Good morning. My name is Gretchen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viatris 2022 Third Quarter Earnings Call and Webcast. All participant lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Thank you. I will now turn the call over to Bill Szablewski, Head of Global Capital Markets. Please go ahead.

Good morning, everyone. During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2022, various strategic initiatives in our Phase I and Phase II outlooks. 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 today's presentation and our SEC filings for a full explanation of these risks and uncertainties and the limits applicable to forward-looking statements, including certain assumptions and risks related to the Phase I and Phase II outlooks. We will be referring to certain actual and projected non-GAAP financial metrics to supplement investors' understanding and assessment of our financial performance. Reconciliations of those non-GAAP measures to the most directly comparable GAAP measures can be found on our website and in the appendix of today's slide presentation. A copy of today's presentation and other earnings materials will be available on our website at investor.viatris.com following this call. Now I'd like to turn it over to our Executive Chairman, Robert Coury.

Almost two years ago today, we brought together two great complementary organizations to form a new company, Viatris, with the purpose of creating a sustainable global healthcare leader. Under the leadership of our Board of Directors, along with management, we laid out a very clear and deliberate strategy to build a highly diversified company with multiple capabilities spanning numerous geographies and therapeutic areas. At that time, we established a two-phase roadmap that detailed and emphasized our strategic priorities to deliver value to our shareholders. Phase 1 has always been designed as our setup phase for Viatris. It is about building a solid foundation, setting us up for Phase 2, which is expected to be a period of renewed growth and leadership in our sector. Up until now, we have been focused on executing on Phase 1, consisting of the years 2021 through 2023. In doing so, our priorities have been clear: integrate the two organizations, generate $1 billion in cost synergies, deleverage the balance sheet, pay down at least $6.5 billion in debt, reduce our gross leverage to our long-term target ratio of 3x, and maintain our investment-grade rating, all while returning capital to our shareholders. Today, here's where we stand. First, we continue to execute on our integration plans and are on track to capturing at least $1 billion of cost synergies by the end of Phase 1. Second, we continue to exercise our financial discipline and intend to keep our investment-grade rating. Third, we paid down $4.2 billion in debt since the beginning of 2021 and are on track to paying down at least $6.5 billion by the end of Phase I. Lastly, we returned capital to shareholders beginning in 2021 with our inaugural dividend, growing the dividend by 9% in 2022, given our strong cash flow generation and plan to add to such return through the execution of our share repurchase plan. All of this while delivering on the seventh straight quarter of strong operating results despite many industry headwinds, including inflationary pressures and a negative impact that we estimate to be approximately $1.3 billion year-over-year for 2022 to the top line due to adverse foreign exchange movements. We anticipate that Viatris' second full year results will further demonstrate the strength and robustness of our business. This past February, we announced a strategically important transaction with Biocon Biologics regarding our biosimilars franchise, which we anticipate will close shortly. We also reported strong results on our first year of operations and announced, after careful analysis, the economics and proceeds we anticipate receiving from other potential divestitures. I will give more detail on these potential divestitures shortly, but first, we announced this morning two acquisitions consistent with one of our previously announced therapeutic areas of emphasis: ophthalmology. We anticipate the combined assets of these acquisitions to add to the top line immediately and grow in strong double digits from there, potentially reaching at least $1 billion in sales by 2028. As a result of the expected strong top line growth, we anticipate these acquisitions will also add at least $500 million in adjusted EBITDA by 2028. The aggregate purchase price for the acquisitions is approximately $700 million to $750 million, which we expect to fund with cash on hand upon closing. Michael and Rajiv will discuss more about this in their prepared remarks. Furthermore, given that we believe our shares are significantly undervalued, we view that, in addition to investing in growth assets, repurchasing our shares is another one of the best uses of our cash. Therefore, we intend to increase our return of capital to shareholders, not only through the continuation of our dividend but also following the receipt of the proceeds of the Biocon Biologics transaction; we intend to begin executing in 2023 on the $1 billion stock repurchase program authorized by our Board of Directors earlier this year. With almost two years of operations under our belt, we are even more confident in the strength of our platform and can more fully address a number of important questions we've received from investors since our last update. These include: one, further details on our planned divestitures; two, the stability of our base business post Phase 1; three, our future capital allocation priorities and plans for Phase 2; four, how we will return our business to growth; and lastly, confidence in our ability to execute on all actions outlined to date. I will start with our announced divestitures. In February, management provided commentary regarding our planned divestitures. We currently expect approximately $5 billion to $6 billion in pre-tax proceeds in addition to the proceeds expected from the sale of our biosimilars business. To fully address the stability and outlook of our current base business in Phase 2, 2024 and beyond, I will identify for you additional details on the planned assets to be divested. It is important to note that these identified assets, which were once core assets to us, are now determined not to be core based on where we are taking Viatris going forward, as we continue to move up the value chain. Similar to our biosimilars transaction, we believe that some additional benefits of divesting these non-core assets include reduced SG&A costs, reduced capital expenditures, and the overall average gross margin profile of these assets being lower than the Company’s current gross margin. The non-core assets identified for divestiture include: one, our OTC business; two, our women's healthcare business; three, our active pharmaceutical ingredients business, or API, while retaining some selective development API capabilities; and lastly, certain geographical markets that were part of the combination with Upjohn's business that are smaller in nature and in which we had no established infrastructure prior to or following the transaction. We expect to complete these planned divestitures by the end of 2023 and anticipate the proceeds will provide additional significant financial flexibility for both our Phase 1 and Phase 2 commitments. Now that I've addressed our divestiture plans, let me provide some additional detail on the outlook of our current business in Phase 2. My comments will refer to the base business from that point going forward, but before any positive impact from the two acquisitions announced this morning, unless otherwise indicated. We believe our base business will be well positioned to deliver 1% top line growth long term. This is supported primarily by our strong internal organic pipeline for our new product launches. We expect our strong pipeline alone to more than offset our annual base business erosion, which we expect to be 2% to 3% beginning in Phase 2 compared to the previously forecasted 4% to 5% for Phase 1. Rajiv will provide more details later. Additionally, including the potential financial impact of the two acquisitions announced this morning, which we expect will be additive to our growth, we are targeting during Phase 2 a top line total revenue CAGR of approximately 3%, adjusted EBITDA CAGR of approximately 4% to 5%, and an adjusted earnings per share CAGR of approximately mid-teens. Note that while these CAGRs include acquisitions announced this morning, they do not take into consideration the potential positive impact of any future business development or M&A. These targets reflect our commitment to executing and delivering growth to our business only using the assets we have in-house, continuing to pay down debt, and thereby decreasing net interest expenses, and significantly returning capital to shareholders through our anticipated future share repurchase plans, which I will discuss shortly. For modeling purposes, you should consider two adjustments for the anticipated $8 billion to $9 billion of aggregate pre-tax proceeds we expect to receive by the end of 2023, or shortly thereafter, from all our divestitures, including our biosimilars business. Therefore, as we enter Phase 2 beginning in 2024, consider making the following adjustments to our views for 2022: first, an adjustment of $2.1 billion in revenues and $700 million in adjusted EBITDA to reflect our four planned divestitures, including our biosimilars business; and second, an adjustment of approximately $300 million in increased R&D expenses, partly due to the impact of recent SEC guidelines for licensing deals that were previously excluded from adjusted EBITDA, but will now be included in the future. This also accounts for some continuing development expenses for the two acquisitions announced this morning, which will drive our continued long-term growth. Although we are not giving official guidance today beyond 2022, these adjustments consider the remaining actions that need to be taken on our divestitures, as well as other expected pushes and pulls in 2023 as we reshape and rebase Viatris. Now turning to our future capital allocation priorities. For Phase 2 beginning in 2024, we expect to reshape and rebase features to generate at least $2.3 billion of free cash flows per year, excluding transaction costs and taxes, with 50% earmarked to be returned to shareholders in the form of dividends and future share repurchases. The remaining approximately 50% will be used to identify and reinvest in our business organically and inorganically with value-creating, financially accretive bolt-on transactions and other potential transactions that fit the mold of what we announced this morning. We are excited as we approach the end of Phase 1 and enter Phase 2 of our strategic plan. After seven straight strong quarters, we hope the market will recognize the value of our strong balance sheet, our ability to generate strong cash flows, and our commitment to returning capital to shareholders, especially with our planned share repurchase programs given the undervaluation of our shares indicated by our current P/E multiple. Regarding the growth of our base business, when we laid out our strategic vision at our February investor event, we discussed business development in areas such as ophthalmology, GI, and dermatology as important complementary vehicles to drive inorganic growth for our company. As Michael and Rajiv will elaborate later, we believe that the acquisitions of Oyster Point and Famy Life Sciences will establish a leading ophthalmology franchise for Viatris. We expect these acquisitions over time to be substantially additive to both our top line and bottom line. On a stand-alone basis, when combined with our commitment to begin repurchasing shares, we expect these acquisitions to be accretive to adjusted earnings per share in 2023. I'd like to personally welcome Dr. Jeffrey Nau, CEO of Oyster Point Pharma, who will be the newest member of Viatris' management team upon closing, and who will speak shortly. Dr. Nau will lead our new ophthalmology franchise at Viatris along with his talented and seasoned management team. We are keenly impressed by Jeff and his team's accomplishments, especially by his leadership and vision. We are confident that their talent and expertise will be a great asset to Viatris following the closing of the acquisition of Oyster Point Pharma and the complementary acquisition of Famy Life Sciences. In terms of our ability to execute on all outlined actions, the tremendous operational and financial progress we've made over the past two years despite a challenging external backdrop is a testament to our company's capabilities to execute on all facets of our plan, as evidenced by the consistent results we've delivered. Another notable achievement in our ongoing successful integration is the exit from substantially all of the transition services with Pfizer last month. For all of this, the Board of Directors would like to thank the senior management team and our approximately 37,000 employees worldwide for their unwavering commitment and performance, particularly during some of the toughest years in this industry, including the global fight against COVID. Before I conclude my prepared remarks, I want to share a few self-evident but underappreciated insights from our perspective with the broader investment community. First, our company is truly differentiated among many of our peers. It sometimes gets lost on the investment community that we are no longer just a U.S. generics and specialty pharmaceutical company, which is materially exposed to the volatility and erosion that exists in the U.S. market. In fact, only $1.8 billion out of an estimated $16.5 billion of our estimated sales in 2022 will represent total sales of our generics in the U.S. We have deliberately minimized this exposure by expanding geographically and by moving up the value chain with more complex products launched in the U.S. and elsewhere, where our products can be differentiated and offer stronger financial returns. Second, Viatris is the only U.S. company with an investment-grade credit rating amongst our peers, which we believe is significant and meaningful especially in today's environment. Third, with one of the strongest balance sheets among peers and significant cash flows, we have the financial flexibility to quickly adapt to the ever-changing global healthcare environment. Fourth, we maintain one of the lowest gross leverage ratios amongst our peers. Fifth, we will be returning significant capital to shareholders through what we believe is an attractive dividend, and soon through share repurchases. Sixth, the Board will continue to look for opportunities to add or further unlock value whenever possible. Lastly, we represent a unique opportunity for the investment community to participate in what we expect to soon be a strong adjusted earnings per share growth story. Simply put, once our business is rebased, we feel confident in our future potential to deliver top-line growth, adjusted EBITDA growth, and adjusted earnings per share growth. With our strong cash flow generation, we expect to return capital to shareholders through dividends and especially through share repurchases. With that, before turning the call over to Michael, Rajiv, and Sanjeev, I’d like to note that following this call, we will be commencing our annual shareholder outreach program, so please look for communication from us in the coming weeks. Thank you, and especially thank you for your interest in Viatris. I look forward to answering your questions during our Q&A period. I will now turn the call over to Michael.

Thank you, Robert. Now following your detailed outline, I will go directly to today's acquisition announcement and provide a high-level overview of our Q3 results. In February, we announced three therapeutic areas of focus for moving up the value chain with NCEs and 505(b)(2)s, including ophthalmology. We believe that the two ophthalmology acquisitions we are announcing today, Oyster Point Pharma and Famy Life Sciences, give us a significant head start in creating an ophthalmology franchise within the Company that will set a strong foundation for what we expect to be a future leader in the space and accelerate our strategy moving up the value chain. The total cash consideration for both acquisitions, including equity and debt, will be between $700 million and $750 million. I'm excited about the assets, the talent, the expertise, and the capabilities we are bringing into the Company with these acquisitions. Oyster Point will provide us with an exciting commercial stage growth asset, Tyrvaya, the first and only FDA-approved nasal spray for treating sinus symptoms of dry eye disease with a unique mechanism of action, activating the trigeminal parasympathetic pathway to increase the production of the patient's natural tear film. Tyrvaya was launched in November 2021, and the feedback from patients and physicians has been very encouraging. Dry eye disease is a major area of unmet medical needs affecting approximately 17 million patients in the U.S. alone. We are excited to bring an important innovation like Tyrvaya to more patients and more countries, consistent with our mission to empower patients worldwide to live healthily at every stage of life regardless of geography or circumstances. Clinical development is ongoing to expand Tyrvaya into further indications, such as neurotrophic keratopathy. Additionally, the Famy Life Sciences acquisition will add five additional Phase III or Phase III-ready front-of-the-eye programs in various indications. We believe Tyrvaya and these front-of-the-eye ophthalmology assets could potentially have combined annual revenue of at least $1 billion by 2028. Together with our own capabilities, we believe we'll have everything needed to set the foundation to become the next global ophthalmology leader. The entire management team and I look forward to working with Dr. Jeffrey Nau, who will be leading this effort, and his talented team as we build a leadership position in ophthalmology and as we execute to make this area one of several billion-dollar growth drivers for Viatris. As you can see, and consistent with our strategy announced in February, we continue to make important strides to reshape Viatris, and we believe we have a clearly defined path to return our company to top and bottom line growth from 2024 and beyond while maintaining the necessary financial flexibility to return significant capital to shareholders and pursue continued business development. None of this would be possible without the solid performance of our current business and focused execution of our integration and reshaping plans. We have recorded seven quarters of consistent and strong business performance. For the third quarter of 2022, we delivered total revenue of $4.08 billion, adjusted EBITDA of $1.5 billion, and free cash flow of $765 million. Our teams across the globe are highly engaged and performing at peak levels. Our pipeline continues to deliver, particularly in the area of complex generics and injectables. We added $144 million in new product revenue in Q3. Year-to-date operational performance aligns with our expectations, enabling us to continue delivering on our Phase 1 financial commitments. Notably, we have paid down approximately $2.1 billion in debt year-to-date in 2022 and approximately $4.2 billion since the beginning of 2021, positioning us squarely on track to meet our target of paying down $6.5 billion by the end of 2023. Our Board of Directors has declared another quarterly dividend of $0.12 per share. Cumulatively, since the formation of Viatris, we've already returned over $800 million to shareholders through dividend payments. We are reaffirming our latest 2022 full-year guidance ranges for total revenue, adjusted EBITDA, and free cash flow, driven by solid operating momentum, despite further increased foreign exchange headwinds. As Robert has indicated, we are confident in the outlook and future growth potential of Viatris. The key tenets for this confidence are: the strength and market dynamics of our remaining base business after the main divestitures, stabilizing results from business transformation, the solid performance of our branded portfolio, and the strength of our pipeline, especially in complex generics and complex injectables, as well as novel products, 505(b)(2)s, and NCEs, and the expected growth from our expanding ophthalmology franchise upon completion of these acquisitions. With that, I would like to hand it over to Rajiv to provide further details on our Q3 performance and outlook for our business moving forward. Rajiv?

Thanks, Michael, and good morning, everyone. I'm very proud of what we've accomplished in our last two years as Viatris. We have executed seven consecutive quarters of strong performance, underscoring the underlying strength of our diversified base business. Let me begin with brief commentary about our strong third-quarter operational results. On an operational basis, we were down 1% year-over-year for the quarter. Every segment performed solidly versus our expectations, including China, despite COVID headwinds. Our Generics segment in developed markets benefited from the launch of lenalidomide in North America. Overall, our Brands grew 1% year-over-year on an operational basis in the quarter, performing better than expected, led by Lipitor, Brufen, and Creon. Our resilient global operations again delivered excellent customer service levels while navigating increasing headwinds from inflation. Moving to integration, we successfully completed our remaining SAP cutovers from Pfizer and have substantially exited all remaining transition services. For the full year '22, we now expect to deliver approximately $525 million in new product launch revenue with better-than-expected margins but below our expectations due to the timing of certain launches. On the R&D front, we crossed a major milestone with the announcement of positive top-line results from our GA Depot Phase III clinical trial along with our partner Mapi. We remain on track for our submission to the FDA in Q1, Q2, and Q3. Now, turning to our operational priorities for Phase 1. We are well on our way to integrating and achieving synergies, stabilizing the base business, and delivering the pipeline. In addition, we expect to complete the planned divestitures by the end of '23. We believe these achievements position Viatris well for future growth. As we look ahead to Phase 2, our priorities are to continue to optimize and minimize total base business erosion, enhance our existing durable high-margin organic pipeline to offset erosion, maximize the execution of our ophthalmics franchise, and identify and add inorganic opportunities to accelerate growth. Our total base erosion improvements are being driven by several factors. Recall, we originally modeled total base erosion in Phase 1 to be about 4% to 5%. Based on our better-than-expected Brands performance and combined with other key catalysts, we believe total erosion for Phase 2 is expected to improve by 200 basis points, bringing it to the 2% to 3% range. Our Brands business, excluding China, will account for slightly more than 50% of the portfolio. Before Viatris was formed, our combined Brands were trending at approximately 6% erosion. At the launch of Viatris, we modeled approximately 4.5 to 5.5% brand erosion based on that trend. However, our effective management of the Brands business has contained this erosion to 1.5% to 2.5% over the last seven quarters. The graph depicting our total Brands sales, excluding China, shows our business operating model has effectively changed and stabilized the trajectory of our expected erosion, which we anticipate will continue in Phase 2, potentially contributing an uplift of 150 basis points to total base erosion. Additionally, factors contributing to our total erosion improvement include no significant loss of exclusivity on the horizon, our purposeful diversification of our core generics portfolio toward complex products, reduced dependency on the commoditized U.S. generics market, and anticipated divestitures of non-core assets that will simplify the Company and further stabilize the remaining business. We believe our ability to minimize total base erosion combined with our current organic pipeline lays a solid foundation for returning to growth in Phase 2, which I will cover on the next slides. Our growing pipeline, primarily driven by the U.S. market, includes an increasing number of complex, hard-to-make products with a higher barrier to entry and a reduced number of partner programs. Additionally, other key geographies, such as China and Europe, will benefit from the focused efforts of the last few years aimed at building their pipeline. We expect Europe to contribute approximately $100 million to $150 million of new product revenue annually, and China is expected to provide close to $100 million annually from '25 onwards. As Robert mentioned, we have certain underappreciated assets in our pipeline that we've invested in recently. We anticipate our complex injectables and select novel products to each make up at least $1 billion in peak annual net sales in Phase 2. Given all these factors, we feel confident about delivering $450 million to $550 million of annual new product revenue. Regarding our complex injectables, our science team has developed several technology platforms, including nanoparticles, microspheres, liposomes, and nano-emulsions. We expect these platforms to deliver a strong portfolio of approximately 40 products, with 10 already filed and under FDA review. This portfolio represents a rapidly growing $50 billion to $60 billion market. By assessing risk-adjusted expectations, we believe our complex injectables franchise could yield a peak net sales opportunity of at least $1 billion in Phase 2. Another significant growth catalyst in our organic pipeline is our novel products franchise, which includes several 505(b)(2)s. We expect products like GA once monthly and our novel meloxicam formulation to have patent protection. Additional products also include Xulane Low-Dose and Effexor GAD. This chart highlights our ongoing pursuit of highly complex products, such as biosimilars to BOTOX. On a risk-adjusted basis, we believe these five select assets alone represent at least a $1 billion peak net sales opportunity in Phase 2. Moving to our ophthalmics franchise, we've taken a major step to establish leadership in this area. As stated earlier, we're excited about the additions of Oyster Point and Famy Life Sciences. Let me discuss the strategic rationale for bringing these assets together. Oyster Point brings not only a novel marketed dry eye product in the U.S. but, more importantly, a highly experienced team that possesses extensive knowledge of the ophthalmic market from clinical, medical, regulatory, and commercial perspectives. Additionally, when combining Oyster Point's capabilities with the Famy Life Sciences pipeline and our global commercial, R&D, and regulatory capabilities, we believe we are building the foundation to become a global ophthalmic leader. Alongside Tyrvaya, we are excited to start with a combined pipeline of complementary programs, including additional indications like neurotrophic keratopathy and five Phase III-ready programs acquired from Famy Life Sciences. This combined global pipeline has the potential for net sales exceeding $1 billion on a risk-adjusted basis by 2028. Once the transaction closes, the ophthalmics franchise will function as a separate division within the Company and will be led by Dr. Jeff Nau. In summary, we believe we are well positioned to return Viatris to growth in Phase 2. We remain confident in our ability to contain erosion to 2% to 3% and generate $450 million to $550 million in new product revenue annually. We expect not only this will offset erosion but also enable a 1% organic top-line CAGR growth of the base in Phase 2. Maximizing and executing our ophthalmic strategy will contribute to an overall revenue CAGR of approximately 3% from '24 to '28, without including additional inorganic opportunities we expect to identify and add to our portfolio in Phase 2. I would now like to welcome Dr. Jeff Nau to share more information about Oyster Point and its exciting growth potential, as well as his insights on the Famy assets. Before I do, I would like to thank our Viatris colleagues for their continued performance and look forward to welcoming our future colleagues from Oyster Point and Famy Life Sciences.

Thank you, Rajiv, and thank you to Viatris for allowing me the opportunity to speak today. Good morning. My name is Jeff Nau, and I am the President and CEO of Oyster Point Pharma, a public biopharmaceutical company focused on the discovery, development, and commercialization of first-in-class pharmaceutical therapies to treat ophthalmic diseases. Our mission at Oyster Point is to advance breakthrough science to deliver therapies that patients and eye care professionals need. I was the first employee at Oyster Point in 2017, and since then, we have grown the company to more than 250 employees, including launching one of the most exciting commercial products for dry eye disease with a leading sales team in ophthalmology. By educational training, I hold a Master's in Medical Science and a PhD in Public Health and Epidemiology. For over 20 years, I have dedicated my career exclusively to drug and device development in the field of ophthalmology. Prior to joining Oyster Point Pharma, I was involved in the development of several promising therapies in the retina space while at Genentech, where I was part of the FDA approval and commercialization for numerous indications for the anti-VEGF therapy Lucentis, a medical breakthrough for treating blindness that generated multibillion-dollar peak annual sales. The Oyster Point team brings decades of experience in the eye care space, with most of the leadership team dedicating their entire careers to eye care. Currently, we are one year into the successful launch of our first FDA-approved product. Tyrvaya is the first and only nasal spray for treating the signs and symptoms of dry eye disease. This disease is a significant market affecting about 38 million Americans and over 700 million people worldwide. It is a chronic multifactorial condition, characterized by an imbalance in the nutrient-rich layers of the ocular surface, known as the tear film. Increasing natural tear production is believed to alleviate signs and symptoms of dry eye disease. Many patients indicated they were dissatisfied with older treatments due to low efficacy, slow onset of action, and stinging and burning associated with prescription eye drops before Tyrvaya entered the market. The team at Oyster Point made groundbreaking advancements with Tyrvaya. Its differentiated clinical profile rapidly activates tear film production to enhance the body’s natural tear generation and can be easily administered. It is a preservative-free nasal spray, convenient with a twice-a-day dosing regimen, and has no contraindications. Tyrvaya was studied in a broad population of adults with mild, moderate, and severe dry eye disease. Clinical trials demonstrated statistically significant improvements in tear film production and other key dry eye measurements. In addition to this exciting product, I would like to highlight the pipeline that Oyster Point will contribute. Our development pipeline contains several programs aimed at treating other ophthalmic diseases with unmet needs, including Stage 1 neurotrophic keratopathy, a severe degenerative condition affecting the corneal nerves. Separately, our proprietary transformational gene therapy program is progressing toward IND-enabling studies in 2023 for Stages 2 and 3 neurotrophic keratopathy, alongside early development for therapies targeting vernal and atopic keratoconjunctivitis, severe allergic conditions of the eye. Oyster Point initially engaged with Viatris on ex-U.S. licensing and partnership opportunities for our products. As discussions progressed, we quickly realized that the global healthcare gateway that Viatris offers provides a rare partnership opportunity to accelerate and amplify both companies' growth strategies, enabling increased access to ophthalmic therapies for patients worldwide. Just as Oyster Point can drive Viatris' expertise in ophthalmology through its extensive knowledge of the space from clinical, medical, regulatory, and commercial perspectives, Viatris can enhance Oyster Point with its global commercial footprint, R&D and regulatory capabilities, supply chain, and additional ophthalmic assets. Conceptually, this partnership represents more than a traditional merger; it embodies a synergy where both companies amplify each other's strengths. As the foundation for Viatris’ ophthalmology franchise, Oyster Point will bring a team with deep ophthalmology expertise to advance research and drug development, alongside an experienced U.S. commercial sales and medical affairs team that I am certain will lead to future innovation at Viatris. Furthermore, as Rajiv mentioned, the ophthalmology portfolio created thus far is poised for significant peak potential by 2030. The strategy outlined today is merely the foundation for the exciting future ahead. Our focus will be on investing resources for the continued launch and international expansion of Tyrvaya and advancing the clinical development of key assets across a wide spectrum of eye care diseases, including dry eye disease and potential breakthroughs in glaucoma, neurotrophic keratopathy, blepharitis, presbyopia, and various other vision-related disorders. In closing and on a personal note, I want to commend the Oyster Point team for building such a strong organization over the last five years. We've established robust capabilities in R&D, clinical development, and commercial within the eye care space in a remarkably short timeframe. It is the value of our people, our lead asset Tyrvaya, and our pipeline that spurred Viatris to acquire Oyster Point for shared growth. I sincerely thank Robert, Michael, Rajiv, and our future colleagues at Viatris, and I share in the excitement surrounding Viatris' future.

Thank you, Jeff, and good morning, everyone. It's great to be with you today to share my reflections on the recent quarter and elaborate on what you've heard from Robert, Michael, and Rajiv about our company's outlook. Please turn to the slide with our third-quarter financial highlights and outlook for Q4 and full-year 2022. We had another strong quarter operationally, aligning with our expectations. On a reported basis, revenue was impacted by foreign exchange headwinds by approximately 9% compared to Q3 2021. Let me walk you through the key drivers contributing to the strong performance in Q3. For revenue, we noticed continued stability across our segments, including developed markets and China. New product revenue in the quarter benefited from the launch of lenalidomide in the U.S. This performance resulted in an overall favorable mix, leading to improved gross margins. SG&A costs continue to benefit from synergies. R&D expenses increased due to continued investment in the pipeline. We experienced another strong quarter of free cash flow generation, underscoring our confidence in the stability of our base business and the organizational focus on cash optimization initiatives. Year-to-date, we have fulfilled 2022 commitments by paying down approximately $2.1 billion in debt and disbursing about $436 million in dividends. With three quarters of solid performance, we feel positive about the rest of the year, expecting this positive momentum to persist. Now, a few comments on expected Q4 financial results. We anticipate that the gross margin percentage will moderate from Q3 levels due to product and segment mix changes. SG&A, similar to last year, is expected to increase from Q3 2022. Free cash flow is projected to be significantly lower compared to Q3 2022 due to anticipated lower adjusted EBITDA, the phasing of interest payments, and higher CapEx. Given the continued strength of operations, we expect to absorb the additional impacts from foreign exchange. We are reaffirming our guidance for total revenues, adjusted EBITDA, and free cash flow. As previously mentioned on our Q2 call, it is likely we will finish at the lower end of the adjusted EBITDA range due to foreign exchange impacts, while we predict free cash flow will align with the midpoint of the range, adequately absorbing the foreign exchange headwind. The next slide illustrates free cash flow over the last seven quarters. Q3 was another strong quarter, especially considering it incorporated the EpiPen settlement totaling approximately $259 million. Accounting for this, underlying free cash flow would have surpassed Q3 2021, reflecting stability in our business. I'm pleased with our progress in improving cash flow conversion, a focus that we will maintain in 2023 and beyond. As mentioned, we expect the Biocon transaction to close shortly, and we will update you at that time regarding the impact on current guidance. Next, I'll detail our sources and uses of divestiture proceeds. You will note that we expect substantial cash flow over the next year. On the left, we estimate total pre-tax proceeds of approximately $8 billion to $9 billion, including about $5 billion to $6 billion from non-core asset divestitures. Since our Investor Day in February, we've made progress on these initiatives, updating our ranges based on ongoing discussions. We anticipate covering all taxes and transaction costs with divestiture proceeds. Importantly, note that the proceeds from these divestitures will not appear in the U.S. GAAP net cash provided by operating activities; however, taxes and transaction costs will impact future U.S. GAAP net cash provided by operating activities. We'll disclose these costs to better model the underlying base business free cash flow. Totaling the anticipated uses, along with cash needed for acquiring the ophthalmology franchise, we expect net divestiture proceeds of approximately $4.9 billion to $6.1 billion. This financial flexibility will be allocated toward increasing debt repayment, share buybacks, and potential future business developments. Moving to the next slide, we are excited about the acquisition of Oyster Point Pharma. The transaction includes $11 per share in cash upfront through a tender offer, and each Oyster Point stockholder will receive one non-tradable contingent value right, representing up to an additional $2 per share based on performance metrics for full-year 2022. Concurrent to Oyster Point's closing, we also expect to acquire Famy Life Sciences, which possesses a complementary ophthalmology portfolio, for a total cash payout of approximately $281 million. Both transactions are subject to customary closing conditions and are expected to be funded with cash on hand. Now moving to the next slide, which outlines the components of our capital allocation framework. Considering net divestiture proceeds and the substantial free cash flow from our base business, we are confident that we can fulfill our Phase 1 commitments and enhance capital returns to shareholders in Phase 2. To recap our Phase 1 commitment, our highest priority was debt repayment and leverage reduction. Two components of this commitment include paying down $6.5 billion in debt, which represents the short-term and scheduled maturities between '21 and '23, and paying down additional debt to lower our pro forma gross leverage ratio to 3x by the end of 2023. This commitment supports our goal of maintaining an investment-grade rating. Ultimately, our financial profile will differentiate us from our peers and provide an attractive capital structure in these volatile times. Another priority during Phase 1 was returning capital through dividends, which we initiated in 2021 and increased in 2022. As outlined, the net divestiture proceeds alongside consistent free cash flow will give us the capacity to execute authorized share buybacks in 2023. Completing our Phase 1 commitments, particularly achieving the gross leverage target of 3x by the end of 2023, will enable us to rebalance our capital allocation strategy for '24 and beyond. As Robert mentioned, we anticipate a balanced approach to capital returns and business investments during Phase 2, with expectations of significant free cash flow growth. We will remain committed to our investment-grade rating, targeting gross leverage at 3x within a range of 2.8 to 3.2x, and we foresee ample cash for capital returns. We expect to allocate approximately 50% of annual free cash flow towards share buybacks and dividends. The anticipated organic adjusted earnings growth during Phase 2, combined with annual share repurchases, will expedite our adjusted EPS growth. With respect to organic and inorganic business investments, we will remain financially prudent as we target bolt-on and tuck-in opportunities. After nearly two years of managing the business and consistent performance through seven quarters, we are confident in our operational rhythm, the outlook, and our investment needs for growth. Therefore, we are positioned to provide long-term targets for total revenue, adjusted EBITDA, free cash flow, and adjusted EPS. As Robert indicated, these targets exclude associated revenue of approximately $2.1 billion and adjusted EBITDA of around $700 million from divesting biosimilars and non-core assets, along with $300 million in increased R&D. The key assumptions underlying these targets include a 2% to 3% base business erosion being fully offset by new product revenue from our pipeline. The return to growth will also be driven by the ophthalmology franchise. The anticipated 3% total revenue CAGR from '24 to '28 does not factor in additional business development activities beyond the acquisition of the ophthalmology franchise. The assumptions supporting adjusted EBITDA growth also encompass an evolving portfolio prioritizing novel and branded products, with anticipated stable gross margins during this period. Expected stability in SG&A investment, albeit a decline on a percentage basis as revenues grow, will support this forecast. R&D investments will incorporate novel and complex pipeline efforts, alongside the ophthalmology assets, alongside the impact of recent SEC guidelines regarding previously excluded licensing deals. Free cash flow growth is expected to be substantial, benefitting from reduced interest expenses, lower one-time cash costs, and initiatives aimed at cash optimization. Lastly, we anticipate adjusted EPS growth will be bolstered by annual share repurchases, which will be an essential element of our strategy for returning capital to shareholders. These assumptions, based on July 2022 foreign exchange rates, do not incorporate any potential benefits should foreign exchange rates revert to historical averages. In conclusion, I am thrilled with our performance after seven strong quarters and the actions we are taking to solidify our foundation. Our cash flow generation, paired with financial flexibility from divestitures, reinforces our confidence in fulfilling our Phase 1 commitments, increasing capital returns to shareholders, and positioning the business for future growth in Phase 2. With that, I will turn the call back to the operator for Q&A.

We'll take our first question from Elliot Wilbur from Raymond James.

A lot to digest this morning. I appreciate the team taking the time to walk us through the detail. My first question and only question, I guess, is with respect to the acquisition of Oyster Point and Famy Life Sciences. I know you've talked about the ophthalmology portfolio generating around $1 billion in sales by 2028. But if I look at current external expectations, at least for Oyster Point, they seem to embed peak sales somewhere around $400 million, which I assume is Tyrvaya exclusively in 2027. And I know that you're expecting contribution from some other pipeline assets, but doesn't seem like many of those would hit before 2025 or 2026. So I'm trying to close the gap there between external expectations and what you are anticipating in terms of contribution from the new broader portfolio. Are you simply more optimistic on Tyrvaya than external expectations? Or am I under appreciating the potential contribution from some of the pipeline assets in that period of time?

Elliot, I will take that. And perhaps Jeff can contribute later. First, let me clarify that, yes, Tyrvaya U.S. expectations are based on global projections. We have considered the $1 billion target, dividing it almost 2/3 for the U.S. and 1/3 for the rest of the world. Secondly, we expect most, if not all, of these products to enter the market within the anticipated timeframe. As we noted, some of the Phase III assets are well-advanced, leading us to expect multiple product launches around '26 and '27 alongside Tyrvaya. If I may add, Jeff, do you want to provide any additional insights?

We're enthusiastic about the portfolio being built here. As Rajiv mentioned, with two dry eye assets making up most of the projected revenue, I wouldn't downplay the other pipeline products expected to address exciting markets. This front-of-the-eye portfolio holds significant unmet needs regarding conditions like blepharitis. Furthermore, we have an array of Phase III-ready assets that can seamlessly integrate with an existing sales force ready to go.

So your EBITDA midpoint of guidance is $6 billion. And Robert, I think you mentioned between divestitures, the SEC accounting, and additional spending on new tuck-ins, it sounds like there is potentially an additional $1 billion to $1.2 billion headwind on EBITDA, and that's without the expected impact of the China VBP rollout next year. So is it fair to say that EBITDA in 2024 is trending somewhere between $4.6 billion and $5 billion? That is my first question. My second question is on Oyster Point. It looks like there is either a bridge program or a major co-pay assistance in place. You can see that in realized pricing per prescription versus where Xiidra and RESTASIS track. Can you speak to the absolute BOMs we're seeing and whether we can scale them up? Additionally, regarding the Phase II OLYMPIA trial in neurotrophic keratopathy, which was due for an update now, could you provide insights on that? And it seems the CVR is likely achieved, considering the TRx and sales numbers pointed out, so should we assume that the Oyster Point acquisition is valued at $450 million, correct, including net debt?

Firstly, I want to express gratitude to the investment community and all of you for your thoughtful input since our management team's response in February. Today, we can provide more detail to address many of your questions. To clarify, we're not giving specific guidance regarding '24 financials right now, but we've provided enough directional guidance for you to gauge what our numbers might look like. Umer, it's crucial in my remarks to emphasize we will navigate 2023 while implementing initiatives and addressing pushes and pulls we foresee to build a bridge to '24. Jeff, do you want to address the next segment?

Certainly, let me segment this into two parts and answer the easier one first. As we approach our earnings this week, I can assure you that we are on track with the OLYMPIA study schedule and will provide updates soon. Regarding Tyrvaya, with our launch this year, our aim has been to build a prescriber base. We are currently focused primarily on a commercial prescription product. While we do still have the bridge program, entering 2023, we plan to increase coverage before initiating extensive marketing, ensuring robust coverage is in place, given the sensitivity of this market. When you look at a product like Tyrvaya, there's an exceptional opportunity to market the product as it is the only nasal spray targeting dry eye disease.

This is Michaela on behalf of Balaji. I wanted to circle back on the acquisition and inquire whether this template could be applied to your other two specialties. Additionally, could you elaborate on when EPS accretion is expected to commence?

As I stated in my opening remarks, yes, we believe this exemplifies a highly attractive target we can pursue, while maintaining our investment grade and being sensitive to increased R&D costs. Simultaneously, we remain cautious about managing growth in our topline. As for earnings per share accretion, in my remarks, I've highlighted the clarity we've now delivered regarding our capital allocation. The 50% commitment to returning capital, once we've completed Phase 1 and achieved our 3x gross leverage target, will heavily influence our overall strategy moving forward. I strongly believe that growth in adjusted earnings per share will define our narrative in the long term.

You have outlined today why ophthalmology is the right vertical for Viatris, but I'm interested in understanding how this compares to franchises like OTC and biosimilars, where the company is also exiting. What factors led you to prioritize ophthalmology for growth while exiting the others? What was the thought process behind this?

We conducted thorough analyses on the direction Viatris should take, examining previous successes and strategizing for the future. The financial dynamics of our business model remain paramount. Our current portfolio has evolved significantly over time, demonstrating our progress moving up the value chain. For example, while OTC is a strong sector, sustaining even its modest growth requires substantial investments year after year. As we shifted our focus, we identified what were once core assets but have since been deemed non-core, allowing us to better allocate both financial resources and talent as we pursue top-line growth.

Thank you for the update. I want to follow up on the non-core divestitures to reach the $5 billion to $6 billion of expected proceeds, as that seems substantial to achieve by the end of next year. How far along are discussions with potential buyers, and how confident are you in this process? Could you also address some of the opportunities in more detail? To follow up, I would like to know what caused the slowdown in launch timelines leading to lower-than-expected new product revenue, and how confident you are regarding the $450 million to $550 million expected contributions going forward, given their importance in generating the targeted 3% revenue CAGR from here?

We have made substantial headway in identifying these particular assets for divestiture, having worked on this project for some time now. We have consulted the right advisers along the way and feel confident about executing these transactions in '23, potentially even realizing proceeds soon thereafter.

Regarding our top line, as Robert mentioned, looking at the projections, we've clearly outlined how our efforts to minimize erosion in our base business will contribute positively. Over recent quarters, we have shifted our focus, resulting in improved performance. Product launches are contingent upon various factors; we remain poised to execute and deliver, particularly as we near Phase 2, which will include the solidification of our existing Brand portfolio strategic transitions.

For the potential diversifications you mentioned, I’m trying to understand if their classification into core or non-core portfolio solely drives your decisions, or if other factors like impact on core revenue or EBITDA post-divestment consideration were assessed?

Yes, we have considered these factors in evaluating our options to present a clear outlook for shareholders.

On Famy Care, it seems to account for about half the value of the $700 million to $750 million total deal value. Can you confirm if there is a particular asset driving that valuation or if it is broadly diversified across all late-stage-ready assets?

I've been around Famy assets for several years, and I've been closely watching their evolution. We have a foundational understanding and confidence in this acquisition, which is structured deliberately with the clinical product portfolio and teams in mind.

For the Famy Life Sciences portfolio, it is primarily balanced with no single asset dictating the value. Our analyses indicated strong potential across the portfolio as a whole.

After operating for nearly two years, we've gained insight into the optimal leverage for this business. We believe that maintaining a leverage ratio of around 3x, with liquid assets, provides the necessary flexibility to respond to any opportunities or risks ahead, particularly with cash flows.

We have adequate cash flow projections to ascertain our upcoming targets for the year, while also achieving Phase 1 commitments and ramping the business up for growth post-acquisition.

I wanted to clarify some of the pro forma figures you provided regarding 2024. You're assuming that by 2024, the erosion on the base business will be approximately -3%, and transitions today could lead to a swing of nearly 6%, contributing almost $1 billion annually. Are you seeing a solid return as these planned paths to growth align with your other existing products? Do you anticipate being able to integrate GI and Derm opportunities during this transition?

Yes, you can recalibrate expectations based on the variables you're analyzing. Our base business doesn't show current signs of erosion; we forecast a slight growth aligned with the additional contributions from our portfolio.

In terms of our models, we've aligned expectations toward understanding the forthcoming opportunities and potential for growth as influenced by our recent activities.

Thank you all for the insightful questions. We are excited about this phase of our development and appreciate your interest in Viatris and the progress we're making. We are heading into a robust position thanks to our strategic direction and precise execution.

Thank you, everyone. As you have seen, this is an exciting phase in our development as we follow through on our commitments to return to growth, continuing to engage in capital allocation strategies for both shareholder return and business investments. We're thrilled to welcome Jeff and his team to Viatris going forward. Thank you very much.

This concludes today's Viatris 2022 third quarter earnings call and webcast. Please disconnect your line at this time, and have a wonderful day.