Teva Pharmaceutical Industries Limited

Hello and welcome to the Q3 2025 Tether Pharmaceutical Industries Limited Earnings Conference Call. My name is Alex and I'll be coordinating today's call. If you'd like to ask a question at the end of the presentation, please press star 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. In a moment, I'll hand the call over to my CEO, Richard Francis, But before I do that, it is my duty and my honor to remind you of our forward-looking statements. Today on this call, we'll be making forward-looking statements, and we undertake no obligation to update those statements after today's call. If you have any questions regarding forward-looking statements, please feel free to see our SEC filings under Forms 10-Q and 10-K in the relevant sections. And with that, Richard Francis.

Thanks, Chris, and good morning, good afternoon, everybody. Thank you for joining the call today. On the call today, I'll be joined by Dr. Eric Hughes, head of R&D and chief medical officer, and Eli Khalif, the CEO of Teva Pharmaceuticals. So starting with, as I always do, the Pivot to Growth strategy. This is a strategy that have guided Teva for the last three years. A strategy based on the four pillars, deliver on our growth engines, which is all about driving Esteto, Uceti, and Ejovi, our innovative portfolio, stepping up innovation, which Eric will talk to you about, but the great progress we're making across our innovative pipeline, sustained generics powerhouse, and the work we've done to stabilize our generics business, and then focus the business. And we'll give you an update on where we are with our transformation of Teva, our $700 million cost-saving programs, as well as an update on TAPI. Now moving on to the actual results. Pleased to say this is our 11th quarter of consecutive growth. up 3% in revenue to $4.5 billion, and adjusted EBITDA up 6%, and our non-GUT EPS up 14%. These all compare to Q3 2024, and our free cash flow is just above half a billion. I'm really pleased to say that our net debt to EBITDA is now below three times for the first time since 2016. Now, moving on to the next slide, one of my favorite slides, I have to admit. Um, this is our 11th quarter consecutive growth after many years of sales decline. And it's worth noting that Q3 24 was a particularly difficult comparison year where we had growth of 15%. And so to go 3% over that comp, I think, uh, is a Testament to the work we've done on our portfolio and the Testament to the teams. Now this puts us on track, um, for our growth targets we set for 2027. to have mid single digit growth. So congratulations to the whole team that have made this happen over the last 11 quarters. Now, going down a bit more detail, what's behind this $4.5 billion revenue and 3% growth? Excuse me. This growth was spearheaded by our innovative products, and I'm really pleased to say that they are now worth over $800 million for the quarter, and the growth is 33% year on year. Estero grew an impressive 38%, reaching $618 million. Yasedi performed strongly, up 24%, reaching $43 million. And the Jovi performed well, up 19% to $168 million. Global Genetics Revenues was up 2%. And TAPI was down 4%, reflecting some seasonal volatility. So now I'm going to double click and go into a bit more detail on all of these areas, starting with Estero. As you know, Stedo was selected earlier this year for CMS, the 2027 price negotiation. And I'm pleased to say that agreement that we've concluded is consistent with our midterm expectations for Stedo that we first laid out back in May 2023. And this means that we can confirm with confidence our 2027 revenue target of 2.5 billion and our peak sales target of over 3 billion. Now let's talk a bit more about Stedo in Q3. It was another strong quarter for Esteto, where the team continues to perform incredibly well. The US reached 601 million in Q3 25, growing at 38% year over year. And this is the first time we have passed 600 million. So congratulations to the team for all their hard work in making this happen. And it really reflects the understanding this team has of the market. We grew TRX 11%. And we continue to see the increasing penetration of Esteto XR. And it's worth reminding everybody again that Esteto XR requires fewer scripts compared to the original Esteto. And that's why it's equally important to look at the milligrams dispensed. And as you can see, these are up 25%. Now, as you see on this slide, we've highlighted that with 2026 approaching, we have a good sense of Esteto's 2026 forming position. And we continue to reflect the balance between preserving value and maintaining access. So based on these strong results in Q3, we can increase our revenue outlook for Stedo to $2.5 billion to $2.1 billion for the year. Now moving on to Yosedi, another exciting member of our innovative family. Yosedi continues to perform well. Momentum remains strong. as we continue to address the needs of the mild to moderate patients and those beyond who take risperidone. Revenues are up 24% year over year, and TRX was up a strong 119%. It is worth noting that revenue growth was partially impacted by a one-time Medicaid gross debt adjustment. Now, this does not impact our long-term LA franchise expectations, and we reiterate our peak sales target of $1.5 to $2 billion for the franchise. Now, this confidence is rooted in the data. Your study's MBRX is significantly above the TRX. As you know, in Q3, we also had an expanded indication for bipolar 1 disorder. Now, to give you more guidance on how to forecast your study going forward, the Q4 implied guidance of 55 to 65 million provides a cleaner run rate for forecasting going forward due to that gross to net adjustment in Q3. But I want to take a couple of slides just to talk about the excitement we have around our L.A., our long-acting franchise in schizophrenia. And why do we think this $1.5 and $2 billion is achievable? Well, it really comes down to the great work that's been done with UCEDD already. You know, the team here has created great traction, as you can see, with 119% TRX growth. We have a great product profile with UCEDD, and we anticipate having a similar strong product profile with Olanzapine. But more importantly, the capabilities and the knowledge that has been built here, we have the same people in front of key payers, the same people in front of these key physicians, these key nurse practitioners, healthcare providers, patient associations, the people who look after the forming committees. That puts us in a very strong position. And we know and believe there's a significant unmet need in the olanzapine for a long-acting treatment. If you put those two together on this slide, We have the ability with Yosedi and our long-acting olanzapine to treat up to 80% of patients who suffer from schizophrenia, whether that's mild to moderate with Yosedi or moderate to severe with long-acting olanzapine. And just to highlight, unfortunately, 4.7 million people suffer from schizophrenia in the US and Europe. So the opportunity for both brands is significant. That's hence the reason why our confidence in the 1.52 billion remains strong. Now moving on to Adjovi. You know, I do love a job. It continues to grow strongly across all regions in what is still a very competitive market. And it's nice data points here. We are the number one preventative CGRP injectable in new prescriptions among the top U.S. headache centers. And we are the number one preventable CGRP injectable in 30 countries across Europe and international. And so we confirm our guidance of 630 to 640 million. Now, staying on innovation, I'm going to touch briefly upon the innovative pipeline. As I know, Eric, we'll talk to you about this later, but I'm super excited about this. Why? Because it's near term. These are late stage assets. Alanzapine, I'll talk to you about the filing of that this year. Dairy, the good recruitment that we're seeing to bring that to the market in 27. Dubikita, starting our phase three study. And Rosomum, great recruitment there. But then I look across to the right-hand side of the slide, and I see the potential of peak sales, and it's over 11 billion. And I remind you, that's just for the indications on this slide. We know that dupuquitug and anti-IR15 will be pursued in multiple indications. So we really have strong growth drivers for the future for Teva. Now moving on to our generics business. Our generics business grew 2% over 2024. And this is fueled by launches as well as the growth of our biosimilar and our OTC business. As I reminded you before, we tend to look at this business over a two-year CAGR just because of the inherent timing of new launches that we have in this business. Now, looking at the regions, we had a very strong quarter for the U.S. It grew 7% in Q3, and that was driven by several launches and particularly strong performance of biosimilars, as well as some phasing patterns for our generic Revlimid, which I would like to point out, these will not be repeated to the same magnitude in Q4. Europe declined 5%, mainly due to some tough comparisons the prior year where we had a number of launches and a number of tender wins, which are for two-year periods. So there's a 1% CAGR for the two years. International markets grew at 3% or 12% on a two-year CAGR. But now I'd like to talk to you a bit about our biosimilars because we're entering an exciting period for our biosimilars portfolio. We now have 10 inline assets globally and the potential to launch six more through 2027. So we're well on track to add another 400 million by 2027, as we forecasted back at the start of the year. And I want to remind you that today we're growing strongly in biosimilars without substantial launches or revenues in Europe, which is the largest region in the biosimilar market. And our European pipeline will start to convert into launches and revenues, and biosimilars will be a more significant driver for Arteva overall after 2027. Now moving on to the fourth pillar, focus on business. we made significant progress with the Teva transformation program. And this is something we started at the start of this year. And we made a commitment to realize two thirds of the 700 million by the end of 2026. And I can tell you on track to do that. The reason why I can tell you that is because we're on schedule to hit our 2025 goals. And that sets us up well for the start of next year. But I'll leave Ellie to go into a bit more detail later on in this presentation. Now, before I hand it over to Eric, I wanted to give you an update on how we're tracking for the 2027 targets, which we are reiterating today. So from a revenue point of view, with the IRA negotiations now finalized, our upcoming launches and the stabilization of our generic business, we estimate that 2025 will end the year with a 3% to 4% growth range, consistent with our 23% to 27% mid-single-digit average growth. On OP, because of the work we've done of driving our innovative portfolio, remind you, up 33%. as well as the progress we made on organizational effectiveness, we are on track to our 30% margin. And this year, we will end around the 27% margin overall. And then that EBITDA dropped below three, as I mentioned earlier. By the end of this year, we should be around 2.8, well on track to hit the two times by 2027. And with that, I will hand over to my colleague, Eric Hughes.