Teva Pharmaceutical Industries Ltd. Q4 FY2024 earnings call

• Pivot to Growth Strategy: Based on four pillars - deliver on growth engines, step-up innovation, create sustainable generics powerhouse, focus the business. Made progress across all pillars in 2024.
• Growth Engines: AUSTEDO up 34%, UZEDY at $117M (beating $100M target), AJOVY up 18% to over $0.5B. Generics business grew 11% across regions.
• Step-Up Innovation: Duvakitug showed promising results, Olanzapine had full safety data, DARI ICS/SABA 91% of sites recruited. Early-stage pipeline exciting with anti-IL15 and anti-PD1-IL2.
• Focus the Business: TAPI business back to growth, fourth consecutive quarter of growth, and divestment process ongoing.

Innovative Business: AUSTEDO grew 34% to nearly $1.7 billion; UZEDY reached $117 million (beating $100 million target); AJOVY grew 18% to over $0.5 billion. Generics Business: Closed at $9.5 billion, up 11%. US grew, Europe had mid-single digit growth, international markets at 15%. API Business: Grew 3%. Revenue contribution: Innovative business, generics business, and API each played roles in the 9% revenue growth.

• 2025 revenue expected $16.8B-$17.4B (2%-5% growth vs 2024).
• Gross margin expected 53%-54%.
• Non-GAAP operating income $4.1B-$4.6B, adjusted EBITDA $4.5B-$5B.
• Non-GAAP EPS $2.35-$2.65.
• Free cash flow expected $1.6B-$1.9B, slight decrease from 2024 due to securitization and legal outflows.

• Foreign Exchange: Impact on revenue, profit, and cash flow due to US dollar strength against other currencies.
• Industry Dynamics: Effect of Inflation Reduction Act in US market.
• Exclusivity Loss: Potential impact of Revlimid exclusivity loss on generics business.
• Litigation: Uncertainty related to CMS lawsuit with no specific timeline provided.

Q: How does the spend break out for Teva versus Sanofi on the duvakitug program?

A: The partnership is 50-50 on OpEx going forward for duvakitug, with cost sharing to achieve full potential.

Q: Any color on UZEDY growth and Part D redesign?

A: UZEDY is impacted by Medicare Part D redesign, but the team sees opportunity for growth from prescription perspective.

Q: How to manage Revlimid exclusivity loss impact?

A: By launching 16 complex generics from 2025-2026, biosimilars, and leveraging growth from AUSTEDO, AJOVY, etc.

Q: Details on free cash flow decline?

A: Free cash flow decline is due to streamlining account receivable securitization program and higher legal settlement outflows in 2025.

Q: Rationale for discontinuing higher dose of duvakitug and potential to bring it back?

A: Higher dose was removed to have more power in arms, but work is ongoing with partner Sanofi on modeling and simulation for future dose considerations