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

Good morning, everybody. I'm Chris Schott from JPMorgan, and it's my pleasure to be introducing Teva today. From the company, we have CEO, Richard Francis. Richard has been at Teva for roughly 3 years in the company and the stock have had obviously a great run here. So looking forward to updates from Richard on progress of the business, and we'll jump into some Q&A after that. So with that, over to Richard.

Thanks, Chris. Thanks for having us. Thank you, everybody, for coming. Absolute pleasure to be here today to talk about Teva Pharmaceuticals. Obviously, I represent everybody in the company. I just get the privilege to talk about it. And today, I'm particularly pleased to be able to talk you through where we are on our pivot to growth strategy, a strategy we launched 3 years ago. And that strategy was designed to get Teva back to growth, obviously, the clue is in the title there. But more fundamentally, it was to transform Teva from a leading global generics company to a leading biopharma company. Now I remember when I said that in New York in 2023, there are a lot of people who are extremely skeptical. But we had a plan. We had a clear plan. We've executed on that plan year-on-year. And I think you'll see the fruits of that labor and the transition we have now to a what I believe is a world-leading biopharma company that has a very, very bright future. Now the pivot to growth strategy was based on 4 pillars: deliver on our growth engines, step up innovation, create generics powerhouse and focus the business. Now we've made big inroads in this, deliver on our growth engines. We'll talk a bit about the innovative business we have of AUSTEDO, UZEDY and AJOVY and the continued strong performance we've had of those. Step up innovation. Once again, a bit of skepticism. Is there innovative capability at Teva? Is there a pipeline that can really fuel a biopharma company? I think I'll show you some slides today that will say absolutely yes. Emphatically yes. And the progress we made, as you saw at the end of last year, duvakitug moved into Phase III studies on UC and CD and our partner Sanofi. We also had a Fast track designation applied to emrusolmin treatment for MSA and our anti-IL-15 treatment for celiac disease. So I say those just as highlights of the things how much we progressed in 3 years, but the fact that those are also recognized by the authorities. Create a sustainable generics powerhouse. There was a bit of volatility when we started this journey in generics. We've actually smoothed that out. We've had some good growth in our generics and going forward, you'll see a stable generics business over the future. And focus of the business, it's all about capital allocation, make sure we allocate capital to the right areas to drive the right growth, the right return on capital and the right shareholder value. Now I'll remind you that this is a sort of 3-phase strategy. We did the first phase, return the company to growth after several years of decline. So that wasn't straightforward. And we've had 11 quarters of consecutive growth since the start of 2023. So a real achievement there. We're in the accelerate phase, this is about accelerating the innovative revenue of the company and making sure that portfolio continues to grow. And that will be supported from the pipeline, which I'll talk more about. And then the final phase is maintained. We have to create a long-term sustainable global leading biopharma company. It's not a 5-year plan. This is a 20-year plan. And everything we're doing is setting Teva up for success over the long-term future. Now when I talk about this biopharma company, there's 1 way of changing a company is just change the sign above the door. So global leading generics to global leading biopharma. But obviously, that's not credible. What is credible is the substance beneath it. And I think the first thing I want to start about is just the financials, the facts. The facts are you cannot transform the company's financials like we have without transforming the portfolio. And as you see here, we've obviously changed the growth trajectory, which I've talked about, moving from declining revenue to consistently growing revenue. But we've grown our revenue in our innovative business, and we're doing that in a very strong fashion. And that's driving a gross margin transformation, as you can see by this slide, is also leading to an improvement in our free cash flow and our EBITDA and our operating margin. And at the same time, we're reducing our debt. So as you look at it in '27 and then you look at it beyond, the numbers don't lie. And as we had -- our gross margin will continue to increase as our portfolio continues to grow, our free cash flow will continue to increase. Our earnings per share will continue to increase so it's a really exciting story. But when I talk about a biopharma company, you have to back it up with the financials. And I think this slide really highlights that. You'll also see that it's driven by our pipeline, which I'll come on to and talk about why we're so excited about our pipeline. But before I do, let's talk about innovation and the products we're commercializing now. And where we started in '23 and where we are now, this is transformative. We have doubled -- over doubled the revenue of AUSTEDO in this 3-year period. And we have changed the expectations when people thinking that peak sales will be $1.4 billion and now we're having raised eyebrows about, is it really $3 billion. That's a transformation expectations. Congratulations to the team in the U.S. for making that happen. And there's still a lot of opportunity there. But then on AJOVY, a product most people have forgotten about it had its moment in the sun. We've refocused that across all of our regions, and we've had double-digit growth in the last 3 years. And so we transformed a product which people have forgotten about and now we're going to say this is going to be a $1 billion product in a very competitive market where we have orals as well as other injectables. And then on UZEDY. UZEDY, I mean, we're talking about congested markets, this is 1 of the most congested markets when you're in schizophrenia. We're the fastest-growing treatment in schizophrenia, and that's because we have a great product profile. And one of the exciting things that we're going to add to that family with olanzapine at the end of this year with our long-acting olanzapine. And so we'll have probably, I think, one of the world-leading schizophrenia franchises and we're confident about that achieving $1.5 billion to $2 billion. So when it comes to innovative, I always sort of remind myself of the question marks people had can Teva commercialize innovative products. And what I can emphatically say is not only can we, I think we do it pretty much better than anybody else. Now what does that do to the financials? It's, as I say, transformative. And I think this is important for anybody looking to invest in Teva. Just the growth profile of this company is driven predominantly by our innovative business, but that changes our financials from a gross margin point of view. And as you see, we've doubled the innovative business in these 3 years, and we're going to aim to keep doubling that. And so that allows us to transform our gross margin. We're very frugal on our OpEx. And so if we continue to do that, which we will, then we'll drive an EBITDA and operating margin expansion, increasing free cash flow and obviously an increase in earnings per share. So I think a very attractive opportunity. Now once again, I always go back to the numbers because it's easy to talk a good game and maybe to create a nice narrative but I think what's important is to make sure that you have some real substance behind these numbers. And as you see on the innovative, we've doubled the business every 2 years. And broadly speaking, we aim to do that going forward. How do we do that? Well, excellence in commercial execution, as I just talked about in the previous slides, really good. In competitive markets, we can become one of the best. Now you've seen that with AUSTEDO, you've seen that UZEDY, we were about to launch olanzapine. But as you see, we will -- in 2027, we'll also be in a position where we can launch DARI our dual action rescue inhaler that will be supported also by emrusolmin and then duvakitug in the coming years. So there's reasons to believe in this growth. Not only do we have still to meet the peak sales of the products we currently have in our market, we're going to be constantly adding new products to this portfolio. Hence, the reason that we think we can get to over $10 billion in peak sales. And 1 thing is worth reminding, obviously, $10 billion in peak sales transformative for any company. But a company like Teva, it is a game changer because where we start the journey where we're going to end this journey going back to some of those financials I spoke about. So how do we get to $10 billion? But here's the slide, which super proud to talk about because I think for me, this is a high-quality pipeline. Why is it high quality because the targets we're going after, we believe are validated. The reason the probability of success is high. But also the unmet need is high. The market size is high, our reason to be competitive, I believe we can win in these markets is also high. But it's late stage. I mean I'm not talking about preclinical stuff here. This is all in the clinic. So let me sort of quickly touch upon it, whether it's our schizophrenia franchise, we're going to be competing in a $9 billion market. As I said, we got $1.5 billion to $2 billion. DARI dual action rescue inhaler, all of our products, we believe, will be -- have peak sales of $1 billion or more, $1 billion or more. We've got a list here. Duvakitug, this is a $38 billion market now in UC and CD. And we believe we have the best TL1A, and maybe we have an asset here that can compete with other MOAs as well and other modalities. And we'll have some data on that, as I'll talk about a bit later. We have other indications. And all I can say to you now is those other indications will be billion-dollar indications. And then emrusolmin the treatment for MSA that will come out and we'll have some data on that this year as with IL-15 and vitiligo and celiac. But as you look at this pipeline, we clearly have an opportunity to have $10 billion in peak sales. But what's interesting, we will be a company who is launching pretty much a product every year going forward. There may be a gap, which will probably be nice to take a bit of a breather, but that's quite extraordinary from a company that doesn't -- wasn't known for innovation, to start to innovate and be launching in this regularity, I think, is really exciting. It goes back to the validity, I think we have behind this $10 billion of sales. Now the exciting data -- and so this is a data readout that feels like a biopharma company because in the first half of next year, we will have the maintenance data on duvakitug. Now you know we had, I think some really exciting data for the induction of Phase II data at the end of 2024. We saw that as best-in-class. So it's going to be important to see what the maintenance data looks like, and we'll be able to announce that in the first half of this year. But that's just one of the readouts. Then we have the vitiligo Phase Ib top line results for anti-IL-15 and that's a product we're particularly excited about. But it's nice to know that other people think it's a great asset. And as you saw earlier in the week, Royalty Pharma have joined us on this asset. They finance it to the tune of $0.5 billion. And I can tell you when you get a company like Royalty Pharma partner with you, they do some extreme due diligence. And this is one of the earliest assets they've invested in. So I think their belief in it sort of validates our belief in it. But we also have celiac disease Phase II/1a data coming up in the second half of next year. And so once again, I've just talked about duvakitug having multiple indications. We have anti-IL-15 which already has multiple indications, and we believe it can go into more indications. That's worth noting because just on duvakitug and just on anti-IL-15, we probably have somewhere between 5 and 10 indications. Pretty transformative for any company. But as you see, we have many other assets. And then we have our dual action rescue inhaler. We've completed the recruitment of the patients at the end of last year. So we're looking to have a data readout at the end of this year. It's an exacerbation study. So we are bit contingent on that. But excited about that. If that goes well, which we're anticipating it will, we'll be able to launch that in 2027. Then emrusolmin, the treatment for MSA, futility analysis, round about midyear, second half of next year. Recruiting really fast. That's a common theme at Teva. We recruit our Phase II and III studies really fast. And then olanzapine I've talked about. And then just per people's interest, we have our anti-PD-1 IL-2 first in human data at the end of this year. And once again, we think this is an exciting asset, but we'll let the data talk for itself when it comes out. Now because of that, I'm going to show this slide, which is, obviously, I always think that maybe this company is undervalued, but I think people who stand in my position often say that. And so I thought I'd put a bit of data up here to maybe validate what I feel. And as I compare Teva to some of the world-leading biopharma companies, when I just think about what's going to drive the revenue in the short term, the top brands we have, what's going to drive the revenue from the pipeline and then how we value. It seems to me just on this limited data, that there's opportunity for excitement around Teva. And some people with the recent rally on the stock and Chris mentioned how much the stock has gone up, say, well, have you missed the opportunity, I'd say, this is the start of the journey. This is absolutely the start of the journey. I know that maybe seem hard to believe but if you go back to that pipeline, you go back to those products I mentioned, the peak sales they have. This is really the start. And so we're taking a look at it if you haven't, because there's a lot of opportunity still there. Now to digging a bit into 3 of the assets. I just picked 3 because we have a lot, but duvakitug, this is an antibody that was designed in-house, so by our team in Sydney. So congratulations to them for engineering, which I think is the best TL1A out there. We saw that in the Phase II results. It shows high level of potency. It's high level of specificity and its low neutralizing antibodies. All of those are critical when you're treating a chronic disease. We think that's why we had such great induction data in our Phase II. And it'll be exciting to see if that's continued in the maintenance data, which is important because these patients will be on the therapy for a long time. Now the treatment for MSA multiple system atrophy, a horrible disease, a fatal disease, which is debilitating very quickly, people end up in a wheelchair and then the mortality rates are very high in a short space of time. Huge unmet medical need, nothing out there right now. We think with emrusolmin, we have a small molecule that crosses the blood-brain barrier and has an opportunity to be disease modifying. So very excited about it. Unfortunately, this is a big opportunity. I say unfortunately because there's obviously patients, 65,000 patients who suffer from this. But from a blockbuster potential, if we're successful, and we'll have a futility analysis in the second half of this year. We've designed the Phase II study to have enough patients in it that this could potentially be registrational, depending on the efficacy. And this will be a profound opportunity to make an impact on these patients. And so we say $2 billion. And from the previous slide, duvakitug just in those 2 indications, we have $3 billion to $5 billion of peak sales. And then anti-IL-15 that I spoke about, another antibody another in-house antibody designed by the Sydney team, again, real capability, designed specifically to do what we needed to do. So great quarterly dosing here, which we think in vitiligo and in celiac disease will be exciting. But as I said, it can go into multiple indication where this pathway, this target, this biology has been -- seem to be effective. And once again, the peak sales are all above $1 billion. And the market sizes here are just at their stock because they're growing, there is no treatment -- effective treatment for celiac disease. And with vitiligo, there's only -- there isn't any systemic. So the opportunity for a condition like this having a systemic, I think, is significantly high. Now talking about our generics business. And I think it's a sign of the progress we've made. I have 10 minutes into my presentation before I talk about generics. The generics business, our aim was to stabilize our business when we started this pivot growth strategy, we did more than that. We actually grew it. And going forward, we see this as an important part of Teva. And we see this as growing sort of low 1% to 2% CAGR going forward one because it's such a huge business to grow it any faster than that is difficult. What's exciting is the amount of biosimilars we have. We were late to the party with biosimilars, but we have 16 coming through. We have 10 we've already in the market, another 6 before '27 we'll launch. But the aim is to have about 20 to 30 biosimilars in our portfolio, and we're actively doing partnerships all the time to make that happen. So now the important part of our generics business, apart from being a global leader is it throws up a significant amount of cash which helps us pay down our debt but also helps fuel that big significant pipeline we've got. So this is a really important partnership that we have at Teva with our generics business. Now looking into the numbers. So that's the setup now comes to the numbers. We issued a press release on Sunday about the outlook. We're not obviously got our earnings in a few weeks, so we'll actually close out 2025. But it's really just to let everybody know where we were heading at this late stage. So revenue is going to be to the lower end of our guidance. Operating margin is to the mid to high point, EBITDA is to the midrange. EPS is to a higher range and free cash flow is to the higher range. So I think we've made some operationally, I think the numbers say it all. And the reason why we are able to drive this level of performance, particularly in our EBITDA, free cash flow and EPS is because of this transformation of our portfolio. I do highlight here that duvakitug we've excluded from these numbers because we have a milestone payment from Sanofi which is $0.5 billion at the end of last year. We exclude that just because we always want to be transparent about our operational performance on what we're doing and how we're driving that business. But at the same time, it's nice to know that obviously, that's come in. And our net debt, which I mustn't forget to talk about is getting close to our IG rating. And as we move on to '26, '27 and beyond. To give a bit of guidance, our top line is flat to slightly down. Don't forget, we lose our generic Revlimid, that's $1.1 billion of revenue. So that goes in 2026. So I think being flat to slightly down is a great achievement. And I think it's worth noting that to be able to grow EBITDA and operating margin and free cash flow, when you're losing $1.1 billion of revenue, you can only do that if you're driving a transformation in your portfolio and driving an innovative portfolio. There's just no other way of doing it, right? And although we're driving efficiencies and cost savings, you can only do that if you have an innovative portfolio growing rapidly. In '27, we continue this trend. We hit our 30% operating margin. Our EBITDA continues to grow. Our cash flow continues to grow, our net debt will be below 2x, and we'll realize all our operational affecting the synergies of $700 million net. So really exciting times. And I think we're in the final sort of stage of this sort of chapter of getting ourselves to a world-leading biopharma company with a very predictable and an exciting future. And then my final slide is to sort of say what the future looks like. It is a world-leading biopharma company, and it's based -- and the definition of that is based on the substance, the substance is the change in revenue, the change in gross margin, the change in free cash flow, the operating margin change, all hard numbers, and that's driven by a portfolio which is growing rapidly is over 30% in Q3, nearly $1 billion. And we're going to be adding to that this raft of innovative products and don't forget I remind you it's a long list already anti-PD-1 -- sorry, anti-IL-15 and duvakitug have multiple indications. So this is really the tip of the iceberg. So with that, thank you for your time and attention. And we'll now go to Q&A.

Appreciate the comments there. Maybe just a big picture question to start out here. I guess, Richard, as you reflect back on the innovative portfolio and I guess, the approach how that's evolved since you became CEO. Talk about how you've been able to kind of transform the business like this. And then as we think of the business going forward, what should we think about in terms of cadence of launch of new products coming to the pipeline, et cetera? Is there more here, I guess, if we think about the evolution of the innovative business.

Yes. Look, it's something I'm really, really proud of. I mean I sort of mentioned it there in my talk that to be questioned as to whether we can actually sell innovative products or develop them, which you were to then end up, I think, selling them and be upper quartile and developing them and be in the upper quartile. And the facts say that I think is -- I'm very proud of how we've done it. We have a maniacal focus on prioritization. We prioritize ruthlessly, and we said AUSTEDO, UZEDY, and AJOVY must be successful. We allocate the right amount of money and capital, and we make sure we have the right talent and people in place. And I think money is probably the smaller aspect, the other is just having a talented team and that talented team is, as you've seen, is focused in different markets AUSTEDO, UZEDY, and AJOVY very, very different markets, very different challenges, not easy. And I think they've shown how good they are. But that's about focus prioritization. We measure stuff. I mean we're operationally so focused. The same on development. I mean this pipeline, you can argue has come out of nowhere. And I think credit to Eric and his team for not only bringing things into the clinic, but prosecuting them in the clinic faster than pretty much any study in any TA we've done. I think we're either the fastest now or the top quartile. So I think it's about making sure the company is very clear on what its priorities are. The capital follows that. We have the right talent in place to do it. And then we're just religiously focused on doing that month-to-month, quarter-on-quarter, year-on-year.

Excellent.

Sorry to answer your question about launches. It's -- I skip over it a bit because I'm sort of excited by the present, but we do launch olanzapine this year. We will launch DARI next year. There's a chance we'll launch emrusolmin in '28, and then '29 we'll launch duvakitug. Then we may have a little breather and then we'll launch vitiligo anti-IL-15, and then we'll launch in celiac disease. And then we may have the 2 indications that we're starting duvakitug this year, they may be start to come through in the early '30s and so it is almost every year, and maybe that's just 1 thing we've got to be really, really careful and thoughtful about because I've never been in the company no matter how big. That launch is a product that's transformative to that TA every year. But we're thoughtful about it. We've been planning olanzapine launch for 2 years. And so we've got into a cadence. But it is exciting. And I think that's another reason why I say to people even if you discount half of what I've said, it's still an amazing future.

And can we think about -- there's been a pretty steady cadence of parts coming into the pipeline? Should we think about that as -- it seems you have a great runway in the next few years, but that every year or every couple of years, we're going to see more of these internally developed programs. Is that reasonable to think about?

Yes. I mean, look, I think Eric and I aligned and Eric can talk now. We don't really care where they come from. We definitely don't have that bias per homegrown. What we happen to have is just a super talented antibody engineering team. And so Eric can talk a bit about the IL-13 TSLP that we've got coming into the clinic, probably early '27. But we're just looking to bring transformative medicines that have a high probability of success so we'll never be the explorers, we're never going to try and find a cure that no one's ever touched. We're clever in how we sort of understand targets and understand how we can do something better either through partnerships or through our antibody engineering. But maybe you want to add that.

We're fully aligned on this. What we look at is neuroscience is our heritage and our expertise, and we're burgeoning immunology expertise. That's our focus. Like Richard said, we don't care where it comes from, whether it's our great labs in Sydney or a BD opportunity that comes up. That's how we're going to play the game. But making sure that we have programs that are high probability known science bringing them together. When it comes to the internal, I'll emphasize again, we can make great antibodies, we do great protein engineering, and we can bring many different things together. So that will continue to spin-out molecules. But the focus on bringing in neuroscience, great franchise we have in the LAIs right now with UZEDY and hopefully olanzapine, that's our focus, and we'll stick to that and be a very efficient group. We just focused on all these late-stage assets because it's great to have 3 Phase III programs and 2 great Phase II coming up.

Excellent. Maybe just looking at the near-term numbers. I think you've given a fair amount of color on '26, '27. Just remind us like kind of how the business is shaping up this year? Pushes and pulls we need to consider in there? And maybe as part of that, I think we're all kind of turning your hands around generic Revlimid what's reflected in that guidance for Revlimid for this year, guidance.

Yes. So it's a really good question because I know I do spend a lot of time looking at your model other models right, a bit of geek like that. And I think it's worth reminding, we lose $1.1 billion of Revlimid. And so if you think about the U.S. business, that sort of brings it to about $2.5 billion. So make sure your models have that. That, by the way, some other nuances here. We had nearly $300 million of generic Revlimid in Q1 '25. So we don't have any of that. So that will be something to model in and our gross margin will be hit by that. We will start off with a lower gross margin at the start of the year than the end of the year, but those 2 factors will play an important part. So I'd ask people just maybe go of the spreadsheet and get on that. So that's a significant change. And so when I think about, when we say flat to slightly down, our innovative business continues to grow very strongly. But to lose $1.1 billion of -- and we have nothing in '26. By the way, we're not trying to be clever. There is no way I can sensibly or the team can sensibly model what generic Revlimid could be. And with so many people coming in to forecast 0, I don't think is actually a bad forecast. And for us to plan financially for that. But we're not -- I don't want to be clever but there's nothing in the back pocket, there is 0 in that, and I honestly believe it will be 0, close to 0.

Very helpful. Looking then longer term so beyond '27, just talk a little bit about the growth you need to see on the innovative business to hit that mid-single-digit target?

Well, I think we've got to see -- to a certain degree, we obviously have AUSTEDO growing strongly. That would sort of taper a little bit just because the base gets bigger and bigger, right? And so that's just natural. I think AUSTEDO stays -- sorry, UZEDY stays on a pretty good growth trajectory, although we are now starting to move into other molecules. So it's not about taking from risperidone long acting, it's now moving into the paliperidone and other things like that. And AJOVY I still see some good traction. I think olanzapine helps us to drive that. I think the one thing I'd say about olanzapine, I feel confident about the mid-single digit. But for me, I'm always thinking about how do we create long-term value. And so for olanzapine, the 1 thing I would say is, although the pent-up demand I think is pretty strong, we will not contract aggressively unless we see the right pricing agreements because we see this as a meeting of huge unmet need. So it depends how the negotiations go as to whether that will hit a fast uptake trajectory from a revenue point of view or whether it will do a bit like we did with UZEDY. We took longer because we didn't contract because we didn't see the contracting to reflect the right value of the product. So those are the things and then don't forget in '27, we've got DARI we launched. The difference in DARI versus the product from AZ is we will have a pediatric indication. And pediatric indication is 25% of the population. And to remind everybody as well, the reason why dual-action rescue inhalers are being put in the guidelines is because I think there's upward of 5,000 Americans die every year because they don't have them. If you think of that from a pediatric, children -- so I think we have a chance of actually moving that product well, because of the focus on children, and that comes in '27 so you put all those together, I feel confident about the mid-single digit. But I think more important, I've sort of gone beyond '27 now. What does that mean for '28? What does that mean for '29, what does that mean for '30? And that's when you start to get to the $5 billion, $6 billion, $7 billion of innovative revenue.

Yes, absolutely. I think you've highlighted in the presentation a lot of data updates this year. Maybe if you were to still those down, what are you most excited about as you think about the updates this year?

Well, yes, there's a lot going on in 2026. So we'll be very busy. And the way it's been -- I mean, it started with the end of 2025 with the submission of olanzapine, which we're very excited about. But going into 2026, we'll have the maintenance data as Richard mentioned from duvakitug for both ulcerative colitis and Crohn's disease is in the first quarter. Then we'll have the vitiligo data from the proof-of-concept study that we're very excited about. Royalty Pharma helped us out in making sure that study that program moves quickly. After that, we'll have the second half celiac disease data. It's another proof-of-concept study with biopsy data in celiac disease. But then we're going to have a futility analysis for emrusolmin in multiple system atrophy, a very high unmet medical need, and it's enrolling very quickly. We'll probably even over enroll that because we want to make that study as pristine as possible for potential accelerated approval. But then on top of that, there will be probably some data from our first-in-human studies of PD-1 and IL-2, and we'll probably be announcing our new indications for duvakitug in this year. So there's a lot going on. And I should mention one of the things that you were just talking about with the DARI program. DARI is a big program. It's a huge important need for asthma. Pediatrics, adolescents and adults are in that study. We achieved the initial targeted enrollment of those patients. Everything out there who does drug development, those pediatrics, adolescents are hard. We're on track. We'll probably over enrolled that too, but we're on a trajectory to get that last event at the very end of the year in December for that event-driven study.

I think we have pretty interestingly the Royalty Pharma agreement with the IL-15. Can you just talk a little bit about, a, why you kind of sought a partner to help finance that and b, what data did they have access to, to make that decision?

Yes. So first and foremost, the Royalty Pharma is a great group to work with. This is the second deal we did with them. They funded our olanzapine LAI that allowed it to go full steam ahead and we were able to accelerate that program. So as Richard mentioned, we have a whole bunch of things all of a sudden lined up, ready to go. That takes a lot of funding, a lot of bandwidth to do. So these deals are just allowing us to keep everything going. So the great partners, they are -- they do great due diligence. They look at every last thing under the hood. And it starts with the fundamentals. They saw that our anti-IL-15 has great potency. It has a 38-day half-life. We've shown target engagement with suppression free IL-15 at the 90 days. That gives you the potential of thinking about a quarterly dose subcutaneous shot. And so they've looked at that. They looked at all our documents, all our basic science and they are following us in the proof-of-concept study. So we're looking forward to that data when it finally locks.

And I think if I'm not wrong, that's one of the earliest deals they've ever done in early stage. And I think I would imagine the only reason why they do that is because the quality of the asset and the quality of the data.

Can I pivot over to AUSTEDO. We had the IRA price negotiations. That was a big topic of debate last year, happy to have that in the rearview mirror. Can you just walk us through a little bit about how you're thinking about the $2.5 billion target for 2027 in light of those -- now your full visibility on that price component of it?

Yes. Firstly, I think it's worth reminding people that we forecast in and then we were going to be part of the IRA back in '23 to '27. And everybody said, you shouldn't because you're not going to sell enough to be in the IRA. So I'd like to point out, we actually backed our ambition with modeling that we were. And we were, which is we were right. But then we know. And I think the team, Chris and Dollaway here did a fantastic job in negotiating with the IRA to get why still, which is -- I suppose you would say is a good result. I still think it's completely fair, but I'm going to get over that. So when I think about the $2.5 billion, I always felt confident that $2.5 billion in '23, I did in '24, I did in '25, I did obviously, even more clarity now absolutely feel confident, why do I feel confident apart from having a world-class team is there's so many patients who aren't treated for tardive dyskinesia, so many patients. And so the unmet medical need is massive. And I would actually start to say I think we're actually starting to really get some momentum now in educating physicians, nurse practitioners, caregivers, patients themselves that come in and seek the treatment. So for me, it's all about the unmet medical need, the untreated patient population, which is huge. So I feel very confident about the $2.5 billion. As I often say, I'm beyond the $2.5 billion. I'm looking at the $3 billion. And when we can get there and how do we build the plan together and we have that already in place. So yes, I feel we're in a very good place. It's hard work. By the way, this doesn't -- this makes the gradient harder for us to climb. But that's not something we shy away from in Teva.

And maybe just 1 follow-up on AUSTEDO. The ex U.S. franchise there. How do you think about the opportunity there?

Yes. I think it's more tapered. I think we don't think of that as significant. One is because of pricing, can we get the right price. There's obviously the MFN need to take into consideration. We didn't really factor that in as a massive lever for AUSTEDO. But we're still working through that, and we still see potential opportunity, but it's more measured. I think the opportunity in international markets probably speaks more to olanzapine where the use of long-acting injectables in schizophrenia is high, a lot higher than the U.S. and the appetite for olanzapine would be high. And the pricing comparisons are not too distant, not too far apart. So I think that's an opportunity for us from an international expansion.

Great. Maybe just turning to olanzapine. As we are thinking about approval later this year at launch, how do you think about the price dynamics there? It seems like on one hand, it's a fairly unique asset and it seems like all the KOL feedback is a big unmet need. Why wouldn't this be something you could get price relatively quickly or reasonable price on the drug?

Because it's not always that straightforward. People don't always pay for the value of what we're giving them, and that's just the pharmaceutical industry I think. So your logic is correct. But the practicality. I think -- so look, I think what we've learned with UZEDY is we believe we know what the value of our product is, and we will stay firm on that and allow us to work with physicians who will drive this drug. Don't forget, I'll remind you UZEDY we did not get agreements on with many of the payers, many of CMS Medicare and Medicaid because we didn't agree Medicare on the price and so physicians phoned up and demanded it. And why did they demand it because there's an unmet need because when a patient has a schizophrenic episode, they need to be treated and get to a therapy dose as fast as possible, UZEDY does that. And what we saw is how those positions will mobilize to ask and obviously, when it is schizophrenia, payers don't rely push back too hard because it's a schizophrenia patient having an episode. With olanzapine, I think that opportunity is even greater so our confidence to hold the line. But it should be -- should it be priced appropriately, should it be seen as the innovative product, it is absolutely should. We're just expecting a relatively tough ride because that's just how the world is moving. If it gets easier, that's great. But once again, as we plan financially, we're not planning for that huge bolus of revenue in '26 and we'll be measured in '27 because once again, we'll not give value away just for the short term.

Yes. Makes sense. Last few minutes here. TL1A, can you talk a little bit about -- I guess maybe a 2-part question. First, the timing of the Phase IIIs that these are up and running, and then, b, just the competitive landscape here. I think we're seeing some initial Merck data as we go through 2026. How you're feeling about your positioning of your asset versus some of your peers?

Yes. So I can start with the fundamentals. When we look at our antibody, it's got the greatest potency we compare to in-house molecules we make. It's got great selectivity. Remember, our MOA is slightly different. We're blocking the DR3, but we're actually maintaining the [ Decoy ] receptor. So fundamentally, we have an advantage, we believe, in the biology, and we have the lowest antidrug antibodies. So the fundamentals of the molecule is strong. That predicted and we showed in Phase II showed very strong data in both the well-controlled study and ulcerative colitis and Crohn's disease, and we posted some very good numbers there. I was particularly excited about the Crohn's disease and the fact that we did as well in treatment experienced patients as naive. So the fundamentals, the initial clinical data are very strong. But remember, this is a chronic disease. We need to have durability of response. So we're looking forward to that data at the end of the first quarter, that maintenance date of 44 weeks out. So I think all of these things add up, the fundamentals make it particularly strong profile. So strong within the TL1A class and hopefully strong across the class, looking at the landscape of competition. So I think there's a lot of upside. There's also the uniqueness of the biology. This is covering many different cytokine pathways as an amplifier and it might have direct antifibrotic effects. So there's a lot to uncover here. And I think it's many years into the future. I'm like Richard, I'm thinking beyond 2027, now into the 30s, which is very exciting.

Maybe just last question. As we think about the delevering process kind of getting to the place you've been highlighting for a few years now. How do we think about business development? What's kind of the focus? What type of assets do you ideally want to bring in kind of maybe just elaborate a little bit more on that?

Yes. No, it's a good point. It's interesting as we come to this conference, no one asks us about our debt anymore. One we've done a great job of paying it off and we'll be investment grade this year at some point. But when it comes to that cash flow, we're starting to generate significant amounts of cash flow. BD is an aspect we've been focused on. We want to bring in some assets into our Neuroscience franchise and maybe into immunology. And we want it to be late stage. We don't want to take on any significant risk because we don't think it's still we have the right balance sheet for that or the appetite. But the 1 challenge is you've seen in the portfolio we got a list on this slide, it's going to be something that can -- we can allocate capital to fairly because we've got some good stuff internally. That said, the commercial team is so good here. I want to give them more products to sell. And so we're active about that. I'd like to think we could -- we'll be announced something like in the next 12 months, but it's going to be the right price, and we will not overpay. We know what return on capital we want, we know how valuable money is. And so we'll stay disciplined and we can because we've got a great pipeline, and we've got a great innovative portfolio is performing really well in the market.

Excellent. Well appreciate all the comments and congrats on the progress.

Thanks, Chris. Thank you for having us.

Yes. Thank you.