Good morning, everybody. I'm Chris Schott from JPMorgan, and it's my pleasure to be introducing Teva today. From the company, we have CEO Richard Francis. Richard's been at Teva for roughly three years, and the company and the stock have had, obviously, a great run here. So looking forward to updates from Richard on the progress of the business, and we'll jump to some Q&A after that. So with that, over to Richard.
Thanks, Chris. Thanks for having us. Thank you, everybody, for coming. Absolute pleasure to be here today to talk about Teva Pharmaceuticals. Obviously, I represent everybody in the company. I just get the privilege to talk about it. And today, I'm particularly pleased to be able to talk you through where we are on our pivot to growth strategy, a strategy we launched three years ago. And that strategy was designed to get Teva back to growth, obviously. The clue's in the title there. But more fundamentally, it was to transform Teva from a leading global generics company to a leading biopharma company. Now, I remember when I said that in New York in 2023, there were a lot of people who were extremely skeptical. But we had a plan. We had a clear plan. We've executed on that plan year on year.
And I think you'll see the fruits of that labor and the transition we have now to what I believe is a world-leading biopharma company that has a very, very bright future. Now, the pivot to growth strategy was based on four pillars: deliver on our growth engines, step up innovation, create a generics powerhouse, and focus the business. Now, we've made big inroads in this, deliver on our growth engines. We'll talk a bit about the innovative business we have of Austedo, Uzedy, and Ajovy, and the continued strong performance we've had of those. Step up innovation. Once again, a bit of skepticism. Is there innovative capability at Teva? Is there a pipeline that can really fuel a biopharma company? I think I'll show you some slides today that will say, absolutely yes, emphatically yes.
The progress we've made, as you saw at the end of last year, Duvakitug, which moved into phase 3 studies on UC and CD and our partner, Sanofi. We also had a fast-track designation applied to Anle138b, a treatment for MSA, and our anti-IL-15 treatment for celiac disease. I say those just as highlights of the things, how much we progressed in three years, but the fact that those are also recognized by the authorities. Sustainable generics powerhouse. There was a bit of volatility when we started this journey in generics. We've actually smoothed that out. We've had some good growth in our generics. Going forward, you'll see a stable generics business over the future. The focus of business, it's all about capital allocation. Make sure we allocate capital to the right areas to drive the right growth, the right return on capital, and the right shareholder value.
Now, I'll remind you that this is a sort of three-phase strategy. We did the first phase, return the company to growth after several years of decline. So that wasn't straightforward. And we've had 11 quarters of consecutive growth since the start of 2023. So a real achievement there. We're in the accelerate phase. This is about accelerating the innovative revenue of the company and making sure that portfolio continues to grow. And that'll be supported from the pipeline, which I'll talk more about. And then the final phase is maintain. We're out to create a long-term sustainable global leading biopharma company. It's not a five-year plan. This is a 20-year plan. And everything we're doing is setting Teva up for success over the long-term future. Now, when I talk about this biopharma company, there's one way of changing a company is just change the sign above the door.
Global leading generics to global leading biopharma. Obviously, that's not credible. What is credible is the substance beneath it. I think the first thing I want to start about is just the financials, the facts. The facts are you cannot transform the company's financials like we have without transforming the portfolio. As you see here, we've obviously changed the growth trajectory, which I've talked about, moving from declining revenue to consistently growing revenue. We're growing our revenue in our innovative business, and we're doing that in a very strong fashion. That's driving a gross margin transformation, as you can see by this slide. Now, it is also leading to an improvement in our free cash flow and our EBITDA and our operating margin. At the same time, we're reducing our debt.
So as you look at it in 2027 and then you look at it beyond, the numbers don't lie. And as we head, our gross margin will continue to increase as our portfolio continues to grow. Our free cash flow will continue to increase. Our earnings per share will continue to increase. So it's a really exciting story. But when I talk about a biopharma company, you have to back it up with the financials. And I think this slide really highlights that. You'll also see that it's driven by our pipeline, which I'll come on to and talk about why we're so excited about our pipeline. But before I do, let's talk about innovation and the products we're commercializing now and where we started in 2023 and where we are now. This is transformative. Transformative. We have doubled, overdoubled the revenue of Austedo in this three-year period.
We have changed expectations when people thinking the peak sales will be $1.4 billion. Now we're having raised eyebrows about, is it really $3 billion? That's a transformation of expectations. Congratulations to the team in the U.S. for making that happen. There's still a lot of opportunity there. But then on Ajovy, a product most people had forgotten about, it had its moment in the sun. We've refocused that, refocused that across all of our regions. We've had double-digit growth in the last three years. So we've transformed a product which people have forgotten about. Now we're going to say this is going to be a $1 billion product in a very competitive market where we have orals as well as other injectables.
And then on Uzedy, I mean, if we're talking about congested markets, this is one of the most congested markets when you're in schizophrenia, with the fastest growing treatment in schizophrenia. And that's because we have a great product profile. And one of the exciting things is we're going to add to that family with Olanzapine at the end of this year with our long-acting Olanzapine. And so we'll have probably, I think, one of the world-leading schizophrenia franchises. And we're confident about that achieving $1.5-$2 billion. So when it comes to innovative, I always sort of remind myself of the question marks people had, can Teva commercialize innovative products? And what I can emphatically say is, no, no, can we? I think we do it pretty much better than anybody else. Now, what does that do to the financials? It's, as I say, transformative.
And I think this is important for anybody looking to invest in Teva. Just the growth profile of this company is driven predominantly by our innovative business. But that changes our financials from a gross margin point of view. And as you see, we've doubled the innovative business in this three years. And we're going to aim to keep doubling that. And so that allows us to transform our gross margin. We're very frugal on our OpEx. And so if we continue to do that, which we will, then we'll drive an EBITDA and operating margin expansion, increasing free cash flow, and obviously an increase in earnings per share. So I think a very attractive opportunity. Now, once again, I always go back to the numbers because it's easy to talk a good game and maybe to create a nice narrative.
I think what's important is to make sure that you have some real substance behind these numbers. As you see on the innovative, we've doubled the business every two years. Broadly speaking, we aim to do that going forward. How do we do that? Excellence in commercial execution, as I've just talked about on the previous slides, really good. In competitive markets, we can become one of the best. Now, you've seen that with Austedo. You've seen that with Uzedy. We're about to launch Olanzapine. As you see, in 2027, we'll also be in a position where we can launch DARI, dual-action rescue inhaler. That'll be supported also by Anle138b and then Duvakitug in the coming years. There's reasons to believe in this growth.
Not only do we have still to meet the peak sales of the products we currently have in our market, but we're going to be constantly adding new products to this portfolio. Hence the reason that we think we can get to over $10 billion in peak sales. And one thing is worth reminding, obviously, $10 billion in peak sales is transformative for any company. But a company like Teva, it is a game changer because where we start the journey and where we're going to end this journey, going back to some of those financials I spoke about. So how do we get to $10 billion? Well, here's the slide, which I'm super proud to talk about because I think for me, this is a high-quality pipeline. Why is it high quality? Because the targets we're going after, we believe, are validated.
The reason, the probability of success is high, but also the unmet need is high. The market size is high. Our reason to be competitive and believe we can win in these markets is also high. But it's late stage. I mean, I'm not talking about preclinical stuff here. This is all in the clinic. So let me sort of quickly touch upon it. Whether it's our schizophrenia franchise, we're going to be competing in a $9 billion market. As I said, we've got $1.5-$2 billion. Daria, dual-action rescue inhaler, all of our products we believe will have peak sales of $1 billion or more. $1 billion or more. And we've got a list here. DuvaKitug, this is a $38 billion market now in UC and CD. And we believe we have the best TL1A.
And maybe we have an asset here that can compete with other MOAs as well and other modalities. And we'll have some data on that, as I'll talk about a bit later. We have other indications. And all I can say to you now is those other indications will be billion-dollar indications. And then Anle138b with the treatment for MSA, that will come out. And we'll have some data on that this year, as with anti-IL-15 and vitiligo and celiac. But as you look at this pipeline, we clearly have an opportunity to have $10 billion in peak sales. But what's interesting, we will be a company who is launching pretty much a product every year going forward. There may be a gap, which will probably be nice to take a bit of a breather.
But that's quite extraordinary from a company that wasn't known for innovation to start to innovate and be launching in this regularity, I think is really exciting. It goes back to the validity I think we have behind this $10 billion of sales. Now, the exciting data. And so this is a data readout that feels like a biopharma company because in the first half of next year, we will have the maintenance data on Duvakitug. Now, you know we had, I think, some really exciting data for the induction of our phase 2 data at the end of 2024. We saw that as best in class. So it's going to be important to see what the maintenance data looks like. And we'll be able to announce that in the first half of this year. But that's just one of the readouts.
Then we have the vitiligo phase 1b top-line results for our anti-IL-15. And that's a product we're particularly excited about. But it's nice to know that other people think it's a great asset. And as you saw earlier in the week, Royalty Pharma have joined us on this asset. They financed it to the tune of $500 million. And I can tell you when you get a company like Royalty Pharma partner with you, they do some extreme due diligence. And this is one of the earliest assets they've invested in. So I think their belief in it sort of validates our belief in it. But we also have celiac disease phase 2 1a data coming out in the second half of next year. And so once again, I've just talked about Duvakitug having multiple indications.
We have anti-IL-15, which already has multiple indications, and we believe it can go into more indications. That's worth noting because just on Duvakitug and just on anti-IL-15, we probably have somewhere between five and 10 indications. Pretty transformative for any company. But as you see, we have many other assets. And then we have our dual-action rescue inhaler. We've completed the recruitment of the patients at the end of last year. So we're looking to have a data readout at the end of this year. It's an exacerbation study, so we are a bit contingent on that. But excited about that. If that goes well, which we're anticipating it will, we'll be able to launch that in 2027. Then Anle138b, the treatment for MSA, futility analysis around about mid-year, second half of next year, recruiting really fast. That's a common theme at Teva.
We recruit our phase two and three studies really fast, and then Olanzapine, I've talked about, and then just to perk people's interest, we have our anti-PD-1, IL-2, first in human data at the end of this year, and once again, we think this is an exciting asset, but we'll let the data talk for itself when it comes out. Now, because of that, I'm going to show this slide, which is obviously. I always think that maybe this company is undervalued, but I think people who stand in my position often say that, and so I thought I'd put a bit of data up here to maybe validate what I feel.
As I compare Teva to some of the world-leading biopharma companies, when I just think about what's going to drive the revenue in the short term of the top brands we have, what's going to drive the revenue from the pipeline, and then how we're valued, it seems to me, just on this limited data, that there's opportunity for excitement around Teva. Some people with the recent rally on the stock, and Chris mentioned how much the stock has gone up, said, "Well, have you missed the opportunity?" I'd say this is the start of the journey. This is absolutely the start of the journey. I know that may seem hard to believe, but if you go back to that pipeline, you go back to those products I mentioned, the peak sales they have, this is really the start.
Worth taking a look at it if you haven't because there's a lot of opportunity still there. Now, digging a bit into three of the assets, I just picked three because we have a lot, but DuvaKit, this is an antibody that was designed in-house, so by our team in Sydney. Congratulations to them for engineering what I think is the best TL1A out there. We saw that in the phase 2 results. It shows its high level of potency, its high level of specificity, and its low neutralizing antibodies. All of those are critical when you're treating a chronic disease. We think that's why we had such great induction data in our phase 2. It'll be exciting to see if that's continued in the maintenance data, which is important because these patients will be on the therapy for a long time.
Now, the treatment for MSA, multiple system atrophy, a horrible disease, a fatal disease, which is debilitating very quickly. People end up in a wheelchair, and then the mortality rates are very high in a short space of time. Huge unmet medical need. Nothing out there right now. We think with Anle138b, we have a small molecule that crosses the blood-brain barrier and has an opportunity to be disease modifying. So very excited about it. Unfortunately, this is a big opportunity. I say unfortunately because there's obviously patients, 65,000 patients who suffer from this. But from a blockbuster potential, if we're successful and we'll have a futility analysis in the second half of this year, we've designed the phase two study to have enough patients in it that this could potentially be registrational, depending on the efficacy.
This will be a profound opportunity to make an impact on these patients. So we say $2 billion. From the previous slide, Duvakitug, just in those two indications, we have $3-$5 billion of peak sales. Then anti-IL-15 that I spoke about, another antibody, another in-house antibody designed by the Sydney team, again, real capability, designed specifically to do what we need it to do. Great quarterly dosing here, which we think in vitiligo and in celiac disease will be exciting. But as I said, it can go into multiple indications where this pathway, this target, this biology has been seen to be effective. Once again, the peak sales are all above $1 billion. The market sizes here are just at their start because they're growing. There is no treatment, effective treatment for celiac disease. With vitiligo, there isn't any systemic.
So the opportunity for a condition like this having a systemic, I think, is significantly high. Now, talking about our generics business, and I think it's a sign of the progress we've made that I am 10 minutes into my presentation before I talk about generics. The generics business, our aim was to stabilize our business when we started this pivot to growth strategy. We did more than that. We actually grew it. And going forward, we see this as an important part of Teva. And we see this as growing sort of low 1%-2% CAGR going forward, one, because it's such a huge business. To grow it any faster than that is difficult. What's exciting is the amount of biosimilars we have. We were late to the party with biosimilars, but we have 16 coming through.
We have 10 we've already got in the market. Another six before 2027 will launch. But the aim is to have about 20-30 biosimilars in our portfolio. And we're actively doing partnerships all the time to make that happen. So now, the important part of our generics business, apart from being a global leader, is that it throws off a significant amount of cash, which helps us pay down our debt, but also helps fuel that big, significant pipeline we've got. So this is a really important partnership that we have at Teva with our generics business. Now, looking into the numbers. So that's the setup. Now it comes to the numbers. We issued a press release on Sunday about the outlook. We've obviously got our earnings in a few weeks, so we'll actually close out 2025.
It was really just to let everybody know where we were heading at this late stage. Revenue is going to be to the lower end of our guidance. Operating margin is to the mid to high point. EBITDA is to the mid range. EPS is to the higher range. Free cash flow is to the higher range. I think we've made some operationally. I think the numbers say it all. The reason why we are able to drive this level of performance, particularly in our EBITDA, free cash flow, and EPS, is because of this transformation of our portfolio. I do highlight here that Duvakitug, we've excluded from these numbers because we have a milestone payment from Sanofi, which is $500 million at the end of last year.
We exclude that just because we always want to be transparent about our operational performance of what we're doing and how we're driving that business. But at the same time, it's nice to know that, obviously, that's come in. And our net debt, which I mustn't forget to talk about, is getting close to our IG rating. And as we move on to 2026, 2027, and beyond, to give a bit of guidance, our top line is flat to slightly down. Don't forget, we lose our generic Revlimid. That's $1.1 billion of revenue. So that goes in 2026. So I think being flat to slightly down is a great achievement.
I think it's worth noting that to be able to grow EBITDA and operating margin and free cash flow when you're losing $1.1 billion of revenue, you can only do that if you're driving a transformation in your portfolio and driving an innovative portfolio. There's just no other way of doing it, right? Although we're driving efficiencies and cost savings, you can only do that if you have an innovative portfolio growing rapidly. In 2027, we continue this trend. We hit our 30% operating margin. Our EBITDA continues to grow. Our cash flow continues to grow. Our net debt will be below two times. We'll realize all our operational effectiveness synergies of $700 million net. So really exciting times.
I think we're at the final sort of stage of this sort of chapter of getting ourselves to a world-leading biopharma company with a very predictable and exciting future. And then my final slide is to sort of say what the future looks like. It is a world-leading biopharma company, and the definition of that is based on the substance. The substance is the change in revenue, the change in gross margin, the change in free cash flow, the operating margin change, all hard numbers. And that's driven by a portfolio which is growing
rapidly. It's over 30% in Q3, nearly $1 billion. And we're going to be adding to that this raft of innovative products. And don't forget, I'll remind you, not only is it a long list already, anti-PD-1, sorry, anti-IL-15, and Duvakitug have multiple indications. So this is really the tip of the iceberg. So with that, thank you for your time and attention. And we'll now go to Q&A
. Appreciate the comments there. Maybe just a big picture question to start out here. I guess, Richard, as we reflect back on the innovative portfolio and I guess the approach, how that's evolved since you became CEO, talk about how you've been able to kind of transform the business like this. And then as we think about the business going forward, what should we think about in terms of cadence of launch of new products coming to the pipeline, etc.? Is there more here, I guess, as we think about the evolution of the innovative business?
Yeah. Look, it's something I'm really, really proud of. I mean, I sort of mentioned it there in my talk that to be questioned as to whether we can actually sell innovative products or develop them, which we were, to then end up, I think, selling them and being up a quarter and developing them and being up a quarter. And the facts say that, I think, I'm very proud of. How have we done it? We have a maniacal focus on prioritization. We prioritize ruthlessly. And we said, "Sven, you said in your job, we must be successful." We allocate the right amount of money and capital, and we make sure we have the right talent and people in place. And I think money is probably the smaller aspect. The other is just having a talented team. And that talented team, as you've seen, is focused in different markets.
Sven, you said it, kind of jokingly, very, very different markets, very different challenges, not easy, and I think they've shown how good they are, but that's about focused prioritization, and we measure stuff. I mean, we're operationally so focused. The same on development. I mean, this pipeline, you could argue, has come out of nowhere, and I think credit to Eric and his team for not only bringing things into the clinic, but prosecuting them in the clinic faster than pretty much any study in any TA we've done. I think we're either the fastest now or in the top quarter, so I think it's about making sure the company is very clear on what its priorities are. The capital follows that. We have the right talent in place to do it. And then we're just religiously focused on doing that month on month, quarter on quarter, year on year.
Excellent.
Sorry to answer your question about launches.
Yeah.
I skip over it a bit because I'm sort of excited by the present, but we do launch olanzapine this year. We will launch Dari next year. There's a chance we'll launch Uncertain in 2028. Then 2029, we'll launch Duvakitug. Then we may have a little breather. And then we'll launch vitiligo, anti-IL-15. And then we'll launch in celiac disease. And then we may have the two indications that we're starting Duvakitug this year. They maybe start to come through in the early 2030s. And so it is almost every year. And maybe that's just one
thing we've got to be really, really careful and thoughtful about because I've never been in a company, no matter how big, that launches a product that's transformative to that TA every year. But we're thoughtful about it. We've been planning an olanzapine launch for two years. And so we've got into a cadence. But it is exciting. And I think that's another reason why I say to people, even if you discount half of what I've said, it's still an amazing future.
Yeah. Absolutely. And can we think about, there's been a pretty steady cadence of products coming into the pipeline. Should we think about that as, yeah, since you've got a great runway in the next few years, but that every year or every couple of years, we're going to see more of these internally developed programs? Is that reasonable to think about?
Yeah. I mean, look, I think Eric and I have aligned, and Eric can talk now. We don't really care where they come from. We definitely don't have that bias for homegrown. What we happen to have is just a super talented antibody engineering team. And so Eric can talk a bit about the TEV-48574 that we've got coming into the clinic, probably early 2027. But we're just looking to bring transformative medicines that have a high probability of success. So we'll never be the explorers. We're never going to try and find a cure for something that no one's ever touched. We're clever in how we sort of understand targets and understand how we can do something better, either through partnerships or through our antibody engineering. But maybe you want to have a.
Yeah. We're fully aligned on this. What we look at is neuroscience, our heritage, and our expertise, and our burgeoning immunology expertise. That's our focus. Like Richard said, we don't care where it comes from, whether it's our great labs in Sydney or a BD opportunity that comes up. That's how we're going to play the game, but making sure that we have programs that are high probability of success, known science bringing it together. When it comes to internal, I'll emphasize again, we can make great antibodies. We can do great protein engineering, and we can bring many different things together. So that will continue to spin out molecules, but the focus on bringing in neuroscience, great franchise we have in the LAIs right now with Uzedy and hopefully Olanzapine. That's our focus, and we'll stick to that and be a very efficient group.
We just focused on all this late-stage assets because it's great to have three phase 3 programs and two great phase 2 coming up.
Excellent. Just looking at the near-term numbers, and you've given a fair amount of color on 2026, 2027. Just remind us kind of how the business you see shaping up this year, pushes and pulls we need to consider in there, and maybe as part of that, I think we're all kind of trying to get our hands around generic Revlimid. What's reflected in that guidance for Revlimid for this year?
Yeah. No.
What's that guidance?
Yeah. So it's a really good question because I know I do spend a lot of time looking at your model and other models, right? I'm a bit of a geek like that, and I think it's worth reminding, we lose $1.1 billion of Revlimid. So if you think about the US business, that sort of brings it to about $2.5 billion. Make sure your models have that. That, by the way, just some other nuances here. We had nearly $300 million of generic Revlimid in Q1 2025. So we won't have any of that. That'll be something to model in, and our gross margin will be hit by that. We always start off with a lower gross margin at the start of the year, then the end of the year. Those two factors are playing an important part.
I'd ask people just to maybe go over the spreadsheet again on that. So that's a significant change. And so when I think about, when we say flat to slightly down, our innovative business continues to grow very strongly, but to lose $1.1 billion of generic Revlimid, and we have nothing in 2026. By the way, we're not trying to be clever. There is no way I can sensibly or the team can sensibly model what generic Revlimid could be. And with so many people coming in, so forecast zero, I don't think is actually a bad forecast and for us to plan financially for that. But we're not trying to be clever. There's nothing in the back pocket. There is zero in that, and I honestly believe it will be zero or close to zero.
Very helpful. Looking then longer term, so beyond 2027, just tell you a little bit about the growth you need to see on the innovative business to hit that mid-single digit target.
I think we've got to see, to a certain degree, we obviously have Uzedy. It's growing strongly. That will sort of taper a little bit just because the base gets bigger and bigger and bigger, right? And so that's just natural. I think Uzedy stays on, sorry, Uzedy stays on a pretty good growth trajectory, although we are now starting to move into other molecules. So it's not about taking from risperidone long-acting. It's now moving into the paliperidone and other things like that. And Ajovy, I still see some good traction. I think olanzapine helps us to drive that. I think the one thing I'd say about olanzapine, so I feel confident about the mid-single digit, but for me, I'm always thinking about how do we create long-term value.
And so for Olanzapine, the one thing I would say is, although the pent-up demand I think is pretty strong, we will not contract aggressively unless we see the right price and agreements because we see this as meeting a huge unmet need. And so it depends how the negotiations go as to whether that will hit a fast uptake trajectory from a revenue point of view or whether it'll do a bit like we did with Uzedy. We took longer because we didn't contract because we didn't see the contracting to reflect the right value of the product. So those are the things. And then don't forget, in 2027, we've got TEV-'248. We launch. The difference in TEV-'248 versus the product from AZ is we all have a pediatric indication. And pediatric indication is 25% of the population.
To remind everybody as well, the reason why dual-action rescue inhalers are being put in the guidelines is because I think there's upward of 5,000 Americans die every year because they don't have them. If you're thinking of that from a pediatric, children really want to look at it. So I think we have a chance of actually moving that product well because of the focus on children. And that comes in 2027. So if you put all those together, I feel confident about the mid-single digit. But I think more important, I've sort of gone beyond 2027 now. I think, what does that mean for 2028? What does that mean for 2029? What does that mean for 2030? And that's when you start to get to the $5-$7 billion of innovative revenue.
Yeah. Absolutely. I think you just highlighted in the presentation a lot of data updates this year. Maybe if you were to distill those down, what are you most excited about as you think about the updates this year?
Yeah, there's a lot going on in 2026. We'll be very busy. I mean, the way it's been, I mean, it started with the end of 2025 with the submission of olanzapine and Uncertain, which we're very excited about. Going into 2026, we'll have the maintenance data, as Richard mentioned, from Duvakitug for both ulcerative colitis and Crohn's disease in the Q1. We'll have the vitiligo data from the proof of concept study that we're very excited about. Royalty Pharma helped us out making sure that program moves quickly. After that, we'll have the second half, the celiac disease data. It's another proof of concept study with biopsy data in celiac disease. We're going to have a futility analysis for Anle138b and multiple system atrophy, a very high unmet medical need. It's enrolling very quickly.
We'll probably even over-enroll that because we want to make that study as pristine as possible for potential accelerated approval. But then on top of that, there'll be probably data from our first-in-human studies of PD-1 and IL-2. And we'll probably be announcing our new indications for Duvakitug again this year. So there's a lot going on. And I should mention one of the things that you were just talking about with the DARI program. DARI is a big program. It's a huge important need for asthma. Pediatrics, adolescents, and adults are in that study. We achieved the initial targeted enrollment of those patients. Everyone out there who does drug development knows pediatrics and adolescents are hard. We're on track. We'll probably over-enroll that too. But we're on a trajectory to get that last event at the very end of the year in December for that event-driven study.
We've had a pretty interesting Royalty Pharma agreement with the IL-15. Can you just talk a little bit about A, why you kind of sought a partner to help finance that, and B, what data did they have access to to make that decision?
Yeah. So first and foremost, Royalty Pharma is a great group to work with. This is the second deal we did with them. They funded our Olanzapine LAI that allowed it to go full steam ahead. And we were able to accelerate that program. So as Richard mentioned, we have a whole bunch of things all of a sudden lined up, ready to go. That takes a lot of funding, a lot of bandwidth to do. So these deals are just allowing us to keep everything going. So, great partners, they do great due diligence. They look at every last thing under the hood. And it starts with the fundamentals. They saw that our anti-IL-15 has great potency. It has a 38-day half-life. We've shown target engagement with suppression of free IL-15 at 90 days. That gives you the potential of thinking about a quarterly dose subcutaneous shot.
And so they've looked at that. They've looked at all our documents, all our basic science. And they're following us in the proof of concept study. So we're looking forward to that data when it finally locks. And I think, if I'm not wrong, that's one of the earliest deals they've ever done in early stage. And I think I would imagine the only reason why they did that is because of the quality of the asset and the quality of the data.
Yeah. Absolutely. Can I pivot over to Austedo? We had the IRA price negotiations. That was a big topic of debate last year. Sure. Happy to have that in the rearview mirror. Can you just walk us through a little bit about how you're thinking about the $2.5 billion target for 2027 in light of the now you have full visibility on that price component of it?
Yeah. Firstly, I think it's worth reminding people that we forecasted that we were going to be part of the IRA back in 2023 for 2027. And everybody said, "You shouldn't because you're not going to sell enough to be in the IRA." So I'd like to point out we actually backed our ambition with modeling that we were. And we were, which is we were right. But then when the IRA and I think the team, Chris and Uncertain here did a fantastic job in negotiating with the IRA to get what I still, which is I suppose people say is a good result. I still think it's completely unfair, but I've got to get over that. So what I think about the $2.5, I always felt confident in the $2.5 in 2023. I did in 2024. I did in 2025. I did obviously even more clarity in that.
absolutely feel confident. Why do I feel confident? Apart from having a world-class team, there are so many patients who aren't treated for tardive dyskinesia. So many patients. And so the unmet medical need is massive. And I would actually start to say I think we're actually starting to really get some momentum now in educating physicians, nurse practitioners, caregivers, patients themselves to come in and seek treatment. So for me, it's all about the unmet medical need, the untreated patient population, which is
huge. So I feel very confident about the $2.5 billion. As I often say, I'm beyond the $2.5 billion now. I'm looking at the $3 billion and where we can get that and how do we build a plan together. And we have that already in place. So yeah, I feel we're in a very good place. It's hard work, by the way. This makes the gradient harder for us to climb, but that's not something we shy away from at Teva.
Maybe I'll just want to follow up on Stevo. The ex-US franchise there, how do you think about the opportunity there?
Yeah, I think it's more tapered. I think we don't think of that as significant. One is because of pricing. Can we get the right price? There's obviously the MFN. It needs to take into consideration. We didn't really factor that in as a massive lever for Austedo. But we're still working through that. And we still see potential opportunity, but it's more measured. I think the opportunity in international markets probably speaks more to Olanzapine, where the use of long-acting injectables and schizophrenia is high, a lot higher than the U.S. And the appetite for Olanzapine would be high. And the pricing comparisons are not too distant, not too far apart. So I think that's an opportunity for us from an international expansion.
Great. Maybe just turning to Olanzapine. As we think about approval later this year and launch, how do you think about the price dynamics there? It seems like on one hand, it's a fairly unique asset. And it seems like all the KOL feedback is a big unmet need. Why wouldn't this be something you could get priced relatively quickly or reasonable price on the drug?
Because it's not always that straightforward. People don't always pay for the value of what we're giving them, and that's just the pharmaceutical industry, I think. Your logic is correct, but the practicality. I think so. Look, I think what we've learned with Uzedy is we believe we know what the value of our product is. And we will stay firm on that and allow us to work with physicians who will drive this through. Don't forget. I remind you, Uzedy, we did not get agreements on with many of the payers, many of CMS, Medicare and Medicaid, because we didn't agree or Medicare on the price, so physicians phoned up and demanded it. Why did they demand it? Because there's an unmet need. Because when a patient has a schizophrenic episode, they need to be treated and get to a therapy dose as fast as possible.
Uzedy does that. And what we saw is how those physicians were mobilized to ask. And obviously, when it's schizophrenia, payers don't really push back too hard because it's a schizophrenic patient having an episode. With olanzapine, I think that opportunity is even greater. So our confidence to hold the line. But should it be premium? Should it be priced appropriately? Should it be seen as the innovative product it is? It absolutely should. We're just expecting a relatively tough ride because that's just how the world is moving. If it gets easier, that's great. But once again, as we plan financially, we're not planning for that huge bolus of revenue in 2026. And we'll be measured in 2027 because once again, we'll not give value away just for the short term.
Yeah. Makes sense. Last few minutes here. TL1A, can you talk a little bit about, I guess, maybe a two-part question? First, timing of the phase threes that these are up and running. And then B, just the competitive landscape here. I think we're seeing some initial Merck data as we go through 2026. How you're feeling about your positioning of your asset versus some of your peers?
Yeah. So I can start with the fundamentals. When we look at our antibody, it's got the greatest potency. We compare it to in-house molecules we make. It's got great selectivity. Remember, our MOA is slightly different. We're blocking the DR3, but we're actually maintaining the DcR3 receptor. So fundamentally, we have an advantage, we believe, in the biology. And we have the lowest anti-drug antibodies. So the fundamentals of the molecule are strong. That predicted, and we showed in phase 2, very strong data in both the well-controlled study and ulcerative colitis and Crohn's disease. And we posted some very good numbers there. We're very excited. I was particularly excited about the Crohn's disease and the fact that we did as well in treatment experienced patients as naive. So the fundamentals, the initial clinical data are very strong. But remember, this is a chronic disease.
We need to have durability of response. So we're looking forward to that data at the end of the Q1, that maintenance data 44 weeks out. So I think all these things add up. The fundamentals make it a particularly strong profile. So strong within the TL1A class and hopefully strong across the class, looking at the landscape of competition. So I think there's a lot of upside. There's also the uniqueness of the biology. This is covering many different cytokine pathways as an amplifier. And it might have direct antifibrotic effects. So there's a lot to uncover here. And I think it's many years into the future. I'm like, Richard, I'm thinking beyond 2027 now. It's into the '30s, which is very exciting.
Excellent. Rich, last question. As we think about the delevering process, kind of getting to the place you've been highlighting for a few years now, how do I think about business development? What's kind of the focus? What type of assets do you ideally want to bring in? Kind of just elaborate a little bit more on that.
Yeah. No, it's a good point. I mean, it's interesting. As we come to this conference, no one asks us about our debt anymore. One, because we've done a great job of paying it off, and we'll be investment-grade this year at some point. But when it comes to that cash flow, we're starting to generate significant amounts of cash flow. BD is an aspect we've been focused on. We want to bring in some assets into our neuroscience franchise and maybe into immunology, and we want it to be late stage. We don't want to take on any significant risk because we don't think we have the right balance sheet for that or the appetite. But the one challenge is you've seen the portfolio we've got listed on this slide. It's got to be something that we can allocate capital to fairly because we've got some good stuff internally.
That said, the commercial team is so good here, I want to give them more products to sell, and so we're active about that. I'd like to think we'll be announcing something in the next 12 months, but it's got to be the right price, and we will not overpay. We know what return on capital we want. We know how valuable money is, and so we'll stay disciplined, and we can because we've got a great pipeline, and we've got a great innovative portfolio that's performing really well in the market.
Excellent. Well, appreciate all the comments. And congrats on all the progress.
Thanks, Chris.
Thank you.
Thanks for having us.
Yeah. Thank you.