Teva Pharmaceutical Industries Limited

Hello, everybody, and welcome to the Q2 2026 Teva Pharmaceutical Industries earnings conference call. My name is Elliot. I'll be coordinating your call today. If you would like to ask a question during today's event, please press star followed by 1 on your telephone keypad. And I'll hand over to Christopher Stevo. Please go ahead.

Thank you, Elliot. Good morning and good afternoon, everyone. Thank you for joining us on our second quarter call. Obviously, our materials are posted to our website this morning, so please see those. And before I turn the call over to our CEO, Richard Francis, I'd like to remind everyone that we'll be making forward-looking statements on this call. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in our earnings press release in our most recent forms 10Q and 10K filed with the SEC. Any statements that we make are only as of today, and we undertake no obligation to update these statements subsequently.

With that, Richard Francis. Thanks, Chris, and good morning and good afternoon, everybody. Thank you for joining the call today. And on me, joining me, the call today will be Dr. Eric Hughes, Head of Global R&D and Chief Medical Officer, and Eli Khalif, our Chief Financial Officer. Now, moving on to the slide I always start with. the Pivot to Growth strategy that we launched in 2023 that's based on these four pillars. We'll summarize how we've performed against these four pillars in quarter two, but just to give you a quick overview. On delivering our growth engines, Esteto, Jovi and Yosetti all delivered strong Q2 performance, and we are raising our full year revenue guidance for these products. It's worth reminding you that the innovative portfolio is reshaping our financial profile with stronger revenue growth, margins, and Free Cashflow. As we move on to the second pillar, Step Up Innovation, our pipeline this year will provide eight major milestones, and this now includes EcoPiPan, and this gives us the potential for five submissions over the next five years. With regard to creating a generics powerhouse, biosimilars are becoming a growth platform within generics. We now have 15 products in the market and 14 in our pipeline, and we see additional opportunities through further partnerships. And on our final Pillar, Focus the Business. I think we make great progress on our capital allocation. We've had one of the agencies upgrade as Fitch to Ingress and Grade and we see the other two doing this in the not too distant future. We also allocated capital to the acquisition of Amalex. We closed that deal in June and we're expecting the launch next year if FDA approves. And then finally, the conversion of the ADS to ordinary shares and the ability to list on the New York Stock Exchange should make investing in Teva accessible to more investors. Now moving on to the financials. Now I'm really proud of this slide and you may ask why, but let me walk you through why. Now we have stable revenues despite nearly 8% of headwinds from generic revenue loss year over year. We're growing our profit margin as well, 80 basis points, improving gross margins year over year driven by strong innovative growth despite this loss of generic revenue. We're actually growing our EBITDA, obviously excluding the AMOLEX acquisition. and our free cash flow is up 31% as a result of our disciplined capital allocation. Now, if I go on to the next slide, I'll give you a bit more detail. As you can see, the innovative portfolio has had a strong quarter, up 43% year on year. A study up 40%, your study up 43% and the Jovi up 56%. Generics is down 15% and this is largely due to lower generics revenue contribution versus 2025. But if I now go into a bit more detail, starting with Estetto, a core growth driver here. This is another strong quarter. In the US, revenue reached 676 million, up 33% year over year, and global revenue up 40%. Demand remains strong, with TRX up 14% and milligram growth up 21%, supported by new patient starts and adherence. Estetto XR now represents over 60% of new patients, Strength and Convenience, Adherence and Long-Term Durability. And because of this strong quarter, we're now increasing our outlook by 50 million at the midpoint. So it's now 2.45 billion to 2.6 billion. It's worth noting that the midpoint there is 2.5 billion, which was the target we gave ourselves for 2027. So we have a chance of beating this year early. but I think more importantly, we see continued momentum and a significant untreated population that still could benefit from Estedo and hence our confidence in greater than 3 billion of peak sales. Now, moving on to Uceti. Uceti continues to grow with strong momentum. It is the fastest growing long-acting injectable treatment for schizophrenia amongst atypical LAIs. Revenue grew 43% to 77 million in Q2 based on strong demand. and that was reflected in our TRX-MOT up 63% year-over-year. The commercial execution has been impressive and this can be seen with USEDI nearly doubling the risperidone long-acting share and it has now gone from 5% to nearly 10%. And USEDI is capturing nearly 80% of the risperidone LAI market. And because of this strong performance, we're increasing the outlook by 15 million at the midpoint, so the new guidance is 270 million to 290 million. Now this continued excellent execution has given us great confidence in the upcoming launch of Olanzapine, which I'll now move on to. So Olanzapine represents a meaningful next growth opportunity with FDA action and US launch anticipated in Q4 of this year. The unmet medical need is significant. Olanzapine holds roughly 20% of US oral prescriptions, while Olanzapine LAI uses less than 1% of the LAI market. Now we know this market. We can really leverage the synergies with UCEDD, but also the deep knowledge of the schizophrenia market, whether that's physicians, patients, nurse practitioners, or some of the long-term care facilities. Our direction of travel is clear, to deliver a best-in-class launch that expands treatment options and reinforces our leadership in the LAIs. Allanzapine, together with UCEDD, gives us a compelling path to an expected peak sales of 1.5 to 2 billion of revenue. Now moving on to Ejovi. Ejovi demonstrates our ability to execute in competitive innovative markets wherever they may be. We continue to outpace the injectable market growth and we lead in many of the markets despite entering late. Q2 global revenue reached $244 million or 56% year over year. The US revenue grew 83% driven by improved contracting, favorable gross to net, and market share gains. Ex-US momentum remained strong, supported by volume growth and leading brand chairs across Europe and international markets. Because of this strong quarter, we are increasing our outlook by 90 million at the midpoint. So now the range is 850 million to 870 million. And looking beyond 2026, we see a clear path to 1 billion peak sales for Jovi. Now moving on to the newest member of the innovative family, EcoPipeBand, a first-in-class opportunity with compelling efficacy and favourable tolerability in Tourette syndrome. a serious pediatric neurological disorder with limited treatment options. We've already filed with the FDA with a potential launch in the first half of 2027. Now, the unmet medical need is clear. There are 100,000 pediatric patients who live with Tourette syndrome. Only 50,000 are treated and only 20 to 30% remain on therapy after one year. So this shows there is a real need for a product like Ecopipan with compelling efficacy and favorable tolerability. Now we're well positioned to execute on this leveraging our CNS capabilities and the experience we've garnered with Esteto, Uceti and soon to be long acting Olanzapine. Now this moves on to a slide which I've never been able to show before actually in my rather long career and I apologize for the small font but we had to get everything on one slide. And what this highlights is just the innovative pipeline we have and our potential to launch one asset per year for the next five years. transforming Teva into a leading biopharma company. The near-term launches are clearly sequenced. The lands have been in 2060, the pipeline in 2027, followed by Dowry, Emerald Solomon, Dubuquitig through 2028 to 2030, obviously all subject to regulatory approvals. But looking up to 2035, we see further upside from the additional indications that we've announced there for Dubuquitig, as well as the additional indication of anti-R15, as well as our T-slip IL-13. We also are pursuing more business opportunities as well. This is development opportunities that is. Now moving into our pipeline slide, I'll try and be short on this and allow Eric to talk more through this, but there are some points which I think are worth mentioning. One is this is a near term pipeline with many catalysts, as I mentioned in my opening remarks. We went into R15, we saw the vitiligo data where we're going to see the CDAC data in the second half of the year. We've got this near-term launches with the Lanzapine and Ecopipine filed. Dairy's progressing well. We've announced two new indications for Dubiquitin. So together, all these assets represent over 10 billion of peak sales. Although I have realized we said that before, and that was prior to actually adding Ecopipine to this slide, as well as the two new indications of Dubiquitin. So I must remember to update it. and what does this all do for Teva? Well, it fundamentally transforms our growth profile. Our growth is really accelerating with revenue moving from 4.9 billion in 2022 to an expected 16.5 to 16.8 this year. And our portfolio is shifting towards higher value innovation with innovative revenue expected to reach 22% of total revenue in 2026 up from 9% and you can see where it's heading to 2030. Now with regards to margins, we are creating stronger margins with gross margins expected to expand from 54% to more than 60% by 2030 plus. And this is once again fueled by our innovative portfolio. Now moving on to our generics business. Our generics business is down 15% versus Q2 2025. But I don't think that tells the full story. If you exclude generic Revrimid, our generic business remains stable. Global generics was down 2%, the US up 1%, and our ex-US decrease mainly was due to lower product launches this year and a softer cough and cold season. While 2026 is expected to be somewhat softer, we can continue to see a stable generics business capable of delivering 1% to 2% annual growth over the long term, supported by a steady flow of our new product launches. I remain very excited about the future of our generics business and one of the main reasons I'm confident is the growth rate that is starting to emerge from our biosimilar portfolio and pipeline. Let me move on to this now. So, biosimilars are transforming our generics portfolio. Before Pivot to Growth, we had three biosimilars. Today, we have 15 in the market, and in the next few years, we expect to double it. It's not just the size of our portfolio, it's the execution. In the US, two out of our five products are ranked number one, and a third is neck and neck, and I believe soon to become a number one. In the US, in the EU, where we have just launched three biosimilars, early signs are very positive. We continue to seek partnering to increase this portfolio and I believe we are becoming the partner of choice because of this excellent execution. And based on our current momentum, we are on track to exceed in our 800 million by 2027. To conclude before I hand over to Eric, we're on track to hit our 2027 financial growth targets of mid-single revenue growth, non-GAAP operating income target 30% and a net debt EBITDA below 2%. and Cash Converse earnings of 30%, 80%. And with that, I will hand over to Eric.