Ladies and gentlemen, thank you for standing by. Welcome to today's Teva Fourth Quarter and Full-Year 2020 Financial Results. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. I must advise you that this conference is being recorded today, Wednesday, the 10th of February, 2021. I would now like to hand the conference over to your speaker today, Kevin Mannix, Senior Vice President, Head of Investor Relations. Please go ahead, sir.

Thank you, Sharon, and thank you, everyone, for joining us today to discuss Teva's fourth quarter and full-year 2020 financial results. We hope you've had an opportunity to review our press release which was issued one hour ago. A copy of the release as well as a copy of the slides being presented on this call can be found on our website at www.tevapharm.com. Please note that the discussion on today's call includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company's operations to better understand its business. Further management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information and facilitates analysis by investors in evaluating the company's financial performance results of operations and trends. A reconciliation of GAAP to non-GAAP measures is available in our earnings release and in today's presentation. To begin today's call Kåre Schultz, Teva's Chief Executive Officer will provide an overview of the fourth quarter and full-year performance, recent events, and priorities going forward. Our Chief Financial Officer, Eli Kalif will then review the results in more detail before providing an overview of Teva's 2021 financial outlook. Joining Kåre and Eli on the call today is Brendan O'Grady Teva's Head of North America Commercial who will be available during the question-and-answer session that will follow the presentation. Please note that today's call will run approximately one hour. And with that, I'll now turn the call over to Kåre. Kåre, if you would please. Kåre Schultz: Thanks, Kevin, and welcome everyone to this call and thank you for your interest in Teva. I will review some of our key business highlights and then Eli will review the financials and then we'll have time for Q&A. I'm very happy to report that we met all our key components of our 2020 financial guidance. As you've seen our revenues came in at $16.7 billion, the non-GAAP operating income at $4.4 billion and the non-GAAP EBITDA at $4.9 billion. The non-GAAP EPS came in slightly above our guidance at $2.57 and the free cash flow came in at $2.1 billion. On the business side, a lot of important things happen. You could say the overarching thing for 2020 was the COVID-19 pandemic and the successful navigation of the pandemic by the company and by the employees. We do our utmost to protect the employees. And by doing so we were able to protect our supply chain with minimal disruption and also continue our R&D programs and our product launches.

Thank you, Kåre and good morning and afternoon to everyone. I hope you all have a safe and healthy 2021. I will begin my review of our 2020 financial results with my main focus being on the fourth quarter performance. This will be followed by an introduction to our 2021 non-GAAP guidance and some of the important assumptions behind it. While most of the discussion around 2021 guidance will come at the end of my presentation. And a few spots along the way, I will touch upon our expectations regarding forward-looking trends to assist you with your modeling. So please take the note of this. Beginning on slide 17. We start with a review of our GAAP performance. The fourth quarter was the strongest quarter of 2020 with regard to net revenues totaling $4.5 billion, while relatively flat compared to the fourth quarter of 2019 sales were up 12% compared to the third quarter of 2020. The strong sequential performance was supported by growth in all segments, especially, North America which benefited from the strong launches of our generic version of Truvada and Atripla as well as the continued strength of AUSTEDO and TRUXIMA. In Q4 2020, we recorded a GAAP operating income of $406 million versus $148 million in Q4 2019. GAAP income of $150 million versus $110 million in Q4 2019 and a GAAP earnings per share of $0.14 versus $0.10 in the same period in 2019. The year-over-year improvement in GAAP operating income, net income and earnings per share was mainly driven by the successful launch of generic Truvada and Atripla in the US coupled with the lower level of intangible assets impairment. Turning to slide 18. You can see that the net GAAP adjustment in the fourth quarter of 2020 were $603 million. Non-GAAP income and…

Thank you. Your first question today comes from the line of Umer Raffat from Evercore. Please go ahead. Your line is open.

Hi. Thanks so much for taking my question. If I may, the CGRP trends quarter-over-quarter on a reported sales basis versus what we're seeing in IMS, there seems to be a bit of a – there seems to be more going on than what volumes would tell us. I was curious, if you could shed some light on that as well as I noticed there's an antibody gastrointestinal as all you guys disclose on it, which is now in Phase I on your specialty pipeline if you could give us any color on that? Thank you very much. Kåre Schultz: Thanks for those two questions. I'll address the last one, and then I'll let Brendan address the first one. So I can't give you a lot of color on our pipeline, the early pipeline. We don't really disclose a lot. But I can tell you that this specific project that is for the Celiac disease and it's an exciting project. We might, about a year from now, have a day where we focus on the R&D pipeline, and then we'll give you some more color. But until then, that's about all I can tell you. So Brendan, will you comment on the CGRP trend?

Sure, happy to, and good morning. So I assume what you're talking about is the increase in share with AJOVY. As you've seen, our total prescriptions and new prescriptions have basically doubled over 2020. And I assume that you're looking at when the revenue will kind of follow that. So if you think about the market, if the patient gets on a product that's on AJOVY. Oftentimes, they're given a sample and then they may enter our savings program for a period of time while we work through the – while they work through the prior authorization process. So revenue tends to lag share by a bit, and we've increased our access quite a bit in 2020. We'll continue to do so in 2021. So the expectation is that as our share continues to grow and rise, you'll see revenue follow that, but as a lagging indicator. Thank you for the question.

Thank you.

Thank you. And your next question comes from the line of Greg Gilbert from Truist. Please go ahead. Your line is open.

Thank you. Kåre, in the past, I've asked you about the melting ice cube that is the generic business and you corrected me by calling it more of an ice bucket. So my question is, do you still think you can keep that business stable over the coming years based on what you have? And is that sort of dependent on biosimilars or any other factors you'd point out? And then, secondly, on opioids, it seems like the wholesalers are getting close on a settlement, as evidenced by their comments and their accruals, et cetera. Do you have anything new to say about where Teva stands in its opioid discussions? And are you open to settling, maybe, in different ways, perhaps, carving states out separately from other parties? Thank you. Kåre Schultz: Thanks for those two questions. I would say, on the ice cube question, I would more call the North American generic business a well working ice machine. These machines you have in a bar where ice keeps coming out. So you always have ice. It doesn't overflow, so you don't get dramatically more ice. It doesn't melt and go away, so you don't lose the ice. That's the same way within the North American business. And I think I've said for, I think, really two years, maybe three years now, it's roughly a $4 billion business in North America. And it's roughly $1 billion a quarter with the natural swings from launches, various other swing factors. So I have great confidence in this business going forward. I have also said many times, the prices are not going to get back to where they were. We do have the world's -- if not the world's lowest, but at least we have lower prices in U.S. than we have in…

Thank you. And your next question comes from the line of Elliot Wilbur from Raymond James. Please go ahead. Your line is open.

Thanks. Good morning. Good afternoon. If I could just ask you to provide some additional color, Kåre and Brendan, around your commentary regarding the trends in the North American generics business, just specifically thinking about the headwinds in terms of volume, price erosion, what's your expectation for 2021 versus 2020? And more specifically, what should we be thinking about in terms of new product launches, new product contribution? We've been talking about direct versions of Forteo, Restasis and NuvaRing for quite some time. Obviously, realized NuvaRing, but there must be some other key launches that have kind of moved into the target range here that we should be thinking about in 2021. And just wondering if there's any -- also any date? Certainly launches based on settlements that would give us a little bit more visibility into trends there. Follow-up just get your commentary around generic EpiPen market dynamics, seeing pretty strong increase in demand, unusually strong for this time of year, assuming there's some tie in to COVID-19 vaccinations, but just wanted to see what you're seeing sort of at the stocking level versus what we're seeing in terms of retail prescriptions? Thanks. Kåre Schultz: Thanks for those two questions. So, I will give an overall take on the North American generics. And then, Brendan will give you some details on that and also answer the question on EpiPen. So if I go back to this analogy of the ice machine, then you can say, the way I look at it is, we have an effective machine that makes new ice cubes over time in form of launches, be it biosimilars, complex generics, symbol generics. And that means we have a steady flow of launches into the market. Of course, they don't come every day. They come here and…

Sure. Thanks Kåre. So, there's a couple of ways to think about the generics business. And when you think about launches, it's both number of launches and value of the launches. In 2019, we launched I think 45 or 46 products. In 2020, we launched 15, but the value of those products was much different. So, 2020 was a good year for us and that was led by Truvada and Atripla. As we think about 2021, we've already launched two products. We have another six or eight that we know we're going to launch, we're preparing to launch. And then we have a stable of complex generics up to maybe 11 that are possible this year. But of course we won't get all of we're not certain which ones we will get. So, I like Kåre's ice machine analogy. I think that that's very relevant. I think that we will launch more products this year than we did last year. It was nice to start out January with the approval on NuvaRing and launch that that is a -- should be a very good product for us. We're a little late to market, so the value isn't going to be this year what it would have been two years ago had we launched it, but it still should be good. As we think about the rest of 2021, as I mentioned, there's a stable of 10, 11 complex generics and some of them we've talked about for a while. It's teriparatide is possible, octreotide is possible, cyclosporine's possible, exenatide is possible. So, there's some products in there where they all come now, but we're working with FDA and all of those. And I agree with Kåre's comment. It is a $4 billion business that we can likely grow in the low-single-digits. And $1 billion a quarter kind of, ebbs and flows depending upon the launches that occur in the timing of those launches. So, hopefully that provides more color for you. On the EpiPen comment. EpiPen, we're still seeing that as a significant product and revenue generator for us. I think that you're right there could be some stocking with the COVID-19 injections. But I wouldn't necessarily think of that as a major event. I think that that could be a slight boost here and there, but I don't think that that's going to add significantly to the overall EpiPen franchise. So thank you for your question.

Thank you. Your next question comes from the line of Ami Fadia from SVB Leerink. Please go ahead. Your line is open.

Hi, good morning. Thank you for taking the question. I had one follow-up and then one main question. So the main question is as you think about deleveraging over the next couple of years, how do you think about maybe adding additional growth drivers to the product? What are you doing in terms of thinking about refocusing R&D, or any inorganic opportunities to drive growth in the coming years? And then, secondly, just with regards to your comments on growth outside the U.S. Can you talk about some of the pushes and pulls as we think about Europe and rest of the world? Thanks. Kåre Schultz: Thanks for those two questions. So when it comes to deleveraging then as you saw in the presentation, we are fully committed to using our cash flows to reduce debt and to get below the three times net debt to EBITDA. Now that does not mean that we're not doing any in-licensing that we're not doing any early stage R&D in-licensing. But it doesn't mean that we're not buying any companies and we are not buying big late-stage assets that have maybe already been approved and so on. We are, however, working with companies where our commercial footprint is attractive. And that means that big upfronts are not needed but that together we can generate value. And if you look at the in-licensing for instance of the Alvotech biosimilar portfolio for the U.S. and that's a good example of that. No dramatic big upfront, but a big value if everything works out well. So that's the kind of deals that we like. We also do a lot on early research collaboration early leads. So we take products into our early development. Of course that doesn't lead to product in the market until 10 years…

Thank you.

Thank you. Your next question comes from the line of David Risinger from Morgan Stanley. Please go ahead. Your line is open.

Yes, thanks very much, and congrats on the very strong performance. So my two questions are first, obviously, the company’s financial progress has been impressive. Could you discuss the company's flexibility to manage potential future cash litigation payments? And second, there's been discussion of a comprehensive settlement. Kåre, could you please provide a little bit more color on that, how you define that and ensure that it covers all U.S. claimants? Thank you. Kåre Schultz: Thanks for that question or those questions. So first of all, of course, we have a situation as we've just been reviewing where we have more than $20 billion in debt which basically means that we don't have any free cash flow lying around. Of course, that doesn't mean that we can't have a cash component in a settlement, but it just means that, we don't have the capability of paying $5 billion tomorrow in cash. That's not the kind of balance sheet that we have. And this is why we've been negotiating with the state AGs and agreeing on a framework that's based on us basically providing, what we are good at providing, which is generics. So we are offering to provide generic Suboxone to all states in the United States. That means that, they can get going on therapy for people who are suffering from substance abuse. And they can save lives with the use of generic Suboxone. So we think that's a really good way to help the situation, to improve the situation. And then, we are aware of other companies who will not be able to contribute like that. And they will be contributing cash. And I think it's to the benefit of the American people that this thing gets settled, because we can discuss it forever. We can have litigation…

Thank you.

Thank you. Your next question comes from the line of Nathan Rich, Goldman Sachs. Please go ahead. Your line is open.

Great. Good morning. Thanks for the questions. First, I just wanted to dig in to the operating margin guidance for this year, the 50 basis points of improvement. Eli, could you maybe help us think about, how you're thinking about gross margins next year? It seems like you have several kind of positive tailwinds with the specialty business continuing to grow, no additional facility rationalization, you talked about a stable kind of North American generics business. So I was just kind of wondering, why we wouldn't see maybe more or gross margin improvement kind of consistent with 2020, given those tailwinds? I know there's a Japan divestiture, in there too. So just wondering, what kind of the swing factors are on, operating margins that we should keep in mind? And then, as a follow-up on -- on the AUSTEDO, the guidance was stronger than we had anticipated. I think it implies about 40% growth year-over-year off of a very strong year this year. So Kåre, maybe just where do you see opportunities to continue to grow AUSTEDO. And I know you talked this year about it, being impacted by the ability to get into doc offices. Have you started to see that improvement? And is that one of the factors that led to the guidance that you gave? Kåre Schultz: Yeah. Thanks for those two questions. I think, Eli you'll start with the question on operating margin. And then, I'll take AUSTEDO.

Yeah. Okay. Thanks for the question, Nathan. So, if you look on the trajectory on the slide that Kåre -- in his part on the operating margin. Moving from 24.5% on 2019 when we actually really introduced last year, our plans. And heading to 26.3% and actually looking to the 26.8%. You can see that 2020 become kind of a pivotal year for us. So I will say the OP margin over the gross margin, in 2019 was kind of 47%. Now we actually came to, kind of a 50-50. And heading to 2021 we should usually think about, our margin to be a flow from the gross margin on the OP more than 50%, they’re really close to what we're saying the midpoint 26.8%. And you can actually look on okay, we did kind of more than one point year-over-year but heading less than one point. One of the elements here we need to remember is that actually we are looking for going forward midpoint on the revenue versus last year. If you remove the divestment in Japan. What we did this year we worked heavily on the OpEx to make sure that we have really, really great cost structures. We are looking on moving forward to supporting some better mix on the revenue and that's actually would kind of a bit higher percentage-wise in terms of OpEx for next year. So we're still kind of looking to grow and looking on how we actually can support it with sales marketing and other activities. But I would say that the direction is to actually flip it and flow through more than 50% from the gross margin into the OP. So I think that's the way you should think about it. Kåre Schultz: So on AUSTEDO, I'll just give the overall comment and then Brendan you can also give some details if you want. So basically, we're continuing the very strong trend we've seen on AUSTEDO. So it's not a dramatic change. What is important here is that we can continue to grow and the reason why we believe so is the big unmet medical need. There's a lot of patients out there suffering from tardive dyskinesia, who can be treated or not being treated. And they can get a huge help in their everyday quality of life. And therefore, we see that new patients are coming on it all the time. Of course, we've had some hurdles on our communication with doctors face-to-face during the pandemic. We expect that will to some degree. But we've also overcome some of that through different tactics. And maybe Brendan you can comment a little bit on how do we see tactically that we will keep on driving the growth of AUSTEDO in the US?

Sure. Happy to Kåre. So at the outset of the pandemic I think we were able to move quickly to virtual and video detailing with physicians and it's certainly not necessarily as impactful as in person face-to-face detailing as far as generating a new-to-brand prescription. But certainly it played a role. We've been able to return to the field where state and local guidelines will allow. So we're continuing to engage with physicians. As far as the unmet medical need that Kåre talked about the patient population for tardive dyskinesia is probably in the 500,000 range number of patients. About 26,000 patients today are treated between the two products in the market. So it's a little more than 5%. So there's still significant opportunity in the tardive market. And then when you think about chorea associated with Huntington's disease, there's about 38,000 patients in the US with Huntington's, about 30,000 of them have a chorea associated with Huntington's. And only about 2,600 of those patients are treated, so a little less than 10%. So there's still significant opportunity with both tardive dyskinesia and Huntington's disease. I think we've really just scratched the surface on this market, as we continue to go through 2021 and the pandemic improves will have a greater percentage of our details being face-to-face. So we certainly see some good upside and some good growth coming from AUSTEDO, both in 2021 in the out years 2022 and beyond. So thank you for the question. Kåre Schultz: So I think now we will take the last set of questions because we are getting close to the hour.

Thank you. Your final question comes from the line of Jason Gerberry from Bank of America. Please go ahead. Your line is open.

Hi, good morning and thanks for squeezing me in. So I guess, my first question Kåre, is just is there an opportunity for ANDA distribution in 2021 to play a bigger role in COVID-19 vaccine distribution. You talked a little bit about the Israeli experience. Is that a one-off, or are these opportunities not available to the more broadly? And then my other question or follow-up question is, as it pertains to the DOJ legal matter that you referenced earlier with the price fixing suit, I know that there was an attempt to get the civil matters stayed pending resolution of the DOJ case. And I think, the court balked at that, but is there still the potential for getting the civil matter stayed, or could we anticipate both legal matters sort of proceeding in parallel this year? Thanks. Kåre Schultz: Thanks for those two questions. I'll try to answer them relatively briefly. The first question on ANDA. It's a yes. Yes, ANDA can potentially play a role in helping states to get vaccine distribution going in a good and safe and reliable way. We know how to do it. We're doing it as you know in Israel, and ANDA has the capability to distribute nationwide to any near pharmacy that you can imagine or any location you can imagine, so there is a possibility, whether there will be a need for it? I'm not sure. But it's definitely something that we are offering to the health care systems right now, if they need help on that front. With regard to the DOJ criminal case on price fixing and the civil case, then there was actually a development, yesterday I believe where in the civil case, we explained to the judge that -- or we have been explaining to the…

Thank you. Ladies and gentlemen, this conference will be available for replay from 2:00 p.m. Eastern Standard Time today through until 2:00 p.m. Eastern Standard Time on Tuesday, 9th March, 2021. You may access the remote replay system by dialing +44-3333-009-785 and entering the access code 5458315. That number again is +44-3333-009-785 using the access code 5458315. That does conclude our conference for today. Thank you for participating. You may all disconnect.