $3.4B
BioTherapeutics 2013 Sales = $2.1B
Hematology & Oncology
BioSimilars
Enhancing competitive position in BioTherapeutics through differentiation, stronger global alignment and improved supply Driving scientific innovation and leveraging expertise into new therapeutic areas through acquisitions and collaborations Focusing the global organization and capitalizing on core technical, scientific and commercial capabilities to improve profitability and returns
Focusing On Differentiated Therapies, Brand & Launch Excellence And Innovation 17
*Sales also include ~$300M of revenues related to Vaccine franchise
Improving Access & Standards Of Care Key Therapy
Prevalence
% Diagnosed
Therapy Size
Therapy Growth
Hemophilia A
~400,000
~30%
~$6.0B
4% - 5%
Hemophilia B
~80,000
~30%
$1.0B+
3% - 4%
1% - 2% [of global population]
~16,000 [treated with factor]
$0.3B+
1% - 2%
~1M
~35%
$1.5 – $2.0B
7% - 9%
Multifocal Motor Neuropathy (MMN)
~13,000
~50%
$0.2 – $0.4B
6% - 8%
Alpha-1 Antitrypsin Deficiency
~200,000
~10%
$0.5 – $0.7B
8% - 10%
Von Willebrand Disease Primary Immune Deficiency (PID)
Sources – WFH, MRB, PPTA, Global Internal estimates; Rajabally. Epidemiologic Variability of CIDP with Different Diagnostic Criteria: Study of a UK Population. Muscle Nerve;39: 432-438, 2009 Internal IVIG Model based on De Serres PI ZZ prevalence estimate
Both Hemophilia And BioTherapeutics Franchises Have Significant Opportunity To Grow Globally 18
Advancing Baxter’s Leading Hemophilia Franchise Large, global market totaling $11B+ by 2017; expected growth of 4% - 5% annually
Increasing Access To Care & Expanding Geographically
Significantly underpenetrated worldwide; ~70% of Hemophilia A patients undiagnosed Market characterized by strong brand loyalty Making inroads in Brazil, China & Russia Improving treatment rates (IU/capita)
Improving Treatment Standards
Driving conversion to recombinant therapies Enhancing prophylaxis penetration of hemophilia therapies (ADVATE, FEIBA and RIXUBIS)
Capitalizing On Brand Differentiation
Enhancing Leadership With New Product Launches
Offering broadest portfolio including new therapies, indications, dosage forms and delivery devices Promoting proven Annual Bleed Rate (ABR) safety of ADVATE, with compelling competitive advantages
Launching RIXUBIS (rFIX), OBI-1 (Acquired Hemophilia A), BAX 855, rvWF and rFVIIa New products represent $3.0B+ incremental market opportunity
Striving For A Bleed Free World … 19
Building On ADVATE’s Strong Safety & Efficacy With BAX 855 Bleed Free World Over 20 years…
2-4 Bleeds Per Year
Baxter Market Research
Over 20 years…
– Fewer bleeds experienced
– 40-80 bleeds experienced
– Joint damage less likely
– Joint damage more likely
– Improved quality of life
– Risk of pain, disability, surgery, mortality
90%
Visit the Doctor 1-2X per year Would wait 18 months for EHL from current therapy provider
67%
Interested in switching to EHL with E5D dosing Interested in switching to EHL with E3D dosing Interested in 1 less infusion per week with 1 more AB
4 or
Normal Joints
Moderate Damage
Substantial 3-8 Damage
24%
9%
7%
Interested in 2 less infusions per week with 3 or more AB
5%
Interested in switching if therapy has slightly higher inhibitor risk
5%
Interest In Switching Diminishes Significantly When Educated On Potential Trade-Offs Between Convenience and Efficacy
Nothing Says Convenience To Our Patients More Than Zero Bleeds 20
EHL = Extended Half-Life; E3D = Every 3 Days; E5D = Every 5 Days; AB = Annual Bleeds
Broadening Portfolio With Additional Hemophilia Therapies New Hemophilia Therapies
Market Opportunity
Hemophilia B: RIXUBIS – Launched in the U.S. in 2013
$1.0B+
– Filed for pediatric indication in U.S. and submitted applications in EU, Japan and Australia
Hemophilia B: Gene Therapy (BAX 335) – Initiated Phase I clinical trial in 2013
$1.0B+
– Induces the body to produce the missing or deficient factor
Acquired Hemophilia A: OBI-1 (BAX 801) – Received orphan drug designation in the U.S. and EU
$100M to $150M
– Filed for approval in the U.S. in Q4 2013
Von Willebrand Disease: rvWF (BAX 111) – First and only recombinant treatment in Phase III clinical trials
$300M+
– Expect to file for U.S. approval in 2014
Inhibitor Bypass Therapy: rFVIIa (BAX 817) – Initiated Phase III clinical trial in 2013
$1.7B+
– Expect to file for U.S. approval in 2015
Delivering Value To Patients By Expanding Bleeding Disorder Platform 21
Differentiating BioTherapeutics And Ensuring Sustainable Growth & Supply 1
Supporting Growing Global Demand
Focusing on raising standards of care globally (under-diagnosed & under-penetrated therapies) Continuing to build on brand preference Leveraging strong safety profile Expanding existing network; improving supply
2 Ensuring Sustainability Of Supply
Leveraging contract manufacturing agreement with Sanquin Building new plasma site in Covington, GA
3
Differentiated IG Portfolio Focused On Chronic Conditions
Improving PID market penetration (increased awareness, diagnosis & optimal care) Facilitating shift in site of care: acute setting to alternative sites to home Exploring new indications and emerging uses
4
Enhancing Portfolio With New Product Launches & Indications
Executing product enhancements, which meet patient and provider needs; less burden and intrusiveness
BioTherapeutics Well-Positioned For Robust Growth 22
Advancing Patient Care And Experience With Differentiated Immunoglobulin Therapies HyQvia HyQvia is a differentiated SubQ therapy –
Once a month dosing through One injection site
–
Lower amount of volume required (similar to an IV dose)
–
Low infusion site reaction rate
–
Self or HCP administered at home
Received EU approval and launched in select countries Submitted an amended BLA in the U.S. in Q4 2013 with an anticipated 6 month review period
20% GGL SubQ Offers patients a faster infusion with less volume Completed Phase III enrollment in EU & U.S. Expect to file for approval in 2015
Expanding Portfolio With Enhanced Delivery And Dosing Flexibility 23
Expanding Portfolio Into New Therapeutic Areas Hematology & Oncology Obtained EU marketing rights from Onconova for Rigosertib Collaborating with Cell Therapeutics to develop and commercialize Pacritinib; two Phase III programs underway for Myelofibrosis (a severe bone marrow disorder)
BioSimilars Partnering with Coherus BioSciences on etanercept, a biopharmaceutical for the treatment of autoimmmune disorders Collaborating with Momenta on development and commercialization of biosimilars
Balancing Risk And Return Profile With Collaborations Leveraging Baxter’s Core Competencies And Global Channel 24
Building A Balanced Biopharmaceuticals Pipeline KEY PROGRAMS
Pre-Clinical
Phase I
Phase II
ADVATE (BRIC & LCM)
Hemophilia
Bio Therapeutics New Specialty Therapies
Biosimilars
Phase III
Regulatory Submission1 Ongoing
RIXUBIS (BAX 326)
2012
FEIBA (Prophylaxis)
2013
OBI-1 (Acquired Hemophilia A)
2013
rVWF (BAX 111)
2014
LA rFVIII PEG (BAX 855)
2014
rFVIIa (BAX 817)
2015
FIX (BAX 335: Gene Therapy)
2017+
rADAMTS13 (BAX 930: TTP)
2017+
LA rFVIII PSA (BAX 826)
2017+
GGL (10% HyQ)2
2013
GGL (20% SubQ)
2015
Anti-MIF (BAX 069:Oncology)
2017+
Rigosertib (MDS High Risk) - EU
TBD
Rigosertib (MDS Low Risk) - EU
2017+
Pacritinib (Myelofibrosis)
2016
Etanercept
2016
M923:Inflammation
2017+
M834:Inflammation
2017+
Focusing On Product Development Of Novel Biopharmaceuticals Across Key Therapeutic Areas … Hemophilia, Immunology & Hematology/Oncology 25
1Represents
first regulatory submission; 2Represents date of amended BLA submission to U.S. FDA
Investor Presentation
Transaction Details Bob Hombach Chief Financial Officer Baxter International Inc.
March 27, 2014 26
Transaction Details Transaction Structure
Timing
Tax-free distribution to Baxter shareholders of new publicly-traded stock of new Biopharmaceuticals Company Stock distribution ratio to be determined at later date
Transaction is expected to be completed by mid-year 2015 Subject to market, regulatory and certain other conditions
Financial Implications
Expect to incur one-time charges related to the transaction during the periods preceding the separation Transaction does not otherwise impact 2014 financial guidance Both companies are expected to be well capitalized, have strong balance sheets and disciplined approaches to capital allocation
Closing Conditions
Final approval by Baxter Board of Directors Favorable opinion and/or rulings on tax-free nature of transaction Effectiveness of Form-10 registration statement filed with the SEC
Creating Value For Baxter’s Shareholders 27
Summary Enhances value for patients, healthcare providers and other key stakeholders Positions both businesses over the long-term to be successful, profitable and sustainable standalone companies Creates two leading companies with unique and compelling growth prospects, investment requirements and risk profiles Optimizes performance of each enterprise and provides flexibility to pursue value-creating opportunities Underscores Baxter’s commitment to align strategic priorities with shareholders’ best interests
Creating Two Separate Leading Global Healthcare Companies In Medical Products and Innovative Biopharmaceuticals 28
Investor Presentation
Creating Two Separate Leading Global Healthcare Companies
March 27, 2014
