Teva Pharmaceutical Industries Limited

Hello and welcome to the fourth quarter and full year 2023 Tether Pharmaceutical Industries 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 remove your question, you may press star followed by two. And I'll hand it over to your host, Lan Mir, Head 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 tevafarm.com. Please review our forward-looking statements on slide number two. Additional information regarding these statements and our non-GAAP financial measure is available on our energy list and in our SEC forms 10-K and 10-Q. To begin today's call, Richard Francis, Teva's CEO, will provide an overview of Teva's 2023 fully results and business performance, recent events, and our focus and 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 Khalid, will follow up by reviewing the fourth quarter financial results in more detail before providing an overview of Teva's 2024 financial outlook. Please know that today's call will run approximately one hour. And with that, I will turn the call over to Richard. Richard?

Thank you, Ran, and welcome, everybody. Thank you for joining the call today. 2023 was a transformational year for Teva. We launched the Pivot to Growth strategy to get Teva back to growth, and I'm pleased to say it did exactly that. Moving on to the next slide. Oh, here we are. No, go back slightly. I would like to remind you that the pivot to growth strategy was based on four pillars. Deliver on our growth engines, step up innovation, create genetics powerhouse, and focus our business. And we're delivering on all four of these pillars, as I will go through in the presentation today. And obviously, you saw today that we've decided to divest our TAPI business, and I'll go into more detail later in the presentation. Now I will walk you through the numbers on this slide. I'm pleased to say, as I said, we got back to growth in Teva. I would also like to highlight the numbers include the Sanofi upfront payment as part of this collaboration, the ongoing development and commercialization of TL1A. So Teva's growth was 7% with regard to sales revenue of $15.85 billion. Or if you take out Sanofi, it would be 3%. Adjusted EBITDA was up 5%, non-GAAP EPS up 2%, and free cash flow up 6%. I'm also pleased to say we made progress on our net debt EBITDA, and that now stands at 3.45. Now, on the next slide, I want to go into a bit more detail as to what was driving this performance. So I'm pleased to say that the innovative business performed well. Astero, in particular, grew strongly at 28%, and Adobe continues to show impressive performance with an 18% growth. With regards to our generics business, we saw solid performance with Europe growing at 3% and international markets at 14%. And I'm pleased to see the stabilization of our North American generics business as well. Now, to go into a bit more detail on what's driving behind these numbers, I'll start with Estedo on the next slide. The setup hit its $1.2 billion guidance that we gave, and the U.S. up 27%, and strong TRX was contributing to that. I'm pleased with this performance as it shows and clearly highlights the benefit of the additional resources we put behind the brand and the extra capabilities that we built. And this gives me more confidence that as we move on to the next slide that I can reaffirm the guidance for 2027 to hit $2.5 billion. And a step in that direction is the guidance we're giving for 2024, which is a $1.5 billion revenue number. It's worth pointing out and remembering there are significant amount of patients and people suffering from tardive dyskinesia that go undiagnosed. And we launched a directed to consumer campaign early in January to help raise awareness and give these people an opportunity to seek help and therapy. Now moving on to the newest member of our family, Yosetti. We have good growth plan for Yosetti for 2024 and we're giving guidance of 80 million. Now, this is possible because of the work we did in 2023, where we drove awareness and access. We made good progress across the commercial players, as well as Medicare and Medicaid, and ensuring we get on to form raise in the many hospitals. Awareness is good as well as feedback about the product profile and the fact that this fits the patient profiles that they all receive. I'd also highlight the size of this market. It's a $4 billion market grown at 6%. So once again, I think Yoseli will contribute to growth this year, but in the coming years as well. Now to move on to the last member of our innovative portfolio, that's Ejovi. We're very pleased with the continued momentum with 18% growth. And you see this growth across all of our regions. In many geographies, we are gaining market share, which shows the true competitiveness of Tether. It is based on this good performance that we're giving a guidance for 2024 of half a billion dollars for Jovi. Now, another aspect of our deliver on our growth engines and our strategies, our biosimilar portfolio, which I'd like to move on to now. I'd just like to highlight the fact that we will be launching five biosimilars in the next four years, which have an opportunity to contribute to our top and bottom line growth. Now, when it comes to biosimilar Humira, we are awaiting an FDA inspection result with our partner site that's based with our partner, Albertac, with their site based in Ireland. And based on a successful outcome here, we aim to launch biosimilar Humira this year. Now moving on to the second pillar of our pivot to growth strategy and our pipeline. My colleague, Eric, will walk you through this in greater detail. But once again, with this strategy and the focus, we've really moved the needle. Olanzapine has completed the recruitment of its first study, and we expect the results in H2 of this year. ICS Saba entered the clinic in Q4 of last year. And as you can see, this is an attractive market where we think we have a differentiated product, and there's only one other competitor. We have good momentum around TIL 1A, and we're very excited about the partnership we have with Sanopi to really maximize this asset going forward. Now moving on to the third pillar of our strategy, our generics, and making this a generics powerhouse. As I've said in the past, this is based on three specific areas we're focused on. Making sure we have the right portfolio in the market that's been executed by commercial teams. Focusing on pipelines so we can bring high-value products across the top and bottom lines of the market on time more often. And also optimizing our net worth and actually the efficiency of our net worth. I'll talk you through the pipeline, but I just want to just highlight the work we've done on our network. We have closed three sites in 2023, so we continue to rationalize and optimize that. And also, we have kicked off an operational excellence plan for 2024, where our aim is to reduce COGS and to allow us to drive gross margin expansion. But now let me talk a bit about the pipeline, because we have made some progress here. As you can see for this, when it comes to complex generics, I think we're in a leading position in the US. Across multiple technologies and platforms, we have and we can launch complex direct products. We launched 10 between 2022 and 2023, but I'm excited by the 13 that will be launched between 2024 and 2025. And as you can see here highlighted on this slide, with the green circles, there's a number that we've already launched. So this has an opportunity for us to drive growth and offset some of the price erosion that obviously is there in the US market. Now to move on to the final pillar and focusing on capital. Today we announced the intention to divest Teva API. This is in line with our pivot strategy. And this will allow TAPI to realize its full potential in the world API market, which is valued at $85 billion. And subsequently allow Teva to focus its capital on driving the pivot to growth strategy, primarily focused around our innovative and generic portfolio. Moving on to the next slide to give you a guide to the milestones that we had in 2024, it's pretty much more of the same. Keep executing on this strategy, driving our innovative portfolio, as you see that $1.5 billion for Esteto, keep driving the pipeline through the clinic to bring it to market as soon as possible, and work on driving the efficiency in our launches and our manufacturing base in our generics business, and obviously the work we'll be doing this year to divest Taffy at the end of this year, start up next. Moving on to my final slide, I'd like to announce our Healthy Future plan, which is a continuation of our ESG journey at Teva. Teva's focused on three main areas, and these divide into healthy people, and that's making sure we create access to medicines across the planet, making sure people have the medicines they need at the right time, and also making sure we have an inclusive and diverse culture at Teva. Secondly, healthy planet. This is really about Teva stepping up and helping minimize the impact of global warming with the many initiatives we've put in place. And finally, healthy planet. Everything we do at Teva is compliant and has the highest ethical standards. With that, I'll hand over this portion of the presentation to my colleague, Eric Hughes.