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

Hello, and welcome to the IL-15 vitiligo Phase Ib 24-week Efficacy Results Conference Call. My name is Alex, and I'll be coordinating today's call.[Operator Instructions] I'll now hand it over to Chris Stevo, SVP, Investor Relations. Please go ahead.

Thanks, Alex. Good morning and good afternoon, everyone. Before I turn the call over to our CEO, Richard Francis, I want to remind everyone that we will be making forward-looking statements on this call. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in our earnings press release and our most recent 10-Q and 10-K filed with the SEC. And any statements we make are only as of today, and we undertake no obligation to update these statements subsequently. And with that, Richard Francis.

Thanks, Chris. Good morning, good afternoon, and thank you, everybody, for joining the call. Today, I'm very excited to share with you our Anti-IL-15 Vitiligo Phase Ib 24-Week Efficacy Results. And today, joining me on the call is Dr. Eric Hughes, Head of R&D and Chief Medical Officer, who will go through the details of the results. And then at the end, we'll have a Q&A to answer your questions. Now the slide you see up, today is very exciting, the milestone on our pivot to growth journey as this slide highlights the progress we've made in transforming Teva into a world-leading biopharma company. As you see by what's in front of you on this slide, that 2026 is a year of milestones. Originally, we had expected 7, but with the addition of ecopipam's NDA filing, we now have 8 key events expected this year. Now, in that context, I'm really proud to talk about today's Anti-IL-15 Phase Ib Results in Vitiligo. But I remind you, besides today's news, we have already shared the duvakitug maintenance data for UC and CD in Phase II in February. We also acquired ecopipam and filed it with the FDA a few weeks ago. And I'd like to remind you that we have many more milestones coming up in the second half of this year with Phase IIa top line results for Celiac for Anti-IL-15. DARI will have its pivotal Phase III readout. And then for emrusolmin, futility analysis of the Phase II. And I'm also excited about the potential to launch olanzapine at the end of this year. And then finally, we have the Anti-PD-1/IL-2 data coming up right at the end. So a lot of exciting data coming out from our innovative pipeline. So a really key year as we transition to a world-class biopharma company. Now if we go to the next slide, the reason why this is really important to create value and sustainability for Teva is, if you look across this pipeline from olanzapine to ecopipam to DARI to duvakitug to emrusolmin to Anti-IL-15, all of these have the ability to be billion-dollar products in their indications. And in fact, any one of which could be transformational to Teva. As you can see by this slide, the size of the potential markets that they are entering into is significant and growing. We have a high-quality pipeline that is well positioned. We continue to drive our innovative portfolio for growth for many years to come. I do remind you that we expect our innovative portfolio to generate $3.5 billion of revenue in 2026. So everything on this slide will be building upon this already fastly growing platform. I'd also like to point out that 2 programs on this list, Anti-IL-15 and TL1A duvakitug will have multiple indications. And for Anti-IL-15, as I hand over to Eric, I know he'll talk to you about Vitiligo data, but also talk to the potential this product has in other indications. So with that, I'll hand over to Eric.

Great. Thank you, Richard. And it's great to be here on the call today to talk about this exciting new data we have for our Anti-IL-15 program. So if I can have the first slide. Vitiligo is an important disease. It's an autoimmune disease that destroys melanocytes because of an immune reaction. It's a pretty common disease. It's about 0.5% to 2% of the global population. So many people are afflicted with this and many are undiagnosed still. There is a psychological burden to the disease. It's not just a skin discoloration. It can cause anxiety, depression and social isolation. The only FDA-approved treatment right now is a topical that covers less than 1% -- less than 10% of the body surface area. So what's really needed is new treatments that are systemic in nature to treat the whole body because it's not just the face, it's the entire body that can be affected. Come to the next slide. So why is IL-15 important? Well, it's a key Cytokine in the pathogenesis Vitiligo. What happens is keratinocytes under stressful conditions, which are a number, can cause the secretion of IL-15. And it's that IL-15 localized in the dermis itself that drives the production and residence of CD8-positive T lymphocytes that are cytotoxic, and they attack the melanocytes and destroy those cells that cause the pigment within the skin. So with our antibody, blocking that IL-15 signal blocks the continued proliferation and resonance of these cells in the skin, which will impact the destruction of the melanocytes and potentially have the potential to be a disease-modifying treatment. So it's a very exciting biology and a real targeted therapy for Vitiligo. On the next slide. So what differentiates our anti-IL-15 antibody? Well, first, it's, we believe, the most potent Anti-IL-15 antibody out there. It was very well designed by our own labs at Teva. So it's a Teva-born molecule, same team that made duvakitug made this molecule. And its half-life is very long. So it's a clinically relevant dosing, you can see that you have a 38-day half-life, which is very important when it comes to the convenience for patients. And that 38-day half-life that you see on the left-hand side of this slide translates into strong target engagement that you see on the right hand of the slide. This graph is showing the suppression of free IL-15 level in the serum. And what you can see here is a remarkable target effect where rapid reduction below the limit of quantitation happens within 1 or 2 days -- and then at the top dose, you can see here, there's suppression below the limit of quantitation up to 80 to 90 days. So clearly, with the half-life and the target engagement we see, the potential for dosing every quarter, that is once every 3 months is a strong possibility for this molecule. So we're very excited about this. The potential of a very easy to give safe molecule that's a subcutaneous shot once a quarter. Come on the next slide. So let me do a little bit of a tutorial on how we measure...

Yeah, go back one.

How we measure the VASI score. So if we go back one more slide. Go back one slide. And forward one. Okay. Well, I'll just start with this slide. So going over the study design. This is a proof-of-concept Phase Ib study. It was designed where we give 1 dose at day 0 and then 1 dose at week 12. And so over a 24-week period, which is the endpoint of the study, we've only given 2 shots of the medication subcutaneously. So it's looking at about 38 patients, and we looked at VASI scores of both Facial-VASI and Total-VASI. It's important to note that 66% of the patients in the study actually had skin involvement that was greater than 10% of their body. And we will be monitoring the subjects out to 80 weeks. So a simple study looking at a conveniently given subcutaneous shot with an endpoint at 24 weeks. If I can go to the next slide. Here, going to this slide I was referring to before, just a quick tutorial on how we look at and measure a Facial-VASI and Total-VASI. It's a fairly simple methodology, but it's actually very reproducible with our dermatologic investigators. And when you look at the Facial-VASI, it's a simple measure of using your fingertip, looking at the number of areas or the surface area involved in the face. So you use a fingertip, look at the areas of depigmentation, count up the number of fingertips and then multiply that by the level of involvement at each going from 0 where there's full pigmentation to 100% where there's no pigmentation and you multiply that and get a score. In a similar way, you do the Total-VASI, which is using a hand, which is about 1% of your surface -- body surface area, and you use the number of hand counts to quantitate the Total-VASI and again, multiply it by the extent of involvement in those areas. And that gets you to these 2 scores. These are regulatory endpoints that can be used for a Phase III study. If we go to the next slide. Now getting to the exciting part, looking at the data that we saw in this study. Those patients with a Facial-VASI score from baseline to 24 weeks after just 2 shots of the treatment achieved a 42% response rate for Facial-VASI50. That's a 50% improvement in their facial score. And then the Facial-VASI75, where 75% of your face improves, those people or about 21% of the population achieved that. And then with Total-VASI, which is a 50% improvement of your total body, 7% achieved that. So we're very happy with these results. This is very consistent with other Phase II studies with other oral systemic treatments. But for me, actually, the most interesting and satisfying fact was not only did we get these regulatory endpoints, but when you ask the patients what they thought their skin did during the study, the response was pretty impressive. With the Facial Patient Global Impression Change score, which is a validated score in Vitiligo, 75% of the patients in the study said that their facial skin improved. And half of those were much to very much improved. And then when you look at the Total Patient Global Impression score change, 55% of those patients said that their skin improved. So I've done work in dermatology before. And I think that the regulatory endpoints, we're glad to see we achieved a very competitive profile, but it's even more important that a patient who's looking at their skin every day and thinks about this on a daily basis, actually thought that their skin is perceived as improving was very impressive. So we're very happy to see that. And I think that will drive a lot of patient satisfaction with a potential treatment in the future. Come to the next slide. So how does this compare? So one of the things that we have been mentioning is we want to be compared to systemic therapies. Upadacitinib is an oral JAK therapy that was actually just got a positive opinion from the CHMP, I think, just last week. When we look at the Facial-VASIs and the T-VASIs compared to that at 24 weeks, I think that they're comparable, if not favorable. So 42% compared to 38% and 39% for the Facial-VASI50. For the Facial-VASI75, we see a 21% versus 19% and 14% and a Total-VASI of 7% versus 6% and 11%. So this is very encouraging for what we think about the effect that we're seeing. And it's important to remember, our product is a shot once every quarter. And it has, to date, a favorable safety profile. When you compare that to an oral JAK that has to be given each day and then has a certain black box warning in their label, we think this is a good value proposition for patients given the convenience and hopefully, the safety that we show in the future. If I can go to the next slide. One thing we did for today, which I'm very thankful for, 2 of the patients in the study, they're not representative of everyone. These are 2 patients that said they had very much improved skin on their face. They were kind enough to consent and give us a permission to use the pictures from their baseline to their week 24 time point. And what you can see first on the left-hand side, this woman had significant hypopigmentation with a wide area of her face. You can see almost loss of pigmentation completely. And then at 24 weeks, you see a considerable improvement in that discoloration she had, particularly on her cheeks and her nose and above her brow. On the -- gentleman on the right, similarly, with a slightly darker skin saw a clear repigmentation on the brow around the nares and around the mouth as well. So this is pretty -- to me, a dramatic effect where you can see even on the normal picture, the changes that you can see in the color of the skin. So I think this can have a huge impact on a person's quality of life and all the troubles that they run through in their mind every day when they're looking in the mirror. So we're very proud of that, and we're very happy that these people were kind enough to let us use their pictures today. Like I say, a picture is worth a thousand words, really puts the numbers in perspective. Go to the next slide. So one thing we think about is what is the opportunity here? And what's the level of unmet medical need we see in Vitiligo? Well, today, before any systemic therapies are even available, we think there's about 4.1 million people in the U.S., EU, U.K. and Japan. And the targeted group, the therapies that these will -- the patients will be targeted for is about 2.7 million. And currently, there's no approved treatment for that systemic therapy right now. But it's important to note, there's analogs in dermatology that really drive what we think will happen in the future. Psoriasis and atopic dermatitis are great examples where a disease area that was probably underappreciated 15 to 20 years ago as safe and effective biologics came out really drove the advance and the size and the understanding of the unmet medical need. So psoriasis obviously grew to a very significant population, same thing with atopic dermatitis. We think that there is the potential that as we have better therapies like we hope we're developing here, we will drive the development of this market and really create a disease awareness when new therapies come out. So we're excited by the future opportunities here. So if I can have the last slide. I'm sorry, I did want to mention too, Anti-IL-15 is a very important cytokine, not only for Vitiligo, but there's a lot of crossover and carry through with other diseases such as Alopecia Areata. We have evidence preclinically of Atopic Dermatitis, but also in gastroenterology, such as Celiac disease and Eosinophilic Esophagitis. And that reminds me that, remember, we'll have our proof-of-concept study in Celiac disease readout in the second half of this year. But there's a lot of great potential for Anti-IL-15 therapy across multiple disease areas, and we're excited to be looking at those in the future. So if I can have the next slide. Now we believe we have a differentiated product. This is an internally developed Anti-IL-15. We believe it has the highest potency of the Anti-IL-15's in development right now. It has a prolonged half-life of about 38 days, which will allow us a convenient dosing every quarter based on our data today and our target engagement biomarker data as well. I think the data today are encouraging. I think it's in line with the systemic therapies that have been also seen in Phase II. We're moving forward with our Phase II program this year. And I also should mention that it's been very well tolerated, really no safety signals seen to date, and we're very happy about that. So we've already met with the FDA. I'm very happy to say that we're now incorporating feedback from them into our Phase II study, and we're very excited to get that going this year. As I mentioned, in the second half of this year, we'll also have the proof-of-concept data readout from our Celiac study. And we're excited in the future to be expanding into other indications that are a natural fit for Anti-IL-15 therapy. And with that on the next slide, I'm going to pass it back to Chris and we'll entertain questions if anyone has them. Thank you.

Thanks, Eric. And while Alex is preparing the queue for the Q&A, [Operator Instructions] and with that, Alex, please go ahead with the first question.

[Operator Instructions] Our first question for today comes from Dennis Ding of Jefferies.

Just one for me. On the long-term follow-up data, do you expect a big rebound in IL-15 once you stop the drug like you saw in the PK study? And how do you think that could manifest in safety? And given the durability of the IL-15 knockdown, I'm curious if there's a plan to approach dosing differently for induction and maintenance and a 6-month dosing could be possible for maintenance?

Thank you, Dennis, for the question. So first, I'll talk about the long-term follow-up. So one of the things that our team has done which I'm very proud of, they did extensive follow-up even of our Phase I study. So we took some of our Phase I studies up to like 400 days. And we've actually characterized the suppression of IL-15 and then the recovery as well as other things like NK cells. So we have a very good sense of the suppression level, the rebound and then it comes back to baseline. And there's no associated AEs with the rebound of the IL-15. And in fact, that's really consistent with just the way in which the body recovers the homeostatic levels of NKs and the effects of IL-15. But it all comes back to baseline, and we would follow that out for a long period. And that's exactly why we follow the patients in this study out to 80 weeks. So we'll have a very good data set. I think the regulators appreciate long-term follow-up. So we're confident in how the drug works and how the body responds to it. Now you mentioned in your other question about, I believe, in an induction dose and a maintenance dose. We're approaching this program with no induction dose. We are starting right off with the dose, and we're going to continue that way. I think that given the characteristics of the disease pathology, the loading dose is probably not necessary because I think we're shutting down the IL-15 within just a few days with the doses we're using, and that's probably not going to be necessary even in the fact that there's an exuberant expression within the skin. I think that the way that we're setting the program is the most convenient for patients, just the one subcutaneous shot and then continue that same shot every quarter. That convenience, and I think the biology indicates that, that's a good pathway to go.

Our next question comes from Matt Dellatorre of Goldman Sachs.

Congrats on the positive data. Maybe first on efficacy. Clearly, the data compare favorably to the oral JAKs. I [am] curious maybe what you're seeing in the early washout period, what you think you might be able to achieve on F-VASI at 48 weeks. It looks like RINVOQ did maybe 23% to 25% on a non-adjusted basis, F-VASI75. And then realized you guys just use a single dose here, should we expect you to do further dose finding in Phase IIb? Or are you all happy with this specific dose?

Great. Thanks, Matt, for the question. Yes. So your first point, and you broke up a little bit there. So correct me if I got the question wrong. But I think your first question is what would you expect at 48 weeks. So if you look at programs out there and the data that's been published and what our expectations are here, when you think about Vitiligo and how the disease happens, T cells go in there and kill off the melanocytes. And then when you stop that destruction, the melanocytes have to then repopulate into the skin. Usually, they come back from germinal centers at the hair follicle. So it takes time for these cells to come back and then recover the skin. So the reason I bring that up is that time is something that helps you. So from 24 weeks to 48 weeks, we do expect -- we'll have to obviously test this, but we do expect the scores to increase. You've seen that in other Phase II programs as well and Phase III programs. So that's expected. There is a time element to the recovery, I believe, in Vitiligo. So that's my answer for the 48 weeks. With dose finding, this is a proof-of-concept study. We looked at one dose. Of course, we will be doing a dose-ranging study in our Phase IIb, and then that will rapidly transform into a Phase III study. One of the things that we're working on right now and have discussed with FDA is a seamless study design, which is a rapid way in which we can progress this compound quickly and use the known endpoints very efficiently.

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

Just wanted to follow up on the dose question. So you outlined the PK/PD data in healthy volunteers, 5 doses and then show the 2 doses on the free IL-15 levels. Can you clarify which of those doses you studied in the Phase Ib? Just kind of wanted to get a sense of are you leaving efficacy on the table? And as you look at doses in Phase IIb, have you studied that dose level 2 that appears to have the maximal free IL-15 suppression levels in this study or if that's planned to be evaluated in the subsequent Phase IIb?

Thanks for the question, Jason. So I can't tell you the dose today. That will be presented in the congresses for the proof-of-concept study. But to your question about how do we approach Phase IIb now. This is a proof-of-concept single dose. We will be doing dose ranging. And that's important because I frequently obsess around our modeling and simulation. There is dose optimization we can do for the dose between the data we have on our PK, the data we have on our free IL-15 and the data we have on our NK cell reduction. So all those together, I think I'm pretty confident in how we're going to select the doses for Phase II.

Our next question comes from David Amsellem of Piper Sandler.

So on the percentage of patients with total body surface area coverage of over 10%, I think you said it was that 66% of patients in the Phase Ib that had over 10% coverage. What's your expectation or what should we expect regarding those patients in the Phase IIb? Is it going to be all comers? Or is it going to be patients with over 10% BSA coverage? That's number one. And then secondly, with that 2/3, 1/3 mix in the Phase Ib, how do you think that may have influenced the data on T-VASI and F-VASI that you had disclosed this morning?

Sure. So I'll answer the last question first. So we didn't see any effect on the baseline level on efficacy. It was very similar across the board. Getting back to the question of what do you expect to come into a Phase IIb study. So when I look at the publications out there today, looking at some of the studies had different baseline factors. In general, you see about 60%, 70% of the patients greater than 10% from what I see. When we design the Phase II, it's going to be very clear. The baseline factors will include greater than 0.5 on the Facial-VASI plus greater than 5 on the Total-VASI. So I think that's consistent with all Phase III programs at this point and what I think is expected by regulators at this point. So the population here reflected what we'll probably see in the future and our baseline factors will be based on a 0.5 Facial-VASI with a 5 on the Total-VASI.

Our next question comes from Louise Chen of Scotiabank.