Teva Pharmaceutical Industries Ltd. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Pivot to Growth Strategy: Based on 4 pillars: growth engines, innovation, sustained generics, focus business.
• Financial Results: 11th quarter of consecutive growth; revenue up 3% to $4.5 billion, adjusted EBITDA up 6%, non-GAAP EPS up 14%, free cash flow over $0.5 billion, net debt to EBITDA below 3x for the first time since 2016.
• AUSTEDO: Confirmed 2027 revenue target $2.5B and peak sales over $3B. Q3 U.S. revenue $601M (+38%), first time over $600M.
• UZEDY: Revenues up 24% y-o-y, TRx up 119%, expanded indication for bipolar I disorder. Reiterates peak sales target $1.5B-$2B.
• AJOVY: Continues strong growth, #1 preventative CGRP injectable in top U.S. centers and 30 European countries; confirms guidance $630M-$640M.
• Generics: Grew 2% y-o-y. U.S. up 7%, Europe down 5%, international up 3% (2-year CAGR 12%). Biosimilars: 10 in-line assets, potential to launch 6 more by 2027.
• Innovation Pipeline: Olanzapine LAI FDA submission in Q3, DARI program on track, duvakitug Phase III IBD studies initiated, emrusolmin enrollment on track, anti-IL-15 proof-of-concept studies in 2026.
• Teva Transformation: On track to realize $700M cost savings by 2027, 2/3 by 2026; $70M savings achieved by Q3 2025.

Segment Performance

• Innovative Products: Revenue over $800 million in Q3, growing 33% year-over-year. AUSTEDO: $618 million (+38%), UZEDY: $43 million (+24%), AJOVY: $168 million (+19%).
• Global Generics: Up 2% year-over-year. U.S. grew 7% in Q3, Europe declined 5%, international up 3% (2-year CAGR 12%).
• TAPI: Down 4% due to seasonal volatility.

Guidance

• 2025 Revenue: Tightened to $16.8B-$17B.
• AUSTEDO: Revenue outlook increased to $2.05B-$2.15B.
• Global Generics: Flat in local currency vs 2024.
• Non-GAAP Gross Margin: At higher end of 53%-54% range.
• Free Cash Flow: Guidance $1.6B-$1.9B.
• Operating Margin: Target 30% by 2027.

Risks

• Geopolitical/Market Conditions: Impacting TAPI divestment process.
• Seasonal Volatility: Affecting TAPI performance.
• Generics Comparables: Tough prior year comparables in Europe.
• Biosimilars Market: Potential price erosion.

Question and Answer

• Q: On AUSTEDO and IRA, A: In line with midterm expectations, confident in $2.5B 2027 revenue.
• Q: On AUSTEDO pricing and access, A: Focus on underserved market, strong execution, balance between value and access.
• Q: On OpEx 2026 and AUSTEDO XR in IRA, A: OpEx savings on track, AUSTEDO XR included in IRA.
• Q: On EU generics and TAPI divestment, A: EU generics growth affected by prior year comparables, TAPI divestment restarted due to strategic fit.
• Q: On 2026 revenue/EBITDA and AUSTEDO Q3, A: EBITDA driven by innovative portfolio and cost savings, AUSTEDO Q3 strong due to underlying demand.
• Q: On biosimilars FDA guidance, A: FDA guidance supports biosimilar strategy, Europe has price erosion but volume offset.
• Q: On CMS agreement and olanzapine, A: CMS agreement in line, olanzapine LAI submission on track, potential Commissioner voucher.
• Q: On duvakitug and capital allocation, A: Duvakitug Phase III on track, capital allocation focused on growth and debt reduction.