Thomas Appio, incoming Bausch Health CEO

Bausch Health stock plum­mets even as com­pa­ny looks to start 'new chap­ter'

Bausch Health’s sep­a­ra­tion from its cash-rich eye care unit is of­fi­cial­ly un­der­way, as the spin­off clos­es its pub­lic of­fer­ing and the com­pa­ny taps a team to guide it in­to a “new chap­ter.” Too bad in­vestors aren’t on the same page.

Bausch Health Com­pa­nies $BHC stock plunged more than 25% on Tues­day, pric­ing in at around $9.67 a share.

The drop fol­lows a rough few years for Bausch, marked by mount­ing le­gal trou­ble and a ma­jor re­brand. Just last year, Bausch promised more than a bil­lion dol­lars to set­tle class claims in a se­cu­ri­ties fraud case, and crit­ics have ar­gued the re­cent spin­out is mere­ly an at­tempt to pro­tect the com­pa­ny’s as­sets from on­go­ing lit­i­ga­tion.

“It is a priv­i­lege to lead Bausch Health as it en­ters a new chap­ter,” in­com­ing Bausch Health CEO Thomas Ap­pio said on the com­pa­ny’s Q1 call. “Last­ly, we are com­mit­ted to build­ing a cul­ture of per­for­mance and ac­count­abil­i­ty, as go­ing for­ward we’ll fo­cus on peo­ple, prod­ucts and process­es.”

Joseph Pa­pa

Bausch an­nounced on Tues­day morn­ing that Ap­pio will take the reins from Joseph Pa­pa, who’s led Bausch Health since 2016 when it was still known as Valeant Phar­ma­ceu­ti­cals. He guid­ed the com­pa­ny through a name change in 2018 af­ter the com­pa­ny faced a slew of in­ves­ti­ga­tions in­to its ac­count­ing and pric­ing prac­tices. That same year for­mer ex­ec Gary Tan­ner was sen­tenced to a year in prison af­ter be­ing con­vict­ed of de­fraud­ing the com­pa­ny in a kick­back scheme.

Af­ter tak­ing over in 2016, Pa­pa promised to set Bausch on a “new course,” and has since di­vest­ed bil­lions in non-core as­sets, while cre­at­ing a plan to sep­a­rate the main phar­ma­ceu­ti­cal busi­ness from its eye care busi­ness. The lat­ter is one of the world’s largest sup­pli­ers of con­tact lens­es, lens and eye care prod­ucts, along with phar­ma­ceu­ti­cals such as glau­co­ma drug Vyzul­ta. The unit brought in $889 mil­lion last quar­ter, ac­count­ing for just un­der half the com­pa­ny’s to­tal earn­ings over that pe­ri­od.

Mean­while, Bausch Health keeps no­table drugs such as a suite of gas­troin­testi­nal prod­ucts from Sal­ix, in­clud­ing the IBS drug Xi­fax­an.

“Our an­chor brand of Xi­fax­an is best po­si­tioned for in­cre­men­tal growth with in­creased in­vest­ments in­tend­ed to fur­ther raise aware­ness of the clin­i­cal un­met need in IBS-D and HE,” Ap­pio said.

Just this past quar­ter, Bausch Health saw $72 mil­lion in sav­ings from di­vesti­tures and dis­con­tin­u­a­tions, pri­mar­i­ly due to its deal to sell off Egypt-based Amoun Phar­ma­ceu­ti­cal, which makes and mar­kets brand­ed gener­ics and an­i­mal health prod­ucts.

Pa­pa will now take over Bausch + Lomb, which priced a pub­lic of­fer­ing of 35 mil­lion for $18 apiece last week, falling just be­low the tar­get­ed $21 to $24 it had pen­ciled in. The re­sult­ing $630 mil­lion will be used to pay down debt at Bausch Health, Pa­pa said.

“Giv­en cur­rent mar­ket con­di­tions, we de­cid­ed to pro­ceed with a small­er IPO of­fer­ing than we orig­i­nal­ly in­tend­ed,” Pa­pa said on the Q1 call, adding that Bausch Health will own a 90% ma­jor­i­ty stake in the eye care com­pa­ny at clos­ing.

Pa­pa had al­so in­tend­ed to pur­sue a pub­lic of­fer­ing for Sol­ta Med­ical, part of Bausch’s or­tho der­ma­to­log­ics busi­ness, but that’s no longer the plan — at least for now.

“We re­main pa­tient with Sol­ta and wait for bet­ter mar­ket con­di­tions for its IPO,” he said on the Q1 call. “Sol­ta Med­ical is a valu­able as­set and has the po­ten­tial to grow in the dou­ble-dig­its dri­ven by healthy de­mand for aes­thet­ic prod­ucts and ser­vices.”

Ap­pio, who’s fill­ing Pa­pa’s shoes, has been at Bausch since 2010 when he joined as a man­ag­ing di­rec­tor in Chi­na. In Au­gust 2016, he was pro­mot­ed to pres­i­dent of Bausch + Lomb/In­ter­na­tion­al. Be­fore join­ing the com­pa­ny, he served 23 years with Scher­ing-Plough in a wide range of po­si­tions.

Go­ing for­ward, Ap­pio said the com­pa­ny plans on lever­ag­ing its in­ter­na­tion­al com­mer­cial scale by launch­ing 45 prod­ucts across 50 mar­kets with­in its in­ter­na­tion­al seg­ment. He al­so hint­ed that the new, slim­mer Bausch Health might not stay slim for long.

“We have es­tab­lished an en­tire BD and strat­e­gy team, and that is look­ing at tuck-in type ac­qui­si­tions that we can bring in­to the port­fo­lio,” he said.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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David Loew (Ipsen)

Ipsen snags an ap­proved can­cer drug in $247M M&A deal as an­oth­er bat­tered biotech sells cheap

You can add Paris-based Ipsen to the list of discount buyers patrolling the penny stock pack for a cheap M&A deal.

The French biotech, which has had plenty of its own problems to grapple with, has swooped in to buy Epizyme $EPZM for $247 million in cash and a CVR with milestones attached to it. Epizyme shareholders, who had to suffer through a painfully soft launch of their EZH2a inhibitor cancer drug Tazverik, will get $1.45 per share along with a $1 CVR tied to achieving $250 million in sales from the drug over four consecutive quarters as well as an OK for second-line follicular lymphoma by 1 Jan. 2028.

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AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

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De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.

Joe Wiley, Amryt Pharma CEO

Am­ryt Phar­ma sub­mits a for­mal dis­pute res­o­lu­tion to the FDA over re­ject­ed skin dis­ease drug

The story of Amryt Pharma’s candidate for the genetic skin condition epidermolysis bullosa, or EB, will soon enter another chapter.

After the Irish drugmaker’s candidate, dubbed Oleogel-S10 and marketed as Filsuvez, was handed a CRL earlier this year, the company announced in a press release that it plans to submit a formal dispute resolution request for the company’s NDA for Oleogel-S10.

Sen. Thom Tillis (R-NC) (J. Scott Applewhite/AP Images)

Phar­ma-friend­ly sen­a­tor calls on FDA for a third time to show patent pro­tec­tions should­n't be blamed for high drug prices

North Carolina Republican Sen. Thom Tillis made a name for himself in the 2020 election cycle as the darling of the pharma industry, accepting hundreds of thousands in campaign contributions, even from the likes of Pfizer CEO Albert Bourla.

Those contributions have led Tillis to attempt to re-write patent laws in pharma’s favor, a move which failed to gain steam in 2019, and request for a third time since January that the FDA should help stop “the false narrative that patent protections are to blame for high drug prices.”

EMA signs off on 3 drugs re­cent­ly re­ject­ed by FDA, in­clud­ing Bio­Mar­in's new he­mo­phil­ia gene ther­a­py

The EMA’s human medicines committee on Friday recommended three new drugs for approval or conditional approval, even as their US counterparts have rejected these three for various reasons.

In a major move, CHMP offered a thumbs-up to a conditional marketing authorization for the first gene therapy to treat severe hemophilia A, although the agency cautioned that it’s so far unknown how long the effects of infusion will last.

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Joe Papa (Ryan Remiorz/The Canadian Press via AP, File)

Joe Pa­pa re­signs as chair of Bausch Health as bil­lion­aire John Paul­son takes over

Joe Papa, chair of Bausch Health, officially resigned on Thursday and the board appointed billionaire hedge fund manager John Paulson as the new chair, effective immediately.

The specialty pharma company sought to make clear that Papa’s abrupt departure “was not due to any dispute or disagreement with the Company, its management or the Board on any matter relating to the Company’s operations, policies or practices.”

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