Teva Pharmaceutical Industries Limited (TEVA) Earnings Call Transcript

Hello, and welcome to the Weltruza approval conference call. My name is Alex. I'll be coordinating today's call. I'll now hand it over to Chris Stevo, SVP, Investor Relations. Please go ahead.

Thank you, Alex. Good morning and good afternoon, everyone. Thank you for joining us on short notice to discuss the U.S. FDA approval of Weltruza [indiscernible]. The materials are posted to the website this morning, and the press release is also on our website. And before I turn the call over to Richard Francis, I'd like to remind everyone that we'll be making forward-looking statements on the 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 Forms 10-K and 10-Q filed with the SEC. Any statements that we make are only valid as of today, and we undertake no obligation to date those statements subsequently. And with that, Richard, the floor is yours.

Thank you, Chris. Thank you, everybody, for joining the call. On the call today, will be Eric Hughes, Head of R&D and Chief Medical Officer. And then for the Q&A, I will be joined by Chris Fox, EVP, our Executive Vice President of U.S. Commercial; and Eli Kalif, Chief Financial Officer. So moving on to the next slide. And the next slide, please. Once again, it's great to be having a call with you where we talk about the execution of our pivot to growth strategy. A strategy we started back in 2023. Strategy was designed to move Teva from a pure-play world-class - company to a world-class biopharmaceutical company. And I think we made incredible progress. And if you remember, it was a decent phase strategy. The first was to return to growth. We've done that over the last 3 years. The second phase was to accelerate growth. And that acceleration was going to come through delivering on our growth engines, our innovative products that we have in the market that we often talk about, but it was also about really bringing an exciting pipeline to the market. And I'm really excited today that we're in a position where we can start to talk about that step up innovation and see our pipeline start to materialize. Now if you go on to the next slide. 2026 has already been a year of acceleration, you could say. We have a number of milestones already this year to do the maintenance data the ECO pipeline accepted by the FDA, given priority review, the anti-IL-15 you saw some data in [indiscernible] and recently in disease. But today is all about WELTRUZA. It's a special day for patients, for physicians and for families there, some of the members have schizophrenia. And as Teva, we're really proud to be able to bring WELTRUZA to the market to help this patient population in coping with that condition. So exciting for us at Teva, exciting that it's a year where we keep bringing new data, new opportunities to drive this long-term acceleration of Teva. But with that, and everybody is excited to hear about the data. So I'll hand over to Eric.

Thank you, Richard. I really appreciate it. And if I could have the first slide, we're -- I have to start by saying we're just delighted by the approval of WELTRUZA by FDA. And I just want to start off by saying, this begins with the patient. Patients with schizophrenia, it's a devastating disease for patients. And it can be a devastating disease for their families as well. But the most important thing is that we do have treatments for schizophrenia. And what WELTRUZA will bring, we hope, is that chance of decreasing relapses because we're going to take advantage of the long-acting injectable for them. So this relentless progression of negative positive and cognitive symptoms over years, we want to prevent those relapses, which should cause the hospitalization and the progression of their disease. So we've thought about the patient from day 1, and we believe that we're really achieving a great thing for them today. Next slide. This patient population is not insignificant. There's 2.2 million people in the U.S. About 1.5 million of them get treated and 20% of all those patients who get treated on an oral olanzapine or olanzapine is a known treatment for schizophrenia. It has powerful efficacy and a known safety profile. And our Teva commercial organization is set up to succeed here. We have a deep understanding of the patient journey, which is very complex. We have been doing and detailing these patients in -- with our [indiscernible] program, and we're building upon that great expertise. As I mentioned, on -- we have a demonstrated safety profile, and we have go-to-market capabilities that are, I think, leading in the industry. But let's get to WELTRUZA on the next slide. WELTRUZA really tintamizes the R&D strategy at Teva. We choose unmet medical needs that need to be addressed. We innovate based on the formulation we brought and built upon the known safety and efficacy of WELTRUZA. We innovated with the formulation by design to differentiate it for the market. We executed the study of high velocity by accelerating the program 6 to 9 months, and that brought in an on-target submission, which then led to an approval that was right first time. So this is our plan. This is how we build upon known science and accelerate it to bring a treatment for unmet need in patients. So very proud of this, and I think this is a winning paradigm for our company. Next slide. So what gets us so delighted and elated at Teva to this morning. Well, WELTRUZA builds upon known efficacy and safety as olanzapine -- this is a tried and true treatment for schizophrenia. And as I mentioned, that's 20% of the oral market right now for patients. But we innovated on it. We brought a once-monthly subcutaneous dose that is no loading dose, no oral supplementation and no post-injection mining. These are the critical attributes of what we needed to achieve, and we delivered on that completely with this label that we have gotten approved by the FDA. So I'm very proud of the work that the R&D organization has done and the work to collaborating with our commercial colleagues to make sure that we get this treatment to patients as quickly as possible. So we're very excited by all the results that we have achieved to date. And this really fills a long-standing gap in care. There are no other alternatives for long-acting injectables that are viable compared to WELTRUZA. So we think that we really are addressing an unmet medical need with the innovations from our labs. Next slide, I want to bring it back to the patient on this last slide. I said that the most important thing is preventing relapse, that's what long-acting injectables continuously show that when you get rid of the problem of adherence, adherence is the problem of a breakthrough and relapse for these powerful drug. By bringing it, I easily used subcutaneous injection that's once a month, we're chipping away at that adherence problem. And you can see in our follow-on study from SOLARIS in period 2 add to about a 1-year follow-on, only 4% of the patients relapse. This is a critical element of what we want to help patients do, get a treatment that use well-known and efficacious, but take away that problem of adherence with a subcutaneous injection once a month. So we're very proud of this. We have great hope for patients in the future and looking forward to getting this out as widely as possible. And with that, Richard, I'll hand it back to you.

Thank you, Eric, and thank you for walking through that. And we finished on this slide. I just want to give you a bit of context to this slide. This is the image that you will be seeing around with regard to WELTRUZA. We are doing a direct -- a DTC campaign with WELTRUZA. And we're doing this because we believe that we have created a real opportunity for these patients, as Eric has mentioned, and the physicians that start treating their patients differently with this molecule. And to do that, we want to make sure people are aware of it. physicians are aware of it. Patients are aware of it, their loved ones are aware of it. So it gives them the chance to get back into that office and have a discussion with their physician and the physicians are also aware of it. So be prepared to see this. And this builds on for many of you who know us, this build on the capability that we built with Astero, where we had to remobilize a patient population with tardive dyskinesia and help physicians start to treat those patients differently for the first time in a long time. So good capabilities that Eric mentioned, we already have in schizophrenia, but good capabilities about how do we mobilize this patient population to help them understand there is a new treatment out there. And with that, I will now open it up for Q&A.

[Operator Instructions] Our first question for today comes from Joseph Thome of TD Securities.

Congratulations on approval. Maybe just as you think about the perfect patient for WELTRUZA versus Uzedy, I guess, do these patients sit in sort of nice targeting boxes for you? Or do you think there's going to be overlap? I guess how do you think about that? And second, are physicians do indicate that they want to use LAIs more in practice but sometimes, there's some logistical hurdles at the site. Obviously, the differentiation are modern will be great. But can you talk a little bit more about what Teva is doing to make sure the physicians have a good first experience at the prescribing site for WELTRUZA?

Thanks, Joe. Thanks very much for the call. Very much appreciate it. And I know Eric will be itching to answer that one because I think you'll hear that we very much thought about the value proposition, what physicians need from LAIs, what they expect that they may not have got. And also the -- what you talked about the co-positioning of these 2 products. I'll turn over to you, Eric.

Yes. So thanks for the question. I heard 2 things there. Who do we envision starting on WELTRUZA versus Uzedy. Well, the first and most obvious place is to start with those who are on an oral risperidone can take Uzedy and those who are on oral olanzapine can start WELTRUZA. I think it's a natural selection that's already out there in the field. What we're delivering though, to your second point is something that they haven't had before. An injection that is easy to give to a patient, it's subcutaneous. It doesn't require any loading doses. It doesn't require any other supplemental oral medication. So a lot of the hurdles of intramuscular injection, a complicated way of starting it we've removed that and given them something that really is great treatment option for patients. That's the unmet need -- and that will also address the basic problem of relapse due to nonadherence. So we've removed a lot of those barriers and the natural places I think that the patients will come from is those oral options that they're on already. Remember, 20% of the oral market is olanzapine, and we're providing the first best option that's really viable for a long-acting injectable.

Thanks, Eric. Is there anything you'd like to add to that, Chris Fox?

Sure. Absolutely. Good morning, everyone. Yes, this is a really exciting time for us, and I love the nature of your question of how do we instill a more better experience with LAI. This is something that we've been partnering with Eric and his team on because we know that this was such an untapped need. And you can see that even as an example, with Uzedy and how we're growing that market because who is starting to more anticipation of how LAI specifically prevent relapse as Eric showed in the data and provide a much better experience, not just because of the no loading dose and no oral supplementation, but also, it prevents irreversible function decline when these patients have breakthrough symptoms or are non inherent on an oral. So we've been preparing for this launch, I got to say, for a long time. It's been well over a year. We had an extraordinary nationwide launch meeting last week and doing exactly that. Our go-to-market and really the education that we're going to use, specifically on olanzapine, but also co-located with Uzedy. I think we're in a uniquely leadership position to be able to cover most of the schizophrenia, about 80% across this [indiscernible] of oral olanzapine patients and oral paliperidone and risperidone patients with Uzedy. So we're really excited. We've got lots of work to do, but we have the right tools and now importantly, the right franchise in Uzedy and WELTRUZA.

Thanks, Chris. Thanks, Eric. Next question.

Our next question comes from Umer Raffat of Evercore ISI.

This is Mike DiFiore in for Umer. And congrats on the approval. Two questions for me. One, are you able to disclose the pricing at this juncture. And number two, just given that if you look back at oral branded olanzapine, Zyprexa, I think it reached around $5 billion in worldwide peak sales. Would you be able to comment whether that potential could be reached with olanzapine LAI? Or do you have any at least preliminary comments on what you expect for oral to LAI conversion?

Thanks, Mike. Thanks for the question. So to answer the first question, the wholesale -- the WACC price, 3,950 to give you that. And then to the second question, which was touching upon the opportunity here, which is a good question. And I think it's probably based on the product profile that Eric just walked through as well as the label that we have. Look, we put down in our forecast $1.5 billion to $2 billion for Uzedy and WELTRUZA. I think there's a lot of enthusiasm around WELTRUZA because of the product profile that Eric just talked about. I think for us, it's about making sure we get out there and do what Chris Fox said, make sure people have an understanding of where these products can be used, how effective they are, how they fit into their clinics, patients can benefit from the compliance and the adherence. And if that plays out, well, then obviously, we're going to have an ability to hit those targets of $1.5 billion to $2 billion. But I think you probably know, Mike, from talking to us in the past, -- we have to think about this in a very thoughtful way. We want to see how this plays out. It is a very managed area, managed care. And so we've got to be thoughtful about that. And so let's get started. Let's get the excitement turned into a prescription. Let's get patients on this drug. Let's get hospital formularies, listing it. Let's get Medicaid to have on their formularies first. And then I think we can talk about what the ambition could be in the long run. But I'm glad you see it as a big step forward for the treatment of schizophrenia patients. So thank you for that.

Our next question comes from Louise Chen of Scotiabank. .

Congratulations on the approval. I just wanted to ask you on payer coverage. When do you expect that to ramp up? And what are the different stages here -- what is the out-of-pocket cost per patient? And then the other thing I wanted to ask you about as we think about modeling the sales, I know the progression will be later on -- but how should we think about gross to net-net progression and also margins for the product?

Yes. So thanks, Louise. I'll probably start to frame a bit and then hand over to Chris Fox on this one. But from a payer point of view, as we've spoken about in the past, this is about, firstly, getting Medicaid on board state by state. And as you may well know, these do start at different times. So day 1, we get some Medicaid and then some take as much as 12 months, even some beyond that. And we think we'll have about 85% coverage at the end of the first year. Medicare is harder, and that's about negotiation as you've seen with you said, we're all about making sure that we get value and access, and we understand that we have a valuable product pay because of the product prologue we want to make sure that is appreciated. So I think that's how we think about it. And that's partly also why to touch on your point of revenue. we don't see significant revenue in H1 next year because this is about all the Medicaid states on board, getting to the hospital formularies, getting some good breadth to be used from physicians and then actually some debt. And that's what you're seeing in the second half of the year. So that's how we think about it and that's how you should model it. That's how it comes to payer access. It's mainly in Medicaid and Medicare. There is a small amount, which will be in commercial. And then maybe I'll hand over to Chris to talk a bit more about one thing about the add of pocket, but also the comprehensive services that we have to ensure that patients can get access to this. So over to you, Chris.

Thanks, Richard. Great question. We are modeling this similarly, as Richard just said, our approach is to really balance very wide access with observation of value. And so it's really important to start with those Medicaid patients. And as Richard elegantly articulated about the process, it is state by state. And so that's something we'll look to address much like we did Uzedy. The out-of-pocket for patient is very different based on their coverage and if they're dual eligible, all of those things. And the team has built a really extraordinary kind of patient hub to be able to help that. And so it's a very bespoke service that allows for us to optimize their experience and give them access as early as possible. And I think the other big thing I'm excited about is very rarely do we get to launch another product so co-located with the current product than that of Uzedy. So we have lots of synergies in this space, both in our experience with providing those patient services, prescriber services as well. And as importantly, as Eric pointed out, this deep understanding of the patient journey. So how do they go from oral and get on an LAI. All of those things are such an important part of that access is a big part of it, but all of those other surround sound things contribute to that experience as well. So we're excited to apply the learnings and the knowledge that we have and help support patients. Thank you for the question.

Thanks, Chris. Thanks for question. Next question?

Our next question comes from Les Sulewski of Oppenheimer.

Congrats on the approval. I have two, one on distribution and one on the funnel of patients. So on the distribution side, given the refrigeration aspect, how are you setting distribution in buy-and-bill versus specialty pharmacy? And when do you expect the permanent J code? And then second, on the funnel of patients you sized the LAI suitable patients at 20% of the oral population. Perhaps just walk us through the first year patients come from? Is that part switches, recent hospital discharges or the stable oral patient group? .

Les, thanks for joining the call. I'll hand those straight across to Chris Fox. So Chris, on the distribution, you had that and then on the funnel of patients, which will be the first to come across to WELTRUZA.

Yes, sounds great. Yes. So we assume that based on all the market research that we've done at an oral olanzapine patient that is not compliant for a variety of reasons would be a perfect olanzapine LAI patient. From what physicians tell us, they're very, very familiar with the molecule, and they really appreciate the efficacy and the control that it gives them. So in our discussions leading up this in the market research that we've done, we see that opportunistically as the perfect place to start. And we'll see where that goes from there. I mean some of the experiences that we've had on Uzedy is that once patients and physicians get experience, they then start to architect for themselves what that looks like and what the perfect patient profile is. And so that's something that we'll be interested in keeping you guys updated on but we certainly think that that's going to be where we start and where we go from here. And I think that this is going to be a very broad opportunity, as Eric said, given that oral olanzapine events about 20% of the total patients. . On the distribution question, just general code, so we don't have to wait for a J code, and we expect to launch as we did with used. So we will have products available sample and hospital kits as well -- so physicians can have those experiences and then get the product in channel in the next couple of weeks and get patients on therapy. Thanks for the questions.