Hello, and welcome to the First Quarter 2024 Teva Pharmaceutical Industries Limited Earnings Conference Call. My name is Alex, and I will be coordinating the call today. I will now hand it over to your host, Ran Meir, Head of Investor Relations. Please go ahead.

Thank you, Alex, and thank you, everyone, for joining us today. We hope you have had a chance to review our Q1 results press release, along with the press release announcing positive Phase III results from the olanzapine LAI trial, both issued earlier this morning. Copies of these press releases, along with the slides presented during this call are available on our website at ir.tevapharm.com. Please review our forward-looking statements on Slide #2. Additional information on these statements and our non-GAAP financial measures can be found on our earnings release, annual SEC Forms, 10-K and 10-Q. To begin today's call, Richard Francis, Teva's CEO, will provide an overview of Teva's first quarter results and business performance, recent events, and our focus and priorities going forward. Then Dr. Eric Hughes, our Head of R&D and Chief Medical Officer, will discuss progress on our Innovative pipeline. Our CFO, Eli Kalif, will follow up by reviewing the first quarter financial results in more detail. Please note that today's call will run approximately 1 hour. And with that, I will now turn the call over to Richard. Richard, if you would, please.

Thank you, Ran, and good morning, everyone. I'm pleased to have you with us today. I'm eager to share our results for the first quarter of 2024. As a reminder, we launched our Pivot to Growth strategy nearly a year ago, aimed at revitalizing Teva's growth. I’m happy to report that we have achieved continuous growth for four consecutive quarters. The effects of our strategy are evident, and I will elaborate on what is driving this progress. The strategy is centered around four pillars: enhancing innovation, delivering on our growth engine, developing a sustainable generics powerhouse, and refining our business focus. I will outline our accomplishments in each of these areas. We are beginning to commercialize innovative products effectively, successfully advancing products through the clinical stage. Notably, we brought olanzapine through the clinic nine months ahead of schedule. Our generics business is also showing strong growth, and I will conclude with an update on TAPI's return to growth. Before that, I want to share exciting news about our olanzapine long-acting treatment for schizophrenia, which is currently in the clinic. We received positive data indicating that the treatment met its primary and secondary endpoints across all dose groups compared to placebo. This is a significant milestone for us and for patients facing this challenging condition. On the left side of the slide, you will see the various molecules used to treat schizophrenia, with olanzapine being the largest for moderate to severe cases. Importantly, there is currently no effective long-acting treatment available for olanzapine, indicating a substantial unmet medical need. This is why we are enthusiastic about this product and its potential benefits for patients. More details will follow from Eric later in the presentation. Now, moving on to our financial results, in constant currency, we experienced a 5% increase in revenue, a 12% rise in adjusted EBITDA, an 18% growth in non-GAAP EPS, and our net debt is now at 3.38. This is a solid start to the year, allowing us to reaffirm our financial outlook for 2024. We're driving revenue growth across all business sectors, whether in innovative products, medicine, generics, or TAPI and API. Notable growth includes AUSTEDO, which increased by 67%, AJOVY by 18%, and our Global Generics business, which grew by a healthy 9%. Additionally, TAPI API is back to growth at 2%. Looking at the numbers: AUSTEDO performed exceptionally well, achieving $282 million for the first quarter, marking a 67% increase compared to Q1 2023, with strong TRx growth of 28%. This momentum supports our guidance of $1.5 billion for 2024 and boosts confidence in our long-term revenue goal of $2.5 billion by 2027. We have also initiated a direct-to-consumer campaign to raise awareness about this treatment opportunity. AJOVY continues to grow at 18%, with strong performance in Europe and international markets. We are pleased with its increased market share in the U.S., Europe, and globally, and we maintain our guidance of $0.5 billion for 2024. UZEDY, launched last year, is gaining traction as we enhance coverage, and we have received positive feedback regarding its therapeutic profile. I am confident we will meet our guidance of $80 million. Our Generics business, which constitutes 65% of our operations outside the U.S., is experiencing solid growth with 5% in Europe and 16% in international markets, alongside an impressive 8% in the U.S. We are also excited about our Biosimilar initiatives, with plans to launch our biosimilar products Humira and SIMLANDI in Q2, attracting interest from payers and PBMs. Furthermore, our biosimilar Stelara has been approved for launch in February 2025, with a total of six biosimilars planned by 2027. As for our focus on innovation, Eric will provide further details, but we are seeing significant advancements with olanzapine, having completed recruitment nine months ahead of schedule. Our CNS pipeline is evolving, and we will keep you updated on our progress. I am pleased with TAPI's advancements as well. Now, let's touch on how we operate as a responsible company. In 2023, we launched our sustainability goals and have introduced seven programs to improve global access to medicine, reduced our carbon emissions by 27% since 2019, and achieved 100% compliance in our ethics and training programs for the year. With that, I will conclude my portion and hand the floor over to Eric, our Head of R&D. Eric, the floor is yours.

Thank you, Richard. As Richard mentioned, we're very excited to announce the positive primary endpoint readout of our olanzapine LAI program, which also met its key secondary endpoints. I will start by describing the study design and where we are executing the study today. The study had an 8-week period, randomized, placebo-controlled, with 3 dose arms. The primary readout was at the end of that 8 weeks, and there is a 48-week follow-up for safety that is being executed with a full randomized patient size of about 675 subjects, slightly over-enrolled. It’s important to note that this second part of the study will read out for safety in the second half of this year. Regarding the primary efficacy endpoints, we met clinical significance and statistical significance. The PANSS score showed a change from baseline of 9.7 to 11.3 points by week 8, indicating efficacy across all 3 dose groups. We are pleased to note that we are about 80% of our total target injections at this point, and there have been no PDSS incidents. Overall, the injections were well tolerated throughout the study. Importantly, the key secondary endpoints including clinical global impressions and personal and social performance scale achieved clinical significance across all doses. This study illustrates our ability to execute and accelerate our programs in the Innovative space, with this study being launched 9 months ahead of schedule. Moving on to AUSTEDO, we continue to inform our patients and investigators about tardive dyskinesia through our real-world observational study called IMPACT-TD, which is the largest study for this condition conducted in the U.S., involving various demographics and severities. The data set will be presented at the second Elevate meeting later this month. Now regarding asthma, it remains a significant patient population with ongoing needs. Our program TEV-248, a combination rescue inhaler using albuterol and fluticasone, is in Phase III studies, and we’re collaborating with Launch Therapeutics to accelerate this program, targeting pediatric patients. Lastly, our Anti-IL15 program seeks to treat celiac disease, aiming to address symptoms for patients who need more than a gluten-free diet. We’re in the process of enrolling patients for a Celiac challenge study. In summary, we're achieving our milestones and accelerating where applicable. We look forward to the final set of safety data later this year. Now I’ll pass it off to Eli.

Thank you, Eric, and good morning and good afternoon to everyone. I'll begin my review of our Q1 2024 financial results with Slide 29, starting with our GAAP performance. Revenue in the first quarter of 2024 was $3.8 billion, an increase of 4% in U.S. dollars and 5% in local currency terms compared to Q1 2023. The increase was primarily driven by broad-based growth from generic products across all global segments, including strong contributions from the generic segment in the U.S., along with continued strong growth in AUSTEDO and AJOVY across Europe and international markets. This was partially offset by lower revenue from COPAXONE and our distribution business in the U.S. In Q1 2024, we recorded a GAAP operating loss of $218 million compared to an operating loss of $13 million in the same quarter last year. The increase in operating loss was mainly due to higher impairments of tangible assets, sales and marketing expenses in Q1 2024, partially offset by higher gross profit, lower legal settlements, and lower intangible asset impairment. As part of Teva's Pivot to Growth strategy, we’ve decided to divest our Generic business in Japan, which is part of our International Markets segment. This resulted in an impairment charge of approximately $600 million this quarter, and we currently expect to sell this business within the next year. Moving to GAAP net loss, we reported $139 million with a loss per share of $0.12, better than the loss per share of $0.20 in Q1 last year, primarily due to a higher net loss related to non-controlling interest. Total non-GAAP adjustments in Q1 2024 were $688 million compared to $661 million in Q1 2023. A notable adjustment this quarter includes legal expenses of $406 million related to litigation cases in the U.S., along with intangible asset amortization and the impairment related to the business classified as held for sale. Our first-quarter revenues were approximately $3.8 billion, with a non-GAAP gross profit margin of 51.4% compared to 49.1% last year, driven by improved portfolio mix and lower operational costs. We started the year with a lower non-GAAP gross margin but expect gradual improvement throughout 2024, driven by strong growth in our Innovative portfolio and continuous cost optimization. Our non-GAAP operating margin rose to 23.4% in Q1 2024 compared to 21.4% last year due to higher gross margin despite increased sales and marketing expenses. We ended the quarter with non-GAAP earnings per share of $0.48 compared to $0.40 in Q1 2023. Our free cash flow in Q1 2024 was $32 million, and we reaffirm our free cash flow guidance for 2024, expecting it to be in the range of $1.7 billion to $2 billion. Our net debt at the end of Q1 2024 was $16.7 billion, with gross debt of $19.6 billion. We expect to gradually improve margins throughout 2024 while continuing to invest in our Innovative pipeline. Now, I will hand it back to Richard for a summary.

Thank you, Eli. Based on what we've told you today, we are confident about hitting our 2027 guidance which includes a 30% operating income margin, net debt at 2x, and cash to earnings at 80%. The execution of our strategy is key, which is focused on returning, accelerating, and sustaining growth. We've made good progress, particularly on our growth engines and our biosimilars. Strong focus on olanzapine today showcases our momentum in this strategy. I'm optimistic about our future. With that, I welcome questions from the participants. Thank you.

Our first question for today comes from Umer Raffat of Evercore ISI.

Congrats on the Phase III efficacy portion of the readout. I had 3 questions, all very trial-specific. First, the efficacy delta you're showing is about 9% to 10%. When Lilly ran their long-acting olanzapine, they were more in the mid-teens. Can you speak to what clinicians want to see? Secondly, is there a plan for a maintenance study, and how does that impact indication? Lastly, how does the trial conduct compare to the UZEDY study given past issues?

I'll hand that straight to Eric.

Thanks for the questions. Let me start with the CRL from UZEDY. We learned a lot from that issue and corrected it. Our ability to execute this study was clear, bringing it up by 9 months. We’re very pleased with how this study was run, as the placebo behaved as expected. The deltas we've seen are consistent with previous studies. What's important is we're providing olanzapine with a simplified administration via a monthly injection. For the maintenance study, further discussions will take place based on this study's results.

I have a couple of questions on biosimilars. How do you view the impact of SIMLANDI with the Evernorth/Accredo contract? Secondly, how aggressive do you think AbbVie will be in defending their brand against biosimilars?

Thank you, David. On SIMLANDI, we’re excited as we bring this to market in Q2. We have included it in our risk-adjusted forecast due to uncertainties. Regarding AbbVie, it’s early, but we are optimistic about the dynamics changing in the biosimilars market. The appetite for biosimilars is changing as we move forward.

I have a follow-up about biosimilar Humira. Do you think the Sandoz biosimilar inflection is due to CVS using exclusionary contracting? Also, regarding TAPI, what is your capacity for API on semaglutide and tirzepatide?

Thanks, Ash. Contracting is very dynamic and evolving. There are various opportunities emerging. Regarding the API, we utilize multiple sources, but we won't disclose specific capacities.

Can you discuss the feedback from neurologists on AUSTEDO, particularly regarding insurance challenges? Also, are there off-label uses you foresee for AUSTEDO?

Insurance access with AUSTEDO is generally good, but there may be inconsistencies depending on specific providers. Regarding off-label uses, we prefer to stick with the approved indications.

What are the key variables affecting your 2024 guidance? Additionally, how does a single PDSS event impact olanzapine's labeling?

We have a range as we monitor the biosimilar landscape. Our guidance is based on risk-adjusted forecasts. Eli, would you add anything?

No, I don’t have anything to add.

Discussion with FDA on PDSS showed up to 3,600 injections as a threshold for avoiding a black box warning. We’re monitoring these injections closely, and the science supports a very low risk for PDSS with our formulation.

Could you update on olanzapine LAI regulatory timelines and interest in filing outside the U.S.? Also, what about leveraging biomarkers with TL1A?

For the olanzapine LAI, we plan to submit in early 2025. Regarding biomarkers, we are evaluating various methods and will incorporate findings that demonstrate predictive value into our strategy.

Interchangeability discussions are ongoing, but nothing definitive is in place yet. We support advancements that facilitate patient access to biosimilars.

Is the change in dynamics affecting your willingness to invest in the next generation pipeline? Furthermore, is olanzapine LAI potentially a blockbuster?

Investment levels remain based on strategic priorities. As for olanzapine, given the unmet need and interest in its potential, we may explore this further as we gather more data.

Could you elaborate on the international markets driving growth? Also, what's your view on the biomarker approach in terms of targeting patients?

We're seeing growth across all international markets, thanks to strategic investments. Regarding TL1A, we’ll gather more data before committing to a specific biomarker strategy.

Could you provide more details on what product launches are driving growth in the Generics business? Also, how are you managing the Revlimid volatility?

I'm excited about our Generics business, which has a strong pipeline. We’re improving supply chain efficiency. About Revlimid, we've optimized our approach thanks to our R&D efforts.

Thank you for everybody's participation and interest in Teva Pharmaceuticals. I look forward to giving you an update for quarter 2 later in the year. Thank you.