Teva Pharmaceutical Industries Limited

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

Thank you, Nadia, and thank you everyone for joining us today to discuss Teva's third quarter 2021 financial results. Joining me on today's call is Cor Schultz, Teva's Chief Executive Officer, Eli Kalif, Chief Financial Officer, and Dr. Sven Dietles, Teva's Head of North America Commercials. We hope you've had an opportunity to review our press release which was issued about an hour ago. A copy of the release and the slides being presented on this call can be found on our website at www.tevapharm.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 in order to better understand its business. and 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. Please note that today's call will run approximately one hour. And with that, I'll now turn the call over to Tevis Chief Executive Officer, Cora Schultz. Cora, if you would please.

Welcome, everyone, and thanks for your interest in TEFA. Our Q3 2021 financial highlights will start focusing on our revenues. The revenues came in stable compared to last year, but with a lot of underlying dynamics, which I'll be reviewing in the following slides. Our adjusted EBITDA came in at $1.2 billion, also very stable compared to a year ago. GAAP-valued EPS came in at $0.26. Non-GAAP-valued EPS came in at Thank you for joining us. and to access KPIs. And of course, we believe that by being the leading generic company in the world, we have a special, you could say, ability to support low and middle income countries with essential medicines and we believe that's a very strong commission we're showing with this bond offering. If we move to the next slide, and here you can see some of the dynamics on the revenue side. I'll just highlight a few of them. If you look at North America, you can see that North American revenue is a little bit below what it was a year ago. It's basically driven by the usual suspects, you could say, which is that Copaxone is declining, and we have Ojovi and Osteto increasing. And I'll be commenting on the increase of Ojovi and Osteto in the coming slides. If you look at Europe, then you can see that Europe is up compared to a year ago. We have seen some fluctuations, as you know, in Europe due to the COVID-19 pandemic. So we saw lower volumes in the first and second quarter of this year. We're seeing volumes starting to pick up again here in the third quarter, and we expect volumes to continue to increase in the fourth quarter. In international markets, we're basically more or less unchanged, and that really means that the key drivers here are, as I said, with Jovi and Osteto. So let's move to the next slide. Here you can see the development for Osteto in the US. As you can see, we have seen nice, strong growth in the last three quarters, but you can also see that there was a COVID-related slowdown in the growth, and that was really because less patients were going to their psychiatrist, more psychiatrist offices were closed during the lockdowns, and therefore we saw this slowdown Thank you very much. Thank you. people suffering from tardive dyskinesia in the U.S. and only a very small fraction of this patient population is currently being treated. So we are very optimistic about the future growth of Osteto. If we move to the next slide, then as you know, Adobe is launched now in most of the European countries and has been launched in the U.S. for several years. And with regard to Osteto, we see a continued nice development in the U.S. in The terms of our total scripts growing quarter over quarter and we also see a very nice development on Adobe in Europe with volumes growing steadily also quarter after quarter. We had an initial ambition of 25% market share in US and Europe for Adobe. We increased that ambition I think one or two quarters ago to a third of the market and we still believe it's very likely that we can reach a third of the market and that's basically due to the Thank you very much. and Japan in the Adobe numbers. So let's move on to the next slide. Here we're showing you our specialty in biosimilar R&D pipeline, product pipeline. We're very happy with it. I won't go through it all. That would take too long. But let me just mention two interesting projects. One is Risperidone LAI, long-acting Risperidone, which has been accepted by FDA. Our file has been accepted. for review. We hope to have it approved next year. This is a major new benefit for people suffering from schizophrenia in the form of a subcutaneous injectable long-acting risperidone. So we look forward to bringing that to the market to the benefit of people suffering from schizophrenia. We also have a new interesting license arrangement. It's shown here in phase one, ANLE-138B. And if we move to the next slide, and I'll just tell you a little bit about that. We have made a license agreement with Modac, a German company, and it's regarding two compounds that are in the development for treatment of MSA and Parkinson's disease. And we're very excited about this. As you know, we have a long history in Parkinson's. We think these projects are very, very interesting and hopefully long-term, if they turn out to work, Then they could also have a potential in treatment of Alzheimer's. So that's a really exciting addition to our portfolio. Let's move to the next slide. As you know, we have a long-term target for our operating margin of 28%. And during our restructuring with the loss of Capaxon, of course, we saw operating margin decline, and then we turned around in 2019, and now we're growing the margin, and I'm happy to report that we're growing the margin in line with our expectations. You can see here, yesterday Q3, it's 26.8, and if you take the midpoint of our guidance, it's 27.5, and we're still committed to the target at the end of 2023 of 28%. Going to the next slide. It's actually today very close to exactly four years since I joined Tether. And I'm very happy to report that in those four years, we reduced the debt by some close to $13 billion, $12 to $13 billion. And we've actually also paid $4 billion in interest rate in those four years altogether. So something like close to $16, $17 billion have been returned to the bondholders. and we'll continue to do that because as you can see on the next slide, we have our unchanged long-term financial targets. We want to take the net debt to EBITDA below three times at the end of 23 and in order to do so, we need cash earnings to be strong, above 80% and we need the operating income margin, as I said before, to be at 28% so that we generate the cash needed to basically keep on reducing and we are committed to use the cash flow for debt reduction and we have no plans of raising equity.