Janet Barth Vice President, Investor Relations & Corporate Communications Welcome to Adams’ Inaugural Investor Day 2007
Janet BarthVice President, Investor Relations &
Corporate Communications
Welcome to Adams’ Inaugural Investor Day 2007
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Housekeeping Items
This meeting is being webcastPlease turn off/silence cellphones, pagers, BlackberriesQ&A – end of each presentationAll presentations posted to Adamsrt.comFormal presentations to end before lunchPlease complete presentation survey
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Housekeeping Items
Scheduled breaksRestroomsRefreshments
Adams personnel available for assistanceWearing yellow or blue badges
Emergency exits
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Safe Harbor
Today’s presentations may contain forward-looking statements. The company’s SEC filings, including the Current Report on Form 8-K filed this morning, identify certain factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements made today.
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Mike ValentinoChief Executive Officer
Meeting Overview
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Meeting Overview
Sales Modeling AnalysisRita O’Connor, CFO
Adams’ Expanded OTC Product PortfolioBob Casale, COO
Adams’ Entry Into Rx MarketKen Miller, Exec. Dir. Marketing
Sales Force InitiativesTim Miller, VP Sales Operations & Training
Review of Erdosteine DataHelmut Albrecht, M.D., SVP R&D
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Other Members of Management…
Marylou Arnett, SVP Marketing
Bill Fogarty, SVP Sales & Trade Development
Bill Howard, SVP New Products
Dave Long, SVP Regulatory Counsel
Tom Long, SVP & General Manager Manufacturing Operations
John Thievon, EVP Sales & Business Development
Peter Wentworth, EVP HR
Walt Riehemann, EVP General Counsel
Rita O’ConnorChief Financial Officer & Treasurer
Sales Modeling AnalysisInventory analysis and revenue modeling assumptions
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Safe Harbor
This presentation contains certain “forward-looking” statements. These statements are based on the current estimates and assumptions of the management of Adams Respiratory Therapeutics, Inc. (or “Adams”) as of the date of this presentation and are naturally subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance onthese forward-looking statements. Actual results may vary materially from the expectations contained in this presentation. When used in this presentation, the words “may”, “will”, “should”, “could”, “would”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “project”, “potential” and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of Adamsto be materially different from those reflected in such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: the continued success of Adams’ existing products and the successful acquisition or development and commercialization of future products; ability to leverage the Mucinex brand name and advertising and general and administrative expenses to increase net sales; continued and increased competition; the severity of the cough and cold season; Adams’ ability to fill backorders; and other risk factors set forth under Item 1A. Risk Factors in Adams’ Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and under Item 1A. Risk Factors in Adams’ Quarterly Report on Form 10-Q for the period ended December 31, 2006. Except to the extent required by applicable securities laws, Adams is not under any obligation to (and expressly disclaims any such obligation to) update its forward-looking statements, whether as a result of new information, future events, or otherwise. All statements contained in this presentation are made only as of the date of this presentation. A, Adams, A Adams Respiratory Therapeutics, Adams Respiratory Therapeutics, Delsym, Mucinex Full Force, Humibid, Junior Mucus, Mucinex Moisture Smart, Mini-Melts, Mucinex, MucinexIN...Mucus OUT, Mr. Mucus, Mrs. Mucus, Nothing Lasts Longer, Opening New Pathways for Respiratory Relief, Turn Off the Cough, and the Junior Mucus, Mr. Mucus and Mrs. Mucus characters are Adams’ trademarks and have been registered in the U.S. Patent and Trademark Office or are the subject of pending U.S. trademark applications. The marks may also be the subject of foreign trademark registrations and/or trademark applications. Each of the other trademarks, trade names or service marks appearing in this presentation belongs to its respective holder.
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What’s On Your Mind?
1. Is IRI* a good tool for modeling revenue?
2. What is the effect of the cough/cold season on trade purchases?
3. How do we evaluate trade inventories?
4. How should we look at the base business moving into FY 08?
5. How should we think about SG&A going forward?
10*Information Resources, Inc.
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What’s On My Mind?
Provide insight on the key variables that impact revenue and expenses How to use the available “tools” for modeling our business
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Question #1Is IRI a good tool for modeling
revenue?
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Purchases through store scanners in retail dollars at: ►Chain drug stores►Most food stores and ►Mass market outlets, Wal-Mart excluded
Retailer margins range from 20% to 35%
What Does IRI Capture?
IRI captures about 70% of the retail universe
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What Does IRI Not Capture?
Wal-Mart ►~25% of our sales (Dec. 2006 10-Q)
National Prescription Audit (NPA) ► Sales flowing through state Medicaid programs
►~3% of our sales (June 2006 10-K)
Non-retail sales ► Government agencies, hospitals, prisons,
universities, etc. ►~11% of our sales (June 2006 10-K)
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Example 1: IRI to Net Sales Calculation(in millions)
$ Consumption $
IRI 1,000
5% Retail(not covered by IRI)
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Wal-Mart 250
NPA 30
Non-retail 110
Total consumption 1,440 @ retail $
1,080 @ factory $ (25% retail margin)
$ 994 @ net sales (92% of gross)
Note: For example purposes only.
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IRI vs. Net Sales
Without doing a full bottom-up calculation, IRI is a good surrogate for annual net sales ►Will never agree 100%, but generally works►Retail margin and non-retail sales subject to
variability
Quarterly spread of revenue can fluctuate due to seasonal buying patterns
Question #2What is the effect of the
cough/cold season on trade purchases?
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September quarter►“Table-setting”quarter: initial display ordering►No meaningful consumption data – can’t draw conclusions
December quarter►“Stocking quarter”: insuring enough stock for potential strong
season, heavy display activity, in-store promotions; heavy advertising
March quarter►“Replenishment quarter”: evaluating season to determine product
performance and needs for future supply►Begin to adjust orders to consumption►Focus begins to shift to allergy season
June quarter►“Out of season” quarter: volume shifts to post-season levels
Trade View of Cough/Cold Season
19Source: Surveillance Data Inc. (SDI)
The Many Shapes of the Cough/Cold Season –
A Historical Perspective
0.0
10.0
20.0
30.0
40.0
50.0
60.0
9-Sep
16-Sep
23-Sep
30-Sep
7-Oct
14-Oct
21-Oct
28-Oct
4-Nov
11-Nov
18-Nov
25-Nov
2-Dec9-Dec
16-Dec
23-Dec
30-Dec
6-Jan13-J
an
20-Jan
27-Jan
3-Feb
10-Feb
17-Feb
24-Feb
3-Mar
10-Mar
17-Mar
24-Mar
31-Mar
Millions
1999/00 2000/01 2001/02 2002/032003/042004/052005/062006/07
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Typical Dome SeasonTheoretical Flow of Quarterly Revenue
Fiscal Quarter
Trade Purchases
Consumption Data
First(Sept) #3 #4
Second(Dec.) #1 #2Third
(March) #2 #1Fourth(June) #4 #3
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Fiscal Quarter
Trade Purchases
Consumption Data
First(Sept) #2 #4
Second(Dec.) #1 #1Third
(March) #3 #2Fourth(June) #4 #3
Typical Peak SeasonTheoretical Flow of Quarterly Revenue
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Translation
(in millions) 1Q 2Q 3Q 4Q YTD
Net Sales reported FY'06 $ 47 $ 63 $ 76 $ 53 $ 239
Reported % 20% 26% 32% 22% 100%
Backorder* 10 10 (10) (10) -
Normalized $ $ 57 $ 73 $ 66 $ 43 $ 239
Normalized % 24% 31% 28% 18% 100%
*Numbers rounded for illustrative purposes.
#3 #1 #2 #4Quarterly Rank
Question #3How do we evaluate trade inventories?
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Factors Affecting Trade Inventory
Trade factors:►Establishing appropriate pipeline inventory
for base and new products (shelf + warehouse)►Supply chain efficiencies►Estimate of strength and shape of season
Supplier factors:►Forward trajectory of brand growth ►Reliability of order fulfillment►Introduction of new items
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How We View Inventory
“Weeks of inventory” = backward looking calculation; inventory ÷ past consumption and in our opinion, not that valuable“Dollar value of inventory” = shipments less consumption and in our opinion, a more useful approach In a seasonal business, the amount of inventory will vary dramatically throughout the season At the end of the season it should adjust to consumption
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Example 2: Trade Inventory Analysis
(millions) Beginning Inventory
Shipments Consumption Ending Inventory
Q107 $ 70* $ 90 $ (42) $ 118
Q207 118 111 (99) 130
Q307 130 83 (128) 85
Q407 85 49 (63) 70
FY07 70 333 (333) 70
*Estimated value of inventory in the trade as of June 30, 2006. (June 2006 10-K)
For example purposes only and not intended to forecast future results or expectations of future performance.
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Key Reminders
Results ultimately driven by changes in annual consumptionQuarterly shipments will adjust to annual consumption
Question #4How should we look at the base business moving into FY 08?
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Roadmap
Make assumption for total dollar consumption of cough/cold/allergy/sinus (C/C/A/S) category ►Without significant product introductions, we assume
market grows by approximately 2 – 3%Make assumption for annual market share for each brand
Key variables to consider:•Strength and shape of season•Adams’ and/or competitive product launches that could impact prior trends
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IRI Dollars Q1 Q2 Q3E Q4E FY07EChg VYA
C/C/A/S 531 906 990 684 3,111 8%
Mucinex 36 82 106 54 279 46%
Delsym 5 18 22 9 54 42%
Total Adams RT 42 99 128 63 333 74%
Adams RT Market Share of C/C/A/S 8.0% 11.0% 12.9% 9.2% 10.7% 4.5Mucinex 6.9% 9.0% 10.7% 7.9% 9.0% 4.1
Delsym 1.0% 1.9% 2.2% 1.3% 1.7% 0.4
Example 3: Applying the Roadmap to FY07
30Source: IRI through 2/25/07 and internal estimates.
For example purposes only and not intended to forecast future results or expectations of future performance.
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Example 4: Applying the Roadmap to FY08
Estimated IRI Dollars Q1 Q2 Q3 Q4 FY08Chg VYA
C/C/A/S 547 899 1,030 729 3,204 3.0%
Mucinex 52 83 110 67 311 11.8%
Delsym 8 19 25 12 65 20.0%
Adams RT 60 102 135 79 376 13.1%
Estimated Adams RT Market Share of C/C/A/S 10.9% 11.3% 13.1% 10.9% 11.7% 1.0
Mucinex 9.4% 9.2% 10.7% 9.2% 9.7% 0.7
Delsym 1.5% 2.2% 2.4% 1.7% 2.0% 0.3
For example purposes only and not intended to forecast future results or expectations of future performance.
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Key Reminders
Our sales reflect shipments to trade customers not consumption from retail shelf Our sales occur in advance of consumptionTrade purchases adjust to consumption on an annualized basisUse normalized FY’06 as a basis for quarterly trends going forward
Question #5How should we think about
SG&A going forward?
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Trends in SG&A Going Forward
Experience leverage on consumer marketing spend►Consumer marketing highest during season
(Dec. and March quarters) when commercials airExperience leverage on base G&A spend
Goal for FY’08 forward: SG&A expense growth trails revenue growth
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Example 5: Leverage In Consumer Marketing Spend
Fiscal 2006 Fiscal 2007 Fiscal 2008* Fiscal 2009*
Mucinex Base Brand
$35 MM $35 MM $30 MM $30 MM
Children’s $15 MM $15 MM $12 MM
ProductEntering NewSegment
Incremental(e.g. $12 MM)
Same as FY08(e.g. $12 MM)
ProductEntering NewSegment
Incremental (e.g. $10 MM)
Total $35 MM $50 MM $57 MM $64 MMFor example purposes only and not intended to forecast future results or expectations of future performance.
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Is IRI a good tool for modeling revenue?What is the effect of the cough/cold season on trade purchases?What do we need to know about trade inventories? How should we look at the base business moving into FY 08?How should we think about SG&A going forward?
Questions Addressed Today
Bob CasaleChief Operating Officer
New OTC Products Review
April 4, 2007
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Safe HarborThis presentation contains certain “forward-looking” statements. These statements are based on the current estimates and assumptions of the management of Adams Respiratory Therapeutics, Inc. (“Adams”) as of the date of this presentation and are subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results may vary materially from the expectations contained in this presentation. When used in this presentation, the words “may”, “will”, “should”, “could”, “would”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “project”, “potential”, “poised” and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of Adams to be materially different from those reflected in such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: the continued success of Adams’existing products and the successful commercialization of new products; Adams’ ability to in-license or acquire new products and brands, successfully develop new products and expand into new market segments; Adams’ ability to leverage the Mucinex brand name and marketing efforts to increase market share and introduce new products; Adams’ ability to achieve projected growth and sales; continued and increased competition; the severity of the cough and cold season; Adams’ ability to preserve and successfully defend its patent position; Delsym's competitive position as the only OTC 12-hour liquid cough syrup; Adams’ ability to meet consumer needs and demands; and other risk factors set forth under Item 1A. Risk Factors in Adams’ Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and under Item 1A. Risk Factors in Adams’ Quarterly Report on Form 10-Q for the period ended December 31, 2006. Except to the extent required by applicable securities laws, Adams is not under any obligation to (andexpressly disclaims any such obligation to) update its forward-looking statements, whether as a result of new information, future events, or otherwise. All statements contained in this presentation are made only as of the date of this presentation. A, Adams, A Adams Respiratory Therapeutics, Adams Respiratory Therapeutics, Delsym, Mucinex Full Force, Humibid, Junior Mucus, MucinexMoisture Smart, Mini-Melts, Mucinex, Mucinex IN...Mucus OUT, Mr. Mucus, Mrs. Mucus, Nothing Lasts Longer, Opening New Pathways for Respiratory Relief, Turn Off the Cough, and the Junior Mucus, Mr. Mucus and Mrs. Mucus characters are Adams’trademarks and have been registered in the U.S. Patent and Trademark Office or are the subject of pending U.S. trademark applications. The marks may also be the subject of foreign trademark registrations and/or trademark applications. Each of the other
trademarks, trade names or service marks appearing in this presentation belongs to its respective holder.
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1271
597
291
1751
646
318
1743
580
279
2009
649
314
2074
602
310
2002 2003 2004 2005 2006
CAS Tablets/Packets CAS Liquids/Pow ders Cough Syrup/Sore Throat
Total CCAS CategoryDollar Sales Trend ($ MM)
2002-2006
4 Year CAGR
Category +8.4%
Cough Syrup/Sore Throat
+1.5%
CAS Liquids/ Powders +0.2%
CAS Tablets/ Packets +13%
Source: Information Resources, Inc. (IRI), U.S. Food/Drug/Mass (FDMx) , 2002-2006.
2,159
2,715 2,6022,972 2,986
Category growth in 2003 driven by Claritin® and in 2005 by Mucinex.
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$223
$10
$72
$305
All other Brands
Delsym
Mucinex
Total CCASGrowth Brands
Dollar Sales Chg VYA ($MM)
Of the $305MM in CCAS growth brands this past year, Adams contributed $82MM– more than a quarter of the total.
Source: IRI, U.S. FDMx, 52 weeks ended 2/25/07.
Total CCAS CategoryGrowth Brands – Dollar Sales Change VYA
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22.0
27.6
35.3
37.9
45.7
48.4
59.0
64.7
65.5
98.2
106.4
(14) Delsym
(10) Alka Seltzer Plus
(9) Theraflu
(8) Benadryl
(7) Airborne
(6) Sudafed
(5) Claritin
(4) Robitussin
(3) Nyquil
(2) Mucinex
(1) Tylenol
CCAS CategoryMajor Brands Performance
$ % ChgVYA
$ Share
ChgVs.
VYA+62.1 11.0 +3.5+50.8 10.2 +2.7
+1.1 6.8 -0.6
+0.2 6.7 -0.7
+12.0 6.1 0.1
-4.7 5.0 -0.8
+20.2 4.7 +0.3
-5.9 3.9 -0.2
+23.8 3.7 +0.4
+10.6 2.9 +0.0
61.8 2.3 +0.7
Source: IRI, U.S. FDMx, 12 weeks ended 2/25/07.
$ Sales (MM)®
®®®®
®
®®
®
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CCAS BrandsTop 10 Productivity Rank - $ Sales per SKU
3.1
3.2
3.2
3.2
3.9
4.7
6.3
7.3
10.1
10.9
Robitussin
Theraflu
Tylenol
Sudafed
Claritin
Nyquil
Zicam
Delsym
Airborne
Mucinex
Avg # SKU’s carried
Dollar Sales Rank
9 2
5 7
3 14
4 12
14 3
15 5
15 6
33 1
11 9
21 4
Source: IRI, U.S. FDMx, 12 weeks ended 2/25/07
Note: Avg # SKU’s is for the 12 weeks ended 12/31/06.
$ Sales per SKU (MM)
®
®
®
®
®
®®
®
43Source: IRI U.S. FDMx, 52 weeks ended 7/2/06 and projection for 52 weeks ending 7/1/07.
Mucinex®
Mucinex® DM
Mucinex® D
Mucinex® Children’s Liquids
Mucinex® Children’s Mini-Melts
Delsym®
3.7 3.2 1.1 0.4 0.6 10.7% total
0.7
1.7
4.9 2.1 0.6 6.6% total
FY 2007 Projected
Dollar Share of C/C/A/S Category+4.1 points VYA
FY 2006
Adams is a major player in the total CCAS Category
Adult Mucinex
+30%
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Fiscal 2007
Fiscal 2007
New Products Fiscal 2007
Fiscal 2006
Fiscal 2006
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Mucinex Core Equity
Mucinex = Mucus Out
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Loyal Consumer Base
Of the consumers who use Mucinex…
►~90% intend to buy it again►~30% try more than one
type of Mucinex►~70% actually plan their
purchase►~50% would rather make an
additional trip to another store if their store did not have Mucinex
Source: Proprietary on-line research conducted 12/06.
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Mucinex Advertising Awareness High
51%38%June ‘06
March ‘07
Advertising Awareness
Mucinex ranks # 2; only Nyquil® higher at 55%.
Ahead of Claritin® (44%) – despite 2x Mucinex spending during cough/cold season
Surpasses both Robitussin® and Tylenol® – 33%
Far exceeds level of other new brands –Airborne® (26%) and Zicam® (23%)
Source: Millward Brown proprietary consumer tracking study.
24%April ‘05
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Ad Awareness the Key Driver of Overall awareness of Mucinex
69%78%
Brand Awareness
Mucinex brand awareness of 78% is exceptional when compared to that of more established brands:►Claritin® – 87%; Tylenol®/Robitussin®/Nyquil® – 97-99%
Far exceeds the level achieved by other new brands:► Airborne® (61%) and Zicam® (55%)
Source: Millward Brown proprietary consumer tracking study.
June ‘06March ‘07
47%April ‘05
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1. Pharmacy Times, 2007 OTC Survey of Pharmacists Recommendations conducted 10/06.2. Proprietary Physician Tracking Study conducted 12/06.
Strong Professional Following
In a few short years, Mucinexhas…
►Become #1 pharmacist recommended adult expectorant1
►Achieved the highest satisfaction rate among PCPs2
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90%+ of patients were pleased with Mucinex
7510.0%6870.0% 6780.0%
5530.0% 5460.0%
COUGH EXCESSMUCUS
NASALCONGESTION
THICKMUCUS
CHESTCONGESTION
One week of treatment with Mucinex significantly improved all mucus-related symptoms
Sym
ptom
Rel
ief
100%
0
100%
# of
Pat
ient
s
0 COUGH EXCESSMUCUS
NASALCONGESTION
THICK MUCUS
CHEST CONGESTION
75.1
68.7 67.8
55.3 54.6
Mucinex 600 mg. – Patient Satisfaction
Source: Proprietary in-house research. “Must Have” Study.
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ConsumerAdvertisingConsumer
AdvertisingProfessional
DetailingProfessional
Detailing
GeneratesConsumerAwareness
GeneratesConsumerAwareness
GeneratesProfessional
Recommendations
GeneratesProfessional
Recommendations
TrialPurchase
TrialPurchase
Consumer/Professional: Working Together to Build Trial & Conversion
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Top Three Influencers of Mucinex Trial
Recommendations by healthcare professionals 49%
Friend/family recommendation 31%
TV advertising 28%
Source: Proprietary consumer tracking study conducted 12/06.
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Mucinex Adult Products Today
►600 mg. guaifenesin-based 12 hour tablets
►Leading position in cough, cold and sinus segments
►Highly productive franchise
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Introducing…The Next Major Addition to the Mucinex Franchise
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►Address consumer that demands maximum strength treatment options
► Expand franchise across any Upper Respiratory segment, Rx or OTC, that delivers consumer value through innovation and stays true to “mucus out” equity
Mucinex Adult ProductsWhere We Are Going
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Market Research Confirms Need for Maximum Strength Product
Key Findings*
►Majority of respondents were very interested in buying Maximum Strength Mucinex
►Majority prefer one tablet dose of Maximum Strength Mucinex
►Research also indicates that Mucinexfranchise revenue should increase significantly with the addition of Maximum Strength Mucinex
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
* Among both current Mucinex users and competitive product users
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Maximum Strength MucinexStrengthens the Mucinex Franchise
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
Definitely / Probably “would buy”
58%58%
83%83%
Strong interest in Maximum Strength Mucinexamong both non-users and current users
►Based upon key attributes important to consumersLong lasting / 12 hoursEfficacious / works quicklyConvenience / 1 pill dose
Total Category Users Mucinex Users
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Mirrors Existing Consumer Behavior
Preferred Mucinex Dosage for Mucinex and Non-Mucinex Users
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
56%
27%
16%
0% 20% 40% 60% 80% 100%
One 1200mgTablet
One 600 mg Tablet
Two 600mgTablets
• 63% of current Mucinex users take only one tablet per dose
• Majority of consumers would choose to take one 1200 mg tablet/dose
•Trading consumers up should achieve better outcomes
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46% of the Volume for Maximum Strength Mucinex Comes From Competitive Brands
54% of the volume for Maximum Strength should come from current Mucinex productsMost vulnerable competitors include:►Vicks Nyquil®/Dayquil®, 11%; Robitussin®, 9%;
Tylenol®, 6%
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
Maximum Strength Source of Volume
Competitive Brands
46% Total Mucinex 54%
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Strong Potential for Maximum Strength
In Year 1, Maximum Strength Mucinex is projected to achieve between $50MM and $70MM in consumption
►Approximately 40% of Maximum Strength Mucinex dollars expected to be incremental
►Total Adult Mucinex franchise is expected to grow in excess of 20%
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
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Base Mucinex, 40%
Max Strength Mucinex, 60%
Research indicates that over time, Maximum Strength Mucinex may represent
60% of Mucinex franchise sales
Assumes:
Maximum Strength Potential
•Full distribution•Continued support •Acceptability of tablet size
Source: Maximum Strength Mucinex Discrete Choice Study, 3/07.
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Marketing Maximum Strength Mucinex
Dedicated TV commercialFocused Professional efforts targeted to doctors and pharmacists
Children’s Mucinex Line
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Children’s Mucinex and Delsymexpanded the category
Children’s CCAS CategoryMajor Brands Performance
1.3
2.7
6.2
7.6
7.9
9.1
10.9
16.0
25.4
25.7
(10) Sudafed
(9) Claritin
(8) Pediacare
(7) Delysm
(6) Benadryl
(5) Robitussin
(4) Mucinex
(3) Dimetapp
(2) Triaminic
(1) Tylenol
$ %VYA $ Share
Chg VYA
+61.6 19.5 +3.4
+22.4 19.3 -1.7
+29.0 12.1 +0.4
n/a 8.3 8.3
+22.9 6.9 -0.6
-9.3 6.0 -2.8
+63.9 5.8 +1.1
-43.0 4.7 -6.3
+16.4 2.1 -0.3
-48.1 1.0 -1.6
Source: IRI, U.S. FDMx, 12 weeks ended 2/25/07.
®
®
®
®
®
®
®
®
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1.1
1.3
1.6
1.7
2.4
2.5
3.2
3.3
5.1
5.5
Claritin
Sudafed
Benadryl
Pediacare
Robitussin
Triaminic
Dimetapp
Mucinex
Delsym
Tylenol
Children’s CCAS BrandsProductivity Rank - $ Sales per SKU
Avg # SKU’s carried
Dollar Sales Rank
6.1 1
1.5 7
3.3 4
5.0 3
10.1 2
3.8 5
3.7 8
5.0 6
1.6 10
2.4 9
$ Sales per SKU (MM)
Source: IRI, U.S. FDMx, 12 weeks ending 2/25/07.
®
®
®
®
®
®
®
®
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Children’s Mucinex Products Today
►Immediate-release guaifenesin-based line
►Innovative form addressing consumer needs
►Highly productive line poised for a top place within segment
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Introducing…The New Additions to the Children’s Mucinex Line
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Two New Indications
Adding New Indications to the Children’s Line
100 mg guaifenesin/ 5 mg dextromethorphan HBr►Orange Crème flavor►Congestion and cough
“Cough” for Mini-Melts100 mg guaifenesin/2.5 mg phenylephrine/5 ml►Mixed Berry flavor►Nasal congestion & Cough
“Cold” for Liquids
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►Parents’ product of choice for cough/cold relief for their children
►Technology-based point of differenceAddress convenience, compliance and efficacy needs
►Future introductions may not be limited to monographed OTC products
Children’s Mucinex ProductsWhere We Are Going
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Children’s Mucinex Meets Consumer Needs
Mini-Melt Cough and Liquid Cold formulations
►Cough is viewed as most disruptive symptom by parents*
►“Good taste” and “easy to take” are critical to compliance according to both moms and pediatricians*
►Cold indication represents multi-symptom relief
Children’s Mucinex is expected to grow in excess of 20% in consumption from FY07 to FY08
*Source: Millward Brown Consumer Tracker 1/07. 70
71
Children’s Mucinex Marketing Support
Dedicated TV commercialFocused Professional efforts targeted to pediatricians
Mucinexnew market segment
equity travels to a
73
Strong Equity Relevant To Consumers
Established brand equity
►“Mucinex In, Mucus out.™”
Successful launch in children’s segment indicates opportunity to extend Mucinex brand name
►All 4 SKUs rank among the top twenty-five; outselling established competitive liquids¹¹IRI, FDMx, 4 weeks ended 2/25/07.
74
Introducing…
75
Mucinex Nasal SpraysUnique Benefits
Full Force
Effective nasal decongestant“Sensory signal” lets consumer know it is working“12 Hour Concentrated Vapor Technology”
Moisture Smart
Effective nasal decongestantSpecially formulated to soothe irritated 75
76
Mucinex Nasal Sprays will compete in a $370MM OTC category
►Nearly a 50/50 split between medicated and non-medicated segments.
IRI, FDMx52 Wks Ended 12/31/06
$ Sales (MM)
% ChgVYA
Total Nasal Category $370 +7Non-Medicated Sprays/Drops/Inhalers 194 +12
Medicated Sprays/Drops 177 +4
Mucinex Nasal Sprays
77
Proprietary research indicates that 64% of current Mucinex adult users who do not use other nasal sprays intend to purchase Mucinex Nasal Spray►Importantly, these users will add this new product
to their treatment regimen
Mucinex Should BuildNasal Spray Category
Source: Proprietary research conducted 12/06, % of respondents that stated (Definitely/Probably would buy).
CategoryExpansionCategory
ExpansionHigher Retail
Revenue
Higher Retail
RevenueNew Category
UsersNew Category
Users
78
Mucinex Will Also Capture Existing Nasal Spray Consumers
► 57% of current nasal spray users also expressed intent to purchase Mucinex Nasal Spray
Current Afrin® users potentially the largest source Mucinex adds value with 50% more product per unit
Higher Retail
Revenue
Higher Retail
RevenueHigher Mucinex
Retail RingHigher Mucinex
Retail Ring
Source: Proprietary research conducted 12/06, % of respondents that stated (Definitely/Probably would buy).
79
Mucinex Nasal Sprays Market Opportunity
Expands Mucinex franchise into additional respiratory segment► High percentage of cough /cold category sufferers also use nasal sprays
Year 1 projected to achieve 4% – 5% dollar share of nasal sprays market.
Leading Medicated Nasal Spray Brands
2006 Dollar Share
Afrin® 16%Vicks Sinex® 6%Zicam® 3%4 Way® 3%
Goal: Become # 2Brand by Year 2
Source: IRI, U.S. FDMx, 52 weeks ended 12/31/06.
80
Mucinex Nasal Sprays Marketing Support
Dedicated TV commercialConsumer incentives to purchase both nasal spray and base MucinexProfessional efforts targeted to pharmacists
81
Mr. Mucus Highlights
“Here’s Mucus” – Mucinex DM “Wrap” – Mucinex SE
“Painter” – Children’s Mucinex Mini-Melts
82
Coming Soon: The New Adventures of Mr. Mucus
Delsym
84
Delsym Core Equity
Delsym = 12 hour Cough Relief
85
Delsym Provides Unique Benefits
The first and only OTC cough liquid that suppresses cough for 12 hours►4 hours longer than leading competitor
Patented extended-release technology
Great-tasting flavor
86
Delsym
Adams acquired Delsym in June 2006 from UCB to:► Increase critical mass within respiratory market and develop a
strategic foothold in OTC cough syrup segment►Leverage our core competency: synergistic consumer and
professional marketing►Gain access to an additional proprietary delivery technology
Expected to grow brand sales to $45-60MM and achieve 15-20% market share of cough syrup segment for FY ‘07►On target to achieve these objectives
87
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
03/19/06 04/16/06 05/21/06 06/18/06 07/16/06 08/13/06 09/10/06 10/08/06 11/05/06 12/03/06 12/31/06 01/28/07 02/25/07
Mill
ions
Source: IRI U.S. FDMx, 52 weeks ended 2/25/07.*4 weeks ended 12/31/06.
Adams Acquired Delsym®
Professional Promotion
Began
Consumer Advertising
Began
+70% VYA
Delsym Consumption ReachedNew High
Achieved all-time consumption high of 18.9% at peak*
ahead of Robitussin® DM
87
88
Improved Delsym Packaging
89
Over 50% of Delsym users did not consider purchasing another brand to treat their cough
90% of purchasers plan to buy Delsym again
Nearly 60% of users treated their cough with Delsym exclusively
Delsym Users Highly Loyal to Brand
Source: Proprietary on-line research conducted 12/06.
High consumer satisfaction with product enables expansion within Cough CategoryHigh consumer satisfaction with product enables expansion within Cough Category
90
DelsymWhere We Are Now
►Fastest-growing cough syrup brand
►Highly productive franchise
►Single-flavor focused for Adults and Children’s
91
Introducing…The New Additions to the Delsym Line
92
DelsymWhere We Are Going
►Building awareness and trial (significant upside potential)
►Franchise expansion that delivers against the core benefit of 12 hour relief
►Improved shelf presence
93
New DelsymGrape Flavor
Grape line extension►Flavor appeals to both children and adults
Grape is #1 flavor in Children’s segment with 39% of retail market*
►Available in both Adult 3 oz. and Children 3 oz.►Same active ingredient and dosing as orange
flavor
* IRI, U.S. FDMx, 52 weeks ended 2/25/07.
94
Delsym Grape Should Attract New Users
New grape variety provides greater choice to consumers for whom flavor is a trial motivator►Fills an important flavor gap in the franchise
Total Delsym consumption is expected to grow 15% to 20% in FY08
95
Delsym Marketing Support
Dedicated TV commercial
96
Fiscal 2007
Fiscal 2007
New Products Fiscal 2007
Fiscal 2006
Fiscal 2006
97
Expansion Accelerates in FY08
Fiscal2008
Fiscal2008
Adams Takes First Steps into Rx Market
Ken MillerExecutive Director, Marketing
April 4th, 2007
99
Safe HarborThis presentation contains certain “forward-looking” statements. These statements are based on the current estimates and assumptions of the management of Adams Respiratory Therapeutics, Inc. (“Adams”) as of the date of this presentation and are subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results may vary materially from the expectations contained in this presentation. When used in this presentation, the words “may”, “will”, “should”, “could”, “would”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “project”, “potential”, and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of Adams to be materially different from those reflected in such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: the FDA’s denial of Adams’ NDA for the combination codeine prescription product; the introduction of a generic equivalent to the combination codeine prescription product; Adams’ ability to successfully commercialize the combination codeine prescription product; Adams’ ability to leverage the Mucinex brand name and marketing efforts to expand professional endorsement of the combination codeine prescription product; Adams’ ability to achieve projected market share and sales of the combination codeine prescription product; the severity of the cough and cold season; the competitive position of the prescription product as the only long-acting oral solid codeine combination product; Adams’ position as the only dedicated sales force to actively promote in the market category; acceptance of the combination codeine prescription product by managed care; Adams’ plans to expand its sales force and other risk factors set forth under Item 1A. Risk Factors in Adams’ Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and under Item 1A. Risk Factors in Adams’ Quarterly Report on Form 10-Q for the period ended December 31, 2006. Except to the extent required by applicable securities laws, Adams is not under any obligation to (and expressly disclaims any such obligation to) update its forward-looking statements, whether as a result of new information, future events, or otherwise. All statements contained in this presentation are made only as of the date of this presentation. A, Adams, A Adams Respiratory Therapeutics, Adams Respiratory Therapeutics, Delsym, Mucinex Full Force, Humibid, Junior Mucus, Mucinex Moisture Smart, Mini-Melts, Mucinex, Mucinex IN...Mucus OUT, Mr. Mucus, Mrs. Mucus, Nothing Lasts Longer, Opening New Pathways for Respiratory Relief, Turn Off the Cough, and the Junior Mucus, Mr. Mucus and Mrs. Mucus characters are Adams’ trademarks and have been registered in the U.S. Patent and Trademark Office or are the subject of pending U.S. trademark applications. The marks may also be the subject of foreign trademark registrations and/or trademark applications. Each of the other trademarks, trade names or service marks appearing in this presentation belongs to its respective holder.
100
First New Codeine Cough Combination Rx In 15 years
For example purposes only.
101
Current Market Value = $255 MM
$255MM=
Narcotic Cough MarketMarket Potential
Source: IMS NPA TRx MAT 1/07*Parity price with branded molecule
Guaifenesin + Codeine19%
Promethazine + Codeine23%
All other Codeine Combos3%
Hydrocodone Combos55%
102
$1.6Bn
Market Potential = $1.6 Bn @ *$70/Rx
Narcotic Cough MarketMarket Potential
Source: IMS NPA TRx MAT 1/07*Parity price with branded molecule
=Guaifenesin + Codeine
19%
Promethazine + Codeine23%
All other Codeine Combos3%
Hydrocodone Combos55%
103
Guaifenesin + 19%
55%
Codeine
Promethazine + Codeine23%
Hydrocodone Combos
All other Codeine Combos3%
Codeine Cough Market
Source: IMS NPA TRx MAT 1/07
104
Guaifenesin + 19%
All other Codeine Combos3%
Codeine
Promethazine + Codeine23%
Codeine Cough Market10.3 MM TRx’s
Source: IMS NPA TRx MAT 1/07
Guaifenesin + Codeine4,310,557 Promethazine + Codeine
5,795,735
All other Codeine Combos179,250
Codeine Market = 10.3 MM TRx’sCodeine Market = 10.3 MM TRx’s
105
Codeine Cough Market10.3 MM TRx’s
Source: IMS NPA TRx MAT 1/07
Guaifenesin + Codeine4,310,557 Promethazine + Codeine
5,795,735
All other Codeine Combos179,250
Codeine Market = 10.3 MM TRx’sCodeine Market = 10.3 MM TRx’s
106
Guaifenesin + Codeine4,310,557
Promethazine + Codeine5,795,735
All other Codeine Combos179,250
Codeine Market = 10.3 MM TRx’sCodeine Market = 10.3 MM TRx’s
=$721MM
Market Potential @ *$70/Rx
Codeine Cough Market10.3 MM TRx’s
Source: IMS NPA TRx MAT 1/07*Parity price with branded molecule (Tussionex®)
Market Potential @ *$70/Rx
• Primarily short-acting generics
• Primarily liquids
107
0
100000
200000
300000
400000
500000
600000
700000
SEPT TRx OCT TRx NOV TRx DEC TRx JAN TRx FEB TRx MRC TRx APR TRx MAY TRx JNE TRx JLY TRx AUG TRx
2006 Season 2007 Season
Codeine Market Seasonality
49% of Annual volume(Dec-March)
Source: IMS NPA TRx MAT 1/07
108
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Family
Medicine
Internal M
edicine
Family
Practice
Nurse Prac
titioner
Physicia
n Assista
nt
Pediatrics
Emergency
Medicine
General Prac
tice
All Other
Source: IMS Prescriber Profiler; Deciles 10-4, 1/07
Codeine MarketDriven by PCP’s
109
Managed Markets
Managed care influence on Rx writing and dispensing continues to grow
66%11%
8%
15%
Third PartyCashMedicaidPart D
Generics reside in Tier I with minimal or no associated Co-payBranded Molecules typically reside in Tier II/III with higher Co-pay
Source: IMS Medicare Weekly Update, June 2006
110
Physician Market Research Ideal Rx Cough Product
Source: Chestnut PartnershipPhysician IDI’s; Feb. ‘07
I wonder what MD’s
want?
Ideal Product Attributes• QD or BID Dosing;Unlike current TID to QID dosing regimens
• Fast Acting;Rapid suppression of cough, enabling patients to sleepthroughout the night
• Helps patients sleep all night without a “hangover”Unlike current TID to QID dosing regimens
• Multiple dose options to fit different patient types
• Adolescents, adults, senior citizens
• Heavier vs. thinner patients
• Sugar free for diabetics
111
Physician Market Research Trusted agents in Cough Treatment
Guaifenesin• Prescribers accept guaifenesin as critical and necessary
• “It’s in most if not everything”• “It works”
• High level awareness of 600 mg tablets• Many desired a 1200 mg BID for a total of 2400 mg
• Codeine Combos are considered most effective;However precautions are taken into consideration
• Addictive properties
• Dose-dependent GI upset side effects (codeine)• Individual patient variability in response/sensitivity
Codeine
Source: Chestnut PartnershipPhysician IDI’s; Feb. ‘07
112
Unique Rx Product Profile
Primary Indication(s) • Loosens mucus and thins bronchial secretions • Makes cough more productive • Controls cough • Helps patients sleep
Formulation(s) • Unique immediate/extended release bi-layer tablets- 1200mg guaifenesin/60mg codeine - 600mg guaifenesin/30mg codeine
*Target Product Profile
*Subject to FDA agreement and approval
113
Unique Features and Benefits
Two titration optionsPatient convenience and complianceadvantage► B.I.D. dosing schedule
Currently available agents T.I.D. or Q.I.D.
Only long-acting oral solid codeinecombinationProven safety and well tolerated► No anti-cholinergic effects
114
B.I.D. Dosing – 12 hour controlTablet vs. syrup Mucinex brand equityGuaifenesin and codeine levels No promotional activity from competitionAdams dedicated sales force No generic equivalentPrice flexibility; no true referenceStarter samples
Potential DriversGeneric market ($8-10/Rx)Managed care acceptance willtake time to develop givengeneric marketPhysicians have years of habitwriting by ingredients 50% of the market requireseducating regarding benefits ofguaifenesin vs. promethazine
Potential Challenges
Establishing Mucinex with CODEINEPotential Drivers and Potential Challenges
115
Positioning12 Hour Control with One Tablet….
Market Insight
Functional & EmotionalBenefit
Reasons to Believe
Currently available agents require multiple doses ofmessy, short-acting cough liquids, which is disruptiveto patients
Suppresses the urge to cough for 12 hours with justone tablet , helping patients enjoy the day or sleep allnight
• Controls coughing for a full 12 hours with a single dose• Convenient solid tablet form• Effectiveness of Mucinex combined with the power of codeine• Thins & loosens mucus to make coughs more productive• Bi-layer technology delivers immediate and extended-release • 2 strengths for dosing flexibility; 600/30mg & 1200/60mg
116
Syrups vs. Tablets Convenience and Accuracy
OR
Convenient long-lasting tablets
Two 1200mg tablets**
Messy cough liquids
*12 t
easp
oons
No messy syrups or short-acting formulationsNo sleep interruptions due to nighttime dosing
Less concern about dosing accuracyFlexible dosing (600mg or 1200mg) to maintaintherapeutic effectiveness for 12 hours
Based on recommended doses cited in the 2006 Physicians ‘ Desk Reference* Maximum daily dose: 2-tsp every 6 hours; 12- teaspoons/day** Maximum daily dose: 1- 1200mg tablets B.I.D.
117
Product TRx (MAT 1/07)
Physician Contacts
(MAT 12/06)PROMETHAZINE/CD 4,576,545 0
PROMETHAZINE VC/CD 732,036 0
PHENERGAN SYR W/CO 695 0
PHENERGAN SYR VC/C 264 0
GUAI/CD 2,049,103 0
CHERATUSSIN AC 1,920,786 0
IOPHEN-C NR 195,082 0
GUAITUSS AC 64,927 0
Source: IMS NPA, IPS March ‘07
Promotional ActivityAdams Plans to Dominate Share of Voice
0!
118
“Starter Sample”
Increase product awarenessEarly trial adoption Provides added value to physician visit Increases likelihood of prescription (Rx) fulfillmentServes as brand reminderExpedites penetration with “no see MDs”
Market
No competitive samplingAcute conditionPatient demands immediate reliefMinimal brand experienceFlexible dosing options
600mg & 1200mgNo generic substitution
Promotional ActivitySampling Strategy
119
“Starter Sample”
Increase product awarenessEarly trial adoption Provides added value to physician visit Increases likelihood of prescription (Rx) fulfillmentServes as brand reminderExpedites penetration with “no see MDs”
Promotional ActivitySampling Strategy
For example purposes only.
120
Codeine Cough Market10.3 MM TRx’s
Source: IMS NPA TRx MAT 1/07
= $721MMWhat is the potential
value of market penetration?
Codeine Market = 10.3 MM TRx’sCodeine Market = 10.3 MM TRx’s
Promethazine + Codeine5,795,735
All other Codeine Combos179,250
Guaifenesin + Codeine4,310,557
121
Codeine Potential
$9-11 MM
$48-55 MM
$100-120 MM
$160-190 MM
$240-280 MM
1-2%
5-6%
10-12%
14-18%
20-23%
Mucinex with Codeine Opportunity
0
50
100
150
200
250
FY 2008 FY 2009 FY 2010 FY 2011 FY2012
Total sales across both sub -markets.Note: Uncertainty in the forecast is captured as a +/ - 10% range around the expected values
Launch years will require aggressive promotion to break prescriber habitsManaged care acceptance will be critical to ensure seamless reimbursement
MCO goal: 70% tier II/III coverage in first full year
Note: Percentages represent TRxsFor example purposes only and not intended to forecast future results or expectations of future performance.
122
Launch Strategy Considerations
2006 2007
Dec 2006NDA
Submission
March 2007NDA Submission
Accepted by FDA
Oct 2007FDA
PDUFA
2008
Earliest*LAUNCHPossible
2009
*Pending FDA ApprovalDDMAC Review
• 2008: Set the table• Physician targeting• Managed care coverage
•2009: Fully optimized launch
123
Summary
Adams’ entry into Rx market represents an attractive business opportunity
► Significant unrealized potential
Adams has the experience and know-how to win within this category
► Mucinex track record of success
No innovation or therapeutic advance in recent years
► Adams would potentially have the ONLY extended-release tablet on the market
Potential to garner 100% share of voice (SOV)
► Brand name recognition sets stage for early adoption
► Only dedicated respiratory field force actively promoting in category
Sales Force StructureTim Miller
Vice President, Sales Operations & Training
125
Current Sales Force
125 reps in 12 regions►50 rep expansion – December, 2004►25 rep expansion – July, 2006
Call Capacity►213,000 prescriber calls (1,700 calls/rep/year)
►110,000 pharmacy calls
Coverage of all major metropolitan areas in US and Puerto Rico
126
Mucinex with CodeineFY’08 Sales Force Strategy
Dominate Share of Voice in codeine category► Dedicated Adams sales force of 125 representatives
Focus on high decile writers in new codeine combo markets ► Decile 10 - 7 or 40% of market volume► Carry Mucinex & Delsym OTC brand message to these new prescribers
Call emphasis► Mucinex with Codeine – 1st position► Mucinex & Delsym OTC brands – 2nd/3rd positions
Continue to support Mucinex pediatric products with important pediatric prescribers
127
Codeine Combo Market – Decile View
Source: IMS Prescriber Profiler, Feb ‘07
Decile Rx MeanCumulative # of Docs
10 836 1,0959 379 3,5058 250 7,1797 178 12,3166 131 19,308
5 97 28,654
4 69 41,682
3 46 61,741
2 25 96,826
1 4 294,517
128
Codeine Combo Market – Decile View
Source: IMS Prescriber Profiler, Feb ‘07
Decile Rx MeanCumulative # of Docs
10 836 1,0959 379 3,5058 250 7,1797 178 12,3166 131 19,308
5 97 28,654
4 69 41,682
3 46 61,741
2 25 96,826
1 4 294,517
Covering 40% of CodeineScripts
129
Physician Audience - New
Targets ~ 18,000 prescribers
►12,000 Primary Care – Internists – SpecialistsBest codeine targets 80% of overall call effortFrequency of 14+ times/year
►6,000 Pediatricians20% of overall call effortContinued support of Adams’ children’s productsFrequency of 7 times/year
130
Future Considerations
Potentially expand sales force to cover additional prescribers in lower deciles
Pulse promotion to lower decile prescribers during season (Dec-March)
131
Take Home Messages
Mucinex with CODEINE represents an attractive entry into Rx market
Cough market is ready for a branded molecule
Adams knows how to win in the cough market
Erdosteine: Where Are We Today?
Helmut Albrecht, MDSenior Vice President, R&D
April 4, 2007
133
Safe HarborThis presentation contains certain “forward-looking” statements. These statements are based on the current estimates and assumptions of the management of Adams Respiratory Therapeutics, Inc. (“Adams”) as of the date of this presentation and are subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results may vary materially from the expectations contained in this presentation. When used in this presentation, the words “may”, “will”, “should”, “could”, “would”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “project”, “potential”, “poised” and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of Adams to be materially different from those reflected in such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: the successful completion of clinical trials and development of erdosteine and other risk factors set forth under Item 1A. Risk Factors in Adams’ Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and under Item 1A. Risk Factors in Adams’ Quarterly Report on Form 10-Q for the period ended December 31, 2006. Except to the extent required by applicable securities laws, Adams is not under any obligation to (and expressly disclaims any such obligation to) update its forward-looking statements, whether as a result of new information, future events, or otherwise. All statements contained in this presentation are made only as of the date of this presentation. A, Adams, A Adams Respiratory Therapeutics, Adams Respiratory Therapeutics, Delsym, Mucinex Full Force, Humibid, Junior Mucus, Mucinex Moisture Smart, Mini-Melts, Mucinex, MucinexIN...Mucus OUT, Mr. Mucus, Mrs. Mucus, Nothing Lasts Longer, Opening New Pathways for Respiratory Relief, Turn Off the Cough, and the Junior Mucus, Mr. Mucus and Mrs. Mucus characters are Adams’ trademarks and have been registered in the U.S. Patent and Trademark Office or are the subject of pending U.S. trademark applications. The marks may also be the subject of foreign trademark registrations and/or trademark applications. Each of the other trademarks, trade names or service marks appearing in this presentation belongs to its respective holder.
134
Preliminary Results of Phase IIb Study
Subsequent analyses are showing more promising data, but it is too early to draw conclusions
March 16, 2007 Disclosure“The preliminary data suggest a significant placebo effect and that the two different erdosteine treatment
groups do not seem to break statistically from placebo. Further analyses will continue during the remainder of fiscal 2007 to determine the ultimate
outcome of the study.”
Detailed analyses and p-values not available at time of press release
135
COPD: Fastest Growing US Health Problem
135
136
COPD: A Chronic Progressive Disease
136
Celli et al: ATS/ERS Task Force. Eu Respir J. 2004; 23:932-46
137
COPD: Recommended Progression of Pharmacotherapy
I: Mild II: Moderate III: Severe IV: Very Severe
Add Short-acting Bronchodilator
Add Long-acting Bronchodilators and Rehabilitation
Add ICS* if repeated exacerbations
> Add long-termoxygen indicated> Consider surgical treatments What’s missing?
*Inhaled corticosteroids
138
Erdosteine: A Muco-Regulator
Mode of Action:►Cleaves disulfide links found in mucus proteins
Pharmacologic Effects:►Thins mucus and alters flow characteristics
(reduces viscosity, elasticity, and adhesiveness)►Improves mucociliary clearance►Reduces mucus volume
Reduces cough and dyspnea
Additional Properties:►Anti-inflammatory activity►Anti-oxidant action►Anti-bacterial properties
139
Equalife Study: Recent Published Erdosteine Data From Europe
(completed between 2000 and 2002)
Outcomes Erdosteine300mg, b.i.d.
(n = 63)
Placebo(n = 61)
p-value
Patients with exacerbation 37 (58%) 48 (77%) NS
<0.05
<0.05
NS
Exacerbation/pt 0.94 (1.12) 1.38 (1.39)
Admissions/pt 0.16 (0.57) 0.31 (0.74)
Days in Hospital 70 163
Equalife Study: Drugs Exptl Clin Res 2004;30:143-152
140
Erdosteine Phase IIb Clinical Study
Objective:LifeShirt®
Subjective:SGRQBCSSLCQVAS
Cough Frequency
Health Status
Subjective:SGRQ
Objective:6MWTFEV-1LifeShirt®
# of Acute Exacerbations Physician & Patient Global Assessments {PSGA/SSGA}General Safety & AE Evaluation
Model as discussed with FDA
10+ Outcome Variables
141
Life Shirt
Go ahead, make my
day!
142
Phase IIb Clinical Study Protocol
Study Design►Randomized, double-blind, parallel-group,
multi-center, placebo-controlled dose-ranging study
Doses Tested ►150 mg, 300mg or matching placebo
capsules, b.i.d.Objectives►Test 2 dose levels vs. placebo ►Exploratory Phase IIb study►Evaluate 10+ primary & secondary outcome
variables►T t t f t bl COPD ti t f 12
143
Statistical Analysis
Intent-To-Treat (ITT), Per Protocol (PP) analyses completed per Statistical Analysis PlanAdditional analyses ongoing ►Population subsets, sub-domains►Additional statistical methods►Co-medications►Comparing effects between visits, etc.
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
144
Physician Global Assessment (PSGA, per protocol)
-0.5
-0.45
-0.4
-0.35
-0.3
-0.25
-0.2
-0.15
-0.1
-0.05
0
Baseline Week 4 Week 12
150 bid 300 bid Placebo
p= 0.0142
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
145
BCSS Total Score (mean, per protocol)
-2.5
-2
-1.5
-1
-0.5
0
Baseline Week 4 Week 8 Week 12
150 bid 300 bid Placebo
p=0.193 (300mg bid vs. placebo at wk 12)
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
146
BCSS Sputum Score (mean, per protocol)
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0
Baseli
neW
eek 1
Wee
k 2W
eek 3
Wee
k 4W
eek 5
Wee
k 6W
eek 7
Wee
k 8W
eek 9
Wee
k 10
Wee
k 11
Wee
k 12
150 bid 300 bid Placebo
p=0.159 (300mg bid vs. placebo at wk 12)
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
147
BCSS Cough Score (mean, per protocol)
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0
Baseline Week 4 Week 8 Week 12 Week 16
150 bid 300 bid Placebo
p=0.225 (300mg bid vs. placebo at wk 12)
p=0.180 (300mg bid vs. placebo at wk 16)
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
148
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
LCQ<median LCQ-Q2<median
150mg bid300mg bidPlacebo
p=0.0038 p=0.0087
Analysis showing the difference between weeks 4 and 12 of treatment
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial. 148
Sicker Patients Improve on High-Dose Erdosteine in LCQ Subset Analysis
149
Leister Cough Questionnaire Physical Score (mean, per protocol)
0
0.2
0.4
0.6
0.8
1
Baseline Week 4 Week 12
150 bid 300 bid Placebo
Overall p= 0.12150mg bid vs Pl, p=0.045300mg bid vs Pl, p=0.144
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
150
Saint George’s Respiratory Questionnaire (SGRQ) Impact Score (mean, per protocol)
-10
-5
0
Baseline Week 4 Week 12
150 bid 300 bid Placebo
p=0.39 (150 bid vs. Pl.); p=0.57 (300mg bid vs. Pl)
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
151
LifeShirt® Results
Small sample size: 87 (78 = 22/21/35)Mixed results across variables►Some with no change/difference from placebo►Some parameters show positive trends►Several statistically significant results, e.g.
Accelerometer (activity measure): p=0.041/0.043 Cough Frequency (overall): p=0.015Tidal Volume (inhaled air volume): p=0.067
Validation of the LifeShirt® and optimization of algorithm still ongoing
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
152
LifeShirt® Accelerometer: Activity Results
(ITT, mean data-Clinic)
110115120125130135140145150155160165170175180
Baseline Week 4 Week 12
150 bid 300 bid Placebo
p=0.041, 300mg bid vs Pl at wk 12
Source: Adams’ U.S. Phase IIb Erdosteine clinical trial.
153
Summary of Safety Data
Safety data collected in daily diary No problematic safety issues or surprise results►1 fatality (cardiovascular-related)►22 serious adverse events (SAE’s)►638 AEs total (~ 1.5 AEs/patient in 12 weeks)No apparent safety issues with co-medications
154
Key Outcomes To DatePhase IIb Erdosteine Study
Most of the primary and secondary outcome variables are without significant results vs. placebo
Positive Outcomes To Date► Statistically significant Physician’s Global Assessment and positive trends for
the BCSS (overall drug effect)► Improving role of sputum in COPD (e.g. BCSS sputum score - mucolytic effect)► Increasing physical domain in cough score (e.g. LCQ physical score),
sicker patients benefit more (e.g. LCQ subset)► Positive effects on Activity in LifeShirt® group (accelerometer) ► Improving impact domain in QoL measure (e.g. SGRQ impact score)
Further analyze strong placebo effect► Review patient selection criteria (smoking history, productive cough, etc.)► Review co-medications► Ensure sufficient statistical power (sample size)
Note: Data analysis only through March 29, 2007.
155
Where Are We Today?
While subsequent analyses are showing more promising data, it is still too early to determine ultimate outcome ►Continue ‘data mining’ during Q4, FY 07► Review results, trends and hypotheses with
external experts►Formulate potential follow-on research plans
in FY08, if warrantedDiscuss results with FDA at EOP II meeting
156
Glossary for Outcome Variables
6MWT: 6-minute walk testBCSS: Breathlessness, cough, and sputum scaleFEV1: 1-second forced expiratory volumeLCQ: Leicester cough questionnairePSGA: Physician static global assessmentSGRQ: St George’s respiratory questionnaireSSGA: Subject static global assessmentVAS: visual analog scale
Mike ValentinoChief Executive Officer
Closing Remarks
158
Safe Harbor
This presentation contains certain “forward-looking” statements. These statements are based on the current estimates and assumptions of the management of Adams Respiratory Therapeutics, Inc. (“Adams”) as of the date of this presentation and are subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results may vary materially from the expectations contained in this presentation. When used in this presentation, the words “may”, “will”, “should”, “could”, “would”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “project”, “potential”, “poised” and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of Adams to be materially different from those reflected in such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others: Adams’ ability to in-license or acquire new products and brands, successfully develop new products and expand into new market segments; the successful commercialization of new products; Adams’ ability to leverage the Mucinexbrand name and marketing efforts to increase market share and introduce new products; Adams’ ability to achieve projected growth and sales; continued and increased competition; the FDA’s denial of Adams’ NDA for the combination codeine prescription product; the successful completion of clinical trials and development of erdosteine; the FDA’s removal from the market of products similar to Mucinex D and Mucinex DM; and other risk factors set forth under Item 1A. Risk Factors in Adams’ Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and under Item 1A. Risk Factors in Adams’Quarterly Report on Form 10-Q for the period ended December 31, 2006. Except to the extent required by applicable securities laws, Adams is not under any obligation to (and expressly disclaims any such obligation to) update its forward-looking statements, whether as a result of new information, future events, or otherwise. All statements contained in this presentation are made only as of the date of this presentation. A, Adams, A Adams Respiratory Therapeutics, Adams Respiratory Therapeutics, Delsym, Mucinex Full Force, Humibid, Junior Mucus, Mucinex Moisture Smart, Mini-Melts, Mucinex, Mucinex IN...Mucus OUT, Mr. Mucus, Mrs. Mucus, Nothing Lasts Longer, Opening New Pathways for Respiratory Relief, Turn Off the Cough, and the Junior Mucus, Mr. Mucus and Mrs. Mucus characters are Adams’ trademarks and have been registered in the U.S. Patent and Trademark Office or are the subject of pending U.S. trademark applications. The marks may
also be the subject of foreign trademark registrations and/or trademark applications. Each of the other trademarks, trade names or service marks appearing in this presentation belongs to its respective holder.
159
Key Growth Drivers
OTC Portfolio Diversification and ExpansionOTC Portfolio Diversification and Expansion
160
Expansion Accelerates in FY08
Fiscal2008
Fiscal2008
For example purposes only.
161
OTC Portfolio Diversification and ExpansionOTC Portfolio Diversification and ExpansionNew Rx NDA New Rx NDA –– MucinexMucinex with Codeinewith Codeine
Key Growth Drivers
162
Mucinex with Codeine Potential
$9-11 MM
$48-55 MM
$100-120 MM
$160-190 MM
$240-280 MM
1-2%
5-6%
10-12%
14-18%
20-23%
Mucinex with Codeine Opportunity
0
50
100
150
200
250
FY 2008 FY 2009 FY 2010 FY 2011 FY2012
Total sales across both sub -markets.Note: Uncertainty in the forecast is captured as a +/ - 10% range around the expected valuesLaunch years will require aggressive promotion to break prescriber habits
Once clinical benefits are recognized uptake should be more rapid and steady
Note: Percentages represent TRxsFor example purposes only and not intended to forecast future results or expectations of future performance.
163
OTC Portfolio Diversification and ExpansionOTC Portfolio Diversification and ExpansionNew Rx NDA New Rx NDA –– MucinexMucinex with Codeinewith CodeineErdosteineErdosteine
Key Growth Drivers
164
Where Are We Today?
While subsequent analyses are showing more promising data, it is still too early to determine ultimate outcome ►Continue ‘data mining’ during Q4, FY 07► Review results, trends and hypotheses with
external experts►Formulate potential follow-on research plans
in FY08, if warrantedDiscuss results with FDA at EOP II meeting
165
Four Catalysts for Growth
OTC Portfolio Diversification and ExpansionOTC Portfolio Diversification and ExpansionNew Rx NDA New Rx NDA –– MucinexMucinex with Codeinewith CodeineErdosteineErdosteineFDA Exclusivity Decision on DM and DFDA Exclusivity Decision on DM and D
166
6.7 MM Rx6.7 MM Rx
1.5 MM Rx1.5 MM Rx
Consumer Consumer AdvertisingAdvertising
February 2006February 2006
Competing Competing Product Product
Removal?Removal?
Competing Competing Product Product
Removal?Removal?
FDA Exclusivity Decision Pending
Consumer Consumer Advertising Advertising
November 2004November 2004
Competing Competing Products Products Removed Removed
December 2003December 2003
Launched Launched July 2002July 2002
Approved Approved July 2002July 2002
$125 MM Rx market
$21 MMRx market
Consumer Consumer AdvertisingAdvertising
November 2004November 2004
Note: Market size = No. of Rx’s (based on IMS Health NPA data for 12 months ended 12/31/06) at Mucinex® pricing.
Launched Launched October 2005October 2005
Approved Approved June 2004June 2004
Launched Launched August 2004August 2004
Approved Approved April 2004April 2004
Mucinex® SE Mucinex® DM Mucinex® D
$84 MMRx market