Please. Thank you. Yeah. Hello, everybody. Can you hear me now? Great.
Hi, Jason.
Welcome to the next company presenter at the BofA Global Healthcare Conference. It's my pleasure to be introducing Teva Pharmaceutical Industries and President and CEO, Richard Francis. My name is Jason Gerberry. I'm a pharma analyst at BofA. I'll be joining this presentation via telepresence, unfortunately, but my colleague, Richard Wagner, is on-site in person. The two of us will go through this presentation. First off, Richard, apologies for not being able to be there in person this year.
That's okay. Good to have you on the screen, Jason.
Great. Well, maybe we can start with a few overarching general questions around Teva's strategy, capital allocation, given the company's recent improvement in its credit profile and overall just evolution of the business and the portfolio. I thought it would be helpful to start with, now that Teva has reached investment grade with three credit rating agencies, how does that change the view, the criteria, for assets that the company might consider for future BD transactions? I know in the past, there was a laser focus on improving the debt profile. Does this, in any way, change how you think about maybe capacity? Can the company maybe be more opportunistic on the BD front? I think that would be a good place to start.
Yeah. Okay. Thank you. The fact that we got a credit rating of investment grade from all three of the credit rating agencies, and we did that, to remind people, a year ahead of when we said we would. We said we'd do that by the end of 2027, so we did that a month or so ago. An important aspect to, which I'm sure everybody knows, but I'm quite proud of, and I know my CFO, Eli Kalif, who sits here, is very proud of, is you get a credit rating upgrade not because you paid down the debt only. It's because you've actually shown a future direction of your EBITDA.
When you look at net debt to EBITDA and where the company's going, they actually think, "Okay, it's not that we paid down the debt and now what?" It's the future of the company looks a lot better and why does it look a lot better and why is the EBITDA going to grow, and we'll talk a lot about that. I think that's important for people to understand because I always say that that metric of investment grade highlights our disciplined capital allocation to pay down debt, but our capital allocation within the company to grow our revenue, to grow our EBITDA, to show that that journey of financial stability, and I'd argue opportunity, is there.
That's one point which I think is important to. That's another milestone, another metric that we set out to do, and we've done ahead of when we would do it, and there's others we can talk about. The other one is to that, how do we allocate capital now and do we do BD? We had four capital allocation criteria, pay down debt, invest in our growth drivers, which was our commercial products, AUSTEDO, UZEDY, AJOVY, and product launches. The third one was develop our pipeline, which is very exciting, and do BD. The fourth one was return capital to shareholders. As you've highlighted, pretty much number one is gone because we'll pay off a chunk of debt this year and early next year.
As we've also seen, Eli Kalif and the team refinanced some of our debt a few weeks ago. We did that at a really good rate because we're a good company, we're investment grade. A lot of things have improved on that side, which allows us now to think about how we want to deploy the capital to those other three areas. A few things we have. Yes, we are very active in BD. Although we've only done one transaction at Amylyx, which I think was a good transaction, and it was very synergistic with what we do, that's based on the fact that we have a very disciplined approach to value and return on that capital.
Although we've been in discussions with other assets and companies, we don't feel it's the right price and the right return for us, we won't do it. We can be disciplined in that, one, because I think we've come from quite a difficult position, from a balance sheet position, and so we're thoughtful. The second thing is we have a great organic pipeline, which allows us to be choosy about what we bring in. As you know, we also potentially could be getting an asset, Biohaven, which is in bankruptcy, and we've been looking at that for some time. We will do more. We do look at a lot, but if the price isn't right, we won't do it. Those transactions could get bigger. We do, and Eric Hughes, head of R&D, and Tim O is here.
We do look at what we're buying and is it better than what we have, and if it is, then we can do it, and then we'll have to stop doing something internally. We're very agnostic about where our pipeline comes from. But definitely, we are planning, Jason, for the world where our balance sheet starts to build cash on it, because it will very quickly. Just the refinance of the debt, we're probably going to save $400 million of finance expenses next year. That just shows you the progress. That's cash. So we're planning for what we can look at, what size those deals can be in two years' time versus now. So we're planning for the now, hoping to get some good deals, but being mindful of price.
We're also planning for what those could look like in three to four years where our balance sheet is very different. But we have a great pipeline, which we'll talk a lot about, and so it's not a must, it's an and/or.
Okay, great. Maybe as we think about where you will be opportunistic to look to add more substrate, if you will, into the pipeline. Are investors right to think that Teva's strategic priority is more on the brand side versus the generic side in terms of where you'd look to support with any BD investment? And within brands, I would imagine the focus remains within your kind of core therapeutic area footprint, but if you could provide any color in terms of how you're thinking about areas where there's maybe a higher priority to augment.
Yeah. I think you're broadly right. The capital allocation for in-licensing and BD will be predominantly innovative. It will be predominantly in CNS neurology and more specifically, if we can, in and around the areas we operate, psychiatry, for example, movement disorders, things like that, and then also potentially immunology because of our innovative pipeline that's coming through. So you're right there. I would add, though, excuse me, that we have been, and we will continue to look at rare disease. And rare disease will be more agnostic as to what TA that is in, because we think rare disease is an area where it's based on core competencies, pricing, supply chain, go-to-market model. Those things that we think we have, we've built with AUSTEDO, we're going to expand with innovative pipeline, and we think that we can leverage, but it has to be the right asset, the right price.
That's just one nuance. I would say that we still do deploy capital to our generics business. It's born more biosimilar. So you've seen us do deals on biosimilars, partnering, and so that will continue because we're at 29 biosimilars now in our pipeline, or 15 on the market, 14 in our pipeline, and we want to keep expanding that. So we will be allocating capital to that, but the far majority of the capital will be to the innovative side, as you say.
Okay. And you've mentioned a couple times now, just some of the success stories, in terms of drugs that you guys have internally developed, be it duvakitug or the anti-IL-15 antibody. So how should investors think about Teva's internal drug discovery capability, right? And, I guess how do you benchmark productivity of the organization, and the success of this part of your business, relative to, say, other established biopharma companies?
So look, I think the difference with us first is, we think of our R&D as little R, capital D. That is an interesting differentiator, but let me explain what that means. When we do discovery, we do discovery on things that we believe have a high probability of success in our hands. Let me explain. We will not discover a new target. We will not discover a new MOA. We will not do that. What we have done, and you have seen with TL1A, anti-TL1A, anti-IL-15, is we will, because of our amazing discovery team that focus on antibodies, we will understand what targets we believe have been validated. But an antibody has even not been optimized to have the maximum efficacy, tolerability, and safety, despite people making that antibody.
We like that approach, so productivity-wise, we like that approach because we think we significantly de-risk the asset straight away because we know the target is relevant, we know the target works. What I think our secret sauce is, we can then make a TL1A that is better than anybody else's, and I think we have shown that. We will make an anti-IL-15 better than anybody else's, and we will show that. We will make a TSLP/IL-13 better than anybody else, and we will show that Q1 next year.
That is not arrogance. That is because we invest so much time and effort in building capability in antibody engineering, which is something that a lot of people do not do. They discover antibodies and targets, which is great, but we believe the work and the capability we build in developing antibodies that are more sophisticated can add real value. Real value.
I think we all saw that already in TL1A, and I think that will start to permeate more as more data comes out. So from a productivity point of view, Eric and I, head of R&D, talk a lot about probability of success. We both do not like taking big bets on capital, so he set up his team in a way that allows us to have significant wins while reducing the risk associated with those. As in, when I came in and spoke to him four years ago, TL1A, even I, and I am pretty uneducated in science, knew TL1A was an exciting target. Anti-IL-15, the more I looked into that, I realized that. So I think, okay, yeah, these are de-risked. Now how do we make the best, and can we make the best? That is all our capability.
That is why our productivity is really good. The other side is on CNS. I think one core aspect at Teva is we know what we do not know. There is a level of humility in the company. So do we think we can discover the new treatment for Alzheimer's or Parkinson's, despite how much we desperately want to? No. Do we think other people in academia, in biotech, around the world could discover some of the treatments for CNS and some of the distressing disorders? Yes. Do we look and monitor them and talk to them constantly? Yes, because that is where we think we can leverage that ecosystem, which is so broad and wide and so many people are trying different things. Then when we think to the same principle as I mentioned earlier, things that de-risk is that MOA, that target, that pathway is validated.
We will go in and we will partner with them. That said, sometimes we are so focused on making sure we have the right risk, as you saw with ICO Pipeline, with Tourette's. We followed that company for two years, and although we saw some really good data in phase II, we still didn't feel comfortable enough to allocate capital to it until phase III. I think if you put all that together, I've never thought about looking at it, but I would say our productivity is very high, but it's based on the fact that we purposefully think about probability of success, and we purposefully think about how do we make sure these assets have a very high likelihood of getting to market. I haven't actually done the analysis, but that's how we think about it.
Which is why, Jason, I think we've ended up in this position where we have this late-stage pipeline that everybody's got excited about, and excited because I think everybody has a view that quite a lot of it could come to market, and if it does come to market, that could be a meaningful inflection in the growth of Teva, both on the top and bottom line, so it becomes really material.
Got it. The industry's moving fast, and there's a lot going on. We hear from pharma companies about leveraging AI to get better compounds into the clinic. China's a source of drugs that pharma companies are able to get through structured license transactions with lower upfront costs. There's favorable trade-offs there, ways to augment the portfolio and the pipeline. Do you see leaning into all those avenues in the future, now that you've transitioned the company through this phase of coming out of higher leverage and legacy litigation profile into now looking at this as a growth company. I'm curious how we think about the next 5 years and sort of the pipeline of evolution.
Yeah. A couple of things is, firstly, I think Eric and Evan Lipkind, my Head of M&A and BD, they were both in China again in August. We visit China. We're very agnostic as to where the science is. I think that's another strength we have because I think people have gone to China, but it's more gone to China because of either failures or because somebody's moved faster. Because we have that little r approach, we just follow where there's great science, and that could be West Coast, East Coast, that could be China, that could be Europe. We don't really care. All we know is we're looking for it. By the way, we're not precious about our own pipeline. The pipeline is what products we bring to market. If it's internal, okay. If it's external, okay. One is not better than the other.
Absolutely not. I think that's another key area which is in focus. The other thing I would say is, as we look at all of that, don't forget, we've done some really interesting things like our anti-PD-1/IL-2. By the way, we can have data at the end of this year on, which will also show our antibody engineering capabilities into an area where people have maybe thought anti-PD-1/IL-2s have had their day. Once again, I think it goes back to the quality of the engineering, but I haven't seen the data. We don't have data yet, but let's see. We did a deal with Fosun Pharma to accelerate that. So they're working on that study in China. So we think super creatively about how do we get to data. That's another thing.
From a company point of view, we sort of have a mindset like in biotech, which is we need data and we need it fast and we need it cheap, because capital is important. So how do we get data fast? Eric Hughes will run clinical studies really quickly and effectively, so we get to read that. So we know it works, it doesn't work. If it works, let's accelerate it. I'll come back to that. But as we think about AI, as we think about all these things, the other thing I'd remind people is we have two assets in our pipeline, duvakitug and anti-IL-15. They all are multiple indication assets. So duvakitug, we now have four indications. We'll probably add another four. We've got a list of 20 +, so probably another four, maybe more. Then anti-IL-15, we have vitiligo, celiac disease, alopecia will follow.
Then whether we add to atopic dermatitis and some other areas are logical. So suddenly we have two pipelines and products in a small company, which is game changing. So while we look at all the things around partnerships, opportunity, and CNS in different parts of the world, we will constantly do that. But I think people need to recognize we have a very significant pipeline based on two assets also, which have multiple indications, and they are shown to be very safe and tolerable, which allows you to go into other indications. So, that makes it very exciting. So I think those are things that we sort of consider. Do we consider all those different areas? Absolutely.
But we have to balance it with, we have a pretty good pipeline now. I remind people it will probably have five launches in five years, the next five years, and will probably have a launch every 12 - 18 months after that, if you believe vitiligo will work, celiac disease will work, and the two new indications in duvakitug, which I think there's a high likelihood they will work because they're validated and actually Merck & Co. have come out with data that shows it does work. So those launches are going to happen. Then the final thing I'll say on that is, when you're looking from an investor point of view, we're going to keep launching innovative products which have 90%+ gross margin onto a business currently that has a 55% gross margin.
It is not hard to work out the maths that if we are disciplined on OpEx, what will drop to the bottom line. I gave you more than you asked for there, Jason, but hopefully it is helpful.
No, definitely. Maybe we will shift to the pipeline and the anti-IL-15 program, which had some interesting data recently. I guess at a high level, you talk about discipline on OpEx on the one hand, but you have also been very creative in how you have funded both this and duvakitug, between the partnership with Sanofi, the Royalty Pharma and Blackstone type of transactions for these two assets. It begs the question, as the company's financial health improves, and as you move along with the anti-IL-15 program, you said it is a pipeline and a drug, right? Is there a natural inflection point where it makes sense to find a partner for an asset like this and get this through phase II-B, where you have established dose and a real strong proof of signal that is, I guess, the registrational endpoint in these populations?
Just curious how you are thinking about how you take some of these assets forward within the confines of your current R&D constraint versus perhaps, over time, we can see a meaningful step-up in R&D investment.
Yeah. I think this comes back to one very important principle we have at Teva. Once again, it is about how we think about assets and R&D. The first important principle is, if we have something we believe works, our job is to get it to market as fast as possible. That is the number one principle. As fast as possible in as many indications as possible. By the way, we will work out the financing. It is sort of the crude way I look at it. If you have got it works, move fast across every indication, we will work out the financing. I will come back to that. But when I came to the company, I can remember talking with Eric Hughes about these products. I can remember speaking to CEOs who are fortunate enough to have pipelines in one product.
I said to them, "If there's anything you would've done differently, what would you have done?" And they said, "If I knew what I knew now, I'd have done all the indications parallel straightaway." Now, obviously, that's extremely. You can't do. You need to have safety tolerability and play things out. But the principle was there, which is if I knew what I had, I would've just gone even faster and harder. I remember that. For us is, when we go about DUPIXENT and eight indications, 10 indications, anti-IL-15, two indications or five indications, is yeah, we need to do more. And we do them fast, whether the science is logical, where we have that probability of success rationale I said at the start. Then we work out the financing. By the way, working out the financing is the easy part of it.
Finding a drug that works is so hard. And finding a drug that works in multiple indications is, this is the only time it's happened to me in my career. And I'm older than I would like to be. I recognize that. The financing will work out. That's what we do. We think about how do we finance it. Now on anti-IL-15, the question is, do we need to find more financing? Well, firstly, we have Royalty Pharma, who I think are a really good judge of an asset, with the due diligences they've done and they do. I think we're in a good place. I think always the way I think about it is how do we maximize an asset, which is how quickly you bring it to market, and then how do you maximize it in the market.
Once again, I constantly think about that. I think, well, is that more financing? Is that more capability? Is it partnerships? All of those in play. And I see none of those as a weakness. All of them should be in play. It's a different play for a different time. If you're constantly flexible and agile on that, I think you'll maximize things. That's all about how do you maximize, create return on the capital to create something that creates shareholder value. I suppose the punchline is dynamic and fast.
Understood. Okay. So maybe just thinking about these market opportunities, celiac and vitiligo, you guys have put out some peak revenue projections. I think investors struggle to know how big these markets can truly be. I think rightly so, right? Because there's the lack of advanced therapies. We just don't know how these markets will evolve over time. I would almost characterize your peak sales guidance as a placeholder, a conservative placeholder. So maybe just talk about how you're thinking about both these settings where they are new spaces for advanced therapies. Are there any analogs that get you excited when you think about the potential of these different disease areas?
Yeah, it's interesting. Just to give you a bit of context of how the narrative's changed. When we went into vitiligo and celiac disease, it was, "Celiac's disease. Is it a disease? Is it druggable? Will anybody take it and pay for it?" Vitiligo, "Do really people suffer from it?" To now, $1 billion of peak sales seems super conservative, and come on. Now, obviously, celiac, I think we have over 4 million patients. Actually, it's not too dissimilar for vitiligo, but if you break it down as to how many will be treated. The rationale for people to challenge us on our peak sales is valid. What I did on the pipeline is say that every product in our pipeline has $1 billion of potential sales. Whether some are going to be a lot more, I wasn't trying to make that point.
I was trying to say that we have over $13 billion of sales in our pipeline, which I think is highly probable, if you just take $1 billion for each. To your point, we're getting challenged on celiac should be a lot more, and vitiligo could be more than $1 billion . My answer to that is, as we get closer to market and we understand product profiles, patient populations, then yes, I agree the number is wrong. How wrong, we can see. I remind people, if we have a 55% gross margin and with the size of the company we are, if celiac's $1 billion, vitiligo's $1 billion, DUPIXENT in all indications is $1 billion, which is probably all hugely conservative, it's an absolute game changer for us.
In a way, I like this question because it should bring people back to, well, if I just model what I think is conservative, it still looks like an amazing outcome from a value creation story. Now, will we start to frame a bit more what could happen in these indications? Absolutely. We're not in an IPO fundraising event here to try and actually create excitement about something. We're trying to give something which is quite methodical and predictable and say, "This is what we think. This is how it'll evolve." Because I think we built a lot of credibility at Teva. While we want to get people excited about the future, we want to do that in a way that builds on that credibility and that thoughtfulness. I feel the time is getting right, because now people are challenging me quite a lot.
I'm thinking, "Okay, we need to update," and we will do. Whether it'll be seen as ambitious as what people want, we'll see. On that, I would say I think whatever we've commercialized, we have beaten everybody's expectations considerably, even the ambitious ones. Do not ever think what we say about these rough guidances ever takes away from our desire to do the utmost best we can when we launch drugs.
Yep. Okay. You mentioned speed earlier in terms of advancing some of these assets. I wanted to come back to the celiac timeline, the 2034 time to a BLA submission. As I think about that, in my mind at least, and something like an adaptive phase II/III design and potentially an ability to use gluten challenge in a pivotal study, these are factors that could probably shave years off of that development timeline. Am I at least conceptually in the right ballpark in terms of thinking about some of the variables as you approach FDA and have a negotiation? Not looking for you to front-run your development plan and all that, but as I just think about some of the possible swing factors in a development timeline, are those two of the major ones?
Look, I think you touched upon something which is quite sensitive for us and quite emotional, so it's a good thing. We believe we can run studies faster than anybody, right? Your challenge is a good and a fair challenge. What I mean by that is even the work that we're doing on Eric's team on vitiligo, he started to move and plan for success even when we had no data. The speed of that transition into the phase II study will be faster than anybody's ever done because we planned for it there. We didn't wait, have a committee, check it out, and then move. He'd already done it. The phase II in UC and CD and duvakitug to phase III was the shortest transition time ever done, right?
That's while we're working with a partner who probably doesn't work as fast as we do. Our ambition to do everything really fast is absolutely there. Your challenge is a fair challenge. Eric gets it quite a lot when we're in these meetings. What we do say is, I don't think anybody's going to challenge our speed on vitiligo because we know that regulatory pathway. We know exactly what is expected. We know exactly what the FDA want from a primary endpoint, everything. It's super clear. That's just execution. Eric and Teva execute really, really, really well. We will be as fast as physically possible, and we'll be faster than anybody's ever done it, I guarantee.
Yep.
On celiac, we're still trying to work through. We're in discussions with the FDA about what are those things you said. I think we'll be exploring all of those opportunities because we want to bring it to the market as fast as possible. But we do have to work with the FDA to get that. We don't want to be in a position where we run a study, and we go out to the FDA, and they go, "Well, I'm not quite comfortable with these endpoints. I'm not quite comfortable with this." I think in this situation, we have to go a bit slow to go fast.
Once we get that, and we've got a lot of credibility now with the FDA, I think once we get that, then we go fast, and we do some of the things if we can, like you said, to be really creative. But you need to get that body on board, and that's why we're in that position. And look, no one's developed a drug in celiac disease, so that's exciting, but also that throws up these challenges. It won't be the same in alopecia. It won't be the same in atopic dermatitis. It won't be the same as the two new indications we've got in duvakitug because there's a pathway already there. So yes, you should expect us to be the fastest.
Okay. Maybe on duvakitug, just one, because I do want to prioritize the 2027 launches. But I think everybody's in wait-and-see mode at the moment on Merck's phase III data that are going to be coming here in the coming months. And you were actually in meetings with Merck yesterday and where they defined, I think, success as being efficacy on par with top-tier biologics in the inflammatory bowel disease setting. Would you characterize things similarly? Do you think that that's sort of the right way to be thinking about what success looks like? Another MOA, perhaps different, obviously, properties like anti-fibrotic properties and just efficacy matching, perhaps the IL-23s in the IBD setting?
So look, I think what we saw in the phase II for our data for duvakitug was we saw, and you can't cross-compare, but I think everybody suddenly did. We saw really impressive efficacy data in the induction and the maintenance. So I think efficacy is good. Could it be a differentiator for us? Could it be a differentiator within the class and just within the indication? I think it possibly could. I think one area that is really important, which I would highlight, is safety and tolerability. The ability to make sure this is safe and well-tolerated for a chronic condition is really, really important. And many of the products here do have either black box warning or monitoring requirements, so that's an added burden. So one could argue if it was similar efficacy to top tier, it would still be differentiated on safety and tolerability.
But the way we look at our asset is we think there is a potential that it could push that efficacy, but we'll have to wait and see for the phase III. But I do think because of the failure rate in CD and Crohn's disease, and the amount of cycling that goes on, there is a desperate need for new MOA. And so I think TL1A would do very well with comparable efficacy of the top tier biologics with that safety and efficacy, safety and tolerability profile because of the cycling that happens unfortunately.
Okay. Maybe olanzapine LAI, if you can just give us a sense of how the regulatory review is going. Is everything on plan? I think the label and the monitoring requirement is so critical to the value proposition of your drug relative to Eli Lilly's ZYPREXA RELPREVV. Just wondering if you can speak to sort of the continuity of the review and the review team and anything we should know about.
Yeah, the review is following the timelines you'd expect, so there's nothing unusual in that, and the communication and the cadence of that. That's all I'll say. They will know when we're
Okay. Yeah. I guess ahead of the year-end approval decision, I wonder if you can just talk a little bit more. You've talked in a few, or Teva as a company has talked about the evolution of payer coverage as being kind of a really important thing for investors to be mindful of in 2027 and probably 2028. I guess on the one hand, you flagged variable adoption as a key uncertainty when speaking about the cadence of the launch inflection. But, on the other hand, I think you've said in the past that with UZEDY, there were delays, and you weren't able to hit the ground running, whereas you should be able to hit the ground running with olanzapine.
I'm trying to flip these two ideas. I guess, maybe is the timing of this not, can it be reconciling with the Part D kind of contracting cycle? Some of the dynamics that we need to be mindful of when we think about sort of how olanzapine should realize its payer pickup next year.
Yeah. Look, let me maybe make that carry some more clarity. Olanzapine will have a really good launch. It will have a really good launch. It will have a launch better than UZEDY. I think people tell me that UZEDY was a good launch. So it will be better than UZEDY, and it will be a really good launch. What I am making sure people fully understand is the payer environment. The payer environment in the U.S. means, because of this patient population, we have to get Medicaid first. People cannot prescribe it unless it is on Medicaid's formulary, and Medicaid is done state by state. We have to go, and some states will look at it day one, and some states will look at it in six months' time, and they will not look at it before, and some nine and some 12.
We will have about 86% coverage at 12 months of Medicare. We have to still visit every state when they allow things to be put on the formulary, negotiate, and get it on. That is just a rate-limiting factor. Okay? That does not mean we are not going to have our sampling program out there. It does not mean we will not be expecting to see good TRX. That does not mean we will not expect to see a good breadth of physicians already prescribing olanzapine and a good spread, breadth, a good depth as well within those physicians. So our aim is good TRX, good breadth, good depth, good inclusion in hospital formularies, good usage of our sampling program, like very good usage, and then getting Medicaid on board. Those are the things.
I think the input metrics we are really excited about, and I think investors should be ambitious around what we should do, no question. The revenue, I say, will probably come in more meaningfully in the second half of next year, just because of the fact that we will be sampling, and we will not actually be getting access. You just cannot generate.
What I want to do is make sure we generate a lot of scripts, a lot of usage, a lot of breadth and a lot of depth, and it becomes an integral part of a psychiatrist prescribing. That is the work we do. That creates long-term value. The other thing to remind people, we are not going to contract with Medicare. Well, we are highly unlikely to, because they will probably ask for a discount, which we will not think reflects the value of the product, as with UZEDY.
That means physicians do have to fight through that reimbursement and ask for it to get it. Now, they do that already with UZEDY, so I think they have become pretty good at that, and I think olanzapine is an easier ask because there is no other long-acting olanzapine that is used. Just those are the things to carry. I do not want you to in any way think we are conservative or hedging. We are going all in. When it comes to revenue, those are the things that are the gating factors. You just cannot change, and so people should think about that when they are modeling.
Yeah. Okay. Maybe in the last couple of minutes, ecopipam and the launch in Tourette's. This is a, since the acquisition, a product that you haven't yet outlined a peak sales parameter for yet. Maybe just thinking about, I guess as I think about this category, you've got essentially some generics that you may have to cycle through prior authorization consideration. Orphan drug pricing is such a wide range of outcomes potentially, right? I fully understand why you haven't guided. But maybe if you can offer a little bit of context as you head into the launch of that and how you're just going to be thinking about sort of the pricing and access dynamics in a category like this that's historically been a generic end market.
Yeah, look, I mean, I'm super excited about ecopipam. One, because in a career, you don't get an opportunity to launch things that can make a meaningful difference to children. As a father of three, that actually excites me a lot, that children in their development stage have Tourette's and that is horrendous. And so to be a part of that is pretty amazing and inspiring. Now, there are 100,000 children who suffer from Tourette's in the U.S., 50,000 do have some sort of therapy, whether that's psychotherapy, whether that's using an off-label drug that's not efficacious but safe, or using an antipsychotic, which has efficacy but has obviously, safety and tolerability issues. So 50 end up on therapy, they don't stay on therapy long, 20%-30% only stay on therapy after a year. So it's a clearly massively unsatisfied market.
And when you actually speak to parents and physicians, they really, really are excited about having a treatment that was designed for Tourette's and has the efficacy and the safety that children will be able to take it. So I think the expectation that we're setting around it is pretty significant. Now, to one of your points, a pivotal part of this is pricing and access. And so we're doing a lot of work now to understand what is the appropriate pricing for the value we're bringing to an unmet medical need, but balance that with value and access. Which we always do, is what is the value we think and what is the access we need? And that's something which you have to balance. So that makes us very excited about it.
Maybe as we start to conclude some of those decisions, we can start to give a range of what this could look like, but we're still in the thick of that and as I'm sure you seem to be aware, we want to make that decision, particularly around price, we will live with for a long time, so we want to be really based on the latest data, the latest conversations and we know we can launch this in Q1. We have a bit of time still on that one. But people should be excited as I am about it. Another thing I'll say is it leans on all our capabilities, patient identification, physician education, patient mobilization, all of those things we did with the Tourette's, with the AUSTEDO, and patient services, specialty pharmacies. This is the thing we know how to do really well.
We're going to apply that to ecopipam, and that should also help us get off to a good start.
Great. Well, I'm imagining you're seeing red zeros in front of you for time left on our fireside chat.
I haven't actually got any red zeros. Can anybody see it? If you're all seeing red zeros, then I think you need to see a physician.
Well, if there's time for one quick other question. U.S. generics broadly, 2026 was a rebasing year as generic lenalidomide had come out of the portfolio effectively. At times, you framed U.S. generics as maybe more of the problem child in the Teva portfolio. I'm just curious, as we sit here today, your confidence level that this business is maybe more stabilized now and maybe there's even a pathway to returning to growth.
Yeah, look, I never would've called it a problem child. I think people consider it a problem child. As I say, again, I was a father of three. You never highlight the one who's a problem child, although you know it. By the way, if any of my kids are watching, none of you are problem children. It's just bad parenting, I've understood, that creates a problem child. If I had one, which I clearly don't, in case they're listening. Going back to the generics business. Look, our generics business, definitely, we took it from five years, six years of decline, to now we have a three-year CAGR of growth.
I think we've shown everybody in the U.S. and outside the U.S. that we've been able to grow this business and fundamentally change some of the things around manufacturing, supply chain, the ability to launch on time in full and reshape the portfolio to have more biosimilars. We've done a lot of hard work. I think one of the things we're seeing this year actually is where we're probably getting a bit more traction than we thought. Our biosimilar business is performing well. We've started to launch in Europe. We're performing very well in the U.S. and that's performing well, and some of the new products we've launched in the U.S. are also performing a bit better than we thought. I think I probably said a few months ago that our generics business was going to be flat to maybe slightly down.
It's probably going to be flat to slightly up now based on those strategic decisions we made, which is to improve our product launches. We've done that, and they started to be bearing some fruit in some recent launches this year. Our biosimilars, we put that portfolio together. We've launched it, and we're actually performing better in our markets that we're in than we anticipated, which I have been talking about for some time. But it's becoming pretty material, and that's why I think more optimistic for this year about our generics business, and our generics business in the U.S.
Great. Well, thank you, Richard, for joining us, and enjoy the rest of your conference.
Thanks, Jason. Always good to talk to you.
Thank you.
Thank you. Bye-bye.