Teva Pharmaceutical Industries Limited

Hello and welcome to the Q3 2023 Teva Pharmaceutical Industries Earnings Conference Call. My name is Alex and 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 remove it, you may press star followed by two. I'll now hand it 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 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 sevafarm.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, Tevas CEO, will provide an overview of Tevas Q3 results and business performance, recent events, and our priorities going forward. Then, Dr. Eric Hughes, our head of R&D and chief medical officer, will discuss progress on our innovative pipeline. Our CFO, Eddie Khalif, will follow up by reviewing the financial results in more detail, including our 2023 financial outlook. Joining Richard, Eric, and Elion on the call today is Ben Gitlitz, 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?

Thank you, Ran, and thank you, everybody, for joining us today. I'd like to begin by saying that we are deeply saddened by the terror attacks in Israel on October the 7th. Since that day, Teva's board, leadership team, and I have made the safety and well-being of our Israeli colleagues our utmost priority. I visited and met employees at the facilities in Israel immediately after the attack. Many of them have families and friends who have perished or been kidnapped. What really stood out and inspired me was that despite all the difficulties, they are running together to bring medicines to the patients who need them, especially now. I am personally humbled by their incredible resilience, care, and sense of purpose. Now, we have increased support of our emergency supply of medicines to hospitals, pharmacies, and patients, and we have partnered with our longstanding partners to donate products and provide other humanitarian aid. Through it all, our production remains largely unaffected, and gratefully, none of our sites have incurred direct damage as a result of the war. We continue to secure contingency plans to be certain we can maintain our business continuity while, most importantly, taking care to ensure that our colleagues are safe and well in these difficult times. Now, moving on to slide five, I'd like to update you on strong performance in Q3 as we continue to execute our pivot to growth strategy. Now, our strong performance of our growth was delivered by our growth engines, Estedo, Jovi, and our generics business. Revenues were up 7% in US and in local currency. Our gross margin continues to improve. We saw an increase by 50 basis points versus Q3 2022. We're pleased to announce an exciting partnership with Sanofi and Q3, a deal to really maximize our TL1A asset. Because of these results, I'm pleased to announce we're going to increase our outlook of revenue to 15.1 to 15.5 billion for 2023. Now, to move on to the next slide, to continue to maybe update you on our pivot to growth strategy. As you all remember, this was based on four pillars. Deliver on our growth engines, step up innovation, sustain a generics powerhouse, and focus our business. So I'm just going to touch on some of the progress we've made in Q3. As I've just mentioned, Estedo is performing well and is on track to hit $1.2 billion for 2023. And we remain committed and confident of hitting the target of $2.5 billion in 2027. You said he was launched earlier in the year. I'll give you an update on that. And we're pleased to announce with our partner, Alvatech, that we're doing an FDA inspection in early Q1 in 2024, It raises the opportunity that we might be able to launch Humira next year. With regard to innovation, I'm joined on this call by Eric Hughes who will go into more detail, but a couple of highlights are obviously around olanzapine, a long-acting treatment for schizophrenia in Phase III study. This is progressing really well and ahead of schedule, so we're confident we'll be able to report results in that in the second half of next year. To have a generic powerhouse, we make good progress. As you'll see, we have growth across all of our regions. And then finally, on pillar four, focus our business. We continue to do the work to create a standalone business unit for TAPI. I'm pleased to announce the appointment of our CEO for that business that allows them to compete in the global market. And moving on to the next slide, just to touch upon one of the news we had in Q3 of the exciting collaboration with Sanofi. I'm pleased with this collaboration because it really strengthens our pivot to growth strategy. It allows us to partner with a global leader in immunology, both from an R&D and commercial perspective, while retaining 50% of the economics going forward, which is important as we want to drive long-term growth for Teva. We see this asset as an asset that can drive long-term growth because of the size of the market we'll be operating in. I'll come to that a bit later on. Now, back to performance. On the next slide. As I said, we had strong performance in Q3. Revenue was $3.9 billion, up 7%. That was driven by both our innovative business as well as our generics business. Esteto continued its impressive growth, up 30%, while Adobe continued to grow well at 22%. Pleased to show that we saw growth across all of our regions with particularly strong performance in the US and international markets. Now, to double-click and dive a bit deeper, I'd like to move on to Estedo. Now, Estedo, once again, we confirmed they were committed to the $1.2 billion target for 2023. Revenue was up to $339 million for Q3, up 30%, and supported and underpinned by good, strong TRX growth of 29%. Now, on the next slide, I want to reiterate our commitment to the $2.5 billion target for 2027. We're doing this by investing in our brand and building capability in the company. As we mentioned earlier in the year, we have increased our sales force. We have invested in improving our patient support services, as well as looking to launch this brand into the European market by 2026. And we see the opportunity not only because we're investing in building capability, but there's a significant unmet medical need when it comes to patients suffering from tardive dyskinesia. And tragically, there's a lot of patients who still need to benefit from Estedo, so we have work to do there in the ability to improve patients' lives. Now, moving on to the next slide is Jovi. We're on track to reach or even exceed the $400 million for 2023, with good growth in Q3 and revenues of $114 million. As I said, growth was 22%. What I like about Adobe is not the fact that we're just growing in all of our regions, but we remain very competitive in what is a competitive sector and segment of the market, highlighting our sales and marketing and medical commercial capabilities. Now, moving on to the next slide, the newest member of our innovative family is UCEDD, a long-acting treatment for risperidone launched in May of this year. Now, we're pleased with the launch, and as you can see, UCEDD is capturing over 55% of all NBRX in the risperidone long-acting market. And this is driven by the strong feedback we're receiving from physicians and patients. Patients obviously appreciate the subcutaneous injection versus intramuscular. I think the physicians find the fact that Uceti can reach therapeutic doses within six to 24 hours to be really helpful when they're treating patients who have a relapse. This market is an attractive market. It's a $4 billion market, and we think Yosedi will have a real part to play in that market. Now, as I've said before, 2023 is a set-up year for 2024. We need to make sure we get access, formal inclusions in our hospitals, and we're making very good progress on that. So, look forward to updating on Yosedi as we near the end of the year. Now, moving away from our innovative portfolio to our generics business. And as I said earlier, I'm pleased to show that we've grown our generics business across all of our regions, U.S. included. And as you can see, strong growth in the U.S. of 15%, solid growth in Europe, and good growth in emerging markets and local currencies of 17%. Now, to move on to our pipeline, which is obviously a key pillar of our strategy, our pivot to growth strategy and step-up innovation, just to look at the late-stage assets we have. I've talked about Olanzapine and how encouraged we are with the recruitment of our patients into that Phase 3 trial, and we look to be announcing, or Eric and his team will look to be announcing those results in the second half of next year. Once again, to reiterate, this is a significant market. And with olanzapine, that really isn't a satisfactory long-acting version of this product, this molecule, in the market. So we're excited about this and the help we can bring to this patient population. Moving on to ICS-SABA. Another product that entered phase three clinical trials in Q3, we've started to accrue patients already. And this is a significant opportunity. As I mentioned on previous calls, based on the guidelines in the US, there are 10 million patients who should be on an ICS-AVA combination. And so if you just take 30% of these, the market is still significant at 2.5 billion. So a real opportunity to continue to drive growth for Teva in our innovative business. And then finally, on anti-TO1, I have spoken a bit about it, and I'm sure Eric will touch on this as well, but just to highlight the size of the opportunity in UC and CD, which we see as around $28 billion for what we think we have a best-in-class product. And then on my final slide, I'd just like to close out with our recent progress on our ESG strategy and initiatives. At Q3 we made good progress on executing our ESG strategy and we made good progress against some of our ESG targets. And I'm pleased to announce on behalf of the team that the company received some awards. We were winner of the best company for ESG reporting in the healthcare sector and also in 2023 best corporate social responsibility initiative. So really highlighting the work and the progress we've made on our ESG strategy. Now, with that, I would like to hand over to my colleague, Eric Hughes, who will walk you through some of our pipeline use.