Hello, and welcome to the Teva Pharmaceutical Industries Limited Q1 2026 Earnings Conference Call. My name is Alex, and I'll be coordinating today's call. I will now hand it over to Chris Stevo, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Alex. Good morning and good afternoon, everyone. Thank you for joining us on our first quarter call. I'd like to note that before we posted our press release this morning on earnings, we also posted a press release on the Emalex transaction as well as the slide deck relating to that transaction. You can find those materials in the same section as our earnings materials. Before I turn the call over to our CEO, Richard Francis, I want to remind everyone that we will be making forward-looking statements on this call. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in our earnings press release and our most recent 10-Q and 10-K filed with the SEC. Any statements we make are only as of today, and we undertake no obligation to update these statements subsequently. With that, Richard Francis.

Thanks, Chris. Good morning and good afternoon, everybody. Thank you for joining the call. On the call with me today will be my colleague, Dr. Eric Hughes, Head of R&D and Chief Medical Officer; and Eliyahu Kalif, the Chief Financial Officer. So starting with, as I always do, the Pivot to Growth strategy slide. We launched this Pivot to Growth strategy three years ago, and it's based on four pillars: deliver on our growth engines, step up innovations, sustain our generics powerhouse and focus the business. As you will see through the recent presentation today, we've made great progress across all of these pillars. On deliver our growth engines, you'll see AUSTEDO, UZEDY and AJOVY continue to drive good, solid growth. Step up innovation: you'll hear from Eric about the exciting pipeline we have and some data readouts and milestones we have this year. Our sustained generics powerhouse: you'll see the growth of our biosimilar portfolio and, lastly, focus the business: you'll see that we remain dedicated to allocating our capital to the highest-return opportunities. Eli will walk you through some of this and also give you an update on the organizational effectiveness work we've done and how we are on track to achieve our $700 million of savings in 2027. But before I do that and to pick up on what Chris has just said, I'd like to talk a bit today about the announcement we made on the acquisition of Emalex Bioscience. This is the first acquisition under the Pivot to Growth strategy. With this acquisition of Emalex we take ownership of ecopipam, a first-in-class asset with compelling efficacy and favorable tolerability in Tourette syndrome. Now to let you know a bit about Tourette's. This is a serious life-altering pediatric neurological disorder with limited good options today. This is a market of serious unmet medical need where current therapies really do not satisfy the need. They either have efficacy but have challenges with tolerability, or they don't quite have the efficacy but have the tolerability profile. Because of that failure, only about half of patients are actually treated and about a third stay on therapy after one year. We see this as a clear opportunity to help patients and expand the market, something we have successfully done with AUSTEDO and UZEDY. As you know, we have strong CNS capabilities at Teva, whether that's in sales, marketing, market access, or patient services, and we believe leveraging these will help drive penetration and growth. It's worth noting that this transaction is highly aligned to our Pivot to Growth business development strategy. Ecopipam has a de-risked mechanism, strong pivotal data, no major development overhangs and orphan dynamics that support attractive pricing. This ensures it is a high-quality, value-accretive asset that accelerates our shift towards innovative revenue and profitable growth without compromising our balance sheet discipline. Now I'm going to give you an insight into the next slide, the treatment landscape, because this will explain why we're so excited about ecopipam. Patients generally start on behavioral therapies. If these fail, families are left with difficult choices. They either have alpha-2 antagonists, which are generally safe but may not offer efficacy for many patients, or they progress to antipsychotics, which can be effective but come with meaningful metabolic and neurologic side effects that lead many families to discontinue or avoid them altogether. I think we can understand there would be real hesitation in putting a 10-year-old on an antipsychotic for the next decade. That is not a sustainable long-term solution for a chronic pediatric condition. Ecopipam changes that equation. It delivers meaningful efficacy with a good side-effect profile, positioning it to become a preferred late-line therapy, and we fully expect pricing to reflect that value. On the next slide, you'll see some of the transaction details. I will leave these for Eli to go through in more detail. One area I want to highlight is that the asset carries a gross margin significantly above our corporate average and that it has no impact on our ability to hit our 2027 targets and those beyond. Now with that, I'm going to move into the quarter one results. We had a good start to the year, solid performance driven by continued strength of our innovative portfolio, and you'll see the growth of AUSTEDO, AJOVY and UZEDY in a couple of slides. Our revenues came as expected: down 1% or up 7% excluding the Japan divestment and excluding generic REVLIMID. It's great to see we are able to mitigate the decrease in generic revenues as planned. So the figures: revenue down 1% at $4 billion, adjusted EBITDA up 2% reaching $1.1 billion, non-GAAP EPS grew 2% reaching $0.53, free cash flow grew 76% reaching $200 million. Net debt to EBITDA is now at 2.42x. It's worth noting these are all compared to Q1 2025. Let's double click and go into a bit more detail on what's behind this $4 billion. As you can see, strong growth of our innovative portfolio: the innovative portfolio grew 41% to $578 million. UZEDY's strong performance was up 62% at $63 million. AJOVY also performed well, growing 35% to $196 million. Our generics revenue performance was as expected, down 13% excluding Japan, or flat excluding both Japan and generic REVLIMID. Now I want to walk you on to the next slide. This shows the transition that's been taking place at Teva from a pure-play generics company to a world-leading biopharma company. The speed of change is significant. Since 2022, the amount of revenue driven by our innovative portfolio is up from 9% to over 20%. We continue to see this grow into 2030 and beyond. An important aspect I always draw people's attention to is the gross margin and how our gross margin is fundamentally changing at Teva because of this portfolio shift. We anticipate a gross margin above 60% by 2030. Now let me dive into the individual products, starting with AUSTEDO. Another strong quarter for AUSTEDO in the U.S., reaching $559 million, up 41% year-over-year, with global results mirroring that growth. Growth has been driven by a combination of TRx, where we had a 13% growth, and milligram growth of 20%, reflecting new patient growth and improved adherence. We continue to see the benefit from the shift towards once-daily AUSTEDO XR, which now represents over 60% of new patients. The convenience and simplicity of AUSTEDO XR are proving to be major drivers of the franchise's durability. It is worth noting that as we talked about in Q4, there was some buildup of inventory in the channel that has not all been drawn down in Q1. For AUSTEDO, we're reiterating our guidance of $2.4 billion to $2.55 billion for the year. Moving on to UZEDY. Q1 performance for UZEDY was strong with revenues up 62% year-on-year and underlying growth driven by continued prescription growth of 75% TRx. This reflects a very strong product profile: subcutaneous, low volume, no loading dose, with therapeutic levels within 24 hours. It also highlights our excellent commercial capabilities in the United States. I'm proud to highlight that since UZEDY was launched, it's nearly doubled the market share of risperidone long-acting injectables from 5% to 9%. This is a significant accomplishment to drive such a change in a market that has been static for so long. We also now see expansion into the combined market of risperidone and paliperidone long-acting injectables. It's worth noting UZEDY is positioned as the LAI of choice with over 86% of its NBRx coming from patients transitioning from orals and those who are antipsychotic-naive. Once again, we are reiterating our guidance for the year. I can't talk about UZEDY without talking about the upcoming launch of olanzapine LAI, where we're very excited. The significant global opportunity is clear: olanzapine currently holds 19% of the oral market but lacks a viable long-acting option for a patient population that would meaningfully benefit from one. As I've described with UZEDY, there will be clear synergies across sales force, market access, MSLs, patient services, and more. The team has built up know-how over the last three years with UZEDY, and investigator excitement is palpable. People are looking forward to the launch of this product as there is a clear unmet medical need. Now moving on to AJOVY. AJOVY is a great example of how well we execute commercially innovative products globally. Despite being a late entrant to the crowded CGRP injectable market, AJOVY has steadily grown, consistently outpacing the overall injectable market. Where we launch, we generally end up as number one. Q1 growth was driven primarily by the U.S. and ex-U.S., particularly Europe, where we had market share gains, volume growth and valuable access gains. Now moving on to our pipeline. I always struggle not to talk about this in great detail because I know Eric likes to talk about it, but I am excited about it. We have seven milestone readouts this year. We started the year with duvakitug maintenance data, which we thought was excellent. We will have the anti-IL-15 vitiligo readout in Q2. Then in H2, there are multiple data readouts: the futility analysis on emrusolmin, anti-IL-15 data in celiac disease, the DARI Phase III conclusion, the launch of olanzapine LAI and the first-in-human PD-1 IL-2 data. These will all add up to over $10 billion of peak sales potential. Now moving on to our generics business, the third pillar of our Pivot to Growth strategy. This performed as planned. Global generics were down 13%, mainly due to generic REVLIMID, or flat if you take out generic REVLIMID. In the U.S., we were down 28% or up 10% excluding REVLIMID; this increase was driven mainly by higher revenues from our biosimilar portfolio. EU was down 1% due to seasonality of some products and launches; international markets were down 9% excluding Japan. The generic growth in the U.S. is now starting to be driven by our biosimilar portfolio. We currently have 11 biosimilar products on the market, four more expected between now and 2027 covering $16 billion of originator brand sales, and another nine after that covering $58 billion. We have increased our biosimilar portfolio by over 50% in the last three years, and it's starting to have a meaningful impact on our generics business. We are starting to launch biosimilars on a regular basis in Europe. To conclude, and before I hand it over to Eric, I want to reiterate our 2027 financial targets on the Pivot to Growth journey: revenue mid-single digit growth, non-GAAP operating income of 30%, net debt to EBITDA of less than 2x and cash to earnings of 80%. With that, I will hand over to my colleague, Eric.

Thank you, Richard. As Richard mentioned, I do like to talk about the pipeline slide for two good reasons. One, there's a big impact we can make for patients across a number of different indications. Two, this represents four submissions over the next five years. When the deal closes for the Emalex transaction, that would be five submissions in the next five years — a real accomplishment for the teams at Teva and the R&D group, and we're very excited about this future potential. First, I want to talk about olanzapine LAI. I have a late-breaking announcement: we submitted to the EU yesterday and we'll be looking forward to validation of that acceptance by the EU in the coming months. The team did a great job accelerating that submission. We submitted to the FDA back in December, and we believe the review process is going as planned; we look forward to approval by the end of this year. Now onto the dual action rescue inhaler program, our DARI program in Phase III. I'm very excited that we've now completed enrollment of the large Phase III program called FLAIR. We enrolled over 2,700 patients. A very important aspect of this large study is that we have a very large sample size of both pediatrics and adolescents, which is important because roughly 25% of patients with asthma are pediatrics and adolescents. Our unique dry powder inhaler is uniquely positioned to be advantageous for this patient population. I'm also happy to report that over 60% of the events have occurred at this point, so we're on track for end-of-year completion of events for this study. Moving on to our first milestone we announced in our February press release for duvakitug: that was our maintenance data. As a review, this study looked at ulcerative colitis and Crohn's disease patients with an induction period of 14 weeks and a maintenance period of 44 weeks. Maintenance is very important because these are chronic diseases and patients cycle through therapies frequently. Having a drug that can maintain its response and continue for years is very important. We were very excited to see that the data at our 44-week time point showed strong maintenance: for ulcerative colitis, 56% maintained response at 44 weeks; for Crohn's disease, endoscopic response was maintained in 55% at the high dose. We also saw a dose response between low and high dose. Remember, this is given subcutaneously every four weeks in maintenance—patient-friendly and good results. How does that compare? We're excited to see data we think is best in class. Across the landscape, this has the potential to be best-in-disease based on cross-study comparisons against TL1A in development, anti-IL-23s that are approved and the JAKs that are approved. The fundamentals of duvakitug are very strong: the antibody has high potency, high selectivity and low immunogenicity. We've shown favorable induction results and the safety profile continues to be strong and favorable. We recapitulated those results with strong maintenance data out to 44 weeks, again with good safety and quarterly dosing, all subcutaneous. That brings us to the Phase III study. We're working closely with our partner Sanofi. The study is on track and has started well; we're looking to accelerate this program. The SUNSCAPE and STARSCAPE programs will be important for defining this class of molecule. Moving on to our anti-IL-15 program, a Teva-born antibody from our labs in Sydney. This program is currently in two proof-of-concept studies for vitiligo and celiac disease. Like duvakitug, this molecule has the potential for approval in multiple indications. We're looking at vitiligo and celiac today; alopecia areata, atopic dermatitis and eosinophilic esophagitis are possible future indications. For this year, we have a vitiligo proof-of-concept study. One notable aspect: this is a 24-week study with only two shots, given subcutaneously once at day 0 and once at week 12, with a week 24 readout for the VASI score, which is the endpoint for registration in vitiligo. Those results will come out in the first half. In the second half, our celiac disease program will read out: a single-dose study with a readout after 12 weeks. This is a classic proof-of-concept study where we give a dose of active or placebo, then challenge patients with six weeks of gluten, about 3 grams per day, and then at week eight we get the biopsy. We'll look at protection of the gut from damage using the villous height-to-crypt depth ratio on endoscopic biopsy. So vitiligo readout in the first half and celiac readout in the second half. Finally, emrusolmin: a differentiated, brain-penetrant small molecule attacking alpha-synuclein at the genesis of pathogenic aggregation. Enrollment is going very well; in fact, we'll over-enroll to ensure robustness while maintaining arm time, and we're on track for the futility analysis at the end of this year. We have orphan designation and Fast Track designation from the FDA. To summarize the milestones this year: duvakitug maintenance readout showed strong data; anti-IL-15 vitiligo in H1 and celiac in H2; the DARI Phase III program fully enrolled and on track for a final readout by December; emrusolmin futility analysis is on track; olanzapine LAI is under FDA review and submitted to the EU; and PD-1 IL-2 data are expected at the end of the year. It's a great year. I appreciate all the work in R&D. With that, I'll pass it off to Eli Kalif.

Thank you, Eric, and good morning and good afternoon to everyone. I would like to start my review of Q1 2026 results with the following key messages: First, we started the year with solid first-quarter results driven by continued strength in our innovative portfolio. Second, the increasing mix of our innovative revenue, along with our transformation programs, gives us confidence to improve margins throughout 2026 and to be on track to achieve our 30% operating margin target in 2027. Third, we continue to monitor the geopolitical situation in the Middle East. Our operations remain uninterrupted with no material impact on our 2026 guidance. And lastly, our capital allocation strategy remains focused on driving our Pivot to Growth strategy and creating shareholder value. The agreement to acquire Emalex and the potential share buyback program reflect our ongoing disciplined approach to capital allocation. Now moving to Slide 35. Before I start with the results, I would like to remind everyone that our Q1 2025 financial results included approximately $75 million revenue contribution from the Japan business venture which was divested on March 31, 2025. For like-for-like comparison, I will exclude the contribution of this business from last year when discussing our financial results for this quarter. Now starting with our Q1 GAAP performance: Q1 revenue was approximately $4 billion, up 4% in U.S. dollars or down 1% in local currency compared to Q1 2025. Our key innovative products AUSTEDO, AJOVY and UZEDY continued to show strong momentum, largely offsetting lower generics due to the expected loss of revenue from generic REVLIMID. GAAP net income and EPS were $360 million and $0.31, respectively. Turning now to our non-GAAP performance: our non-GAAP gross margin in Q1 2026 was 52.9%. This gross margin was better than our expectation, mainly driven by continued strong growth in our key innovative products and a favorable product mix within generics. Non-GAAP operating margin decreased approximately 50 basis points year-over-year to 24%, mainly due to higher planned investment in sales and marketing to support our innovative growth. Overall, we ended the quarter with a non-GAAP EPS of $0.53 compared to $0.52 in Q1 2025. Our free cash flow in Q1 was $188 million, up from $107 million last year. As I shared on our previous call, our Q1 2025 results included approximately $300 million revenue contribution from generic REVLIMID. Excluding this contribution and the divested business in Japan, our revenue increased by 7% in local currency and adjusted EBITDA increased by 28% in Q1 2026. On Slide 36, I would like to remind everyone of the margin trajectory I showed last year in May and how we plan to go from approximately 26% operating margin in 2025 to our 30% target in 2027. This represents approximately 400 basis points of improvement over two years, driven by our continued portfolio shift toward high-growth and high-margin innovative products as well as $700 million of cost savings expected from our transformation program, despite the impact of losing revenue from generic REVLIMID in 2026. In 2025, we made significant progress by improving our underlying operating margin to 26.8%, which was ahead of our initial expectations. Moving to Slide 37, we continue to make progress on our margin expansion journey in 2026 with a solid start in Q1. Overall, we are transforming Teva into a structurally higher gross-margin business with a growing innovative portfolio mix and transformations in our manufacturing cost base. Our OpEx transformation allows us to keep operating expenses as a percentage of revenue stable as we reinvest savings from G&A toward our innovative portfolio and pipeline to position us for both short-term and long-term growth. Moving to Slide 38: we are making significant progress in our transformation programs to deliver sustainable margin improvement. During Q1, we continued to execute on our targeted programs and remain on track to achieve approximately two-thirds of our total $700 million savings target to be realized by the end of 2026. We have already recorded approximately $205 million in restructuring costs in 2025 and cash outflow of approximately $100 million. In Q1 2026, we recorded an additional restructuring cost of approximately $25 million. For the full year of 2026, we expect cash outflow of approximately $90 million to $100 million, all of which are already incorporated in our guidance. These transformation efforts, along with our ongoing portfolio shift towards innovative products, give us the confidence to grow underlying EBITDA in 2026 and 2027 and to achieve our 30% operating margin target by 2027. On Slide 39, let me provide additional details on our agreement to acquire Emalex with a couple of key messages. First, as Richard highlighted, Emalex is highly aligned with our Pivot to Growth strategy. Second, we are maintaining a strong balance sheet with no change to our 2027 leverage target of 2x net debt to EBITDA. Now turning to the key terms: the upfront consideration is $700 million in cash with additional commercial milestones of up to $200 million. We expect the transaction to close in late Q2 or early Q3, subject to customary closing conditions. Moving to the financial impact: we expect the product to have a gross margin profile of approximately 80%, subject to regulatory approval and launch in 2027. I will discuss changes to our 2026 financial guidance to reflect this acquisition on the next slide. Importantly, we expect Emalex to meaningfully contribute to our revenue growth and margin expansion after ecopipam is launched and scaled, and to be accretive to our non-GAAP EPS starting in 2028. We remain on track with our 2027 financial targets, including our 30% operating margin. We expect higher operating expenses related to Emalex in 2027 to be absorbed by the initial revenue uptake from ecopipam following its launch as well as additional efficiency measures. Now let me turn to our 2026 outlook on Slide 40. As I mentioned, we had a solid start to the year with strong underlying revenue, margin and cash flow performance in Q1, largely offsetting tough comparisons related to generic REVLIMID revenue last year. We're also excited about the Emalex acquisition, which is expected to further leverage our commercial infrastructure in the CNS space. Based on our Q1 results and visibility into the rest of the year, we are reaffirming our 2026 outlook range on an underlying basis, excluding Emalex, for all financial metrics provided on our Q4 earnings call, including growing our EBITDA in 2026. Although Teva is acquiring 100% of Emalex shares, we expect the acquisition will be treated as an asset deal. Therefore, the upfront consideration of $700 million will flow through the R&D line as IP R&D expenses in the P&L. We also expect approximately $75 million of additional operating expenses in 2026 related to Emalex starting in Q3, including transaction costs. The changes to our 2026 guidance range for operating profit, EBITDA and EPS reflect this additional approximately $775 million of expenses related to the acquisition. There is no change to our free cash flow guidance range of $2 billion to $2.4 billion. Excluding the Emalex acquisition, our effective tax rate outlook range of 16% to 19% remains unchanged. We continue to expect 2026 non-GAAP gross margin to be in the range of 54.5% to 55.5% during the year. Our operating expenses are expected to be in the range of 27% to 28% of revenue, with the first half higher than the second half, reflecting planned investment in the first half along with higher impact of transformation program cost savings in the second half. With the expected operating expenses and transaction costs related to Emalex, we expect operating expenses for 2026 to be toward the higher end of our 27% to 28% range. Lastly, let me provide some direction on quarterly progression for the rest of 2026. We continue to expect revenue to gradually increase over the course of the year. Q1 revenue was slightly better than our expectation due to less-than-expected destocking in the channel and timing of some orders from Q2 to Q1. Since inventory levels in the channels remain elevated, these dynamics may evolve during the rest of the year. As mentioned last quarter, we expect AUSTEDO revenue in Q4 2026 to be down year-over-year due to different purchasing patterns and the pricing environment expected ahead of IRA implementation in January 2027. Our non-GAAP margins are also expected to gradually ramp up over the course of the year, in line with revenue trajectory and savings from transformation programs. However, we expect margins to be stable in Q4 versus Q3, reflecting anticipated channel dynamics related to AUSTEDO in Q4 2026. Lastly, our capital allocation strategy remains focused on driving our Pivot to Growth strategy. Over the last few years, we have made significant progress strengthening our balance sheet and are now close to our target leverage of 2x net debt to EBITDA and achieving an investor-grade credit profile. We believe we are well positioned to achieve these goals and our execution has been recognized by major credit rating agencies. This progress allows us to continue to invest organically in our innovative portfolio and pipeline as well as provide flexibility to execute thoughtful and accretive business development to create long-term shareholder value as we are doing with Emalex. In addition, our Board has instructed management to plan for a share repurchase program that may be implemented subject to meeting applicable legal requirements. The timing and amount of repurchase will be subject to further Board approval and dependent on various factors, including market conditions, share price and other investment opportunities aligned with our Pivot to Growth strategy. We believe this potential use of capital will further enhance long-term shareholder value while preserving financial flexibility to continue to invest in our business. With that, I will now hand it back to Richard for his closing remarks.

Thank you, Eli. I want to once again reiterate why we are excited by our Emalex deal and why it fits perfectly with the Pivot to Growth strategy and the criteria we laid out for business development. First, it is a rare neurological asset squarely within our core therapeutic focus area. Second, it's a natural fit for our CNS franchise, leveraging the commercial infrastructure and capabilities we already have in place. Third, it is financially accretive, driving revenue growth starting in 2027, margin expansion beginning in 2028 and creating both strategic and financial optionality over time. Fourth, the risk profile is highly attractive: pivotal studies are complete, the program is well understood and the regulatory filing is expected in the second half of 2026. Finally, this transaction has no impact on our commitment to 2x net debt to EBITDA by 2027. To summarize, this is exactly the type of disciplined, value-creating transaction we said we would pursue. I'm very excited about the impact this is going to have for patients who today have very limited treatment options. Before I conclude, let me remind you of some drivers that we believe make Teva an attractive investment and how our Pivot to Growth strategy continues to execute as planned, transforming Teva into a leading innovative biopharma company. We expect our innovative portfolio to continue driving growth well beyond 2027. It's currently anchored by AUSTEDO, which we are reiterating our target of reaching more than $2.5 billion in 2027 and over $3 billion peak sales, along with our innovative products UZEDY and AJOVY, which will continue to drive our product mix and profitability. We are also preparing for exciting innovative launches coming up, starting with olanzapine this year. In conclusion: the growth journey continues — innovative brands, double-digit growth, upcoming launches, Emalex's attractive acquisition of a first-in-class neuroscience treatment aligned with our strategy and financial targets, near-term value unlocking milestones from our world-class pipeline, a stable outlook for our generics powerhouse and acceleration of the Pivot to Growth strategy. With that, I would like to open the floor to questions. Thank you.

I'll now open the call for questions. Our first question for today comes from Louise Chen of Scotiabank.

Congratulations on the quarter. I wanted to ask about the Emalex acquisition. Could you give more color on the synergies with your CNS franchise, especially on the pediatric side? And as a follow-up, how do you think about the peak sales potential of this asset and what assumptions support that thought?

Louise, thank you for the question. Regarding ecopipam, we're very excited about this asset because of the significant unmet medical need. There are about 100,000 children who suffer from Tourette's, but only about 50,000 of those actually go into therapy and less than 30% stay on therapy after one year. So clearly there is a significant unmet need. In terms of synergies, we have synergies across patient services, managed markets, MSLs and to a degree our sales force. We will put in place a small pediatric sales force to focus on ecopipam. It's worth noting the deep expertise we have in movement disorders at Teva among neurologists and within the psychiatric community. We believe we can offer meaningful hope for this pediatric population. On peak sales, as we get closer to launch we'll start to give an idea of what we think this could be. At this moment we are focused on the unmet need, the lack of treatment options, and the patient perspective.

Our next question comes from Glen Santangelo of Barclays.

Richard, clearly impressive growth in the innovative portfolio, and you reiterated the greater than $2.5 billion sales number for AUSTEDO in '27. I'm trying to reconcile comments earlier about '27 where you expected low single-digit growth. Unpacking this quarter, when you normalize for FX, the Japan business venture and generic REVLIMID, this looks like a 7% growth quarter to us. Eli, can you confirm that? And how should we think about the balance of this year and growth into next year given olanzapine coming and ecopipam potentially contributing next year?

Glen, thanks for the question. I'll try to unpack it. If I'm understanding correctly, you may feel we are being conservative toward 2027. Is that the essence of the question?

Yes. It feels like you're growing much faster than that right now and you're expecting modest growth in AUSTEDO next year with contributions from the pipeline. I'm trying to reconcile the low single-digit expectation for next year.

Okay, thanks for the clarification. Let’s start with AUSTEDO. There are a few moving parts, and the biggest is how the Inflation Reduction Act (IRA) impacts us pre-IRA, particularly in Q4. It's hard to predict what happens to inventory and the channel ahead of pricing changes in 2027. So we must be thoughtful about AUSTEDO and see how that plays out. Do we have concern about the untreated patient population that still needs AUSTEDO? No. Do we have worry about our ability to execute on patient uptake, dosing and adherence programs? No. We remain very confident about the long-term growth of AUSTEDO; that's why I reiterated the $3 billion peak sales. It's more a timing issue. Regarding UZEDY, AJOVY and olanzapine, we prefer to get a couple of quarters under the belt to understand dynamics before getting ahead of ourselves. So for 2027 guidance, we'll provide more clarity at the end of the year. For now, we are pleased with the quarter, but let's get more quarters under our belt before projecting further.

Our next question comes from Matthew Dellatorre of Goldman Sachs.

Congrats on the strong quarter and the deal announcement. First on capital allocation broadly: if we think about free cash flow of $2.5 billion to $3 billion over the next several years, could you comment on a base case for allocation across business development, share repurchases and further debt paydown? Second, on the branded pipeline: what is the latest expectation for indication expansion strategy for duvakitug, and is there anything you're particularly focused on from a competitive landscape perspective this year or over the coming months?

Thanks, Matt. I'm going to hand capital allocation to Eli and the indication question to Eric.

Thanks, Matt. We ended the quarter with $3.7 billion cash on the balance sheet. If you think about midpoint for this year, like $2.2 billion free cash flow, we've generated almost $200 million already and expect another approximately $2 billion to build, giving a strong balance sheet. Considering the closing on Emalex, cash dynamics change but we remain strong. As we grow EBITDA and transform our gross margin, we expect a $2.4 billion to $3 billion run rate beyond 2026 for free cash flow. The buyback authorization we announced is a natural evolution of our capital allocation, creating additional optionality for management to allocate capital. We are in a strong position and may do another one or two deals in the hundreds of millions range; we are not planning larger deals in the short term. If something larger appears, we would evaluate financing options. We still have our $1.8 billion revolver available. Our objective remains to not depart from our 2x net debt to EBITDA target. The rationale is to reach the 2x target and then manage our debt to preserve flexibility to grow the business.

Thank you, Matt. For duvakitug, we and Sanofi categorize potential indications into T2, non-T2 and fibrotic groups. We choose indications based on market size, scientific rationale, regulatory chance of success and speed. We've aligned on indications and will announce them before the end of the year. We're moving quickly on Phase III programs in inflammatory bowel disease where the opportunity is large. We believe duvakitug is highly differentiated from other molecules and that these indications will advance quickly.

Our next question comes from Dennis Ding of Jefferies.

I have two on the Emalex transaction. Your slides don't mention much about the adult population, but Phase III hit on both pediatrics and adults as a secondary population. Do you expect a broad label covering both pediatrics and adults? How meaningful can that be on TAM beyond the 50,000 children you noted? Also, can you comment on efficacy in the adult-only population? As a follow-up, can you help narrow down pricing? You mentioned rare in your slides, but that's a broad category.

Thank you, Dennis. To be clear, ecopipam is being developed primarily for pediatric Tourette's, which is the majority of the patient population. That answers the first part. Regarding pricing, given orphan and rare dynamics and significant unmet need, we expect pricing in the typical orphan/rare range but will provide more granularity as we approach launch. Eric, do you want to add anything on adults?

Yes, thanks. Adults were included as a smaller population in the Phase III study and efficacy results trended with the pediatric results. The pediatric efficacy is particularly important because a D1 receptor antagonist with this safety profile—no weight changes, no metabolic findings, no extrapyramidal signal typical of D2 antagonists—is especially valuable for pediatrics. The safety profile is favorable and the totality of the data supports the value of the product in this population.

Our next question comes from Jason Gerberry of Bank of America.

I've got a generics pipeline question. Teva has a settlement to launch a generic TYVASO nebulizer this year but chose not to launch for business reasons. Would you reconsider given TYVASO is in the large IPF category and might be a $4 billion to $5 billion indication? A license could give you sole-source as a generic for a pre-extended period. Is it simply difficult to get a generic approval? As a follow-up, I noticed on your slides the IL-15 for vitiligo is now listed as accelerated path 2031 time to BLA versus before it was a range of '31 to '34. Have you had regulatory interaction confirming that accelerated path?

Jason, thanks. On the generic pipeline, we generally don't discuss competitive details about specific generic launches for commercial and legal reasons, so I can't provide further color. Eric, on the IL-15 program, do you want to comment?

Yes, Jason. The change to an accelerated 2031 timeline for IL-15 reflects greater confidence in the team's execution and a clearer pathway for the Phase II/III development plan. It's driven by progress and execution rather than a specific single regulatory interaction to announce today.

Our next question comes from Umer Raffat of Evercore ISI.

A couple on the Emalex acquisition. First, given the molecule's long history and the likely absence of a composition patent, is orphan exclusivity the primary protection? Would that overlap with AUSTEDO IPs? Second, is there any preliminary FDA feedback on whether the duration of trials run so far is sufficient to satisfy them on suicidality and neuro side-effect assessments?

Thanks, Umer. We expect ecopipam to be covered by orphan drug exclusivity, which affords seven years from the date of FDA approval, taking us into the early 2030s. Emalex holds a patent covering methods of treating Tourette syndrome using ecopipam expiring in 2035, which may be eligible for patent-term extension. Emalex has filed an additional method-of-treatment application that could expire in 2043 if granted. Regarding overlap with AUSTEDO XR, we believe we have a clear path for patent extension into the 2040s for the XR formulation. Eric, do you want to address the FDA feedback regarding suicidality and neuro assessments?

Yes, Umer. The development history includes a robust data package from Schering-Plough and Merck as well as Emalex's studies focused on Tourette's. The Tourette's program includes two well-controlled studies: a Phase II study showing treatment responses and change from baseline on the Abnormal Involuntary Movement Scale (AIMS), and a randomized-withdrawal Phase III study showing persistence on treatment compared to placebo — both statistically significant. The database is robust for an orphan indication, and we are confident it supports approval. On suicidality: rates were extremely low and balanced in placebo-controlled parts of the studies. The studies included thorough monitoring for suicidality, extrapyramidal symptoms and metabolic parameters and found no signal. There was no weight gain, no metabolic changes and no extrapyramidal symptoms of motor dysfunction. In a long-term open-label extension, 66% of patients remained on drug at one year versus roughly 20-23% on typical antipsychotic treatments. The totality of the information is favorable and should be appreciated by regulators.

Our next question comes from David Amsellem of Piper Sandler.

A couple from me. On Emalex, do you think a REMS will be necessary regarding suicidal ideation or other risks? Also, Emalex had a program in restless legs syndrome; do you plan to pursue that? Finally for Richard: you've mentioned M&A strategy towards neuroscience being more inorganic and immunology more organic — is that still the case or are you taking a more flexible approach?

David, thanks. I'll hand the first two to Eric.

Thanks for the question. We don't currently see a need for a REMS for this program. While suicidality concern may be expected for some classes, the data here do not support a REMS. Regarding the restless legs syndrome program, we haven't made a final decision yet, but that's something we could entertain in the future.

On M&A strategy, broadly you are correct: neuroscience has tended to be reinforced inorganically while immunology has been developed more organically. That remains a general orientation, but we remain disciplined and flexible. Our overarching goal is to create a world-class biopharma company and allocate capital in a way that creates value for patients and shareholders. We will consider both internal and external opportunities if they meet our strategic criteria.

Our next question comes from Christopher Schott of JPMorgan.

Congrats on the acquisition. Two questions: on Emalex, how should we think about the post-approval ramp given unmet need? Are payer dynamics likely to result in a slower ramp, or could uptake be relatively quick? Second, on AUSTEDO, you noted some destocking dynamics that didn't fully occur in Q1. Anything we should keep in mind for Q2 and Q3 that could result in growth rates below underlying volume — any channel dynamics to be aware of?

Chris, on Emalex, there is a significant unmet need in a pediatric population that commands attention. We are excited but will be thoughtful and diligent about how the commercial ramp could look, considering access and payer dynamics. We expect interest and demand, but we'll provide clearer guidance once we have more line of sight. Regarding AUSTEDO: we didn't see the full channel drawdown in Q1 that we expected, and that may shift dynamics into Q2 and Q3. There is also the Q4 uncertainty ahead of IRA changes. However, our leading indicators — TRx, milligrams, new prescribers, coverage — are strong. So keep an eye on those indicators; they suggest underlying demand is robust. We'll give more color as Q2 data come in.

Our next question comes from Ashwani Verma of UBS.

On the $700 million upfront for Emalex, does that change your timeline to reach investment-grade debt? Can that still be achieved this year? And as a follow-up, with geopolitical developments in the Middle East, are you seeing impacts on shipping, freight costs or sourcing materials?

Ash, thanks. Nothing will change our trajectory to reach investor-grade this year. The $700 million upfront will be reflected in R&D and in cash outflow as expected, but given our EBITDA growth trajectory and cash generation, we don't see this affecting the path to investor-grade. Regarding the situation in the Middle East, we are monitoring closely. There have been nominal increases in some transportation and energy-related spend, but these are minimal and manageable within our guidance assumptions for 2026.

Thanks, Eli. Ash, thanks for the question.

Our final question for today comes from Leszek Sulewski of Truist.

On IL-15, what's your confidence level for the upcoming vitiligo readout and later celiac, given other readouts from Sanofi and Amgen? Second, how competitive does your data need to be versus the dual inhibition approach of IL-2/IL-15?

Thanks, Leszek. The IL-15 target is becoming increasingly validated. The relevant benchmark is recent Phase II and Phase III results for oral JAKs, which are systemic treatments. We will be reporting 24-week data, so compare based on similar timepoints because disease response matures over time. We believe our program has a chance to be competitive and also offers a differentiated profile as a systemic therapy given it's a subcutaneous injection administered quarterly — a potentially important convenience and tolerability advantage relative to oral JAKs or other approaches.

Thanks, Eric. I think that concludes today's call. Thank you for all your questions and for your interest in Teva. We look forward to giving you an update again in Q2. Thank you very much. Goodbye.

This concludes today's conference call. Thank you all for joining.