UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported): September 28, 2015 (September 28, 2015)
Valeant Pharmaceuticals International, Inc.
(Exact name of registrant as specified in its charter)
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British Columbia, Canada |
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001-14956 |
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98-0448205 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
2150 St. Elzéar Blvd. West
Laval, Quebec
Canada H7L
4A8
(Address of principal executive offices)(Zip Code)
514-744-6792
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
On September 28, 2015, Valeant Pharmaceuticals International, Inc.
(Valeant) distributed a letter to its employees relating to recent changes in Valeants stock price. A copy of the letter is attached hereto as Exhibit 99.1. The foregoing description is qualified in its entirety by reference to the
text of such letter.
The information in this Item 8.01, including Exhibit 99.1, is being furnished and shall not be deemed filed
for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 8.01 and Exhibit 99.1 shall not be incorporated by reference into
any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the
extent expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward Looking Statements
The letter to Valeants employees, attached hereto as Exhibit 99.1, may contain forward-looking statements, including, but not limited to statements
regarding: expectations respecting future revenue, financial performance, organic growth and script growth of Valeant, its product portfolio and certain of business segments and businesses; anticipated revenue mix among Valeants business
segments and businesses; the anticipated strength of Valeants product pipeline and anticipated launches and approvals of certain of such products; Valeants exposure to government reimbursement; and anticipated price increases in certain
of Valeants business segments. Forward-looking statements may be identified by the use of the words anticipates, expects, intends, plans, should, could, would,
may, will, believes, estimates, potential, or continue and variations or similar expressions. These statements are based upon the current expectations and beliefs of management
and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties
discussed in Valeants most recent annual or quarterly report filed with the Securities and Exchange Commission (SEC) and other risks and uncertainties detailed from time to time in Valeants filings with
the SEC and the Canadian Securities Administrators, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to
update any of these forward-looking statements to reflect events or circumstances after the date of this letter or to reflect actual outcomes, except as may be required by law.
Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit No. |
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Description of Exhibit |
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99.1 |
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Letter to Valeant Employees distributed on September 28, 2015. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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VALEANT PHARMACEUTICALS INTERNATIONAL, INC. |
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By: |
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/s/ Robert R. Chai-Onn |
Name: |
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Robert R. Chai-Onn |
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Title: |
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Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development |
Date: September 28, 2015
EXHIBIT INDEX
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Exhibit
Number |
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Description |
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99.1 |
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Letter to Valeant employees dated September 28, 2015. |
Exhibit 99.1
Dear Colleagues:
A number of you have asked me and other
senior members of our management team about the significant drop in our stock price especially over the past 5 trading days. While the entire pharmaceutical and biotech sector has been impacted by market volatility and numerous press articles
about pharmaceutical pricing, we have been hit particularly hard.
After talking with a number of investors and observing the concerns and assertions in
the media, I thought it would be helpful to give you my perspective on the two main issues worrying investors:
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Concern that our business model and strategy is dependent upon large price increases in our U.S. pharmaceutical business, |
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Concern around our exposure to U.S. government drug price reimbursement |
I can assure you that this bear
thesis is incorrect on both accounts.
Valeant is well-positioned for strong organic growth, even assuming little to no price increases. As we have stated
many times, Valeants core operating principles include a focus on volume growth and a concentration on private and cash pay markets that avoid government reimbursement in the U.S. and across the world. We have consistently pursued profitable
growth through diversification, strong execution and financial discipline while minimizing exposure to governmental policy changes and volatility. Our strategy is quite different from traditional pharmaceutical companies in this regard, and is still
not always well understood. We have - and will continue to - work diligently to upgrade the quality of our assets through a strong track record of developing high quality products internally (e.g., Jublia, ULTRA Contact Lenses) and through
acquisitions (e.g., Bausch + Lomb, Salix). By focusing on organic growth and execution, we will continue to demonstrate our strong business performance to the market. Needless to say, I thank all of you for your continued hard work to deliver these
results.
Turning to the first concern about our business model, the majority of our portfolio will continue to deliver strong volume-based organic growth
and is not dependent on price increases. To put this in context, let me lay out the facts.
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In 2016, we expect to generate approximately 30% of our revenue outside the U.S., where we have historically realized little to no net price increases and in fact, during some quarters, our net price has actually
decreased. We expect continued high single-digit/low double-digit growth in our emerging markets and 3-5% growth in ex-U.S. developed markets going forward. |
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We expect approximately 20% of our 2016 revenue to come from U.S. businesses including Contact Lenses, Consumer, Surgical Devices and Generics. These businesses realize, on average, small price increases in line with
the Consumer Price Index, or no price increases at all. We expect continued double-digit growth overall for these businesses. |
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Dermatology, Ophthalmology RX and Dentistry Rx 2016 revenue is expected to represent approximately 20% of revenue and, across these businesses, our teams have delivered over 30% script growth year to date. We expect
continued double-digit growth for the foreseeable future given the strength of our brands (e.g., Jublia, Prolensa, Retin-A Micro franchise, Solodyn) and a strong, late stage pipeline (Addyi, brodalumab, IDP-118 and Vesneo). |
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We expect the Salix business to represent approximately 20% of our 2016 revenue and expect double-digit script growth and corresponding revenue growth trends to continue. |
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Finally, we expect the remaining approximately 10% of our business in 2016 to come from our Neuro and Other portfolio, where we have historically taken price increases. This business is becoming a smaller part of our
portfolio over time, and is one area whose growth is not driven by volume. With the recent genericization of Xenazine, this portfolio is composed primarily of off-patent, legacy products that are competing against low-priced generics. This segment
also includes Isuprel and Nitropress, which have been the focus of much of the U.S. press. We purchased these two assets earlier this year and we thought the best long-term commercial strategy was to reprice these brands. However, it is worth
mentioning that neither products revenue is part of our organic same-store sales growth calculation since we have owned them for less than a year. On average, we have budgeted a mid-single digit revenue growth rate for this segment in 2016.
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Turning to the second concern about proposed changes to government reimbursed products in the U.S., our exposure to U.S. government
reimbursement currently represents approximately 15% of our total revenue. Of this, about one third, or ~5%, represents sales to Medicaid, the Department of Veterans Affairs, the Department of Defense, and other government entities, where the
business is at best marginally profitable. Despite this, we continue to offer our products through these programs to ensure these patients continue to have access to needed medications. The remaining 10% of our government exposure is related to
Medicare. As I stated above, our overall strategy is to focus on private and cash pay markets and to minimize government reimbursement. I believe our exposure to government reimbursement is lower than any other major pharmaceutical company.
As we approach the end of the third quarter, I want to thank all of you for delivering what we expect will be another quarter of double-digit organic growth
and strong financial performance, despite the genericization of two of our largest products, Targretin and Xenazine. Our fundamentals remain strong for the rest of 2015 and we expect double-digit organic growth in 2016 and beyond as we prepare for
the launch of Addyi and anticipate other potential product approvals such as Veseno, Relistor Oral, and brudalumab.
This is not the first time we have
faced questions about our business model and strategy in the market, and it likely wont be the last. By continuing to focus on organic growth and execution, I am convinced we will continue to generate the best outcomes for our shareholders and
the healthcare community. I want to once again thank all of you for your hard work and I know that together we will demonstrate the strength of our operating model.
Mike
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