Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Mylan Third Quarter 2018 Financial Results. At this time, all participants are in a listen-only mode. [Operator Instructions] We will have a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. Now it’s my pleasure to turn the call to Melissa Trombetta, Head of Global Investor Relations. You may begin.

Thank you, Carmen. Good evening, everyone. Welcome to Mylan’s third quarter 2018 earnings conference call. Joining me for today’s call are Mylan’s Chief Executive Officer, Heather Bresch; President, Rajiv Malik; Chief Commercial Officer, Tony Mauro; and Chief Financial Officer, Ken Parks. During today’s call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2018. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today’s projections. Please refer to the earnings release we furnished to the SEC on Form 8-K earlier today, as well as our supplemental earnings slides, all of which are posted on our website at investor.mylan.com for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements. Mylan routinely posts information that may be important to investors on this website and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure. In addition, we will be referring to certain actual and projected financial metrics of Mylan on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of our financial performance. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP. The most directly comparable GAAP measures, as well as reconciliations of the non-GAAP measures to those GAAP measures, are available in our third quarter earnings release and supplemental earnings slides, as well as on our website. Let me also remind you that the information discussed during this call, except for the participants’ questions is the property of Mylan and cannot be recorded or rebroadcast without Mylan’s express written permission. An archived copy of today’s call will be available on our website and will remain available for a limited time. With that, I’d like to turn the call over to Heather.

Thank you, Melissa. Good afternoon and thank you for joining today’s call. While we are continuing to see the global healthcare environment evolve at a rapid space, Mylan’s third quarter performance was in line with our expectations and we delivered solid year-over-year growth. However, in the market search for stability, analyzing certain indicators and isolation can exacerbate volatility. We will discuss our perspective related to several examples of these during today’s call whether that be Mylan’s pending generic Advair approval, utilization of biosimilars and complex generics or the overemphasis of the impact of commoditized oral solid dose products within our North America business. Our ability to deliver long-term growth is not dependent upon the timing of any one approval, any one country’s market dynamics or any one dosage form, but rather the broader, more complete context of Mylan’s global diversified business model. More than 7,500 products around the world divided almost equally between generic and brand sales, market leadership in countries around our geographies and a scientific platform that has generated a record number of complex generics and biosimilar launches for Mylan year-to-date. We continue to believe Mylan is built to last. With all this said, we remain committed to our full year 2018 guidance provided in August and this confirmation is not dependent on any single product approval or launch. In North America, while our business is predominantly generic, we are benefiting from a broader mix of dosage forms well beyond oral solids and are seeing continued stabilization of the pricing environment. Year-to-date, we have launched nearly 40 new products in North America with two-thirds of these being injectables. In Europe, our business benefits from an equal mix of branded generic and over-the-counter products. Year-to-date, we have launched nearly 300 products across all of these channels. Our commercial infrastructure…

Thank you, Heather. Let me start by celebrating the broad contribution impact of our Morgantown facility, restructuring and remediation which began in the second quarter of this year on our North American business, as this may have been misunderstood by the investment community. Our U.S. business is much more than commoditized oral solid doses and consists of a broad portfolio of injectables, drums, semisolids in addition to hard to make oral solids. Currently, only one of our top 10 and eight of our top 50 gross margin generating products for North America are manufactured in Morgantown. It should be noted that we did not expect to have any significant new product launches from the site in 2019. As we work to reduce the complexity of this facility, we have proactively discontinued a number of products, while also transferring some to other sites. These actions have led to a temporary disruption in supply of certain products for our customers and reduced volume in North America generic sales. However, the value related to the rationalize product is not proportionate to the reduced volumes of those commoditized products. While we are executing on our commitment to FDA, the plant continues to supply products for the U.S. market. Our remediation and restructuring activities will continue in the near-term. We understand that this current and temporary situation post a burden on our customers and appreciate their ongoing confidence in Mylan, based on our outstanding historical track record. As one of world’s largest pharmaceutical market, the U.S. remains a key market for Mylan. We will continue to focus on providing a broad range of products, including industry-leading new launches and maintaining a meaningful market share across a diversified portfolio. No matter, where our products are produced in our network, our goal is to ensure the highest…

Thanks, Rajiv, and good afternoon, everyone. I’ll take a few minutes to provide a quick overview of our financial results for the third quarter. Total revenues of $2.9 billion were 4% lower than the prior year or 2% lower, excluding the negative impact of foreign exchange. On a constant currency basis, Europe, which was up 2% and Rest of World, which was up 11% help to mitigate a 13% decline in North America. The decrease in North America net sales was primarily driven by lower volumes on existing products, including EpiPen, partially offset by new product sales, including the recent launch of Fulphila. The decline in volumes was primarily driven by the timing of purchases of our products by customers and actions associated with the restructuring and remediation program at our Morgantown manufacturing facility. In addition, North America net sales were negatively impacted by approximately $50 million related to the implementation of the new revenue recognition accounting standard at the beginning of 2018. North America net sales excluding the $50 million impact were down 9% versus the prior year. Adjusted net earnings increased 10% to $648 million and adjusted diluted EPS increased 14% to $1.25 during the quarter. That includes benefits from ongoing integration activities and the lower share count following the completion of our $1 billion share repurchase program in the beginning of the year. Moving to segment profitability, excluding approximately $98 million of expenses related to the Morgantown restructuring or remediation program, North America adjusted segment profitability declined 6%, which is less than the rate of the sales decline, and primarily due to the impact of new product launches and favorable product mix. Europe’s profitability grew 7% during the quarter, mostly driven by new product sales and favorable product mix also. Rest of World profitability expanded 45%, mostly…

Thank you. [Operator Instructions] Our first question comes from Elliot Wilbur with Raymond James. Your line is open.

Thank you and good afternoon. I guess, specifically, wanted to get a little bit more color and insight into some of the segment profitability metrics. I guess, specifically, North America and Europe both were very strong despite some constraints on the topline, in fact, I think, you are close to a record level since you began the new segments disclosure reporting a couple of years ago, wouldn’t have expected that North America kind of given the absence of EpiPen contribution and not really sure what kind of drove this strong year-over-year and sequential profitability trends in Europe as well. So maybe just a little bit more insight into those to name it would be helpful. Thanks.

Hey, Elliot. Thank you for the question. You are exactly right. I mean, this was a strong profitability growth quarter, not just for Europe and for North America, but also for the Rest of World. And as we talked about in the comments, as I talked about specifically in the comments and you can see when you look at our press release, our gross margin ratio increased from a little more than 52% on an adjusted basis, last year in the third quarter to more than 55% this year. Called out, basically the two drivers in both places, number one -- both places being North America and Europe. Number one, our product launches, new product launches and we have talked about that as we move through the year. We specifically said that new product launches in Europe will be more heavily weighted to the second half of the year, and we saw both in Europe and North America exactly the expectations that we had moving into the quarter. Those new product launches tend to run at profitability levels slightly higher than the overall Mylan average. So that was a positive contributor in both North America and Europe regions. Secondly, I would call out for Europe specifically, we have talked about as we have come into 2018, the focus and investment into our global key brands. Some of those global key brands are other than the legacy Mylan business, some of them are out of the EPD business we acquired a couple of years ago and some of those come out of the Meda business that we acquired in 2016 We called it out, because we said, as we moved into 2018, we were going to continue to reap the benefits from our Mylan integration activity and we able to reduce our overall G&A cost, and at the same time, take that money invested back into selling and marketing to support those global key brands that are very sensitive to advertising promotion and selling efforts in the countries across Europe specifically and that’s exactly what we have done this year. We had the savings from G&A and we have had the discipline and focus and leadership and teams to support these global key brands in not just one market but multiple markets. So that should give you a little bit more color. It’s really about product launches. You have heard scientific capabilities and that’s turning into revenues and profits and then the focus on our global key brands.

Thank you. Our next question comes from Ronny Gal with Bernstein. Your line is open.

Good afternoon. Congratulations on a very nice quarter. I wanted to touch on two things if I can. First, I noticed that UNH contracts were your preferred brand for their plan, so nice execution there on a commercial marketing side. And just you can let us know what roughly the pricing is for this product versus its list price or some other metric whether this is more of a generic level pricing or more of a branded level pricing. And similarly with most of the European adalimumab contract already in, can you give us a fair an assessment of where your volume will stand -- your volume share will stand in 2019 in Europe?

Yeah. Ronny, thanks for the question. First of the UNH, I think thank you for recognizing this. It’s a great opportunity. We think this partnership we have with United really provides enormous amount of access and affordability to this marketplace and we think this unique contracting opportunity really will drive opportunity not just in 2018 but in 2019 as well. And as it relates to Hulio, our Humira products in Europe, it’s just beginning, we are seeing tenders as you have noted across many of the European markets like the Netherlands, Norway and Denmark. Certainly we feel like there’s a huge -- a tremendous opportunity within Europe, not just in the tenant markets but in the markets where we have physician substitution. So we are excited about the beginning of the launch, winning a few tenders in select markets and really expanding on that going forward into 2019.

Thank you. Our next question comes from Chris Schott with J.P. Morgan. Your line is open.

Great. Thank you very much for the question. The first one I have is on Morgantown, any additional color you can provide in terms of the impact, the remediation is having on both your top and bottomline adjusted results, as well as any more granularity on when in ‘19 we can expect operations to begin to normalize that facility? And just a quick second one just is an update on the strategic review, any timelines where we can think about an uptake here and directionally any color in terms of what the committee is spending its time evaluating? Thank you.

Thanks, Chris. I’ll take Morgantown and Heather will comment on the second part. Chris, as you will anticipate, when we have taken -- undertaken the remediation and the restructuring. Because we mentioned in our quarter two, calls that just to manage the -- manage to keep pace with FDAs revolving standards we need to rationalize and simplify the plant and reduce the complexity. So we had undertaken certain discontinuation of commodity products, as well as moving these products within our network to some other sites. So we -- I think, if we separate qualitative and quantitative, it’s more a qualitative issue for us, because it has set off from the customers service level point of view our reputation as a reliable supplier. That’s where I think we have seen the more pain rather than the quantitative one, because what -- where we have lots of doses is mostly on commodity products with the, yes, you see a couple of billion doses going down. But there -- as we mentioned, disproportionately, they are not from the value point of view there. So we -- as we go in 2019, you will see us restructuring in Morgantown, that’s number one, but basically balancing the network so that we can optimal delivery the meaningful market share, the value and the volume mix, so that’s where we are heading.

And Chris, as far as the strategic review, as we just announced it last quarter. I can assure you the Board is busy looking at lots of things as we talked about unlocking that value, and I think that, when they are ready for an update we certainly will put that out. But we have put no timeframes around that.

Thank you. Our next question comes from Liav Abraham with Citi. Your line is open.

Good evening. A couple of quick questions, firstly, can you just provide a little more granular details on the Fulphila launch and how that’s progressing. And then, secondly, Ken, in the past you have provided us with a breakdown of revenue for new products in the quarter, broken down into U.S. and Rest of World. Could you provide that for this quarter as well? Thank you.

Yes. Thank you. On Fulphila, maybe just to give you kind of what’s been our approach when we talk about this surgical launch, we really had been focusing on community oncology clinics as well as hospital-based outpatient clinics. So as we continue to watch weekly, we see our weekly movement into these clinics such as going to 700 units a week to 800 units a week here and we see that continuing to grow. Last week alone we are a little over 8% of the pre-filled syringe market, which makes up almost 50% of the entire Neulasta marketplace. So we are very happy. We are very happy where we are at today and where we continue to see our trends are grow and continuing to build upon that oncology practice experience, and really building out relationships with the GPOs and the IDMs in terms of how we can look at long-term value continuing to grow in capital share in this very, very large U.S. marketplace.

And Liav, so for the quarter we had slightly under $300 million of new product launch revenues, which I would say, about half of that came out of North America overall and the remainder of it was split between Europe, our API and ARV business, and then the remainder was in just kind of the Rest of World segment. So that would be kind of the highest level breakdown on where that’s coming from.

Thank you. Our next question comes from Gary Nachman with BMO Capital Markets. Your line is open.

Hi. Good afternoon. With generic Copaxone you have been taking more share in the last couple of months. So what types of formulary wins have you been getting and how much additional price did you have to give up to get that share? And if generic Advair is approved soon, what do you expect market formation to look like at this point? Thank you.

Maybe just to hit upon Copaxone, what I will say is, we had said the last quarter and the previous quarter, we weren’t happy where our market share was, and we have been continuing to focus on this with pharmacies, with PBMs and with payers. And you are right, over the last quarter, we have seen sequential 25% gain in market share, up 5% total market share gaining Q2 to Q3, at one point in Q3 new scripts were getting the 30% level for the first time. So we are very excited where we are going but we are not finished and we have got more to do and more to work with as it relates to that. And as it relates to Advair?

Yeah. I would just add as it relates to Advair, whenever the market does form, we believe it’s going to be an important product for a long period of time. As you know, a very high barrier-to-entry, very complicated product, we look forward to bringing it to the market, but believe that, as we have continued to learn about and as the continued dynamics evolve with how to pull product through, I can assure you we will be launching in a smart as we can to ensure that we are able to get into the patients hand. So we look forward to the launch as soon as it can happen.

Thank you. Our next question comes from Umer Raffat with Evercore. Your line is open.

Hi. Thanks so much for taking my question. First on EpiPen, my question is you are filing say no more than 3% of any product is -- no more than 3% of your revenues are any single product. So that would imply EpiPen and its authorized generic being something like 350 million. But we are seeing Pfizer report 174 million first nine months alone or 230 million run rate. So that Pfizer run rate doesn’t quite reconcile with EpiPen and its AG being 350. Is it fair to say, EpiPen’s 350 and the AG’s another 200? And as Ken, for your debt paydown schedule, are you assuming any significant change in your working capital or any new securitizations?

So I -- Umer number one, your statement, the reiteration of our statement around no product accounting for more than 3% of total revenues is absolutely correct and so the math would get you exactly where you laid out for us. I can’t speak to what Pfizer has out there, but I can tell you exactly what we know, which are the numbers we manage and the sales that we account for, and your first statement is exactly debt on and consistent with our earlier statements. On the debt pay down, what I would tell you is, we have shown over the last couple of years consistent improvement in working capital velocity. The couple of days per quarter in a year-over-year comparison of improvement and working capital days on hand, which is exactly what we are driving towards as we move to the balance of this year and into 2019. And we are going to have a lot of opportunities to take a look at where that working capital velocity will come from. We have talked in some of the settings, including in our Investor Day earlier this year, how we got Europe combined all on a single ERP system instance, and in doing so that gives us ability to reach out and look at receivables from one spot instead of 35. We will get payables from one spot instead of 35 and we built in and are doing specific activities to drive those days in the directions that they need to be moved to. So your question around debt paydown is number one, we certainly have the debt repayments outline that are coming due in this year and next year. And I will tell you that we also expect to continue to drive working capital velocity improvements not just in the balance of 2018 but through 2019, and I would even suggest going forward. When you put numbers around that everyday of working capital for Mylan accounts for about $40 million of cash flow, so the continuation of working capital velocity is high on all of our list and specifically mine.

Thank you. Our next question comes from Tim Chiang with BTIG. Your line is open.

Hi. Thanks. I noticed that you guys had gross margin improvement this quarter of 55% approximately. Is this a number that you think can be repeated in future quarters and also you are benefiting from lower SG&A spending, also lower R&D spending, is that also something that’s going to continue?

On gross margin, what I’ll tell you is we watch every quarter as it occurs. We certainly had a period as I outlined $300 million or so of new product launches and you hear Rajiv, Heather and Tony, all talking about the pipeline and we are investing in those products that are more complex, those that bring more value not only to us but to the patient, and in doing so, those tend to be slightly higher profitable products. The timing of new product launches could drive a quarterly movement in what gross profit looks like. But what I would tell you over time is this pipeline that this team has built over multiple years is set to deliver gross products -- gross margins at nice rates over the long-term, but I won’t call out any quarter alone. Secondly, your question around SG&A, I go back to say the statements earlier around SG&A, which is we continue to look at these assets that we brought together through acquisitions. We find opportunities to continue to improve the G&A part of that SG&A and still invest in the selling side of that equation. So we have opportunity -- when you say is it sustainable? Yes. We continue to find opportunities to do things in our, quote-unquote, back office, more streamlined more improved, which just gives us more dollars to drop either to the bottomline or to invest where we need to grow products. And then I will let Rajiv comment on the R&D question.

Yeah. Look our commitment on R&D is very well highlighted and illustrated as we mentioned in Heather’s remark, as well as in my remarks. So R&D spend is a timing issue and not a trend.

Thank you. Our next question comes from Irina Koffler with Mizuho. Your line is open.

Hi. Thank you for taking the question. As you are labeling discussions on Wixela proceed, can you reassure us that it’s still a substitutable product that we are talking about and your confidence level around that? Thank you.

Yeah. Absolutely we can reassure you that it’s a substitutable product and we are very active optimistic and we believe FDA needs to do what they need to do and we would expect the same, but at the same time, we had have been very confident about the possible comment earliest.

Thank you. Our next question is from Louise Chen with Cantor Fitzgerald. Your line is open.

Hi. This is Jennifer Kim on for Louise. Thanks for taking my questions. I just had two quick ones. First, I think, you mentioned that there was a volume decline for EpiPen this quarter due to the timing of purchases and I’m wondering then would you anticipate the volumes to sort of operate themselves in the fourth quarter? And then the second question is, with the recent approval of a second biosimilar for Neulasta, how does that affect your thinking about the market? Thanks.

Maybe if I had on EpiPen very quickly. What I would say is traditionally Q3 for us is the highest volume quarter just due to the seasonality of the product. So what I would say is, I think, Q4 will rebalance itself out to probably 20% of the annual volumes as we have seen in traditional years of past. As it relates to another Neulasta product, like I said, this is a $4 billion product and oncology, the largest biologic product available in the oncology therapeutic world and right now we are tracking a little bit above 8% in the pre-filled syringes. So I think there’s opportunity for more. I think there’s a great opportunity for Mylan, and I think, we will continue to see our product grow and will stay very surgical on track with our plan as we are very happy with results and very happy where it’s going.

Thank you. Our next question comes from Jason Gerberry with Bank of America. Your line is open.

Hey. Good evening. Thanks for taking my questions. Just a question on biosimilar Lantus, I’m just curious, is this some product you guys think is one that you can get an acceptable gross profit margin on and I asked in lieu of Merck’s decision to walk away from this citing profitability metrics, and I know about a year for you guys, so just kind of curious if you can help us think about that one? Thanks.

I will take it then, Tony, please feel free to add. We believe Lantus is a very important product and we remain confident first of all in science, and in fact, we continue to work with FDA to find a substitutable product. At the same time, we believe there’s a market and there’s a need, and we have been very confident from our costing point of view, from the backward integration, which we have done with our partner Biocon that we will be able to have positive drop margin when we come to the launch of this very important product.

And maybe just that to add as Rajiv said this diabetes franchise is one that continues to grow globally, and I think, each market will be unique, each market will have its own sets of opportunities and we will be very focused on the markets we concentrate to grow and ensure our market share is available and bring access that is important patient community.

Thank you. Our next question is from Ami Fadia with Leerink. Your line is open.

Hi. Good afternoon. I’ve got two questions, firstly, on Fulphila, could you give us a sense of your capacity with regards to supplying to demand in the market? And secondly, on Advair, when it gets approved what type of a ramp are you anticipating, would you expect a relatively slow ramp kind of like the way we have seen with Copaxone or would you anticipate a more typical generic ramp? Thank you.

So, Ami, regarding Fulphila, I think, we -- our capacity is exactly as we had planned and as we had anticipated this launch. So we don’t see any capacity constraints from our marketing perspective. And you…

And as far as Advair, I mean, mean here is what I would say, Ami, as we have talked about these complex products being pulled through that chain and I tried to reiterate this in my opening commentary that it’s not just good enough to get a product approval, the regulatory burden, but also our work about pulling it through. And I can assure you that we are absolutely doing our part as we look at how this is going to be positioned with our end goal being that it reaches the patient’s hands who need them and being that access and affordability to this marketplace. So as -- once we do get the product launch we will obviously stay close and report back, I think, that we have taken very appropriate and conservative assumptions, and I think, it will be something that’s got a very long tail to add longevity and contribution from this product.

Thank you. Our next question is from David Risinger with Morgan Stanley. Your line is open.

Hi, there. Dushan [ph] here for David Reisinger. Could you please provide more color on the new financial metrics that you are considering to focus the Street on?

Yeah.

Go ahead Heather.

Yeah. Yeah. Sure. And then anything would ask. Look we have been continuing to indicate that we don’t believe that the EPS and the short-term is kind of around that projection is the right indicator for what’s really fueling our long-term viability, our performance over the long-term and really quite honestly, where we are focused as a management team. So these are things -- we are looking at a lot of things, and obviously, when we come back with 2019 outlook, we certainly will share them with you, as well as our rationale.

And the only thing I would and I completely agree with everything Heather just said, and I would just say, consider how you see our financial results come out, which are that EPS is certainly a number that certain people like to take a look at and we certainly want to make sure and drive that to be as optimal as we can. But what I would also tell you, is what we really also want to do is make sure not just focus on EPS in a quarter, but consistent solid cash flow generation and conversion of EBITDA and net income into cash, so we can continue to delever, continue to invest in our business and continue to build that pipeline. So you will see us looking at things around what’s driving value to the business from an economic perspective and what’s driving cash into the -- out of the business and then back into the business to make sure that we are keeping our balance sheet healthy and our company strong and ready to deliver on the business plans that we have set for ourselves not just for the next quarter or the next year but the next few years. So, as I said, we will give you more color around those specifics as we continue to look at it when we get in front of you in late February timeframe with our outlook for 2019.

And ladies and gentlemen, this concludes our Q&A and program for today. Thank you for participating. This concludes it and you may all disconnect.