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

Okay. Great. Well, good morning, everyone, and thank you for joining us. My name is Matt Dellatorre, and I'm the generics pharma analyst here at GS. And we're really pleased to have Teva joining us this morning with Richard Francis, President and CEO.

And maybe, Richard, just to kind of get us started on kind of like the high-level outlook. We're just off your recent Strategy and Innovation Day, where you expanded upon many aspects of the company's Pivot to Growth strategy and highlighted how Teva is now in the acceleration phase. Maybe walk us through kind of the key aspects of the acceleration phase and what you all are most focused on from an execution perspective over the next 12 to 18 months.

Okay. Well, firstly, Matt, thanks for having us. Appreciate it. So you're right. We have entered the second phase of our Pivot to Growth, which is the acceleration phase after successfully completing the first phase, which has returned to growth after several years of decline. And so we -- in Q1 was our ninth quarter of consecutive growth. And the acceleration phase is really a continuation of the strategy, but a doubling down on it. And let me explain that. So in the first 2 years, the strategy is to move Teva from a pure-play generics to a biopharma company. And now obviously, 2 years ago, that seemed like an idea as opposed to something that can happen. But now in the last 2 years, we put $1 billion of revenue on our innovative portfolio and we aim to put over $1 billion by 2027. And so I think the acceleration phase is all about accelerating our ability to commercialize our innovative products, AUSTEDO, UZEDY and AJOVY. And then to bring our pipeline through our late-stage pipeline, which is olanzapine long-acting treatment for schizophrenia, dual action rescue inhaler for asthma and then we have emrusolmin and then we obviously have duvakitug and UC and CD. So the acceleration base is just adding more and more products to our innovative portfolio. And I think we've shown we can commercialize those really well. And it is worth noting that we don't have any LOEs of any significance on the horizon. So you're adding launches, I think, on top of launches in areas where there's significant unmet need. The -- so that's what the acceleration phase is. And then the generics part of the business is about creating what we've done in the last years stability because that's a big business still, and it throws off a lot of cash, and that allows us to one, continue to improve our balance sheet, but also to invest in this innovative portfolio. Further reminding that duvakitug and Eric at the Strategy and Innovation Day, Eric Hughes, Head of R&D, highlighted anti-IL-15 and these 2 products, one could argue theoretically have the ability to go into 8 to 10 indications. So we need to be able to fund those and maximize those, and that's why the generics plays an important part of that as well.

Great. And maybe kind of stepping back, if we look at the business from the different segments today, is it fair to say the outlook is strong growth for branded and generics flat? Or are you guys still trying to grow generics to some degree?

Yes. I think the headlines I would say for everybody to take it as that strong growth, very strong growth for innovative and flat for generics. Now that said, I don't want to say we don't have the ambition or the capability to do more, but the way we financially plan our capital allocation is that has the potential to be flat. Now for the next few years, it will be flat because obviously, we lose generic Revlimid next year, which we've well communicated. But we will get back to the same level. So we'll compensate for that by the end of '27. And the way we do that is we have -- the one thing that you need in the generic business we have in Teva is a deep pipeline both in standard generics, complex generics and biosimilars. And those all keep coming through, and we have really good coverage. So I think we have the ability to continue to make that business perform, but we financially plan from a stability point of view, just because I think that allows us to be more prudent when it comes to capital allocation decisions and financially plan. The last 2 years, I think people had a lot of skepticism of our generics business, and we grew across all 3 regions, both years and grew very well. But what we forecast for the next up until '27 is flat because obviously, we have to compensate generic Revlimid. But back to your high-level sort of summary is correct. This is about the branded business to grow based on the growth rates of the products we already have in the market as well as the products we're going to add to them, which have significant unmet need, which we believe we have the ability to make that successful. And that's the way, I think, to think about it from a sort of opportunity point of view.

Great. The margin trajectory has also been an important focus for both Teva and investors and you all have announced significant cost reduction efforts. If we take a longer-term perspective, obviously, this margin expansion will just happen as naturally as you shift to more branded. But maybe speak to us about kind of the key challenges or the things that you have to balance in the near term to reach these 2027 margin target?

Yes. It's one thing that we've -- obviously, there's a lot of interest around it. I like the 2027 targets and they mean that we have to be ruthless about capital allocation. And back to that initial question, we could talk about -- we could grow the generics business, we could grow the branded. We've made a really specific choice to really maximize the opportunities on our branded business because it's so exciting. To do that, we need to make sure we fund it from a commercialization point of view as well from a pipeline point of view. To do that, we need to be very focused on cost and OpEx being capital, where do we place that capital or where do we take it away from. And I think the last 2 years, we've shown we're good at that. And we've highlighted this $700 million program, which is about reducing expenditure in G&A and manufacturing to increase it into our innovative business, while at the same time allowing us to compensate fully for the profit that we're going to lose from generic Revlimid. So I think as we go forward, it will still be that ruthless capital allocation, making sure we keep allocating capital to the things that give the best return on capital, which is going to be inhibited. And what I like about Teva is -- and what we don't want to lose is there is a generic mindset when it comes to cost. So cost -- when you spend money, it's -- you got to get a return on it. And so what I want us to -- as we move to a biopharma company, we still keep the mindset of every dollar is really important, how we allocate is really important and how we allocate that capital should get a good return. And I think you'll see that over time. But remember, as we transition our portfolio, we change our profitability profile significantly, both on operating margin and on gross margin. And that allows us as we keep growing our top line to allocate more capital to the things that are going to keep driving OP margin and gross margin. So I think we've got a really good future ahead of us if we keep executing, which we will.

Great. And then maybe before we shift over to kind of some macro policy topics, is there anything we should keep in mind heading into the second quarter?

I think, obviously, we started quarter 1 and we had a good quarter, once again showing a bit of the strategy playing out, innovative, performing very strongly. The generics, I think I reminded everybody that Q1 was going to be a high watermark, the 3% growth. And I reminded people, we had a lot of launches last year. Just an example, Victoza was launched in Q2 last year. We also have things going on, I can't call the macro, it's more U.S. around the maybe the reduction in pharmacies with Walgreens. So those things will happen. So I think from a generics point of view, remember that the 3% is a high watermark. We're generally back-ended in our generics business anyway. But that's probably the thing to keep in count. We got comparison years, we had a lot of launches last year, we did really well. So keep that in mind. But probably can't into any more detail than that based on the fact that we're just a few weeks away from Q2.

Great closing. Okay. So maybe just switching to kind of some macro and policy topics for a second. I realize it's very difficult to handicap still at this point. But what is your latest thinking on the likelihood timing and scope of potential pharma tariffs?

Oh my God. So what I think that -- maybe the way we think about it at Teva is we plan for multiple scenarios. So we contingency plan really well. And so we've already planned, and I think we've taken into account. And in Q1, I think Eli Kalif, the CFO, highlighted that the tariffs which are put in place then, we've mitigated, and we're not changing our forecast for the year. We've worked through every single sort of potential outcome, whether they get to what are termed the car tariffs or higher. And I think we have an ability to manage our business well within those scenarios. But we'll have to see we've taken action. We have things that we can pull. But obviously, we want to see how it actually plays out. It's super dynamic. I mean it's on a macro level, global level, things are put in place, and they're taking away. There's good discussions, and there's bad discussion. So I think for us, it's about do we have the plans in place regardless of how it plays out that we can protect our long-term growth trajectory on the top and bottom line. And I think that's -- I feel we're well covered on that with the caveat. I don't know where it's actually going to land.

Could you comment on whether or not you've had or having any interactions with the administration or Congress on kind of maybe the treatment of, say, generics versus branded, or just kind of more broadly the potential for this?

Yes, we do both. So we engage in the branded business because we will want to educate on that side. But we definitely educate on the generic side, both with the associations as well as individually. I think people forget that Teva -- I remind people, 1 in 14 scripts in the United States are Teva script. So we had a massive part of the health care system. And the generics business is, I would say, a very cost-effective part of the health care system in the United States, it's very efficient. And so you don't really want to alter that ecosystem because I think the payers Medicaid, Medicare and the U.S. do very well out of the generics from allowing good access and good value for money. So we educate them on that. We also educate them on the pressure on cost of goods and manufacturing and that is a very different discussion than on branded and where that should be. That said, we point out we have -- I think it's 9 manufacturing sites in the U.S. And so we're the largest manufacturer of generic medicines in the U.S. So we're very committed on that. And also then on the branded side, AUSTEDO is made in Florida, is made in the States. So I think we just keep educating them on what are you trying to do, trying to improve the ability to maintain the health care system. So generics is going to help you do that, but this is how you need to think about generics and the branded, the same thing about branded. So very actively involved in that. But we'll see how that plays out. I think one of the things I would say is the administration of these laws we're talking to on the 232 is they're seeking to understand. They really are seeking to understand. So that's encouraging because the more they understand, I'd like to think they'll come to a rational conclusion, one would hope. But the most important thing is they're having that discussion. And we're having with them individually and with the associations.

Great. Maybe just lastly on the kind of policy side, President Trump's recent MFN Executive order, has been an overhang for the sector. What are your latest thoughts on the prospects for such a drug pricing policy and given Teva's current branded portfolio, is it fair to say you all are fairly insulated from this in the most part?

Yes. I mean, look, what's another one, we have to see how it play out because it's sort of -- yes, there's a lot of noise around it and you're understanding where could it actually fall. But you're right, because of where we are, as this emerging innovative biopharma company, we haven't launched our products internationally. Tony said so -- and so that gives us the optionality. One, we're not whatever happens, it doesn't impact us immediately. And then we can strategically plan where we're going to launch and what price we're going to launch. So I think in a way, we're in a good position because with this emerging biopharma company that doesn't have to deal with this big geographical footprint yet. That's our plan. Our plan is, obviously, to launch AUSTEDO in Europe, olanzapine in Europe and duvakitug, we're going to promote that in Europe, emrusolmin globally. So we have all those plans, but we can now think about strategically how we do that and what that looks like, depending on where we end up. But I was even reading some comments yesterday that some of the pure-play biopharma people are maybe less concerned about that now. With Teva, our default is we're concerned about everything and we then develop contingency plans. And then if things don't need to be used, then we're okay, but we never look for a macroeconomic situation to benefit us because we can't control it.

Makes sense, yes. Maybe trying to shifting to the portfolio and pipeline or the branded portfolio and pipeline. We've seen great growth for AUSTEDO in recent quarters and years now. And you all gave long-term guidance of more than $3 billion at your recent Strategy Day. Maybe -- I know you've talked about this in the past, but kind of just briefly, what are the dynamics you're seeing in that market that gives you the confidence that, that trajectory can continue?

Yes. Firstly, I'd like to sort of congratulate the team in the U.S. for driving the growth of AUSTEDO. That was -- I remind people when we started this strategy, I think everybody forecasted peak sales of $1.4 billion. We gave guidance of $2 billion roughly this year. So we've shown that if anybody doubted our ability to drive an innovative product commercially, we can do that. Now when it comes to the opportunity, unfortunately, it comes down to the huge untreated population. So there's nearly 800,000 people that suffer from tardive dyskinesia and still the majority -- vast majority, I think only 10% are on treatment, maybe slightly more. So there's a huge amount of medical needs. So the way we think about it, if we can keep driving those patients into physicians' office, get them diagnosed, get them onto treatment, then the market and the product -- the market has the potential to grow. And obviously, AUSTEDO being very well in the market will benefit from that. So for us, the greater than $3 billion in 2030 is based on sort of the maths, if more patients get treated, and we pick up a fair share of that, then that should be achievable.

Great. CMS negotiations for 2027 are ongoing. Is there anything you can share in terms of how those negotiations are progressing? And then what is kind of your base case relative to like the first wave that was around a 20% net price hit on average?

So I can't comment because literally, we are in the thick of it. So -- and what I would say is when we launched the Pivot to Growth, we put a number in, I think before most people are thinking about doing things like that. And once that goes back to our philosophy is, if we're not sure, we plan for something to happen rather than hope it doesn't because hope is not a strategy. And so we're going to think of it. What I would say is the number we put in is wrong. Is it too conservative? Is it the other way around? I don't know. But I'll remind people, regardless of where that falls, there are still the majority, 90% of patients are untreated. So regardless of what happens, AUSTEDO has a great growth trajectory. But I'd also say from a Teva becoming a biopharma company, we still have UZEDY growing really well. We still have AJOVY, we'll have olanzapine, we have DARI, dual action rescue inhaler and then we have duvakitug. So all our chips on AUSTEDO, although I think AUSTEDO has great potential. But I always remind people that AUSTEDO regardless of CMS, we'll be able to grow just because of those untreated, but we have a whole portfolio of innovative drugs which are coming to the market. And that's the thing that's exciting. I talk about you say well, maybe talk about that, how well that's growing. I talked about how the fact that AJOVY is growing and growing over 20%. And I talked about AUSTEDO and olanzapine, DARI, you think, well, okay, you think, well, okay, if you're modeling it, you can model this one maybe has a steeper growth trajectory than this, but they're all growing and that's exciting thing.

Maybe just lastly on AUSTEDO. There has been talk, I think it was in one of Trump's recent executive orders about maybe getting rid of the pill penalty. Is that -- I mean, clearly, it's not something you're going to bank on, but is that something you all consider? And do you have any thoughts on the likelihood of the pill penalty being removed?

Well, all I can say is I think it should. I mean, probably not best to get me started on the IRA anyway because there's a lot to that. If we can have another go that we could improve. But yes, the pill penalty made no sense. I mean ultimately, we're supposed to bring drugs to the market which fill an unmet medical need and help society, whether that's pill of biologic or it doesn't really matter. That shouldn't be the focus and why it was. I never fully understood. So I hope they're successful. The fact that they've actually started that discussion so early on is encouraging. But once again, it's about seeing what happens and what gets executed and what gets changed, I think. But if that could be, that would be really positive for the industry as a whole and for patients.

And then maybe shifting to long-acting olanzapine. You all recently gave long term or, I guess, peak sales guidance for both UZEDY and olanzapine of $1.5 billion to $2 billion. I guess, kind of the first immediate question is why can't it be bigger? Why can't it be as big as a competitor's franchise, which I think was around $4 billion in '24? So that's the first question.

Okay. I feel like I'm in a budget discussion. But firstly, I welcome the question because isn't it great we're having a question about Teva about can you do more with your innovative launch than you've got? I mean that's just -- I welcome that discussion even if we may not -- the way we think about it is, firstly, -- there's some things that have to happen, I think, for that to play out. Now UZEDY, I think, has been a surprise to everybody that we've gone to a congested Risperidone in long active market. And I remind everybody that Risperidone is genericized long-acting. In fact, we've launched a long-acting generic a while ago. So it has long-acting generics. It has long-acting brands, and you said it has surprised everybody. And the reason why it surprised everybody is one, it's a great product. It fills an unmet medical need, whether it's subcutaneous, non-refrigerated, pre-filled syringes or most importantly, the fact, you get to therapeutic levels within [indiscernible]. Now that has really got traction. And we've got a great commercial team who have executed it really, really well. So one would argue is obviously then we launched olanzapine were sort of -- it's a running start, so we should be able to do even better. The thing that I think maybe is the difference in the modeling is, how does the long-acting market grow, both in the U.S. and international. And it has been a market which has in the U.S., I think it's 13% of the hole schizophrenia market, and it should be a lot bigger. And so just trying to understand why there may be those are because there hasn't been a subcutaneous available. There hasn't been something that's patient friendly. There hasn't been something that hit therapeutic level so quickly. So maybe there is an opportunity to expand that. But I think for us, the way we talking to investors, we see -- we think we have the ability to do this across these products, and that's how we sort of model and how we think about how we build our P&L going out, how we think about capital allocation. Now if things end up being better than that, that's great. But what we're trying to do is say this is the realms and what we think about as we execute and we think there's a bigger opportunity, we'll obviously communicate it. We're definitely not conservative. I think when I was on stages like this a year ago, people have very different numbers. And now based on the success of UZEDY and things, I think it could be more. But there's a lot still to happen. And don't forget, in the U.S., these are part of the -- an area that's getting significantly more managed than ever in CMS. And so that's something the payer access is harder and no one that's going to look like in 18 months. So we always are very measured on that. We're not assuming everything is going in our favor. So that's probably where we get to slightly different numbers, but we'll definitely try and make the number as big as possible.

Great. And then maybe just kind of lastly, this technology that you've used for both UZEDY and olanzapine, is there potential to use that in other molecules or that is kind of -- this is where it's just going to stop?

Well, I think it sort of goes back to an area of expertise, which Eric talks a lot about, which is we're very good on drug delivery, whether that's being devices or long-acting because obviously, one of the things being in generic company, we have to do them all. So we understand how the different modalities work and how you move into different areas of long-acting because we do -- we've done them all over the last 30 years. So we have a good capability. So we're always looking at. And obviously, Medtech is a technology we used for UZEDY and olanzapine. And we look at that across other areas, but there's many other long-acting technologies that we're constantly looking at. But it's about finding the product that needs that finding -- and it's not about moving just to long-acting is does it give the physician flexibility as well to adjust those. So not everything can go long acting. But definitely, and I think that sort of also we didn't speak about it, but one of the things I like about the pipeline we have is -- and this is something which sometimes is a bit controversial is, I think it's a very derisked pipeline because olanzapine, the technology that we're using there is the same as UZEDY, we've seen the efficacy and the safety data, so we know it works. The dual action rescue inhaler, we could argue that's not super sexy, but a huge unmet medical need. We know those products work. We create -- we've been manufacturing devices for 30 years. So the POS that's super high. One could argue duvakitug based on the Phase II results, probably success of Phase III, I would argue is high based on Phase IIs are very predictive of Phase IIIs in these diseases. So once again, I've encouraged people to look at our pipeline and go, it's a good pipeline, but it's good because a lot of it is a high POS. And then maybe emrusolmin, which is the treatment for multiple system atrophy is probably not a high POS, on the mid to that, but huge, huge unmet medical. And I didn't mention that, but if that comes to the market, then we have a Phase II that is designed to be powered enough to make it registrational if it did show the efficacy. And that could come in '28. And as I highlighted, 2 weeks ago, it's a multibillion-dollar opportunity in rare disease.

Well, TL1A, so maybe kind of shifting to that real quick Obviously, that's probably your most valuable pipeline asset at this point and it received a lot of attention. And you all are, of course, developing it as a pipeline of product. When do you think we might start to see proof of -- Phase II proof-of-concept studies and some of these other indications you guys have recently highlighted?

Yes, that's a good question. Everybody is interested in that, which I'm pleased, there are some people who understand it can be used in different indications. We worked through that in the last year actually with Sanofi. And so I think we'll be in a position in the not-too-distant future to communicate something. I think we're always a bit cautious of wanting to highlight the opportunities, but we also try and keep our gun powder dry a bit as to what we're doing and why we're doing it, because ultimately, there is a slight competitive advantage. But the reason why we partnered with Sanofi was because they saw the attractiveness of a pipeline in a product. And obviously, they've got a lot of experience that with Dupixent. And so we knew they had that capability. So we will be announcing something. How much and how clear it will be we'll work through. But we definitely -- for the partnership, we see this as multiple indications, no question.

Is there a chance that we could see Phase II's readout ahead of the IBD Phase III? Or is that probably a little?

I mean the good thing, this is where Eric is probably thinking what is he going to say. But the good thing about TL1A is it's, because it has such a good safety profile, so good. And as Eric reminds me, if you want to move anything to a new indication, you've got to have an understanding from a science point of view, but what you don't want to do is create issues because it's so clean that allows us to move maybe a bit more in an expedited way into the Phase II, which is probably what you're touching upon. So yes, we are thinking like that. We are thinking about can we -- now I don't think we're at this stage, but one could argue in the future where you could jump into a Phase III even, but that's a long way down the track. I think right now, having a cleverly designed Phase II, which is quick allows us to data and then move into Phase III is how we're thinking about it. Absolutely.

And then maybe just kind of briefly. You're obviously partnered with Sanofi here, and they are an industry leader, and that's clearly a major advantage in terms of launching in all these Allodynia indications. Could you speak to maybe how aligned you 2 are in terms of kind of the pace and the breadth of development for this asset?

I think we are very aligned. I mean, the good thing about it is because those are the 2 key things. You're aligned in the breadth and the pace because that's where like any relationship, you start with good intentions and then maybe drift apart. The reason why, as I said, I like Sanofi is one is they have a lot of experience. So we can help them execute. They can help us execute on multiple indications. But -- and I'm not -- I'm sure Paul doesn't like me saying this, but they do have Dupixent, which at some point will end, right? And so that creates a sort of a line in the sand where they also need to be bringing things to the market. And so as we partner together, I knew they had a sense of urgency because of that. And TL1A being a pipeline of product allows us to think of, okay, if we execute on this, then we have something which can help offset that. So sometimes you have to have the pushes and pulls in the urgency sort of forced upon you. And I think we have it because we want to drive growth and financial return, they have it because they need to start building a pipeline that offsets some of the LOEs.

Yes, makes sense.

And I just phone them constantly.

Maybe kind of lastly on the pipeline, we'll see Phase III data for DARI in second half, potential launch in '27 and consensus sales for AstraZeneca's competitive drug are about $1.2 billion right now. I guess the question for you guys is how big of an opportunity could this be? And what's going to be the greatest kind of just commercial challenge if we assume that this Phase III is probably pretty derisked?

Yes. And we think it is. Well, firstly, we have to recruit, we're recruiting well. And just so you know why we're so good in development at Teva is because we execute and our team executes really, really well because they're looking at the data all the time. There are no multiple Phase IIIs that we just look at and we're just sort of -- it's Eric is in the detail. And so he believes we'll recruit -- have full recruitment by the end of this year. And then because it's an event-driven study, then if we just have to see how that plays out. But the reason -- so firstly, I don't agree with the consensus on AZ's peak sales and that's because there are 10 million Americans who should be on this therapy and if they're on this, you wouldn't be at -- they can't be at $1.4 billion. And if you vary a fraction of them on this, it's going to be a lot bigger. And they should be on it because it's stopping hospitalizations and all the things which is the reason why the guidelines have given that advice. So the reason why I think we have the ability to be successfully -- successful commercially is you never want to be second to a market unless and this is one of those unless the market is created by AstraZeneca. I think they're world-renowned respiratory company and have capability. They create the market for dual active rescue inhalers. We come in 3 years later, and we do have -- we'll have a pediatric indication, which is 25% of the population. And I think our -- the way we planned it out is we obviously just go and say, we're indicated for pediatrics and you can use both. We also think we have an advantage in our device. Our device is very simple. And I think that will play out into a wider population as well. But look, I think the market is going to be bigger than people have predicted. And I think one could argue if we just get what we solely indicated for, we get 25% of the market, that's a good business. But I think that market is with 2 players, and it's going to be driven and grown over the longer term.

Great. Maybe shifting to capital allocation, which you all have emphasized is a very important aspect of approaching the business. You all have highlighted neuro I&I and rare disease as kind of your key areas of interest given where your current capabilities lie. Maybe just kind of speak to your level of appetite for bringing in an additional branded pipeline asset over the next 12 to 18 months?

So I mean we've a high appetite for it, definitely. But at the same time, once again, we think about capital allocation, return on capital deployed, we think about an internal pipeline that's now starting to come. We want to launch that well. So we're lucky we have a lot of organic growth. But I do want to do BD because I think we can sell stuff really, really well. Like we're really good at it. Whether if you look at AUSTEDO, UZEDY, AJOVY, very competitive markets. We've had to bring patients into the clinic, others we've had to compete with big companies or congested market, and we've shown we can do it. So I feel that I would like to give the team more opportunity. So we're actively looking all the time. But we're very thoughtful about it because, one, we can be because we have that organic. But we want to make sure that we are allocating capital to something that will have a good return particularly in the short medium because what we bring in, we want to be derisked. So we'll not be bringing anything in that carries a significant amount of risk because why would we do that. So it's going to be derisked and that can add to our top and bottom line relatively quickly.

Okay. So you -- so in terms of stage, you would prefer something maybe Phase II or Phase III or later?

Even later. I mean, look, obviously, you've got to build, and so we will almost look to the future a bit. But don't forget, we have 2 products which are pipelined in an asset. So as I said, anti-IL-15 and duvakitug have a lot of indications. We've got a plan for that. Then -- so we would still bring some stuff in earlier, but it's always going to be in the clinic. I don't think you're going to see us do anything preclinical. And we want something that is Phase III or commercial because we can put into our machine and we can execute on that. Those are hard to find that fit, and we wanted to be synergistic as much as we can because then we get a in force to the bottom line really quickly. So that's what we want to do. Those are hard to find, but we are constantly lucky. But that's the way we think of because if we find that, we're not carrying risk. The risk is just on execution. If we execute well, we'll get a good return on capital, and I would do that. We're looking hard, but those -- there's not a lot of those around.

Right, right. And then anything in terms of the deal structure, would this be -- are you -- do you preference for an acquisition or a partnership or licensing deal?

Probably more licensing just because it's often, it's -- you'll get a better structured deal. It allows you to have milestones a lot to think about certain things, whereas -- and I just don't think right now, from a capital allocation, M&A is something we need to consider. So I think in licensing is something which I look at as being really attractive because once again, if you think about the macro environment for biotech, it's hard to launch now. It is really hard to launch, really hard, not just to raise capital to launch, but to launch successfully and to get a return on that quite quickly. So I think one thing that Teva is now getting recognized was we can launch really well, and we can commercialize really well. So if you want to think about that we can license it in, and we can give investors a return on their investment and restructured well, we can give them a return in the long term. So I think that's how we're trying to create that opportunity. And maybe the time is right. But once again, it comes back to not doing so for the sake of doing it. Is this the right allocation of capital.

Great. Well, with that, I think we're all out of time. So Richard, thank you very much for being with us. Really appreciate your time.

We appreciate it, Matt. Thanks very much. Thank you.