Teva Pharmaceutical Industries Limited (TEVA) Earnings Call Transcript & Summary

Good morning, and welcome. Please welcome Head of Teva Investor Relations, Ran Meir.

Hello, everyone. Thank you for joining us today at Teva Strategy Day 2023. It's great to have you in person here in the New York Stock Exchange, and I want to thank also all the people who are joining us online through the webcast. If you want to follow the slides -- our presentation slides, you can find a copy of the slides on our website at ir.tevapharm.com. And before we go to view the agenda, I would like you to take a good look on Slide #2. This slide contains important forward-looking statements and additional information about these statements and our non-GAAP financial measures is available on our SEC Forms 10-K and 10-Q. Now let's go over what we'll cover in the next 2 hours: Richard Francis, our President and CEO, will kick off with a presentation outlining the new strategy; Dr. Eric Hughes, our Head of R&D and Chief Medical Officer, will follow with a deep dive on some of the most exciting assets in our innovative pipeline; and finally, Eli Kalif, our CFO, will be explaining how it all comes together financially and discuss our long-term targets. After Eli's presentation, we'll open the floor for Q&A. And now I'm very happy to invite Richard Francis.

Good afternoon, everybody, and welcome to all the people online. I really appreciate you making the effort to come down here today to hear about the new pivot for growth strategy for Teva. I'm excited to communicate this with my colleagues in detail. Now to give a bit of background as to how I arrived here today. About 7 months ago, I was looking at the opportunity at Teva, and I did some outside in, sort of, analysis. And the more I look, the more I thought I think there could be something interesting here. I think this company could really have some capability for a bright future. Now obviously, I thought that enough to join, and I'm glad I did. Because now working with my executive management team over the last 4 months where we've gone deep into the business. So this strategy is based on detailed analysis, and we've gone deep into every aspect of the business, trying to understand the strengths, the weaknesses of the company, looking at where the opportunities are externally, where the threats are. And after all of that thorough analysis, I can tell you, I am more optimistic and more excited than I was when I'd done that initial due diligence. And I truly believe that this pivot for growth strategy, which I'm going to walk you through today is going to highlight to you that we can, Teva, become a stronger company, a bolder company and a simpler company. And what we offer as well is we are much more than a leader in generics. Now I've heard your concerns. I've been speaking to many of you over the last 4 months who've questioned the ability for Teva to get back to growth. And I've heard that, and I think those concerns are legitimate. But I also think that this strategy gives us the opportunity to return to growth. We have to make choices. We have to prioritize, and we have to focus. But I'm convinced this will let -- leave the company in a better position, and we will start growing again. I also believe we're at a turning point because some of the past -- some of the uncertainties we've had in the company are starting to become uncertainties in our history. Starting with our debt. Our debt continues to come down, and we're starting to get close to industry standards, and we've proven that we can pay our debt year-on-year. Second, the litigations, which obviously, we've been working on for many years, they are pretty much finalized now with 49 out of 50 states when it comes to the opioid litigations. And the third area here of uncertainties is can Teva launch innovative products. And that was a big question mark. And I'm pleased to say in the last 6 weeks, we've launched 2. AUSTEDO once a day in our treatment from tardive dyskinesia and [ UZEDY ] our long-acting treatment for schizophrenia. So I think we've proven that. So I think these uncertainties, I would say, are starting to become appear in our rearview mirror. Now when we talk about growth and we talk about what are the drivers for growth. Let me talk -- walk you on to some of the core aspects I've seen as we've delved into the company's capabilities. One is our portfolio already, our innovative portfolio of AUSTEDO, AJOVY and UZEDY primarily is already, by the way, 10% of our global revenue. So it's not insignificant. And obviously, that's growing quickly. Now when it comes to the pipeline, which we're going to go into detail in, this is something I didn't get to analyze when I was looking from the outside in. But as I got closer and closer to the detail, what I've realized is there is a real innovative heritage at Teva and a real capability, particularly around antibody engineering and formulations. And so the pipeline that we have at Teva, I think is an exciting pipeline. It's based on validated targets and clear mechanism of action. So in my mind, that means it carries less risk than other pipelines may have. Now our core business, our generics business, I think, is obviously a global leader, and that business throws off a significant amount of cash, which in the short term allows us to pay down our debt, but in the longer term, allows us to invest in some of these growth drivers and some of this innovation. And then last, and this is truly by no means least, is our people. Four months into the Teva organization, probably the most important asset we have in this company is our people and our culture. The can-do attitude that we have at Teva is remarkable. And I think that's the attitude that I want to -- and that's the type of culture that we need to have going forward. There's a real hunger for growth in this company. And I think that's going to allow us to execute this strategy quickly and effectively. Now when I think about these -- when we think about a strategy, I think it's always good to put timelines to it. Otherwise, it stays very high level. And this strategy is going to be very specific. So let's start with the road map. So I've broken this into 3 phases: short, medium and long term. So how are we going to drive growth in the short term to return to growth. We're going to drive this through AUSTEDO, AJOVY and UZEDY, primarily. And I'm going to talk to you about how these products have particularly long growth drivers and the opportunity to drive growth over the revenue over the long term is significant. Now as we look to accelerate growth in '25 and beyond, these products will be supplemented by some of the pipeline Eric is going to talk about long-acting olanzapine, ICS/SABA. We'll also start to benefit from BD. We are getting back into BD. Now obviously, that's going to be restricted a bit because of our balance sheet, but we're going to be active and we'll be very selective in what we bring in. It will be synergistic to our organization and allow us to keep growing the top line. We'll also see in this period, margin expansion, and that will come through not only because we're driving this portfolio of innovation but also the work we're going to do around creating a generics powerhouse, which I'll come on to later. And then as we move into '28 and beyond, then we'll start to get into that earlier stage pipeline, which will start to come through and that will drive and support growth. And that's obviously around the TL1A, anti-IL15 and anti-PD-1L2 that Eric will talk to you about. And now once again, that will be supplemented by BD. At that point, our balance sheet will be very different. And so what type of BD and what scale of BD we can do will be significantly different. And those 2 pairs will continue to drive margin expansion. So now that's the road map, so what is the strategy. The strategy is based on 4 key pillars: deliver on our growth engines, step-up innovation, create a generics powerhouse and focus the organization. So starting with delivery on our growth engines. Now one of the things I've realized as I've come in, we have some great assets and great potential. But maybe in the past, we didn't allocate enough time, effort, resources and managerial time on some of these assets. And AUSTEDO is one of those. And I will talk to you a bit about why I think AUSTEDO has a long runway of growth and a big potential for this company. When it comes to step-up innovation, I think this is another one where maybe in the complexity of the company, we didn't really understand some of the great assets we had in our pipeline. And since Eric's come in, we've created real focus on these assets. We've applied more resources, more managerial time and more capability to make sure we can drive them through the clinic quickly and get them to the market. Now when it comes to create a generics powerhouse, what do we mean? Well, we're clearly the largest generics company in the world right now. But the powerhouse comes from being a more focused organization, making sure we're allocating our capital resources and our capability on the areas and the products and the portfolio that drive growth. That's both in our in-market portfolio as well as in our pipeline. And you'll see the actions we're taking to create that focus as we go forward. And then lastly, to create a more focused company, focus on what are the growth drivers, where is the opportunity and making sure capital follows that. And another discovery I've had is our API business. So TAPI, our API business, which actually is one -- is the second largest in that sector. We want to create a stand-alone unit for that to allow it to benefit from the growing market and the growing demand in API globally, which is growing at 6% to 7%, and I'll talk to you a bit about that going forward. So these are the pillars that are going to drive the Pivot to Growth strategy going forward. So let me take these one by one. So to deliver on our growth engines, AUSTEDO, UZEDY and our biosimilar portfolio. So starting with AUSTEDO. Now AUSTEDO has significant opportunity, and we put down here $2.5 billion. And by the way, this is by 2027. So we're very clear on the time line. And why can we achieve that? Well, primarily, unfortunately, there's a huge unmet medical need, nearly 800,000 patients suffer from tardive dyskinesia. And so only a fraction as you can see from this slide are actually on treatment. So that is a significant opportunity for us to make a difference to the people who have this condition but also to drive this brand going forward. Now the question is, can we do it? Well, in simple terms, we are going all in on AUSTEDO. What does that mean? It means when it comes to actually making sure we have the right resources and focus, we will have it. We've already put together a new sales force or increased the sales force, should I say, and some of the channel mix and the spend we have around this product. And in fact, I was just flown in 2 days ago from the launch meeting from AUSTEDO XR, the U.S. team, which was also the launch meeting for UZEDY, the long-acting treatment for schizophrenia. But the energy and the resources we've applied to AUSTEDO XR are significant and reflect the opportunity that this product brings to the company. Now there's other areas we need to -- we can address on compliance and adherence to make sure these patients and these -- can stay on this therapy, take the right medication on the right day and stay on it long term. We also know that the benefit of having a once-a-day formulation, which has arrived in the market this week will allow us to improve our patient capture as well as the adherence going forward. Then we want to actually make sure we bring some of those untreated people suffering from tardive dyskinesia into the physician's office, and we ended doing that through a direct-to-consumer campaign. And last, but by no means least, we're looking at geographical expansion, something which we probably haven't done enough in the past, and we're looking at taking AUSTEDO primarily to Europe. And so we're working through that opportunity immediately. Now what does this look like from resources? Well, we're going to spend more because of the quality of the asset. And so we've already increased the spend on AUSTEDO by 20% this year, and that will go up by 40% next year. So once again, we are all in when it comes to AUSTEDO. Now moving on to UZEDY. UZEDY is our new treatment for schizophrenia, our long-acting treatment. Now it was interesting, I was on a field ride in the U.S. about 6 weeks ago with some representatives who are promoting AUSTEDO. And so I met these physicians, psychiatrists and clinical nurse practitioners to talk to them about AUSTEDO. And generally, in a number of occasions at the end of the call is, "by the way, can I ask you about your long-acting risperidone, when is it coming?" So unsolicited, a bit surprised, so I inquired why are you so interested in this product coming to the market. And they talked about this product profile, this patient-friendly product profile and this physician-friendly product profile. What is key here is the fact that the current long-acting treatments for schizophrenia are an intramuscular injection, it's painful. Ours is a subcutaneous, low-volume, little pain in the injection site, can be kept out of the fridge, useful things for a patient, but for a physician, 1 injection and you're at the therapeutic level within 24 hours. There's no loading dose, you're done. There is no need for supplementary oral medication, you're done. When you compare that to other therapies, where the physician gives 1 injection, maybe has to give them some oral supplements and then has to have them come back into the office again for the next injection to get to the therapeutic dose. The complexity there you can see for the physician and also for a patient, particularly one who needs relief from this episode. So we see UZEDY actually as a significant opportunity. Now what is the opportunity? Well, there are 2.5 million roughly people in the United States suffering from schizophrenia. And as you'll see, only a fraction of those are on long acting, primarily because there is not a long-acting product with a profile like we have in UZEDY. And that's what I learned when I spoked to these physicians and these clinical nurse practitioners. And that market is $4 billion and growing at 6%. So once again, I said that UZEDY has an opportunity here to bring the right product for the patient and the physician, but also to be a growth driver for us going forward. Now moving on to another growth driver, biosimilars. Now people have asked me whether biosimilars is really a growth driver going for the long term. Absolutely. Now there are some conditions to that, which I'll explain. In the short term, there are $40 billion of brands coming off patent, which we are targeting with our pipeline for the short term. And longer term, we have 13 assets, which we want to bring to the market. So we see significant opportunity to drive growth short, medium and long term across this Pivot to Growth strategy. Now in the short term, these -- the biosimilars we'll bring into the market. This is where the $40 billion of value comes from. But in the long term, our strategy is going to be around leveraging our capabilities and portfolio size. Now I think to be a successful player in biosimilars, you need to have a few attributes. One of them is the footprint, the geographical footprint but the commercial capabilities to take these products to markets in very different health care systems. Sometimes you require sales and marketing, sometimes you acquire contracting expertise, channel, sometimes in the hospital, sometimes in the retail. There's multiple things. Teva has all of those. So we have this infrastructure that we can leverage. We also need to have manufacturing at scale, which is what we have at Teva as well. And then finally, our strategy is going to be about doing partnerships because we want to build a big portfolio to leverage this platform. So we want to have more and more biosimilars that create synergies, which creates an opportunity to drive longer-term growth and margin improvement. It also allows us to think about capital allocation and how we allocate capital and how we think about risk, which -- we'll address both of those with partnerships. So that is the Pillar 1, that is deliver on our growth engines. Now on 2, Pillar 2 is step-up innovation. Now I'm only going to talk a little bit about this because I don't want to step on Eric's toes. But once again, this is a pipeline that we haven't communicated much in the past, and we're going to communicate because I think it's important people understand the quality of our pipeline. This goes back to the quality of our people. We have an innovative heritage. We have it with COPAXONE and many other products we brought to the market. And many of these assets, particularly antibodies come from within Teva, and that just shows our antibody engineering capability. But I wanted to talk to you today is just 3 of them, olanzapine long-acting, ICS/SABA and TL1A. So starting with olanzapine. This is a product which I think has real potential. Now it does rely on having the right efficacy and safety profile. The reason why this particular molecule hasn't transferred from an oral to a long acting in the psychiatrist office is because there is no long-acting that has the right efficacy and safety profile. We're going to show you today and Eric is going to show you why we believe we have both of those. And it goes back to the technology we've leveraged with UZEDY. So this is not something new we're trying to do. We've already proven we can do it when UZEDY. So for me, that's relatively derisked. And you've seen the size of the opportunity in the schizophrenia market, long acting, $4 billion. And with this particular molecule, as I said, none of them have moved across the long acting because of the challenges and the lack of the right product profile. So now moving on to ICS/SABA. Now this is an interesting one in that when I looked at ICS/SABA, I -- it's what I had to look at a few times before, I really started to understand the value this could bring to the company. Now when you bring a product to a market, there are certain things you want to see. One, you want to see a significant unmet medical need, which we have here with 10 million patients, people on SABA. But then if you can, you have guidelines and recommendations by the associations saying that patients should be treated with the product that you have, which is ICS/SABA combination. So the guidelines now are saying the 10 million SABA patients should be switched to ICS/SABA. The second thing you want to know is do you have the capability to execute on that? So when it comes to research and development, we have a device expertise. We do. It's a long standing at Teva. Do we have a respiratory understanding in the market? Absolutely. We've had -- we've been in respiratory for a long time. And then the final thing is, what are the barriers to entry for other people? And I think when it comes to developing devices and combination products, that is difficult. At Teva, we've shown we can do it. And so for me, this means this has a long-term runway for revenue growth. And the size of the market is not insignificant either, 2.5 billion, we estimate. It all depends on how many of the patients switch from SABA to ICS/SABA. So once again, an asset which can hit our pipeline in our midterm and deliver growth. Now moving on to TL1A. Well, this is a bit of the talk of the town right now. Once again, this is an in-house product we developed through our antibody engineering capability, and we believe it's the best in class. We believe it's the best in class because it's potency, selectivity and its low level of neutralizing antibodies. Now what's exciting is not only the quality of our product, but the fact that this can go across multiple indications. And if you just take ulcerative colitis and Crohn's disease, the market could be significant. And we've estimated here, and I think that's been agreed generally this presents a $25 billion opportunity. So when we think at the later stage of our pipeline coming through, the significant growth can come from this product. And as I've already said, this is a target that's been validated to a certain degree. But Eric is going to show some really exciting data to help back up what I've just said. So that's our step-up to innovation. Now let's move on to how do we create a powerhouse in generics? Well, firstly, we're in a great position when it comes to generics. We have a few things that I think are essential to have a sustainable business. Firstly, we have a geographical spread. We have 60% -- slightly over 60% of our business outside the U.S. It's growing consistently at high single digit, and it's very profitable. And it's based on some core competencies that we have in those regions about scale, infrastructure and pipeline. In the U.S., we have also some capability and scale, particularly around high-value generics, complex generics. So there's a lot that we have already. So what do we need to do to turn it into a powerhouse? Focus. We need to be more focused on what we do. And so that starts with the fact that when it comes to our portfolio that we have in the market, we need to make sure we're focusing our efforts on the areas where we can add value and drive margin. The low margin areas of our portfolio, the ones that are dilutive or even loss-making, we need to remove them from our portfolio and allow that space in our factories and in our portfolio to be taken up by the products we can sell more of because there are those. At the same time, when it comes to R&D, we have said we're going to go after 80% of products coming off patent. We're not going to do that anymore. We're going to go after 60%. Why? For two reasons. The majority of the value is with the 60%. The incremental value for that extra 20% is marginal. But what is not marginal is the amount of work that puts in the organization and the amount of complexity it adds. So we want to focus on less to get more. And particularly when it comes to our complex generics that we want to bring to the market, as you know, historically, we have a mixed track record of bringing those to the market on time. And our belief is in this strategy is if we focus on less with our resources and our capability, we have a chance to improve the probability that we will bring to these products to the market on time more often. And if we do that, that will create more value, both on the top and the bottom line. So it's a focused approach to our R&D. Now these 2 things above allow us to continue to optimize our network. So we're going to continue to optimize our network going forward because this will allow us to drive more efficiencies, more utilization and lower our cost of goods, which once again will drive our margin up. So these 3 things together create focus and create a generics powerhouse. Now moving on to the fourth pillar, creating a focused business. As I walked you through the business, you can understand that we have different segments of it, but we're going to become very clear in this strategy, where we're going to focus our time and where we want the growth, and it's around our innovative and our biosimilar business. Now we have with this generics powerhouse, a very sustainable and predictable business going forward. That's what we want to see. That will allow us to direct capital resources and money into our inhibitive business. So it's an enabler. With regard to TAPI, I want to touch upon TAPI now, our API business. We're going to move this out from within Teva to have as more of a stand-alone. The more we analyzed it, the more we realize its potential and how that potential was being restricted by being encompassed within the organization. So let me talk to you a bit about TAPI. Firstly, this API business is the second largest in the industry. It focuses on high-value API. So it's margins are high. This is accretive to the Teva's business from a margin point of view. Itself -- its resource is around manufacturing and R&D. It has those stand-alone R&D and manufacturing capabilities. And it's not virtually integrated within Teva. Teva does not rely on the TAPI business. And so this gives us opportunity to maximize this business going forward to drive growth on this business to allow us to grow the top and bottom line. And that's what we aim to do, to create a stand-alone business with a focused management team with one goal, to grow this business, to maximize the opportunity, which we see in the API market, which, as I said, is growing at around 6% to 7%. And this is a differentiated API business with high margins and to allow us to go after that whole market. So that is the Pivot to Growth strategy. Those are the pillars that are going to drive that strategy. And then the question I just want to remind everybody is how we do our business at Teva. So when it comes to our ESG agenda, we're very committed to this. So when it comes to the environment, the progress, we've published our goals, we're making great progress on that. When it comes to access to medicine and our societal impact, we're still committed to that. We will still have a significant portfolio where we can drive access to medicines around the world. And then how we do our business, high level of integrity and a high level of compliance. That's what we aim to achieve going forward. So with that, with the introduction to the strategy, I'm now going to hand you on to that second pillar, which is step up innovation and hand you on to Dr. Eric Hughes, who will walk you through that.

Thank you, Richard. I'm very excited to be here today. I'm Eric Hughes. I'm the Head of R&D and the CMO for Teva. Now for 20 years, I've been at a number of large pharmaceutical companies. And I've really developed an appreciation of cutting-edge science. When I started at Teva 10 months ago, I was very pleased to see a really rich and innovative pipeline. And that's what makes me really confident that we can really step up in innovation. So what's our strategy for stepping up in innovation? One, we'll focus on our key therapeutic areas. That includes neuroscience, which we have a large or long heritage in, immunology and immuno-oncology. As Richard mentioned a little earlier, we'll leverage our strengths. We are very good at engineering antibodies. We are very good at making formulations, and we have a great device group that can develop very complex devices for delivery. We will focus on accelerating the late-stage innovative pipeline. It's very strong derisk to a certain extent. So we're really going to be putting all our resources on that effort. And finally, we will reallocate some of our great expertise from our generics group into our innovative medicines group. And Richard just showed you this slide very briefly, and I'm not going to get into all our pipeline today, but I want to focus on 4 of our really exciting assets in our innovative medicines group. First, I want to talk about olanzapine LAI, really promising program, building on the great technology we use for UZEDY called SteadyTeq. Then I'm going to talk about this program, it's -- as Richard mentioned, is very popular in the news right now, our anti-TL1A program that we've been in for quite a while. We'll be bringing that forward in ulcerative colitis and Crohn's disease. Then the third, I want to focus on are, which is something we haven't talked about at all before is our anti-IL15 program in Celiac Disease. And finally, I want to really highlight a very exciting program we have called Attenukine. This is a program that we can develop molecules to bring better treatments for patients with cancer. So first, olanzapine LAI. We should talk first about this patient population. It's a devastating disease to have schizophrenia. These people are isolated. They have difficulty interacting with society. It's not only devastating for the patients, but for the families that care for these people. There are 2 million people in the U.S., even more than 2 million that have this disease. And given the devastation, the good thing is that we have treatments for it. You could -- when you take medicines for this, you can actually perform very highly in society. The trouble is all -- most of those treatments are oral. And we know that it's difficult to be adherent to medications. We all have trouble taking our own medications. But in particular, for a variety of reasons, these patients are not completely adherent. And when you're not adhering to the medication, you relapse, you get hospitalized, you go in a spiral of worsening disease. So how do you fix adherent? Well, long-acting injectables are a key to making this a better treatment for patients. UZEDY is a great example. We just launched it. We're very happy about that approval we just got. And that really is a great example of the technology that we've developed in-house called SteadyTeq. It's a copolymer that delivers a long-acting injection. For UZEDY, it's 1 to 2 or 2 months. But we're applying that same technology to olanzapine LAI. And UZEDY will treat those mild to moderate patients, most of them will likely come from who are taking risperidone or paliperidone now. Olanzapine though is that next more powerful medication that physicians like to use. And we have an option for these patients who have no viable current long-term injectem. So very important for patients, and we're very excited to be studying this. So you might be asking, what about PDSS? So PDSS, is an infrequent but serious complication that the current intramuscular injection causes with olanzapine. With a deep intramuscular injection, you can nick large blood vessels and you get a high peak concentration of the drug on occasion with an injection. So that causes a syndrome of lethargy and sedation. And that gave a black box warning to the long-acting injectable that's intramuscular. So what's different about our compound or our development or our formulation? And why are we so confident that we're not going to see PDSS. So first of all, it's a subcutaneous injection. So a subcutaneous injection is much more tolerated than an intramuscular deep injection. So you're not near the large vessels where you're injecting. Second, this is -- the best part about this is the type of co-formulation we've made with this copolymer. When you inject this formulation, the SteadyTeq formulation, it rapidly aggregates and forms capsules around the drug, and then lets the drug slowly release over a month period. So you're far away from large vessels, you're aggregating the blood in a depot that slowly releases the drug. So we're very confident we will not see the PDSS and we're very excited to bring this compound forward. So we've already started the Phase III. And I'm really happy to say that it's enrolling well. This is a randomized, controlled double-blind study, working at 3 different doses of olanzapine LAI for a 1-month injection. Each month for the first 8 weeks, and then we roll the folks over into a long-term follow-up study. It's a large study of 640 patients, and this will include 3,600 injections in total. So we'll have a very good database to show not only the efficacy of the program or the compound but really the safety profile. So we're really hopeful. It's a promising product, and we're excited to see the results. So now moving on to TL1A. This is a very exciting program we have at the company. And just to review a little bit. Inflammatory bowel disease is a large population of patients, there's 4 million patients in the U.S. And it's a chronic inflammation of the gut that causes not only inflammation, but then fibrosis as well. And this is really impactful for patients. So the symptoms are diarrhea, abdominal pain and bloating and it can really disrupt a person's life. And many of these people actually go on to having surgery to correct some of these problems. So it's not an insignificant disease, and it's really impacting patients' lives. Now 60% of these people get treated, but most of that is non-targeted therapies and when they do get to biologics, they cycle through the biologics because of nonresponse. So there remains a high unmet medical need for ulcerative colitis and Crohn's disease. Now why is TL1A such an interesting and talked about MOA. So 1 thing about TL1A to cytokine is it has a real pleiotropic effect. It hits many different areas of the immune response to turn it up. It also has a dual effect, we believe, on fibroblast. So it creates fibrosis as well. So blocking TL1A has the potential not only to down regulate inflammation but also halt the reverse fibrosis. So very 2 exciting potentials of this target. One thing to remember is there's 2 receptors for TL1A. One is the actual DR3, which is the one that signals binding inflammation and the DcR3, which is a decoy receptor that takes away TL1A in a natural response to over inflammation. So a very promising target. Because of this pleiotropic effect, it could be used in many different indications potentially. And it probably will be studied in the coming years. So what's special about our antibody and how did we design it differently? So as I mentioned, there's the DR3 receptor. That's where the inflammation happens. That's the one you want to block. But then there's the decoy receptor, the DcR3 receptor. Again, this is this inducible receptor that when there's an overproduction of TL1A that body naturally produces it to create a homeostasis in response to any inflammation. So what we did here is we developed first, a very potent antibody and second, 1 that would target the TL1A to block the DR3, but to also maintain the clearance of the compound and the cytokine in the natural clearance pathway. So very clever science, very good engineering by our scientists. So why do we actually believe this is true? So here, first, let's look at the graph on the left. This is just looking at TEV '574, that's our compound. And you can see in this inhibition assay in vitro that we have great potency for the DR3. But when you look at the DcR3 on the same assay, we have about 117 fold less potency. So we're hitting the inflammatory signal and we're maintaining that natural decoy clearance of the cytokine. So this is strong evidence about the potency and the selectivity of the compound. Now on these middle graph and on the graph on the right, we created 2 comparator reagents in our laboratories based on patent information on the 2 clinical candidates that are currently in development, named #1 and #2. And you can see with #1 in the center that there's slightly less potency, and there's also no selectivity between the DR3 and the DcR3. So less potent, less selective. And then finally, on the right, the comparator reagent #2 is directly compared to TEV '574, and you can see that we're about an order of -- 1 to 2 orders of magnitude more potent than #2. So I hope you can see from these in vitro assays that were more potent and likely more selective than both compounds. But there's more to it than that. So one of the things that's important when you're targeting a cytokine is you got to be able to measure the cytokine that you're targeting. And it's not talked about much because it's hard to make these assays. But here, we're looking at actual knocking down of free TL1A. That's the cytokine that is actually biologically active and available to cause inflammation. And you can see in these nonhuman primates here, we gave a single dose of TEV '57 and you get a rapid reduction, almost down to undetectable levels, and that stays suppressed out for 14 days. So we're very happy to see that we're actually having target engagement acting on the actual cytokine that we're trying to knock down. So very good supportive evidence of the potency of the compound and the clearance and the effect on TL1A levels. So we're very excited to see this and we're moving forward rapidly in our study. So hopefully, you can see with the preponderance of the evidence right now, we have the potential to be a best-in-class TL1A. We have greater potency, greater selectivity. We have animal models that show a reduction in inflammation and fibrosis. We have done an asthma study where we actually showed that we had a favorable safety profile that was tolerable and had similar AEs to placebo. Importantly, in that study, we saw less than 10% antidrug antibodies as well, which is critical. In my experience, great programs are one that have low antibody -- anti-drug antibodies that maintain a long effect when you're treating patients. And then finally, as I mentioned, Teva is great at making devices. We're working on our subcutaneous auto-injector now, and we'll have that for Phase III. So we started our ulcerative colitis, Crohn's disease study. It's a double-blind placebo-controlled randomized study. We're looking at 3 different doses, the typical induction phase is about 14 weeks. Those folks will then roll over into a long-term follow-up. This is a large study of 280 patients, and it's important to remember, it's a basket study. So half of the patients are ulcerative colitis and the other half are Crohn's disease. And in fact, this might be the first example of a randomized controlled study for Crohn's disease with this MOA ever. So we're excited to get this study going. After we have an interim analysis that is second half of next year, we'll talk with health authority to design our Phase III program. Now we're not all about inflammatory bowel disease. We also have a program in Celiac disease. Now Celiac disease is a high -- a prevalent disease, about 2 million people are believed to have Celiac disease, but many of them are undiagnosed. It's almost like a disease that's been forgotten to a certain extent. But it's terrible because these people really suffer from diarrhea, bloating and abdominal pain. And what causes that? Many of you may know the disease and someone who has it because it's really in response to gluten in the diet. When you eat gluten, the body produces a key cytokine in the gut, IL15. The IL15 attracts intraepithelial lymphocytes to the gut wall, causes inflammation and damage to the lining. So it's a really problematic disease because I challenge you to ever try not to eat gluten in your diet. It's actually very difficult. And even people who are fastidious in keeping gluten out of their diet sometimes get exposed to it even when they're really trying. So it's almost like a Damocles sword. You never know when you're going to be awake all night long with abdominal pain and diarrhea. So it's difficult. And even in about 20% of those patients, even if they stop all the gluten, they still won't respond to a non-gluten diet. So we should aspire to do better for these patients. So why are we excited about our program? So again, our scientists have developed a high-affinity antibody for IL15. And what I'm showing here on the right is a graph of free IL15 in the first 2 completed cohorts of our first-in-human study. And it's impressive, the amount of suppression we see. You can see at the top dose in green, there was suppression on a single dose all the way out to 80 days. And even at the lower dose, we saw a suppression up to about 40 days. So very potent activity, good potential for having maybe a Q 1 week or a Q 1 month or Q 2-month therapy for these patients. So very exciting novel biology, really working fast to get into patients to show proof of concept, and we'll have more data in this next year. Now moving on to Attenukine technology. This is a very exciting work that we've been doing for about 10 years at this point. And as an immunologist, I get very excited about this because it's really taking advantage of things that we've studied for decades and have learned a lot about. So certainly, IL2 is something you know a lot about interferon is something we know a lot about and PD1 and targets that we are working on, we know -- have learned a lot about. But what's the idea behind the Attenukine? So we can give people cytokines, you can give people IL2, you can give people interferon alpha. And we know that they can have treatment effects, but the toxicities are intolerable. Vascular leak syndrome, cytokine storm, the toxicities limit the power of cytokines. So what are we doing? When we're taking those same cytokines, we're weakening them, attenuating them, and we're attaching them to antibodies and directing them right to the cell where they take their effect. So very potent activity of a cytokine, but making it more tolerable by weakening it, but bringing it to the place where it needs to work. So it's a great idea and it's a great technology. And we've shown that it works. So with the Attenukine you see here on this slide, we made 1 to anti-CD38 connected to interferon alpha. And when we put these 2 together and with our trusted partner at Takeda, we out-licensed it, and we're really happy to see that, in fact, for multiple myeloma, you can see that they got a 43% observed response rate and then a 10% complete response rate. And remember, these are in highly treatment-experienced patients. So we gave great benefit to these patients in a novel way using this Attenukine technology. So proven, and we're very excited to see their data. But what are we doing next? So this is a particularly exciting program where we're taking IL2, attenuating it, connecting it to an antibody that then brings it to PD1. So you probably know what PD1 is. PD1 is the inhibitory signaling in cell in cancer that has revolutionized immuno-oncology. This is a target, when you block this signaling receptor, you can really turn on the immune system to actually kill cancer cells. We're taking advantage of that target, and we're bringing the IL2 directly to those cells. So if you think about checkpoint inhibitors, it's like taking your foot off the brake to treat cancer, and we're putting the foot on the accelerator to treat cancer. And you can see here, we can do this with systemic IL2, but it really has failed in the past. So we're different from systemic IL2s. But why do we believe so much in this Attenukine? So I'm looking at a number of tumor models here in mice. And on the far left, you can see when we treat these animals, they get a tumor injection. But when we treat them with vehicle, the tumor grows very rapidly. It's in gray, over about 40 days. If you give them a checkpoint inhibitor, PD1 and you add IL2 that's not bound, they do a little bit better as you might expect. But when you give them the PD1, IL2 together, there's almost a complete suppression of any tumor growth. So a really robust preclinical evidence. The really exciting thing as an immunologist to see is when you take those same mice that survived the first experiment, you don't need to treat them again. They have immunologic memory and keep the tumor from growing back. So very powerful treatment and then induced an immunologic memory. And then finally, on the last graph, I just want to really prove the point, same -- similar tumor model, rapid growth in the gray in vehicle. The blue line is then a checkpoint inhibitor, is similar to what you see in the real world. But even when we give our PD1 attached to the IL2, it again, has great suppression but we're not blocking the PD1, IL2. Remember, one of the more ingenious things the scientist did was make a non-blocking PD1, IL2 using the IL2. So if you needed to use this compound with a checkpoint inhibitor in the future, we can. We know that they bind, and it gives us a great strategy going forward. I certainly think that potentially we can use this as monotherapy. But if we need to use it in combination with other checkpoint inhibitors, we can. So great potency, great activity, very strategic way of designing a molecule. So hopefully, you're as excited as I am to see our progression in these different programs. Our olanzapine LAI program, as I mentioned, started and we'll see the results in 2025. Our interim analysis for the TL1A program will be the second half of 2024. We'll have much more Phase I data in our IL15 program next year. And we're really excited to get our PD1, IL2 into patients in the first in-human at the beginning of 2024. And finally, ICS/SABA readout in 2026. So just to leave you with a few takeaways. We have a great late-stage program, a derisk program with ICS/SABA, olanzapine LAI and our TL1A asset. We're really excited by the fact that we're at an inflection point for our early program. We know that our scientists have been working for a decade on these. And now we're at the point in which we're bringing them into the clinic or near the clinic. So we're filling that pipeline as we speak. And last but not least, we will always want to complement our expertise with BD activity in in-licensing. So with that, I want to thank you for your time, and I appreciate it. I think the next person is Eli.

Thank you, Eric. Welcome, everyone. Thank you all for your interest in Teva. It's really a pleasure to see you here today, and thanks for those that are joining us online. So just before I start, I would like to frame our discussion today with all the information you saw from Richard and Eric. Today, I'm going to discuss about our process so far, and also how we're heading into our new funding growth strategy. I will elaborate on the last 4 years and the progress we've done, and I will also mention the fundamental financial principles that we established. And then we'll talk about our liquidity, debt management, and we'll share with you the view of how we see our capital allocation for the coming years. I've been with Teva now for the last 4 years. And so far, the team, done tremendous job on focusing on robust programs. We keep -- fulfill our commitments with a great discipline. And essentially, strategically, we created kind of a huge shift that I truly believe that position us to a very well, how we say, achievement going forward. Now we improved our margins from 2019 to 2022 by more than 300 basis points through a very, very extensive restructuring and optimization of the business. We had a significant reduction in our debt. And by this, we lower our net debt-to-EBITDA ratio to the level of 4. And we see ourselves heading back to become an investment-grade company. Now based on the insights you heard today from Richard and Eric. We established a fundamental financial principle that will allow us to execute and to achieve our growth strategy. First, free cash flow. We are optimizing further our free cash flow. We're leveraging our generic powerhouse for solid cash conversion. In the last 2 years, we took specific distinct initiatives about our working capital to have a better match supporting our business with more efficiencies. Secondly, it's about liquidity. You saw us earlier this year hitting the market with 2 main activities: one, we had a very, very successful refinancing for the '23, '24 and '25. And by this we were able to make sure that our free cash flow generation have the ability to serve the debt; second, we amended our covenant in order to remain and to have us a certain level of financial flexibility. Now with the new Pivot to Growth strategy, we look at the business, and we needed to make some clear choices. And what does it mean? It means that part of this process, we're moving through a portfolio optimization on certain assets. We are going and evaluate certain assets that accompanies across our brands, across our other elements. And then by these, enabling for ourself, a room to maneuver and to invest in growth and in potential business developments. These developments that's for the short term are more partnership and license deals and for the long term, also M&A. Now through this old process, we are trying to check the box on those 3 elements that you see here: first, aligning to the growth strategy; second, make sure that it's aligned with the working capital optimization; and third, high conversion to cash. Now let's go through some other elements. We start with our generics business. With a clear strategy, as Richard mentioned, on our generic strategy by our ability to get focused on those high-valued generics opportunities, narrowing our coverage on the LOEs from 80% to 60%, we're actually streamlining and optimizing our generics business. By simplifying that business, you will see immediate reduction in costs. That will improve our gross profit and our gross margin. And also, as Richard mentioned, we are aiming to remain to become leaders in that area. Now I will elaborate later about how we see ourselves in terms of our manufacturing network optimization. But with all those activities that I just mentioned were fueling innovation. You will see us shifting between 15% to 30% from R&D budget on generics into more innovative programs. And that will help us to do mainly 2 things: one, maximize our late-stage programs, which is the -- mostly olanzapine and TL1A, and also have the ability to accelerate early-stage programs into a more later stage. This slide is actually demonstrating our manufacturing optimization, and this is in full swing. Today, we have 52 sites. By end of '24, we predict to reduce another 4 sites. And by end of '27, another 8 -- another 4 up to 8 sites. Now this exercise is not simple, super complex. You need to make sure that you keep smooth supply chain. You still have the ability to move programs, get the right certification, consolidate the business. And this is one of those muscles that our company is very strong. Effectively, we reduced from 80 to 52, 35% from -- our manufacturing footprint got reduced. And with this one, we will see a huge benefit on our cost base. Now another element I would like to discuss, it's about our R&D. Here you see a graphic illustration about our R&D allocation. You saw us in the latest years, splitting our R&D allocation into 40% for innovative, 40% generics and 20% biosimilars. As we are pivoting into our growth strategy, you will see us more allocating into the innovative area, around 60% to 80% by end of '27. Now this is not just about shifting 1 program from generics to innovative, we're actually going to have significant growth in our revenue, which means that the entire R&D budget is going to grow. And by this, that slice between 60% to 80% is going to increase, and that will keep -- fuel our innovation. Let me talk few minutes about our debt and liquidity. I want to assure you that with a proactive discipline and strategic activities that we've done so far and we'll keep doing, we'll keep reducing the debt. We'll keep deleverage. You saw us early this year by clearing our runway for the next 3 years, allowing us to serve the debt with our free cash flow generation. Effectively, if you think about it, from 2017 until today, we paid more than $20 billion to our bondholders. You will see us coming back to the market at the end of '24, early '25 to treat the '26 and '27 to make sure they're also sorting in into our ability and to finance it from our free cash flow. And then it's about our cash and revolver. In the latest, I will say quarters, we didn't done in -- any draw on our revolver. But we see it as a very, very strategic vehicle for us. So we amend the covenant in order to keep that financial flexibility for any business development that may raise in the near future. Now so far, we discussed about our progress. We discussed about our debt management, liquidity. Now I want to share with you how we view our capital allocation. We established a very comprehensive capital allocation strategy in order to make sure that we're able to fuel our innovation and to balance with our financial commitments and keep our growth. The source, cash flow from operation, all those activities that I just mentioned, would keep optimizing our free cash flow and conversion, simplifying generics. And in addition, the cash that we'll generate from our portfolio, assets optimization exercise. Those we'll use with the following order: first, keep deleveraging. Keep reducing the debt and make sure that we have a strong balance sheet; second, we will fuel more our existing growth drivers, AUSTEDO, AJOVY, UZEDY and also supporting and new launches in order to keep our competitive advantage; and lastly, with the right prioritization and allocation on investment in R&D, fueling innovation, as well with a very disciplined, strategic, selective activities we'll invest in business development. Now many of you have been asking us if we're going to keep the 2027 financial targets. And the answer is yes. In the last several months, when we went into the entire strategic review, ran again our models. And today, I'm here to tell you that we're going to retain them. From what Richard mentioned earlier and Eric, you saw a very, very clear strategy on how we're going to lay a growth in our revenue to at least mid- to single-digit growth. We're going to hit the 30% operating margin by end of '27, and we'll keep lower the debt to the level of 2x net debt to EBITDA. And of course, for all those 3 elements, we need to keep -- have a strong cash conversion. Now before I hand it back to Richard, I would like to have kind of key points for my presentation. First of all, by reallocating resources, optimizing our portfolio, prioritizing investment in R&D and with a strategic discipline and selective investment in business development, we're fueling innovation. We are supporting sustainable growth, and we are providing a long-term shareholder value. We set a very clear comprehensive capital allocation in order to allow us to balance between our financial commitments and our ability to support growth and invest in our growth engines. And as far it's related to our financial commitments for '27, I want you all to understand that the entire executive management, the entire organization at Teva takes it very seriously, super seriously. We are all in. Now we are all in to make sure that we enable growth. But more important, profitable growth to enable us to expand our margin, convert it to high cash, keep serving the debt, and make sure that this company really moving to a new chapter. And with that, I will hand it back to Richard for final remarks, and then we will open it for Q&A.

Thank you, Eli. Thank you, Eric, for that comprehensive overview of the pipeline and the financials. So now just to conclude, and then we'll open up for some questions. I hope you've seen that from a strategic point of view, we're making some very clear choices. We're making clear choices about where we need to allocate capital and when we need to allocate focus, resources and time. And here, this slide just illustrates when it comes to innovation in our biosimilars, those are key growth drivers in the short, medium and long term. The enablers for that are the generics powerhouse, we've described how we're going to create and also the legacy specialty. We're going to take TAPI, our API business make it a stand-alone so we can maximize that asset and that organization, which clearly has room to grow, which would also help drive our top and bottom line. But what does it all look like from a financial point of view? Well, to give you sort of an illustrative idea, I've sort of put together this bar chart. And this shows, really -- what I want you to take from this slide is the majority of our growth is going to come from our innovative products and our biosimilars. And what you must understand is our innovative products, there are AUSTEDO, UZEDY and AJOVY. And there's some in this time frame maybe of olanzapine. But I point that out because those in the market now, we have them and we promote them and we're selling those now. Well I think that gives us a certain level of certainty. We can debate the size of the bar but the fact that we are going to drive growth going forward on that. The same with biosimilars, our portfolio as it comes through and as we bring that to the market. What I would ask you to think about is, as you think about our business going forward and you analyze it and critique it, we clearly are changing some of the dimensions of our business now. From a company that had a core generics business, we're going to create a more sustainable business. But we have a significant portion of our business now, over 20% of it is going to be innovative. And that has different margins, as Eli spoke about, different levels of profitability and also different multiples as does biosimilars. And I think that's something to consider as you evaluate the company going forward. So the Pivot to Growth strategy, in summary, so Teva tomorrow will be a stronger company, a sustainable generics powerhouse with predictable revenue and margin improvement and accretion going forward. A bolder company where we double down on innovation and we actually end up doubling our revenue in innovation, which generates significant upside from a profitability point of view and a simpler organization because we understand what each piece of the organization is responsible for doing and how it contributes to the pivot for growth strategy. And obviously, TAPI as a stand-alone organization to maximize that opportunity. So thank you, everybody, in the room for your time and attention for listening to us, and thank you for the people online. And now I think we're going to take some questions if you have any. Thank you.

Thank you Ran. Thank you for a great presentation. I'm sure you and your team has gone through sleepless nights to come with this. So one of the questions I got recently from a fairly large holder of your firm is on the generics business to see if at any point of time, do you take a look at divesting the generics business, though that's Teva's claim to fame. And at what point you decide that this is still valuable to retain as a business as a core for Teva? That's question number one. Two, just on UZEDY -- on AUSTEDO, if I at where we are today, around $1 billion of business for this year, if I grow it at 15%, I probably net around $1.7 billion by 2027. So there's an incremental $800 million that you're expecting from geographic penetration or increased diagnosis. I would love to see how you can break that down further.

Okay. Thank you for the question. So if I understand the first one correct me, is about whether we separate the generics business at any point. So the answer to that is no. In our Pivot to Growth strategy, hopefully, we've articulated clearly that our generics business, once we've actually turned this into a predictable business, high levels of margin. Actually, it's a real asset for the company as we drive the innovative proportion of our business because once our debt gets down to low levels, we're generating a lot of cash to actually invest in those growth drivers. So I think the answer to that is no. The answer to your second question about AUSTEDO. So the confidence comes from the fact that I think this is an asset that, apart from the fact that the penetration of the patient population is relatively low, is the amount of support and resources we put behind this asset in the past. I think the team have done a phenomenal job in driving the growth we've seen. But what I spoke to you about earlier, about 20% extra resources this year and 40% extra next year, an extra sales force, the work we're doing around the channel, compliance adherence and conversion. So taking a patient that gets a script to ending up on a long-term therapy. The dropout rate there is significant, right? We call them holes in the bucket. So we're going to put -- we're going to cover those holes in the bucket to make sure those scripts we generate, and we're going to keep generating more actually convert into patients on long-term treatment. So I think when you think about the journey from patient to physician's office, the physician's office to treatment to long-term treatment, there's many areas where we see an ability to have an impact. So we didn't put out the $2.5 billion lightly. I mean I knew that would be critiqued and scrutinized, but I'm confident we can achieve that because the programs we put in place and the understanding of the market we have. So I hope that answers the questions, and thank you for the question.

Thanks for the presentation. I had a couple on capital deployment. You talked about maybe more actively engaging in business development going forward. I think after looking at the cash that's likely to go to debt pay down, you're maybe looking at $1 billion to $2 billion of cash for acquisitions over that 5-year period. I guess when would we start to see the company maybe looking to do deals? And is business development included in that mid-single-digit revenue growth guidance that you gave? And then -- sorry, just lastly on this topic. Do you have any thoughts around potentially exiting some of the legacy products that you have given that they have been a drag on the company's overall growth?

Okay. So I'll sort of give a flavor -- an answer to that and then Eli, if you want to come in a bit. But -- so yes, we are going to do business development. It is going to be constrained to a certain degree by balance sheet in the short term. But as Eli has pointed out, the progress we're making on our debt is significant. And we're going to get down to investment grade pretty quickly in the near term, I think, 2 to 3 years. That gives us a lot more flexibility, obviously, going forward as to how we would fund acquisitions if we wanted to do them. So I think -- we need to think about the BD in regards to our balance sheet. We're already actively stepping up our efforts in BD. I can tell you just in the last 4 months, we are -- now with the constraints we have, we look at in-licensing deals. We look at things that are synergistic to our company, that means we don't have to add incremental costs that we think can drive the top line but fits in with our infrastructure and maybe our therapy focus, but we're working on that. We're working hard and that requires relatively little capital. And that will just grow as to just the price tag that we can do going forward based on what Eli showed you. So for me, I think we have a clear plan on business development. We're far more active than we've ever been, and we have a really big offering. One thing I remind people of, Teva is a global pharmaceutical company that is #1 or 2 in many markets that we operate in. We have scale. We have knowledge within the channels, the reimbursement, pricing, supply chain. So when people need a global pharmaceutical company to partner on something, there is no other company like Teva because if it's global, it will have a huge portfolio and have many assets it's focusing on. So we could do -- I think we're going to find -- people are going to find Teva appealing with that regard, and that allows us to think about deals maybe slightly differently than others. The question about, are we going to sell off legacy assets and things like that. What we've tried to do in this strategic plan is put in place everything we control. And we control everything in this plan is something we know we can execute and we know what's going to be the financial impact. We haven't [ counted into ] any divestments, any capital from divestments or any changes in that. We don't think that's the right way to go ahead. We have that flexibility going forward, but we only want to use that going forward is flexibility. We don't want to rely on it. I think that's constraining and that maybe starts to reduce the credibility of the strategy. But Eli, do you want to add anything?

No, I will just mention, you asked a question about the mid-single-digit growth, right? Yes. So per question, it's embedded business development deals inside.

Jason Gerberry from Bank of America. Just on AUSTEDO, can you talk a little bit about the expansion here, you're basically kind of calling for 2027 to double your revenue off of kind of where you'd end up in 2023. And so how much of that is maybe taking share from your competitors on the XR profile versus sort of category expansion on the step-up in selling and marketing investment for the overall category growth? And then a follow-up on the TL1A program and just sort of what the potency sort of may translate to in terms of clinical differentiation versus, say, Prometheus or Roivant. It looks like Prometheus is a pretty safe and well-tolerated drug through the induction regimen. So do you think that the -- there's going to be additional safety liabilities that may be manifest in the maintenance phase? Or do you just think that this is more of an efficacy play?

So I'll start with AUSTEDO, it was AUSTEDO that you were asking about first to double it to. I'm glad everybody has got the $2.5 billion in their mind, at least based on the questions. It goes back to -- so to be clear, yes, we're going to take market share from our competitor [ at present ]. No question about that. But it goes back to also that patient journey. We already generate a significant amount of scripts. And it's the conversion of those scripts into patients on therapy long term. So there's work we can do around moving somebody from that and where they -- from the hardware prioritization and conversion to specialty pharma, there's many aspects, which we haven't touched upon as a company, which are relatively standard when it comes to specialty medicines. So we're applying new resources and new capability into that particular part of our business. So we already generate a healthy amount of scripts. It's a question of converting more of those to allow patients to actually benefit. So that's a significant opportunity. Then we have the opportunity of growing the amount of scripts we get in the market and competing better than we've done in the past against the other product in the market. So that's another. And those 2 things together, along with compliance and adherence I think, drive significant growth. And then a DTC campaign, which we've done in the past, we know when we do that, it drives more awareness and more people into the physician's offices, which then translates into more opportunity for them to seek treatment. So all those things together we carefully modeled this, and I'm confident that we get to $2.5 billion in '27. And judging on coming from the launch meeting of the once a day because once a day, if you look at the data and the market research actually, that reminds me. AUSTEDO commands in the physician's mind, the psychiatrist's mind, a leading profile when it comes to efficacy, safety and the ability to treat this condition. The one chink it had in its armor, the one missing piece of the puzzle was once a day, and we have that. And the advantage -- though the profile of our competitor was solely based on once a day, not -- there's other attributes. So based on that, I think we've got everything we need. It's about execution. But the opportunity is there, and I think understanding where it needs to come from is there. So we are confident about that. And as I said, I just came from the launch meeting, and if the enthusiasm, experience and knowledge we have of the field team in Teva USA is anything to go by, then I'm confident we're going to hit that $2.5 billion. And the TL1A?

TL1A. So what I showed today was potency, selectivity, and we have safety at this point. I don't think -- you could argue that those are the foundations of a good program. So every program I've ever worked on always wanted to have great potency. I think the selectivity is a big differentiator here because potency will give you benefits when it comes to [ PK ] exposure. The selectivity here gives us an avenue of clearance, I believe. And that is going to be a really impact on the lasting effect of the activity. So I think the safety, what we've seen so far is very good. I think the lack or the low level of antidrug antibodies is critical for longevity as well. So I think the selectivity and the ADAs are going to be a real benefit for the long-term maintenance of response.

I had a couple today, if I may. First, I think everyone is curious, the TL1A, is it a real TL1A? You have you been able to generate perhaps the competitor TL1A constructs internally to try to do a head-to-head in some sort of preclinical model, especially in the context of some patent filings suggesting on, off time could be very different for your TL1A versus the competitors. That's one. On the olanzapine, I was curious -- so subcu approach is obviously different than how Lilly attempted it with RELPREVV. But there is evidence suggesting accidental blood vessel injury could happen even with the subcu not necessarily always with IV or IM. So could you speak to that? And then finally, Eli, I saw that pie chart for 2027 R&D versus now and the 2027 was bigger I couldn't count how much bigger, but I assume about 40%, 50% bigger. Can you speak to that?

Do you want start with the TL1A?

Yes, I'll start with the TL1A.

Unless you want some thinking time.

No, no, it's okay. So for the TL1A, yes, it's a real antibody. And we've been working on it for quite a long time. We were probably one of the first groups in the space. The antibody has been targeted and developed very specifically. From day 1, it was designed to bind 1 single subunit of the trimer and to not block the clearance pathway through the decoy receptor. So the potency is there. I think that we should make sure that we follow free TL1A levels. I kind of tried to emphasize that today because if you have a separate clearance pathway, you have an option, you have the ability to remove cytokine from the system. If you're just accumulating bound TL1A, you're right, the on-off rate will be important for free TL1A. So I think that's where this field is going to go. We'll monitor this. We're going to look at this in all our studies, and we're excited to see the potent effect of the drug. So I'm confident in that. Getting on to the olanzapine LAI. So yes, there are vessels subcutaneously as well, Umer. But I think I would also point to the fact that the copolymer is ingenious. When it hits an aqueous solution, it rapidly aggregates and forms capsules around the olanzapine. In the other formulations, they're more soluble when they're injected. So even if you hit potentially a vessel with our formulation, it will aggregate rapidly and be trapped. So we believe that we're actually very confident that this will not be seen.

Eli?

Numbers?

Yes. So you got it right. It was a graphic illustration. But I will say it will be relatively growing according to our EBITDA expansion, which is around between 20% to 40%.

And if I may just clarify, Richard, do you think TL1A is best developed in the hands of Teva? Or would you want to have a big immunology player? Less because of sharing R&D expense, but perhaps more because some big players are sitting with a lot of rebate dollars. So a drug in your hand is worth 2x in the hands of someone who has a lot of rebate for the channel.

Yes. Look, I think obviously, there's a lot of excitement around TL1A. So everybody is talking about it, and it seems like everybody wants one. We fully funded, as you highlighted there, through the R&D and out the other end in our strategy to keep this in-house. Look, I've been part of launching products in the United States for a long time, and there are many challenges and opportunities to doing that. The challenge you mentioned there about rebate dollars, that's one. But I've been part of organizations where that is also overcome, particularly if you have a best-in-class molecule. So I think that's something right now, we're focused on accelerating that through the clinic ourselves and get that to the market as soon as we can.

Ash Verma from UBS. So I had 2. One was just on biosimilars. So as we are looking some of the assets coming from your Alvotech partnership, what is kind of your commitment level to that partnership right now? We haven't seen the results from the perspective of what you might be expecting in terms of the approval timelines. And is -- in your contract, is there some terms around if you can walk out from that partnership if you're not able to get what you wanted by the time that you wanted it basically. So that's the first question. And then second one, on TL1A, another debate on this seems to be whether the antibodies binding the monomer and trimer or just the monomer alone, that's like one of the key discussion point between Prometheus and Roivant. Anything that you can share on that would be great as well.

Great. Thank you for the question. So yes, we are -- we do remain very committed to the Alvotech partnership. We think Alvotech has shown that they can research and develop biosimilars and bring them to the market as they've done in Europe. So we're very committed to that. And we remain so based on the assets we have with them. But we're also committed to doing business development and expanding the portfolio with other partners as well because our strategy is about -- to be honest, about size of portfolio. Our belief is that as the biosimilar state take traction in the U.S., it's going to be about bringing more and more to the market using our infrastructure that we have in place to do that. And so we're committed to the Alvotech partnership, but we'll also be looking for other partnerships to leverage our infrastructure and to also make sure we have that capital allocation, we're obviously developing some of our biosimilars internally. But as has been pointed out by Umer and others, we have an R&D budget, which is going up. We want to be thoughtful about that and how do we allocate the right amount of resources to the right parts of our business. And partnering in biosimilars allows us to think about that thoughtfully because that's one of the approaches we'll be taking going forward.