Bausch Health Companies Inc. (BHC) Q4 2012 Earnings Report, Transcript and Summary

Good morning. My name is Christy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Valeant Pharmaceuticals Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] Ms. Little, you may begin your conference.

Thank you. Good morning, everyone, and welcome to Valeant's fourth quarter and year-end 2012 financial results conference call. Presenting on the call today are J. Michael Pearson, Chairman and Chief Executive Officer; and Howard Schiller, Chief Financial Officer. Ryan Weldon and Laizer Kornwasser, EVP and Company Group Chairman, are both here and available to answer questions during the Q&A session. In addition to the live webcast, a copy of today's slide presentation can be found on our website under the Investor Relations section. Before we begin, certain statements made in this presentation today may constitute forward-looking statements. Please see Slide 1 for important information regarding these forward-looking statements and associated risks and uncertainties. Readers are cautioned not to place undue reliance on any of these forward-looking statements. The company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the actual outcome. In addition, this presentation contains non-GAAP financial measures. For more information about non-GAAP financial measures, please refer to Slide 1. Non-GAAP reconciliations can be found in the press release issued earlier today and posted on our website. Now I'll turn the call over to Mike Pearson.

Thank you, Laurie. Good morning, everyone, and thank you for joining us. As you have read in our press release, we finished out 2012 with a strong fourth quarter resulting in another great year for Valeant and its shareholders. We are particularly pleased to deliver over $420 million in adjusted cash flow on the fourth quarter, which is a key metric for all of us. On today's call, I will review our fourth quarter and overall 2012 results and performance, provide a short update on our early progress in 2013 and then turn over the call to Howard to provide a financial update. After our remarks, Howard, Ryan, Laizer and I will be available for Q&A. Total revenue in the quarter was $986 million as compared to $688 million in the fourth quarter of 2011, an increase of 43%. Product sales in the fourth quarter of 2012 were $947 million as compared to $654 million in the same period in the prior year, an increase of 45%. Our fourth quarter cash EPS was $1.22 per share or an increase of 30% over 2011. There were no one-time items in this quarter. Adjusted cash flow from operations was $423 million for the quarter, an increase of over 67% over the prior year. On an annual basis, we increased total revenue by 44% and product sales by 47%. Cash EPS was $4.51, an increase of 54%, which included the interest expense related to the Medicis transaction. Excluding this expense, cash EPS for 2012 was $4.53, an increase of 58% over 2011. Adjusted cash flow for the full year increased 40% to nearly $1.3 billion. Organic growth continued be strong for both the quarter and the year. We're particularly pleased to report a return to positive growth for our Neuro and Other business after 6 quarters of decline. As we mentioned earlier this year, we expect U.S. Neuro and Other business to continue to grow throughout to 2013. We also note the continued very strong growth in the emerging markets despite significant economic headwinds this year. Finally, I would like to note that our Canadian and Australian segment grew 5% same-store, 6% pro forma, excluding the impact of the Cesamet generic entry in the first quarter of 2012. We expect this segment to return to growth in the second quarter of 2013. Slide 5 summarizes our adjusted cash flow by quarter in 2012. We are pleased to report we delivered at the very high-end of our revised guidance given last quarter of $1.1 billion to $1.3 billion. At the end of each year, we always like to compare our final results versus our original January guidance. Consistent with our track record over the last 5 years, we have over-delivered on every key metric: revenue growth, cash EPS and adjusted cash flow from operations. We were also pleased to once again deliver a very strong organic growth for the year. On my final slide, on 2012 performance, I would like to recognize and thank some of our executives and their teams for a particularly strong performance in 2012. To Leszek and Pavel for their truly outstanding performance where in 2012, we were the fastest-growing pharmaceutical company in Poland, including branded generics, pure generics, branded companies and biologic companies. To Andrew and Chris and their teams in Southeast Asia and South Africa; both businesses delivered 20% growth and operating margins above 40%. To Ryan for turning around U.S. Neuro and Other to positive growth. To our other U.S. general managers of our prescription dermatology, aesthetics, oral care, ophthalmology and OraPharma, who each delivered double-digit organic growth for the year. And finally, to Dr. Rovalo and his team in Mexico, who once again delivered double-digit organic growth on a pro forma basis. While we are only 2 months into 2013, we are off to a strong start. In terms of business development, we have already closed 3 deals, all-around two-time sales. Natur Produkt and Eisai, we issued press releases on. In addition, we've purchased 3 OTC products from Lek-am in Poland representing over $20 million of sales. In terms of the Medicis integration, essentially, all of the headcount related synergies are now completed. The new Medicis field force is fully trained on both companies' product lines, and all of them are back in the field. We are aggressively pursuing the non-personnel synergies, such as legal costs and the termination and sale of R&D programs, and are also making good progress there. When we recently updated our deal model in preparation for this call, we are pleased to report that there is significantly more value for our shareholders in this transaction than we originally modeled. Furthermore, despite our disciplined spend in R&D, we expect to have a banner year in terms of progressing our R&D pipeline. Efinaconazole remains on track for our May 23 PDUFA date; our NDA for Luliconazole has been accepted by the FDA, and we have a December 11 PDUFA date for that compound; DYSPORT is currently launching in Canada; we expect to file 2 new Emervel fillers in the U.S. in 2013; and we are also on track to file our MetroGel BV indication in the first half of this year. Finally, we've provided you with guidance in January and reaffirmed that guidance earlier this month when we initiated our debt repricing. We will update our financial guidance for 2013 at our next earnings call in early May. I would also like to remind everyone that we will be making changes to our segment reporting in the first quarter of 2013. We will still be providing the same model of revenue and organic growth detail, but we will be reporting only 2 segments from an SEC reporting perspective: developed markets and emerging markets. Each segment will be comprised of similar margin profile business units, and we believe this reporting structure continues to represent our business appropriately. Now I will turn the call over to Howard.

Thank you, Mike. Today, we reported our fourth quarter 2012 results. As Mike mentioned, we are very pleased with the performance of our business and are confident in our ability to deliver superior results in 2013. Total revenue in 2012 reached $986 million, a 43% increase over Q4 2011, and we are looking forward to our first billion dollar plus revenue quarter. Our cost of goods sold for the fourth quarter was 25%, which was on par with Q4 2011, but higher than Q3 2012. While we are making progress in our cost of goods sold initiatives, including our plant consolidations in Brazil, Mexico, Europe and Canada, this increase versus Q3 2012 was primarily driven by a one-time write-off of obsolete inventory in Brazil. The real story, however, is to be found in the year-over-year comparison, we improved from cost of goods sold of 27% in 2011 to 24% in 2012. While we will continue to have quarterly fluctuations based on product mix, we feel confident in our ability to continue to improve our cost of goods sold percentage. SG&A expense as a percentage of sales remained constant this quarter at 20% of revenue. This percentage will also fluctuate from quarter-to-quarter due to factors, such as the timing of synergy capture and sales activity. We expect SG&A as a percentage of sales to remain in this range over time. R&D expense was $20 million for the quarter or about 2% of revenue. Similar to SG&A, we expect R&D expenses to fluctuate from quarter-to-quarter but stay in this relative range in 2013. Operating margins for 2012 were 53% of revenue, a 2-point increase from 2011, primarily due to improvements in cost of goods sold. Bottom line, we achieved cash EPS of $1.22 and adjusted cash flow from operations of $423 million. Since the Medicis deal closed late in the quarter and given the timing of sales and expenses, Medicis did not contribute materially to cash EPS in the quarter. Excluding the Medicis acquisition related interest expense, cash EPS would have been $1.34, an increase of 43% over the prior year. And as Mike mentioned, we had no one-time items to report in this quarter. Slide 11. We are continuing our practice of showing you this slide to provide greater detail to our reported results and breaks out past one-time items so it's very clear how the underlying business is performing. In each quarter of 2012, we were able to grow both revenue and cash EPS at very high double-digit growth rates. And for the year, revenue grew 44% and cash EPS grew at 58% as compared to 2011 if you exclude the Medicis related interest expense. As we mentioned on our guidance call in January, we expect Medicis related acquisition and integration related expenses to be less than 1 year of run rate synergies. In our Q4 press tables, we reported $286.9 million of Medicis related project costs. Of that amount, $47 million related to the payments for Medicis' legal and financial advisers that was accrued by Medicis prior to closing, but payable at closing. In addition, $134.3 million related to stock appreciation rights and other compensation that was accrued by Medicis prior to closing and accelerated vesting of stock-based awards as a result of the transaction. These expenditures were not related to the achievement of synergies. In Q4, we spent $105.2 million to achieve synergies. We continue to expect that the cost to achieve synergies will be less than 1 year of run rate synergies. We will update you on our progress in capturing these synergies on our Q1 conference call. Slide 13 gives you a bridge from 2011 revenues to 2012. As you can see, the base business generated significant incremental revenue. In addition, we had a very active business development year, and acquisitions contributed over $1 billion in revenue. We are particularly proud of our revenue growth in 2012, given the generic and FX headwinds that we've faced during the year. The end result was a 44% increase in revenue in 2012. In 2012, we also initiated a number of steps to further intensify our focus on cash flow. These included setting working capital targets for each business unit and performing monthly reviews to track progress versus these goals. We're also doing a better job of estimating deal related restructuring costs and measuring our performance. In addition, corporate senior management and business unit management have cash flow objectives built into their annual bonus programs. With that, we'll now open the call for questions.

[Operator Instructions] And your next question comes from Annabel Samimy with Stifel. Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division: So I just wanted to check with on the dermatology side. I guess, some of your competitors are talking about being able to take advantage of some of the dislocation in the market from consolidation. And clearly, during the integration, sales get hurt, and we can see from some of the trends in Medicis' sales. So are you going to be putting any programs in place to stem that, either -- or do you have to do anything over and above what is already in place?

So we've actually made very good progress in terms of the sales force integration. By the end of January, we had our national sales meeting of -- with the new sales force, where the new sales team was trained on both products. They've been back out in the field since the end of January. And if you look at the market share trends reports, you can see that 8 of the 10 products that we're promoting since the end of January we've increased market share. So we're actually quite pleased with the progress we're making. Now obviously, as we now have a much broader line of products, it affords us the opportunity to do some other creative things in terms of our marketing approach, and you'll see those programs introduced by the beginning of the second quarter. Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And if I can ask a question on, I guess, your emerging markets. Are there any major shifts or headwinds -- you mentioned that there were some headwinds in emerging markets, but are there any major shifts in the headwinds or are there any specific challenges we should be thinking about going into this year?

I don't think so. Last year was a little bit tough in terms of Central and Eastern Europe. It was a pretty tough year in terms of the overall markets. Our team did an outstanding job, and we've gained market share pretty well across the board. We've been around to each of our units already this year, and I think the view of local management is that -- actually, this year should be significantly better than last year in terms of market growth.

And your next question comes from the line of Chris Schott with JPMorgan. Christopher T. Schott - JP Morgan Chase & Co, Research Division: Just a little bit of that last on the emerging markets side. What's different about this year than last year that gives you confidence that business can start to recover? And then the second question, I know in your comments, you said that your deal model suggesting that there is potentially more value for shareholders from the Medicis transaction than you originally expected. Just elaborate a little bit more on what you're seeing there? Is that more on the cost side, is that more on the revenue side? I'm just trying to understand what -- as you've been digging into that asset what you're seeing there that you're -- that is giving you that confidence.

Sure, Chris. First, I guess I would dispute your characterization of needing to recover in the emerging markets. I think actually, we have a very strong performance in 2012 in terms of organic growth and profitability. But I think that the fact that we have talking to -- going out to Europe, Southeast Asia, South Africa and Latin America is a couple of things: one is, our product introductions are quite robust this year, and we feel very good about that; and the second is, the reimbursement on our pressures that we experienced last year don't appear to be as acute going into this year. So that's what gives us sort of a level of optimism in terms of what we think about 2013. In terms of the deal model, I think we see upsides on all 3 dimensions: costs, revenue and also longevity of assets, which obviously has a big -- it's quite important in terms of any kind of discount cash flow analysis. So we've been able to -- certainly beat what we've thought in terms of the cost targets, and we'll be updating, as Howard said, in the end of the first quarter. In terms of revenue, we feel actually quite good about some of the products and the promotional sensitivities, and we're seeing very good early results out in the field. And we -- in terms of longevity, we talked about some of the R&D programs, the luliconazole, the BV indication for MetroGel, things like that. We did not have visibility into R&D when we do the deals, so those are all upsides to our model. Christopher T. Schott - JP Morgan Chase & Co, Research Division: Okay, great. And then one final question for Howard. Can you just talk a little about how we should think about quarterly progression of earnings this year, anything that we should be thinking about as we're looking at our models?

I think, right now, our thinking is similar to what we talked about in January, and that'll be more heavily weighted to the back end. We've talked about 55, 45, sort of back end, front end in Q2 which has traditionally been our weakest quarter. And the only thing that could cause that relationship to move around a bit is the capture of synergies. But we still would expect Q2 to be our weakest quarter. So I don’t think anything has changed at this point in that regard.

And you have a question from the line of Lennox Gibbs with TD Securities.

You have a good little portfolio in Russia, but we also know you have pretty high aspirations for Russia. What are your 2013 priorities for the Russian market, both from a strategic and an operational perspective? Just what do you need to accomplish?

Well, we just closed our Natur Produkt, which was a significant acquisition for us there. I think the -- so priority number one is to get everything integrated. Good progress has already been made. Because it took quite a while to close that particular deal, we had a lot of time to prepare for the integration. So again, our integrated top management team in Russia in place is priority number one. Priority number two is to continue to grow the business. We grew the business last year well above market, and we want to continue that performance. And then strategically, it's one of the emerging market areas we like the best, so we'll continue to be looking to add products and add companies to that part of the business. Again, I think as we've mentioned in the past, the business in Russia right now is -- on a run-rate basis is over $200 million and growing high double-digit for us, so it's -- and quite profitable, so it's a very, very important market for us.

Are there any obvious sort of missing pieces in the business, or across the businesses?

I don't think there's any missing pieces per se. We can operate quite well.

We just like to be bigger.

Yes, we like to get bigger, a lot bigger.

Okay. And then just quickly on IDP-108. So on the last call, you gave the impression that they're going to use sort of soft non-sales force methods really to target the Primary Care channels. Can you step us through your rationale for that decision, just particularly relative to perhaps trying to leverage a larger partner to get to the Primary Care part of the market?

Sure. We believe that, economically, it's in our shareholders' interest to promote this product quite aggressively, within in the dermatology and podiatrist community. And I think we're well-positioned to do so with our acquisition of PEDiNOL. And now, the fact that we have the largest dermatology sales force in the United States. In terms of Primary Care, we -- this is a disease that actually, you can easily self-diagnose, you just have to look at your feet. And so from that standpoint, we do believe consumers are able to diagnose this issue, and I think to the extent we can encourage them to go visit their dermatologist or podiatrist, that will bring more and more patients into those practices, which will be greatly appreciated by our partners in those areas. Obviously, if they go to their Primary Care physician, they can also get the scripts written in there. So we believe that's the most cost-effective way of addressing this marketplace. We are not convinced that a Primary Care doctor is that interested in receiving a call on a product on onychomycosis. And we think it will be very expensive. And it's -- at least in our opinion, not in turn -- it's not worth the return on investment of having to either build a major Primary Care capability or even pay someone else to do it for us.

And you have a question from the line of David Risinger with Morgan Stanley.

First, I was just wondering what the Medicis revenue contribution was in the fourth quarter. Also, it'd be great to get some updated comments on the outlook for future facility rationalization and consolidation. And then finally, I was hoping, Mike, that you could talk about the prospects for a megadeal.

I'm sorry, Dave, the last question again?

I just wanted to hear updated comments on the prospects for a megadeal. I think when you've commented recently, you've suggested the potential for a megadeal involving equity.

Yes, okay. Howard?

On Medicis, there -- we'll report on our K that there was around $50 million of revenue for the 20 days that we own the company. As I mentioned, it really didn't contribute anything to cash EPS just because of the timing of expenses. There was sampling, there was bonuses that needed to get paid. And there's just some of the expenses that were there that we weren't able to get out the last 20 days. So that was it for the fourth quarter.

In terms of facilities, really more of the same. We did -- in Brazil, we shutdown 1 of the 3 plants already, so that's complete; in sort of by mid this year, the second is scheduled to be shut down; and so, by the third quarter, we'll be down to 1 plant in Brazil. In Mexico, we're really operating out of 2 facilities at this point, and the plan is again, to try to get that down to 1 by the end of this year. In Europe, we have a plant up for sale, and we do have a buyer for that. So we will had hoped to contract -- or close that transaction sometime in the first half of this year. And then in Canada, we're well along into shutting down 1 of our 2 facilities in Montréal, our Bordeaux plant, and integrate that into Laval and Steinbach. So everything remains on plan. In terms of administrative space, again, we've -- we're keeping our Medicis operation out in Scottsdale. Probably that facility that we're in is larger than we need, and you probably shouldn't be surprised if we move to a smaller facility out there, but that sort of summarizes the facility rationalization plan. In terms of merger of equals, we -- again, we wanted to signal earlier this year and the end of last year that [indiscernible] that we think could create significant shareholder value if the right partner, that we could find, we continue to be in active conversations for both large and small deals. But the timing of deals, as you know, is unpredictable, so we're not going to give any timing commitments.

And you have a question from the line of Greg Gilbert with Bank of America.

Price versus volume, elements for U.S. Derm in the fourth quarter?

Give us a minute. We don't have that right at our -- maybe we can take some other questions, and then Greg, when we pull that up, we can answer.

Okay. And then perhaps we could get a sense for any of the acquisition and restructuring cost that you expect this year tied to the deals you've already completed. I know you can't predict the ones you haven't done yet.

Yes, I mentioned -- and for Medicis, we'll continue -- it'll be -- we had $105 million in Q4. The restructuring cost for Medicis will be less than that -- less than $100 million in Q1. And then there'll probably be some additional in Q2 and Q3, but they'll continue to get smaller. And as I said, it'll be less than 1x run rate -- 1 year run rate synergies. There's some small amounts from deals from prior years, but those continue to get smaller and smaller. We're tracking closely restructuring, and we're pushing hard just to get transactions off that list. But there are some small amounts through the year. I forget the total, I think, prior deals, it was $50-ish million thereabouts in total, it's certainly less than $100 million. Might be more than $50 million, but in that kind of ballpark.

Okay. One more for you Howard, have you and your team thought about pursuing the advanced pricing agreement with the IRS? Do you think that's relevant for a company like you? And then for Mike, on alternate fulfillment in Derm, now that you've relaunched the Derm effort and have everyone is sort of working together, does the AF effort feature more prominently in the role of the sales force going forward or less so?

We've not received advanced pricing, and that's an area we always debate and discuss, but we have not to-date.

Okay, Greg, I have -- what I have is full year numbers in terms of growth rate in terms of price versus volume for Dermatology. And you can follow up with Laurie later on the quarterly, we will try to get that for you. But we are over 15% in terms of volume for the year in Dermatology, and I think the fourth quarter is probably pretty consistent with that, and we were less than 10% on price for the year.

And those include that $50 million in Medicis revenue on the fourth quarter, Mike, or that's excluding that?

It does include, it does include the 20 days. Yes.

Okay. All right, we'll follow-up on the quarter later.

Greg, on alternate fulfillment. Alternate fulfillment is probably going to be about the same level of emphasis as it has been with Medicis. The program's working actually quite well. We're going to be rolling out a couple new-generations of the program, but we're not going to talk about it on this call. And we're obviously looking at other products that could run through this system. Currently, it's just ZIANA and SOLODYN, but certainly, probably by mid-year, it'll be a number of other products that we'll be using alternate fulfillment as well.

And you have a question from David Amsellem with Piper Jaffray.

It's Rebecca Forest for David. So it looks like Wellbutrin XL IMS scripts have increased post withdrawal of [indiscernible] generics. Do you expect to see a continued uptick in Wellbutrin XL scripts going forward, or has the full impact of the withdrawal of [indiscernible] generic already been realized?

Our assumptions for the year, in terms of our budget, as Howard talked about it at earlier January, is that Wellbutrin will stay relatively stable. And probably in our budget, we probably have a bit of a further decline, but in actuality, we hope the trend continues. We'll -- at the end of the first quarter, the other companies that have generic Wellbutrin products have to resubmit data in terms of the 300 milligrams strength. And we'll all have to see whether those products pass the test or not. If there's further withdrawals from the market, obviously that will help us, if not, we will continue to remain pretty stable.

Okay. And then on the debt, how do you think about optimal debt levels longer-term, like, beyond the next year or so?

Optimal what?

Debt levels.

Debt levels. Howard?

As we talked about before, it's sort of a -- that's a multidimensional puzzle because we want to make sure that our debt levels are such that we maintain access long-term at competitive rates so we can execute our strategy. And then the other side of the equation is the opportunity -- the business development opportunities we continue to see around the world, which are quite -- continue to be quite attractive. And our list of business development opportunities we're looking at is long as I've seen in my year plus at Valeant, so we're continuing to be very excited on that front. And then obviously, the [indiscernible] operations making sure that we generate absolutely as much cash flow from our existing business as possible. And that's the way we've thought about it, the discussions we've had with the board. We've said publicly that we want to stay below 4x, and that continues to be where we're at, and we'll get there this year. And -- but that's how we think about sizing our debt level overall.

And you have a question from the line of Tim Chiang with CRT Capital.

Howard, I just wanted to follow up. I know you guys hinted or indicated that you're going to try to delever the -- or pay down some debt this year. I mean, is there a hard target figure that you're looking at in 2013 in terms of debt paydowns?

No. I mean, our goal is to get below 4x. And originally, we said by the end of the year and then we said by the end of the third quarter. I mean, again, it's all a function of our business development opportunities how quickly we get there. And we have this discussion weekly, and we'll get there. But we've not said we're going to pay this amount of debt at this point. We did pay down a little bit of debt this year -- this week rather, paid $100 million down this week. So we're focused on it, and we'll get there. But we don't think it's prudent to say we're going to pay down x amount of debt by this date, and lock ourselves into that. If we see very attractive business development opportunities, we think it's in shareholders' interest for us to pursue those. And again, from a credit point of view, we will get below 4x. So we're not abandoning that goal either.

And you have a question from Ram Selvaraju with Aegis Capital.

Two very quick things. With respect to luliconazole, I think you disclosed today that the PDUFA date is December 11, 2013. Can you at least give us an idea of how quickly you expect to bring that product launch online assuming a timely approval? And secondly, can you give us an idea on a product specific basis what the contribution of the Potiga/Trobalt franchise was to your neurology franchise results?

Sure. So Luliconazole, we would expect to launch it within days or, at most, weeks of approval, so we're prepared to do so. So certainly, it would be launched by the beginning of 2014, probably earlier, if we're fortunate enough to get it approved, which we're hopeful of. In terms of Potiga, the way the agreement is set, we booked actually no revenues for Potiga, that runs all the way through the GSK. And it, over the course of the year, would have had a negative impact on our neuro bottom line.

Okay. And then very quickly, with respect to the recent [indiscernible] acquisition, can you remind us what 2011 and 2012 sales were for that products, if you have that information?

Yes, the -- these [indiscernible], I think, the net sales last year were sort of in the low-40s, so $43 million, $44 million, $45 million. I don't have 2011 sales.

And your next question comes from Gary Nachman of Susquehanna Financial.

Mike, what are the biggest drivers of the growth in Derm x Medicis in terms of products, and are those sustainable for the next couple of years? And have you noticed any real impact on DYSPORT specifically from the relaunch of Xeomin that happened in the first quarter?

Sure. Well, again, the drivers of our growth in Dermatology, it's CeraVe, it's Acanya, it's Elidel. Those are probably, the [indiscernible] is doing nicely. And yes, we do believe that these will continue to grow for the foreseeable future in terms of the Valeant's portfolio of products.

Do you expect -- just on that, do you expect Zovirax to continue to grow, or are you assuming that to be a relatively flat product?

We would continue to hope that it would continue to grow. We have some initiatives planned for this year on Zovirax, which, again, we're not going to talk about specifics which we think will actually help grow it. And so -- but it's not going to grow at the levels of these other products, which should be sort of high double-digit growth for the year. In terms of DYSPORT and what we're seeing with Merz having reentered the market is that Merz is obviously a very good company and is out marketing their product and Allergan continues to be aggressive. In terms of toxins, it competes more directly with BOTOX than our product, our product has some different attributes. So it's more of a competition between Allergan and Merz in terms of the toxins.

Okay. And then efinaconazole, if you get the approval for that at the PDUFA, how soon could you launch that, would it be right away? And if you've done some work actually on luliconazole, I'm assuming you have, or the MetroGel BVE, how big do you think those products could be, small -- could you give us just sort of a range for those?

In terms of the first question, yes, we'll launch it certainly in the third quarter. That would be -- we've got our sales force fully trained, we might launch it before the third quarter, but in terms of full promotion, it'll be third quarter if we're fortunate enough to get it approved at that time. In terms of...

Luliconazole or MetroGel BVE.

We don't have -- we have Medicis projections for those products and we're doing our own analysis, and I prefer not to give you our estimates at this time since they're not particularly refined at this point, but we -- but certainly, both will be significant products.

Okay, significant, can I say that would be greater than $100 million for each of them?

Significant.

Say that again.

Okay. And you don’t need to add to the sales force, do you, to launch those?

Well, we will be adding to the podiatry field force once IDT-108 gets approved. But luliconazole will be the exact same set of doctors. So that will -- it'll actually make for actually a better call, 2 new products. So we are expecting that maybe 40-ish reps mid-year for podiatry, but none in dermatology. And so, 40 mid-year, and that will cover both products.

And you have a question from David Krempa with MorningStar.

I know 1 year or 2 ago, you said you didn't want to use equity to do a deal, but now you seem to be more open to it. Is that just strictly a take on the valuation of your stock, or has something else happened to change your thinking on that?

I think a couple of years ago, when we [indiscernible] said that is we are not going to pay a premium for a company using equity, and we continue to believe that, that's the right answer. In terms of a our merger of equal, a no premium deal, similar to what happened with Biovail, we do believe that can be value accretive for our shareholders and will accomplish a second piece, which would deleverage our balance sheet. So we think a transaction like that -- and now that we've had the experience of the Biovail transaction, which turned out to be a very good thing for our shareholders. So that's the type of transaction we're talking about, not one that we would pay a premium and use any of our equity.

And we have a question from Juan Sanchez with Ladenburg. Juan F. Sanchez - Ladenburg Thalmann & Co. Inc., Research Division: A couple of brief questions. Are you guys buying back shares these days, are you keeping the cash for something else? And the other question is, where is your cash, and do you have any restrictions on moving cash around? And the [indiscernible], where is your debt hosted at these days as well?

I'm sorry, the last piece of that? Juan F. Sanchez - Ladenburg Thalmann & Co. Inc., Research Division: Where is the debt as well, in which country?

The -- right now, we've not been repurchasing shares, and again, when we think about business uses of our cash between business development opportunities, debt paydown and equity, repurchasing shares, we're making the trade-offs you'd expect us to make based on the opportunities. And so that debt -- in terms of cash, I mean, there's small amounts that are trapped in, but very small amounts. For the most part, we can move cash around, again, because we're not a U.S. company. We do not have the same restrictions that U.S. companies do, so we do have the ability to move that around. And our debt at this point is below $11 billion, we're at $10.8 billion.

And your final question comes from the line of Fred Garcia with RBC Capital Markets.

Just a question on some of your smaller businesses like the ophthalmology, dental and generics, what are you thinking -- or are you satisfied with the performance of those businesses, are they -- something you're thinking about adding further to, can you talk a little bit further about that?

Sure. I think, I mentioned that -- actually, all of our U.S. smaller businesses, the ophthalmology, the OraPharma, the aesthetics, which now is part of Medicis, the OTC business, they're all growing double digits and are all very, very profitable, so we really like those businesses. One of our strategic initiatives for the year that we talked about last time was actually to build out -- to continue to build out these businesses. We think they're important growth platforms for us, so we continue to look for opportunities there. At the end -- in December, I think we've talked about this earlier, we added a couple of -- we did a couple of deals in the dental space. We added a whitener product and also some dental implants, so we're -- you should expect to continue -- for us to continue to do deals like that, where we continue to add products to the bags of some of the smaller businesses.

Okay. And then just one last thing, on the -- going back to the Medicis alternate fulfillment channel and how that sort of contributes to the growth. What percentage of the sales is that currently, and where do you expect that to go in the future?

We have never given details. Medicis never gave details, and that was probably a smart practice. So when I can give details in terms of what's flowing through alternate fulfillment, what's not,. What we can reiterate is that all of our key brands in dermatology since our sales force are now growing.

And you do actually have a question from the line of David Steinberg with Deutsche Bank.

First, I think on Allergan's recent call, they mentioned that they've taken some share back in the neurotoxin market, in part maybe the sales force disruption at Medicis. I'm just curious, do you think you can gain that share back, and if so, why and how? And then, secondly, with regards to efinaconazole, I think you said you're not going to have a GP sales force, and -- but at the same time, I understand what Novartis wants Lamisil, one reason it became a $1.5 billion drug was they had heavy direct-to-consumer advertising. I know it goes somewhat against your DNA. But to create awareness of the brand and also the disease, would you consider DTC as part of the marketing program?

All right. Thanks, David. In terms of DYSPORT, actually DYSPORT continues to grow. So I haven't seen all of the market -- overall market growth detail. It's -- so far, our fingers crossed, we're actually doing quite well with DYSPORT. So we have not seen the impact that others may have talked about. In terms of direct-to-consumer, I think our DNA is actually to make as much money for our shareholders as possible. And so any investment that has a great return, we're going to do. So our DNA is not to spend, it's just our DNA is to spend wisely. So if a consumer outreach program makes sense and we believe it will have a very high return on investment, it's certainly something that we will consider. Is that it, operator?

Yes, sir. There are no further questions.

Great. Well, thank you, everyone, for joining us this morning, and we look forward to talking to you end of the first quarter.

And thank you, all, for participating in this morning's conference. You may now disconnect.