Teva Pharmaceutical Industries Limited

Hello and welcome to the Q1 2025 Tether Pharmaceutical Industries Limited Earnings Conference Call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished, please press star, followed by one on your telephone keypad. And I'll hand it over to your host, Christopher Stivo, Head of Investor Relations to begin. Please go ahead.

Thank you, Alex. Good morning, everyone. In the course of this call, we're going to be making some forward-looking statements, and any statements we make are valid only as of today, and we undertake no obligation to update them in the future. And if you have any additional questions on our forward-looking statements, you can see the relevant sections of our SEC filings under Forms 10-K and 10-Q. Additionally, during today's call, all comments made to revenue growth year over year will be in local currency terms unless otherwise noted by one of us. And with that, I will turn it over to Richard Francis.

Thank you, Chris, and good morning and good afternoon, everybody. Thank you for joining the call. Looking forward to talking to you through this agenda today where myself, Eric Khalid, my CFO, and Eric Hughes, the head of R&D. We're going to go through the business update for Q1, but also we're going to give you an insight into the path towards our 2027 targets and the confidence and the high level of confidence we have in achieving those. Now, as you remember, this all started in 2023 with the pivot to growth strategy being launched. And this was to return the company to growth. And as you can now see, this is our ninth consecutive quarter of growth. And this has been driven by executing on our pillars to live on our growth engines, step up innovation, sustain the generic spare house, and focus the business. And as you'll see throughout the presentation, to live on our growth engines, we continue to perform strongly with Estero, Ajovi, and Yesedi. Eric will give you some insight into the progress we've made on our pipeline and why we're excited about it, the filing of Alanzaprine in the second half of this year, and the progress to the phase three trial for Duva-Keto. You'll see once again, our generics business continues to grow, and that will soon be supported by similar launches, which I'll talk through later in the presentation. We're constantly focused on capital allocation and allocating our capital to the highest areas of return to drive growth. As for TAPI, I can tell you that we are still in advanced discussions, and I can't comment further until we make an announcement. So now moving on to the results. As you can see, revenue was up 5% to 3.9 billion. Adjusted EBITDA was up 3%, and our non-GAAP EPS was up to 52 cents, up 8%. Good free cash flow for the quarter, and our net debt EBITDA is just above 3. Now to move on to the next slide. As you can see, and I've mentioned it already, but I will mention it again, this is our ninth consecutive quarter of growth. really emphasizing the fact that this strategy and the focus and the prioritization we've put around our innovative brands is driving growth on a ninth consecutive quarter. Now, let me go into a bit more detail as to what is driving this. And I think this is a really important slide and a really important time for Teva to show this slide. What you'll see is the growth was spearheaded by our innovative brands, but they reached 589 million sales. That's a 45% increase. over last year. And this was led by Estedo growing at 39% globally, Jovi up 26% globally, and Yosedi doubling to 39 million. Now, I'm pleased to show that our generics business continues to grow in this quarter, up 3%, and we have another quarter of growth for TAPI. But let me double-click now and go into some of the detail here. So starting with Estedo. Really good performance across the world, but this is primarily led by the U.S. And as you can see, the U.S. business is up 40%. So congratulations to the team here. And this is really driven by two factors. First, the combined effects of continues to grow our TRX, but also the continued penetration of Stato XR. And as you can see, we now have more than 60% of new patients on Stato XR. Now, the benefits are clear, and I think Eric and I have talked about those quite a lot. It reduces pill burden, it creates an optimal dosing, and subsequently leads to better patient adherence and compliance. And as you can see here, the US milligrams growth is up 38%. And because of this good start to the year, we are narrowing the guidance here and just raising the bottom end by 50 million to 1.950 billion for the year. Now to move on to USETI. You said he continues with strong momentum and I'm pleased to show that the TRX continues to grow and up 177%. Now, obviously this was on a small base, but I think what is pleasing to see here is that we've now gained over 60% of the share of the spirit on long acting market. And what this means is going forward, we need to start to compete more broadly in the long-acting market. So that's including patients not treated with the oral or the long-acting respirator. Now, we believe we have confidence in doing this because of the strong product profile we have that Eric and I once again talk a lot about. The fact that you can reach therapeutic dose within 24 hours without supplementary therapy is a very big positive for physicians, as well as the subcutaneous needle and the fact that it doesn't have to be stored in a fridge. So good growth there from Resetti. Now moving on to Jovi. Jovi up 26%, reconfirming our guidance for 600 million. And once again, what pleases me about this is it shows that we can execute on our innovative brands globally, not just in the US. And good growth we're seeing in Europe and good growth in international markets. And some nice data points here that I just want to reference. We are the number one preventative CGRP injectable company in the top US headache centers. And we are the number one preventative CGRP in injectables in 28 markets across Europe and international. So these three products really show our ability to drive innovative brands when we bring them to the market. So congratulations to all the people that are responsible for this. Now, as I move on to our generics business, as you can see, we continue to grow our generics business up 3% year on year. And as you can see, we grew this across all of our regions, 5% in the US, 1% in Europe, and 2% in international markets. Now, this is a slower growth than we've had in previous years. And this was really because of the prior comparisons, where we had a number of launches across all of our markets. And in Europe, we had a number of tenders, which were not really repeated in Q1. We also saw the slowdown in inflationary in many of our international and European markets. That has also impacted us. Now, what I'd like to point out, Q1 represents the high watermark, likely high watermark for 2025. So just factor that in as you consider our generics business going forward. Now, I'd like to take a moment to talk about our biosimilar business. We talked about this from a point of view that we have a portfolio strategy play and we're going to bring multiple products to the market. And we're starting to see that happen now. As you can see in Q1, we launched two products in the United States, Biosimilar Humira and Biosimilar Solaris. So congratulations to the team for bringing those to the market. But in 25 to 27, we have another five products to launch. And some of these, depending on FDA approval, could actually come in 2025. But this just emphasizes the fact that we have a number of portfolio biosimilars coming to the market. And this gives us a real chance to grow our biosimilar business at a faster rate than we have in the past. Now I want to take a bit of time. That's Q1, and I focused on driving the business in Q1 and giving you an outlook on that. Now I want to take a moment to talk about why we are so confident about hitting our 2027 target. And this really comes down to two areas of focus. One is, how do we keep driving the top line? And the second is, how do we manage are OPEX and capital allocation. So let me start with the first one. So as you can see here, we have multiple growth drivers for 2027. Touching upon some of the brands I've just spoken about, in our innovative portfolio of Esteto and Ejovi, we see continued growth in these over this period. And we're confident about hitting $2.5 billion of sales for Esteto in 2027. But this will also be supported by UCEDD, as you've seen good growth with UCEDD, and that will be joined by Olanzapine in the second half of next year as that comes to the market. So we'll have a nice long acting franchise in schizophrenia. Now, as we think about our generics business, we think about that being stable from 25 to 27. And in our generics business, we include OTC and biosimilars. But just like to point out, that means we'll be offsetting the generics Revlimid impact by 2027. And then if you factor in our legacy innovative brands like Capaxon and Bendecca, we anticipate they will continue their slow decline. What is worth pointing out on this slide is that this growth is predominantly driven by our innovative portfolio, which is a high margin business. Now, if I move on to the next slide, I'd like to talk to you about how we're thinking about capital allocation and OPEX. But this is more fundamental than this. This is really about transforming Teva from a pure play generics company into a leading biopharmaceutical company. I'm going to do this by primarily focusing on three areas. First is modernizing the organization, leveraging our regional hubs, driving more automation, reducing layers. And then prioritizing resource allocation, reducing costs in functions like G&A and TGO and making sure we allocate them to the growth drives I just mentioned on the previous slide. And then optimizing our external spend. We have a lot of suppliers and we have an opportunity to consolidate those and really optimize our procurement. Now, when we do that, we're going to end up with, in 2027, 700 million of net savings. And that is after the reinvestment in our growth portfolio that I've just mentioned and our pipeline, while offsetting the generic Revlimid profit loss in 2026. So as you can see, we have a very clear path to achieving 30% operating margin in 2027. Now with that, I would like to hand over to Eli Kalief, who's going to walk you through the financials and a bit more detail on that 30% operating margin. Over to you, Eli.