Bausch Health Companies Inc. (BHC) Earnings Call Transcript & Summary

Good afternoon, everybody. I'm Terence Flynn, the biopharma analyst at Goldman Sachs. This afternoon, we're very pleased to host Bausch Health Companies. Today, joining us from the company, we have Joe Papa, Chairman and CEO; Joe Gordon, who is President and Co-Head of Bausch + Lomb International; Art Shannon, who's Senior Vice President and Head of Investor Relations and Global Communications. Thank you so much all for joining us today, really appreciate the time. Joe, maybe I'll turn it over to you first to start with some opening remarks before we go through my questions.

Sure. It's a pleasure to have a chance to talk to everybody today. We've been undergoing a transformation of Bausch Health over the past 4 years, and we put together a brand-new team, brand-new leadership team, and we've made great progress. We've now reported 9 consecutive quarters of organic growth. We've got a really strong eye health business with our Bausch + Lomb business, driven by mega trends, which showed about 5% growth in 2019. A strong gastroenterology business, of Salix, driven by our lead product, XIFAXAN. Salix showed about 13% growth in 2019, and we've been doing it while still increasing our investment in research and development as we continue to build a business that we believe is sustainable, long-term growth, a durable business, a business that's global and diversified as we think about the future of Bausch Health. And importantly, we're launching new products that we think are going to be 1 of the important drivers for our future success. In 2020, we got off to a great start in the first quarter. We have now been working through the COVID-19 issues, and delighted to say that the team has been very productive in working through COVID-19. Our supply chain is intact, running and delighted to say that we're working through all the issues. Nonetheless, there are important issues that we continue to deal with in terms of the business, and happy to address any of those individually, but the team's -- been a great interaction with our team and great work by our supply chain to ensure that we always have product available for our patients, for our customers and physicians to make sure that we can help them as they help their patients. Let me stop there, Terence, and turn it back to you for any questions.

Great. Thanks, Joe. I appreciate you setting the stage. Obviously, one of the big picture questions we've all had is thinking about the impact post-COVID on the structure of the health care system and company's business models, whether it's delivery of care, clinical trials, supply chain, you touched on a little bit. So maybe any preliminary perspective you could share on ways in which as we emerge from COVID-19, your business or strategy could adopt or adapt?

Sure. I think, first and foremost, the world is going to change as a result of COVID-19, we firmly believe that. One specific example, telehealth. We know that the physician billings for at least a couple of the individual plans we've talked to, were less than 1% of them are going towards telehealth. Most -- that's prior to COVID. Now we see that they're up to about 15% telehealth billings by physicians. So clearly, how the physician's going to do business has changed. A good example of how we're reacting to that is we came forward with what we referred to as dermatology.com, which is a way for us to interact with patients and physicians and make it easier to do business on our dermatology business for physicians. So it's a simple example of how the market is going, changing in telehealth, and how we are getting prepared for that. Clearly, a second big change for us has been how we do our promotion to physicians. We have moved to a virtual promotion at this time, certainly during the last 6 to 8 weeks. We are now migrating back to, what I would call, more normalized operations. But this whole concept of virtual promotion, I had a chance to participate in a dermatology call just a couple of weeks ago with a physician, and it's a great way to have an interaction with a physician at all levels of the organization. There was a rep there, a district manager and myself, all interacting with that important key opinion leader. So it's a good thing for the system that we can all learn to adapt to the programs at hand. Clearly, another obvious comment will be e-commerce and the importance of e-commerce. Our consumer business has done very well prior to COVID-19, but even during COVID-19, we've been able to continue to have strong performance out of our consumer business. And I think e-commerce and the importance of e-commerce has been a big driver for that. Finally, last thing I would say in terms of how it's changing Bausch Health is, we clearly see ourselves as a player with critical mass in the health care space. We do, every day, somewhere in the world, over 150 million patients utilize a Bausch Health care product. So we wanted to make sure, as we thought about how can we help in the treatment of COVID-19. We may not have all the products, but we certainly donated an antiviral product. We have Virazole to help patients and evaluate it for COVID-19. We donated chloroquine, azithromycin. In China, one of the things that was happening is physicians were working very long hours and their glasses were fogging up because of the goggles they were wearing. So we donated a long-acting contact lens that people were able to use and give relief from the fogging up of their goggles. So those are the ways that we're trying to help improve the overall response to COVID-19, both how we see the trends of it, but also how we feel we can help. And finally, I'd say we've also tried to be very efficient with our own operating expense during this time period as there's been certainly less travel required and office available for us in the near term.

Okay. Great. Appreciate the color on all those fronts. I guess the other topic everyone's focused on is now that we're into June, and we're starting to see some states and countries reopen, just wondering how the operating environment is tracking relative to your expectations that you outlined on your first quarter call? And maybe speak to how this varies across geographies and end markets.

Yes. That's a great question. And when we did our first quarter results in May, we made comments about what we were seeing at the time. We made some overall assumptions on the marketplace. And in fact, in order to do our planning for the full year, we actually did 4 separate different scenarios or budgets as we thought about it. But in general, the market is developing similar to the way I would -- we've expected it. I'll give you one data point that we posted to our website today that I think could help you understand there's a lot of anecdotal comments out there, but one of the things we keep track of is we have a medical device that is used for cataract surgeries, retinal surgeries called Stellaris Elite. The beauty of the Stellaris Elite system is, we have something called eye intelligence. Eye intelligence helps the physician keep track of their patient, keep track of billing, but it also does one other thing very uniquely. It sends us a data point every day about how many times it's being used, and we collect that data. and so we can look at it globally and more specifically, in the United States, the data comes from, so we can get it throughout the United States. One of the things that -- and we posted it today, just to give people a sense of what was happening. If you think about what happened pre-COVID, like in January, February through mid-March, and you think of that as kind of the normal run rate, by the time we got to mid-March through early May, the number of procedures that the Stellaris Elite were running had dropped over like 90%. So you saw a dramatic falloff, but importantly, in early May, we start to see some recovery so much so that as we approach the end of May, we're now back to about 85% recovery, which we think is a great source of data. It is not the -- worldwide. It is U.S.-only data. It is only our Stellaris Elite, but we think because of our random sampling of it across the country, it gives a good indication of what's happening in the ophthalmologist office as it approaches surgery. And it's important, it's not just the performance of this for the surgical device, but it's all the things that go with surgery, things like the ophthalmic drops that you need for the surgery. It's the IOLs that you place with the cataract. All that is coming forth as part of the data that we get from it. The other thing in vision care that's important to us, clearly, is our vision care business. Joe, you may want to talk about some of the data we saw in quarter 1 on vision care. And then importantly, how it's come back now since that quarter one. So Joe Gordon.

Yes. So good afternoon. Yes, I mean, Joe's exactly right. I mean the chart about the Stellaris Elite machine, it just shows activity right, where activity was, and it's just showing that activity is moving north. Same thing on the vision care side, which is our contact lens. I mean we had an outstanding first quarter. We had a factory increase of about 24% and our consumption was right around there in a category that grew about 7%. So obviously, gaining share there. And then as you got into late March and then into April, optometry, retail optometry basically was just shut down. A lot of the doors were just shut and the folks were able to talk to docs at home. Consumers were able to get contact lenses if they needed them, but obviously, that wasn't as back to normalcy. And we saw a certain level on where their contact lens usage was and then as we got through the month of May and into June, much like we saw on the activity in our Stellaris machines, you're seeing consumption and usage of vision care and contact lenses start to increase every single week. As I said, this week is going to be better than last week, and last week was better than the week before. So you clarify it as it is in -- it's recovering. It certainly hasn't recovered, but things are moving north in all these different areas, which is very refreshing to say.

Maybe I'll just make a quick comment about the other important U.S. business, of course, our Salix business. We know in our Salix business that about 72% of our reps are now making calls on their doctors that the productivity isn't what it used to be, but I'm sure -- but it's continuing to get better every week, as Joe Gordon said. And then finally, maybe just a quick trip around the world. Asia, China, everyone's back to work, but admittedly, the return to elective procedures like cataract is slower. People are not shopping as much in retail outlets in China, but everyone is back to work. Our facilities in China are up and running. Singapore, Malaysia, Thailand, still closed. Korea, Japan, open, but once again, a little bit slower of an uptake. And then finally, the European Union is opening at this point, and it's probably led best by Germany in terms of the overall response. So it's maybe a quick trip around the world as we see what's happening for our overall business.

Great. Maybe just one follow-up for Joe Gordon. On the contact lens side, any expectation in terms of when you might see it get fully back to normal? Is this kind of end of this year? Or is it into '21? I think some of the other contact lens companies had made kind of a range of assumptions. So just wondering how we think about when we might get to a more normal level.

Yes. We're -- for contact lenses, the back-to-school timeframe is always a very, very important timeframe that some people are typically getting their annual eye exams and getting their prescriptions and getting new fit sets and whatnot. And we really see that as a jumping off point of where we have the ability to get back to, I'm doing air quotes on "normal", but get back on a more normal run rate for sure. But we could see it for sure. It was a month or so ago when they first opened up the doors, they had to stay out in the -- patients had to stay out in their cars, and then the receptionist called them, telling them to come in. There was no waiting room. There was no chairs there. Now it's a little different. There's social distancing, but their -- the rate -- if there was a normal run rate, say, of 18 patients a day. When they opened back up, that was more like 8 or 9, and we're seeing that number start to drift northward, if you will, barring any further COVID scares. But like I said, that back-to-school timeframe and into the fourth quarter, we're -- we see no reason why we couldn't get back to close to normalcy anyway.

Okay. Got it. And then maybe Joe Papa, just on the Salix comment. So pretty encouraging figures, 72% of reps now calling on docs. What are the script trends? Or maybe what's your shipping data suggesting here as we kind of go into May, into June now? Is that -- where does that stand relative to where you were at kind of maybe the trough levels back in April?

Yes. So I'm going to start with kind of a big picture and then get back to exactly the question. The big picture on XIFAXAN, obviously, a very important product to us. Our largest product is that if you look at 2020 year-to-date versus 2019 same time period, XIFAXAN, it's flat. Having said that, it's clearly a story of a couple of things happening. On the one hand, the -- we were ahead on a prescription level for January, February and let's call it, through mid-March, but we were ahead somewhere in the 8% to 9% range. Through April and May, we were down somewhere around that 9%, 10%. And you average those 2 out and you come up with flat versus a year ago. Having said that though, we are working through the trends. And I would describe it the same way Joe Gordon has said that the data is telling us that we're getting better all the time. We've kind of flattened it out, and we're getting better all the time. And probably the way -- the easiest way I could talk about it is what -- we view XIFAXAN and our gastroenterology business, we view it as XIFAXAN has a business in hepatic encephalopathy, where we have high compliance, high adherence because it's gotten even better because if you don't adhere to the regimen, you don't comply, you potentially could end up back in the hospital, and no one wants to be there. So there's been a very strong compliance with XIFAXAN. The other thing we've seen is the increase in the size of the prescription with XIFAXAN because more of the patients are using it for hepatic encephalopathy, and they're getting maybe, instead of a 30-day supply, a 90-day supply. So each prescription has been more valuable. On the other hand, on the IBS-D indication, it's been a source of significant growth for us, especially in primary care. We are seeing a trailing off of that business at this time. Although, once again, I would characterize it as relatively flat over the last 6, 7 weeks now. So we've worked our way through the -- we've hit a trough, and we're now at that trough, and we expect to see it continue, especially, as I said, the sales reps are able now to get back into the -- talk to their physicians, especially in primary care. The fundamental reason why we believe IBS-D will return is because the alternative of treating with XIFAXAN is, we know there's about 12 million prescriptions written annually in the United States for drugs that are antispasmodics like BENTYL, dicyclomine or an anti-diarrhea like Lomotil, yet all they do is simply mask the symptoms. Conversely, if you use XIFAXAN for some patients, they will get through episodic treatment of a couple of weeks, they'll get a long-lasting relief and that's the reason why we believe there is an opportunity for XIFAXAN to help these patients in the long term. And it will return, but clearly, we need to see that patients return to the office as well as get our reps back in, get samples back in for the doctors. And that's what we're obviously gearing up to do. Our expectation is that 72% will continue to climb. Clearly, in some geographies like New York, metropolitan areas, it's slower, but some of the parts of the country out west and in the south are much faster.

Okay. Got it. Maybe just to step back again and go to a high-level question here. Your long-term guidance has been a focus. Obviously, you provided an update there, given COVID dynamics. So maybe you can just remind us, as you think about the key factors to achieving that guidance now, what should we be most focused on, both from a revenue perspective and the EBITDA guidance?

Sure. Probably, first and foremost, from a big picture point of view, I'd say we have a very durable business. It's a global business and very diversified business. And I think that's an important part of why we'll have the type of revenue guidance growth that we talked about, 3% to 5% and higher on the EBITDA side. Second comment I'd offer is, because we've made incremental investments in R&D, we have been very successful with new products. I'll just talk about a couple of those new products because I do believe new products are going to be the key for us. But in the case of a LUMIFY, we launched LUMIFY, within 12 months became the #1 product in the redness relief category, continues to do very strong. A year ago, in March, we acquired TRULANCE. We paid approximately $200 million for our product that this year, despite COVID and the latest weekly data for the last 10 weeks, is up 51% versus a year ago, despite COVID impact. So we think that, that TRULANCE product is another great example. Similar comment with our VYZULTA. VYZULTA product that we launched now, about 2 years ago, is up 44% for the last 10 weeks versus a year ago, and that's notwithstanding COVID. So those new products are clearly going to be a part of it. The success that Joe Gordon and his team have had with Biotrue and the Ultra product being up plus 20%, we think are going to be important drivers of the continued performance. And now, importantly, and Joe, you may want to comment about the next product, the Si-Hy daily product that you got a chance to launch in the very near future. But maybe you can talk to that, and I'll finish with some of the other reasons why.

Yes. We're very excited. As you know, we got our FDA approval for our daily Si-Hy lens. Name is going to be Bausch + Lomb Infuse, and we plan to launch it right at that -- we're getting ready to launch it right at that back-to-school timeframe, as we talked about just a little bit ago. And in keeping with the Bausch + Lomb tradition, optics is always the #1 objective for -- as we launch a contact lens, and this product certainly will have it. It will be balanced with comfort. That's expected out of the Si-Hy lens, and we'll actually be able to talk to our doctors about a couple other added benefits when the launch timing does come.

And maybe the only other comment to build to your original question of what makes us confident on that revenue side, in the CAGR side is that we've also -- even with COVID here, we've been able to hold on or build market share. Joe talked about his performance in the U.S. in the first quarter. When Joe took over the U.S. Bausch + Lomb business, we had about a 7% share. We're now over 10%. I think we're up to about 11% share in our Bausch + Lomb business. So it is that same team that has been building share for us that's going to launch the Si-Hy Daily. The other area is, same comment. Our share in VYZULTA is -- market share has continued to improve. The market for VYZULTA for -- is up about 3% over the last 10 weeks. We're up 44%. So it gives you some sense that we -- I'm sorry, the market is actually down 3%, I apologize, down 3%, and we're up 44%. So you can see we're gaining share in some important categories. I mentioned TRULANCE. The TRULANCE product is competing in a market that's up 6% over the last 10 weeks. We're up, with TRULANCE, up 51%. It gives you some sense that not only are we able to hold on to share, we're actually growing share in a couple of key categories that we think that's an important part of what will make us successful and allow us to hit these types of revenue CAGRs for the future.

Great. And maybe the corollary is just on the margin side. So any segments where you think maybe investors on the street are underappreciating kind of the margin profile of your business? Or is COVID going to impact that at all in terms of maybe streamlining some things, given what we talked about at the beginning of the call?

Yes. I think there's 2 parts to this. I think 1 part of it is that as we launch these new products, they do have good margin structures, especially after we get through the initial launch phase. Which we are doing now. But I think that's one part of it. The other important part that I haven't talked about, but I think it's important to raise is that through the first 4 years, that at least, I've had a chance to be a part of Bausch Health, we've worked through approximately $1.2 billion, I believe, $1.3 billion of product that lost exclusivity. As we worked through the majority of that now, we're seeing a lot less of that in the next 2, 3, 4 years. Therefore, we won't have that headwind against us that we had the last 2 to 3 years. So I think that's going to be an important part of driving the margin structure that we have across our total business because we won't be working through the important headwind of loss of exclusivity. And despite that fact, we showed 9 consecutive quarters of growth despite these headwinds that I've described from loss of exclusivity. I think that's the other important part of what to think about for our margin structure.

Okay. Got it. And maybe just for Joe Gordon, a follow-up on the Si-Hy dynamics. So you mentioned launching in the U.S. around kind of back-to-school timeframe. Anything that you can learn from the launch in Japan so far that you guys can leverage? And maybe any updates there in terms of kind of market share? And what you're seeing over in Japan? And is there a read across to the U.S.?

Well, look, Tom Appio, who runs the business, ex-U.S., he and I, obviously, work very closely together and share some similarities. Although there are 2 different markets, they're marketed in a different way. So -- but we -- there are some of -- learnings there, too, but we're going to follow our success on our Ultra and our Biotrue on how we gain market share, as Joe said before. We had a 7 share or so back in the 2016, 2017, where we're -- went right by the 11% share mark, and we've got a goal to get this business to a 25% share here in the U.S. over a period of time. But the contact lens category in the U.S. is about $3 billion, about half of that right now is dailies and growing. And one of the biggest parts of that area that is growing is the Si-Hy. So we think this is a great time to launch, and we think we'll have some pretty good things to say about, not our product, about infused to the docs.

Okay. Got it. I guess, Joe, the other -- Joe Papa, the other big picture question, and this kind of waxes and wanes depending on I feel like the week or the month. But on the potential to take strategic action regarding maybe a potential breakup, you've talked about disconnects and in terms of valuation of your B&L segment versus some of the peer companies. We've talked about some of the new products that you guys are launching. You outlined your target of 25% share in the contact lens market. So maybe just an update on that front in terms of kind of the valuation as you see it and the disconnect? And then any steps you can take to maybe unlock greater value there on the strategic side.

Sure. So we've essentially built a new team 4 years ago. And I think from day one that I got here and when Paul Herendeen joined me as CFO, we've been looking at a couple of things that we thought were important. First, how can we improve our business performance to show the organic growth that I commented about before 9 consecutive quarters. I think P&L is now actually up to 14 quarters consecutive of organic growth. So those are all going in the right direction. The R&D increases that we've put forward. We were running R&D, probably about 60% -- 50%, 60% higher than where it was 4 years ago to make sure that we have long-term growth in organic. And we divested. We had -- we divested $3.8 billion of asset proceeds in the first couple of years to ensure that we could reduce the debt. Because one of the things that we clearly do understand is, we have more depth than both the quantum and the absolute leverage of the debt than we would like. And we've been working very diligently to pay down that debt. Having said all that, I want to be clear, we are open to all the options to unlock the value including either asset sales or spinoffs, if we believe that will drive further shareholder value appreciation. We're going to be open to all those potential actions because as we look at it, we believe that the sum of the parts of our Bausch health care business, most notably the Bausch + Lomb business, is significantly greater than what the current market expectation is. And we look at Bausch + Lomb versus peers like Alcon or Cooper, and they're trading at an EBITDA multiple that is probably around twice. What our overall Bausch Health is trading at. So that's one of the things that, as a management team, we expect us to focus on shareholder value, and we'll actively look to -- for ways to increase shareholder value, realizing that we have a significant amount of debt. We've reduced the debt from $32 billion. We brought it down ballpark $8 billion of net debt, but we still know that's too much, and we're going to look to try to reduce that debt to unlock the value for our shareholders and do it with urgency as we think about the future of our company.

Great. And any other, I guess, like asset divestitures? I know that's been a big part of the -- bringing down the debt, but anything else on that front over the near-term that you guys can do? Or is it more just executing against the plan, using the cash flows from the business to pay down that net debt?

No, I think we're going to look at all potential options, including asset divestitures. I think -- I won't point anyone specifically, but I think we're open to consider all ways that one can increase the shareholder value of our company. So those are the things that will make sense to us as we think about how we can reduce our debt. First and foremost, the best thing to do is to grow the revenue, grow the EBITDA and use the cash to pay down the debt and to grow EBITDA to reduce the leverage, but we're also going to be looking at potential asset divestitures. And as I said before, spin-offs that would allow us to improve overall shareholder value.

Okay. Great. Understood. I guess, a few more on the product side. One product that you really talk about was TRULANCE too much. And I know you made some additional investments on the sales force side there. Maybe just any more color you can share and how to think about the outlook for that product in your IBD segment?

Yes. We're incredibly pleased with TRULANCE. If you think about what happened is, we acquired TRULANCE in March of 2019 for less than $200 million. And it's -- today, it's at a run rate already of ballpark the $80 million, $90 million run rate. So it's up 50% versus last year. So despite COVID, so the way we've done that, we put more investment into the reach and frequency of our sales force in terms of the getting to more doctors. We increased [indiscernible] by approximately 90% from where it was. We've put it as a, carried it up with what we believe we have a best-in-class product with XIFAXAN for IBS-D, and we paired that with what we believe is a best-in-class label for IBS-C with TRULANCE. So that positioning for doctors we think was really important. Number two, what we did is we improved the market access position for the product, and that has given us significantly increase in terms of the coverage that we had and importantly the pull-through of what we have. So another example of how we believe we can add to TRULANCE. And as I said, the data, it's up 50-plus percent through the last -- or the first 10 -- last trailing 10 weeks versus a year ago. It's up 51%, as I mentioned, in a market that's only up 6%. So you absolutely see we're gaining share there because of some of the steps we've taken with the TRULANCE product. Very pleased with that acquisition and what it's done for us as a company in gastroenterology.

Great. Maybe the other segment I wanted to touch on in the last few minutes here was dermatology. So you mentioned that this was a segment that could lag the recovery on the first quarter call. But any update here in terms of what you're seeing on the derm side as places start to reopen?

Yes. Dermatology is an area that has been a little bit lagging the rest of the turnaround in Bausch Health. As I said, the Bausch + Lomb business, the Salix business has led the turnaround. Dermatology was -- it's been focused predominantly on launching new products, DUOBRII product as an example. DUOBRII got off to a great start, but it has now been impacted by COVID-19 as the number of patients visiting the dermatologist office, and psoriasis patients, in particular, is down. So that has caused some challenges for us in terms of the growth. Having said that, the one thing we are aware of is that when new patients in for psoriasis go to the dermatologist, we believe DUOBRII is very well positioned, and in fact, we tend to -- when patients are new to brands, treatments for psoriasis, we tend to pick up 20% to 40% of those new-to-brand prescriptions for treatment of psoriasis. That we think is really important. We think we're picking it up for a number of reasons: Number one, we're picking it up because patients prefer topical products for the treatment of psoriasis. We pick up about 86% of patients with psoriasis who use a topical product. Number two, we're picking it up, we believe, because DUOBRII -- treatment of DUOBRII from a plan point of view is, if used throughout entire year, annual treatment costs somewhere around, let's call it, $3,000 just for the sake of argument. Whereas, if you have to go to a biologic, treatment cost per patient per year is somewhere in the, let's call it, $60,000 a year, $70,000 a year. So that's the reason why from a plan point of view, from a patient point of view, we believe DUOBRII will continue to pick up business. But to your point, it has been a little slower because the number of patients in seeing the dermatologists that are new patients for the treatment of psoriasis has been lower than what it had normally would have been in a non-COVID impacted year. But nonetheless, long term, we still think there's a big opportunity for DUOBRII as we go forward into the future. As I said, because most patients prefer it, and we've also gotten very good market access coverage. We reported -- when we first launched it, we had about 30% coverage for market access. Today, I'm delighted to say, we have about 67% covered lives. And importantly, we're going to launch this product, not only here in the United States, but around the world. And we hope to have good news to share on launches of DUOBRII and other geographies in the very near future.

Great. And maybe do you have a similar statistic? I mean you mentioned with Salix, somewhere around low 70% of reps have been calling on docs. Do you have the same stats for dermatology? I just wonder in terms of where the reopening is on the derm practice.

Yes. Actually, we're actually -- about 79% of our reps making live calls in the dermatology space, 79%. So very similar type of numbers.

They're very similar across all the businesses. And obviously, it varies by geography within the U.S., right? We're seeing a lot of activity out West and in the southeast, a little bit less so in the Northeast.

Okay. Maybe just in the last couple of minutes here, wanted to touch on kind of the pipeline business development opportunities. The 2 pipeline assets is your S1P. So maybe as you think about differentiation here in entering that market, maybe just remind us how to think about the profile there? And then on your Lucentis biosimilar, is that the start of a bigger push into biosimilars? Or is this kind of a one-off?

Yes. Let me start with Lucentis biosimilar because I think it's a pretty quick answer there. What we looked at is, we do not have the expertise to develop biosimilars, and I do not plan to add that expertise, to be clear. But what we do know is that in order to be successful launching commercially a biosimilar, you need 2 capabilities: One, you need to be able to develop and manufacture a biosimilar, which we do not have that capability; the other capability you need that we do have is the relationships and the commercial infrastructure to call on the key physicians for the treatment of retinal disease. That is clearly a capability of our Bausch + Lomb team. Therefore, as this opportunity came forward with STADA, we had a conversation with them about our capabilities, their capabilities, and we just felt we were natural partners to launch this product into the marketplace to be successful. We feel that the biosimilar here and the physicians in the ophthalmology position, especially, are very receptive to launching biosimilars to bring down the overall cost to society for treatment and allow us to enter into the space with our relationships and to be successful. So we've got, we think, a very good relationship with STADA. We look forward to launching this product. It's in currently in a -- it's got a Phase III trial underway, and we're excited about the opportunity. On the amiselimod, another different example, but where we've been able to add and license a product, an S1P modulator that at a relatively very inexpensive rate, but we had a big question in our minds as to whether or not this S1P modulator was going to have a cardiac safety signal. There was some information of other products in this category that potentially had it. So what we needed to do is we ran the, what we think is a definitive clinical evaluation in cardiovascular safety and the top line results that we got at the end of, I think, it was January, said that the topline results were favorable, and that there was no cardiac signal or elongation of the QT interval prolongation. So that, we think, is great news. It gives us free rein now to go forward and develop this product for what we think could be a differentiated S1P modulator. Part of the S1P modulator advantage we think we have here is an extended half-life of the product. a long half-life, which we think can provide some differentiation when it comes to dosing interval, et cetera, and also the remission capabilities for it. So we look to develop it, start some additional trials, but I remind you, this is a significant opportunity in the treatment of IBD. There is about 1.6 million Americans that currently suffer from IBD, about 900,000 of those are suffering from ulcerative colitis. We think this is a really significant opportunity, where we can potentially play a role and try to help these patients. And it obviously fits so well with the rest of our gastroenterology business from Salix with our XIFAXAN, with our TRULANCE, with our RELISTOR and other products that we're developing. We think this is a great fit for the future of our business.

Great. Maybe just the last follow-up on that one is that, with the next trial, would that be a Phase II like dose-finding in IBD patients? Or could you go straight into a Phase III study?

It will be a Phase II study in the second half of 2020, is our plan.

Okay. Got it. Well, Joe, and Joe and Art, thank you very much for joining us this afternoon, really appreciate the time and insights. Best of luck over the coming months and take care.

Thank you very much for sponsoring. Thank you. Have a great day and stay safe and healthy, everyone.

Thank you.