Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q2 2020 Earnings Presentation
42 slides from Teva Pharmaceutical Industries's earnings presentation, Aug 5, 2020
Slide 1: Second Quarter 2020 Results
Teva Pharmaceutical Industries Ltd. Second Quarter 2020 Results August 5, 2020
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainti
Slide 3: Kåre Schultz, Chief Executive Officer
Kåre Schultz Chief Executive Officer
Slide 4: COVID-19 Update
COVID-19 Update
Slide 5: Supporting All of Our Stakeholders during the COVID-19 Pandemic
Supporting All of Our Stakeholders during the COVID-19 Pandemic Our Patients Our Employees Our Communities Uninterrupted Supply Safety and Protection Support and Resources |5|
Slide 6: Making a Significant Contribution to Healthcare Around the World
Making a Significant Contribution to Healthcare Around the World 1 in every 10 Teva manufactures prescriptions in multiple medicines listed the U.S. filled with a Teva product on the World Health Organization’s essential medicines list Teva provides As the leading generics provider in the US, saving
Slide 7: Highlights
Highlights Financial Business − Revenues of $3.9 billion − Topline phase 3 fasinumab results announced with Regeneron − Non-GAAP EBITDA of $1.1 billion − Exclusive strategic partnership with − GAAP EPS of $0.13; Non-GAAP EPS of Alvotech for the commercialization of five $0.55 biosimilar product cand
Slide 8: Revenue Development
Revenue Development $ millions 4,357 8,326 8,227 4,149 4,177 307 (7%) 658 (8%) 642 (8%) 317 (8%) 342 (8%) 3,870 565 (13%) 335 (9%) 1,103 (13%) 1,053 (13%) 521 (13%) 582 (14%) Other Activities 488 (13%) International Markets 1,402 2,448 2,404 Europe 1,264 1,183 (32%) 1,001 (29%) (29%) North America (
Slide 9: AUSTEDO Continues to Grow
AUSTEDO® Continues to Grow AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 161 35,000 32,967 $283M in Net Sales for H1 2020 136 30,000 $412M in Net Sales for FY 2019 122 105 25,000 96 ~33K prescriptions dispensed in 20,000 Q2 2020 74 69 62 Favorable nationa
Slide 10: AJOVY Regaining Momentum
AJOVY® Regaining Momentum AJOVYTM Weekly Normalized TRx Count AJOVYTM NBRx Share* Highlights • $34M U.S. net sales for Q2 2020 14,000 • Autoinjector (AI) launched end of 12,000 11,483 April. Now accounts for ~40% of total 30% AJOVY NBRx and ~15% of TRx 28% 28% 10,000 26% • NBRx share increased to >2
Slide 11: Fasinumab Phase 3 Readout
Fasinumab Phase 3 Readout Regeneron data from two fasinumab phase 3 trials achieved the co-primary endpoints ̶ Two phase 3 trials FACT OA1 and FACT OA2, achieved the co-primary endpoints for fasinumab 1 mg monthly, demonstrating significant improvements in pain and physical function over placebo at
Slide 12: Alvotech Biosimilar Partnership
Alvotech Biosimilar Partnership Exclusive strategic partnership for the commercialization of five biosimilar product candidates in the U.S. Partnership combines Teva’s long-standing commercial presence and extensive infrastructure in the U.S. market with Alvotech’s scientific experience and state-of
Slide 13: A New Strategic Focus in the Japanese Market
A New Strategic Focus in the Japanese Market ̶ In April 2016, Teva established a business venture (“BV”) with Takeda in Japan in which Teva owns a 51% stake and Takeda owns the remaining 49%. ̶ On July 30th, the BV announced a new strategy focusing on the commercialization of a selection of complex
Slide 14: TRUXIMA
TRUXIMA® Launched TRUXIMA® (rituximab-abbs) Injection for Rheumatoid Arthritis, the only biosimilar to Rituxan® (rituximab) available in the United States for this Indication | 14 |
Slide 15: First Digital Inhaler Portfolio Helps Patients Monitor and Track Medication Usage
First Digital Inhaler Portfolio Helps Patients Monitor and Track Medication Usage Digihaler® Technology contains built-in sensors and utilizes Bluetooth® technology Companion Mobile App Patients can view data about their inhaler use and technique and set reminders to use their maintenance inhalers D
Slide 16: Long-Term Financial Targets
Long-Term Financial Targets To be achieved by year-end 2023 Operating Income Margin (1)(2)(3) Cash-to-earnings (1)(3)(4) Net debt/EBITDA (1)(3)(5) 28% >80% <3X Committed to utilizing cash flow to pay down debt; we do not plan to raise equity (1) Free cash flow includes cash flow generated from opera
Slide 17: Eli Kalif, EVP & Chief Financial Officer
Eli Kalif EVP & Chief Financial Officer
Slide 18: Q2 2020 Summary
Q2 2020 Summary $ millions, except EPS Q2 2020 Q2 2019 Q2 2020 Q2 2019 GAAP Non-GAAP Revenues* 3,870 4,177 3,870 4,177 Operating income (loss) 173 (644) 979 1,011 Net income (loss) attributable to Teva 140 (689) 605 653 0.13 (0.63) 0.55 0.60 Earnings (loss) per share ($)** 1,100 million 1,092 millio
Slide 19: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q2 2020 Comments Impairment & Accelerated Depreciation 402 Mainly sale of assets of Japan BV Amortization 249 Quarterly run-rate Contingent Consideration 76 Restructuring 33 Equity Compensation & Other 27 Legal settlements 13 Minority (105) Tax items effect (231) Tota
Slide 20: Non-GAAP Summary
Non-GAAP Summary $ billions, except EPS Q2 2020 Q2 2019 Change H1 2020 H1 2019 Change Revenues* 3.9 4.2 (7%) 8.2 8.3 (1%) 2.0 2.2 4.3 4.3 Gross profit (8%) - 52.0% 52.4% 52.5% 52.1% 1.0 1.0 2.2 2.0 Operating income (3%) 10% 25.3% 24.2% 27.0% 24.4% EBITDA 1.1 1.1 (3%) 2.5 2.3 8% Net income attributab
Slide 21: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 North America Segment 2,071 2,051 2,373 2,082 2,047 Generic Medicines 946 914 1,137 952 923 AJOVY 23 25 25 29 34 AUSTEDO 96 105 136 122 161 BENDEKA and TREANDA 125 124 125 105 103 COPAXONE® 274 271 264 198 238 ProAir
Slide 22: Spend Base
Spend Base $ millions -9% -7% 3,167 3,114 2,891 1,989 2,046 (63%) 1,859 (66%) (64%) 1,177 1,068 1,031 (37%) (34%) (36%) COGS OPEX Q2 2019 Q1 2020 Q2 2020 Revenues 4,177 4,357 3,870 GP% 52.4% 53.1% 52.0% OP% 24.2% 28.5% 25.3% | 22 |
Slide 23: Free Cash Flow
Free Cash Flow $ millions 974 551 551 582 168 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 | 23• | * Free cash flow includes cash flow generated from operating activities net of capital expenditures and deferred purchase price cash component collected for securitized trade receivables.
Slide 24: Cash Conversion
Cash Conversion $ millions +605 +133 1,133 Long-range target: 80% 1,440 79% 1,306 528 40% H1 2019 1 H1 2020 2 H1 2019 1 H1 2020 2 H1 2019 1 H1 2020 2 Free Cash Flow Cash Conversion* Net Income | 24 | * Free Cash Flow / non-GAAP Net income
Slide 25: Debt Reduction Continues
Debt Reduction Continues $ billions 26.6 25.7 Net Debt 24.9 24.3 23.9 4.6 4.6 4.7 4.9 4.9 EBITDA MAT Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Net Debt / EBITDA MAT 5.72 5.62 5.32 4.95 4.90 Leverage 65% 64% 64% 64% 64% | 25 | * Net Debt (Gross Debt – Cash Balance) divided by EBITDA MAT (non-GAAP); Tev
Slide 26: Reaffirming 2020 Non-GAAP Outlook
Reaffirming 2020 Non-GAAP Outlook $ billions, except EPS FY 2019 2020 Outlook Comments Revenues 16.9 16.6 - 17.0 COPAXONE 1.5 ~1.2 AUSTEDO $412 million ~$650 million Continued increase of revenues in the U.S AJOVY $96 million ~$250 million Continued increase of revenues Operating Income 4.1 4.0 - 4.
Slide 27: Q&A
Q&A
Slide 28: Additional Information
Additional Information teva
Slide 29: H1 2020 Summary
H1 2020 Summary $ millions, except EPS H1 2020 H1 2019 H1 2020 H1 2019 GAAP Non-GAAP Revenues* 8,227 8,326 8,227 8,326 Operating income (loss) 364 (510) 2,223 2,029 Net income (loss) attributable to Teva 209 (794) 1,440 1,306 0.19 (0.73) 1.31 1.20 Earnings (loss) per share ($)** 1,098 million 1,091
Slide 30: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q2 2020 Q2 2019 $ millions, except EPS Q2 2020 Q2 2019 Change Margins Margins Revenues* 3,870 4,177 (7%) COGS 2,107 54.5% 2,284 54.7% (8%) Gross profit 1,763 45.5% 1,893 45.3% (7%) R&D 225 5.8% 276 6.6% (19%) S&M 597 15.4% 666 15.9% (10%) G&A 264 6.8% 296 7.1% (11%) L
Slide 31: H1 2020 GAAP Income Statement
H1 2020 GAAP Income Statement H1 2020 H1 2019 $ millions, except EPS H1 2020 H1 2019 Change Margins Margins Revenues* 8,227 8,326 (1%) COGS 4,402 53.5% 4,577 55.0% (4%) Gross profit 3,826 46.5% 3,749 45.0% 2% R&D 446 5.4% 537 6.5% (17%) S&M 1,210 14.7% 1,313 15.8% (8%) G&A 567 6.9% 589 7.1% (4%) Leg
Slide 32: Q2 2020 Foreign Exchange Impact
Q2 2020 Foreign Exchange Impact $ millions Q2 2020 Q2 2019 Diff FX Effect* Diff net FX Revenues 3,870 4,177 (307) (79) (228) Operating income (loss) 173 (644) 817 (35) 852 GAAP Operating income 979 1,011 (31) (37) 5 Non-GAAP Some amounts may not sum due to rounding. | 32 | * Net of hedging activitie
Slide 33: Net Revenue
Net Revenue Net Revenues* and Profitability (Non-GAAP) ($ millions) 4,468 4,357 4,177 4,149 4,093 3,870 51.8% 52.4% 51.4% 50.6% 53.1% 52.0% 24.6% 24.2% 25.7% 23.8% 28.5% 25.3% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Net Revenues Gross Margin Operating Margin | 33 | • * Revenues prior to 2020
Slide 34: Profitability
Profitability Profits and EPS (Non-GAAP) ($ millions, EPS in $) 1,244 1,051 1,061 1,019 1,011 979 835 654 653 637 683 605 0.60 0.60 0.58 0.62 0.76 0.55 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Net Income Operating Profit EPS | 34 |
Slide 35: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 COGS 1,989 1,990 2,206 2,046 1,859 S&M 621 551 665 570 559 R&D 271 242 237 221 233 G&A 286 270 309 290 245 Other income (0) (11) (9) (13) (6) Total 3,167 3,042 3,406 3,114 2,891 | 35 |
Slide 36: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 69 -73 -39 11 1,011 979 Q2-19 North America Europe International Markets Other Activities Q2-20 | 36 |
Slide 37: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,244 36 (3%) 1,051 1,061 156 (13%) 1,011 16 (1%) 17 (2%) 979 55 (5%) 130 (12%) 101 (10%) 66 (7%) 136 (13%) 97 (10%) 258 502 341 (24%) (40%) (32%) 244 316 (25%) (31%) 686 565 (65%) 550 573 504 Other Activities (54%) (44%) (59%) (50%) International Marke
Slide 38: Quarterly EBITDA
Quarterly EBITDA $ millions 1,375 1,144 1,183 1,204 1,108 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 * EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items, as well as depreciation expenses). | 38 |
Slide 39: Q2 2020 EBITDA to Free Cash Flow
Q2 2020 EBITDA to Free Cash Flow $ million (524) (-47%) (178) (174) 96 (74) 39 (131) 1,106 (503) (92) 401 582 273 Non-GAAP Interest Tax payments Working Capital Restructuring Securitization Operating Securitization Asset sales; Free EBITDA payments, net & Other cash flow reclass Capex gross cash flo
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Jun 30, 2020 Mar 31, 2020 Diff Cash and Cash Equivalents 2.4 1.8 0.6 AR Trade 4.5 5.2 (0.6) Pre-paid Expenses and Other Current Assets 1.5 1.6 (0.1) Inventory 4.4 4.3 0.1 Fixed Assets 6.1 6.2 (0.1) Intangible Assets 9.9 10.3 (0.3) Goodwill 24.6 24.5 0.1 Other Lo
Slide 41: Q2 2020 Net Debt Movements
Q2 2020 Net Debt Movements $ billions -0.6 0.2 24.3 Net Debt 23.9 Mar 31, Increase in Cash Balance FX & Other Jun 30, 2020 2020 Gross Debt 26.1 26.3* Cash Balance 1.8 2.4 * In July 2020, Teva repaid at maturity €1.0bn of EUR denominated debt (€7.9bn as of Jun 30th, 2020) | 41 | Net Debt = Gross Debt
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