OGN - Organon stock plumbs all-time low on Q3 weakness in flagship women's health unit

2023-11-02 13:29:17 ET

Shares of Organon ( NYSE: OGN ) on Thursday slumped as much as 12.5% to a record low of $12.83, after the company saw a quarterly revenue decline in its main women's health business.

Pharmaceutical giant Merck ( MRK ) spun-off Organon ( OGN ) in June 2021 in an effort to streamline its operations into two patient-focused companies.

OGN reported Q3 adjusted earnings per share of $0.87 which missed estimates by 19 cents. Overall revenue slipped 1.3% Y/Y to $1.52B, also missing expectations by $50M.

Revenue in women's health, OGN's biggest unit, fell 8% Y/Y to $418M, primarily due to a 23% decline in sales of its NuvaRing, an insertable vaginal ring used to prevent pregnancy.

"The Women's Health franchise was down 7% on a constant-currency basis in the third quarter, primarily driven by NuvaRing, which went LOE (loss of exclusivity) in 2018 and now has five generics in the market," Organon ( OGN ) top boss Kevin Ali said on the earnings conference call .

Ali also noted that the company saw a slow quarter in China in terms of IVF cycles picking up, stemming from the Asian country's ongoing review of healthcare practices. The CEO called it a "transient issue."

Meanwhile, OGN's fertility products saw a revenue decline of 10% in Q3, on the back of a 3% fall in sales of birth control implant Nexplanon due to unfavorable discount rates.

"We will not take effective price in Nexplanon in the U.S. in 2023. Our future U.S. pricing increases will now be aligned with when health plans update their pricing and reimbursement schedules," Organon ( OGN ) chief executive Ali said on the call.

Additionally, the company saw a slow uptake of its recently launched biosimilar to AbbVie's ( ABBV ) blockbuster arthritis drug Humira. OGN's copycat drug, called Hadlima and developed in partnership with Samsung Bioepis, brought in sales of $8M in Q3, slightly above the $6M posted a year ago. It is priced at an 85% discount to Humira.

"With regard to Hadlima, our original expectation for global Hadlima sales in 2023 was that it would represent just under 1.5% of full year 2023 revenue," OGN CFO Matthew Walsh said on the earnings conference call.

"Given the slower market formation in the U.S. for Humira biosimilars...global Humira revenue mix will be significantly less than that in 2023," Walsh added

Walsh also said that the Hadlima outlook was one of the key factors driving the company's guidance cut. Organon ( OGN ) now expects full year revenue of $6.15B to $6.25B, compared to a prior range of $6.25B to $6.45B. The consensus estimate is $6.31B.

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