Hello, everybody, and welcome to the Q3 2026 PEPFAR Pharmaceutical Industries Earnings Conference call. My name is Elliot, and I'll be coordinating your call today. If you would like to ask a question during today's event, please press star followed by one on your telephone keypad. Today, we ask you to limit yourself to one question and one follow up. If you have additional questions, please rejoin the queue. I would now like to hand over to Christopher Stevo, Head of Investor Relations. Please go ahead.

Thank you, Elliot. Good morning and good afternoon, everyone. Thank you for joining us for our third quarter earnings call. As usual, our materials are posted to our website this morning, so please feel free to see them there. And before I turn the call over to our CEO, Richard Francis, I'd like to remind everyone that we'll be making forward-looking statements on this call. The company cautions that investors that any forward-looking statement involves risks and uncertainties 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 in our most recent forms, 10Q and 10K, filed with the FCC. Any statements that we make are only as of today, and we undertake no obligation to update those statements subsequently. However, I will now undertake the obligation to give you our CEO, Richard Francis.

Thank you, Chris. Good morning, good afternoon, everybody. Thank you for joining the call. with me today on this call would be Dr. Eric Hughes, Head of Global R&D and Chief Medical Officer and Eli Kalif, CFO. Now moving on to the next slide, as always do I start with the Pivot to Growth Strategy and the four pillars. We launched it in 2023 and I'm going to give you an update in Q3 as the progress we've made against this strategy. Starting with deliver on our growth engines, we'll see that the innovative portfolio continues to perform well, instead of all delivering strong Q3 performance and our innovative portfolio is up 33% and we're raising full year guidance across all of these products. Now the importance of these products can be seen in our financials and you'll see that our revenue is stronger, our margins and our free cash flow also becomes stronger. Now looking to the second pillar, step up innovation, you see that we have eight major milestone readouts this year but also we've seen some good progress and the approval of Welch Reuser was a significant moment to Teva as well as the patients suffering from schizophrenia. We also have good progress in Ipipipan and we have FDA fast track designation for our NTR15 candidate for celiac disease. And so looking ahead we have four additional potential submissions over the next five years. With regard to an announcement we made earlier in the week, Emma Solman, After an independent data monitoring committee met on a pre-specified infant utility analysis, we have discontinued the Phase 2 study. As Greg pointed out, there were no safety concerns. Now, while this outcome was not what I had hoped for, and I'm deeply disappointed for the patients we are hoping to serve and the physicians who helped us on this journey, I'm particularly proud of the teams and the effort we've put into this program. What we have learned will take forward with even more determination. Now, another change to our and a pipeline that happened before the earnings was with regard to BioXcel and the acquisition of BXCL501. This is an asset we think is going to further strengthen our neuroscience franchise and our psychiatric portfolio. There's a big unmet medical need we believe in treating agitation at home and we think this in the hands of Teva could really help these patients with this unmet need. Now moving on to Sustained Genetics Powerhouse. Biosimilars you'll see throughout the presentation is becoming a significant growth driver for us now at Teva and our genetics business. We have 15 products on the market and 16 more in our pipeline and more opportunities to expand this. And actually, earlier today, you may have seen the press release that showed we have further strengthened our partnership with Samsung. We have two FDA-approved RT-TNFR for biosimilars. On the final pillar, on capital allocation, With the latest S&P upgrade, Tether has now achieved investment grade status across all three major rating agencies, reflecting the continued strength of our financial profile. We also, in this last quarter, refinanced 4.9 billion of senior notes. So please think about that. And then with regard to EDS conversions to ordinary shares in the New York Stock Exchange, we've now opened up the opportunity for broader investor access to Tether. So now starting with what I think was the highlight of Q3 for us, which was the launch of Welltrusa, the approval of Welltrusa. Now, this was a milestone for Teva, but more importantly, a milestone and an advancement between patients living with schizophrenia. Let's be clear, it starts with the patient. Schizophrenia is a devastating disease, and every relapse can have a significant impact on patients and their families. With Welltrusa, it brings a proven olanzapine efficacy in a once monthly subcutaneous are all injectable with the opportunity to help patients stay on treatment and reduce relapses. WALTUZA is the first and only long-acting injectable with no loading dose, no oral supplementation, or post-injection monitoring. And because of this, we believe WALTUZA can make a real difference for patients suffering from schizophrenia. So what is the opportunity? Well, on the next slide, you can see it's significant. With 2.2 million people who are diagnosed with schizophrenia in the US, approximately 1.7 million are treated and approximately 20% of the prescription are for oral olanzapine. We all know that olanzapine has a well-established efficacy and then safety profile and that is going to prove the strong foundation for Veltruza. But also, as we all agree, that our commercial organization is very well positioned to succeed with Veltruza, building on the great work that has been done over the last three years with your study. And I'll go into that in more detail later. But when you combine these two products, We have a portfolio designed to address a broad spectrum of unmet needs, which is setting what is highly differentiated and yet complementary. They're anchoring the two proven molecules of risperidone and olanzapine. And because of this, we have confidence in achieving the peak sales of 1.5 to 2 billion. But now let's move on to the financial. Now Q3 2026 reflects Tether's transition to a biopharma company. And the facts are in the numbers here. So let me walk you through that. So revenues declined 2%, but our gross margin grew to 58.7%. That's up 345 basis points. Our EBITDA grew 7%, and our non-GAAP EPS was up 10%. Now, I remember way back in 2023 when I presented the first quarter as CEO, and our gross margin was approximately 48%. So this really showed the substantial progress we've made in transitioning this company from a pure pay genetics to a biopharma company. Now, this isn't a one-quarter effect. It reflects deliberate choices we have made to transition the business. We set out in 2023 to become a biopharma company, and these results show that that transformation is happening. And what I'd highlight is there is more to come. Now, these results include IPR and D-impact, and Eliyahu will present and explain in a few minutes. Now, moving on to the next slide, our total revenues are $4.4 billion. Innovative was up 33% year-on-year, as I've mentioned. Esteda was up 21% globally at $751 million. Esteria was up 96% at $85 million. Najib was up 61% at $269 million. Generics were down 16%, and this was largely due to the low contribution of generic revenue. But now let me go into a bit more detail. So on to Esteda. Esteda reaches its $2.5 billion target one year ahead of schedule. I'm really, really proud of this and congratulations to the team for making this happen. So, revenues in the U.S. are up to $727 million, up 21%, and the fundamentals remain strong. U.S. TRX grew 18% and milligram dispense grew 23%. Now, given this strong momentum, we increased our outlook by $75 million at the midpoint, so our study will now be $2.55 billion to $2.65 billion. So congratulations to the team on that. I would like to highlight that the opportunity for Speda remains strong. You see that the market growth that can remain, new patients with 85% of patients not treated, you see a strong opportunity to keep growing this product to greater than 2 billion of the pre-sales as we previously communicated. Now moving on to your study. Your study is the fastest growing AI for schizophrenia. The revenues grew 96%. and the underlying demand remains strong, with TerraExit and MIT up 62% year-over-year. The excellent commercial execution is expanding the market, with the study nearly doubling with Spiridon-LAI's share from 5% to 10%, and capturing approximately 83% from Spiridon-LAI. It is worth noting that if you remember back 25, Q3 and Q4, we did have some one-off negative impacts, so it's worth keeping that in mind when you plan forward. That said, we're increasing our outlook on your study by 20 million at the midpoint. Now the range is 290 million to 310 million. It probably doesn't need pointing out, but I will, that this continued excellent execution gives us a solid foundation in which to launch what to use it. Now moving on to Adobe. GevExtend continues to extend its global leadership in migraine, continue to outperform the injectable market and lead in many markets where we have launched. Global revenue reached $269 million, up 61% year-over-year, with strong momentum across many markets. In the US, revenue grew 89%, while ex-US momentum remained strong, supported by volume growth as well as market share gain. Because of this strong momentum, we increased our average by $85 million at the midpoint, are raising it to $930 million and to $960 million. Now, I'd like to point out, this doesn't happen by chance. And if you remember, when we started on this journey in 2023, nobody was talking about Adjogu, but we reinvigorated it. And I think this reflects something broad about FedEx. We do things with intent, and we execute with intensity. And that's why looking beyond 2026, we see a path to greater than $1 billion of good sales for Adjogu. Now moving on to a couple of new products on our pipeline that I've touched upon earlier. Firstly, Ecopython. This is a first-in-class opportunity for Tourette's syndrome, combining compelling efficacy and favorable tolerability in a serious pediatric neurological disorder with limited treatment options. There are 100,000 pediatric patients who live with Tourette's syndrome every year. 50,000 are treated, but unfortunately, only 20% to 30% remain on therapy after one year. We hope to help that. and hope to help these patients and these children. Our next key milestone is obtaining regulatory approval, which we anticipate in Q1, 2027. Now moving on to the latest addition to our innovative pipeline is the asset that we acquired from Biocell, which is BXCL 501. Now this is expected to address another clear unmet need for patients experiencing acute agitation at home, extending our patient focus in neuroscience and bringing potential benefits to nearly 7 million patients. BXEL 501 could be the first at-home treatment for acute agitation and in regulatory approval, adding another differentiated opportunity and significant value to our neuroscience portfolio. This order also highlights another example of disciplined capital allocation, finding differentiated assets where Tether can have real value. Now, my colleagues will go into a bit more detail on Ecopython and BXEL 501 next week at our R&D day. Now, moving on to The next slide. When we talk about growth and we talk about the aggressive growth in Q3, it's worth pointing out that we have a decade-long runway of growth catalysts. And as you can see here, we have a maturing pipeline that I will talk about in more detail next week. But as you look at 2030 beyond, it really does get quite congested, this slide. And that's a great, exciting opportunity for Feather and for potential investors. Now moving on to the next slide, a slide which we've talked about for the last couple of years, But now we're starting to see some of these products actually come to the market. Obviously, we've spoken about Viltruza, we've spoken about the Netsam Opportunity, the QWAT, the EcoPipeBound. Now we've added BXF CL501. So we have a pipeline here that we are confident can deliver over 10 billion of sales going forward. But we'll give more detail on this at our R&D day next week. Now moving on to the generics business. Generic Powerhouse. are all going to have is resilient beyond Revlimid, which is exciting. And let me show the fundamentals that go with this. If you take away generic Revlimid, our global genetics business grew 1%, with the US down 3%, and EU up 7%, and emerging markets down 4%. Now, we expect our genetics business to be flat to slightly up in 2026, but we continue to be positive about long-term growth trajectory of this business, 1% to 2% over the long term. Now, I remain very optimistic about the future of our generic business. The main reason is the growth rate is really around our rapidly expanding biosimilar portfolio pipeline. So now if I move on to this, you will see this clearly on this slide. It's one of the fastest growing biosimilar businesses we have there. We set out to achieve 800 million of sales by 2027. Well, I'm in a position to tell you today that we're going to do that in 2026, a year ahead of schedule. and at the same time, we're expanding our portfolio from nine assets in 2024 to 15 today and potentially 18 in 2027. But it's worth noting, this is not simply about adding assets. We're deliberately shifting our portfolio towards biosimilar, an increasingly important growth driver for our genetic business. And what's important, it's not just about the portfolio, it's how we execute it. And as you can see, three out of the five US biosimilars are ranked number one, while in Europe, we are building leading positions across several important markets. If you go on to the next slide, we're going to continue on this journey, expanding our portfolio and bringing these biosimilars to markets in both the US and Europe. As you can see here, we have the potential to be 31 already, but I've also realized that this slide is already out of date because of the deal we announced today with Samsung, so it should be 32. So apologies for that, but it does really reflect the speed we move at at Teva. So based on this the Solid Foundation of Innovation and the Portfolio Transition of our Genetics Business with Biosimilars. I can move on to the next slide and say we are firmly on track to achieve our 2027 targets that we laid out back in 2023. And with that, I'm going to hand over to Eric.

Thank you, Richard. I'm going to have my first slide. I just want to review really quickly the progression of our innovative growth drivers. This is led by a trio of neuroscience products with the approval of WellTrueZone. and now the hopeful approval in 2027 of Ecopypan for Tourette's disease. And then finally, our new drug dexmedetomidine that is being used for the treatment of agitation. We're looking for a producer date in Q4 of this year. So really a great spearhead leading with our neuroscience portfolio. But following on to that is our burgeoning innovative pipeline in immunology, leading off with DARI, which will be ending our phase three study soon, we're also in phase three at this point with ulcerative colitis and Crohn's disease. We'll also be initiating adiagenitis suprativa infarctuosomatic Crohn's disease with our partner Sanity. And then finally, our 15 program where we have exciting new data this year and a proof of concept study in vitiligo and celiac disease. So a real engine of growth for our innovative drivers. On the next slide though, the real ball of the ball today is and Walt Truza. This is a fantastic product for patients with schizophrenia, building upon the known efficacy of Elanzapine, but we really delivered on the label with no loading dose, no oral supplementation, and no post-injection monitoring. I just have to give a shout out to the R&D team for doing such a great job in this development, and I appreciate that our data set was so well received by the FDA to give a label that really gives something that patients can use in the future. So kudos to the team. But, you know, on the next slide, I just want to really go over, there's been a lot of momentum just since the last earnings call in Q2. Since then, we have the announcement of the priority review at Ecopipen. We've had the submission of the IND for the hydrogenized supertipus study and for dupatitum. We announced and shared some top-line data that showed clinically significant changes in our gluten challenge for celiac disease. We had presented our Vero IGO data at the EADB conference in September. We achieved the futility analysis for Emry-Sulman. Unfortunately, that didn't turn out the way we wanted. The team did a great job in executing the study, and we'll review the loads of data that we've produced to see how we'll bring that program forward in the future. But really, the Welch Reza was a big announcement on October 8th. and then finally we presented at UEGW the Dubikito data on the maintenance data, how we started the entire year, bringing it full circle and presenting that great data for Dubikito. So lots of momentum just in the last quarter, so we're very proud of that work. And if I go to the next slide, so you can see we're marching down the catalyst that we had outlined at the very beginning of the year, Dubikito, Equipypan, Anti-IL-15, DARI, Emerson, and now we're adding Welltrusa, and we'll be talking about PD-102 and dexamethylamine in the future R&D meeting next week. And finally, I'm just going to end with the fact that I was going to be quick today because we'll be talking a lot more about the, you know, some deep dives into our pipeline, you know, some new programs and new data that we'll present next week on November 11th at our R&D day. I hope people can call in and listen to the webcast. If you need more details, just visit our website will write to us. And with that, I'm going to pass it off to Eli Cooley.

Eli Cooley Thank you, Eric, and good morning and good afternoon to everyone. I would like to start my review of Q3 2016 results with the following key messages. First, sustaining innovative growth momentum. We expected to continue to deliver strong product mix growth supported by disciplined commercial execution and focused investment while conforming to high margin profile. Second, continue to maintain credible tasks with 30% operating margin by 2027. Capture the full benefit of the transformation program, including structural cost savings, productivity improvement, and operating leverage from a more favorable growth and product mix, while actively mitigating generic revenue and earning erosion. And lastly, execute a disciplined capital allocation strategy. Preserve financial flexibility while prioritizing debt reduction and sustained execution on our financial policy, resulting in investment-grade profile, targeted business development investment with acceleration of innovative R&D, and focused on shareholder return. Now, starting with our Q3 gap performance on slide 30. Before I discuss our Q3 results, let me briefly explain why we also reflected the IT R&D impact IPR&D can result in significant upfront and milestone expenses related to investments in externally acquired or licensed pipeline assets. Given the transaction-driven nature of these expenses, starting with Q3 26, we present the impact of these transactions on our results to provide a clearer and more comparable view of our underlying operating cost performance. Q3 revenue were approximately $4.4 billion, down 2% in US dollars and in local currency compared to Q3 2025. This decrease was largely driven by lower generic products, many generic revenues, and was largely offset by continuous strong growth of our key innovative products, Stato, Adjovi, and EZE. GAAP net profit and profit per share were $233 million and 20 cents respectively. Turning now to our non-GAAP performance. Our non-GAAP gross margin in Q3 26 was 58.7%, an increase of 245 basis points, reflecting a favorable mix of products with strong growth in our key innovative products, partially offset by low revenue from generic products, mainly generic revenue. And GAAP operating margin was 31.7%. to 182 basis points above Q3 last year. This increase in operating margin was mainly due to a higher gross margin, partially offset by higher plan investment in sales and marketing to support our innovative growth and allow preparation for . Well, as by capital gains from the sale of property in Europe. Overall, we ended the quarter with a NAMGAP EPS of 86 cents, 10% higher compared to Q3 25. Our fee cash flow in Q3 was in line with our expectations at $495 million, slightly below last year. In October 26, we repaid approximately $1.8 billion of our debt maturities. As of today, no amounts are outstanding under our revolving credit facility. To provide you with some additional color, our Q3 25 years of debt results included approximately $1 billion revenue and $730 million EBITDA contributions from our GMX revenue. Our Q3-25 results included $430 million revenue and $300 million EBITDA contribution from generic revenues. Excluding these, our financial results year-to-date and for this quarter reflect a strong underlying performance. Moving to the next slide. As a reminder, our operating margin expansion to 30% is driven by two structural elements. The first is the portfolio shift towards higher growth higher margin innovative products. And second, are the several transformation programs. We continue to make solid process with our day-to-day operating margin, reaching 28% on our updated 2026 guidance of 27.8% to 28.2%, all excluding for IPR and the expenses. Looking ahead to 2027, we expect further 180 to 220 basis points of improvement driven by the full expected impact of our transformation program and continued innovative growth while compensating for generics revenue erosion. This is the core of our financial transformation, moving from a company historically driven by generics to a bar from a company. Moving to slide 32. Focused financial management has been important source of cash creation for us, and importantly, It has allowed us to redirect capital towards higher return opportunities. From 2022 through 2026, improvements in networking capital generated approximately 1.3 billion of incremental cash, with additional approximately 160 million from lower interest expenses. Together, that represents roughly 1.5 billion of cash generation that we have been able to redeploy into the business, including accelerating our innovative pipeline and investing in our broader priorities. Looking forward, we see the opportunity to continue this dynamic. Between 2027 to 2030, we expect to generate an additional of approximately $500 to $900 million from networking capital, together with approximately $1.4 to $1.6 billion from interest expense savings, bringing the accumulated opportunity to approximately $3.4 to $4 billion. By the end of the 2030, we expect to reach negative networking capital as a percentage of revenue. And importantly, as the business grows, this becomes increasingly powerful. We are freeing up capital and reinvesting it in higher rates of return while continuing to grow and create further capacity for investment. At the same time, we remain focused on maintaining the right balance sheets. We have repaid approximately 12 billion of debt since 2019 and remain on clear path for the net debt to EBITDA two times by the end of 2027. With approximately 2.7 billion expected free cash flow in 2027, compared with the less than 1 billion of annual maturities from 2028 to 2030, and approximately 2.5 billion of free cash flow expected in 2030, We believe we have a significant financial flexibility to continue investing in our growth while maintaining appropriate leverage. So this is really a reinforcing cycle. Discipline financial management generates cash. That cash is reinvested into a high return growth opportunity. And as the business grows, we create even greater capacity to invest. Now turning to 2026 outlook on slide 33. Based on our strong performance year-to-date and the visibility into the reminder of the year, we are raising our full-year revenue guidance range to $16.7 billion to $17 billion, which is an increase of $175 million to our midpoint. We are also updating our outlook range for operating profit, adjusted EBITDA, EPS, and free cash flow. As Richard mentioned earlier, the acquisition of DXCL 501 from BioXcel is now closed. Here is a reminder of the deal terms. The agreement provides for $57.5 million upfront payments, as well up to $67.5 million in potential contingent payments linked to the timing of expected FDA approval and certain sales milestones. Let me provide some color on our guidance assumptions, starting with the revenue. First, our innovative portfolio continues to perform strongly across all three products. Sato, Ajovi, and Uzedi. We are increasing the full year guidance for all the three products. With Sato now expected at $2.55 billion to $2.65 billion, Ajovi at $930 million to $960 million, and Uzedi at $290 to $310 million. We expected our global generic revenue full year to be slightly up in local currency compared to 2025, excluding the impact of generic revenue and the Divested Japan Business. We continue to expect 2026 Nangap growth margin to be in the range of 54.5% to 55.5%. We now expect 2026 operating income to be in the range of 2.8 billion to 2.9 billion with an operating margin of 22.6% to 23.1%. Excluding IPR&D, this range will be between 27.8% to 28.2%. Our operating expenses continue to reflect the deliberate investment we are making to support our growing innovative portfolio and biosimilars. Our guidance for operating income and adjusted EBITDA reflect this continued growth investment in office. With adjusted EBITDA now expected to be in the range of 4 billion 23 to 4 billion 43. Excluding IPR&D, this range will be between $5.1 billion to $5.3 billion. We continue to expect finance expenses to approximately $800 million and a tax rate in the range of 20% to 23%. Our diluted EPS guidance is now $1.92 to $2.11, and we are also increasing our guidance for free cash flow to be in the range of $2.1 billion to $2.4 billion for the full year. Now, let me provide you some additional thoughts on Q4. For Stevo, we continue to expect revenue in Q4 2016 to be down year-over-year due to expected expenses changes in the purchasing partners and the pricing environment ahead of the IRA implementation in January. In addition, we are preparing for the Q4 launch of Voltruza. Since the initial volume is expected to be larger samples or vouchers as we establish a fair coverage, We continue to expect no major revenue contribution in Q4. Over the last several years, we have consistently delivered on our commitment and made significant progress across our key financial metrics. Today, we are not providing detailed 2027 guidance outlook, but looking ahead, we expect this momentum to continue with a mid-single-digit growth in revenue figure from 2023 to 2027. We outlined on slide 69 more comprehensive information about our financial trajectory. Moving to the next slide on capital allocation. Over the last few years, we have made significant progress in strengthening our balance sheets. This progress allow us the financial flexibility to invest in our innovative portfolio and pipeline, evaluating value-accrued business development opportunities, along with the optionality of returning capital to shareholders and more. And lastly, I would like to briefly touch on our transition to a direct ordinary share listing on the New York Stock Exchange. We believe this change is making Teva shares more accessible to a broader investor base. We are now able to buy ordinary shares directly in a seamless manner and strengthening our position in the U.S. capital markets. With our recent return to investment ratings from all three major rating agencies, this represents another important milestone in our financial transformation. We believe this transition reflects the momentum we're building through our Pivotal Growth Strategy and further enhance our ability to invest for long-term growth and create shareholder value. With that, I will now hand it back to Richard for his closing remarks.

Thank you, Eli. So in summary, Terra is now a more focused high growth by a pharma company, and our pivot to growth strategy is delivery. The growth engine of our innovative portfolio is accelerating. Stato, Musetti, and Adobe are growth drivers, and we're excited by the recent FDA approval of WorldChooser. In the near future, our incremental growth will come from the next generation of innovation. And to conclude on the next slide, as we continue our journey, three themes are clear. In a pivotal year for Teva, we delivered as promised. Our pipeline is advancing with speed. Our disciplined capital allocation is what sets us apart. And to build on what Eric said, we are looking forward to seeing you at our R&D day next week in New York City. With that, I'll open the floor to questions.

Thank you.

If you would like to ask a question, please press the button.

Sorry, Eliyahu, before you get the queue ready, I just wanted to remind people you should try to limit yourself to one question and one follow-up. And if you have additional questions, we're happy to have you back in the queue and we'll answer as many as time permits. Sorry, go ahead, Eliyahu.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. And as a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question today comes from Yun Choi with Evercore ISI. Your line is open. Please go ahead.

Hi, guys. Sorry. Thanks for taking my question. Omer here. I wanted to touch upon two things here. First, the last slide has this interesting disclosure on a possible 57 to 58% gross margin in 2027. I believe that's a new disclosure, which is up quite nicely from the full year 26 of about 55% gross margin. My question is this, if Austeto is flattish next year because of IRA implementation, Can you speak to what enables that 200 to 300 pips in gross margin expansion, which is presumably not branded business-driven? Second, speaking of Fostetto more specifically, I just wanted to run some math with you. First, we heard Gilead mention about a billion five in IRA impact to Bictarbi, which represents something between a quarter to a third of Bictarbi's Medicare exposure. So considering Fostetto's Medicare exposure is about a billion five, is it reasonable to assume something like half a billion or so in IRA exposure for Osteto into next year? Thank you.

Thanks, Uma. Thanks for the question. And I appreciate the fact that you looked through all of the slides even in the appendix. So thank you for that. So I'll hand over to Eliyahu to talk a bit about the gross margin. But I think one thing I'd say on a high level is when we did disclose the direction of travel with our gross margin back at our capital market today. I think what you're seeing is the fact that the transition to a biopharma company is accelerating that because our portfolio is transitioning at speed and at scale combined with some of our efficiency trials. But I'll hand that to Elliot to give a bit more context in detail.

Thank you, Omar, for the question. We did mention in the past that 50% to 58% and while keeping the 27% to 28% OPEX, get us to the 30% OPEX. But that's just kind of the high level. But what I will mention is the following. If you look on just, you know, this quarter, we actually are able to be about 58%. If you compare it to last year, the same quarter was a bit above 55%. This is kind of a 350 basis point and mainly coming from the innovative shift that we had on our revenue mix. and what we're going to see next year and to remind everybody we have the 700 million dollars on consummation savings around two-thirds of it is actually related to OPEX and we are going to actually utilize it and recognize it this year but the rest of the program is more kind of a declaration related to our network optimization which is going to impact our code so if you think about us ending the year close to and I would say in the higher range of 55.5%. You take 200 basis points to the midpoint, it's 67 to 58%. Kind of the 100 basis points going to manufacturing and optimization of our crops and 100 basis points going to our innovative revenue shift.

Thanks, Eliyahu. And look, one thing I'll say about that trajectory gross margin upwards, it will just keep continuing. It's just a question of by how much, but it will continue because of the transformation of our portfolio, because of the transformation of the launches we have coming up. Now, to answer your second question, Numa, generally speaking, yes, you're right. So that's probably the first thing to say. Without getting into guidance, you know, consistent with our past practices, we'll provide guidance in 27 next year. But yes, we have a high degree of confidence at Asceto will achieve $2.5 billion next year and greater than $3 billion at peak. 2027 was always a year we planned for. We have strong fundamentals offsetting the IRA impact, and so that's what gives us the confidence in that. I'd say, just to give even more broader context, what has really changed is the company is having a portfolio of private additions to its federal. So, once again, I'm not giving guidance on 2027. We expect Terra's revenues to grow again. Beside Yosedi and Joe, we were now adding Wattusa and EcoPython and then potentially maybe VXCL 501. So our portfolio of innovation allows us to continue to grow beyond 27, in 27 and beyond. And that allows us to grow our margins. So, you know, I think It's a good question. I appreciate you asking it because it's multi-layered, but it fundamentally comes back to the execution of the Pivot to Growth strategy, the execution of moving us to a biopharma company with a fast-growing innovative portfolio. Thanks for the question, Yuma.

We now turn to Douglas Thao with HC Wainwright. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking the questions. Maybe two questions on Osteto and Jovi. First, in terms of Osteto, I noticed you've continued to have an acceleration in terms of the milligrams per patient. And I'm just curious, some of that is obviously just coming from natural migration to XR, but I'm curious within the XR franchise alone, How much continued traction have you had? I know patients are generally not getting to the 36.6 that was in the phase three trial. And how much of a focus is it to sort of get patients ultimately to that level? And then just in terms of the Jovi where we've sort of had the franchise really renewed growth recently, I'm just curious when you think about the prospects You know, what you're necessarily seeing in the U.S., it looks like you're doing better on a revenue standpoint per patient. You know, sort of how you see share shaking out. You've definitely taken share from Aim of Egg, you know, over the long term, and how much growth will come from U.S. versus ex-U.S. Thank you.

Okay. Firstly, thank you. I think is the right word for the coverage, so I appreciate that. And thank you for your questions. Let me try and pick them up. So firstly, I'm going to start with Stevo. So you talked about the milligrams growth there, 22% to Q3. How that has happened is a couple of things. Firstly, there was the launch of XR, but then there was also the launch of the ability to get a titration pack through prescription. Because one of the things about Stevo is you need to titrate up to the optimal dose to get efficacy. So having a titration pack prescribed and then having XR once a day just makes that process simpler and so that's what's really different now we haven't actively gone out there to drive conversion from BD to XR we've let the physician make that choice so but because of the fact that those two things are in place we've seen that continuously improve which is good for the patients because we want to have the patients on the most efficacious dose you know and one of the The challenges and opportunities with Estedo is that people start to feel ecstasy pretty quickly, but we want to make sure they go on to something that is best optimal for them. But that's down to the position to use the titration pack and XR to help do that. So that's the fundamental of that. And we see, you know, continued progression of that this year and going forward. Now onto your question around Jovi. Jovi, I think, was around about U.S. performance and how strong that is and then the rest of the world performance. Let me sort of talk you through the U.S. performance first. CS performance, and it goes back to what I said in my opening remarks, which is about a focused execution on delivering a strategy at a brand level. What do we want to do globally and what do we want to do locally and what capabilities do we need to put around that, what resources and what choices do we need to make? And I think in the U.S. we've seen the work of the team there to make decisions on making sure we have the right access and the right value. and when you do that as well as you're growing market share then you have the ability. Then with regard to the rest of the world you have the opportunity and as you've seen that we continue to grow in Europe and international markets above market significantly above market and because of that we grow in market share and so if you do that we continue to see the revenue growth. I think that this highlights because I know this is a an unusual situation but we focus We now turn to Glenn Santangelo with Barclays. Your line is open. Please go ahead.

Oh, yeah, thanks for taking my questions. Richard, just two things I wanted to hit on quickly. You know, when you were talking about sort of the biosimilar launch slide, you sort of commented how congested it's becoming. But as I'm sure you're aware, you know, you've seen a bunch of, you know, incremental litigation in the space, for example, you know, Janssen seeking a PI on Sympony and you know Genentech bringing a suit on Zolaire and you know a lot of concern around Antivio and you know on the launch timing there just sort of given the IP at Takeda and I'm just kind of curious how Teva thinks about navigating all that potential litigation making the decision on whether to launch these products because on that slide it seems like you have Some incremental contribution coming in in twenty seven from these drugs. And then secondly, I did want to ask about, you know, twenty seven related to equal pipe and BXL five oh one. I'm sure you're going to touch on this at the R&D day next week, but I'm just kind of curious at a high level. Are you expecting any type of reasonable contribution from those two drugs in the second half of twenty seven? Thanks. And I'll stop there.

Hi, Dan. Thanks for the questions. So on the biosimilar ones with regard to litigation, yeah, that's pretty much the business we're in when it comes to genetics and biosimilars, you know. We want to bring these products to the market and people want to litigate and stop us doing that. So it sort of is not a surprise to us. Obviously, we would like that not to be in place, but we strategically plan and we financially plan with realism. So when we think about our portfolio of 32, We take into account the puts and takes. And I think when I started on this journey, I said to people who asked me, which is going to be the most successful biosimilar? I said, I don't know, because there's too many variables, IP, litigation, launch timing, amount of competitors, price erosion, et cetera. But when you have a portfolio, you allow yourself to manage those risks in a more thoughtful way that allow you to continue to grow. And because of that, you know, I feel very confident of the direction we're on with our biosimilar business. And I think what's important noting now, we are reaching a certain momentum and scale that this is going to fundamentally change the portfolio of our genetics business. And I think that's something for people to maybe double click on and recognize. So I think that's, that's one. The other thing I tell a biosimilar business is to some degree, it doesn't follow all the traditional rules. As I said, three out of five of our biosimilars in the US are number one. We were not number one to the market. So that just shows you it's not as straightforward as people think, and I like that. And the same in Europe. We've come to Europe late in many instances, but we're also showing that we can be number one in those markets because of the capability and infrastructure we have in place. So I think biosimilars, you know, he was talking more about it, but we're going to keep expanding that portfolio, and litigation will come, and we'll deal with that as and when it comes. But it won't derail us. Now on ECOPIPAN and PCXL 501, I've got to ensure you turn up next week, so I can't tell you anything. All I'll say is a good question and the right question. And we'll start to give you some insight into why we're excited about these two products. Whether we'll give you any guidance on that, you'll have to wait and see. But I'm glad you're starting to focus on those because I think in our hands, as we've shown, we can really drive value. We've just had that conversation on JV, but I think when you look at Euclid Pipeline with a significant unlit need and you look at the BCXL501 with a significant unlit need and agitation, I think we're very excited about what we could do with those. So apologies, but I'll see you in New York next week.

No worries. Thanks. We'll see you next week.

Our next question comes from David Amselen with Piper Sandler. Your line is open. Please go ahead.

Thanks. So actually have a couple of Ecopipem questions, more longer term focus. So you didn't provide peak sales potential for the product in your slide, unlike other products in the pipeline or recently approved. So maybe just a question on how you're thinking qualitatively about how impactful this product could be. How are you thinking about access dynamics, mix of Medicaid versus commercial and how long do you think it's going to take to get good access? Any pricing analogs that you can help us with in terms of how to think about that? And then do you think this is a product that could slot in ahead of the approved antipsychotics that are commonly used? I know that's a bunch, but it's obviously an important driver going forward. Thanks.

Thanks, David. Thanks for the question. No, it's a really good question. And I'll give Eric a heads up that let's talk about that third line moving ahead of antipsychotics. But I think you've touched upon all the variables there that we're thinking about. So first off, there is the fact that we've got to think about what is the appropriate price for such an innovative product that's going to bring compelling efficacy and controllability and safety. And we're doing a lot of work on that now because obviously that is a very important factor in this equation. and so that's you know another reason why we don't want to talk talking about sales and peak sales because you want to get that work done and we want to make sure that as thorough as it can be so as we've said in the past you know the pricing will reflect something of a rare orphan nature where there's a significant unmet need in the pediatric population the second thing that comes down to then is access and how do we want to approach access and now as you know we are very thoughtful about access and we think about and the long-term value of a product and how you have to be thoughtful in what you do with regards to access around that. And so we're working through that. With regards to Medicaid and commercial, the mix is a bit different here. So I think we're looking at more commercial plans on this product, which, as I stated in the past, is a change for us because we spend a lot of our time dealing with Medicaid and Medicare. So I think that's how I would think about it. I'll hand over to Eric, but what I would say is when I get to speak to physicians and when I actually get to speak to patients, and I've actually even come across some people who suffer from Tourette's, then there is a clear opportunity for an efficacious and safe and well-tolerated product to move ahead of an antipsychotic, but maybe I'll hand that to the doctor in your room.

Thank you, Richard. So, you know, I think that the value of Ecopypan comes down to the data sets that we've generated to date. you know there's two well-controlled studies both in phase two and phase three now one with a you know 30 reduction in the tick uh experience for the for the patients and a 50 reduction in the relapse rate so it's great data but more importantly these you know side effect profile was you know favorable i think where you saw you know very good tolerability no metabolic effects uh you know good activity for the for their ticks and you know no abnormal movement disorders so When I think about how physicians might use this in the future, sure, they might step through what they do today with alpha-ageneric receptor agonists, which is off-label, then they might go on to antipsychotics. But I think when they get used to what the profile is of Ecopipine and understand both the efficacy and the safety profile, it will move up in that list of possibilities out there. I think that long-term efficacy, remember, You know, only about mid-20s do people stay on their therapies today. In our long-term follow-up, you know, 66% of patients stay on the drug for up to a year. So I think the profile once physicians get used to it, it'll move up in that armamentium.

Thanks, Eric. Thanks for that answer. Thanks for the question, David.

Our next question comes from Jason Gerbery with Bank of America. Your line is open. Please go ahead.

Good morning, thank you for taking my questions. So one question for Eric, just the, what does the timeline look like for Teva's efforts to advance a TL1A bispecific into the clinic? I know you guys have some efforts that had been ongoing pre-clinically, so anything you can update there in terms of timeline? And then my follow-up question is just, does the US government agreement exclude Teva from some of the generic tariff headline? I don't know what to call it exactly, but does the agreement provide exemption from any generic tariff risk? Thanks.

So I can start to answer the question on the TLNA bispecific. So I'll disappoint you right after that. I'm not going to tell you much because we have an R&D day next week, and we may be talking about bispecific programs with our TLNA. And I would mention that we are one of the first in the TLNA space. We have a very potent hydroselective drug with low antibody, anti-drug antibodies in phase three. But I think that our scientists are the experts in TLNA. We'll hear more about that next week.

Jason, with regard to your question on generics and any agreement with the U.S. government, as they laid out some time ago, it's a two-year time frame they've put in place to come to some sort of agreement. and so there's nothing that's been concluded there but as you can imagine a company like Teva is always at the table and so as and when we get more information we'll let you know.

We now turn to Louise Chen with Scotiabank. Your line is open please go ahead.

Hi thanks for taking my questions and congratulations on the quarter. I wanted to ask you first, what's your latest thinking on M&A and business development? And then secondly, if you could talk about your R&D philosophy a little bit more and the efficiency at which you move products through your pipeline. Thank you.

Hi, Louise. Thanks for the question. So M&A. So what we think about is efficient deployment of capital all the time. Obviously, we're thinking about that a lot, and we have been thinking about that a lot in the last few years, despite that people thinking today wasn't going to come. And what I mean by today is an ever-improving balance sheet, investment grade, and as Eli's pointed out, an opportunity for the company to really generate some free cash. And so, obviously, we know our balance sheet is going to start to improve significantly. Because of that, we were always planning for this day. I hope you have something that people start to realize. We do plan long-term for Teva, until we start to think about what can be around the corner. And so, yes, we do think about more business development deals. We think about potential MA, but it has to be one that we feel that is good value. It drives the long-term value of the company, puts us on a sustainable footing to become a world-class biopharma company. And I think hopefully you've seen with the deals we've done, we're very thoughtful about how we deploy capital externally. and making sure we do things that we know will drive a good accretion short-term as well as long-term. And so that's our philosophy. The balance sheet gives us a bit more flexibility, but our discipline will not change. Now on the R&D philosophy. Eric, are you going to tell them anything?

I might give them a headline. So, yeah, thanks for the question, Louise. You know, I think it's a pretty simple strategy and philosophy we have. We'll talk about it more next week. It's really about using known science to increase your POS, you know, speed and execution. It's true whether or not AI and there's discipline capital and using partnerships where you can increase your bandwidth and your funding. So it's straight up simple, but you have to execute it.

Thanks, Eli. Thanks, Lisa. Thank you for the question. Next question.

We now turn to Dennis Ding with Jefferies. Your line is open. Please go ahead.

Hey guys, good morning. Two questions, if I may. One on Valtruza. So you framed the market as 2 million in the US diagnosed and 20% on oral olanzapine. So you're essentially implying the TAM is around 400,000. But how does the TAM change given many patients don't tolerate olanzapine because of weight gain and then they eventually discontinue? And Valtruza likely will have a similar side effect profile. where do you see Welltrusa being realistically used? And I guess in a way I'm asking if you have an estimate for how many patients have shown efficacy on olanzapine, tolerate the weight gain, but are also showing evidence of noncompliance. So that's question number one. And then question number two for biosimilars, can you please clarify again and confirm on slide 20 that you're looking to launch a biosimilar symphony in the US in 2027? And I'm just wondering you know everything about the litigation aspect here as a barrier for a U.S. launch and the reason we ask is because the four-day bench trial that J&J has against Biothera starts March 2028 and I'm assuming your partner's bench trial will be scheduled around the same time frame so just help me you know help me reconcile the timing differences here and if what you're implying is that you'll be aggressive in pursuing a settlement to ensure a 2027 U.S. biosimilar symphony launch. Thanks so much.

Okay, thanks. Thanks. Thanks for the question. So I will tag team the first one with Eric. But the way that we think about it is the reason why olanzapine commands such a large portion of the market in schizophrenia is because it is very efficacious and it's seen as the gold standard when it comes to efficacy. So while you've identified some of the metabolic challenges it has, When it comes to managing schizophrenia, when patients have severe schizophrenia, efficacy is the number one priority. And that's why Olanzapine has maintained that segment of the market. So obviously, when it comes to severe schizophrenia, compliance becomes key. And that's why we think more truly comes in. In a way, we're not dealing with those side effects. They're already known and people are picking on us because of the efficacy of both the physician and the patient. But I'll let Eric give more context to that.

Yeah, I'll add a little bit more color to that. Well, Truza, its value is its known efficacy and its known safety profile. So as a physician, you're using something but bringing something new to it with the LAI. 20% of the market approximately already uses Alonzin. That's how well known it is and how used they are of using it. So bringing that convenience and that hopefully added benefit of lower relapses and a better adherence with an LEI is really the value proposition here. I think that really defined it very easily for a physician to choose who should get it. And I'd add that we've done the same thing with Usetti and it kind of routed Thank you, Eric.

And then when you go on to the question you had on the biosomal symphony, when we talk about launch readiness, we talk about the ability to be able to launch. We may or we may not launch, and that depends on a number of factors. But we always set ourselves up that we are in a position to launch if possible. And so that's the way to think about it. IP litigation can go many different ways, but what I always insist upon is we are ready. So if things do go the way we plan them or we are hoping that they do, then we are there to make sure this access is made available to patients.

Our next question comes from Dan Clark with Lerink Partners. Your line is open. Please go ahead.

Great. Thanks so much. Good morning, everyone. Wanted to ask my first question on the AUSTETA slide. You mentioned there are new capabilities in place to support MFP effectuation next year. Can you just give some color on what those are and sort of how those might impact, you know, either sales or kind of price next year? And then my second question, just a little more clarity on how you're thinking about the timing of well trues or revenue next year. Should we think about that being more easier as you work to secure access or any color you could find that would be very helpful? Thank you.

Thanks, Benny. Thanks for the question. So starting in reverse order, Onwell Truza, revenue expectations are in the latter half of the year. Let me explain a bit why. So we've launched in this quarter, and this is all about making sure we get access and familiarity with the product, both in the hospital formways and with the physicians. Now, as you may be aware, we have the majority of our patients in Medicaid and Medicare. And so to get access to lotteries, we have to get access on Medicaid for many reasons. And that is something which is limited by each plan. And so some will do that at launch and some will do that six months, nine months, 12 months. At 12 months, we'll have about 85% of Medicaid coverage. So access is one of the big limiting factors. And obviously then we have Medicare, but it's really Medicaid. Now, the things we do on the inputs to make that happen is we have sampling, we have hospital formulas to make sure the hospital formulas have it on. But ultimately, it comes down to that access. That means you're not going to see revenue of any particular value in the first half of next year. But as a lot of those states come on board, then we see the opportunity for physicians to start using Welltrusa more broadly. And that's why we say the second half of next year. And obviously that changes significantly with the full year. in 2028. But that's how I think about it. What we will do is make sure we update you all on some things I call the inputs or the leading metrics around TRX, around access breadth of use by physicians, depth of use by physicians. But we feel very confident in where we're heading. We'll choose it because of the things that Eric has mentioned on the product profile, the unmet medical need, and the fact that we have a really strong capability. You said it, And then on Esteto, I think the question was around what capabilities have we built to minimize the impact of the IRA and the effectuation of that. It's really doing a bit more of the same in that we've been planning for this for some time. So we're not suddenly walking into 2027 unprepared. We've been preparing this for multiple years, as we said, on the Pivot to Growth strategy in 2027. We knew this was going to happen, sorry, 23, 4, 27. We knew this was going to happen. So we've been building capability, putting our strategy around this. So I think we're well-placed. That goes down to many factors around how we manage the patients, how we manage trusted pharmacy, how we manage access, how we manage multiple parts of the patient journey. And those are put in place some time ago. And so that gives us a level of confidence that we can keep growing this product to over 3 billion in time. And so 27 is just merely a stage on the journey to that. And as I repeat, we always plan for 2027. And so in no way are we daunted by the challenge ahead of us.

We now turn to Joseph Thom with and TD Securities. Your line is open. Please go ahead.

Hi there. Good morning, and thank you for taking my questions. Maybe one on the commercial side first. Just as you're seeing about the LAIs, obviously one of the benefits can be time on therapy and increased compliance. What are you seeing in terms of real-world Buzetti refill rates and kind of patient time on therapy? And has that matched your kind of expectations ahead of launch? and then maybe one on the pipeline. We've seen a few celiac data sets this year. How is Teva balancing kind of speed to market versus competition and also signing off perfectly with the FDA on what endpoints they want and clinical trial success? Thank you.

So thanks for the question, Joe. So on the compliance and adherence, I can't give any sort of specifics to well choose, but what we see with the other long actings in the market is there is increased, as you imagine, compliance and adherence. You go from having a daily pill or multiple pills to have an injection once a month, or in your city's case, once every two months, then obviously compliance and adherence increases pretty significantly. So we think that is a benefit, obviously, for the patient to realize that efficacy. but obviously for the continuation of therapy. And by the way, compliance and adherence, I'm sure you know, is really important in schizophrenia because every relapse you have actually damages the brain. And so the effectiveness of the medication after that, you know, starts to slightly go down. So you want to avoid anything. So compliance and adherence are key, which is why, you know, when you have a product, like you said, that is easy to use, easy to administer, no loading dose, gets to blood levels within 24 hours, it gets used significantly because they want our patients to comply. And we see the same opportunity for our users. So I don't have any details yet. Maybe we'll look into that and see if we can find some data sets, but it seems to be very clear from what we've seen with your study. But thank you for that question. Now moving on to CLEC and the pipeline. I'll offer that one to Eric to talk a bit about that and our approach to that.

Yes, and thanks for the question on celiac disease. You know, it's a broader question around FDA and endpoints and speed to market. You know, our teams take advantage of all possible ways of speeding things up. You know, there's been a lot of change in the biosimilar space that we were a part of the conversation very early on, and we've been part of the conversation with accelerating normal phase three programs where you use one to two federal trials. We always look at every option depending on what the science tells us. With celiac disease, we're moving very quickly in that space, you know, with the data that we've generated recently and our proof of concept study, that's driving our conversation on how to design our phase twos and our phase threes. And we'll get in a little bit more of that next week. But we certainly, you know, have really honed in on, you know, what we're going to think those CVAC design studies are going to be. You know, at the same time, we're moving very quickly into the language, which is a very clear endpoint and pathway to registration. But thanks for the question.

Elliot, excuse me. I just have to apologize. We have time only for one more question, but we can follow up with the cell side analysts afterwards as we've discussed before. So please stay tuned and we can take any additional questions after the call. So we could have our last question, please, Elliot.

Of course. Our last question comes from Chris Schatz with J.P. Morgan. Your line is open. Please go ahead.

Great, thanks so much for the question. Maybe just a two-parter around how we were thinking about investment going forward. I guess when we look at R&D programs like the TSLIP IL-13 or maybe any other broader immunology-type programs you'd look at, would you look to partner these like you did with the TL1A, or do you feel like these are assets that Teva can now move forward on their own given the broader kind of footprint, investment opportunity, et cetera, that you have on the branded side? and maybe just a second part to that. I know you said a futility with Emerald Solon. Would you take another bet like that of a kind of a high risk, high return asset or has the BD shift also moved towards more de-risk assets given the evolution of the company? Thanks so much.

Thanks, Chris. Thanks for the question. So on the example, on Tuesday, April 13th, The way we think about it, and you'll hear a bit more of this next week at the R&D day, is pretty simple. If we find science that works, we'll prosecute it aggressively and quickly, and we'll work out the money on the way, so to speak. But what does that mean is we stay respectful of our commitment to increase shareholder value and to be respectful of margins. But at the same time, because of where we start, from a gross margin point of view, we have more flexibility than most companies. And so that's how we think about it. Do we need to partner financially with TESA Bar 13? We'll see how that plays out. We'll see how many indications that could go to. We'll see how many people want to be part of that, whether that's financing or whether that's other companies. I think that just shows the optionalities we have at Teva to deal with products which have multiple indications in exciting areas. So that's one. On the second part, which is I'll not forget now.

Oh yes.

Does that stop us going after those maybe No probability of success as it's going forward. Yes, I suppose it's a simple answer to that. And then the question would probably be, why did you do this one? Well, when Eric and I came together back in 2023, we looked at it and thought, actually, the ability to actually get to this point we have today required very little capital. We actually understood the science pretty well and thought, actually, this could have a chance. And they said, because of that, We actually went forward and did it. So the capital allocation was a big part of it. We didn't have to. There was no opportunity cost of doing this one, so to speak. Going forward, we don't see the need to do that. We want to focus on things which have a high probability of success. That is our R&D strategy. That is our BD strategy. And that's how we think we can consistently give good returns to our investors over a long period of time by really being thoughtful about capital allocation and risk. Thanks, Chris. Thanks for your question. And I think that's the last question. So I want to thank everybody for that interest in Teva and the continued interest in Teva. And I look forward to meeting many of you in New York at the R&D Day next week. Thanks very much. Thank you, everyone. Thank you, Elliot.

Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.