Teva Pharmaceutical Industries Limited

Good day and thank you for standing by and welcome to the Terra Pharmaceutical first quarter 2021 financial results conference call. At this time all participants are in a listen only mode. After the speaker presentation there will be a question and answer session. To ask a question during the session you will need to press star and one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and zero. I would now like to hand the conference over to your speaker today, Kevin Monix, Senior Vice President, Head of Investor Relations. Please go ahead, sir.

Thank you, Annette, and thank you everyone for joining us today to discuss Teva's first quarter 2021 financial results. We hope you've had an opportunity to review our press release, which was issued about an hour ago. A copy of the release as well as a copy of the slides being presented on this call can be found on our website at www.tevafarm.com. Please note that the discussion on today's call includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company's operations to better understand its business. Further, management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information and facilitates analysis by investors in evaluating the company's financial performance, results of operations, and trends. A reconciliation of GAAP to non-GAAP measures is available in our earnings release and in today's presentation. To begin today's call, Cor Schultz, Teva's Chief Executive Officer, will provide an overview of the first quarter, recent events, and priorities going forward. Our Chief Financial Officer, Eli Kalif, will then review the results in more detail, including our 2021 financial outlook. Joining Cor and Eli on the call today is Brendan O'Grady, Teva's Head of North America Commercial, who will be available during the question and answer session that will follow the presentation. Please note that today's call will run approximately one hour. And with that, I'll now turn the call over to Cor. Cor, if you would, please.

Good morning, good afternoon to all of you, and thank you for dialing in. We are presenting today Q1 2021, the financial highlights, and we have a set of solid numbers to present to you. Our revenues came in at $4 billion, which we see is a good result given the Thank you for joining us today. We had one pay down of some convertible bonds in the period and net debt is now reduced to 23.2 billion US dollars. And then last but not least, we reaffirm our 2021 outlook and Eliyahu will show you some more details on that later in the presentation. Next slide, please. Now, if we take a look at the quarterly revenue, then I'd like to remind you of a couple of things that's been happening when we look back and compare. We have a normal run rate of around 2 billion in North America and around 1.2 billion in Europe. But if you go back to the first quarter of last year, then you see on the dark green that the European numbers, they were significantly higher than normally coming in at 1.4 billion. Now that was the 200 million patient level hoarding of products related to the start of the COVID-19 pandemic. That reversed in Q2 last year, so you see Europe dropping down to 1 billion instead of the normal sort of 1.2 billion. So that swing factor, of course, means that our comparator is more challenging in the first quarter of 2020 than it is in the second quarter of 2020. Apart from that, we have a couple of special cases that you can also see in the numbers, and that's really both in North America. That's the first quarter of 19. That was the very successful launch of Troxema. and the fourth quarter of 20. That was a very successful launch of the generics to Truvada and Atripla. So those things kept in mind. We see a good result for the first quarter of 21. We still see that the underlying volume is reduced in Europe simply due to the fact that less people go to the doctor, less people go to the hospital due to the continued lockdowns in the first quarter of this year. We do expect the COVID-19 lockdowns to slowly ease here during the second quarter, but really see the hopeful return to normal volumes in the third and the fourth quarter of this year in Europe. If we move to the next slide, please. On Osteto, we saw US sales of 146 million in the first quarter. This is an increase of 20% versus last year. We always have a dip in the first quarter. You can see that also happening in 20 and in 19. And that's a consequence really of the insurance system in the US where you have these resets of deductibles and other elements that typically lead to lower script volumes in the first quarter and then a resumption of growth once you get into the second, third, and fourth quarter. We are expecting to see that also this year. We are seeing more than 35,000 prescriptions now in the first quarter, and we continue to see future growth of this number. We're also focusing on expanding access and availability of Osteto, especially to the tardive dyskinesia patient population. As you know, there's around 500,000 patients suffering from tardive dyskinesia in U.S., and we are so far only delivering Osteto to a fraction of this population. So we will be starting DTC advertising in the coming months, and hopefully this will be a further driver behind the strong growth of Osteru that we foresee for this year. Next slide, please. With regard to Adobe, as you can see here, we continue to see a growth in our TRX count. Of course, some small variations, but underlying a strong development of the total number of TRX. and we do see sales globally of 48 million in the first quarter. 31 million in North America and 16 in Europe. We've seen a uptick in our neutral brand script rate in BRX and it's right now around 25%. We wanna try and drive this higher and we'll be working hard to do so in the coming months. In January this year, we just launched a triple pack which is a further sort of example of our quarterly dosing and the convenience that we offer to patients who are seeking preventive therapy for their migraine by taking adjovi once a quarter. Next slide, please. We're also now at a stage where we have launched in the majority of European markets. So we have now launched in 19 European markets. And as you can see from this slide, The European market is now growing. You have it to the left, the total market. It has basically doubled within the last year, and we expect it to continue to grow. We are seeing a nice growth in our share. We did not launch as the first company in this class in Europe, but we can see that when we launch, we start taking share, and it's been growing very, very steadily, and we expect it to continue to grow. We have especially strong positions in Germany, Nordic, UK, and some of the other main markets. So with regard to Adobe, I'll just repeat what I said last time that we are still bullish on our market share and we do have an aim to have one third of this market as a target over the coming years. Next slide, please. I showed you the nice effect we had on sales when we launched Truxema and we continue to see a very strong penetration of Truxema. We are now up to more than a quarter of the market. 26% is the latest data point we have on our share of the market. And as you know, we are the only retoximate biosimilar that also has the indication for RA. So we are very optimistic there will continue to be a strong position for Troxema in the market in the coming years. Next slide, please. Our portfolio, as we've discussed earlier, we see it as nicely balanced between biosimilars, novel biologics, and different improved versions of small molecules. And I'm especially happy that we got such good results on risperidone-LAI. This is a long-acting novel therapy where you can subcutaneously dose for a month or two with risperidone. and this will be very, very beneficial for people suffering from schizophrenia, lead to better compliance and a better therapy for these people. So very much looking forward to filing this very soon and hopefully launching it next year. Apart from that, we have, as you know, a long list of biosimilars moving into the market over the coming years and some exciting lifecycle management, both for Feminesimab and for Osteto. Next slide, please. One of our key targets, long-term financial targets, that we've set for the end of 2023 is our operating margin. And as I'm sure most of you know, the target is 28%, and we're also showing this here at the end of the line, so to speak, on this graph. The reason why the margin came down, as you probably also all know, was really the significant loss of revenue from Copaxone going generic in the US and in Europe. and that really drove our margin down from the level of around 28 down to 24.5% in 19 where it bottomed out. We continue to see a nice improvement. We are still standing firm on the target for 2023 and this quarter, as an example, we had a actual margin of 27.1. Next slide, please. So talking about the long-term financial targets, not much new here. They're completely unchanged. The target for operating income margin is 28%, cash to earnings above 80, and net debt to be down below three times. So nothing new here. We're still committed to utilizing cash flow to pay down debt, and we do not plan to raise equity. Next slide, please. Now, at Tether, ESG is everyone's business, and it actually always has been. We've always been very focused on both environmental, social, and others. But we are getting better at reporting what we are actually doing. And our next report on this, our next ESG report will come out soon on May 4th and I can only encourage you to take a look at it. It will explain in much more detail how we are minimizing our impact on the environment, how we are taking a lot of steps to secure equity and good access to our medicines. how we're dedicating ourselves to quality ethics and transparency and a lot of other good topics. You can see some of them here, but it's a whole long report that will be coming out in a week's time that shows our strong progress and dedication to ESG. With that, I'll hand over to Eliyahu who will give us some more details on the numbers.