Teva Pharmaceutical Industries Limited

Good day and thank you for standing by and welcome to TEVA's first quarter 2022 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 1 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 first speaker today, Ran Mehir, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you, Annette. Thank you, everyone, for joining us today to discuss Teva's first quarter 2022 financial results. We hope you have had an opportunity to review our earnings press release list A copy of this press release, as well as a copy of the slides being presented on this call, can be found on our website at tevafarm.com. Please review our forward-looking statements on slide number 2. Additional information regarding these statements and our non-GAAP financial measures is available on our earnings release and in our SEC forms 10-K and 10-Q. To begin today's call, Cor Schultz, Teva's CEO, will provide an overview of the first quarter performance, recent events, and priorities going forward. Our CFO, Eli Kalif, will follow up by reviewing the financial results in more detail, including our 2022 financial outlook. Joining Cor and Eli on the call today is Van Ditlefs, 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 will now turn the call over to Cor. Cor, if you would please.

Thank you. Welcome everyone. I'm happy to present a solid first quarter of this year. We've continued progress on many fronts. If we take a look at the financials, then revenues came in at $3.7 billion. Our adjusted EBITDA came in at $1.1 billion. And our gap diluted loss per share was $0.86 billion. and our non-GAAP-valued EBS came in at $0.55. The free cash flow came in at $117 million, and we are happy to show you that the debt reduction continued and net debt is now reduced to $20.7 billion. Our 2022 revenue outlook has been revised slightly downward, mainly due to foreign exchange headwinds. All the other key components, as we will show you later, are being reaffirmed. On the business side, we were very happy to see continued growth of a state of prescriptions growing to a new all-time high. And at the same time, we also saw a growth in market share for our other key growth driver, Adobe, where we saw strong developments in Europe and also nice progress in the U.S. In Europe, our generic and OTC markets were recovering following the easing of COVID-19 restrictions. So we saw a comeback of volumes and a nice recovery. Thank you for joining us. and of course we have their pending FDA approval. If we move to the next slide, then you can see a highlight on the opioid litigation. As you all know, we have settled in Rhode Island in March and we also settled in Florida in March. And we have, based on this, also changed our accrual on the balance sheet and Eli Kalif will comment a bit on that later. There are two ongoing trials right now, one in West Virginia and one in San Francisco. Both are bench trials, which means there is a judge presiding over it. There's no jury. Our experience with bench trials recently has been positive. We had the trial in California in Orange County where we won a clear victory, and there was also a J&J that appealed to the Oklahoma Supreme Court, which was also a bench trial where there was also a win. We are in ongoing negotiations, and we are hopeful that we can settle this with a nationwide settlement for all states sometime before the end of this year. If we go to the next slide, and here you can see our revenue development. And you can see that in the first quarter, we had two, you could say, negative developments compared to the first quarter of 21. One was that the exchange rate between Europe and U.S., between the euro and the dollar, worsened, So there was a significant increase in the dollar value in euros, and that basically meant that the reported euro sales in dollars is down. In underlying currencies, the sales are actually up, and we see, as I said before, a positive development of volumes in the generic space in Europe. In the U.S., the key difference here is really, like I mentioned before, that we had Trouvard and the Tripler sales in the first quarter of 2021, and we have had rev limit sales in first quarter 22, but not to the same extent. And in international markets, you see a very stable development. If we go to the next slide, then here, as I commented on Osteto, you can see that we have an all-time high TRX count in the end of the first quarter. If you look at the revenues, then we had the usual swing there where the first quarter is always low and there are really two main reasons for it. Thank you very much. If we go to the next slide, then here you can see Adobe, and in the U.S. you can see that we also there have an all-time high of the TRXs, and you can also see that in Europe we have an all-time high of the monthly volume market share, which is now up to 30%. I've said before that we are expecting to see a third of the market in all key markets, including Europe and U.S., So we are really aiming for at least a 33% market share in both North America and Europe. And we are slowly getting there, which is very, very nice. You can also see here on this sales numbers that the sales in Europe are now getting up and being close to the US sales. And we expect that to continue going forward. So we see very positive both profitability and momentum in Europe. If you go to the next slide, then we have the news here that we communicated some weeks ago. that we received a CRL on Risperidone LAI. So we will be answering the questions that we got from FDA. We expect that this could cause a delay of a refiling with some up to six months and then probably a six-month review period. We still have strong belief in the concept and in the efficacy, so we still believe to get this product approved, but there will likely be a delay of up to 12 months on it. Another thing you can see here is illustrated on the next slide, and that's the fact that we have a very broad biosimilar portfolio. We have 13 biosimilars in development now, seven in-house programs, and six that we have from partners. And, of course, we're very excited about the big launch that's upcoming next year, the Humira launch. We now have a settled entry date of July 2023. And as you know, this is a very good product. It's the high-concentration version, citrate-free and interchangeable. So we are looking forward to that. We think we are still seeing very good performance on the ones we have launched. So Truxima is doing exceedingly well in the marketplace still, holding on to something like a quarter of the retoxin market. And we're also happy now that this year we will see a launch in Europe of a Lucentis biosimilar, So all in all, it's going very well on the biosimilar side, and longer term, of course, we are aiming for addressing some roughly 80% of the value in biological products going off patent, both in North America and in Europe. On the next slide, you see another important element of our restructuring, which is basically, you could say, post the patent cliff of Copaxone to get our operating margin back up where it should be, and as you know back in 2018 we set a target of 20% and you can see here now that we're getting very close and just for the record I would like to say even though the graph could look like it's flattening out then of course we're not going to stop at 28% we will set new long-term targets which will be an improvement and we will communicate those targets within the coming year. The same goes for the next slide where we have another of our key financial targets shown. That's the net debt reduction. As you know, we have a target to reduce net debt. And also there we'll keep on driving it down. And the same goes for the net debt to EBITDA, Rachel. We'll be setting a new target for that. We have a target for end of 23, below 3. And we'll be setting a new long-term financial target also for the net debt to EBITDA within the coming year. On the next page, you can see we're making a little commercial for our upcoming ESG progress report, which will come out in about a week's time. And we've been working very hard on this for a number of years, and we are setting some very ambitious targets. We're also making sure that our ESG performance is linked to executive compensation. We also have secured now that our, you could say our financing, our debt is linked to sustainability. will tell you later on about our new RCF, which also has a sustainability element. And all through, we are very happy about our performance. And we're also happy that it's been seen outside the company. So we see improved performance on our ESG ratings, which of course is a good sign that we are doing the right thing. If we go to the next slide, then that's a slide that those of you who follow the company, you've seen it many times. We've shown it since 2018. It's our long-term financial targets. There's no change here. And the only change is sort of a little commercial here also that within the coming year, we will come up with new long-term financial targets taking us into the next five-year period. I look forward to that, of course. And I also look forward to meeting these targets at the end of 2023. So with that, I'll hand you over to Eli Kalif.