Teva Pharmaceutical Industries Limited

Good afternoon ladies and gentlemen and welcome to the Teva Pharmaceutical Industries first quarter 2019 financial results call. At this time all participants are in a listen only mode. There will be a presentation followed by a question and answer session at which time if you wish to ask a question you will need to press star 1 on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today on Thursday the 2nd of May 2019. I'd now like to hand the conference over to your first speaker today, Kevin Mannix, Senior Vice President, Investor Relations. Please go ahead.

Thank you Jenny and thank you everyone for joining us today to discuss Tevis first quarter 2019 financial results. We hope you've had an opportunity to review our earnings release which was issued approximately one hour ago. Thank you for joining us. Thank you for joining us. Our chief financial officer, Mike McClellan, will follow by reviewing the first quarter results in more detail. Brendan O'Grady, Teva's head of North America Commercial, will join Cor and Mike for the question and answer session that will follow the presentation. And with that, I'll now turn the call over to Cor Schultz. Cor, if you would, please.

Welcome, everybody, and thanks for dialing in. The short message for the first quarter of 2019 is that everything's on track. Basically, the revenue is on track, the launch is on track, the cost reduction program is on track, and the debt reduction is also on track. And as a consequence of that, we're reaffirming our financial outlook for the year. If we look a bit more at the details, then revenues came in at 4.3 billion, and that was after 200 million of headwind on the currencies. The gap diluted loss per share was 10 cents, and it was mainly related to write-downs on intangible assets. The non-GAAP diluted EPS was coming in at $0.60 according with our plans. Same thing for EBITDA coming in at $1,150,000,000 and the free cash flow which came in at $360,000,000. We're seeing a stabilization of US generics and European generics so that means we're seeing a stabilization of our global generics business. You probably remember a year ago where we took significant action to stop the declining value of the US generic business by basically going out and saying that we would not be selling products at a loss and streamlining our whole portfolio of generics. When we had the half-year results last year, I was indicating that we were seeing signs of stabilization, but we couldn't be sure about it. And when we shared the full-year results three months ago, we confirmed that now we have seen a stabilization. This is further confirmed by this first quarter. We now have five quarters in a row where the North American generic business is around $1 billion in revenues per quarter and where the European revenue is around $900 million per quarter. and of course with some exchange rate things. So that's important that it has worked. We are now having a stable business in our generics, of course helped by ongoing launches and by strong key products. In terms of products, we have good success with Adobe. It's growing nicely. I'll get back to that and the same thing for Assetto. Both products are growing nicely. I'll comment on that. I'll also comment on Copaxone where we of course see a continued loss of revenue due to the generic competition. and then we're very excited about the launch of Adobe that's coming up in the EU following the approval by the EU in April of this year. On the spend base, we will be achieving our two-year target of a 3 billion reduction. I'll show some more details about that and that's of course partly due to the site consolidation, closing manufacturing sites all around the world but it's also due to general savings in the whole P&L. The net debt has been decreasing by half a billion and we are now at 26.7 billion and we have 1.6 billion scheduled for repayment in the middle of this year. Let's have a look at the spend base and the restructuring progress we're making. So this is a chart where we compare the starting point, the $16.3 billion we had in total spend in 2017. That was the basis for our restructuring program where we said that during 2018-2019, we would reduce the spend base by $3 billion, getting to a full year spend of 2019 of $13.3 billion. So that's the target, $13.3 billion. on the middle here you have the MAT which is of course constantly moving down as we reduce cost and the MAT for the first quarter looking back four quarters is standing at 13.8 and that indicates that we will hit the restructuring target but what indicates it even more is that if you take the first quarter total spend then it comes out at Thank you very much. More people will leave this year. It's basically all announced, but it's a consequence of the delays in winding down factories and doing different changes at different sites. So we'll see a further reduction of several thousand employees during this year. Now, we can't succeed by just cutting costs. We also need to grow our revenues. And the two key drivers here are Adobe and Osteto. And if we take a look at Adobe first, then you can see we have a very steady increase in patients in weekly scripts. The weekly script count is approaching 10,000, which we hope to hit in a couple of months. And you can see that the NBRX share, so the neutral brand share, is hovering just below 30, between 28 and 30%. That basically means that, of course, long-term, the NBRX share gets translated into NRX, gets translated into TRX. Thank you very much. and for that reason we have a low, very low net sales. That's not a consequence of the discounting we're doing. It's more a consequence of the fact that we pay for patients to get on grant and then if they have insurance, we will on a gradual basis over the year increase the cash that we're collecting for these patients. 8% of the scripts are on quarterly dosing which roughly translates into some 20-25% of all our patients being using the product on a quarterly basis and we have strong growth in the number of prescribers and we have good access by now. So all in all, we are very, very happy about the progress of Adobe and we do very much look forward to launching this great product which helps people with chronic migraine in Europe. And I can just point you also that we just released long-term data on Adobe, long-term clinical data and it's really phenomenal good data. We still see 60% plus people having more than a half of their migraine days and on episodic migraine, we see two thirds of people having more than a halving of their migraine days. So really good encouraging long-term clinical data also. If we look at Osteto, Osteto is growing very, very nicely as well. You can see both the TRX numbers, the patient numbers and the revenue is growing nicely. We do expect to hit our target for the year, which is 350 million in sales. and we are having very favorable national formulary coverage, both in commercial and in Medicare Part B. So as you know, we've discussed before, in tardive dyskinesia, there's huge unmet need. If you look at these TRX counts per quarter, and you should compare it to that in tardive dyskinesia alone, there's probably 500,000 patients in the US suffering from this condition. They've had no real efficacious therapy before but with this drug, they now have a drug that's indicated for it and we're very optimistic about the future growth of Osteto both in patient numbers and in revenue. If we take a look at the Propaxone, Then we continue to see generic competition, of course, and we see a steady increase in the volume that goes to the generic brands. Right now, we're sort of at the level where we had Thank you very much. Thank you for watching. and of course in the coming years it will keep on sliding and we maintain the level of a reduction of around roughly 45% in revenue per year in reduction of Copaxone revenues. With that, I will hand over to Mike who will give you some more details on the financials.