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

Thank you, Richard, for joining us here at the BofA Global Healthcare Conference in London. My name is Jason Gerberry. I'm one of the SMID cap biotech and specialty pharma analysts. And so pleased to be introducing our next company presenter, Teva Pharmaceuticals and Richard Francis, CEO. Richard, it's been, what, about 18 months on the job. And a lot has changed, I think, for the better. I think your predecessor was focused on dealing with some legacy issues with the company in terms of leverage and some litigation matters. And then you've been able to come in and now start to orient the company towards more of a growth-driven strategy.

So I don't know if you want to maybe just level set for the group here, just kind of what you've observed at Teva, some of the good, the bad and kind of where you see the company going.

Thanks. Firstly, thanks, Jason, for having me. Always good to see you. Good to see you in London. So yes, it's been -- actually, it's been 20 months, not that I'm counting, since I came in. But what we've done in that 20 months as a team is developed a clear strategy, Pivot to Growth. And you'll hear me -- and we talk a lot. I talk about it all the time, the strategy sets the direction of the company. We're growing this company because we have a strategy to grow it. And it's based on really maximizing our innovative portfolio in the market and in our pipeline as well as making sure we have a growing generics business. And I think we have the capability to do both of those really well. And we have to be disciplined and focused. But what we've shown, I think to the surprise of some, is from an innovative point of view, we've accelerated our products in the market, AUSTEDO, UZEDY, AJOVY. And Eric Hughes, our Head of R&D, has brought our pipeline through really quickly. So I think we're redefining Teva a bit. We are not a global generics company. We're a global pharmaceutical company that has a world-class generics business and has a world-class emerging and very fast-growing innovative business. And we've done that. And I think that's why it's galvanized the company. And you said, what's the good, the bad? The good is it's a great company with great people who really want this company to be successful. And so the commitment to the strategy, which is always important, has been 100%. And so we've done a huge amount in the short space of time because people are clear about what they have to do and they want to do it. And I think that's where we are. And I think this is just the beginning.

Okay. Great. So you've talked a lot about your commitment of Teva to becoming investment grade and maybe why that's so important. What's a realistic time line that you think that the company could get to being investment grade? And then I guess as we think about some of the puts and takes to getting to that, be it either you've got some divestitures that could accelerate things, you've got maybe a few legacy litigation matters that may be -- some puts and takes there. So maybe do you see those as kind of generally offsetting factors? And maybe just kind of frame that dynamic.

Yes. So look, I think, firstly, we have our guideline financially for 2027, which is a 5% CAGR revenue growth, OP of 30% and net debt-to-EBITDA ratio of 2 -- of x2 on a cash conversion of 80%. Now those are goals we set. Now people ask me about those goals: are we sticking to them? Are we going to do them? And as we've got more favorable in our performance and our outlook, people have said, do you really need to do investment grade? Why are you targeting that? And I've said, because we said we were, and Teva will do everything we say we're going to do. And so we said we're going to do it, and we will do it. Now to your question of how quickly, regardless of divestments, regardless of anything, we're on a clear part to do that by '27, if not even before. Obviously, with some divestitures, our capital allocation is pay down debt, invest in our growth drivers and do business development. So obviously, if some of these divestitures happen, it gives us the optionality to accelerate that time line. And obviously, today, we talked about earlier, with the rerating by Fitch, who moved us up one notch, what was pleasing about that is, obviously, that's, I think, a validation of the strategy, the work we've done, the execution we've done on that and their belief that, that will continue. And hence, the reason they give us that positive outlook. So I think, for me, getting the debt down is important because we said we were. And obviously, that gives us a lot more optionality as to what we can do going forward once we've had that in place.

Yes. Okay. And mindful that business development has taken a backseat to some of the other capital allocation priorities. As you look ahead for the next few years, is it still maybe smaller structured transactions, kind of light on the upfront, maybe more back-ended biodollars as sort of the opportunities that you can kind of pursue around the edges here in the near term? Because it sounds like operating towards this 2027 goal and these longer-term targets as a priority set would seem like larger deals are still kind of on the sideline.

Well, I always think about capital allocation regardless as where do you get your best return. If you think about the '27 goals, we can do and we can achieve the '27 goals and beyond a lot organically. Our pipeline, where you -- we'll probably talk about olanzapine, TL1A, ICS/SABA, IL-15, these will all bring growth in '27 and beyond and some actually sooner. So the need to do BD is less sort of critical. And so we've always got to think when we allocate capital, if we allocate to the BD, are we funding those internal opportunities as well? So I think that gives us optionality. Now that said, to create a company that's going to be growing successfully for 10, 15, 20 years, we need to make sure that the innovative pipeline is filled properly. And also our commercial infrastructure, we leverage as much as we can. So we have -- we can have more things in the bag. We can have more things in our pipeline. But the barrier to us allocating capital is quite high because we want to make sure it will drive our Pivot to Growth because we know we're on a good trajectory. So we don't really need to -- we don't want to destabilize that. So that's how we think about it. Now I look at a lot of stuff all the time, but I always compare it to things we have. And so that's the criteria we look at.

Okay. Maybe shifting to your LAI. I oftentimes think about your LAIs as more of a portfolio of 2 products, right? You have UZEDY that's marketed, and now you have olanzapine, which is largely clinically derisked. I think we're getting detailed data at ECNP for this program. And you've guided to something like 10% to 20% of the market could be the peak revenue potential of these 2 together, so call it $800 million-ish or so, right? So maybe is that sort of a conservative placeholder? As you think about the UZEDY launch, how that's gone and just how the payer environment looks for newer innovative LAIs, what's sort of the landscape that you're launching into and maybe some of the puts and takes? Because olanzapine clearly has a big volume opportunity, and I think people see that as one that is a little tricky to forecast. And maybe you hold off on getting too bullish until you see a label.

I think that's good advice. But to help answer the question, though, look, I'm really excited about what we've done with UZEDY. I think UZEDY has raised the eyebrows in the market as to, wow, you seem to be doing really well with this product because we have a good product profile. But I think what that's helped us do is really understand the psychiatric community, the schizophrenia marketplace and show that if we have differentiated product, we can do well despite what you've highlighted is the challenging payer environment. In the challenge payer environment, you have to bring value, and we're clearly doing that with UZEDY. As we bring olanzapine along, what I like about this, that will go into exactly the same infrastructure, be it our managed markets, be it our sales representatives, our MSLs, et cetera. So that completely leverages those. We get synergy there. But also we're bringing olanzapine along 2 years after we brought UZEDY. So I think those relationships with the customers and the key stakeholders is going to help us have a really good launch of that product because the market does need a long-acting olanzapine, as you know. And so I'm excited about it. I think we're going to get clear on what we think that opportunity could be as we get closer because we're doing a lot of research and we do want that final label. And on that, the safety, we're now at 99% of injections completed with no PDSS. So that's really positive. But I sort of want to get to 100% and having that done and then be clear about what the label is going to look like, and then I can really understand what the opportunity is. But it is significant, and it's significant for Teva because one of the things about Teva is our innovative business is growing very fast, and I think it's very attractive. But the base of that business means if you add a product on that, that does $500 million, $800 million or $1 billion, it really changes the dynamic of the growth on the top and the bottom line.

Yes. So you mentioned -- or I guess I mentioned the label. You followed up with that. But thinking about RELPREVV, that's the marketed version of olanzapine currently, when I talk to physicians, it's really not the black box. It's the 3-hour post-dose monitoring that has sort of been the commercial killer for RELPREVV. So maybe just talk about sort of the regulatory interaction when you designed the study and the 3,600 injections and sort of the discussion to ensure that maybe you don't have that monitoring requirement because that seems to be the key label variable.

Absolutely. Yes. So look, we had discussions, got guidance from the FDA what would be required to show efficacy and safety. And we have these discussions about PDSS. And so we've designed a study in line with what they want. So I'd like to think we're confident that we don't have PDSS, and that changes the label. That said, I'm always warned by my regulatory colleagues since the FDA has the freedom to do whatever they want. But I think, don't forget a lot of the Phase III clinical trial sites were in the U.S. and Europe. And so these physicians also are excited because they've been treating patients with this product. So I think all of that, I think, helps us lead to a positive outcome, but we'll have to wait and see.

Okay. So I think in the past with UZEDY, at least, some of the regulatory issues, I think there's CRL that sort of maybe delayed the launch relative to expectation. And there's some commentary that perhaps maybe the payer contracting maybe wasn't where you'd want it to be for year 1. So what does that mean for year 2? Like do you feel like, year 2, you'll be more on a fully contracted basis and then there's an acceleration to uptake? And does olanzapine have a different contracting trajectory relative to, say, UZEDY if everything goes to plan?

Yes. Look, I think you summarized it really well. Look, we did have a more challenging payer environment to deal with. That said, it's because we didn't want to discount. We understood the value of our product, and people asked for discount, and we said we don't [ undersell ] the value of our products. So we held, we held the line. And what we're seeing now is physicians are still pushing through the product because they see the value of the product because you can get to a therapeutic-level dose within one dose, which is huge. And so I think the payers now are coming back and say, okay, this clearly has a difference. Can we start discussing it? But I think what that shows is the discipline we have with Teva is we know the value, and we're prepared to show the value and wait for that. Now how does that lean into olanzapine is your question. Firstly, we know all the people now. We've been contracting with them for -- it will be 2 years. We know all the formulary committees in the hospital. We know all the key stakeholders. And they understand the technology behind UZEDY, which is the same technology behind olanzapine. And they see this huge unmet need. And the value it brings, they don't have to hospitalize these patients who are having an episode. So I think that puts us in a really good place, but we'll have to wait and see because we're not going to discount this to a level we don't think reflects the value of the product. And that means we'll always have that in mind because we're not planning a 1-year race. We're playing a 5 to 10 year. But I do think for UZEDY, to also answer another part of your question, we do see the product being able to perform better in 2025 because of that access.

Okay. So with olanzapine LAI, is there -- if you could maybe preview what we would learn incrementally at the ECNP medical meeting. I mean we've have kind of gotten top line on efficacy. We know 99%. I presume maybe we might be at 100% high at ECNP. But anything you can kind of preview for that update for investors?

I think if we obviously do have the full safety, then that will be announced. But I think that's sort of -- we want to make sure we have the most current information ready for that presentation. So I think you'll have to sort of wait and see. So everybody is going to have to tune in.

We will get, I mean, detailed tolerability data. I know that's one question about olanzapine and some of the legacy issues, even with the oral molecule around the metabolic profile. And I imagine investors will get the first look at a more detailed safety profile.

Yes. So what we've communicated is we're not anticipating that to be vastly different [ than the oral, the weight gain ]. If it does, that's a positive. But I think we're -- we see maybe no reason to believe that, but let's see how the data actually stacks up. Obviously, the thing that's really front and center is the PDSS, and so I think that's what people are wanting to understand, how many injections, how many patients, et cetera, and the detail behind that.

Okay. And certainly, some investors, because of olanzapine's high volume, think that this could very easily be $1 billion drug, right? Invega has had the ultimate success in this space. Do you think that this is a space that there is meaningful upside potential still for something that maybe you can tap into? And this seems like an area of unmet need that hasn't been tapped into the therapeutic space. I'm just curious to get your perspective there.

Yes. Look, I mean, without commenting precisely on the number, I think the unmet medical need is huge. I mean olanzapine is the most efficacious molecule that's used in schizophrenia. It's 20% of the market. And obviously, when you deal with diversification, you're dealing with the patients who have the most difficult condition. And those you need to be compliant because the compliance is obviously important in schizophrenia, but it becomes even more important, the severity of the disease. And so when we speak to physicians, they say we really need a long-acting because I need to know the patients are controlled and they're taking their medicine. So I think the unmet need is there. The excitement, I think, is there. And this molecule is really, really valued by psychiatrists because of its efficacy, which is what you need. Front and center, you need efficacy. So I do think the opportunity is significant. The things we have to manage through is how is the managed care and how that is going to be managed and what that means and making sure we still have the right value proposition. But this is all positive. This is all sort of degrees. And for me, it's very exciting. And what's also exciting is we're becoming sort of known within this community with AUSTEDO, UZEDY and now olanzapine as sort of the big player. When you go to conferences, people say it is Teva, which is a turnaround from 18 months ago where you're a generics company dabbling in innovation, and now we're seen as an innovative company as well, where we're leading the way in psychiatry. And that shows the transformation you're going to have when you really focus the business, really focus the resources and really build capability in your R&D and your commercial teams.

How much synergism is there with the LAI piece of the business and AUSTEDO, which AUSTEDO has probably a meaningful proportion of scripts written by psychiatrists?

Yes, there definitely is an overlap in the synergy there. Obviously, there's synergy from a managed market. There's synergies, to a certain degree, from KOL. So we definitely do have that. So that's an advantage. We also are mindful that we want to maximize the assets. So we're not trying to be incredibly focused on can we share costs because the opportunity for both brands, in UZEDY and AUSTEDO, are so significant. We want to make sure we allocate enough resources to maximize that because I think that's the thing we didn't do well in the past. We really didn't invest in these. And now we've invested in building capability and allocating resources. And I think we're showing the return on that.

Okay. Maybe shifting gears to AUSTEDO, which has been really, arguably, the big growth engine for the company. It's your highest-margin product. And so I imagine as that continues to grow towards your 2027 kind of aspirational or, whatever you want to call it, longer-term target, that should drive a meaningful amount of operating leverage, I would think, into the P&L. You have flagged maybe 2027, 2028 as a year where there could be a drug price negotiation impact from the IRA. I understand that that's a prudent base case to have, but there's also a generic of tetrabenazine in the market that has something like 10%, 15% molecule share. And there is an exception if there's a bona fide generic that you could be exempted from IRA. So maybe it seems like there -- is it prudent to maybe be mindful, there's a number of scenarios that could play out, including that there could be an exception to IRA?

So you're definitely glass half full, aren't you, on that. So...

We don't know what bona fide generic means.

Yes, exactly. There's a lot of things in the IRA we don't know. And the way I think about it -- I'm a bit more glass half empty on most things, and then if there's an upside, we'll deal with it. I think as we've communicated, we always put in the impact of the IRA as best as we could calculate it back in '23 when we gave the target of $2.5 billion. We know that number is wrong. The question is how much, is it too big, or is it too small? And we'll see how this plays out. I think what we've always tried to do at Teva since I've been here is be measured in everything we predict and not expect us to always have the better outcome, and let's accept that we're probably not, and then we'll build our business, our resources and our financial strength around that. And if it ends up being more positive, that's upside. But yes, the IRA, I mean, I think it is very difficult to understand. As obviously somebody who's worked through NICE and the European regulation, which is very clear and methodical, this one is a hard one to interpret. So there could be some upside. But for us, we're playing it out as if it's going to happen sooner, so in '27 or '28, and we could be in '28. And we'll navigate all of those. The thing that I keep reminding people is by then UZEDY will be at a nice run rate. Olanzapine will be launched, and that will be growing, and we'll potentially have ICS/SABA that's launching in its first 18 months. So it's not all about UZEDY. We'll have 3 brands, and AJOVY keeps growing. So the impact that will have on our growth, whether it's more severe or less severe is, I think, to a certain degree mitigated already because of the effort we put in accelerating our pipeline. So that's how I think of it because I don't think about '27. '27, those targets, we committed to hit, we will hit. But I'm already thinking about how do we get to '30 and how do we keep growing this company.

Got it. So when I looked at IRA, obviously, there are a lot of older drugs that were really heavily rebated already. And so the difference off of WAC were huge, percentage-wise, right? But I know there are estimates that maybe it was more of a 15% cut on -- off of net, right? So AUSTEDO is arguably, probably, not a heavily rebated drug given kind of where you play. I don't know if you would push back on that supposition. But is that kind of the right way to think about directionally, something in the 15% to 20% that's phased in over 3 years, and then after that, you can kind of return to just growth on volume?

So look, I really don't want to speculate about it because I think, you're right, some of the big differences maybe that you see on the slides and the headlines are not as substantive when you get into the difference between the net already. There's many factors that play into this. I think I don't want to get drawn on that. Let's see how it plays out. What I would say, and you touched upon it there at the end, is AUSTEDO doesn't stop growing in '27 regardless what happens. That will maybe change the gradient for a period of time. But there are 785,000 people suffering from tardive dyskinesia, and I think we've got about 100,000 on treatment. So the opportunity is still significant. It's a question of what happens to that growth profile for a period of time. And that's what I keep reminding people of. And in the context of Teva and AUSTEDO still growing and then the 3 products I've just mentioned, from a forecasting point of view, that's -- we just have to debate what is the growth going to be, not is there going to be growth. And I think that's a really different story than we've had in the past with Teva, and that's a nice conversation to have. And that's what I would ground people at. IRA, we're taking into account. We're sort of facing up to that. It will be what it will be. But regardless, it's not going to change our ability to keep growing the company.

Okay. So on your longer-term target, I think it implies about 400 bps of operating margin expansion. Conceptually, I'm just curious if you'd agree with this. I mean you have a headwind in Revlimid, but then you have a bunch of biosimilars kicking in. And I kind of think about those 2 as kind of offsetting the partnership economics, and then you overlay that with AUSTEDO and if you're able to kind of stack $1 billion of revenue on your highest-margin product. Is that really like the key thinking, framework-wise, to how you get to such a profound operating margin expansion?

Yes. So firstly, I mean, I think profound is sort of the right word. I mean 30%, if you're a pharma company, people don't hit that. We're a company with 8 billion of generics. So I think it's going to show a great achievement for the company and a great management of the P&L and the cost structure to achieve that. But yes, I mean, we need to really maximize our innovative products because they have a high gross margin. And then we need to do exactly what you've said. I think we have the biosimilar opportunity to offset some of that Revlimid. But also don't forget, we launched our GLP-1 this year. We have potentially octreotide coming, Sandostatin. We have Symbicort, many complex generics coming. And the more we do that, if you aggregate this together, those have an ability to offset it as well as have other growth. So I think we have already sort of targeted our '26 as how do we think about that. And once again, it sort of goes back to that discussion, IRA. Whether we keep growing in '26 or that growth slows down a bit, whatever happens, the direction of travel for Teva, in my mind, is really clear. It's growth. It depends what we -- if you pick a year or you pick a 3-year or a 5-year or a 7-year, it is clear growth. And that's without starting to talk about what's going to happen to TL1A, what's going to happen to IL-15 and some other things we have coming through. And then the drug for MSA, which, if it's efficacious, which I agree is a challenging disease, but that could come to the market a lot quicker. So all those factors together, it feels like a very different value proposition than it was. And so it's just a range of that, which I think is a different conversation.

Okay. Last one on AUSTEDO...

We can talk about AUSTEDO for longer, if you want.

It's obviously a really critical product. But the tardive dyskinesia market, I think, by our estimates, was maybe 20% penetrated with the VMAT2 inhibitors as a class, thinking about your product Ingrezza. And so some of the growth has been things that can improve revenue capture per patient, right, titrating up to the highest dose. So just trying to disentangle the growth dynamics. How much of that is increasing penetration and patient volumes versus things that maybe improve that revenue capture per patient?

Yes. I mean that's -- you hit the nail on the head there. I mean people talk about how many patients we bring to the market, and we get them diagnosed. I think that's really important. But there's a huge opportunity in making sure patients get on the right dose, at the right adherence and then standard therapy for a long period of time, which obviously, with these patients with their conditions, is difficult. And we just started that journey of putting programs around those to help that. And we're already seeing traction on that. But I think that's the other big value driver. It's not just bringing patients in. It's how do you make sure those patients are treated long term on the right dose and compliantly. That creates a revenue upside as well. And the team we brought in to focus on this have really put in some great programs, which, by the way, only some of them are starting to get some traction now, so those will keep improving quarter-on-quarter and even year-on-year. So I think the opportunity is on those both, bringing people in and then the people we have or patients we have on therapy to make sure the right dose every day, every week, every month, and there's an upside there.

Yes. Okay. So maybe shifting gears to TL1A. At some point in fourth quarter, presumably we'll get a top line update from that Phase II study. There's an extension phase to the study as well, where I think you're looking at 2 monthly dosing. But the treatment period, which, I think, is 12 or 14 weeks, is like every 2-week dosing period. And I know that the half life is shorter than some of the other TL1A biologics. So will you have enough information by end of the year to know what your dosing profile will look like, assuming that the study is satisfactory in terms of the profile that you want to move it into Phase III with your partner?

Yes, because that's how we designed the Phase II to give us the information we need to go into the Phase III. So I think we're very confident that we can hit the ground running in '25 in our Phase III. And that's an interesting one because I think we've shown how fast we've been in Phase II, and we want to keep that momentum into Phase III, and that will be supported by Sanofi, which has considerable resource and expertise. So probably one of your questions is going to be, where are you in this race? Are you a third -- a distant third? I don't think we're a distant third anymore. I think this Peloton has gone quite tight, and we've got momentum. And we're already planning for our Phase III, and we're working with Sanofi on that. So we'll have all the information we need to pick our dosing. And so we're confident. And we're excited about this because maybe we won't be third.

Yes. I mean I believe Roche is going to start next year. So it sounds like you're kind of on the same footing, maybe for the #2 position. I don't know how important you think order of entry is between 1, 2, 3 in a space like this.

Well, I think, look, you always want to be first, I'm not going to pretend otherwise, in this race. That said, if you're second by 6 months or 12 months, I think, if you look at the data, it doesn't really make any difference. I launched an oral drug into MS that was 3 years late, and it took the market. I think adalimumab was last to the market, and that showed what it could do. I think it's about the capability and the focus, and I think we have the right partner. We have -- we're intensely focused on TLA1. As you've shown -- as we've shown, when we have a commercial product, we know how to really go after it, and we'll do the same in TLA1. So I'd like to be first, but I think we're going to be within the range. And then it's about making sure we have the right penetration and we have the right prelaunch work, and we have plenty of time to do that with the right partner.

One thing we've heard from physicians, even like drawing comparisons to like Humira when they went citrate free, right, and sort of the injection experience, is it painful? Am I doing 2 jabs, doing 1 jab every 2 weeks versus every 4 weeks? How do you think -- do you think these factors are going to be important in sorting through maybe kind of differential market share gains in the space?

Look, I think all product profiles do have an impact. I think the slight difference here -- and we'll see how it plays out because we'll obviously do a lot of -- we spend a lot of time talking to physicians, is there is such an unmet medical need here. Most importantly, they want efficacy. So that's first and foremost, and the patients that are treating want efficacy. But I do think they will think about all of those things that surround giving the treatment and the receptivity of the patient. I think one of the things that's going to play out, in my view, is the neutralizing antibodies because physicians will know, in this disease area, it's just the start of a journey of many treatments are going to have to go onto it. So I want to start with something that has the lowest level of neutralizing antibodies because we'll have optionality going forward. And clearly, our data demonstrates that. And our Phase III data that we had in asthma shows that. So I think if it just comes to the TLA1s, apart from the fact that I think we have better targeting specificity and potency, the neutralizing antibodies and in some markets I've been in are an important part of a physician's decision-making criteria of what class -- which drug and what class do I use first because I want to have optionality, because this disease shows me I need optionality. So I think those things will play out. I think that will be very important. And the other thing is -- potentially, but we're going to have a subcu injection, so I think that makes it very patient friendly as well.

Okay. Another important, I guess, aspect of this class that we hear from physicians is I don't need another drug that works great in bio-naïve patients, right? You've got so many classes of drugs now coming into the -- especially the colitis space. And so I think one of the things that really stood out with the Prometheus data was that it worked equally well in biorefractory and bio-naïve subjects. So I guess it's a long-winded way of asking, as we get the fourth quarter update, will we be able to discern these aspects of the drug and even magnitude of treatment benefit? Or would that be more of the first half 2025 detailed medical presentation where we get maybe answers to those questions and how your profile stacks up?

I think at the end of this year, it will be more top line, I think, as Eric's communicated. I think when the full data is rolled out in '25, that's when, I think, you'll have a more fruitful discussion on that.

Yes, okay. And then in terms of what's next for this class of drug and the partnership beyond IBD, I know that -- I think you framed this as a potential molecule that has pipeline and a drug sort of capabilities. And so have you guys been actively discussing new areas to explore? I imagine that the next step would be, if you were to explore other indications outside that, some Phase II proof of concepts at some point maybe starting next year, presumably.

Yes. Look, we do believe -- I think we've said it all the time that we believe that this has more indications, multiple indications because of its mode of action. I think also our partner, Sanofi, believes the same, and that's why they were so interested in it. So we have been discussing those and actively discussing those. Which is also why I say when people say, are you third or second, I say, well, in the third indication, we could be first because we are looking at that seriously. And I do think that. And by the way, not that you're going to ask the question, but I'll throw it in here. IL-15, we think the same way. We're testing in celiac disease, but we're thinking vitiligo as an opportunity and maybe 2 other indications. And that's another thing that I don't think people have necessarily registered in our pipeline. They say, you have so many assets. Well, TLA1 is 2. Could it be 3? Could it be 4? Could it be 5? IL-15 is 1, 2, 3. So our pipeline actually is bigger than people think if you take it indication by indication. And so I think that's another thing that I always like to highlight to people when they look at it and say, what's the depth of your pipeline? So it's a lot deeper than you think if you actually look at it from an indication point of view.

Can you frame the IL-15 opportunities since you brought it up? You're going to have some data here in fourth quarter. It's my understanding it's a healthy volunteer, sort of gluten-challenged type of study. And so how derisking of a study is a healthy volunteer in terms of what you can learn? And how confident we can get that you have a drug? And I know others have explored IL-15 and had mixed results so far.

Yes. So firstly, I think what we've shown is we're really good at making antibodies and the engineering of antibodies. And so we've actually made the other IL-15s. And so we've looked at what they do in vitro and compared them. And we know exactly -- and we engineered ours to be better and more specific. And the things we did are similar to TLA1. Our TLA1 is our third TLA1, so we kept improving it. So you're right. We'll have something in celiac disease. And that was designed to allow us to move forward into a full study with celiac if we get the right data. But we're also now looking at proof of concept in 2 other indications to be able to move quickly. I mean for me, when you have a multiple -- an asset with multiple indications, you really have to move fast and go for it and do things maybe slightly in parallel and slightly at risk. But that's when we get that data. And I think, once again, I don't think people are going to necessarily look at that when that comes out. And I think people are going to -- okay, what does this mean? And we'll be able to show maybe our differences versus the other IL-15, and we'll be able to show data like we did on the TLA1. But if you sort of surround this all -- and even in this conversation we're having, Jason, to maybe when we spoke in Q1 '23, it's all about an innovative pipeline, which is comparable to any of the players in the pharma industry. And we're talking about performance in commercial that's comparative or better than anybody in this industry. And you may -- and I maybe now encouraging you to, not that I'm asking you to, we haven't talked about generics. We haven't talked about debt apart from leverage. And so that's a very different company in 20 months than it was. And I think we're having -- you're asking the question on the right thing because those are the things that will drive value and sustainability. But that's a -- in 20 months, that's a very different company than it was based on some really solid pillars around innovation. And when people say to me, can you really become an innovative company? And well, we are. We just never focused on it. So the efforts and the capability we have in discovery, around antibody engineering, the work we have in taking schizophrenia products through Phase III faster than anybody else has done shows we do have this muscle, maybe atrophied a bit, but now it's a lot stronger. So I think all of these things excite me, as does MSA, as does our anti-PD-1, IL-2, which we'll have data on that, I think -- it actually comes in the first half of next year. Which these are great discussions to have and great opportunities to show that we have sustainable value creation and revenue growth going forward.

Okay. And then last branded question, and we'll jump to a couple of generic questions here. But just observations with Astra, they have super launched this -- seems like script trajectory. It's pretty interesting. Maybe the revenue capture will follow. But I think there's roughly 11 million SABA units out there as the proxy for the market here. And I think you guys have talked about this maybe being a $2 billion category, which implies maybe 20% of that SABA volume converts over to ICS/SABA. So maybe just the work that you guys have done and maybe thinking of how much of the market would convert to ICS/SABA. It seems like there could be an upside opportunity tied to this.

Yes. So look, I think you framed it exactly the way we think about it. So firstly, we've talked about only 30% -- 20% to 30% converting, which is -- I'm pretty good on forecasting projections and modeling. I really like doing that. [indiscernible] time. This one, we just said, let's be conservative. Let's just say it's 20%. The reality is the guidelines say all of those should be, right, on it. So it should be 100%. Now with Astra going first, this is another one where you always want to be first, unless it's in this situation where you've got to create the market. And a lot of respect for AstraZeneca and respiratory. And I think they will create a market they're going after. And I think they see those 11 million not converting, only 30%. So we're going to follow 2 to 3 years later. But our differentiation is we're just going to be pediatric indication. We can obviously go into adults. And so they create the market. We'll come in, and we'll say, well, 25% is pediatric, and we have a pediatric indication. And we have a different device as well, which is simpler to use, we think, than the AZ. So we do have differentiation. We don't have to be going head-to-head and taking 50% of the market and try to compete with them. What's good is they'll set the access. They'll set the knowledge, and they'll set the trend of using this, and we'll come in. And I go back to what I said earlier, from a Teva point of view, that could be really meaningful that I see us have a contribution, and it comes in at a similar time to IRA. So it's another thing that we'll be talking about as we have conversations going forward, what is the actual size, how is that growing. And by the way, we do have experience in respiratory, so it's not something we haven't done either. So I'm excited about -- I got a lot more excited. When I came in, I was sort of dazzled by TL1A, IL-15, anti-PD-1, IL-2 and all of that. And I sort of -- yes, ICS/SABA or whatever. And then as I got back, I thought, actually, this is really good. It's derisked from a clinical point of view because we know this product work. We know devices because we make devices for 30 years. Actually, the market is big. Maybe it's a tiny bit [ unsexy ]. But I also respect AstraZeneca and Pascal, and they've put a lot of resources behind it. I don't think they do that because they have a lack of opportunity. I think they do because they see something. So I'm very excited. And hopefully, we'll have some more updates on that.

Okay. And then on the generic biosimilar side of the house, I think the whole resurgence of PBM biosimilars this year with you guys and Sandoz having seemingly pretty favorable updates. I know Cigna has been out talking about a lot of that private label really converting this year and then really converting in a big way next year when the brand gets kicked off formulary presumably, like you are the only high-concentrate, interchangeable, the private label supplier there. So get the lion's share of that. So how do you see kind of like this change in biosimilars? Is this private label mechanism, do you think, kind of the way to go as you think ahead to products like Stelara, Simponi, which are also going to be important follow-on launches for you? And how important has interchangeability been to getting such a high level of orders on demand?

So firstly, I'm really pleased by the change of the dynamic of the market. It's sort of sluggish, and now I think PBMs and payers are seeing the value that biosimilars can bring. That said, it's still early days. It's a very fragmented health care system in the U.S. And so each one has to move, and then they have to action it and change the formularies. But it seems to be heading in the right direction. I do think interchangeability does play in our favor. But you have a certain size of the market that's going to be private label. And then you have a big chunk that's not going to be, so you -- and you still have to work through the pharmacies and the traditional routes, and that's where interchangeability, I think, helps. That's why having a big portfolio -- I'm going to bring 5 to the market before '27, really also helps. So for us, I've always said I'm excited about the opportunity. The good thing about our Pivot to Growth and our financial goals, our biosimilar portfolio has been risk adjusted because it is a dynamic market. It's heading in the right direction. So we're pleased about that, and we're seeking to maximize it all the time. But some of these things still need to evolve from an environment point.

One thing I've observed, right, like initially, there were tons of players in the space. It seems like we're weeding out some of the people maybe who don't have the fortitude for the space. It's a big capital investment. But as you think about winners and losers -- and you talked about having a big portfolio of products, right? And you think about the learnings of having a generics portfolio with tons of SKUs, like how important will that ultimately be to success in this space to have multiple, say, I&I biologics, biosimilars?

I think it does play out. I mean, look, when we talk to people, I mean, we supply 1 in 14 medicines to the U.S. I think it is something like that, right? So we work with these people on a massive volume. And so we've come with biosimilars. They know us. They know our supply chain. They know what we can do. We know the level of quality and professionalism we have. Now that starts to play out in stuff as important as this. So it is, to me, that the size and the scale and reputation of Teva does play a part in this. But also, there's a part where we want to be far in generics and biosimilars and complex generics, but we've set ourselves targets of we're going to be mindful of price and mindful of discount because we're driving a growth trajectory. This is not about market share gain. This is not about volume. This is about the right contract at the right price that drives sustainability and an allocation of capital that gets a return.

Okay. Well, we're out of time. So Richard, thanks so much for joining us at the conference, and hope you enjoy your meetings.

Appreciate it, Jason. Thanks very much.

Thank you.