Hello, and welcome to the Teva Pharmaceuticals Industries Limited Q2 2024 Earnings Call. My name is Alex, and I'll be coordinating the call today. I'll now hand it over to your host, Ran Meir, SVP, 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 Q2 results press release, which was issued earlier this morning. A copy of the press release, 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 is available on our earnings release and in our SEC forms 10-K and 10-Q. To begin today's call, Richard Francis, Teva's CEO, will provide an overview of Teva's second quarter business performance, recent events, and 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 second quarter financial results and our embedded financial outlook in more detail. Please note that today's call will run approximately one hour. And with that, I will turn the call over to Richard. Richard, if you would, please.

Thank you, Ran, and good morning, everybody, and thank you for joining us on our Q2 2024 earnings call. So, I'd like to start by talking to you about the pivot to growth strategy. And it's just over a year since we launched this pivot to growth strategy. And as you know, the foundation of it was four pillars, deliver on our growth engine, step up innovation, sustain generics powerhouse, and focus the business. And I'm pleased to say we've made great progress over the last year. Deliver on our growth engines, we have continued to drive AUSTEDO and UZEDY and AJOVY from a revenue point of view, and I'm pleased to say that we've launched SIMLANDI, our biosimilar Humira. With regards to step-up innovation, Eric and his team have done a great job in bringing this pipeline through quickly. We're pleased to say that Olanzapine is now at 95% of target injections completed with no PDSS. And also, there's some good news on TL1A, with the acceleration of that and top line results expected in Q4 this year. Eric will also start to highlight a bit more about ICS/SABA, and we're pleased to introduce the new member of our pipeline family, a treatment for MSA, where we'll go into in more detail later on. On the third pillar, sustained generics powerhouse, as you'll see, we've made significant progress here as well with good growth across all regions. And then finally focusing our business and our capital allocation, with regards to TAPI, we have the second quarter of revenue growth, and we're well on our way with the process of divestment there, which I'll go into in a bit more detail later on. So, now, is the pivot to growth delivering on what we set out to do? And as you can see by this slide, I believe it is. We've had six quarters of continuous growth, culminating in the quarter two that we're going to walk you through today of a strong 11%. So, clearly, this strategy is helping the company align and focus and drive revenue growth. Now, to go into a bit more detail on these numbers, as you can see by this slide, revenue's up to $4.2 billion, 11%, adjusted EBITDA up to $1.2 billion, 4%, and our non-GAAP EPS up to $0.61, up 9%. Because of these strong results, I'm pleased to announce that we're going to increase our guidance for the year, and that will be across revenue, EBITDA, and EPS, and Eli will go into a bit more detail of the specifics of that, but obviously we're very pleased to announce that today. Now, going into a bit more detail as to what's driving that 11%, what I'm pleased is that this has been driven across all of our businesses. As you can see from this slide, our innovative business continues to perform well and grow quickly. But you'll also see that our generics business growing at 14%, and I'll walk you through how this has grown across all regions, is also a major contributor. And then finally, TAPI API growing at 5% means once again, we've returned this business to growth and this gives us a lot of confidence for the rest of the year. Now get into even more detail on some of these areas, starting with AUSTEDO, really excellent performance by AUSTEDO. So, congratulations to the team behind this. Really proud of what you've done. $407 million of revenue, 32% revenue growth and TRX at a strong 30%. And because of this strong performance, we're raising guidance from $1.5 billion to $1.6 billion for the year. So, very pleased about the progress we've made on AUSTEDO. Now, just to give you some updated news on AUSTEDO, we completed the family with regards to every dosage form having a once a day system. This is a nice sort of completion of the circle and allows the patients who are titrating to have a more simplistic dosing regimen. So, congratulations to the team for bringing that to market. As we move on to AJOVY, AJOVY continues to grow strongly at 12%, driven primarily by the European business and the international markets. But what I continue to be impressed with is the competitiveness of all of our regions. We are gaining market share across all of our regions, US, Europe, and international markets. As I've highlighted before, this just shows the quality of the team we have at Teva when it comes to driving these innovative products in even very competitive markets. Now, I'd like to move on to the newest member of our family, UZEDY, and we are very pleased with the momentum that we have with UZEDY. What we're seeing is this really favorable product profile continues to attract new physicians and excite them. And from a patient perspective, the subcutaneous needle is obviously something they welcome versus the IM. But also, what we're not seeing is the practical nature of the administration, the fact that this product doesn't have to be kept refrigerated, but most importantly, that this can be administered to a patient and they receive a therapeutic dose within eight to 24 hours, and physicians love that. And so, this is what is allowing us to compete very effectively and to take market share in the risperidone long-acting market. So, we're pleased with the progress we're making there and confident for the rest of the year. Now, as I move on to the last part of the growth drivers, deliver on our first pillar, I move on to the biosimilars. As you know, we launched SIMLANDI, our biosimilar Humira in Q2 of this year, and we're really pleased with the progress we've made. We've fully stocked the channel. We're getting good and growing coverage with our payers, and also we set up a private label with Quallent. So, I think we are well set for this to generate some performance in Q3 and Q4 of this year. But building on this, we were also pleased that we got approval from the FDA for our biosimilar of Stelara, and this will be launched in February of 2025. But now we have approval, this gives us the opportunity to start to prepare for this launch. Now, it is worth pointing out on this slide also that as excited we are about these two products, we do have another five in the pipeline that are coming in the near term. So, as you can see that our biosimilar strategy is gaining momentum and it will contribute to the pivot to growth strategy and allow us to grow top and bottom line. Now, moving on to the second pillar, step up innovation. Eric's going to talk a lot about this later, so I'll try not to steal any of his thunder. What I will do is just highlight the significant progress that has been made. This is now becoming a deep pipeline that's exciting. We'll talk a bit about Olanzapine and obviously TL1A, but it's nice to start to see some data points in the future emerging on TL1A anti-PD1-IL2. We're also working hard to accelerate ICS/SABA, and as I said earlier, we are pleased that we're bringing a much needed medicine to the MSA community in a Phase 2 study that's starting later this year. So, very excited about the work Eric and his team have done. Now, I'm going to go into a couple of these assets to sort of highlight why we're excited about them from a commercial point of view. So, starting with our ICC/SABA. As you can see, this is a big market. There are 13 million people who suffer from asthma in the US and the recommendations of the guidelines, the GINA guidelines are that these people should be on a combination therapy. So, that excites us obviously because IC/SABA is a combination therapy, but what is interesting is we will be differentiated in the fact that we have a pediatric indication and a patient-friendly device. Now, just to sort of give you some grounding on the numbers here from a pediatric indication, asthma is the most common chronic disease when it comes to children in the United States. It also accounts for more hospitalizations than any other chronic illness in this patient population. So, clearly, there's an opportunity for us to help these people, and that's what we're energized to do with ICS/SABA, hence we're trying to drive this to the market as quickly as possible. Now, another pipeline product that we're very excited about and there's a lot of discussion about is Olanzapine. The reason why we're excited about it is obviously the opportunity. There’s a large market of $5 billion for long-acting anti-psychotics. What's interesting is there is no long-acting Olanzapine that's used in any quantity at all, and that's because they haven't had the right product profile. We believe in Olanzapine, our long-acting Olanzapine, we will have the product profile that has efficacy, safety, and tolerability all in one. It will also have similar attributes to UZEDY, which the ability to reach therapeutic doses quickly, so avoiding oral supplementation, so making it very user-friendly for the physician. And that's why we're seeing the excitement amongst the psychiatric community. So, now moving on to our third pillar, which is creating a sustainable generics powerhouse. So, as you see here, 40% growth globally, but all regions contributing very strongly. We're particularly pleased to see the US at 16%, but as you can see, 8% and 22% for international markets, strong growth across all of our regions. Now moving on to TAPI, our final pillar of our strategy, which is focusing on capital. The aim was to get the TAPI management team up and running and focused on driving this business. As I've said in the past, it's an $85 billion market. We have a great business with TAPI, and the question is keeping it focused. Could we get it back to growth? We have done that for the second quarter. We've seen continued strong traction across the CDMO community, and the divestment process is on track, and we're targeting completion by H1 in 2025. So, that concludes my presentation for today. I'm going to hand over to Eric, who's going to walk you through that exciting pipeline that I spoke about.

Thank you, Richard. Starting with our late-stage innovative pipeline, first I'd like to talk about anti-TL1A, our program in inflammatory bowel disease, also known as Duvakitug. This is a study that we accelerated. We randomized our last patient on July 5th, and that gives us about a three-month acceleration, which we're excited to say that we can now produce top line data in the fourth quarter of this year. Moving on to Olanzapine LAI, we've also accelerated this program by nine months, and we'll be presenting our Phase 3 data in the second half of this year at a conference so that we can review the exciting data we announced earlier this year. Finally, ICS/SABA, our dual-action rescue inhaler that Richard mentioned, we're working very diligently to keep our Phase 3 study on time, which we're doing a good job right now and we're on target for our second half of 2026. But as usual, we'll always work hard to accelerate that program as well. So, an exciting late-stage program that we've got going here at Teva. Now, one of the things we announced this month as well is something that I'm particularly proud of, is our AJOVY program in pediatrics. We finished our pediatric study in episodic migraine, the SPACE study, and this was a well-controlled robust study of approximately over 200 patients for treatment of eight weeks. And we're very pleased to say that we achieved primary and secondary endpoints that showed a significant reduction in our monthly migraine days compared to placebo. And this was very consistent with what we saw in the adult population, with no emergent safety signals. So, it's very encouraging to see in a more fragile population, the safety and the efficacy continue to be shown for AJOVY. We continue in our pediatric adolescent program in chronic migraine. So, we hope to someday bring this treatment to children around the world and our label, but more to come. Now, moving on to a new program that Richard had mentioned, and that's in MSA, multiple system atrophy. This is a devastating, fatal, and neurodegenerative adult disease. It's characterized by autonomic failure, cerebellar ataxia, and Parkinsonism. It's particularly devastating to think that in five years, 60% of these patients become wheel-bound, and by 12 years after diagnosis, few of the patients are still living. It's an orphan disease of about 65,000 patients in the G7, and there's currently no available treatments for this terrible disease. Our program, Emrusolmin, is an important program that targets the alpha-synuclein aggregates that drive the disease pathology. Now, it's important to remember, this is an orally administered small molecule. It's brain-penetrant. That means it gets to not only the membrane-bound alpha-synuclein aggregate, but also the intracellular forms. And that's important because Emrusolmin has the potential to be a disease-modifying treatment. It blocks the early aggregates, destabilizes them, creates less toxic early aggregates, and drives them into monomeric form. It also blocks the formation of the larger aggregates as well. So, really important action, and we're very excited to be starting a Phase 2 study in the second half of this year. Now, moving on to another program that we're excited to show progress in, that's our anti-PD1-IL2 ATTENUKINE program. This is an exciting program because it brings together two important aspects of the immune system, targeted therapies to the PD1 T cells, but bringing an attenuated IL2 to those cells. So, this is an important thing. The goal here is to not only activate these T cells, but avoid the cytotoxic toxicity of high doses of IL2. And you can see in this ex vivo study to the left that when you look at melanoma cells with human PBMCs, we have great activity for the anti-PD1-IL2, but also an additional activity if you combine it with a drug such as Keytruda. So, we're very excited. We've screened our first patient in the study and more to come in the future. So, as Richard mentioned, we're progressing our innovative pipeline both early and late. Starting with Olanzapine LAI, I mentioned we accelerated by nine months. We'll have the full safety database complete by the second half of this year. So, we're on target. Duvakitug is now moving forward. We accelerated by three months and we're going to be looking for those top line results in the fourth quarter of 2024. Our anti-IL15 program is now fully enrolled, a POC study for Celiac disease, and we've opened a new IND for vitiligo, and we'll be finishing up our Phase 1 work in the second half of this year. Our anti-PD1, as I mentioned, anti-PD1-IL2, as I mentioned, has now screened its first patient. We're looking for full enrollment by 2026 of part one. And our dual action rescue inhaler, ICS/SABA, we're on target for patient recruitment. We'll work to accelerate that program as well. We're on target for the second half of 2026. And finally, Emrusolmin. I'm particularly proud to be getting a Phase 2 study started this year. And with that, I'll pass it off to Eli Kalif.

Thank you, Eric, and good morning and good afternoon to everyone. I will begin my review of our Q2 2024 financial results with Slide 26, starting with our GAAP performance. Revenues in the second quarter of 2024 were $4.2 billion, an increase of 7% in US dollars, or 11% in local currency terms, compared to the second quarter of 2023. This increase in revenue was mainly driven by growth from generics products across all our segments globally, including strong contribution from generics Revlimid, and the launch of generics Victoza in the US, and strong continued growth from AUSTEDO. In Q2 2024, we recorded a GAAP operating loss of $5 million compared to an operating loss of $654 million in the same quarter last year. This improvement in the second quarter of 2024 was mainly driven by high revenue and gross profit, as well as lower legal settlement and loss contingencies, and the goodwill impairment charges compared to the same quarter last year. GAAP net loss in Q2 2024 was $846 million, and GAAP loss per share was $0.75, compared to the net loss of $872 million and a loss per share of $0.78 in Q2 of last year. The lower net loss in the second quarter of 2024 was mainly due to the lower operating loss that I just discussed, partially offset by higher income taxes related to the settlement agreement we announced in June with the Israeli tax authorities to resolve all pending litigation for the company's taxable years from 2008 until 2020. Turning to Slide 27, you can see that total non-GAAP adjustments in the second quarter of 2024 were $1.5 billion, similar to Q2 2023. A notable non-GAAP adjustment this quarter includes corresponding tax effect and unusual tax items of $503 million, mainly related to the settlement agreement with Israeli tax authorities I just mentioned. Other notable adjustments include a goodwill impairment charge of $400 million related to our TAPI reporting units based on Teva's pivot to growth strategy assumption and our planning for investment. Now, moving to Slide 28 for a review of our non-GAAP performance. As I mentioned earlier, our second quarter revenue was approximately $4.2 billion, an increase of 7% in US dollars or 11% in local currency terms compared to Q2 of last year. Our non-GAAP gross profit margin was 52.9% compared to 52.2% in Q2 2023, and 51.4% in the first quarter of 2024. This increase in our non-GAAP gross profit margin, both compared to last year and the first quarter of 2024, was mainly driven by expected improvement in our portfolio mix, mainly from strong continued growth from AUSTEDO, as well as the decrease in our operational costs. As we progress through the rest of the year, we expect our gross margin to continue to improve in the second half, driven by continuous improvement in our portfolio mix, with a strong continued growth in our innovative products and a continuation of our cost optimization programs. Moving to non-GAAP operating margin in Q2 2024, which was 25.3% compared to 26.1% in Q2 2023. This decrease in non-GAAP operating margin in the second quarter of 2024 was mainly due to higher sales and marketing and R&D expenses as a percentage of revenue, reflecting our deliberate investment to support our key growth engines, including promotional activities related to AUSTEDO, and investment in our late-stage pipeline assets, both in line with our pivot to growth strategy. These were partially offset by our higher gross margin. We ended the quarter with a non-GAAP earning per share of $0.61 compared to $0.56 in Q2 2023, mainly driven by higher operating income and lower financial expenses. Now, moving to Slide 29, as communicated in the beginning of this year, we are making a thoughtful and deliberate investment to support our growing innovative portfolio, as well as progress and accelerate our key pipeline assets. As you can see, this is reflected in our first half results, a continuing improvement in our portfolio mix and the disciplined cost management in driving our margin expansion, as well as enabling us to invest in our business to drive both short-term and long-term growth. Looking at the rest of 2024, we expect to see operating leverage in the second half of this year driven by an expected ramp in our revenue, and continue to expect operating expenses to be in the initially provided range of 27% to 27.5% for the full year. Turning to free cash flow on Slide 30, our free cash flow in the second quarter of 2024 was $324 million, compared to $632 million in Q2 2023. The decrease in free cash flow in the second quarter of 2024 resulted mainly from changes in working capital items due to revenue growth, including a negative impact from accounts receivable due to timing of collections and accounts payable, higher tax payment, as well as higher proceeds from divestitures of business and other assets in the second quarter of last year. Today, we are reframing our 2024 free cash flow guidance, which we initially provided in January. Our 2024 free cash flow is expected to be in the range of $1.7 billion to $2 billion, and we expect it to continue to pick up during the second half of the year driven by high revenue and profitability, as well as working capital improvements. Turning to Slide 31, our net debt at the end of Q2 2024 was $16.4 billion. Our gross debt was $18.6 billion, compared to $19.8 billion at the end of 2023. The decrease in our gross debt was mainly due to the repayment of $956 million of 6% senior notes at maturity in April 2024, and the positive impact of $247 million from exchange rate fluctuations. Our net debt to EBITDA slightly improved, coming in at 3.3x for Q2 2024, mainly due to higher EBITDA. As of June 30, and as of today, there is no amount outstanding under our $1.8 billion revolving credit facilities. Now, let's turn to Slide 32 to our 2024 non-GAAP outlook discussion. As Richard highlighted earlier, and as I reflected on the first half of this year, we have made solid progress in terms of our revenue. This includes solid momentum in our key growth engine, especially AUSTEDO, which continues to see strong demand supported by our focus on investment. In addition, our core generics business continues to perform very well across all our markets, and we also expected Copaxone revenue to be better than initially guided in our provided guidance in January. Therefore, to reflect our revenue performance in the first half, along with expected development in the second half of 2024, we're raising our 2024 full year revenue guidance to $16 billion to $16.4 billion. This reflects an increase of $200 million at the midpoint of our previous guidance range. Accordingly, we're also raising the lower end of our 2024 non-GAAP outlook for operating income and EBITDA by $100 million, and the lower end of the earning per share guidance by $0.10 to be between $2.30 to $2.50. We continue to expect our non-GAAP gross margin to be between 53% to 54% for the full year, with a gradual pick up in the margin in the second half of the year, in line with our revenue trajectory and portfolio mix, as well as improvement from our ongoing cost optimization programs. Like I mentioned earlier, we expect to see operating leverage in the second half of the year, and our operating expenses to be as initially provided range of 27% to 27.5% for the full year. Coming to free cash flows, we continue to expect free cash flow to be between $1.7 billion to $2 billion for the full year. With this, I conclude my review of Teva's results for the second quarter of 2024, and now I will hand it back to Richard for a summary.

Thank you, Eli. And I'd just like to take the opportunity to reiterate our 2027 financial guidance. We aim to grow mid-single digit revenue, the operating margin at 30%. We're committed to net debt EBITDA of 2x, and cash flow to earnings of 80%. So, once again, we reiterate our commitment to that. Now, if I move on to our confidence in that and what drives that is the pivot to growth strategy. And as you know, the first period of time was 2023 to 2024 to return the company to growth. And as I showed on my earlier slide, we've done six quarters of growth, and we continue to believe we will be returning to growth and have the opportunity to continue on that journey because of the work we're doing and the results we're seeing with AUSTEDO, UZEDY, AJOVY, and also the generics business, as well as the biosimilar pipeline starting to come through. We believe that allows us to also position ourselves for 2025 and beyond to continue that growth and accelerate it based on some of the exciting programs that Eric has talked about, but also the fact that in those products I've mentioned, AUSTEDO and UZEDY, we have growth that we predicted and we've communicated as well that we think can drive beyond 2025. So, with that, we remain very optimistic about the future, and I'd like to close the presentation and now open it up to questions and answers.

Thank you. Our first question for today comes from Ash Verma of UBS. Your line is now open. Please go ahead.

Great. Good morning. Thanks for taking my question, and I have two. So, just on the API business, it's good to see back to growth dynamics here. Can you talk broadly about the composition of this business? Is it small molecule heavy, large molecule, or peptide or any flexibility to switch the mix? And it seems like the demand trends are very different depending on which segment you're in. So, that would have some significant implication on the divestment proceeds. And then secondly, on AUSTEDO, I wanted to ask like, do you expect to be on the CMS list for 2027? Thanks.

Great. Thanks, Ash. Thanks for the questions. Always appreciate it. So, with regard to TAPI, what I can say is that the exciting thing about TAPI is it works across all technologies and platforms. So, it's the second-largest API manufacturer in the world with extensive R&D and manufacturing capabilities. So, we touch every aspect of API across all platforms and technologies, which has allowed us to return it to growth quickly because obviously we can work with many partners, CDMOs, as well as pharmaceutical companies. So, we feel very confident that that part of our business is well positioned for growth for this year as well as beyond when it's separated. With regard to AUSTEDO and your question about I think the IRA and the pending change in the payer landscape, what I would say, when we put the pivot to growth strategy together last year and we communicated our $2.5 billion target for AUSTEDO in 2027, if you remember, we communicated that we took into account IRA at that point. And so, we have included that within our forecast going forward. Now, it's a dynamic situation, and as we get more information, obviously that gives us more clarity on what we've planned for and what we've assumed. So, that answers that second part of the question. I think I will add though, as you've seen by the presentation today, both from Eric and myself, we have a lot of assets as well coming through. We have UZEDY, which is gaining momentum. We have Olanzapine that's coming to the market. We have ICS/SABA that's coming to an exciting market that's differentiated. And then we have obviously in a slightly longer midterm, we have TL1A. So, I hope I've answered your question clearly on AUSTEDO, but I also would like to highlight to everybody that we have an innovative pipeline that is maturing very quickly, and that also helps us maintain our growth trajectory. Thanks for your question, Ash.

Thank you. Our next question comes from Balaji Prasad of Barclays. Your line is now open. Please go ahead.

Hi. Good morning, everyone, and great to see the all-round growth across all business segments. Two questions from me, firstly on AUSTEDO. Richard, you have commented, and you have spoken about the efforts that you have been doing in revamping this business. Maybe it's a good time to kind of revisit and help us understand what's working here and where do you see scope for further improvement in the field with regard to diagnosis or spreading the knowledge? Two, on SIMLANDI, I think what we are seeing latest biosimilar MI trends is like 20% biosimilar MI have 20% in market share. We are yet to see SIMLANDI starting to impact this and accelerate the trend. So, you did call out that you expect to see launch in Q3 and Q4, and your partner has commented upon purchase orders booked for 1.1 million units, approximately 10% of the market. So, could you quantify what that means in terms of impact for Teva? Thanks.

Thanks, Balaji. Appreciate the questions. So, on AUSTEDO, what keeps driving the momentum and the performance, I think I've sort of mentioned this in the past, but it is worth reiterating. We have a great team. We put together an absolutely great team, a world-class team here. We've given that team the resources necessary to execute the plans that they have, and that execution is getting better quarter on quarter. Some of the plans this team put in place last year, we're only going to start to really gain traction this year. And there are other things that have been done by this team that'll gain momentum. DTC is one of them, bringing more of these undiagnosed patients into the office, but that's merely just one of them. There's many things this team is doing around the channel, effectiveness, adherence, and getting patients onto therapy, onto the right dose, but it really comes back to a world-class team who know what they're doing. So, that gives me a lot of confidence that this trajectory that AUSTEDO is on can be maintained. Now with regard to SIMLANDI, we did launch in Q2, as you pointed out, and we have had significant interest from the channel and the payers. So, what I've communicated in my presentation is we're well set. We have the channel stocked. We've had good interaction and we're getting ever-increasing coverage with the payers. Now it’s down to us to try and pull that through, working with our partners. I think that's when we're going to get more clarity on how effective we are at doing that, and the market is switching from the brand to the biosimilars in Q3 and Q4. So, I'd say there's more to come on that as we play out the rest of the year, but we're excited by the opportunity. As I keep communicating, we have a portfolio here, and we're going to keep bringing this portfolio to the market. I think the US market is going to continue to mature and become more dynamic and more receptive to biosimilars. We've seen that start this year. I envision that that will continue throughout the rest of this year and years going forward. So, we remain excited about how biosimilars and our portfolio can help drive pivot to growth. Thanks, Balaji.

Thank you. Our next question comes from David Amsellem from Piper Sandler. Your line is now open. Please go ahead.

Hey, thanks. So, I wanted to drill down more on operating leverage, not so much for the back half of this year, but longer term. So, in terms of spend, you've got eventual launch of LAI Olanzapine, so there's launch spend there, obviously investments in AUSTEDO. And then of course, you're talking about further investment in R&D. So, can you just talk about the trajectory of spend longer term and how that fits in with your ability to drive significant operating leverage as we move through next year and longer term? So, that's number one. And then secondly, can you talk more broadly about your neuroscience business and specifically how M&A fits into that? You have a leverageable asset with your sales organization. So, how much of that is a priority as opposed to just focusing on cultivating the pipeline? So, help us understand your thought process there. Thank you.

Thanks, David. Thanks for the question. So, on operating leverage, a couple of things to help sort of frame it. Firstly, we have a lot of opportunity at Teva to drive growth, and I think as I've communicated in the past, we've made a decision to invest in that, to make sure we can take this opportunity and maximize it. And that's both across the products we have in the market, AUSTEDO, UZEDY, AJOVY, and soon to be Olanzapine, as well as the pipeline that Eric's team is bringing through quickly. Now, just a couple of things to build on what you said. Obviously, when it comes to launching Olanzapine, we already have the infrastructure, the sales force, everything in place with UZEDY. So, that's a beautiful synergy we have there. So, as we launch some of these products, we see probably maybe an incremental increase in S&M, but nothing of any major because we have this CNS-focused sales force that we can leverage. So, I think that's one thing to understand. The other thing is, we have thought very carefully about how we accelerate our pipeline and how in some cases we've partnered with people to do that because we’re conscious that we do want to achieve leverage. We do want to get to the 30%, and we believe we've developed a path to do that. The other thing I'd add in, which I did have on one of my slides, but I didn't talk about is, we're also increasing the performance in the efficiency within our manufacturing base, which obviously is a significant cost base. And so, we put together a value-added program, we call it a values acceleration program, sorry, which is all about driving down COGS, driving in efficiency, and driving improvement in net working capital in all the fundamentals, but we're going after that with a real vigor. So, that's also going to be able to improve our gross margin, which will help obviously fall down the P&L. And obviously, to highlight, we've hired Matt Shields, our new head of manufacturing, TGO, who comes with a great wealth of experience of putting programs like that in place. So, that's another area. So, that's why we believe we remain confident about hitting the 30% margin. And also, I'd like to add on that, we do have significant growth in these products, in AUSTEDO, in UZEDY, and in Olanzapine and ICS/SABA. I think that's where also people need to understand how that with the different gross margin falls down the P&L. Now, moving on to your second question about our neuroscience business, we're very excited about it. We're very excited about the capability, and I think we've had a few questions around this, about how we've managed to really drive the performance of AUSTEDO, also the performance of AJOVY in a very competitive market, and the acceleration and the momentum we've got behind UZEDY. So, that is an asset, and I think you described it as that, our sales organization, our commercial team, and we are looking to add to that. So, let me be very clear, we are, but we are pretty choosy. We're very mindful of Teva's position, Teva's balance sheet, and the opportunity we have organically. So, we want to make sure whatever asset we bring in, it is complementary from a financial perspective, as well as complementary from a capability perspective. And so, we are looking, but we want to make sure we do the right decision because we think we have good momentum. We're right on track. And so, we want to make sure that it’s additive to that. So, that's the answer to your second question, David, and appreciate your questions.

Thank you. Our next question comes from Jason Gerberry of Bank of America. Your line is now open. Please go ahead.

Hey guys, thank you for taking my questions. First one's just on generic Revlimid. It's clearly a big contributor, from what I can gather. And so, how should investors think about the sort of size of this product they're going to need to model? This is revenue that will need to be replaced in 2026 when the limited competition dynamics come to an end. And along those lines, I'm seeing like in the first half, non-GAAP adjustments of about $270 million for contingent considerations on future royalties tied to generic Revlimid. So, can you walk through the accounting on that? Is that just sort of for planned future royalties over the next year and a half while the product is subject to limited competition? So, those are my questions. Thanks.

Okay, Jason, thanks for the questions. I'll start and maybe give Eli a chance to also contribute so you don't have to just continuously listen to me talk. So, we're pleased about - firstly, let me just say we're pleased about our generics business, 14% growth globally. And we have a big business, as I've mentioned many times in the past, in Europe and international, and that's growing at 8% and 22%. So, really proud of that, and congratulations to the team, and I want to make sure we appreciate that. Now, moving on to the US, which obviously we saw significant growth. Now, part of that is driven by Revlimid, the continued good performance there, but I do want to remind everybody that we have launched a number of complex generics into the market this year, and that also drives growth, as well as we launched Victoza in Q2. And obviously, Victoza's an exciting opportunity, the first GLP-1 into the market, and so that's received a lot of attention. And so, also that's helping us drive growth. We also do have just underlying good performance in our generics business as we manage our supply chain better than we've done in the past. So, I think all those fundamentals fit together. Now, we are aware that in Revlimid, there is going to come a point where this does come to an end, and because of that, we're focusing really hard on making sure we bring our high-value complex directs to the market on time more often. I think you've seen some progress on that, and we have more than to come hopefully this year as well as early next year. We also have our biosimilar portfolio, which I've highlighted earlier, is six biosimilars to come to the market. So, as we put those together with the improvement in the operational efficiency of our base generics business, I think we have the ability to minimize the impact of Revlimid when that product has more competition. So, that's the way we view it, and we are planning for it. So, I think we feel that we're in a good place. We have to keep executing, of course. But with that, I'll hand it over to Eli to answer more of that specific question around the royalties.

Yes. So, Jason, as you saw last quarter and this quarter, actually year-to-date, we're around $238 million on the adjustment on the continuous consideration. This quarter is $174 million. This is coming strictly from the fact that based on accounting rules, you need to forecast actually - that's the ability that you have on the balance sheet, which is coming from legacy acquisitions, as you know. And this is just a reflection of our forecast.

Thanks, Jason. Thanks for the questions.

Thank you. Our next question comes from Omri Efroni from Oppenheimer. Your line is now open. Please go ahead.

Hi guys, and congrats on a great quarter. I was wondering if you have - if can give some color about the biosimilars market share in the United States, because last time we talked, the market wasn't open yet because the branded companies paid the PBMs rebates, and I was wondering if some movement has been taken into the market.

Hi, Omri. Good morning. I didn't quite catch that question clearly. Maybe if you could repeat it, that'd be helpful. Thank you.

I was wondering if Teva has seen some movement in the biosimilar market in the United States because last time we talked, the biosimilar market was pretty close, and I was wondering if the dynamics have changed.

Yes. Okay, I got it. Thank you for that. Thank you for repeating. So, the dynamics have changed, and it continues to remain dynamic. So, we have seen more of an appetite for the PBMs and the payers to embrace the opportunity of biosimilars. That said, it is a complex market in the US and how you take that and how you drive that through the channel to the physician, to the patient is variable. But I think what is most important for me is, as we've seen it with some of the deals that we've done on private label and other things, that the payers and the PBMs and the channel are really looking at biosimilars in a different way. I think they're seeing this as a strategic opportunity to help them manage costs better and help them give access to these important therapies to patients. But it's dynamic, and I use that word specifically because it is constantly changing. And so, I don't think this is necessarily a straight line. I think we'll end up at a place where it becomes very settled, but I think we're still on that journey.

Okay, got it. And maybe a follow-up question.

Hi guys. Thanks for taking my question. I have a couple here, if I may. Perhaps first, Richard, I know you spoke to the AUSTEDO dynamic, but could you remind us, is it about half of it, which is Medicare? Because I was trying to think about potential IRA inclusion in 2027, and if half the sales have a 25% price cut, wouldn't it mean AUSTEDO could be flat in 2027? So, I'm just trying to think about the $2.5 billion number, and maybe that's broadly the ballpark, not precisely to the dot, but just wanted to put that in perspective. Secondly, on TL1A, could you confirm there was not any interim analysis? Thank you very much.

Hi, Umer, thanks for the question. So, I'll answer the first part and then I'll let Eric answer the other one, just so Eric can talk. I don't want him to go through the hour without talking. So, answering the question on AUSTEDO, look, I think as I said in my first comments, we have taken into account the IRA with AUSTEDO. And we thought about that long and hard last year because we only set the $2.5 billion. We knew that would be challenged for many reasons. And so, we wanted to be sure. Now, so we have taken into account. Now, one of the things you've highlighted is we don’t know how this is going to play out accurately. And we're going to learn a lot in the next few weeks, and we're going to learn a lot in the next six months. That allows us to refine the assumptions we made and those predictions we made. But I feel confident because of the fact that we took it into account right at the start, and I think that was the most important thing. So, as that becomes even clearer, more accurate, we'll come back to you, Umer, and everybody else to give you an update on that. But I feel we're in a good position. With regard to the TL1A, I'll hand that to Eric. So, over to you, Eric.

And thank you, Umer, for the question. I can confirm, there's been no interim analysis for our TL1A program. The study remains blinded. We're just very excited that we're able to accelerate the enrollment, get the full data set going so that we can bring that into 2024 in the fourth quarter. This is agreed upon by our DMC, and we're excited just to accelerate the program so we have a full data set by the end of the year.

Thank you. At this time, we currently have no further questions, so I'll hand back to Richard for any further remarks.

So, I'd just like to thank everybody for dialing in and having the interest in Teva. We very much appreciate that. Thank you for your time, and look forward to giving you an update on the performance of Teva and the pivot to growth in Q3. Thank you. Bye-bye.

Thank you all for joining today's call. You may now disconnect your lines.