Good morning, everybody. Why don't we get started? For our first presentation, we're very excited to host Richard Francis. He's the President and CEO of Teva Pharmaceuticals. We do have Eli Kalif there in the front row. If you just wanna raise your hand and show everybody. We got Chris Stevo and Sanjeev Sharma representing the IR team. We're happy that everyone could sort of join us. 2025 was a gigantic year for Teva, not only financially, I mean, a lot of accomplishments in the pipeline. Maybe as a good place to start, Richard. I'm sorry, before I should've did that, before we do that, I probably should introduce myself. Sorry, this is the first presentation of the conference, so I'm just warming up.
I'm Glen Santangelo. I'm the analyst at Barclays that covers the stock. Please feel free to follow up if anyone has any interest in the name afterwards. We'd be happy to spend some time with you. Richard, thank you for joining us. We're excited that you guys could kick it off. Maybe as a good place to sort of level set the conversation, maybe you can sort of walk through some of those 2025 highlights, not only financially, but you had a lot of key pipeline updates. Maybe that's a good place to start talking about some of the accomplishments of last year, and then we can sort of dive right in.
Absolutely. Yeah. So thank you for hosting us. I always appreciate it. Good to talk to you. So 2025 was a very important year. We've started the transition of Teva from a pure play generics company to a biopharma company. We started that in 2023, the Pivot to Growth strategy. I think, you know, we really gained momentum. I think the way that's best exemplified is probably in this idea that transitioning to an innovative company sounds great on paper, and it sounds a great way to drive long-term value creation, but it's about the math. Does it play out that way? Last year, you know, our innovative portfolio was over $3 billion, and it grew at 35%.
Real momentum across all our leading brands, AUSTEDO, UZEDY, and AJOVY. I think fundamentally, you've seen that drive down through the P&L. Our gross margin has changed, ability to drive EBITDA, and ability to drive EPS and create real shareholder value. I think the skepticism, could it be done, has passed now. I think now the questions always are, how quickly can you move this? How quickly can the transition of the portfolio continue? What does the end game look like? That's starting to now come to fruition with the pipeline. Although we've made great progress on the pipeline, it's really 2026 it becomes sort of the breakout year. We have seven milestones for 2026.
You know, we started the year with the duvakitug maintenance data, which once again, I think position it as the best TL1A out there. In Q2, we're gonna have the first data in anti-IL-15 in vitiligo. In Q3, we're gonna have the anti-IL-15 data in celiac disease. In Q3, we're also gonna have the futility analysis of emrusolmin in MSA, so a go/ no- go. In Q3, we'll also have the readout of our dual-action rescue inhaler in asthma. In Q3, we'll launch Olanzapine, our long-acting treatment for schizophrenia that joins its sibling UZEDY, that's doing really well on the market. In Q4, we have the first in human data on our PD1-IL-2.
That doesn't sound much like a pure play generics company. That's sort of 2025 now was a really good year. As in Teva, it's all about the next year, and it's all about making sure we nail it in 2026.
Yeah. Well, I mean, so many good things to talk about in 2025, before we start diving into some of your branded drugs, I mean, is there anything that disappointed you last year? Anything that maybe was a little bit less than what you thought, or I don't know if there was any sort of negative surprises.
Look, I mean, I'm generally quite glass- half- full, half- empty type of guy. As people who work with me, it's probably quite depressing sometimes. I'm always looking for what is more. I think there's things we could have done better across our business. If I really step back and look at it objectively, we've moved the company on many parallels, whether it's our generics business, whether it's our biosimilar business, whether it's our manufacturing cost base, whether it's our innovative. I think we've moved things in parallel at speed across quite a large company. I think I'm very pleased with that. I think for once, not saying we couldn't do things better. You know, I think they're more in the margins.
I think, you know, one of the things I was particularly proud of is we started this organizational effectiveness, this cost efficiency program, and we achieved our goal in 2025 when we started it, and that set us up well for 2026 to achieve two-thirds of the $700 million. You know, when I reel off the things we've done, probably the one thing actually now I think about it, I would've liked to have done some BD. I'd have liked to in-license something. You know, we have a real focus on capital and the return on capital deployment. We have a good organic growth engine. We can do a lot organically. We'd like to add something to it, but it's gotta be the right price. It's gotta fit in. If it ultimately isn't, you know, we're good at holding the line and staying disciplined.
Okay. All right. Why don't we dive into your branded portfolio now? Why don't we start with AUSTEDO? 30% growth three years in a row. I mean, that's probably surprising to you, right? I mean, essentially, you crossed $3 billion run rate now in your three branded products. With AUSTEDO obviously is the majority of that. Maybe that's a good place to start. What's sort of giving you the ability to grow maybe much faster than you would've expected, right? I mean, I seem to remember you guys put out that $2.5 billion goal in 2027, and we seem to be getting there faster than expected. Maybe could you talk a little bit about some of that brand strength and maybe what's driving that to help us kind of assess the durability of that recent trend?
Yeah, no, look, I think it comes down to two particular areas. One would be what is the market opportunity? I think that plays an important part. Then is what is our focus and our capabilities. The market opportunity, you know, as much as this is, you know, still surprising is 85% of patients who are diagnosed with tardive dyskinesia are still not on therapy. It's a very dynamic market where people come on, and they come off. The opportunity to really drive real growth and change people's lives is huge still. That's the sort of market dynamic.
I think what we've done and a lot of what we do at Teva is about applying real prioritization, real focus, setting clear expectations, applying the right level of resource, having a great team with great capability, but clear expectation setting. When we set the $2.5 billion in 2027, you know, for me, that was one where the organization then had to step up and say, "Okay, let's work back. What do we need to achieve in 2023, 2024, and 2025 to get there?" A really talented team, super focused, and that team keeps getting better. You know, it's very impressive. Great market, excellent execution.
As you say, we may get to the $2.5 billion ahead of a year, which sort of is quite surprising to many who obviously, as you said, didn't believe it was ever gonna happen. You know, I think that's a testament to understanding the opportunity, applying the right resources, and executing flawlessly.
Could we talk about the XR transition in there as well?
Absolutely.
We see it having a pretty big impact on the pricing, right? Which I'm sure there's a margin that's associated with that. If you could just sort of talk about maybe where we are in that transition process.
Yeah, that's a good point, Glen. Thanks for bringing it up. Obviously, we have this patient dynamic and lots of new patients coming in, but also we launched the XR formulation, the once-a-day. What that has allowed patients to do is to titrate to a more efficacious dose easier. Because they do that easier, they end up on a higher, sort of average dose. Still, by the way, less than the phase III clinical trials. There's still some way to go. We have seen that. If you look into all our quarterly results, we do emphasize the growth in milligrams per patient, you know. It's been in the 20% for quite some time. The opportunity to bring more patients in is there.
The opportunity to get those patients on XR, which helps them get onto a more optimal dose, which helps them be more compliant and adherent. If you think about that, there's so many opportunities we have to keep growing the brand. As you've highlighted, the milligrams does correlate to value. That is a value driver. We still have a long way to go to get patients, the majority of patients on XR and the majority of patients on the optimal dose. I see that's why when we talk about the greater than $3 billion for the asset, you know, we have a high degree of confidence in that. I think people are starting to also get confident in achieving that number.
When I think about the guidance for this year, $2.4-$2.55, f rom memory, right? That kind of implies only 6%-13%. I say only after three years of compounded 30% growth. I get that. It feels like it continues to be an underpenetrated opportunity. It feels like we got the ongoing XR tailwind. It feels like maybe there's some competitive share gains. I don't know if you wanna talk about t he competitive dynamics of that market, but it still feels like there's a lot of those tailwinds are kind of still in your favor. Maybe we're seeing the deceleration of growth, you know, from the law of large numbers, some pricing in there. I don't know if you wanna just sort of touch on that.
A couple of things to focus on there is, as you saw, we had a really big Q4. In Q4, we highlighted that we had about $100 million benefit from the channel stocking in, mostly the channel stocking in. That sort of sucks it out of Q1. If you take that out, reverse that out, we've grown it between 11%-18% this year. 18% the high end. I think 18% off a 30% compound growth, as you said, it should come down because we're going off a bigger base. I still think it's really healthy. You know, the one thing I take the opportunity to highlight this year, and people ask about the range. You know, part of that's because we had the stocking in Q4, but also part of it is we're not quite sure how it's gonna play out in Q4 this year with the IRA price being initiated in Q1 of 2027.
Are people gonna have different inventory levels in Q4? Maybe. You know, we'll see how that plays out. We're watching what the first wave of IRA drugs have done. We've got a good idea. But that's just to help people understand that range. It's less about new patients coming in, less about our ability to execute. It's more about those dynamics which are hard to predict.
I think just sort of moving on, it feels like to me a little bit AJOVY and UZEDY, they sort of get lost in the shadow of AUSTEDO. I don't know if there's any high-level commentary you wanna make on those two drugs because they continue to be great growth drivers for the company. Now I think your branded revenues are up to almost 20% of the total revenues, and they're meaningful contributors as well. I don't know if there's anything you wanted to add on that front.
Yeah, no, I think it's really important, actually. I'm glad you brought it up. First, let's take UZEDY. UZEDY is our long-acting risperidone, it's a schizophrenia product. Now then when that was launched, expectations, I think, generally were really low, and that's probably fair enough. Big incumbent brand in that sector. Other brands genericized, so really, really difficult competitive environment. We've come in, you know, I think the high end of the guidance this year is $280 million. So really shown a great product, great product profile, and well executed what a brand can do. I think actually this really shows the capability that we have in our team to take a difficult market, to understand the dynamics of it, to have the strategic thinking to understand the price and the access is a really important sort of ratio.
I think UZEDY, people need to look at that and go, "Wow, what they've done. We're gonna talk about Olanzapine probably shortly. That's the franchise of $1.5-$2 billion. AJOVY, I think it just shows, you know, what commercial products can do in Teva's hands. AJOVY was sort of given up on, you know, the injectable CGRPs, the orals have come in. It's the market's gone. It's very competitive, big players across all of our regions. We've continued to grow double digits, over 20%, and we're taking market share.
How do we do that? Same thing. Great focus, great planning, great execution. Those fundamentals we're good at. I'd say AUSTEDO, UZEDY, and AJOVY have a lot in common. It's about excellence in planning. Understanding the market execution, which is worth talking about because when we talk about Olanzapine, DARI, duvakitug, all the products that are coming to market, we will launch them really well.
Okay. We're gonna talk about Olanzapine, duvakitug, and the rescue inhaler in one second. I just have one last question before we move to the pipelines. You have a world-class generics business. We talk about it a lot less. I don't know if there's sort of any high-level commentary you wanna make with respect to pricing trends. We have biosimilars now, s ort of flowing through there. Maybe the cadence of those biosimilar launches a little slower than maybe you would've thought. I don't know where we stand, but it's such an important component 'cause of the cash flow of your business. That it generates, that enables you to do all this other sort of R&D and business development activity. Any high-level generics commentary and then we'll?
Yeah, absolutely. Once again, I think sometimes if you look at generics on its own, there's some really impressive results to talk about there. You know, we've talked about some other exciting areas. Let me talk about generics. This was quite a volatile business, but in the three years we've generated a CAGR in the mid-single digits across the whole business, and it's one of the largest in the world, so it's a big business to do that over. I think some of the exciting things we've done that are ahead of us now to come is we have a biosimilar portfolio of 28. We've launched 10 now. We have 10 on the market. We're gonna launch another six by 2027. We're gonna launch the rest starting 2028 going forward. We're gonna keep adding to that.
Now we have the second-largest biosimilar portfolio. If you think about all that growth and performance we've driven in our generics business, it's been without biosimilars. I think you think about this as like taking a car that we've been getting even more efficient. You know, a really, really good engine, and we're applying biosimilars to it. You know, that's the turbo. I think we're setting ourselves up for, I think, a very positive future for our generics. 'Cause we're changing the portfolio, and we've changed the manufacturing network. We're gonna start to see our COGS coming down, which allows us to protect our gross margin. A lot of good things, and that does allow us to keep fueling the pipeline, which we'll talk about, 'cause we have a really big, broad pipeline now, and it's late stage, so, you know, we need to fund that.
Yeah. Okay, let's move on. Duvakitug on the TL1A, you obviously just published the 44-week data. That looked probably stronger than I think most people were expecting. I mean, what was your sort of interpretation of that data readout? Does that make you incrementally more bullish? You know, any high-level thoughts as you embark on these phase III trials?
Yeah. Look, we were always bullish because we know we've made the best TL1A, and we made it by design. You know, we didn't fall into having the best. We designed it to be the best. It is the best in induction and maintenance. I think the frame is. I'll ask people to think about, we don't think we have the best TL1A to compete with TL1As in UC and CD. We think we now have an asset that will compete across MOAs. We think because of its efficacy, its safety, and its tolerability. No monitoring. We believe t here'll be no black box. We think this could be really a big player in UC and CD. For us now, I think Sanofi posted $2 billion-$5 billion of peak sales in UC and CD.
We sort of took that. You know, I challenge whether that's ambitious enough, but we'll wait. I always remind people, if it's the $2 billion, w hich I struggle to understand why, it's a game changer for Teva, but it won't be based on the efficacy of the data we're seeing.
I mean, I think when you announced that Sanofi partnership, some people were surprised, right? Now we've had the Blackstone sort of partnership announced more recently. Could you just touch on that quickly on why you did that?
Yeah, no. Then there was the Royalty Pharma partnership. Look, I think the key principle for people to understand is, and it's a key belief we have at Teva, is we have great pipeline, but pipelines, in my view, is all about bringing to the market as fast as possible. That is the sole aim. Bring it to the market as fast as possible, you create significant value. That's our job. Now, we happen to have a really, really exciting big pipeline with many indications. Duvakitug could end up in 5-10 indications, right? We have big ambitions. anti-IL-15 is gonna be in three, possibly four and five. For us, it was all about let's not get stuck in the rounding error of what this financing can do long term for multi-billion dollar assets. Let's just get it to the market as fast as possible.
That's our key principle. I think what you've probably seen in three years is a company that seemed to have no pipeline initiative to have now one of the busiest late-stage pipelines. That's our approach. Move fast, get it to market, create value, create shareholder value, and maximize that patent life.
Okay. Olanzapine. I think in your opening remarks, you talked about commercialization in 3Q this year. Is that what you said?
Depending on the FDA, it should arrive in either September or October. Let's say Q4, October.
Okay.
October.
I mean, maybe could you give us a history lesson of sort of the timeline here? I mean, I know, there were some historical issues with some of the long-acting injectables, and maybe talk about why Olanzapine may be different.
Yeah. Firstly, let's talk about the olanzapine molecule. The olanzapine molecule is considered the most efficacious molecule, so it's used to treat severe schizophrenia. It's the most used molecule in the U.S. and in Europe. 20% of schizophrenia patients are on Olanzapine in the U.S., and 30% in Europe. It's no one will debate it's the most efficacious. Now, it hasn't had a long-acting. There's one on long-acting that was launched in the market that isn't being used because you have to monitor the patient after you inject because of a side effect called PDSS. There is no long-acting. Now, if you look at what happened with the non-olanzapine molecules, 13% of those transferred to long-acting when they became available.
One could use that as an analog and say of the all Olanzapine market, one could expect 13% to transfer to our long-acting Olanzapine. You could also say it could be a lot larger because a patient who has severe schizophrenia, they have to be compliant. They really need to be put on long-acting, which is why we see a lot of excitement. The potential here is we've said $1.5 billion-$2 billion for our portfolio. UZEDY and Olanzapine. I'm very comfortable with that. You know, I think there's now growing excitement. Could it be more? You know, we said we can do $1.5 billion-$2 billion. Let's get those numbers on the scoreboard, and then we'll see what we can do. We've got to launch it first. We're launching in Q4. I would take the opportunity to tell people what does a good launch look like.
It's not revenue, but it's about sample, physician use, breadth and depth of physician use, formulary use on P&T committees at hospitals where it can be used. Just broad usage generated excitement and experience. Then we'll start to make sure we get good access on Medicaid. On Medicare, it'll probably be a bit slower. What we learned with UZEDY is, you know, what we're not prepared to do is give away value based on the product profile. We'll hold for the right access at the right value. That could take time, but we've planned for it to take time. What we saw with UZEDY is physicians value the product profile we're bringing to the market with UZEDY. They will value it even greater with Olanzapine.
I just watched that revenue maybe towards more the second half of 2027 because it's about access, usage, and sampling. Because we're trying to create a franchise that's gonna be a big one and live for a long time. We need to be thoughtful about how we introduce it from a pricing point of view.
Okay. Could we switch over to the asthma program?
Absolutely, yeah.
Okay. Could you remind people the current competitive landscape there? You currently have a phase III trial sort of going on. Could you sort of reiterate your confidence in that trial and sort of what you're seeing thus far?
The data readout's gonna be in second half of this year, around about Q3, where we're gonna have the readout of the phase III study. It's a dual-action rescue inhaler. In the U.S., guidelines have been issued that 10 million American asthma patients should be on a dual-action rescue inhaler. One has been launched by AstraZeneca a couple of years ago. Yeah, they're shaping the market. It's the first time there's been one here, so they're educating physicians on using this. By the way, there are over 5,000 fatalities every year because of the lack of a dual-action rescue inhaler being used. There's a real need here. We come to the market late, which is generally, you know, you don't wanna come to market late.
This is the one you do 'cause, you know, a very good respiratory company like AstraZeneca is forming the market. We come in. What's our differentiation? We will have a better device, but the key differentiation is we'll have a pediatric indication. 25% of this market is pediatric. We can come in and follow them, so to speak, and say, "Okay, use our dual-action rescue inhaler because it has a pediatric indication.
We only have a few more minutes left. I'm amazed at how fast the clock has gone.
A lot to talk about.
'Cause there's so much to talk about here. You know, outside of duvakitug, Olanzapine, and DARI, there's more. You addressed some of those in your opening prepared remarks. Let me just give you know, a minute just to talk about anything else in the pipeline that you wanna share with the audience and that, you know, you think everybody should be focused on.
Well, obviously, the anti-IL-15, the vitiligo data, obviously, Royalty Pharma came in. It's the earliest ever partnership they've done on financing and in an asset. I think obviously what they've seen excites them. I think the vitiligo data will come out in Q2. I think it's interesting because that means we can get to market in 2031, which is because there's a regulatory path that's been already shown through by Incyte and other company as a topical out there. If you think about it, and then we have the celiac disease, but the way to think about Teva, we're gonna launch Olanzapine this year. In 2028, we'll launch DARI dual-action rescue inhaler.
Maybe we'll launch emrusolmin for MSA, rare disease. In 2029, we'll launch duvakitug. We'll take a year sabbatical, and then we'll have in 2031 an anti-IL-15 for vitiligo. We're looking to announce two more indications for duvakitug this year. If you think about it, you know, our challenge is how do we keep launching these products while maintaining good growth on our innovative portfolio?
Yeah. It's just crazy. I mean, you think about, you know, your $3 billion in branded revenues today and you wind the clock forward five years from now and think about where this company could be, right? I mean, you talk about the innovation transition, right? It's happening right in front of our eyes, right?
Yeah. I mean, look, I mean, I think just on that point, our pipeline has over $13 billion of peak sales in it. It's not a pipeline based on phase I. It's a pipeline that's a late-stage pipeline. You know, you can risk adjust that, but you put that into our P&L with where our gross margin is right now, it's a game change for value creation.
Yeah. Yeah. All right. We got a couple minutes left, and I got two questions left. Let's talk about guidance. You know, could you talk about some of the key drivers in the revenue and EBITDA guidance? I think one of the things that we wanted to talk specifically about was the cadence. Of that throughout 2026, because you got Revlimid in 2025 that maybe is messing with some of the quarters. Anything with respect to the 2026 guidance that you think is worth calling out.
Yeah. I really appreciate you calling that out, actually, because as we're doing this transition from a pure play generics to a biopharma company, there's lots going on in our P&L. There's lots going on in our portfolio. When you think about guidance, firstly, what's important, our EBITDA is gonna hit $5 billion. It's gonna have a 5 in front of it, okay? I won't say anything more. That after losing Revlimid is I think a massive achievement, and it's reflective of the portfolio transition as well as the cost.
Now, on how that progresses, H1 and H2 are always H1 is always lighter than H2 at Teva from a gross margin and from a revenue point of view. But particularly in Q1, what I'd highlight is our gross margin will probably be more reflective of Q1 in 2025 minus Revlimid, which is, you know, I think that was around 51% gross margin 'cause obviously we don't have Revlimid this year.
I think it's worth thinking about that, and then you'll see our gross margin continue to improve throughout the year, and then they're probably the 55%. If anybody's modeling, please model that in there. That's just about the portfolio transition and the fact that we've lost over $1 billion of generic Revlimid. Which, from a modeling point of view, I think is important. But just remember, you lose $1.1 billion of Revlimid, you lose a lot of profit, yet we grow EBITDA. How do you grow EBITDA? You only do that with a transition of a portfolio that we've spoken about, a $3 billion innovative at 35%, and also very, very, very rigorous cost programs to put in place which we're executing. Teva is gonna come out of 2026 fitter, leaner, more set up for continued shareholder value creation.
You say leaner, and this is gonna be my last question. I wanna give you the last word here. I mean, obviously, so much positive stuff has happened in 2025. We've talked about the strength of the brands. We've talked about sort of the development in the pipeline. We didn't really talk about sort of your cost-saving initiatives and the 30% margin target you have for 2027. So there's a lot to sorta unpack there. You know, it looked like to me the stock was getting a fair amount of the credit up at $36, $37, and now it's sorta pulled back here to the $31 level. We can maybe talk about macroeconomic. We can talk about the Middle East conflict, whatever it is.
I wanna give you the last word here to tell the investors what you think is important, where they should be focused on. I know we have obviously touched, but I wanna give you the last word if there's anything else that you wanna emphasize to the investors.
Yeah. Look, I mean, when people, it's I think if you look in your rearview mirror, then you think, "Oh, wow, the stock is doing really well. It's in a great place." I never look in the rearview mirror. I look ahead to what's in front, what the value creation that's in front of us. There's two things I think is really worth thinking about, and if you then let the math play out. One is our EBITDA is just gonna keep growing. We're at $5 billion this year. We're gonna keep growing. Our cash flow is gonna grow, not exponentially. It's gonna grow really significantly. By 2030, we're gonna have over $3.5 billion, maybe even more, close to $4 billion of free cash flow. How does that happen?
It happens because our portfolio is transitioning so fast with this product we talked about. Our cost-saving programs, we are maniacal about cost savings, capital allocation. Our capital goes to sales and marketing, our pipeline, and making sure our factories have the right equipment in them. Everything else doesn't get capital because it doesn't drive shareholder value. It's a service part. The shareholder value to come, I always say we're a third of the way through the story. Right? Don't sit on the sidelines too long. 'Cause then I think you'll be disappointed.
Excellent. All right, Richard Francis, thank you very much.
Thanks, Glen. Take care.
Appreciate it. Thank you very much.