Teva Pharmaceutical Industries Limited

2025 earnings conference call. My name is Alex. I'll be coordinating the call for today. If you'd like to ask a question once the presentation has finished, please press start, followed by one on your telephone keypad. I'll now hand it over to Chris Stevo, SVP, Investor Relations. Please go ahead.

Thank you, Alex. Good morning and good afternoon, everyone. On this call, we'll be making forward-looking statements, And we disclaim any obligation to update those statements after today's call. If you have more questions about our forward-looking statements, please feel free to see our disclosures under SEC Forms 10-Q and 10-K. Also during today's call, we'll be often referring to sales growth in local currency, as well as sales growth excluding the prior year results of our recently divested Japanese business venture. So please bear that in mind. And with that, let me turn it over to Richard.

Thank you, Steve. Thank you, Chris, even. And welcome, everybody. Good morning. Thank you for joining the call. I'll be joined today with Eric Hughes, my head of R&D and CMO, who will be walking you through the pipeline. And Eli Khalif, CFO, will go through the financial update. So starting with, as I always do, the pivot to growth slide. Next slide, please. The four... Pillars are up here to go. So we've been executing this since 2023, and I'm pleased to say it's delivered continuous growth and we enter a 10th consecutive quarter of growth. Now, I'll give you an update on how we're doing on all of these pillars today, but you'll see on deliver on our growth engines are in it. Innovative portfolio of Stato, you said in a job, he continues to perform really well on step up innovation. Eric will walk you through how excited we are by our late stage pipeline and how we're progressing that very quickly. On sustained generics powerhouse, you'll see that our generics business is stable. I would remind you this is reflecting strong prior year comparisons and some phasing, but I'll go into that in a bit more detail later on. And on focus to business, we'll give you an update on the Teva transformation programs that we announced in Q1 and at our capital markets day, and you'll see that we're well on track to deliver the savings that we committed to. Now, if you move to the next slide, revenues were up. to $4.2 billion, up 1%. And I think not only is this the 10th consecutive quarter of growth, but what I'm particularly pleased about is where this growth is coming from. And as you'll see throughout the deck, this is driven by an innovative portfolio of Estero, JV, and Yosetti. And this has enabled us to have good, strong growth of our adjusted EBITDA up 7% and our non-GAAP EPS up 10%. And our net debt to EBITDA is just over 3%. we go on to the next slide a slide that i do like to show uh externally and internally because after many years of sales decline we are in our 10th quarter of consecutive growth it's also a good slide just to highlight that prior comparison year that we have in q2 24 we had 11 growth um and so that's just worth noting but we remain committed and confident that we're going to hit our mid single digit average growth rate that we committed to for 27 targets. And that average growth rate is between 2023 and 2027. So let's go into a bit more detail on the revenue. So the revenue, as I said, was up 1%. But if you look, I'm excited about where this is coming from. Esteto, just below 500 million, up 19%. Iseri up 120% at $54 million. And Ejovi, a very strong 31% at 155. Our global genetics business declined 2%. And just to reiterate what Chris said, this is excluding the Japan divestiture. And I'll go into a bit more details as to what's driving this generics, but I would remind you of the strong comparison year that we had last year. Now on TAPIs down 11%, I'd say in terms of Q2 results, I would say this is more of an anomaly and not indicative of TAPIs normal results. And there are several things that have impacted their seasonality and just timing of shipments, but we expect TAPI to grow for the full year. So now going into the innovative portfolio in a bit more detail, as you can see, Stedo grew 22% in the US, our major market, up to $495 million. And because of these strong results, we're in a position to narrow the range here, and we brought up the bottom part of the range to $2 billion. Now, this performance was driven by good TRX growth and particularly growth of XR, which you'll see has fueled our growth in our milligrams, which is up 34%. And this is important to understand because as we grow our XR, which we see as very beneficial for patients and their compliance and their adherence, it does obviously change the dynamics around TRX. And that means the number of scripts that will come through will be less because people move to XR. And we've explained that a number of times. I just wanted to reiterate that. Now, as we move on to Yasedi, another strong performance, I'm really excited to be in a position to raise the guidance to 190 to 200 million, up 120% year on year. And this just shows the good capability that we have in our US team to execute, but also the good product profile. As Eric and I often talk about, the physicians do really like your study. It's easy to use. It gets to therapeutic levels within 24 hours, subcutaneous. It isn't required to be kept in a refrigerated, and it's in a pre-filled syringe. Now, as you can see, we've made real progress in competing in the respirator market and in the long-acting market, but now to continue to this impressive growth, we want to move to actually compete in the broader market of schizophrenia. So we'll be looking for patients to benefit from this on other molecules currently. Now, this impressive performance of Yosedi, I think it's worth just reminding everybody that we will be finally in olanzapine and we'll be in a position to launch our long-acting olanzapine next year. And the capability we've built in this team, the knowledge of the patients, the physicians, and the payers, give us real optimism that we can develop a world-class long-acting franchise in schizophrenia. And once again, I'd like to move on to Adobe now, our third and final of our innovative portfolio. We've got a bit of a trend here. We've increased the guidance here on Adobe as well because of the strong performance. So we're up from 600 million to 613 to 640, that range. And I often say this, but it is worth reiterating. I'm really impressed with our ability to execute in what is a very competitive market. Not only are we facing all CDRPs, but it is a competitive injectable market as well. But the team, whether it's in the US, Europe or international markets continue across many of these areas to grow our market share and to show a level of competitiveness. Now, moving on to our second pillar, which is step up innovation. This is a slide that I will go into a lot more detail. So I'll just highlight a couple of things which I'm particularly pleased about is one, the late stage of this pipeline. So we have products either come to the end of the phase three and about to be filed or in the middle or about to start with Dubik-Ketog. What I'd also draw your attention to is two of these products can be in multiple indications. So Dubik-Ketog is one and anti-IL-15 is another. But if you just take them with the indications we've listed here and take the totality of this, this pipeline will generate in peak sales over 10 billion of sales. So that is a really exciting for any company, but a company in the transition to a biopharma company like Teva, I think that's particularly exciting. And if you go on to the next slide, that's where I think I can really reiterate our confidence in hitting our 2027 numbers from an innovative point of view of 3.5 to 4 billion, because obviously we'll be launching Olanzapine next year and you've seen the momentum we have in your study. But as we get to 2030, we've said we'll have greater than 5 billion of innovative sales. I remind everybody that we expect to see Estero to continue to grow to 2030 and beyond, Yosedi, and there's also, we've shown the performance of Ejovi, but that'll be joined by Olanzapine, Daria, Dual Action Rescue Inhaler, and Duva Ketu. Now, the thing to remember as well is that As we drive this innovative portfolio, we are changing our profitability because these are very different levels of profitability than our generics business. Now moving on to our third pillar, our generics powerhouse. So as you can see here, the generics business performed at 2% across our global business. And I remind everybody that there was a tough comparison year where we had an 11% growth the prior year. And so I have put up here a two-year CAGR just to show that when we think about generics, we think about this on a multi-year period because obviously some years we have more launches than others. But let me just give you a bit more detail here. So in the US, this was driven by two things. Our prior year comparison where we launched Victoza and we had a big launch with Victoza in the US in Q2 2024, as well as some phasing and time-lapse shipments of generic Revlimid. Now, if you exclude these, our US generic business grew. So that just shows the healthiness of the business we have in the US. And from an EU point of view, we did actually grow the business 8% in the prior year, which is very high for such a big business. So although that growth has come down, it reflects, once again, just the phase of new product launches, some tenders, which only happen on a two-year basis, and some competitive stockouts, which we took advantage of last year, and they're no longer there. But we remain very confident about growing our generics business going forward. And for the full year, we're just reiterating that our guidance for our generics business will be flat to low single digit. The confidence going forward is based on the fact that we have 15 complex generics to launch, multiple other generics to launch across our EU and international markets, as well as eight biosimilars, which we'll be launching between now and 2027. Talking about biosimilars, let's move on to biosimilars now. And as you can see here, Uh, it's an exciting time for our biosimilars. We're seeing some really good sales momentum, um, in the U S and that's been driven by our established brands, as well as our new launches with, um, Solazi and Solaris that we, generic Solaris that we launched, uh, in Q1 of this year. And I'd like to remind you, we have a portfolio play here. And so we have more launches to come. In fact, we have five additional launches in the second half of 25 and to 27. So our ability to hit their goal of generating 400 million of additional sales by 2027, which we announced at our capital market day, we remain very confident about. And it's good to see that our strategy of a portfolio play is starting to play out. Now moving on to the final pillar of our pivot to growth strategy on focusing the business. I just wanted to give you an update of where we are in the Teva transformation. As you know, we announced that we're transforming Teva as we had to become a world-class biopharma company. And to do that, we put together a modernization program, which will allow us to generate 700 million of net savings. And this is after the reinvestment in our innovative pipeline and our innovative portfolio. We've also committed to deliver two-thirds of this by the end of 26. And as you can see by this slide, we're well on track. We've already achieved 20% of this two-thirds, showing you we have good momentum, good execution, and delivering on these savings. Now moving on to TAPI. I do want to give you a brief update on the deal here. The deal is still in active and advanced discussions. And while I'm disappointed that I don't have a definitive update to provide you at this time, my main focus on delivering the best outcome for our shareholders and we'll reach the final decision in the third quarter. So before I hand the baton to Eric, I just wanted to give you an update on how we feel about the full year and our guidance for 2025. Now, we're confident to hit our guidance in 2025, and when you think of it from a revenue point of view, the way we're going to get there has slightly changed, and I think it's changed in a positive way. As you can see by this slide, our innovative portfolio is going to over-deliver on what we thought at the start of the year, and we rate guidance across all of the products, Esteto, Uceti, and Ejovi, totaling an additional $95 million for the year. Our GX business, as I've said, we predict will either be flat or low single-digit growth. And because of that, we believe from a revenue point of view, we will hit our mid or slightly below our mid-20s. point of our revenue guidance. But Ellie will go into a bit more detail on that and the confidence we still have in our EBITDA and our EPS. So with that, I'll hand over to Eric.