Teva Pharmaceutical Industries Limited

and thank you for standing by. Welcome to the Tevis fourth quarter and full year 2022 earnings 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 one and one on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Ran Mir, Senior Vice President, Head of Investor Relations. Please go ahead.

Thank you, Nadia. Thank you everyone for joining us today. We hope you have had an opportunity to review our press release, which was issued earlier this morning. A copy of the press release, as well as a copy of the slides, Thank you for your attention. To begin today's call, Richard Francis, Teva's CEO, will provide an overview of Teva's 2022 results and business 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 Richard and Eliyahu on the call today is Sven Dietles, Teva's Head of North America Business, 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 Richard. Richard, if you would please.

Thank you, Ran, and welcome everyone. I'm excited to be here today, and I'd like to start by saying it was great meeting many of you in San Francisco at J.P. Morgan last month. And I look forward to getting to know Teva shareholders, investors, and analysts so that we can have an open dialogue going forward. I'm excited to be here because there's a lot of opportunity at Tether. The team has done a tremendous work to get the company back to a solid foundation and now there's an opportunity to get back to growth. Before I start my review of Tether's 2022 results and discuss our guidance for 2023, I would like to update you that I've already initiated a strategic review process with my leadership team. Our team is already hitting the ground running and we are working hard on analysing some of the core strategic questions that the segments we operate in are going to involve over time and really understand what options we have. It's going to be a very clear purposeful strategy with real intent behind it. Every function, every dollar should follow that strategy going forward. Once the work is done around mid-year, I'll come back with the team and we'll present that to the market. Now let's move on to some highlights for 2022. We ended 2022 with revenues of $14.9 billion and adjusted EBITDA of $4.6 billion. GAAP diluted loss per share was $2.12 and non-GAAP diluted earnings per share was $2.52. You should note that our revenues were still affected by the strengthening of the US dollar during the fourth quarter and we have therefore still seen significant headwinds from exchange rate movements on our revenues. We had a net impact of £780 million for the full year compared to 2021. Free cash flow in 2022 was £2.2 billion and we continue to reduce our debt in accordance with our strategic targets. Net debt is now down to £18.4 billion. Moving to the business overview, Estero, our leading brand, is growing very nicely, up 20% year over year. And Ajovi also grew across all three geographies, US, Europe and international markets. I'll further discuss these two products in a few minutes. We've also seen nice growth in our generics and OTC revenues in Europe, reflecting our strong position there, and also some successful product launches. We've also seen good growth in generics and OTC on international markets through a combination of volume growth as well as price adjustments to address inflation. So good to see 9% growth in Europe and 5% in international in local currency terms. We're also excited about the progress we're making on our pipeline. We recently initiated the phase three trial of subcutaneous long-acting olanzapine for schizophrenia. Together with Ysetti, a Respiradone long-acting product, which I'll talk about in a few minutes, we're developing an exciting franchise for patients suffering from schizophrenia. As for the Nationwide Opioid Litigation Settlement, we announced last month that we are moving on with these settlements after receiving broad support from the States Attorney Generals. We are already settled with 49 out of 50 states and the sign-on process for the state subdivisions has begun and given the very positive response from states, we remain optimistic that the settlements will garner similar support for them. Moving on to the next slide to look at our revenue and how it's developing. Overall, you'll see a fairly stable business with the portfolio of products and geographicals further well balanced. I'd like to point out that in 2022, Q4 was the strongest quarter in terms of revenue, similar to previous years. If you exclude the impact of FX, revenues in Q4 2022 were actually up 1% compared to the fourth quarter of 2021. So in local currency terms, we had a nice single digit growth in both Europe and international markets. Moving to the next slide, and explaining the comment I just made on Europe. It's a market that I'm very positive about. Europe is good, stable business with Teva. In markets like Europe, if you have a good pipeline, good go-to-market model, the business is predictable, and it can drive continued growth. And we believe we have all of those elements in our European business. We have good portfolio, good pipeline, and strong leadership in many of the markets. And this also supports a good margin profile, as you can see from the slide. and this is all paying out well. As you can see, revenues grew in Europe in the fourth quarter, 4% in local currency terms, which we're very pleased about. Now, moving on to Estedo, our next slide. Quarter four is a record quarter for Estedo as we continue to see strong growth in both total and new prescriptions. Revenues grew 20% for the full year and 22% in the fourth quarter. I'm happy to see strong continued development with nice increases in both revenue and the numbers of prescriptions. So all in all, the trajectory looks positive. Nellie will elaborate on it when we talk about our 2023 outlook. Now to better understand the potential of Esteda, I'd like to take a look at the next slide. As you can see, there are approximately 785,000 patients suffering from cardiac dyskinesia in the US. But unfortunately, only 15% of these patients are diagnosed. and then even more disappointing, 5% are getting treatment. So clearly there is a lot of unmet need. And of course we're working hard to broaden that base, making sure they can benefit, the benefit of the product reaches more patients who need this therapy. This will drive increased prescriptions and also presents a significant long-term growth potential for a startup. Now moving on to a journey. Full year, our revenues grew more than 20% globally. This was despite the foreign exchange headwinds we faced in Europe and international markets. Now I think Adobe is a great example of Teva's strong commercial and execution capabilities. As you know, Adobe was not first to market in the US and Europe, but we're still capturing really strong market share and actually second in Europe. So that's very impressive and another proof point to me that the innovative and commercial go-to-market capabilities of Teva are strong. What we're seeing now in the US is really about slow growth is around the injectable anti-CGRP therapies. and while most of the growth in migraine space is driven by the oral therapies. Outside the US, we expect the JV to benefit from continued patient growth and launches in additional countries in Europe and international markets.