Q4 2023 Teva Pharmaceutical Industries Ltd Earnings Call

January 31, 2024

Operator: Hello, and welcome to the fourth quarter and full year 2023, Teva 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 the telephone keypad. If you'd like to remove your question, you may press Star followed by two. I'm going to hand it out to our host Ran Meir Head of Investor Relations. Please go ahead.

Alex: Like to ask a question at the end of the presentation. You can press star followed by one on the telephone keypad.

Speaker Change: So much for me to your question you May Press Star two.

The MTR highest bond met Ran Meir head of Investor Relations. Please go ahead.

Ran Meir: Thank you Alex, thank you everyone for joining us today, we hope you had the opportunity to review our press release, which was issued earlier this morning. A copy of this press release, asl well as a copy of the slides being presented on this call can be found on our website at tevapharmcom. Let me review our forward-looking statement on slide number two. official information regarding this event and our non-GAAP financial measure is available on [Inaudible] 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 full-year results and business performance, business 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 Eli Kalif will follow up by reviewing the fourth quarter financial results in more detail, before providing an overview of Teva's 2024 financial outlook. Please note that today's call will las approximately one hour, and with that I will turn the call over to Richard.

Speaker Change: That's an opportunity to review our press release, which was issued earlier this morning.

The press release.

The slides presented on this call can be found on our website at <unk> Dot com.

Let me review our photos segment on slide number two.

Speaker Change: Information regarding this event and our non-GAAP financial measure is available on Agri any SEC forms 10-K and 10-Q.

Speaker Change: To begin today's call. We just want to say never say always provide an auto deals there was a lifeline for any full year results.

Speaker Change: Format, these events and I'll focus on <unk> and <unk> forward.

Speaker Change: That's helpful Eric.

Speaker Change: R&D and Chief Medical Officer, who will discuss progress.

Speaker Change: On our innovative pipeline.

Speaker Change: Our CFO in Italy infant follow up by reviewing the fourth quarter financial results in more detail before providing an overview will stay last slide 20 financial outlook.

Speaker Change: Please note that today's call is there's a lot of folks does Nate one hour and with that I will turn the call August release of nature.

August: Thank you Anne. Welcome everybody. Thank you for joining the call today. 2023 was a transformational year for Teva. Launched the pivot you guys strategy to get back to growth and I'm pleased to say it does exactly that. Moving onto the next slide. Let's go back to slide please I would like to remind you that the pivot to growth strategy was based on four pillars. Delivering our growth engine. Step up innovation cryogenics powerhouse and focus our business and we are delivering on all four of these pillars and I will go through the presentation today and obviously you saw today. We decided to divest our choppy business I'll go into more detail later in the presentation. Now I'll walk you through the numbers on this slide. Just to say as I said, we got back to growth and Teva I would also like to highlight the numbers include the Sanofi upfront payment as part of this collaboration. Government to commercialization of <unk>. Yeah. So Kevin scribes was 7%. Sales revenue was $15 5 billion well if you take out so let's say it would be 3%. Adjusted EBITDA was up 5%, non-GAAP, EPS up 2% and free cash flow up 6%. I used to say, we made progress on a net debt to EBITDA. 345. Now on the next slide I wanted to just get more detail as what was driving this performance. So I'm pleased to say that the emphasis has performed well. <unk> in particular grew strongly at 28% and the journey continues to show impressive performance with an 18% growth.

Richard Francis: 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 onto the next slide, here we go, go back to slide please, I would like to remind you that the pivot to growth strategy was based on four pillars. Deliver on growth engines, step up innovation, great generics powerhouse and focus our business, and we are delivering on all four of these pillars, as I will go through in the presentation today. And obviously you saw today that we decided to divest our API business, I'll go into more detail later in the presentation. Now I'll walk you through the numbers on this slide, I'm pleased to say, as I said, we got back to growth and Teva I would also like to highlight the numbers include the Sanofi upfront payment as part of this collaboration. Government to commercialization of <unk>. Yeah. So Kevin scribes was 7%. Sales revenue was $15 5 billion well if you take out so let's say it would be 3%. Adjusted EBITDA was up 5%, non-GAAP, EPS up 2% and free cash flow up 6%. I used to say, we made progress on a net debt to EBITDA. 345. Now on the next slide I wanted to just get more detail as what was driving this performance. So I'm pleased to say that the emphasis has performed well.

August: Welcome everybody. Thank you for joining the call today.

August: 2023 was a transformational year for Teva.

August: Launched the pivot you guys strategy to get back to growth and I'm pleased to say it does exactly that.

Speaker Change: Moving onto the next slide.

Speaker Change: Let's go back to slide please I would like to remind you that the pivot to growth strategy was based on four pillars.

Speaker Change: Delivering our growth engine.

Speaker Change: Step up innovation cryogenics powerhouse and focus our business and we are delivering on all four of these pillars and I will go through the presentation today and obviously you saw today.

Speaker Change: We decided to divest our choppy business I'll go into more detail later in the presentation.

Speaker Change: Now I'll walk you through the numbers on this slide.

Speaker Change: Just to say as I said, we got back to growth and Teva I would also like to highlight the numbers include the Sanofi upfront payment as part of this collaboration.

Speaker Change: Government to commercialization of <unk>.

Speaker Change: Yeah.

Speaker Change: So Kevin scribes was 7%.

Speaker Change: Sales revenue was $15 5 billion well if you take out so let's say it would be 3%.

Adjusted EBITDA was up 5%, non-GAAP, EPS up 2% and free cash flow up 6%.

Speaker Change: I used to say, we made progress on a net debt to EBITDA.

Speaker Change: 345.

Speaker Change: Now on the next slide I wanted to just get more detail as what was driving this performance.

Speaker Change: So I'm pleased to say that the emphasis has performed well.

Speaker Change: <unk> in particular grew strongly at 28% and the journey continues to show impressive performance with an 18% growth.

Richard Francis: <unk> in particular grew strongly at 28% and the journey continues to show impressive performance with an 18% growth. You got your generics business, we saw solid performance with Europe growing at 3% and international markets at 14%. I'm pleased to see the stabilization of our North American generics business as well. So that's a bit more detail on what's drive behind these numbers I'll start with our setup on the next slide. We stood up hit it's one 2 billion. <unk> in the U S of 20. 7%. And strong Trs was contributing to that. I'm pleased with this performance as it shows clearly highlights the benefit of the additional resources, we put behind the brand niche extra capabilities that we built. This gives me more confidence that as we move onto the. The next slide as I can reaffirm the guidance for 2027 had two 5 billion. Step in that direction is the guidance. We gave you for 2024, which is a $1 5 billion revenue number. It's worth pointing out and remembering the significant patients people suffer from tardive dyskinesia that go undiagnosed. We launched a direct to consumer campaign early in January to help raise awareness and get these fill in opportunities. Health and therapy. Now moving on to the newest member of our family setting. We have good grasp on for Ya study for 2024, we're giving guidance of $80 million. This is possible because of the what we did in 2023, while we drive awareness and access make good progress across the commercial payers as well as Medicare and Medicaid and insurance. Formulation the medical. Awareness is good as well. Feedback about the product profile. This fits the patient profiles that they will be safe.

Speaker Change: You got your generics business, we saw solid performance with Europe growing at 3% and international markets at 14%.

Speaker Change: I'm pleased to see the stabilization of our North American generics business as well.

Speaker Change: So that's a bit more detail on what's drive behind these numbers I'll start with our setup on the next slide.

Speaker Change: We stood up hit it's one 2 billion.

Speaker Change: <unk> in the U S of 20.

Speaker Change: 7%.

Speaker Change: And strong Trs was contributing to that.

Speaker Change: I'm pleased with this performance as it shows clearly highlights the benefit of the additional resources, we put behind the brand niche extra capabilities that we built.

Speaker Change: This gives me more confidence that as we move onto the.

Speaker Change: The next slide as I can reaffirm the guidance for 2027 had two 5 billion.

Speaker Change: Step in that direction is the guidance. We gave you for 2024, which is a $1 5 billion revenue number.

Speaker Change: It's worth pointing out and remembering the significant patients people suffer from tardive dyskinesia that go undiagnosed.

Speaker Change: We launched a direct to consumer campaign early in January to help raise awareness and get these fill in opportunities.

Speaker Change: Health and therapy.

Speaker Change: Now moving on to the newest member of our family setting.

Speaker Change: We have good grasp on for Ya study for 2024, we're giving guidance of $80 million.

Speaker Change: This is possible because of the what we did in 2023, while we drive awareness and access make good progress across the commercial payers as well as Medicare and Medicaid and insurance.

Speaker Change: Formulation the medical.

Speaker Change: Awareness is good as well.

Speaker Change: Feedback about the product profile.

Speaker Change: This fits the patient profiles that they will be safe.

Richard Francis: I'll also highlight the size of this market a $4 billion market growing at 6%. So once again I think you said you contribute to growth this year, but in the coming years as well. Now to move on to the loss of a member of our innovative portfolio that is Jody. We're pleased with the continued momentum with 18% growth and. And you see this growth across all of our regions and many geographies, we are gaining market share which shows the true competitiveness of Teva. It is based on this good performance that we've given our guidance for 2024 $5 billion and HIV. Now in other aspects of up to deliver on our growth engines of our strategies, all flash portfolio, which I'd like to move on to now. 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 Boston to Humira. We are awaiting an FDA inspection result. With our partner side. Based upon all the fact based. Based in Ireland and based on a successful outcome here, we aim to launch Biosimilar Humira this yet. Now moving on to the second pillar of our pivot to growth strategy and our pipeline I'll call Garrett will walk you through this in quite a detail once again with the strategy and the focus will be. Move the needle Olanzapine has completed recruitment of decisively. Study and we expect the results in H two of this year. Ics Saba entity I think 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 is only one other competitor. We have good momentum around <unk> and we're very excited about the partnership we have with Sanofi to really maximize this asset going forward.

Speaker Change: Now to move on to the loss of a member of our innovative portfolio that is Jody.

Speaker Change: We're pleased with the continued momentum with 18% growth and.

And you see this growth across all of our regions and many geographies, we are gaining market share which shows the true competitiveness of Teva.

Speaker Change: It is based on this good performance that we've given our guidance for 2024 $5 billion and HIV.

Speaker Change: Now in other aspects of up to deliver on our growth engines of our strategies, all flash portfolio, which I'd like to move on to now.

Speaker Change: 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 Boston to Humira.

We are awaiting an FDA inspection result.

With our partner side.

Speaker Change: Based upon all the fact based.

Based in Ireland and based on a successful outcome here, we aim to launch Biosimilar Humira this yet.

Speaker Change: Now moving on to the second pillar of our pivot to growth strategy and our pipeline I'll call Garrett will walk you through this in quite a detail once again with the strategy and the focus will be.

Garrett: Move the needle Olanzapine has completed recruitment of decisively.

Garrett: Study and we expect the results in H two of this year.

Speaker Change: Ics Saba entity I think 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 is only one other competitor.

Speaker Change: We have good momentum around <unk> and we're very excited about the partnership we have with Sanofi to really maximize this asset going forward.

Richard Francis: Now moving onto the third pillar of our strategy. Alex and making this a generics powerhouse as I've said in the past this is based on <unk> III. Specific areas of focus on making sure we have the right portfolio and the market has been executed by our commercial teams. Focusing our pipeline. So we can bring high value products across the top and bottom line to the market on type or after and also optimizing our network. And actually the efficiency of our network. I'll talk you through the pipeline I just wanted to just highlight what 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 are at where our aim is to reduce cogs. To allow us to drive gross margin expansion. Now, let me talk a bit about the pipeline because we have made some progress here. As you can see the desk when it comes to complex generics I think we're in a leading position in the U S across multiple technologies and platforms. We have and we can launch complex generic products. We launched 10 between 2022 and 2023, but I am excited by the 13 that will be launched between 2004 and 'twenty five and as you. You can see here highlighted on this slide with the Green circles. There is a number that we've already launched this as an opportunity for us to drive growth and offset some of the price erosion that obviously is that in the U S market.

Speaker Change: Alex and making this a generics powerhouse as I've said in the past this is based on <unk> III.

Speaker Change: Specific areas of focus on making sure we have the right portfolio and the market has been executed by our commercial teams.

Speaker Change: Focusing our pipeline. So we can bring high value products across the top and bottom line to the market on type or after and also optimizing our network.

Speaker Change: And actually the efficiency of our network.

Speaker Change: I'll talk you through the pipeline I just wanted to just highlight what we've done on our network. We have closed three sites in 2023, So we continue to rationalize and optimize that.

Speaker Change: And also we have kicked off an operational excellence plan for 2024 are at where our aim is to reduce cogs.

Speaker Change: To allow us to drive gross margin expansion.

Speaker Change: Now, let me talk a bit about the pipeline because we have made some progress here.

Speaker Change: As you can see the desk when it comes to complex generics I think we're in a leading position in the U S across multiple technologies and platforms. We have and we can launch complex generic products. We launched 10 between 2022 and 2023, but I am excited by the 13 that will be launched between 2004 and 'twenty five and as you.

Speaker Change: You can see here highlighted on this slide with the Green circles. There is a number that we've already launched this as an opportunity for us to drive growth and offset some of the price erosion that obviously is that in the U S market.

Richard Francis: Now, let's move on to the final pillar and focusing our capital today, we announced the intention to divest have API. This is in line with us. And this will allow <unk> to realize its full potential. World a world API market, which is valued at $85 billion. And subsequently all have Teva to focus capital on driving the pivot to growth strategy, primarily focused on the innovators and generics portfolio. Moving onto the next slide but can you guys guided the milestones that we have in 2024. It's pretty much more of the same keep executing on the strategy driving innovative portfolio as you see that $1 1 billion or $5 billion, but instead of keep. Keep driving the pipeline through the clinic to bring to market as soon as possible and work on driving efficiency in our launches on our manufacturing base in our generics business. Obviously, what we'll be doing this year to divest tap at the end of this year startup. Moving onto my final site. I'd like to announce a healthy future. The plan, which is a continuation of our ESG journey at Teva. Teva is focused on three main areas and these devices that healthy people and Thats, making sure we create access to medicines across the planet, making sure people have the medicines they need to buy time. So 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 to plug a woman with the many initiatives we've put in place. And finally healthy. Everything we do at Teva is compliant and at the highest ethical standards. With that I'll hand over this portion of the presentation as my colleague Eric Hughes.

Speaker Change: And this will allow <unk> to realize its full potential.

Speaker Change: World a world API market, which is valued at $85 billion.

Speaker Change: And subsequently all have Teva to focus capital on driving the pivot to growth strategy, primarily focused on the innovators and generics portfolio.

Speaker Change: Moving onto the next slide but can you guys guided the milestones that we have in 2024.

Speaker Change: It's pretty much more of the same keep executing on the strategy driving innovative portfolio as you see that $1 1 billion or $5 billion, but instead of keep.

Speaker Change: Keep driving the pipeline through the clinic to bring to market as soon as possible and work on driving efficiency in our launches on our manufacturing base in our generics business.

Speaker Change: Obviously, what we'll be doing this year to divest tap at the end of this year startup.

Speaker Change: Moving onto my final site.

Speaker Change: I'd like to announce a healthy future.

Speaker Change: The plan, which is a continuation of our ESG journey at Teva.

Speaker Change: Teva is focused on three main areas and these devices that healthy people and Thats, making sure we create access to medicines across the planet, making sure people have the medicines they need to buy time.

Speaker Change: So making sure we have an inclusive and diverse culture at Teva.

Speaker Change: Secondly, healthy planet. This is really about Teva stepping up and helping minimize the impact to plug a woman with the many initiatives we've put in place.

Speaker Change: And finally healthy.

Speaker Change: Everything we do at Teva is compliant and at the highest ethical standards.

With that I'll hand over this portion of the presentation as my colleague Eric Hughes.

Eric Hughes: Thank you Richard. Moving on to slide four Jovi. Physicians choose a jove jovi, because of its safety and efficacy as well as its convenient auto injector monthly dosing. Okay. Today I'm excited to show you. Our recent data that we've produced from two real World evidence studies, Pearl and finesse showing the durability of Adobe. Migraine is a chronic disease and having durability of response is very important and what we can see in this study is that the data that youre free of migraine has been maintained for two years. After starting a job. This is very important and this translates not only to you just a simple reduction in monthly migraine, but it really is. Eight full days for some patients to achieve a day without migraines. So each month, a patient gets back about it. A week after white without migraine, so very important. Moving on to our slide for Eddie as Richard mentioned, we are very excited to get the approval last year and watch as Eddie and we're also happy to show more durability of Missouri as well here following up on subjects from our pivotal study we showed that the quality of life in patients not only are maintained up to 50. Six weeks, but also slightly improved so this is very important as well for patients with schizophrenia, because we had patients with long duration of crazy the short durations of disease, but we can show here that with a long acting injectable, we can actually not only maintained but improve their quality of life. This is important for our long acting. <unk> because we believe it is important to maintain the exposure in the patient's blood to the spirit of it. So we think this is very important we're happy to see this durability of response moving onto a sterno. One of the things is important for our sterile and as Richard mentioned, there's very much room to grow and access patients who have tardive dyskinesia and one of the things we need to do is make sure. It is easy and convenient to use et cetera as possible. We know in real world evidence that only about 50% of our patients.

Eric Hughes: Moving on to slide four Jovi.

Eric Hughes: Physicians choose a jove jovi, because of its safety and efficacy as well as its convenient auto injector monthly dosing.

Eric Hughes: Okay.

Eric Hughes: Today I'm excited to show you. Our recent data that we've produced from two real World evidence studies, Pearl and finesse showing the durability of Adobe.

Eric Hughes: Migraine is a chronic disease and having durability of response is very important and what we can see in this study is that the data that youre free of migraine has been maintained for two years. After starting a job. This is very important and this translates not only to you just a simple reduction in monthly migraine, but it really is.

Eric Hughes: Eight full days for some patients to achieve a day without migraines. So each month, a patient gets back about it.

Eric Hughes: A week after white without migraine, so very important.

Eric Hughes: Moving on to our slide for Eddie as Richard mentioned, we are very excited to get the approval last year and watch as Eddie and we're also happy to show more durability of Missouri as well here following up on subjects from our pivotal study we showed that the quality of life in patients not only are maintained up to 50.

Eric Hughes: Six weeks, but also slightly improved so this is very important as well for patients with schizophrenia, because we had patients with long duration of crazy the short durations of disease, but we can show here that with a long acting injectable, we can actually not only maintained but improve their quality of life. This is important for our long acting.

Eric Hughes: <unk> because we believe it is important to maintain the exposure in the patient's blood to the spirit of it. So we think this is very important we're happy to see this durability of response moving onto a sterno.

Eric Hughes: One of the things is important for our sterile and as Richard mentioned, there's very much room to grow and access patients who have tardive dyskinesia and one of the things we need to do is make sure. It is easy and convenient to use et cetera as possible. We know in real world evidence that only about 50% of our patients.

Eric Hughes: We know in real world evidence that only about 50% of our patients. A titration pack can achieve the dose range that is necessary to get good. So we ran a study. Sure. Okay, and we were pleased to see that 78% of subjects could finish the titration pack or 90% or 97% adherent and this is important because getting to the titration pack easily and simply for patients gets those patients up into the right dose range that makes sure that we get our patients efficacy and we hope this translate. Since the durability and adherence for long term treatment, so very important and we're glad to see this. <unk> worked so well for our patients. Finally, I just want to review our milestones in the R&D organization, we are.

Eric Hughes: A titration pack can achieve the dose range that is necessary to get good.

Eric Hughes: So we ran a study.

Eric Hughes: Sure.

Eric Hughes: Okay, and we were pleased to see that 78% of subjects could finish the titration pack or 90% or 97% adherent and this is important because getting to the titration pack easily and simply for patients gets those patients up into the right dose range that makes sure that we get our patients efficacy and we hope this translate.

Eric Hughes: Since the durability and adherence for long term treatment, so very important and we're glad to see this.

Eric Hughes: <unk> worked so well for our patients.

Speaker Change: Finally, I just want to review our milestones in the R&D organization, we are.

Eric Hughes: Finally, I just want to review our milestones in the R&D organization, we are. Doing well in our enrollment for our phase III study of a tier one and it's accelerating. Looking forward to that phase II interim analysis in the second half of 2020 form. Our fully enrolled in our <unk> phase III globally, and we will be having our full clinical package of efficacy and safety in the second half of 2024, our anti IL 15 program is finishing up its phase one Ian. <unk> in healthy volunteers, and we'll present that data in the second half of this year. We will also finish enrollment of a proof of concept study in celiac patients by the end of this year. We're excited to look forward to the first in human dosing of our anti PD one IL two program. The first half of this year and finally, we're actively enrolling. Our phase III study in Ics save and looking forward to those results in the second half of 2020.

Doing well in our enrollment for our phase III study of a tier one and it's accelerating.

Speaker Change: Looking forward to that phase II interim analysis in the second half of 2020 form.

Speaker Change: Our fully enrolled in our <unk> phase III globally, and we will be having our full clinical package of efficacy and safety in the second half of 2024, our anti IL 15 program is finishing up its phase one Ian.

Speaker Change: <unk> in healthy volunteers, and we'll present that data in the second half of this year. We will also finish enrollment of a proof of concept study in celiac patients by the end of this year. We're excited to look forward to the first in human dosing of our anti PD one IL two program. The first half of this year and finally, we're actively enrolling.

Speaker Change: Our phase III study in Ics save and looking forward to those results in the second half of 2020.

Speaker Change: And with that I'll pass it off to <unk>.

Eli Kalif: Thank you, Eric and good morning, and good afternoon to everyone. I'll begin my review of our 2023 financial results with a main focus being on fourth quarter performance. He will be followed by our non-GAAP outlook for 2024, and <unk> and some of the important assumptions behind it. Beginning on slide 24. I would like to remind everyone that in October 2023, Deborah entered to an exclusive collaboration with Sanofi to develop and commercialize anti tier one asset. Per the terms of the collaboration agreement <unk> received an upfront payment of $500 million into fourth quarter of 2023. Which was recognized as license arrangement revenue. These upfront payments had a positive contribution of 500 million to both our revenue and free cash flow after adjusting for certain transactions related costs. This payment had a positive contribution. Ultimately $430 million. Now throughout the presentation I will be discussing our results for the quarter and for the full year 2023 as reported. Also I want to draw your attention to the disclosure. We included in the press release. This morning regarding the revision to certain GAAP financial metric in 2022, and 2023 to correct. There are related to contingent consideration liability. This revision did not impact our non-GAAP results for either year. Now turning to our Q4 GAAP performance. Revenue in the fourth quarter of 2023, 5 million, an increase of 50% in U S dollars and 14% in local currency terms. Compared to the fourth quarter of 2022 the increase. <unk> was mainly driven by the upfront payments that I just mentioned the sale of certain product rights in Europe segment continued strong growth in our system and higher revenue from generic products in international market. This was partially offset by lower revenue from generic products and our distribution business in North America and from Copaxone. In Q4, 2023 reported GAAP operating income of $755 million compared to an operating loss of $940 million in the same quarter last year. The increase in operating income was mainly due to a goodwill impairment charges in the fourth quarter of 2022 and higher gross profit. Last year, partially offset by higher impairments restructuring and other items in it fourth quarter of 2023.

Speaker Change: He will be followed by our non-GAAP outlook for 2024, and <unk> and some of the important assumptions behind it.

Speaker Change: Beginning on slide 24.

Speaker Change: I would like to remind everyone that in October 2023, Deborah entered to an exclusive collaboration with Sanofi to develop and commercialize anti tier one asset.

Speaker Change: Per the terms of the collaboration agreement <unk> received an upfront payment of $500 million into fourth quarter of 2023.

Speaker Change: Which was recognized as license arrangement revenue.

Speaker Change: These upfront payments had a positive contribution of 500 million to both our revenue and free cash flow after adjusting for certain transactions related costs. This payment had a positive contribution.

Speaker Change: Ultimately $430 million.

Speaker Change: Now throughout the presentation I will be discussing our results for the quarter and for the full year 2023 as reported.

Speaker Change: Also I want to draw your attention to the disclosure. We included in the press release. This morning regarding the revision to certain GAAP financial metric in 2022, and 2023 to correct. There are related to contingent consideration liability. This revision did not impact our non-GAAP results for either year.

Speaker Change: Now turning to our Q4 GAAP performance.

Speaker Change: Revenue in the fourth quarter of 2023, 5 million, an increase of 50% in U S dollars and 14% in local currency terms.

Speaker Change: Compared to the fourth quarter of 2022 the increase.

Speaker Change: <unk> was mainly driven by the upfront payments that I just mentioned the sale of certain product rights in Europe segment continued strong growth in our system and higher revenue from generic products in international market.

Speaker Change: This was partially offset by lower revenue from generic products and our distribution business in North America and from Copaxone.

Speaker Change: In Q4, 2023 reported GAAP operating income of $755 million compared to an operating loss of $940 million in the same quarter last year.

Speaker Change: The increase in operating income was mainly due to a goodwill impairment charges in the fourth quarter of 2022 and higher gross profit.

Speaker Change: Last year, partially offset by higher impairments restructuring and other items in it fourth quarter of 2023.

Eli Kalif: Last year, partially offset by higher impairments restructuring and other items in it fourth quarter of 2023. With a net income of 461 million and GAAP earnings per share of <unk> 41. Which was higher than last year, mainly driven by higher operating income as I just explained. Sure. Turning to slide 25, you can see the non-GAAP adjustment in the fourth quarter of 2023 and. Notable adjustments this quarter included a contingent consideration expenses of 408 million mainly related to the change in the estimated future royalty payment in connection with generic revenue. Now moving to slide 26. For a review of our non-GAAP performance. As I mentioned earlier, our fourth quarter revenue were approximately <unk> 5 billion. Our annual revenue in 2023 were $15 8 million, an increase of 6% in U S dollars or 7% in local currency terms compared to 2022. Excluding the contribution from upfront payments regarding our anti tier one acreage aberration or revenue growth in 2023 was 3%. Now, let's move down the P&L, starting with gross profit margin. Our non-GAAP gross profit margin was 58, 2% compared to 54, 2% in Q4 2020 to. The increase in our gross margin was mainly due to the upfront payment as I, just mentioned and the favorable portfolio mix as well as the sale of certain product right in Europe as part of our portfolio rationalization. This was partially offset by higher costs related to inflationary and other macroeconomic pressures. Excluding the impact of the upfront payment our non-GAAP gross profit margin would have been consistent with levels of Q3. This was slightly below our expectation mainly due to timing effects related to a certain elements of our cost associated with the inventory consumption, our portfolio mix and better than <unk>. <unk> performance of our low margin distribution business as well as an unfavorable impact from hedging activity. Overall, we saw sustainable improvement in our gross profit margins. The first quarter of 2023 with stabilization of the margins in the second half of 2023.

Speaker Change: With a net income of 461 million and GAAP earnings per share of <unk> 41.

Which was higher than last year, mainly driven by higher operating income as I just explained.

Speaker Change: Sure.

Speaker Change: Turning to slide 25, you can see the non-GAAP adjustment in the fourth quarter of 2023 and.

Speaker Change: Notable adjustments this quarter included a contingent consideration expenses of 408 million mainly related to the change in the estimated future royalty payment in connection with generic revenue.

Speaker Change: Now moving to slide 26.

Speaker Change: For a review of our non-GAAP performance.

Speaker Change: As I mentioned earlier, our fourth quarter revenue were approximately <unk> 5 billion. Our annual revenue in 2023 were $15 8 million, an increase of 6% in U S dollars or 7% in local currency terms compared to 2022.

Speaker Change: Excluding the contribution from upfront payments regarding our anti tier one acreage aberration or revenue growth in 2023 was 3%.

Speaker Change: Now, let's move down the P&L, starting with gross profit margin.

Speaker Change: Our non-GAAP gross profit margin was 58, 2% compared to 54, 2% in Q4 2020 to.

Speaker Change: The increase in our gross margin was mainly due to the upfront payment as I, just mentioned and the favorable portfolio mix as well as the sale of certain product right in Europe as part of our portfolio rationalization.

Speaker Change: This was partially offset by higher costs related to inflationary and other macroeconomic pressures.

Speaker Change: Excluding the impact of the upfront payment our non-GAAP gross profit margin would have been consistent with levels of Q3. This was slightly below our expectation mainly due to timing effects related to a certain elements of our cost associated with the inventory consumption, our portfolio mix and better than <unk>.

Speaker Change: <unk> performance of our low margin distribution business as well as an unfavorable impact from hedging activity.

Eli Kalif: Overall, we saw sustainable improvement in our gross profit margins. The first quarter of 2023 with stabilization of the margins in the second half of 2023. Going forward in 2024, we expect our gross margin to continue to improve driven by continuous improvement in our portfolio mix with strong growth in our innovative portfolio as well as continuation of the optimization program. We have initiated we expect that our non-GAAP gross profit margin to be between 53% to 54%.

Eli Kalif: Overall, we saw sustainable improvement in our gross profit margins. The first quarter of 2023 with stabilization of the margins in the second half of 2023.

Speaker Change: Overall, we saw sustainable improvement in our gross profit margins. The first quarter of 2023 with stabilization of the margins in the second half of 2023.

Eli Kalif: Going forward in 2024, we expect our gross margin to continue to improve driven by continuous improvement in our portfolio mix with strong growth in our innovative portfolio as well as continuation of the optimization program. We have initiated we expect that our non-GAAP gross profit margin to be between 53% to 54%. <unk> in 2020 for full year. Similar to 2023, we expect gross margin to gradually improve throughout this year. Moving to the non-GAAP operating margin in Q4, 2023, which was 34, 7% compared to 29, 1% in Q4 2022. This decrease was mainly driven by higher non-GAAP gross profit margin as I, just explained as well as lower operating expenses as a percentage of revenue. On an absolute basis, our higher operating expenses this quarter were related to higher investment in R&D and sales marketing in line with our pivot to growth strategy. We offset by efficiencies in R&D. We ended the quarter with. <unk> per share of $1 compared to 71 in Q4, 2022, mainly driven by higher operating income. Turning to free cash flow on slide 27. Our free cash flow in the fourth quarter of 2023 was $1 5 billion compared to $1 1 billion in Q4 2022 in addition to that. It was driven by. Hey, good items, partially offset by the sale of accounts receivable under our U S. <unk>. <unk> in the fourth quarter of 2022. During the fourth quarter of 2023, we also initiated the first payment of the nationwide settlement in connection with the opioid litigation. Greece, our total bandwidth of legal settlement by approximately $244 million compared to Q4 2022. Overall, the full year of 2023 free cash flow was $2 4 billion compared to $2 2 billion in 2022. Turning to slide 28. We continue to make strong progress. In terms of reducing our debt our net debt at the end of Q4 2003 was $16 6 billion compared to $18 4 billion at the end of 2022. Our gross debt was $19 8 billion compared to $21 2 billion at the end of 2020 to the degree the decrease in our gross debt was mainly due to a $1 6 billion sooner notes repaid at maturity, partially offset by <unk> 2 million of exchange rate fluctuation. During Q4 2023, we repaid the full $500 million under our $1 8 billion revolving credit facility.

Speaker Change: Going forward in 2024, we expect our gross margin to continue to improve driven by continuous improvement in our portfolio mix with strong growth in our innovative portfolio as well as continuation of the optimization program. We have initiated we expect that our non-GAAP gross profit margin to be between 53% to 54%.

Speaker Change: <unk> in 2020 for full year.

Speaker Change: Similar to 2023, we expect gross margin to gradually improve throughout this year.

Speaker Change: Moving to the non-GAAP operating margin in Q4, 2023, which was 34, 7% compared to 29, 1% in Q4 2022. This decrease was mainly driven by higher non-GAAP gross profit margin as I, just explained as well as lower operating expenses as a percentage of revenue.

Speaker Change: On an absolute basis, our higher operating expenses this quarter were related to higher investment in R&D and sales marketing in line with our pivot to growth strategy.

Speaker Change: We offset by efficiencies in R&D.

Speaker Change: We ended the quarter with.

Speaker Change: <unk> per share of $1 compared to 71 in Q4, 2022, mainly driven by higher operating income.

Speaker Change: Turning to free cash flow on slide 27.

Speaker Change: Our free cash flow in the fourth quarter of 2023 was $1 5 billion compared to $1 1 billion in Q4 2022 in addition to that.

Speaker Change: It was driven by.

Speaker Change: Hey, good items, partially offset by the sale of accounts receivable under our U S. <unk>.

Speaker Change: <unk> in the fourth quarter of 2022.

Speaker Change: During the fourth quarter of 2023, we also initiated the first payment of the nationwide settlement in connection with the opioid litigation.

Speaker Change: Greece, our total bandwidth of legal settlement by approximately $244 million compared to Q4 2022.

Speaker Change: Overall, the full year of 2023 free cash flow was $2 4 billion compared to $2 2 billion in 2022.

Speaker Change: Turning to slide 28.

Speaker Change: We continue to make strong progress.

Speaker Change: In terms of reducing our debt our net debt at the end of Q4 2003 was $16 6 billion compared to $18 4 billion at the end of 2022.

Speaker Change: Our gross debt was $19 8 billion compared to $21 2 billion at the end of 2020 to the degree the decrease in our gross debt was mainly due to a $1 6 billion sooner notes repaid at maturity, partially offset by <unk> 2 million of exchange rate fluctuation.

Speaker Change: During Q4 2023, we repaid the full $500 million under our $1 8 billion revolving credit facility.

Eli Kalif: During Q4 2023, we repaid the full $500 million under our $1 8 billion revolving credit facility. And as of December 31, and as of today, there is no amount outstanding on. The ordinary Boulder. Yes. As a result, our net debt to EBITDA also improved coming in at 345 times for Q4 2023. As part of our capital allocation strategy, we expect our net debt reduction to continue as we continue to progress towards our long term target of two times net debt to EBITDA by end of 2027. Now, let's turn our attention to 2024 non-GAAP outlook. As Richard mentioned 2023 was the pivotal year for Teva and through our product around the world worked very hard to execute on our pivot to growth strategy. We've made some deliberate choices and began investing in our growth drivers and our promising pipeline, while also navigating and addressing the impact of. The macroeconomic and geopolitical headwinds. As we move through 2024, we remain focused to continue to execute on our long term strategy. With this in mind, we begin with 2024 total revenue, which we expect to be between $15 7 billion and 16 contributor. Compared to 2023. This represents a growth of two 6%, excluding the $500 million upfront payment received related to our tier one assets. As Richard mentioned earlier, our revenue growth will be driven by continued strong momentum in our innovation innovative portfolio. And stabilized generic. Coming to our non-GAAP operating profit, we expect our gross margin to gradually improve throughout 2020 form as we continue to execute our pivot to growth strategy was to continue to make deliberate investments in our innovative portfolio and progress our key pipeline assets to drive both at. In short and long term growth for the company with that in mind, we expect our operating expenses to be approximately 27 to 27, 5% for the full year, including R&D expenses between six to six 5% of revenue. As a result, our non-GAAP operating income is expected to be between 4 billion and $4 5 billion and our non-GAAP. Adjusted EBITDA is expected to be between $4 525 billion, both growing over 2023 level, excluding the effects of the upfront payments. We expect finance expenses could be approximately $1 billion in 2024 in line with 2023 levels.

Speaker Change: And as of December 31, and as of today, there is no amount outstanding on.

Speaker Change: The ordinary Boulder.

Speaker Change: Yes.

Speaker Change: As a result, our net debt to EBITDA also improved coming in at 345 times for Q4 2023.

Speaker Change: As part of our capital allocation strategy, we expect our net debt reduction to continue as we continue to progress towards our long term target of two times net debt to EBITDA by end of 2027.

Speaker Change: Now, let's turn our attention to 2024 non-GAAP outlook.

Speaker Change: As Richard mentioned 2023 was the pivotal year for Teva and through our product around the world worked very hard to execute on our pivot to growth strategy. We've made some deliberate choices and began investing in our growth drivers and our promising pipeline, while also navigating and addressing the impact of.

Speaker Change: The macroeconomic and geopolitical headwinds.

Speaker Change: As we move through 2024, we remain focused to continue to execute on our long term strategy.

Speaker Change: With this in mind, we begin with 2024 total revenue, which we expect to be between $15 7 billion and 16 contributor.

Speaker Change: Compared to 2023. This represents a growth of two 6%, excluding the $500 million upfront payment received related to our tier one assets.

Speaker Change: As Richard mentioned earlier, our revenue growth will be driven by continued strong momentum in our innovation innovative portfolio.

Speaker Change: And stabilized generic.

Speaker Change: Coming to our non-GAAP operating profit, we expect our gross margin to gradually improve throughout 2020 form as we continue to execute our pivot to growth strategy was to continue to make deliberate investments in our innovative portfolio and progress our key pipeline assets to drive both at.

Speaker Change: In short and long term growth for the company with that in mind, we expect our operating expenses to be approximately 27 to 27, 5% for the full year, including R&D expenses between six to six 5% of revenue.

Speaker Change: As a result, our non-GAAP operating income is expected to be between 4 billion and $4 5 billion and our non-GAAP. Adjusted EBITDA is expected to be between $4 525 billion, both growing over 2023 level, excluding the effects of the upfront payments.

Eli Kalif: As a result, our non-GAAP operating income is expected to be between 4 billion and $4 5 billion and our non-GAAP. Adjusted EBITDA is expected to be between $4 525 billion, both growing over 2023 level, excluding the effects of the upfront payments. We expect finance expenses could be approximately $1 billion in 2024 in line with 2023 levels. Looking at our tax rate, we expect our non-GAAP tax rate to be in. 3%. Higher than it was pre. The tax rate of 30%, which benefited partially due to intellectual property related integration plan and carryforward losses. This brings us. The non-GAAP earnings per share in the range of $2. Two $2. We expect our 2020 for free cash flow to be in the range of $5 72. $2 billion. Yes. We do not provide quarterly guidance, but I thought it will be helpful too. To share how we are thinking about the progression throughout the year overall based on our expectation today, we expect revenue and earnings to progress gradually during the year with the revenue in the second half of FY 'twenty four to be slightly higher than the first half. Our non-GAAP margins are also expected to. Throughout the year in line with the revenue trajectory as well as an improvement from our optimization program we have initiated. With that this concludes my review of <unk> results for the fourth quarter and fiscal year of 2023, and now I will hand, it back to Richard for a summary.

Speaker Change: We expect finance expenses could be approximately $1 billion in 2024 in line with 2023 levels.

Speaker Change: Looking at our tax rate, we expect our non-GAAP tax rate to be in.

Speaker Change: 3%.

Speaker Change: Higher than it was pre.

Speaker Change: The tax rate of 30%, which benefited partially due to intellectual property related integration plan and carryforward losses.

Speaker Change: This brings us.

Speaker Change: The non-GAAP earnings per share in the range of $2.

Speaker Change: Two $2.

Speaker Change: We expect our 2020 for free cash flow to be in the range of $5 72.

$2 billion.

Speaker Change: Yes.

Speaker Change: We do not provide quarterly guidance, but I thought it will be helpful too.

Speaker Change: To share how we are thinking about the progression throughout the year overall based on our expectation today, we expect revenue and earnings to progress gradually during the year with the revenue in the second half of FY 'twenty four to be slightly higher than the first half.

Our non-GAAP margins are also expected to.

Speaker Change: Throughout the year in line with the revenue trajectory as well as an improvement from our optimization program we have initiated.

Speaker Change: With that this concludes my review of <unk> results for the fourth quarter and fiscal year of 2023, and now I will hand, it back to Richard for a summary.

Richard Francis: Thank you Ali. Yes, I would like to just reiterate the financial targets for 2027 revenue growth mid single digit operating margin of 30%. Net debt adjusted EBITDA. Two times cash earnings ratio of 80% and Reconfirming. This as we move forward as we gain confidence on the pivot to growth strategy. Moving onto the final slide. Just to reiterate. The pivot to a strategy will do to drive growth. <unk> was to accelerate growth to return to growth in 'twenty three 'twenty four to accelerate it and 25 to 27. We believe this will be built on the <unk>. Momentum that Eric has in the pipeline in those products coming to the market and also youll start to see the biosimilars gain traction as well based on my earlier comments. So. Maybe it's clear to say that we are gaining momentum with pivot to growth and now it's about executing as we did in 'twenty three and 'twenty four. I'll hand it over. Operator, let's take some questions. Thank you for your attention.

Richard: Yes, I would like to just reiterate the financial targets for 2027 revenue growth mid single digit operating margin of 30%.

Richard: Net debt adjusted EBITDA.

Richard: Two times cash earnings ratio of 80% and Reconfirming. This as we move forward as we gain confidence on the pivot to growth strategy.

Speaker Change: Moving onto the final slide.

Speaker Change: Just to reiterate.

Speaker Change: The pivot to a strategy will do to drive growth.

<unk> was to accelerate growth to return to growth in 'twenty three 'twenty four to accelerate it and 25 to 27. We believe this will be built on the <unk>.

Speaker Change: Momentum that Eric has in the pipeline in those products coming to the market and also youll start to see the biosimilars gain traction as well based on my earlier comments.

So.

Speaker Change: Maybe it's clear to say that we are gaining momentum with pivot to growth and now it's about executing as we did in 'twenty three and 'twenty four.

Speaker Change: I'll hand it over.

Speaker Change: Operator, let's take some questions. Thank you for your attention.

Operator: Yes. As a reminder, if you'd like to ask a question you can press star followed by one. Telephone keypad. I'd like to remove your question you May press star flipped back to Peter. Please ensure you're on mute locally when asking your question. Our first question for today comes from Glen Santangelo from Jefferies. Your line is now open. Please go ahead.

As a reminder, if you'd like to ask a question you can press star followed by one.

Speaker Change: Telephone keypad.

Speaker Change: I'd like to remove your question you May press star flipped back to Peter.

Speaker Change: Please ensure you're on mute locally when asking your question.

Speaker Change: Our first question for today comes from Glen Santangelo from Jefferies. Your line is now open. Please go ahead.

Glen Santangelo: Yes, thanks for taking my questions. I just wanted to follow up on the guidance because there's a couple of things that are sticking out to me it looks like youre, assuming at the midpoint revenues youre going to be up a little bit less than 1%, but you're assuming EBITDA at the mid points down almost 2% and I think if I. I heard Richard correctly, you're assuming gross margins are going to be up for perhaps due to product mix and so it seems like you're forecasting a much bigger ramp in operating expenses and I Wonder if you could just sort of flesh that out a little bit if it's coming more in the sales and marketing side or greater R&D spend and then maybe have just a quick follow up thanks. I think the question is directed to you.

Glen Santangelo: I just wanted to follow up on the guidance because there's a couple of things that are sticking out to me it looks like youre, assuming at the midpoint revenues youre going to be up a little bit less than 1%, but you're assuming EBITDA at the mid points down almost 2% and I think if I. I heard Richard correctly, you're assuming gross margins are going to be up for perhaps due to product mix and so it seems like you're forecasting a much bigger ramp in operating expenses and I Wonder if you could just sort of flesh that out a little bit if it's coming more in the sales and marketing side or greater R&D spend and then maybe have just a quick follow up thanks.

Speaker Change: I heard Richard correctly, you're assuming gross margins are going to be up for perhaps due to product mix and so it seems like you're forecasting a much bigger ramp in operating expenses and I Wonder if you could just sort of flesh that out a little bit if it's coming more in the sales and marketing side or greater R&D spend and then maybe have just a quick follow up thanks.

Speaker Change: I think the question is directed to you.

Speaker Change: Thanks, Glenn for the question. First of all we are looking on the midpoint, which is $60 million compared to the numbers. We ended up 2012, excluding the upfront payment and which means we are looking for. Four 3% growth on the midpoint. On the top line and as far as related to some dynamics. The operating margin. Sure. So keep growing and to Opex I mentioned and that we are looking on the range between 27 to 27, 5% and that means that. R&D between six to $6 five. <unk>. I think in G&A instead. We were around 45%. And that means that. As part of our growth. So for your question. When we line up our guidance. Our 2033.

Glenn: First of all we are looking on the midpoint, which is $60 million compared to the numbers.

Speaker Change: We ended up 2012, excluding the upfront payment and which means we are looking for.

Four 3% growth on the midpoint.

Speaker Change: On the top line and as far as related to some dynamics.

Speaker Change: The operating margin.

Speaker Change: Sure.

Speaker Change: So keep growing and to Opex I mentioned and that we are looking on the range between 27 to 27, 5% and that means that.

Speaker Change: R&D between six to $6 five.

Speaker Change: <unk>.

I think in G&A instead.

Speaker Change: We were around 45%.

Speaker Change: And that means that.

Speaker Change: As part of our growth.

Speaker Change: So for your question.

Speaker Change: When we line up our guidance.

Speaker Change: Our 2033.

Glen Santangelo: Thanks. Okay, maybe if I could just sort of follow up because I just want to make sure I understand the revenue guidance, a little bit and you gave us a lot of the pieces, which is helpful. I just wanted to be clear about what youre seeing in terms of the generics business in 2024, I mean, I can see you obviously cut the <unk> assumption, a fair amount, but I'm China. Figure out where the rest of the offset is I know you have a bunch of big launches on the generic side Korlym Terror paradigm Portio can you just sort of flesh out a little bit what youre expecting in that generics business. Just so we're clear on what you are saying.

Speaker Change: Okay, maybe if I could just sort of follow up because I just want to make sure I understand the revenue guidance, a little bit and you gave us a lot of the pieces, which is helpful. I just wanted to be clear about what youre seeing in terms of the generics business in 2024, I mean, I can see you obviously cut the <unk> assumption, a fair amount, but I'm China.

Speaker Change: Figure out where the rest of the offset is I know you have a bunch of big launches on the generic side Korlym Terror paradigm Portio can you just sort of flesh out a little bit what youre expecting in that generics business. Just so we're clear on what you are saying.

Speaker Change: Hi, Glenn it's Richard here. Thanks for the question, yes. So once again just to sort of reiterate and I think your question is directed at the North American <unk> business. But just to highlight the fact that our European and international market business. We expect it to continue a great. One in line with what we did in 2003, but to come back to your question about 'twenty four yet we do have a number of launches that are coming through we're pleased that we've made progress on those I would like to highlight that some of those are coming in with competition as well, which. To take into account when forecasting. When we launched products part of the aim there is to offset some of the price degradation that we see every year in the U S and so net net we see a stabilization of our north American business going forward. And as we continue to build and improving our launches and our supply chain. That's why we believe in the medium to long term, we can drive the business back to growth.

Richard: But just to highlight the fact that our European and international market business. We expect it to continue a great. One in line with what we did in 2003, but to come back to your question about 'twenty four yet we do have a number of launches that are coming through we're pleased that we've made progress on those I would like to highlight that some of those are coming in with competition as well, which.

Richard: To take into account when forecasting.

Richard: When we launched products part of the aim there is to offset some of the price degradation that we see every year in the U S and so net net we see a stabilization of our north American business going forward.

Richard: And as we continue to build and improving our launches and our supply chain. That's why we believe in the medium to long term, we can drive the business back to growth.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks for the question. Thank you.

Operator: Our next question comes from Ash pharma of UBS. Your line is now open. Please go ahead.

Ashwani Verma: Yeah, Thanks for taking my questions. Just two. Clarify on 2020 for guidance. Including the partnership. Accounting here from Sanofi upfront for 2024 is there any specific. The amount that you're expecting to see I believe the next set of milestones is on phase III initiation, which I believe it won't happen this year. First one and then secondly, I was just curious on the on the North America Donetsk <unk>. Or do you plan it seems like a step down from. The franchise has been run rating at is that because. There wasn't any kind of a benefit from generic revlimid or are we starting to see any change to the price stabilization Medicare. Thanks.

Ash Pharma: Just two.

Ash Pharma: Clarify on 2020 for guidance.

Ash Pharma: Including the partnership.

Ash Pharma: Accounting here from Sanofi upfront for 2024 is there any specific.

The amount that you're expecting to see I believe the next set of milestones is on phase III initiation, which I believe it won't happen this year.

Speaker Change: First one and then secondly, I was just curious on the on the North America Donetsk <unk>.

Speaker Change: Or do you plan it seems like a step down from.

Speaker Change: The franchise has been run rating at is that because.

Speaker Change: There wasn't any kind of a benefit from generic revlimid or are we starting to see any change to the price stabilization Medicare. Thanks.

Speaker Change: Hi, guys. Thanks, Thanks for those questions. So with regard to Sanofi. Correct. There is no we will not receive any payments and 24 and 25. Based on as Eric highlighted on a successful interim analysis. This year of our phase II data of tier one I will move it to phase III in 'twenty, five and that will trigger some milestones from Sanofi, but in 'twenty four there won't be anything. I forgot your North America generics question. Couple of things and I'll try and answer all of your questions. Part of it. What you saw was the fact that we don't really have. Any significant revenue of Revlimid and <unk>. Quarter four so that's worth noting and then if you think about the business we do have. We have included in that truck steamer, which is our biosimilar business, which as you know has performed well and generated good revenue. There are a number of years, but obviously is declining steadily now. So if you factor those things those factors and then I think my comment about we see a stabilization of the <unk>. North America generics business going forward I think stands true based on the number of launches we have coming out I think we have the ability to offset a significant amount of the price erosion that we see early in the U S and so I think the way to think about it is this stabilization, but on that quarterly change, it's really primarily driven by a bit of the portfolio. And a bit of relation to Biosimilar single product took sema, so hopefully that helps us.

So with regard to Sanofi.

Speaker Change: Correct. There is no we will not receive any payments and 24 and 25.

Speaker Change: Based on as Eric highlighted on a successful interim analysis. This year of our phase II data of tier one I will move it to phase III in 'twenty, five and that will trigger some milestones from Sanofi, but in 'twenty four there won't be anything.

Speaker Change: I forgot your North America generics question.

Speaker Change: Couple of things and I'll try and answer all of your questions.

Speaker Change: Part of it.

Speaker Change: What you saw was the fact that we don't really have.

Speaker Change: Any significant revenue of Revlimid and <unk>.

Speaker Change: Quarter four so that's worth noting and then if you think about the business we do have.

Speaker Change: We have included in that truck steamer, which is our biosimilar business, which as you know has performed well and generated good revenue. There are a number of years, but obviously is declining steadily now.

Speaker Change: So if you factor those things those factors and then I think my comment about we see a stabilization of the <unk>.

North America generics business going forward I think stands true based on the number of launches we have coming out I think we have the ability to offset a significant amount of the price erosion that we see early in the U S and so I think the way to think about it is this stabilization, but on that quarterly change, it's really primarily driven by a bit of the portfolio.

Speaker Change: And a bit of relation to Biosimilar single product took sema, so hopefully that helps us.

Speaker Change: Thanks.

Speaker Change: Yeah.

Operator: Thank you. Our next question comes from Jason <unk> of Bank of America. Jason. Your line is now open. Please go ahead.

Jason Gerberry: Hey, guys. Thanks for taking my question. My question is on the Biosimilars and wondering if you think you could. Potentially make hay with this biosimilar humira, if you get the interchangeability designation with the February approval can you leverage that to get like a big chunky contracts as the preferred biosimilar supplier I know that the other non interchangeable high concentrates have struggled to get share. And then how that may be carries over into 2025 right. I mean, there is a question about the lora the PVM biosimilar space sort of broken with innovators, playing the rebating game or could you leverage like a portfolio play with interchangeable Humira and then layering on top of that the Lora. So just kind of wondering your overall perspective on what you've observed. Served with the Pbms Biosimilars and whether you think that there's an opportunity there. Thanks.

My question is on the Biosimilars and wondering if you think you could.

Jason: Potentially make hay with this biosimilar humira, if you get the interchangeability designation with the February approval can you leverage that to get like a big chunky contracts as the preferred biosimilar supplier I know that the other non interchangeable high concentrates have struggled to get share.

Jason: And then how that may be carries over into 2025 right. I mean, there is a question about the lora the PVM biosimilar space sort of broken with innovators, playing the rebating game or could you leverage like a portfolio play with interchangeable Humira and then layering on top of that the Lora. So just kind of wondering your overall perspective on what you've observed.

Served with the Pbms Biosimilars and whether you think that there's an opportunity there. Thanks.

Speaker Change: Yes, thanks, Jason Thanks for the question so. On the Biosimilar, one starting with possibly Humira really obviously depends on the FCA given a successful inspection of all upon to help it takes facility in Iceland now if that does happen and we'll hopefully know relatively soon and then it does give us an opportunity to launch. I think there's obviously a lot to play for that still because 2023 was a slope with regard to the penetration of the Biosimilars that said there are a lot of uncertain variables when we get there. The FDA approval of the site. And then we have to launch and then the timing of that launch and to your point. How we can penetrate with. The Pbms what I would say is we're having good conversations people are very interested in hearing about when our product could come to the market I think a lot of that is based on the product profile not just into changeability of the auto injector. So I see opportunity hit the way I've always characterized it is. This opportunity is. In the short medium and long term I think humira. Revenue too. Business. This year I think it definitely will in 'twenty five 'twenty six 'twenty seven I think the direction of travel will be very clear for biosimilars. I think humira doesn't define. 23, what happens going forward. So that's why I think about either but we have some lobbyist there with regard to when we actually get this product approved. <unk> talked about <unk> I think that. What I've learned in Biosimilars and I've been in quite a long time is is one product doesn't set the precedent for the next one and I think there's a lot of as many things that are different around one that it has a lot less competitors. For one. Until we have a clear line of sight of when we're going to be approved which is. <unk> be launched which is in February of 2025. So we're very optimistic about that we see that as a sizable asset. And so we see that as something that can generate significant revenue.

Speaker Change: On the Biosimilar, one starting with possibly Humira really obviously depends on the FCA given a successful inspection of all upon to help it takes facility in Iceland now if that does happen and we'll hopefully know relatively soon and then it does give us an opportunity to launch.

Speaker Change: I think there's obviously a lot to play for that still because 2023 was a slope with regard to the penetration of the Biosimilars that said there are a lot of uncertain variables when we get there.

Speaker Change: The FDA approval of the site.

Speaker Change: And then we have to launch and then the timing of that launch and to your point.

Speaker Change: How we can penetrate with.

Speaker Change: The Pbms what I would say is we're having good conversations people are very interested in hearing about when our product could come to the market I think a lot of that is based on the product profile not just into changeability of the auto injector. So I see opportunity hit the way I've always characterized it is.

Speaker Change: This opportunity is.

Speaker Change: In the short medium and long term I think humira.

Speaker Change: Revenue too.

Speaker Change: Business. This year I think it definitely will in 'twenty five 'twenty six 'twenty seven I think the direction of travel will be very clear for biosimilars.

Speaker Change: I think humira doesn't define.

Speaker Change: 23, what happens going forward. So that's why I think about either but we have some lobbyist there with regard to when we actually get this product approved.

Speaker Change: <unk> talked about <unk> I think that.

Speaker Change: What I've learned in Biosimilars and I've been in quite a long time is is one product doesn't set the precedent for the next one and I think there's a lot of as many things that are different around one that it has a lot less competitors.

Speaker Change: For one.

Speaker Change: Until we have a clear line of sight of when we're going to be approved which is.

Speaker Change: <unk> be launched which is in February of 2025. So we're very optimistic about that we see that as a sizable asset.

Speaker Change: And so we see that as something that can generate significant revenue.

Speaker Change: Once again with regards to the speed of uptake. To see how that plays out I think the important thing for Teva is we're not. Being very we're not hanging on the fact that these. Product needs to come to market and deliver deliver quick revenues because we have a portfolio play we have 13 assets to bring to the market as I mentioned, we've got five that we don't launch by 2027, I think the old generate a good return and drive our topline and bottom line, but to be very specific about which ones will generate rich, which revenue when I think. <unk>. We don't want to do because at the end of the unpredictability that we've seen. In the last year. So hopefully that gives some way to answer your question Jason.

Speaker Change: To see how that plays out I think the important thing for Teva is we're not.

Speaker Change: Being very we're not hanging on the fact that these.

Product needs to come to market and deliver deliver quick revenues because we have a portfolio play we have 13 assets to bring to the market as I mentioned, we've got five that we don't launch by 2027, I think the old generate a good return and drive our topline and bottom line, but to be very specific about which ones will generate rich, which revenue when I think.

Speaker Change: <unk>.

Speaker Change: We don't want to do because at the end of the unpredictability that we've seen.

Speaker Change: In the last year.

Speaker Change: So hopefully that gives some way to answer your question Jason.

Speaker Change: Got it thank you.

Speaker Change: Thank you our.

Operator: Our next question comes from Ross <unk> of Evercore. Line is now open. Please go ahead.

Ross: Line is now open. Please go ahead.

Umer Raffat: Hi, guys. Thanks for taking my question. A couple here if I may 1st maybe just on the design of your UC Crohn's study at baseline are you expecting in mild to moderate or moderate to severe patients and what percentage maybe biologic experienced in your expectation. Secondly, I noticed for your Crohns study. The point you were using which is and the Scopic response is actually different than what FDA wants for their co primary. There's a couple of your secondary endpoints on CDI lift and $1 50, or endoscopic remission, which is what FDA is very focused on for co primary so should we really be focused on those secondary endpoints is the primary basis of determining how the crohn's trial looked and then finally, if you could just give a quick update on your recent generic launch of Korlym given all the interest and how the launch is going to date. Thank you.

Ross: A couple here if I may 1st maybe just on the design of your UC Crohn's study at baseline are you expecting in mild to moderate or moderate to severe patients and what percentage maybe biologic experienced in your expectation.

Ross: Secondly, I noticed for your Crohns study.

Ross: The point you were using which is and the Scopic response is actually different than what FDA wants for their co primary.

Ross: There's a couple of your secondary endpoints on CDI lift and $1 50, or endoscopic remission, which is what FDA is very focused on for co primary so should we really be focused on those secondary endpoints is the primary basis of determining how the crohn's trial looked and then finally, if you could just give a quick update on your recent generic launch of Korlym given all the interest and how the launch is going to date.

Speaker Change: Thank you.

Speaker Change: Thank you Homer Britain's. I'll take this question as you don't mind. So with regard to the inclusion criteria for our study we're focused on the mild to moderate. A moderate patients that we see coming into the study right now that is typical of the studies that have been run recently. We are happy to see that our inclusion criteria in the study has been able to enroll well and in fact, our inclusion criteria and our study execution has got at an accelerated pace of not only the ulcer colitis, but actually the crohn's patients as well, which is very encouraging to see it because this is one of the first. Well controlled. A placebo controlled study for Crohn's in this new MLA so the criterias. On those patients coming into the study right now with regards to the endpoint. So the endpoints that we've included in the study or the FDA accepted study endpoints that we've discussed with FDA. There are pretty common across the different studies I think one of the criteria that you have to pay attention to is how you count some of the clinical endpoints that might change how you see. Youre placebo response compared to your active so we're confident in the way. We've designed the study we've done this in conjunction with FDA and then your final question on correlate I know that. You want to take that.

Speaker Change: I'll take this question as you don't mind.

Homer: So with regard to the inclusion criteria for our study we're focused on the mild to moderate.

A moderate patients that we see coming into the study right now that is typical of the studies that have been run recently.

Speaker Change: We are happy to see that our inclusion criteria in the study has been able to enroll well and in fact, our inclusion criteria and our study execution has got at an accelerated pace of not only the ulcer colitis, but actually the crohn's patients as well, which is very encouraging to see it because this is one of the first.

Speaker Change: Well controlled.

Speaker Change: A placebo controlled study for Crohn's in this new MLA so the criterias.

Speaker Change: On those patients coming into the study right now with regards to the endpoint. So the endpoints that we've included in the study or the FDA accepted study endpoints that we've discussed with FDA.

Speaker Change: There are pretty common across the different studies I think one of the criteria that you have to pay attention to is how you count some of the clinical endpoints that might change how you see.

Speaker Change: Youre placebo response compared to your active so we're confident in the way. We've designed the study we've done this in conjunction with FDA and then your final question on correlate I know that.

Speaker Change: You want to take that.

Speaker Change: Thanks for the question Sheila. We have no comment we launched that. I think a week ago. So that is launched in the market. And the answer to your question. Thank you very much. Thank you.

Speaker Change: We have no comment we launched that.

Speaker Change: I think a week ago. So that is launched in the market.

Speaker Change: So that is launched in the market.

Speaker Change: And the answer to your question.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from David <unk> of Piper Sandler. Your line is now open. Please go ahead.

Speaker Change: Our next question comes from David <unk> of Piper Sandler.

David: Your line is now open. Please go ahead.

David A. Amsellem: Hey, Thanks, So one question on <unk> and one on <unk> so on us. Wanted to get a sense for the level of sales and marketing investment and DTC investment that youre thinking about the product longer term certainly your competitor. Has <unk>. Spent pretty heavily. Promoting. Good morning Congrats. How do you think about that and how does that tie into your long term thinking regarding the trajectory of <unk>. Operating margins. So that's the number one the number two on as Eddie I think. You mentioned, the $80 million or 24, just wanted to drill down on where these patients are coming from these patients that are switching from other L. A is are they naive to L. A. Are you getting switches from say an Meg. Invega products I, just wanted to get a sense for. Where your business on as Eddie is coming from in these early days. Thank you.

David: Wanted to get a sense for the level of sales and marketing investment and DTC investment that youre thinking about the product longer term certainly your competitor.

David: Has <unk>.

Speaker Change: Spent pretty heavily.

Speaker Change: Promoting.

Good morning Congrats.

Speaker Change: How do you think about that and how does that tie into your long term thinking regarding the trajectory of <unk>.

Speaker Change: Operating margins. So that's the number one the number two on as Eddie I think.

Speaker Change: You mentioned, the $80 million or 24, just wanted to drill down on where these patients are coming from these patients that are switching from other L. A is are they naive to L. A.

Are you getting switches from say an Meg.

Speaker Change: Invega products I, just wanted to get a sense for.

Speaker Change: Where your business on as Eddie is coming from in these early days. Thank you.

Speaker Change: Thanks, David Thanks for the question. So on steady you're right we have invested. So. We have built capabilities. So it's not just about sales force bringing in. In. Pharmaceutical expertise and so we've done that I think has been a significant contributors to the acceleration of the product. We aim to make sure that we are competitive and maximizing revenue. But also knowing that to your last part of your question, we want to be driving improvement in our operating margin and we see the ability to do that definitively with instead of <unk>. Mark can you put into it so as we talk about $2 5 billion. In 2027. This is going to be a major contributor to us driving up topline, but particularly RFP. We have modeled that out extensively. <unk> got two you said. So what we're seeing right now to highlight this is relatively small data. But we're seeing. Suitable amount of patients coming from all Risperidone. A lot of patients who are going straight from the oral to long acting you said it but when it comes to choosing a long acting <unk>. Spirit. Significant portion of those are going on <unk> said, he as well. So I think that just highlights I think what I pointed out. The physicians like this put a profile primarily the fact that you can get on to therapeutic levels within six months to 24 hours, which one you have. So putting episode is really critical so. So I think that's why we've seen that enthusiasm 24 was about taking that enthusiasm in the access and converting it into scripts. So that's what we're doing so hopefully that answers your question David.

So on steady you're right we have invested.

Speaker Change: So.

Speaker Change: We have built capabilities. So it's not just about sales force bringing in.

Speaker Change: In.

Speaker Change: Pharmaceutical expertise and so we've done that I think has been a significant contributors to the acceleration of the product.

Speaker Change: We aim to make sure that we are competitive and maximizing revenue.

Speaker Change: But also knowing that to your last part of your question, we want to be driving improvement in our operating margin and we see the ability to do that definitively with instead of <unk>.

Speaker Change: Mark can you put into it so as we talk about $2 5 billion. In 2027. This is going to be a major contributor to us driving up topline, but particularly RFP.

Mark: We have modeled that out extensively.

Mark: <unk> got two you said.

Mark: So what we're seeing right now to highlight this is relatively small data.

Mark: But we're seeing.

Mark: Suitable amount of patients coming from all Risperidone.

Mark: A lot of patients who are going straight from the oral to long acting you said it but when it comes to choosing a long acting <unk>.

Mark: Spirit.

Significant portion of those are going on <unk> said, he as well. So I think that just highlights I think what I pointed out.

Mark: The physicians like this put a profile primarily the fact that you can get on to therapeutic levels within six months to 24 hours, which one you have.

Mark: So putting episode is really critical so.

Mark: So I think that's why we've seen that enthusiasm 24 was about taking that enthusiasm in the access and converting it into scripts.

Speaker Change: So that's what we're doing so hopefully that answers your question David.

David: Yes, that's helpful. Thank you.

Thank you.

Operator: Thank you. Our next question comes from Chris Schott of Jpmorgan. Your line is now open. Please go ahead.

Chris Schott: Your line is now open. Please go ahead.

Chris Schott: All right great. Thanks, so much just two questions from me just following up on the Opex comment. You, obviously stepped up Opex youre seeing really nice growth in these core drivers pipeline is progressing I'm just trying to get my hands around. Opex beyond 2024, so I guess is this kind of 27% to 27, 5% range that we're seeing this year. Good level for the next few years or are you now actually reaching and up in absolute spend level, where we can maybe think about some opex leverage kind of looking beyond 'twenty four. And then my second question was just just a little bit more color on the international generic growth drivers. It seemed like that business was particularly strong in 'twenty three I think from your comments youre, assuming similar growth this year and we're just a little bit more color on the dynamics youre seeing in those markets. Thank you.

Chris Schott: You, obviously stepped up Opex youre seeing really nice growth in these core drivers pipeline is progressing I'm just trying to get my hands around.

Chris Schott: Opex beyond 2024, so I guess is this kind of 27% to 27, 5% range that we're seeing this year.

Chris Schott: Good level for the next few years or are you now actually reaching and up in absolute spend level, where we can maybe think about some opex leverage kind of looking beyond 'twenty four.

Chris Schott: And then my second question was just just a little bit more color on the international generic growth drivers. It seemed like that business was particularly strong in 'twenty three I think from your comments youre, assuming similar growth this year and we're just a little bit more color on the dynamics youre seeing in those markets. Thank you.

Speaker Change: Okay. Thanks for the questions Chris on the first one I'll tag team a bit with Ali I think just to give you sort of a high level on the opex. What are the things we realized through a type a we have a significant opportunity in front of us here and now with <unk>. And if its a portfolio in the market you said, a steady and a geography and a great pipeline that I've just talked about is really important we invest in those two. Optimize them and bringing to market as soon as possible. So that's what we're doing now. We are absolutely committed and believe we are going to hit our 30% margin in 2027 and investing now allows us to change the trajectory of those products to speed, we bring them to the market olanzapine potentially the end of 'twenty five. Early 2006, and that obviously changed once again on your portfolio mix. The gross margin. Deliver which obviously flows down to the IP. So we have thought this through. Very carefully about that and how we invest and then when we actually start to see some significant pick up in our bottom line, but I'll, maybe give the specifics to early as well. Thanks, Richard Thanks for the question. And just to continue Richard answer. In terms of absolute numbers, we don't see that one too much expand. Otherwise. More than what we have in 'twenty four 'twenty five onwards. And as we grow with revenue of course, the percentage will go down. But currently for this year, that's the range we also. I would like to remind that certain shipments in our R&D and our sales and marketing that's still. Consider that Robert element that would add some level of control in terms of prioritization and timing on that level. So this is still controllable items from our perspective. And then on the second question you asked Chris around International please to see you've seen a good growth there. And. In 2023 and the continued. Ambitious 2020 for desktop primarily driven about. <unk> continued market expansion, but really making sure we focus on the markets that can deliver. And. Our teams have done a tremendous job in doing that and so making sure the proposition of our resources goes to the markets that can drive top line and also bottom line, which is a sub component of our pivot to growth strategy. So hopefully that answers both your questions Chris. Thank.

Speaker Change: What are the things we realized through a type a we have a significant opportunity in front of us here and now with <unk>.

Ali: And if its a portfolio in the market you said, a steady and a geography and a great pipeline that I've just talked about is really important we invest in those two.

Ali: Optimize them and bringing to market as soon as possible. So that's what we're doing now.

Ali: We are absolutely committed and believe we are going to hit our 30% margin in 2027 and investing now allows us to change the trajectory of those products to speed, we bring them to the market olanzapine potentially the end of 'twenty five.

Ali: Early 2006, and that obviously changed once again on your portfolio mix.

Ali: The gross margin.

Ali: Deliver which obviously flows down to the IP. So we have thought this through.

Speaker Change: Very carefully about that and how we invest and then when we actually start to see some significant pick up in our bottom line, but I'll, maybe give the specifics to early as well. Thanks, Richard Thanks for the question.

Speaker Change: And just to continue Richard answer.

Speaker Change: In terms of absolute numbers, we don't see that one too much expand.

Otherwise.

Speaker Change: More than what we have in 'twenty four 'twenty five onwards.

Speaker Change: And as we grow with revenue of course, the percentage will go down.

Speaker Change: But currently for this year, that's the range we also.

I would like to remind that certain shipments in our R&D and our sales and marketing that's still.

Speaker Change: Consider that Robert element that would add some level of control in terms of prioritization and timing on that level. So this is still controllable items from our perspective.

Speaker Change: And then on the second question you asked Chris around International please to see you've seen a good growth there.

Speaker Change: And.

Speaker Change: In 2023 and the continued.

Speaker Change: Ambitious 2020 for desktop primarily driven about.

Speaker Change: <unk> continued market expansion, but really making sure we focus on the markets that can deliver.

Speaker Change: And.

Speaker Change: Our teams have done a tremendous job in doing that and so making sure the proposition of our resources goes to the markets that can drive top line and also bottom line, which is a sub component of our pivot to growth strategy. So hopefully that answers both your questions Chris. Thank.

Speaker Change: Thank you for them.

Speaker Change: Thank you.

Speaker Change: Our next question comes from <unk> Prasad of Barclays. Your line is now open. Please go ahead.

Prasad: Your line is now open. Please go ahead.

Balaji V. Prasad: Hi, good morning, everyone and thank you for the questions. So a couple of just firstly on the. <unk> Q4 performance and 2024 outlook, we just very strong mid point higher than the highest Bloomberg estimate I see. It looks like this has been drowned in the aftermath of the restatement locally into the stock reaction. So can you. Please provide more color on how does that band and the implications for days after those onetime restatement. Secondly on your partnership with Admiral considering that Teva is adding greater involvement in the biosimilar space through the re inspection. Looking at the FDA level. <unk> received the 40 threes later to FDA observing frequency foundation of operators. Help us understand how easy or difficult today to address this issue and in general what is the nominal resolution, which the FDA can accept for such observations. Thank you.

<unk> Q4 performance and 2024 outlook, we just very strong mid point higher than the highest Bloomberg estimate I see.

Prasad: It looks like this has been drowned in the aftermath of the restatement locally into the stock reaction. So can you. Please provide more color on how does that band and the implications for days after those onetime restatement.

Secondly on your partnership with Admiral considering that Teva is adding greater involvement in the biosimilar space through the re inspection.

Prasad: Looking at the FDA level.

Prasad: <unk> received the 40 threes later to FDA observing frequency foundation of operators.

Prasad: Help us understand how easy or difficult today to address this issue and in general what is the nominal resolution, which the FDA can accept for such observations. Thank you.

Speaker Change: Thanks, a lot Jay I appreciate the question I'll start with the second question and then I'll hand, the first question. Is it too early so with regard to the Alphatec. Partnership correct, we have been heavily involved in helping them I think I've said in the past I think we have around about 30, FDA inspections, a year across our 54 sites. Very proficient at dealing with this and we. Given that given that guidance and help to Alphatec I think with regard to the observations that you have seen the one observation. I think it's. For us that is considered a relatively small observation. Yeah. What I caution is with the FDA, it's totally up to them to give a view on whether that allows us allows alphatec to have that site cleared. But we think that is a good inspection, which shows the huge amount of work that's being done. At that site to make it. <unk> by the FDA, but I. Always caution the FDA have to approve the site for us and so what I say I think alphatec have put themselves in a very good position, but we'll have to see how that plays out and then to answer the first question. I'll hand, it back to Lee.

Speaker Change: Is it too early so with regard to the Alphatec.

Speaker Change: Partnership correct, we have been heavily involved in helping them I think I've said in the past I think we have around about 30, FDA inspections, a year across our 54 sites.

Speaker Change: Very proficient at dealing with this and we.

Speaker Change: Given that given that guidance and help to Alphatec I think with regard to the observations that you have seen the one observation.

Speaker Change: I think it's. For us that is considered a relatively small observation.

Speaker Change: For us that is considered a relatively small observation.

Speaker Change: Yeah.

Speaker Change: What I caution is with the FDA, it's totally up to them to give a view on whether that allows us allows alphatec to have that site cleared.

Speaker Change: But we think that is a good inspection, which shows the huge amount of work that's being done.

Speaker Change: At that site to make it.

Speaker Change: <unk> by the FDA, but I.

Speaker Change: Always caution the FDA have to approve the site for us and so what I say I think alphatec have put themselves in a very good position, but we'll have to see how that plays out and then to answer the first question.

Speaker Change: I'll hand, it back to Lee.

Lee: Thanks apology for the question, yes, so as part of our preparation for the consolidation the statement for 'twenty three. And we determined that there were errors in the single contingent consideration liability and related expenses, which are connected to the estimated future royalty payments. This resulted from exclusion of some payments related royalties. In that way. Re measurement. Need to recalculate. Said, the materiality of those arrows and determined that those are not material to each one of those 30 'twenty two 'twenty three. And about these revisions over the number which is not a restatement. We actually and implement them in doses financially. I would like to mention that <unk> did not impact our non-GAAP results is not the bulk of it all our total cash flow from operating. <unk> from financing activities investing activities as we speak we are in progress and a process to implement remediation plan to address this internal control.

Lee: And we determined that there were errors in the single contingent consideration liability and related expenses, which are connected to the estimated future royalty payments.

Lee: This resulted from exclusion of some payments related royalties.

Lee: In that way.

Lee: Re measurement.

Lee: Need to recalculate.

Lee: Said, the materiality of those arrows and determined that those are not material to each one of those 30 'twenty two 'twenty three.

Lee: And about these revisions over the number which is not a restatement.

Lee: We actually and implement them in doses financially.

Lee: I would like to mention that <unk> did not impact our non-GAAP results is not the bulk of it all our total cash flow from operating.

Lee: <unk> from financing activities investing activities as we speak we are in progress and a process to implement remediation plan to address this internal control.

Speaker Change: Thank you.

Speaker Change: Thank you for logic.

Speaker Change: Thank you.

Operator: Our next question comes from Nathan Rich of Goldman Sachs. Your line is now open. Please go ahead.

Nathan Rich: Your line is now open. Please go ahead.

Nathan Rich: Yes.

Nathan Rich: Great. Good morning, and thanks for the questions I wanted to follow up on the North America generics business. Richard in response to an earlier question you had talked about stabilization in the North America generics business in 'twenty four I guess does that mean, we should be annualized the <unk> revenue run rate or is that more of a flat year over year relative to 2023 comment. And then maybe a longer term question on pricing. Some of the Pbms as I talked about moving to kind of cost plus drug reimbursement just curious if. You would expect that to have any longer term impact on generic pricing for the industry. Okay.

Richard in response to an earlier question you had talked about stabilization in the North America generics business in 'twenty four I guess does that mean, we should be annualized the <unk> revenue run rate or is that more of a flat year over year relative to 2023 comment.

Nathan Rich: And then maybe a longer term question on pricing.

Nathan Rich: Some of the Pbms as I talked about moving to kind of cost plus drug reimbursement just curious if.

Nathan Rich: You would expect that to have any longer term impact on generic pricing for the industry.

Nathan Rich: Okay.

Richard: Hi, Nathan. Thank you for your question. So I think when it comes to north. North American. One thing what we talk about is and I think we've talked about this early on in the pivot to growth we want to first stabilize the U S. Generic business in particular, and then get it back to growth. What you see here is with the number of launches we've had that we have an opportunity to do that now whether that tips into growth or whether it tips. It back into flat stabilization, we'll have to see how it plays out and the reason for that hesitation and be absolutely definitive is because of what you talked about around pricing and what the erosion will be next week also next week. And also with the number of launches we have how many competitors come in and how they play out. So there's a lot of variables within that I think for us, it's about stability and building on that and getting it back to growth. And to be I think thoughtful about how we communicate that so thats the way to think about it with regard to pricing. What you said about the Pbms, saying that look I welcome anybody that starts to look at generics pricing to make it sustainable. I think right now it's a very challenging environment continues to be where the value that Gino explained to the health care industry to the hospitals to society. Is not reflected in the price that we can sell them at. And I think that creates a very challenging environment and I think probably that has led to the pbms and the payers thinking about actually supply challenges and how do we mitigate those and I think this is what this is this has raised its discussion with this best solution I think there's many others I could also suggest I think ultimately. You have to have a price that creates sustainability that allows us to invest in not only launches, but capital in our manufacturing sites. And I think that the <unk>. People just to step back and understand a bit more about what it takes to achieve that so good. The fact that as having a conversation now but I don't think that is the silver bullet necessarily. To improve the market.

Speaker Change: North American.

Speaker Change: One thing what we talk about is and I think we've talked about this early on in the pivot to growth we want to first stabilize the U S.

Nathan Rich: Generic business in particular, and then get it back to growth.

Nathan Rich: What you see here is with the number of launches we've had that we have an opportunity to do that now whether that tips into growth or whether it tips. It back into flat stabilization, we'll have to see how it plays out and the reason for that hesitation and be absolutely definitive is because of what you talked about around pricing and what the erosion will be next week also next week.

Nathan Rich: And also with the number of launches we have how many competitors come in and how they play out. So there's a lot of variables within that I think for us, it's about stability and building on that and getting it back to growth.

Nathan Rich: And to be I think thoughtful about how we communicate that so thats the way to think about it with regard to pricing.

Nathan Rich: What you said about the Pbms, saying that look I welcome anybody that starts to look at generics pricing to make it sustainable.

Nathan Rich: I think right now it's a very challenging environment continues to be where the value that Gino explained to the health care industry to the hospitals to society.

Nathan Rich: Is not reflected in the price that we can sell them at.

Nathan Rich: And I think that creates a very challenging environment and I think probably that has led to the pbms and the payers thinking about actually supply challenges and how do we mitigate those and I think this is what this is this has raised its discussion with this best solution I think there's many others I could also suggest I think ultimately.

Nathan Rich: You have to have a price that creates sustainability that allows us to invest in not only launches, but capital in our manufacturing sites.

Nathan Rich: And I think that the <unk>.

Nathan Rich: People just to step back and understand a bit more about what it takes to achieve that so good. The fact that as having a conversation now but I don't think that is the silver bullet necessarily.

To improve the market.

Speaker Change: Thanks for the question Nathan.

Speaker Change: Thank you.

Thank you.

Operator: Next question comes from Jason <unk> of Bank of America. Your line is now open. Please go ahead.

Jason: Your line is now open. Please go ahead.

Jason Gerberry: Hi, Thanks for taking the follow up. I was curious can you comment on margins now that the planned divestiture I think it was $700 million external $300 million internal revenues, but just wondering how to think about. How how profitable that business is when we tried to like think about potential valuations and then with the land the P&L AI program, where you guys give any. Updates regarding number of injections without pds's signal or with the next update just be the second half 2024. Pivotal top line update thanks.

Jason: I was curious can you comment on margins now that the planned divestiture I think it was $700 million external $300 million internal revenues, but just wondering how to think about.

Jason: How how profitable that business is when we tried to like think about potential valuations and then with the land the P&L AI program, where you guys give any.

Jason: Updates regarding number of injections without pds's signal or with the next update just be the second half 2024.

Jason: Pivotal top line update thanks.

Speaker Change: Thank you Jason Thanks, Thanks for that question. Question coming back. So I think with regard to tap it I think the idea is what is going to do for margins and I'll hand, that's early but on the whole I think it's pretty neutral with regard to what it does to margins. So don't think of it impacting our margins in a positive or negative way, that's probably the simplest way. So think of that one anything to add to that Eric. I don't think I think that okay, and then going on to Olanzapine I'll hand that one. So Eric maybe give some more specific about the fact that we fully recruited the study and maybe how many interactions. We've had yeah sure I can give you a date on that right. Now. So there is 675 patients from the study that's fully enrolled globally at this point. To date, we've got 2030 injections completed no PD assess at this point that 62% of our total target that we want for the clinical package for the submission. So we're well on our way and we will monitor this very closely.

Speaker Change: Question coming back.

Speaker Change: So I think with regard to tap it I think the idea is what is going to do for margins and I'll hand, that's early but on the whole I think it's pretty neutral with regard to what it does to margins. So don't think of it impacting our margins in a positive or negative way, that's probably the simplest way.

Speaker Change: So think of that one anything to add to that Eric.

Eric Hughes: I don't think I think that okay, and then going on to Olanzapine I'll hand that one.

Eric Hughes: So Eric maybe give some more specific about the fact that we fully recruited the study and maybe how many interactions. We've had yeah sure I can give you a date on that right. Now. So there is 675 patients from the study that's fully enrolled globally at this point.

Eric Hughes: To date, we've got 2030 injections completed no PD assess at this point that 62% of our total target that we want for the clinical package for the submission. So we're well on our way and we will monitor this very closely.

Eric Hughes: Thanks, guys. Thanks for the question. Thank you.

Eric Hughes: Yeah.

Speaker Change: Thank you.

Operator: Our next question comes from Aleksey <unk> of IMG. Your line is now open. Please go ahead.

Aleksey: Your line is now open. Please go ahead.

Yes, hi, Thank you for taking my questions. As to your debt. What are your plans or refinancing upcoming maturities, including the bonds.

Aleksey: As to your debt.

Aleksey: What are your plans or refinancing upcoming maturities, including the bonds.

Aleksey: Thank you Alexia for the question Alex could you take that one yes. Thanks for the question yeah. So. We're looking on the coming year. The maturity of around 950. $1 million deal in Nashville in another. Approximately $700 million do you in October when the Euro maturities and we are pretty I would say position very well. And to manage the maturities of 24 and 25 from our <unk>. Turning to the cash flow and we will have. Our end of an era. The three point to $4 billion. Around the October 26, which allowing us enough time. Consider it when we need to make the next day or refinancing. We're constantly looking on the market in terms of saying it. Paucity in trends and. We're calculating our strategy around it. But currently we don't have. Any specific needs to go. Alrighty. But what do you expect to. Deal with that. This peak. And in October 2026, this year. Todd pre funded it. Yeah. So it really depends on the dynamics and the weighted average of that I would say, our and maturities that we need to go down which is. The level of victory. The percentage that's mature team 26 in the market now is in the range of 6% to seven so it's really depend on how this one evolves because that we need to obviously consider some capital allocation in terms of interest expenses and timing. As I mentioned, we are constantly looking on that one and usually we would like to grow between 12 to 16 months ahead. In order to address both maturities and but we think that there is kind of enough time with the team. We're reviewing all those qualities around it.

Alexia: We're looking on the coming year.

Alexia: The maturity of around 950.

Alexia: $1 million deal in Nashville in another.

Alex: Approximately $700 million do you in October when the Euro maturities and we are pretty I would say position very well.

Alex: And to manage the maturities of 24 and 25 from our <unk>.

Alex: Turning to the cash flow and we will have.

Alex: Our end of an era.

Alex: The three point to $4 billion.

Alex: Around the October 26, which allowing us enough time.

Consider it when we need to make the next day or refinancing.

Speaker Change: We're constantly looking on the market in terms of saying it.

Speaker Change: Paucity in trends and.

We're calculating our strategy around it.

Speaker Change: But currently we don't have.

Speaker Change #100: Any specific needs to go.

Speaker Change #100: Alrighty.

But what do you expect to.

Speaker Change #100: Deal with that.

Speaker Change #100: This peak.

Speaker Change #100: And in October 2026, this year.

Speaker Change #100: Todd pre funded it.

Todd: Yeah. So it really depends on the dynamics and the weighted average of that I would say, our and maturities that we need to go down which is.

Todd: The level of victory.

Todd: The percentage that's mature team 26 in the market now is in the range of 6% to seven so it's really depend on how this one evolves because that we need to obviously consider some capital allocation in terms of interest expenses and timing.

Todd: As I mentioned, we are constantly looking on that one and usually we would like to grow between 12 to 16 months ahead.

Todd: In order to address both maturities and but we think that there is kind of enough time with the team. We're reviewing all those qualities around it.

Speaker Change #102: Okay Alright.

Speaker Change #103: Alright, thank you.

Speaker Change #104: Thanks for the question. Thank you.

Operator: Our next question comes from Madison earned from Jpmorgan. Your line is now open. Please go ahead.

Madison: Your line is now open. Please go ahead.

Madison: Alright, Thanks for taking my question on your Slide page 14 on the generic pipeline, you're including Nexplanon as one of your technology targets can you just walk us through as to what Youre planning there is that an NDA filing that youre planning just see if you could give us some detail. Thank you. Alright.

Madison: Alright.

Speaker Change #106: Hi, Madison. Thanks for the question I'm glad you noticed the slide 14 in the numerous complex generics. The market. With regard to some of these obviously, it's quite a competitive environment. We don't like to get into too much of the specifics because of the nature of that I think highlighting them. It gives a good insight to what we have and what's coming but I think thats. What we wanted to show here and the fact that we have a very broad portfolio across a number of technologies. So that's our aim here, but for competitive reasons, we really don't want to get into. The strategy of the details around that and hopefully you can understand that.

Speaker Change #106: The market.

Speaker Change #107: With regard to some of these obviously, it's quite a competitive environment.

Speaker Change #108: We don't like to get into too much of the specifics because of the nature of that I think highlighting them. It gives a good insight to what we have and what's coming but I think thats. What we wanted to show here and the fact that we have a very broad portfolio across a number of technologies.

Speaker Change #108: So that's our aim here, but for competitive reasons, we really don't want to get into.

Speaker Change #108: The strategy of the details around that and hopefully you can understand that.

Speaker Change #109: Thank you.

Thank you.

Speaker Change #109: Time, we currently have no further questions. So I'll hand back to Richard Francis for any further remarks. Thank you and thank you everybody for dialing in and appreciate your interest in Teva.

Operator: Time, we currently have no further questions. So I'll hand back to Richard Francis for any further remarks.

Richard Francis: Thank you and thank you everybody for dialing in and appreciate your interest in Teva. I appreciate the questions and I look forward to catching up with many of you in the next couple of days and obviously look forward to speaking to our quarter. One earnings later in the year. Thank you very much.

Richard Francis: Thank you and thank you everybody for dialing in and appreciate your interest in Teva.

Richard Francis: I appreciate the questions and I look forward to catching up with many of you in the next couple of days and obviously look forward to speaking to our quarter. One earnings later in the year. Thank you very much.

Operator: Thank you for joining today's call you may now disconnect your lines.

Speaker Change #111: [music].

Speaker Change #111: Yes.

Speaker Change #111: [music].

Speaker Change #111: Okay.

Speaker Change #111: [music].

Q4 2023 Teva Pharmaceutical Industries Ltd Earnings Call

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