Melissa Trombetta - Mylan NV Heather M. Bresch - Mylan NV Rajiv Malik - Mylan NV Anthony Mauro - Mylan NV Kenneth Scott Parks - Mylan NV.

Elliot Wilbur - Raymond James & Associates, Inc. Jami Rubin - Goldman Sachs & Co. LLC Marc Goodman - UBS Securities LLC Aharon Gal - Sanford C. Bernstein & Co. LLC Umer Raffat - Evercore ISI Gregg Gilbert - Deutsche Bank Securities, Inc. Douglas Tsao - Barclays Capital, Inc..

Good day, ladies and gentlemen, and welcome to the Mylan Third Quarter Earnings Conference Call. As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Melissa Trombetta, Head of Investor Relations. Please go ahead..

Thank you, Crystal. Good morning, everyone. Welcome to Mylan's Third Quarter 2017 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 outlook and 2017 guidance. 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 this morning, as well as our supplemental Q3 earnings slides and our investor presentations titled Built to Last, 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 post information that may be important to investors on this website, and we may 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, supplemental earnings slides and investor presentation.

Let me also remind you that the information discussed during this call, with the exception of 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..

Thanks, Melissa, and good morning, everyone, and thank you for joining our call. Before we get started, I'd like to send a special message to our employees in Texas, Florida and Puerto Rico, and thank them for their perseverance following the devastating hurricanes that struck there during the quarter.

We're extremely grateful that all of them are safely accounted for and are proud of how we all came together to support one another and people and surrounding communities in the storm's aftermath. Though we recognize that the journey to rebuild will be a long one, especially in Puerto Rico, which was affected most severely.

We're glad to report that our plant there is operational, and we have not experienced any shortages of the drugs we manufacture at the facility. Turning now to our business. I'm personally very grateful to say that after years of hopeful anticipation, it finally happened.

Early last month, we received FDA approval of our Glatiramer Acetate product for both the 20-milligram and 40-milligram strengths and immediately launched them into the U.S. marketplace. Being first-to-market with the 40-milligram strength as well as offering the 20-milligram is a milestone in many regards.

First and foremost, it underscores our scientific and regulatory capabilities to develop, secure approval of, manufacture and bring to market an extremely complex product, despite an arduous multiyear process.

Second, and equally as important, is our ability to continue to deliver on our mission of providing access to more affordable products to patients, and that's where our new Mylan MS Advocate Program comes in. It's designed to help patients get started and stay on track with their physician's treatment plan for either dosage strength.

It should be noted that this program also paves the way for the many other products in our pipeline that have special commercialization needs. Lastly, I would be remiss if I didn't also mention how proud we are of all of our employees here at Mylan.

Our success in launching this very important product, one of the largest generic launches in recent history, which could not have come at a better time, only stands as a reminder of why we get up every day and what we fight and stand for.

This single launch alone could have the effect of saving billions of dollars cumulatively for MS patients, taxpayers and the overall health care system.

This launch should also serve as an important reminder to all stakeholders in the health care system about the importance of our industry and the role that we play, especially as our industry continues to come under attack by those whom we believe may not fully understand or appreciate how our industry work.

And all that's involved in bringing very important products like this to market. Because of this, we applaud our industry's trade group, the Association for Affordable Medicine, for their hard work in helping educate all stakeholders interested in our healthcare system. With that said and while the U.S.

healthcare system rebases itself, there are some fundamentals that will not change. The demand for high-quality Generics will not be going away. Generics already fill 90% of all prescriptions dispensed within the U.S. as well as a growing proportion of scripts filled around the world.

Meeting this global demand is exactly what we envision and have executed on over the last decade. This is exactly why we moved out of the U.S. Generics and Specialty neighborhood and into a much larger and more resilient house in the global community.

We've build our global platform to absorb and withstand geographic volatility, and it's through our product and channel diversification that Mylan has truly transformed itself from a single market, high-risk, first-to-file company into a resilient global business with strong durable cash flows.

To put a number to it, we now believe that approximately 75% of our more than $2 billion adjusted operating cash flows stem from predictable, recurring revenues across all markets around the world, leaving a 25% basket of smaller, less predictable products, primarily in the U.S. Generics market.

This model provides Mylan with a unique opportunity to meet the demands of individual markets around the world much more reliably, and as a result, it positions us very differently from our peers. We believe there is a real disconnect between our current valuation and the global business we've built.

I believe our depressed share price is reflective of investor sentiment regarding a U.S.-only marketplace, which, therefore, provides us an opportunity to educate and expand shareholders' knowledge base and therefore, our multiple.

I am personally committed to helping shareholders fully understand our transformation and who Mylan is today, so that we can reach our intended goal of fully realizing Mylan's value through total shareholder return accretion.

As a part of that commitment, we will be embarking on an investor outreach program that will lay out how we intend to address this disconnect. Specifically, we intend to effectively deploy capital for future growth, while maintaining our investment-grade balance sheet.

We will continue investing on our existing pipeline and additional opportunities to further enhance our pipeline. We will continue to look for and execute on opportunistic bolt-on transactions to add our existing platform. And finally, we will do all of this while continuing to grow the top and bottom line.

Above all, the key message we'll be delivering is that, we have Built Mylan to Last, and that what makes us different is what makes us durable. As a result, we now have a substantial number of opportunities that are unique to Mylan's growth profile.

Having begun our transformation a decade ago, we have a huge start, and going forward, you can be absolutely sure, we'll be executing to the best of our ability to use our strength to matter even more to our customers, patients and healthcare systems around the world, and therefore, continue delivering growth and value to our shareholders.

You can find our presentation called Built to Last, in the Investor Relations section of our website at mylan.com. When you arrive at this site, you'll also see an invitation to learn more about Mylan's story and our global impact by providing access to medicine, innovation and science and public health policy.

It's part of a campaign we've recently launched, called Better Health for a Better World, and through it, we intend to better tell our story to a much broader audience.

Turning to the third quarter, our results, which included adjusted EPS of $1.10, were especially strong considering the ongoing challenges we experienced in the U.S., including accelerated deceleration of EpiPen sales, both from our launch of an authorized generic as well as the contraction of the overall epinephrine auto-injector market.

Substantially moderating those challenges were our Rest of World and European segments, which together accounted for 60% of our third-party net sales during the quarter.

Both segments showed continued strength, with our business in Europe again posting double-digit growth, a great example of the ability of our highly diversified global platform to absorb our industry's inevitable headwinds wherever they occur.

As for the fourth quarter, given our GA launch and the stability of our platform, we see a strong finish ahead. We are, thus, increasing the low-end of our full year total revenue and adjusted EPS guidance ranges. Our new 2017 revenue range is $11.75 billion to $12.5 billion, which represents an increase of 9% at the midpoint versus full-year 2016.

Our new 2017 adjusted EPS range is between $4.45 to $4.70 per share, a decrease of 6% at the midpoint when compared to the prior year. What's more? We believe the momentum and growth we see ahead is sustainable, which is why we remain confident in our 2018 target of at least $5.40 in adjusted EPS.

We look forward to bringing you detailed guidance for 2018 during our 4Q call. We're once again continuing to deliver and differentiate Mylan in a rapidly changing industry.

And for our third quarter performance, I'd like, on behalf of Mylan's board and our entire leadership team, to thank our employees around the world for their outstanding teamwork and execution and for their commitment to delivering Better Health for a Better World. With that, I'll now turn the call over to Rajiv..

Thank you, Heather, and good morning, everyone. Before I begin, I would like to thank our employees around the world for their hard work and unwavering focus on our mission, especially those who were affected recently by natural disasters.

We are very proud of our employees who, despite personally going through this ordeal, were able to ensure that there was no significant disruption and drug shortages from our facilities. Let me briefly turn to our third quarter results. I will provide an overview of our top line performance, and Ken will cover segment profitability.

Overall, we delivered nearly $3 billion in total revenues for the quarter, a decrease of 2% compared to the prior year. We saw strong performance in our Europe and Rest of World regions, which again, represent more than half of our revenue. This helped to partially mitigate the expected decline in North America.

All regions benefited from contributions from our acquisition of Meda businesses, which continue to perform well and meet our expectations. Mylan integration is going strong, and we're excited to see the integrated platform come to life with no business disruption, while we brought various assets from Meda and Renaissance together.

Now, we are continuing to optimize the assets we have acquired, and identify additional cost-savings, as well as revenue opportunities, beyond what we have previously stated and are expected to generate additional annual saving of more than $200 million.

In North America, our robust portfolio, rich pipeline, commercial infrastructure and our long-standing relationships we have fostered with our customers give us the unique ability to face the turbulence of this market.

We expect to see sustainable cash flows from our hard-to-make, complex product portfolio, which generally have a high regulatory hurdle to climb, and oftentimes, require clinical trials and, thus, give relatively better visibility of emerging new competition. Also, such complex products usually provide more predictable and durable cash flows.

About 30% of what we believe to be our global durable cash flows come from North America. We also anticipate that our growing portfolio of injectables, OTC as well as Topicals Business will also further contribute to our stability and future growth in this market.

I would also note that EpiPen, the one big reason for decline this year, is projected to be less than 3% of total revenue, and is not a meaningful contributor as we go into 2018. A strong and sustainable performance in Europe is being delivered from our well-executed integrated platform of Mylan legacy, Abbott EPD and Meda businesses.

Our European business is no longer primarily generic, but has approximately two-thirds of revenue coming from our Rx and OTC channels. Our portfolio of key brands, like Creon, Influvac, DYMISTA, Dona, Betadine, Saugella and EpiPen, belongs to a class of hard-to-make complex products and provide us predictable and durable cash flows.

These brands have a great brand equity in these markets, and also, given the nature of these markets, do not get genericized overnight. About 40% of what we believe to be our global durable cash flows come from Europe.

We will be further focusing on our global key brand portfolio, and we'll continue to make sustainable efforts to further grow and expand these across other countries.

Also, we're excited by the growth opportunities we see to further strengthen our business in our key markets, like France, Italy, Germany, Poland, UK and Nordics, where we are now in position to add many more exciting products from our pipeline, like biosimilars and through a cross-pollination of our vast portfolio as we go along.

Our Rest of World business currently represents approximately 60% of revenues from Generics, with the rest from Rx and OTC. This business not only is a significant source of durable cash flows, but will be a significant contributor for sustained growth in the future.

We are focusing on expansion of our strong global portfolio into various markets, which came along with Meda acquisition like China, Russia, Turkey, Mexico as well as Brazil. Our Australia and Japanese businesses will continue to show a sustained performance.

Also, we'll continue to build on our successful track record of our ARV performance and expand this further globally beyond emerging markets of Sub-Saharan Africa.

For example, we recently announced a three-year volume-based contract with a consortium constituting of UNAIDS, CHAI, Gates Foundation, PEPFAR and Global Fund to provide the new anti-retroviral therapy of TLD for more than 90 countries.

This is a significant step to accelerate treatment rollout as a part of global efforts to reach all 36.7 million people living with HIV. This initiative will give this otherwise relatively volatile business more predictability, stability and growth over a period of time.

About 30% of what we believe to be our global durable cash flows come from the Rest of the World. Before I review our key pipeline programs, let me start by saying that we are very pleased to have received FDA approval of the first generic for Copaxone 40-milligram as well as another much-needed alternative to the Copaxone 20-milligram.

We have always believed in our science, regulatory and intellectual property capabilities, and we are excited to bring this affordable and substitutable product ultimately to the patients who are dealing with this very difficult disease.

This approval is a perfect example of whole Mylan's mission of providing high-quality medicines to those who need them is consistent with FDA's focus on access to complex Generics.

We also are excited about the opportunity to launch the generic version of Copaxone 40-milligram with our partner Synthon in certain key European countries as we receive EMA approval in October. Each country will now follow its own process to obtain marketing authorization to launch in their country.

We have already launched generic version of Copaxone 20-milligram in certain European markets. From the future pipeline investments point of view, we'll continue to focus on the development and manufacturing of complex products, while we diligently invest in our core businesses, including ARV's, injectables, Topicals and oral solid dosage form.

This is especially the case with our injectable portfolio as we are seeing more approvals come through for these products. As you recall, we acquired Agila with a goal of becoming a reliable, global source of high-quality injectables for patients. With a period of enhancements to the acquired facilities behind us, this goal is now a reality.

This year alone, we received more than 20 approvals of injectables in U.S. and more than 70 products are in our pipeline or pending approval.

Complex and hard-to-make products especially require substantial R&D resources and investments, a strong regulatory and intellectual property expertise, along with an ability to invest significant capital to manufacture and commercialize these products.

We believe Mylan is well-positioned in all of these areas to execute on our other pipeline opportunities. Turning now to some of our key pipeline programs. Starting with our biosimilar programs. The regulatory environment continues to be active over the last few months, while we believe additional changes are still needed to enable the U.S.

biosimilar market, we are encouraged by the commitments expressed by Commissioner Gottlieb, and steps being taken by U.S. FDA in facilitating the views as well as their recent initiation of their efforts to educate physicians on the benefits and the cost savings of biosimilars.

We are also very pleased at the steps we saw last week on the (20:47) for the Medicare. Regarding our Biocon partnership, we continue to see progress with the submission and regulatory process. With our pegfilgrastim application in the USA, you will recall that FDA issued a CRL relating to certain CMC data from drug product facility inspection.

It is important to highlight the fact that the CRL did not raise any questions on biosimilarity, pharmacokinetics, pharmacodynamic data, clinical data or immunogenicity. We remain very confident that we will be able to respond to the CRL in the next few weeks.

On the GMP side, Mylan and Biocon have been in close collaboration with FDA, and we have a clear path towards it – clear path forward to resolve issues identified in the inspection. For trastuzumab in the USA, we continue to work with FDA to resolve all outstanding issues, and we are hopeful to get this very important product approved very soon.

Our BsUFA goal date for this product is December 3, 2017. With respect to our pegfilgrastim and trastuzumab applications in Europe, Mylan along with our partner Biocon has completed the corrective actions for the inspection observations and continue to make good progress toward a re-inspection of the Bangalore site.

We are also making progress on the Marketing Authorization Applications. As per the administrative protocol, we have resubmitted both applications to EMA to restart the review. We'll keep you posted on the progress on these programs as we go along.

I also note that for pegfilgrastim, we have also completed our regulatory submission for Canada, Australia and South Africa. And for trastuzumab, we have also submitted marketing applications in Canada, Australia and 32 additional countries. And we have already received approvals in another 19 countries.

With respect to Insulin Glargine, in the U.S., we submitted our 505(b)(2) application, which is under active review with FDA. You have seen that we have been sued by Sanofi, which triggered a 30-month stay on our approval. This 505(b)(2) application includes vial and disposable pens with cartridges.

For our part, we'll continue to work on this submission with FDA to bring an interchangeable alternative Glargine to the patients as soon as possible. For Europe, the insulin manufacturing facility in Malaysia has been given GMP clearance by EMA, and we continue to have an ongoing and productive interaction with EMA on our application.

In addition to the submission in U.S. and Europe, we have also submitted marketing applications in Canada, Australia and 41 additional countries. We have already received approval in six other countries.

Moving to our Momenta partnership, our biosimilar ORENCIA received initial top line results from its Phase 1 study last week, and unfortunately, it did not meet primary PK endpoints. We are disappointed by these results, and we'll work closely with Momenta to fully analyze the data and determine next steps.

Additionally, with respect to our next biosimilar candidate in this partnership, M710, we continue to plan for it to enter clinics in 2018. On the respiratory front, you will recall that we have conformed with FDA that no further clinical or device-related studies are required for our generic Advair program.

We have responded to the CRL, and continue to work with FDA for this very important product. Also, we are encouraged that FDA is treating this complex product as a high priority. We remain ready from a manufacturing and commercial perspective, and are optimistic to bring this very important product to patients as soon as possible.

Our revefenacin collaboration with Theravance Biopharma continues to make progress, and just last week, we announced a presentation to the additional positive efficacy data from the three-month pivotal Phase 3 study at 2017 CHEST Annual Meeting. We are expecting to file this NDA for a novel nebulized LAMA treatment for COPD very shortly.

If you recall, we announced previously that we have entered into a partnership with the 3M for the development of generic version of Symbicort for the U.S. market. We are excited about the progress we are making in the development of this product and are confident that we are on track towards a 2018 ANDA 505(j) submission.

Pivotal PK studies are now complete with BE demonstrated (26:27) for both low and high-strength products. Regarding our generic form of RESTASIS, we have made good progress on our application, and we believe that we have a product that adheres to the FDA's latest new guidance. Our bridging goal date is December 31 of this year.

With this district court verdict behind us, we look forward to bring this very important product to patients soon.

In summary, I remain confident that we are poised for future growth with this incredibly unique and durable platform, and I'm excited about the progress we are making within our pipeline, our continued commercial diversification reaching across different channels and geographies and our ability to mean more to our customers around the globe.

With that, I will turn the call over to Tony..

Thank you, Rajiv, and good morning. As Heather and Rajiv commented, the strong global diversified business we have built over the past decade gives us more confidence than ever about our future and our ability to be a key supplier to customers and patients around the world.

Our unique commercial platform is fit to withstand change in our industry and continues to distinguish Mylan as a partner of choice during a time of further customer consolidation and globalization. One of the most important drivers behind our confidence is the daily effort made by our commercial team of nearly 7,000 people around the world.

Without them, our products wouldn't reach the patients and providers who need the most. We are beginning to reap the rewards of a long-term and significant investments in science and innovation that Rajiv outlined in his remarks with the much anticipated U.S.

launch of the first generic for Copaxone 40-milligram as well as a generic version of Copaxone 20-milligram. We are particularly pleased with our prescription uptake to date for the 40-milligram strength. For the week ending October 27, our share of new prescriptions was 16.2%, and total prescriptions was approximately 8%.

We also are encouraged by the number of patients who are utilizing our comprehensive support services through our MS Advocate Program. Some of these services include in-home injection training with an experienced MS nurse, educational resources and a 24/7 patient support center.

We view this launch as a critical opportunity to provide an affordable alternative for patients and payers, while still optimizing conversion and delivering value for Mylan. We look forward to successfully commercializing both strengths of this product in other key markets around the world as we receive appropriate regulatory approvals.

In addition to generic Copaxone in the U.S., we are pleased with the strong performance of some of our global key brands around the world such as DYMISTA, Dona, Betadine and Elavil. These important products, which were acquired through our Meda transaction, experienced significant growth this quarter and continue to exceed our original expectations.

We expect this growth to continue as we leverage our strong commercial infrastructure in key markets, like Italy, France, Germany and the emerging and expansion markets. I'd now like to provide an overview of our regional performances beginning with North America.

As anticipated and outlined last quarter, this segment declined about 22% to just under $1.2 billion. Sales of EpiPen declined by $245 million this quarter, as the overall market contracted when compared to the robust growth from the same quarter the prior year, as well as experiencing additional competition.

Excluding EpiPen, North America declined 6% as anticipated and as outlined last quarter, primarily due to the impact of significant first-to-market products losing exclusivity over the prior year, as well as increased competition. We are still estimating annualized price erosion in the high single digits for the region for 2017.

Despite these challenges, we continue to see momentum and be excited about the future for this region. We've been pleased with the launches of several limited competition products this quarter, most notably, the launch of Imatinib tablets further strengthen our robust U.S. oncology portfolio, which now contains more than 40 products.

This is a very important therapeutic area for Mylan, globally, which would bolster even further in the coming years with the introduction of several biosimilars to treat cancer.

That said, I am pleased to report that the geographic diversity of our platform, which we have been building over the last 10 years, also has been balancing pressure in North America. In Europe, sales totaled more than $1 billion, a year-over-year increase of 24%.

These strong results were due to incremental sales from our Meda acquisition and favorable pricing and volume trends in the region. This includes mid-single-digit organic growth in the region, specifically in some of our largest markets, such as France, Italy, Germany, UK and the Nordics.

We also continue to be excited about the stability and performance of our strong brands in the region, such as Creon and Influvac, as well as new growth from brands like Betadine and DYMISTA.

This quarter's growth from our acquired assets reinforces our confidence that building scale in Europe under our One Mylan approach has us well positioned within the region. In our Rest of World segment, sales totaled $740 million, a year-over-year increase of 9%, driven primarily by our new Meda assets and strong performance in emerging markets.

We are also seeing strong performance from some of our key brands in this region. Amitiza, for instance, delivered robust growth of more than 20% for the quarter in Japan, and we will continue to seek ways to optimize our assets and partnerships in this market.

Overall, for the third quarter, we saw, as expected, global generic price deflation in the mid-single digits, and we continue to anticipate this for the full-year 2017.

In summary, we believe our unique product mix of Generics, brands and over-the-counter medications across a range of therapeutic categories and sold in multiple sales channels, combined with an expansive geographic reach and strong commercial platform, position Mylan better than any other company in the industry to serve our customers and deliver better health for patients.

With that, I'll turn the call over to Ken..

Thanks, Tony, and good morning, everyone. Turning to our financial results for the third quarter, total revenues in the quarter declined slightly year-over-year to approximately $3 billion.

Rajiv and Tony have already taken you through our top line results for Mylan, in total and our segments; I'll now take you through the rest of our financial performance, which was in line with our expectations. In the third quarter, our adjusted gross margins were approximately 53% compared to approximately 57% from the same period last year.

The decline is the result of lower gross profit from the sales of existing products in North America, primarily EpiPen, partially mitigated by new product introductions and contributions from last year's acquisitions.

Moving on to our operating expenses, on an adjusted basis, R&D was approximately 6% of total revenues, which was in line with our expectations and down slightly from the prior year period due to the timing of clinical activities related primarily to our respiratory programs.

SG&A expense, also on an adjusted basis, declined 3% to $586 million, or approximately 20% of total revenues and also in line with our expectations. In the quarter, the benefits from our ongoing Mylan integration activities more than offset the incremental SG&A from our Meda acquisition.

Our adjusted tax rate was 17.5% for the quarter, bringing our year-to-date tax rate to 18%. We continue to expect our adjusted tax rate for the year to be in the range of 18% to 18.5%.

Moving on to segment profitability, as a result of the declines in third-party sales, including EpiPen, segment profitability in North America declined 27% in the quarter to $576 million.

Partially offsetting this decline, segment profitability expanded in the Europe and Rest of World segments, reflecting contributions from the Meda acquisition as well as new products sales. When compared to the prior year period, Europe segment profitability was up 15% and Rest of World segment profitability was up 16%.

Adjusted net earnings in the quarter declined to $590 million, and adjusted diluted EPS declined 20% to $1.10. Briefly turning to our results for the nine months ended September 30, total revenues increased to approximately $8.7 billion. That's a year-over-year increase of 11%.

Acquisitions contributed approximately $1.4 billion in net sales during the nine-month period, and adjusted earnings for the nine months ended September 30 decreased by $26 million to $1.7 billion, and adjusted diluted EPS decreased 5% to $3.13.

Now, turning to our cash flow and liquidity metrics, adjusted net cash provided by operating activities totaled $2.1 billion for the nine months ended September 30 compared to approximately $1.9 billion in the prior year period. Capital expenditures totaled $156 million compared to approximately $240 million in the prior year.

As we said previously, we are fully committed to continuing to deleverage and have demonstrated that by paying down our debt by approximately $1.2 billion in the first nine months of the year, which includes approximately $420 million in the third quarter.

As a result of our continued strong cash flow generation, for the full year, we expect to deliver on our initial cash flow guidance of between $2 billion to $2.4 billion of adjusted free cash flow, net of our revised capital expenditures range of $300 million to $350 million.

Our ability to generate strong cash flows reflects the strength and durability of our portfolio, resulting from the decade-long transformation of our business into a global diversified player, and is supported by the power of our balance sheet, which provides us with the financial flexibility to invest in the future of our business.

At the end of Q3 2017, our debt-to-adjusted EBITDA leverage ratio as calculated under our credit agreement was 3.6 times and was in compliance with our covenant requirements.

You may recall that following the Meda acquisition, we elected to increase the leverage ratio covenant as permitted under our credit agreement to 4.25 times through the second quarter of 2017.

Just last week, on November 3, we entered into amendments to the agreements for the 2016 term loans and 2016 revolving facility to extend the leverage ratio covenant of 4.25 times through the December 31, 2018, reporting period. These amendments provide us with the additional financial flexibility as we manage our capital structure during 2018.

This does not change in any way our commitment to our deleveraging strategy or maintaining our investment-grade credit rating as we continue to work towards our long-term average debt-to-adjusted EBITDA leverage ratio target of approximately 3.0 times.

Moving on to the revised guidance, primarily due to the approval and subsequent launch of generic Copaxone in the U.S. market, we've increased the low end of both our full year total revenue and adjusted EPS 2017 guidance ranges.

Our revised total revenue guidance range is $11.75 billion to $12.5 billion, which represents an increase of 9% at the midpoint versus full-year 2016. Our new adjusted EPS guidance range is between $4.45 to $4.70 per share, that's a decrease of 6% at the midpoint when compared to the prior year.

This year-over-year decline reflects the ongoing North America generic business dynamics as well as the more than $500 million impact from the rebasing of our EpiPen brand.

Moving to 2018, as Heather mentioned, we're continuing to target at least $5.40 in adjusted EPS, which is an increase of more than 18% from the midpoint of our new guidance range for 2017. This target factors in the launch of generic Copaxone as well as the deferred launches of complex products from 2017, including generic Advair.

It also includes incremental savings from integration activities and cost actions, continued growth in our Europe and Rest of World segments as well as the continuation of a challenging North American environment. We'll provide further details of our 2018 outlook on our fourth quarter earnings call.

Before I turn it over to Q&A, I urge all of you to take a closer look at the Built to Last presentation that Heather spoke about earlier and which is posted on our website this morning.

We're very proud of the business that we've built over the last decade, and this presentation highlights our transformational journey as well as the path we plan to take to fully realize the value transformation and our differentiated portfolio.

We believe that our differentiated business model, our performance and our stable, durable cash flow generation are not yet reflected in our stock price valuation. With that, we'll now open the call for questions..

Thank you. Our first question comes from Elliot Wilbur from Raymond James. Your line is open..

(42:45). Thanks. Good morning. A question for Heather and the team, I guess, as you head into the year-end and you think about the budgeting, planning and, obviously, forecasting process, certain things like uncertainty and variability in the U.S. generic market is going to remain high elevated for the foreseeable future....

Elliot, I'm sorry. Operator, if you could – we're not being able to hear you, Elliot at all on your questions..

.

Could you hear me now?.

Much better..

You may proceed with your question sir, your line is still open..

Okay. Thank you. Sorry about that. A question for Heather and the rest of the team, I guess, as we head into year-end budgeting, planning, forecasting process, obviously, uncertainty around where generic market is going to likely remain high for the foreseeable future.

So just wondering, what you're thinking about in terms of or how you would characterize what you think are the greatest risks or the greatest unknowns at this point, whether it's continued uncertainty around FDA approval timelines for pending pipeline products, the impact of additional competitive entrants on portfolio products or sort of ongoing or evolving consortium purchasing dynamics.

Just maybe sort of comment or kind of rank order, where you think the greatest risk among those factors lie with respect to the base business? Thanks..

Sure. Thanks, Elliot. Look, Elliot, what I would say and hopefully, this call continues to underscore the global nature of our business. I think all the weaknesses you just laid out are all primarily U.S. driven.

And as we continue to show, both from our European as well as our Rest of World segments, our ability to continue to grow at double-digit in the case of Europe and high single-digit in Rest of World, that as we continue to leverage our assets, our products in these areas and continue to bring complex Generics as we'll be launching Copaxone throughout Europe.

I think those are very important to telling the story of how we're continuing to be able to absorb the volatility in this U.S. Generics market, and which is why I made the commentary that just to remind everyone that we moved out of the neighborhood of just U.S.

Generics and Specialty and into this global community, that's helping us absorb that, and the Mylan that we built today is able to continue to deliver and on our growth profile as we continue to bring these products to market. As far as the U.S.

Generics, we continue to see those headwinds are going to continue for the foreseeable future, but I think again, the dynamics of our portfolio of the products we're launching, Rajiv spoke of the multiple injectable products we've launched and the 70 that are in our pipeline.

So the durability again of what we are launching from complex to injectables as well as continuing to deliver on our outside of the U.S. platform is what's able to give us the confidence to say that at least $5.40 next year. Given all those things you just mentioned, taking into consideration.

So what I would say is just again the message of the durability of our platform and our ability to absorb the volatility, which we believe really distinguishes us from our peers..

Thank you. Our next question comes from Jami Rubin from Goldman Sachs. Your line is open..

Great. Thank you. Heather, maybe if you could just take a step back and would love your thoughts on what you're seeing industry-wide, obviously the industry has been decimated with all the factors we've already talked about.

But that's leading to in some cases, consolidation, other companies like Novartis, Mallinckrodt, maybe others are talking about selling their generic businesses.

Where do you see Mylan fitting in with all this change? Are you in a financial position to be able to take advantage of some of these assets coming to the market, presumably at lower prices? And, I guess, Ken, to that question, I'm just wondering if – you've talked about your goal of getting your debt-to-EBITDA to three times or better.

How flexible would you be on that if the right deal were to come up? Thanks very much..

Hi, Jami, so thank you. We have been pretty staunch since the Meda acquisition that we really had the assets that we needed to leverage this global commercial platform and have that infrastructure in place.

With that being said, we've continued to say as we see bolt-on opportunities that we can now use this commercial platform that we've built to be able to continue to feed this platform, we'll do so. And I think to your point, it truly is a buyers' market, because there's lots of great assets out there for sale and we think at reasonable prices.

So I can assure you that the financial flexibility that we still have today and are maintaining because of our – the generation of our cash flows, that we're going to continue to be balanced as far as, yes, paying down debt and staying committed to investment grade, but also have the flexibility to be able to bring the right products or dosage forms into our mix, both whether it's U.S., Europe or Rest of World, and I think you're going to continue to see us execute on that.

And the last thing I'd say, because I think your point about the decimation of the industry, I think one thing I would just ask, and I've said this before, but I think it's continuing to play out is the continuity of our management team and the tenure of it.

We've been together a decade, as we've continued to not only manage at the peaks, but in the valleys. And I think that's where you see a management team that has – had a strategy out there, we've executed to it. We've continued to navigate the waters, I think, better than anybody else out there.

So hopefully, that differentiation is what continues to put investors at ease with not only the credibility we've now hopefully amassed on the scientific side, but also just being able to continue to maximize this global platform and absorb what the industry is going through here in the U.S..

Listen (49:29), Jami, I would just add on that on the financial discipline side and flexibility, you've seen us last year even with the Meda acquisition and a leverage ratio covenant extended to 4.25 times that we really never reached more than 3.8 times, and we remain committed to bringing that down as you've seen last quarter and this quarter down to 3.6 times under our credit agreement calculations.

We did say, and I did say in this call that we've asked and obtained an extension from our banks at 4.25 times for the balance of 2017 and 2018, and that doesn't mean we're not committed to continuing to de-lever.

But it actually speaks to the strength of our cash flows, and we talked about that a lot during the call today, as well as the fact that, as Heather said, in this environment, there are assets out in the marketplace that we just are going to continue to take a look at for potential bolt-on opportunities.

And the banking group supports us, and that's why we have continued to de-lever, but have asked for that extension at 4.25 times. So there is a little bit of flexibility in our financial decision there, but obviously, with the discipline that over the long-term, we target a 3.0 times EBITDA leverage ratio number..

Thank You. Our next question comes from Marc Goodman from UBS. Your line is open..

Yes. Just in the U.S., Tony, can you talk about the Econdisc and WBAD, the latest consortium to get together. I'm just wondering if you're starting to see any impact from that in this quarter.

When do you expect we'll know what type of impact to expect there? And then, just in Europe, I mean, it was a pretty big number, and I was wondering if you could just give us a sense of was there any major launches? I mean, was Copaxone a big number in the quarter? Or biosimilars? Just give us a sense of was there anything unusual, because it was pretty good.

Thanks..

Thanks, Marc. Around the global customers we're speaking of, in particular WBAD and Econdisc, we continue to work very closely with them and all of our customers to ensure that we're identifying not just risk, but opportunities.

We feel like the markets we're in globally gives us a very good advantage in terms of how we overlay our portfolio with those particular opportunities.

And as Econdisc joins WBAD, we feel like we reviewed it and looked at it and feel confident that we have the opportunity to grow in the future as these customers get larger with more scale across multiple markets, so..

And for Europe – Marc, this is Rajiv. I think we see a slew of launches; not of big launches, but the multiple countries and multiple launches. But more importantly, the portfolio expansion and the focus and attention these brands are getting, not only to sustain, but continue to grow, that's driving it basically. That's driving the growth in Europe..

And one other – as you think about how the numbers come together, remember that we closed the Meda acquisition in early August of last year. So the year-over-year results do have an incremental month of Meda in them, especially in Europe..

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

Hi, everybody. Good morning, congratulations on the result (52:56). Two, if I can sneak one in. One, you've got a corporate contingency in your cash flow statements of $275 million.

Can you just let us know what that is? And second on Advair, do you have a target action date? And do you expect one?.

So on the first question, Ronny, I think what you're seeing is that in the reconciliation in the back of the press release, there's an add-back of $275 million to get from GAAP operating cash flows to adjusted operating cash flows. As we called out, we paid for about half of the DOJ settlement in the third quarter.

The other half has already been paid in the fourth, but that's essentially what makes up the $275 million..

And Ronny, for Advair, yes, we have a target action date of June, middle of June. But at the same time, given this GDUFA I and GDUFA II, the bridging goal date, this being a high-priority product to the FDA, we continue to work with FDA very closely on this to better (54:03) that date..

And I would just say, to add to that, that with the new Commissioner Gottlieb, his emphasis on complex Generics and being very mindful of bringing products to new market formation, we continue to know that generic Advair stays a priority review.

And to Rajiv's point, we're hopeful as all the science behind us that we will continue to stay very close and work with this administration on what they've stated as real priority for them as well. So we find that very encouraging..

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

Hi, guys. Thanks so much for taking my question. I have two, if I may. First, maybe for Heather. Heather, is there an EPS number between $5.40 and $6 for 2018, which could serve as a threshold for additional compensation for senior leadership? Is there a $5.70 EPS, for example? Just wanted to understand that.

And then, secondly, Rajiv, could you just give us some more color on RESTASIS, specifically, what you meant? The bridging date is end of December 2018. So does that put your potential target action date in second half of 2018? I just wanted to make sure we fully understood that. Thank you..

our target. And when we come out in Q4, we'll certainly give detailed guidance and, at that time, provide ranges and everything, as appropriate. And I think any of the other disclosures are certainly out there that you can go check on our website, but I would just say that's why we feel very confident in our at least $5.40..

Yeah. And on RESTASIS, actually, if you have tracked, we had a target action date, Umer, on September, and that's when we received a IR (56:00) based on that new guidance change, which was immediately addressed and submitted.

And this bridging goal date is now, basically, the December end is a bridging goal date, and there is no – we believe we have addressed every aspect of science (56:13), and we can be technically looking us getting over the threshold and getting approval of this very important product by this date..

And I think, Umer, that just underscores what we had said earlier, what – our mission of continuing to fight for and bring affordable Generics to the marketplace, globally, is what drives us, and I think this is a great example of persevering through what I would call pretty desperate legal maneuvers to try to maintain a monopoly that should have been gone a couple of years ago, and our ability continue to fight not only in the courts, but with the science and have a clear pathway to approvals.

So we're looking forward to bringing this important product to the market..

Thank you. Our next question comes from Gregg Gilbert from Deutsche Bank. Your line is open..

Hi. Good morning. Another two-parter. I was hoping, Tony, I know you're not emphasizing the U.S. part of the generic neighborhood today. But on the generic price in the U.S.

excluding the effect of your launches or the semi-exclusive products, was the erosion on your base of products, let's say, that they have been on the market more than a year, the same as it's been in recent quarters, or did it get better? Did it get worse? And separately for Heather and Ken, you both commented on dissatisfaction about your valuation.

Would your acknowledge that part of the valuation disconnect can be accounted for by investor perception around shareholder friendliness and corporate governance. And if so, what are you doing tangibly to address those? Thanks..

Thanks, Gregg. On the U.S.

Generics portion of the business, certainly, we've been discussing and talking about a full year number of mid-single digits, and I would say for Q3, we talked to you last quarter about it being a little bit choppy as well as Q4 just due to specifically around some significant first-to-file products in the previous year for the quarter that we're measuring against.

So, I would say it was exactly where we thought we would be. And, at the same time, looking from a full year perspective, we feel high single digits is the accurate estimate that we have for 2017..

Yes, Gregg.

And as far as our discontent with the valuation, I think, as I said, I'm personally committed to get out there and educate and sit down with our shareholders to really talk about the business we have today, because I think that what you'll find in the presentation that we provided, Built to Last, is that when you look at Mylan in the portfolio, we have in each of these segments and you look at peers within, especially Europe and Rest of World and some of the valuations that are happening around their businesses where we have as good, if not, better businesses within those geographical regions, I think that's where a multiple expansion is certainly warranted when you now put our whole global product mix together.

And I don't believe that's rooted or grounded in governance, I think that as we continue to have shareholder meetings and certainly stay open-minded and have these discussions, again, what I can say is, we look at companies out there around the globe with a whole host of governance issues from family-owned to a whole wide array of how they're on the public markets.

We really believe it's the fundamentals that should drive that valuation, and we believe that the shareholder outreach program is going to go a long way to help rebase and have honestly us get credit of the company we've built over the last decade.

And believe that we've got a real strong lead ahead of anybody else out there and have a real opportunity to really be the bellwether of this industry..

Couldn't agree with Heather more, and I would just say, look, from a finance perspective, the presentation just went out there this morning.

I would ask you to just really take time and take that presentation apart, because what you'll see is that under kind of any kind of measures, you would look at the performance, you would look at the global footprint, you look at the stable, durable cash flows of this business, and it is truly, truly undervalued.

And the message that we're all trying to get across today and over the coming months, because we'll be out there talking to you more as we put this together, and we think the solidification of the business transformation has effectively been completed is we'll talk about that opportunity.

But what I would challenge you to do is look at the numbers, look at the math, look at the compares and any case, the stock price, the company is not fully valued yet..

Thank you. Our next question comes from Douglas Tsao from Barclays. Your line is open..

Hi. Good morning. Thanks for the questions. Just a question on the Copaxone launch. If we look at the scripts according to IMS, the traction in the 40-milligram seems to be going very nicely, not necessarily being reflected in terms of the 20-milligram.

Just curious if we should expect that to upturn? Or do you see most of the opportunity lying in the 40-milligram? Thank you..

What I would say Doug certainly, we knew from launch on onset that the 40-milligram made up almost 85% of the market.

However, the 20-milligram is still very important to us as well, and we're very encouraged the 40-milligram script trend is (1:01:29), specifically new prescription trends over 16% after three weeks of launch, we feel like this is a tremendous opportunity, as well as an opportunity to look at market expansion, with 17 brands in MS space and only a one generic with the 40-milligram, we think there's an opportunity to expand on that product and expand the market at the same time.

So yes, the 20-milligram is equally important to us, although the 40-milligram is the larger opportunity..

Thank you. And that does conclude our question-and-answer session for today's conference. Thank you for participating in today's call. This will conclude the program. You may all disconnect. Everyone, have a wonderful day..