Teva Pharmaceutical Industries Limited

Hello and welcome to the Q1 2023 Teva Pharmaceutical Industries Limited Earnings Conference Call. My name is Alex. I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star followed by one on your telephone keypad. If you'd like to withdraw your question, you may press star followed by two. I'll now hand over to your host, Ran Mir, SVP of Investor Relations. Please go ahead.

Thank you, Alex. 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 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 two. 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, Richard Francis, TABOS CEO, will provide an overview of TABOS Q1 2023 results and business performance, recent events, and priorities going forward. Our CFO, Ellie Khalif, will follow up by reviewing the financial results in more detail, including our 2023 financial outlook. Joining Richard and Ellie on the call today are Sven Diekles, TABOS head of North America business, and Dr. Eric Hughes, our head of R&D and chief medical officer. will be available during this 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 good morning and good afternoon, everyone. Thank you also for joining us today. Now, before I start going into the Q1 results, I thought I'd just take a bit of time to give you my thoughts and impressions of the last few months I've had at Tether. Now, in short, impressed by many of the things I've seen and discovered while going around the world talking to many of our people. And it's because of this that I think we have real opportunity at the company, and maybe the company is underappreciated currently. Now, let me go into sort of four areas I'd like to focus on here. Now, I know most of you think of us as a generics company. And in truth, we are more than that. We have an emerging innovative business, primarily driven by Stetto and Ejovi, but recently about to be supported by Yosedi, a long-acting schizophrenia product. And this is going to fuel continued growth going forward. And already, this is 10% of our total revenue. We also have a Biosigma portfolio, which I'll talk a bit about later, which is an opportunity to benefit from $4 billion of brand value coming off patents in the next few years. Second, our pipeline. Now, I definitely know this is not fully known and understood, but I can tell you we have some exciting assets here. And as I sort of dug deeper, I've seen some unique capabilities in our R&D organization, particularly when it comes to antibody design and formulation expertise. And as we go through our pipeline, I think you'll see that we have a balanced risk profile on many of our assets. Now, coming to our core business, our core generics business, this is a strong global business. And what I've discovered, this is more than the U.S. In fact, 60% of our business is outside the U.S. in Europe and emerging markets. And this is a strong business that generates significant cash, which obviously they're currently using to pay down debt. Now then moving on to our people, which is probably what has inspired me the most. We've got a great group of people here at Tether and a great culture, the real can-do attitude. And this is something we're going to leverage as we move forward with Tether on our new strategy for growth. Now that said, we have some headwinds and some short-term challenges, which we'll discuss today, particularly around our cost of goods. But we have plans to deal with these going forward. And because of that, we are reaffirming our guidance for 2023. Now, moving on to the next slide, I would just like to invite everybody to our Investor Day, which we're going to hold in New York next week, where we're going to introduce our new strategy for growth for Tether. Now, this strategy will be built on some of the strong foundations that I described in the previous slide. And I've been working hard with the executive management team here at Tether, along with many others in the company, to really challenge ourselves to look at how we can with a changing market, unlock real value for Tava going forward. I'm excited by the outcome. We have made some clear choices in this strategy, some clear prioritization, and we have a focused company going forward where the capital allocation will follow this. So as I said, please join us next week where we unveil the new chapter for Tava. Now moving on to Q1 performance. Let's start with revenues. Our revenues for Q1 versus Q1 2022 were 3.7 billion, up 4%. Esteto was up 10%, and the Jovi up 35%, driving that innovative business that I mentioned earlier. And in European generics, in local currency, we're up 12%. In local currency and international markets, we're up 9%. So I think a solid performance for Q1 on the revenues. Now, taking a look at it from a regional perspective, as you can see, all regions were up in local currency growth, 2% for North America, 9% for Europe, and 8% for international markets. Now, I would keep in mind that our revenues are still affected by the strengthening U.S. dollar, and we did have a negative impact of $128.4 million versus 2022. Now, moving on to the next slide to talk about Estedo. as part of this innovative portfolio that I talked about. Revenues were 170 million at 10%, and what's particularly pleasing is TRX was up 28% versus last year. Now I'm very excited about Estedo, and particularly because I see this as an untapped opportunity. We have roughly 800,000 people suffering from this condition, and only 120,000 diagnosed, and then only 50,000 treated. So we have significant opportunity to grow this product and help patients suffering from this condition. On the next slide, you'll see this has been further improved, this patient offering with the launch of Esteto XR. This is the once-a-day formulation. Now, I think this is the final piece of the puzzle for Esteto, because obviously, as you appreciate, many of these patients are on multiple medications, and thus having a once-a-day offering, I think, really offers some advantage for them and strengthens the product offering for those patients and caregivers. So now moving on to another part of our innovative portfolio is Adobe. Now Adobe is almost reaching $100 million a quarter, currently sitting at $95 million, up 36% in North America, up 17% in Europe, and up 74% in international markets. So we're growing across all regions which we're very pleased about. And what I've mentioned before, and I'll reiterate, what I like about Jovi is the fact that this was not a product we managed to bring to the market first in its category. In fact, in many areas, we were not and we were last. But what we've shown with our commercial capability and muscle, that despite this, we can achieve growing market share and a significant position in many of the markets, often number two. And so I saw some growth going forward in Jovi through geographic expansion, and expansion of market share. Now, the new product to this innovative family is USETI, Respirido, which was approved about two weeks ago. I'm excited about this long-acting Respirido. I was recently on a field ride in the US with some of our sales representatives and speaking to psychiatrists and clinical nurse practitioners actually about USETI. But many of them were asking when this long-acting risperidone would be available. And in discussing with them why they were so enthusiastic about it, it came back to our patient-friendly profile. The fact that we have rapid absorption within six to 24 hours of administration was important to them. The sub-Q small needle, lower volume. All of these made it an easy-to-use product for them in this patient population. Now, keep in mind that the long-acting market is a $4 billion opportunity when it comes to schizophrenia. And so with this profile, we think we have real opportunity to generate some revenue going forward. Now, pivoting back to our generics business, as I mentioned before, we have a big business outside the US, over 60%. And we're seeing continued strong growth in both of these regions, 12% in local currency in Europe, and 9% in international markets. And this is attributed to our core capabilities. We have a good pipeline, we can regularly launch products into our portfolio, we have a good supply chain, and we have a good commercial infrastructure. So I see no reason why we cannot continue to leverage this capability going forward. Now to move on to our pipeline. And you'll notice for this call I've separated the innovative pipeline from the biosimilar pipeline. And that's really to start to highlight the pipeline and some of the exciting assets we believe we have in it. Now, I'll just call out a few here. Olanzapine long-acting, another long-acting medication for patients, people suffering from schizophrenia, which will add to our franchise. ICS-SAVA in asthma, which is in phase three, and then CL1A in phase two. I'll describe these in a bit more detail in a couple of slides, but obviously looking forward to presenting more depth on our pipeline next week at our strategy day where Dr. Hughes, our head of R&D, will be talking about these in far more detail. Now moving on to our biosimilar pipeline and franchise. I think what I've said in the past is you need to have a good pipeline and a good portfolio to succeed in biosimilars and to have a good commercial footprint. I think you can see we have both of those. Now to address a question which I think is going to come up today is about biosimilar QMira and where we are with that. So maybe I could take a few moments to talk about that. So as many of you know, the FDA issued a CRL to our partner, Alvatec, based on certain re-inspection observations in their facility in Iceland. Now, Albatac is expecting communication from the FDA shortly, assessing their responses to these observations. And once Albatac received communication from the FDA, we will have a better understanding of the timings of a potential launch of Biosilver Humira. Now, going back to those promising late-stage assets from our innovative portfolio. Now, I don't want to step on Eric chooses Teres for next week when we launch the new strategy, the Investor Day. So I'll keep it brief, but maybe just give a slight headline on some of these programs. So, olanzapine. We're excited by this because obviously I've mentioned to you already with your study, there's a significant opportunity to move the schizophrenia market to a long-acting therapy. Now, this Lanzapine product leverages our Bepo technology with Medincel, which is the company we work with on UCEDDi. So I'd like to think this has been proven because of, obviously, the recent approval of UCEDDi. Now, moving on to ICS Saba, this clearly leverages our respiratory expertise and our ability to bring complex products to the market. It brings together two well-characterized and well-used products. for a subset of the asthma market, which we believe is worth around $2.5 billion. And it will only have one competitor. Then lastly, moving on to the anti-PL1A asset, which I'm sure you're all familiar with. It seems to be a very hot topic right now. We see this as a good opportunity because it's a validated target. And we see, because of the number of indications that it could potentially go after, a significant opportunity around $25 billion. And we believe we have a best-in-class profile. But more to come on those assets on the investment day. In closing, I want to talk about an important priority of ours, which is our commitment to ESG. And I just want to take a bit of time to give you an insight into the progress we've made. So let me just pick a few of these out. When it comes to greenhouse gas emissions, we have a goal of and reduce these to 25% by 2025. As you can see, we're closing on that already. Another area of focus has been on compliance and business integrity. And we have met our goal of 100% of all our employees trained in compliant policies. Finally, I can highlight the economic impact we've had. $44 billion in savings from Tevis Generic Medicines across 21 countries. And we've contributed $20 billion to GDP across 24 countries. So I think we've made very good progress with regard to our ESG commitments. And with that, I'll hand over to my CFO, Eli.