Jason Gerberry. I cover biotech and pharma. Pleased to be introducing Teva Pharmaceutical Industries and Eric Hughes, EVP, Global R&D and Chief Medical Officer. Eric, thanks for joining us. Good to be here. Thank you for having us. I thought I'd focus the discussion initially just on some corp strategy matters, and, you know, you did recent royalty and Blackstone deals. How should investors think about sort of those deals as a template for the future? You also did your first BD deal as well, how you're thinking about capital deployment, but also giving up economics on certain drugs to expedite those through development. Are these, you know, in part done given you have margin targets and, you know, there's a desire to ensure that you deliver on those? Maybe we could start there. Thanks again for having me, and yeah, there's a fundamental way in which Teva's approaching our deals. You know, we have a relatively, you know, robust late-stage pipeline with a relatively high POS, you know, the way to create value is to go at pace. These deals are really just a way in which, you know, we can I like to say future proof some of our programs. You know, we've done deals on four of the five programs we've got, and what that does is gives us the, you know, gunpowder to go really quickly. You know, we've done a deal with Royalty Pharma on olanzapine LAI. We did an Abingworth deal with DARI. We did a Blackstone deal with duvakitug, and now we've done the Royalty Pharma deal with anti-IL-15. What that does is, it keeps us unconstrained on speed, so the teams have really leaned into it, and you can see we've executed on these programs. You know, there's another fundamental part about that is that acceleration, you know, to get the launch a couple years forward, to get a launch going quickly, the value there is far greater than any cost that we're seeing in these deals. That's one thing. Also we're sharing the risk so that, you know, those deals, they're sharing risk with us. For us, it's a natural thing we'll lean into. Whether we do more in the future, it all depends, but it's all about unconstraining the speed in which we can develop the drugs. To that end, right, you know, you have the, I'm gonna botch the name, pop, ecopipam. Ecopipam. Right. Now you've got a launch opportunity in 2027. You've got olanzapine LAI, which effectively is launching in 2027. You've got DARI, which launches probably sometime in 2027 as well. I mean, I don't know if this is by design, you know, are you kind of, like, leveraging these deals to have a new indication or a new drug that launches every year through the end of the decade? Yeah. I mean, just to sum it up, that's, with ecopipam added to the list, that's five submissions in the next five years, that's a fantastic runway on relatively de-risked programs. Yeah, the deals help just executing that, you know, with, you know, speed. We don't have to worry about any ups and downs in our, in our budget. We're just moving quickly because that's gonna generate the vast majority of the value on these programs. You know, it's frustrating to see, you know, in my prior lives, prioritizing programs. If you have to prioritize your programs, there's programs you shouldn't be doing. We know that these programs all should be moving forward as quickly as possible. Okay. There's a lot of focus on the upcoming IL-15 data that you're gonna have for vitiligo. Yeah remind us, that's a phase I study, single arm, where you'll be looking at, basically the clinical endpoints are VASI based on face and body. Maybe if you can just educate us a little bit in terms of what you can glean from these single arm studies. Are these proof of concept in your mind that inform pivotal study as a next step? Yeah. Yeah. The anti-IL-15 program for vitiligo, you know, there's a lot to unpack here. The first thing I'd say is, you know, it's a great opportunity for our molecule. You know, when we compare our molecules to others out there in the competition, we believe we have the most potent. It has a half-life of 38 days. You know, we're focused on, you know, every three months giving a dose, a subcutaneous dose every three months. There's a large convenience factor for the potential in vitiligo. Now, getting to vitiligo I think is an underappreciated indication. This is more than 3 million people in the U.S. and the E.U. right now, and, you know, in my experience in dermatology conditions, patients are motivated. You know, although maybe vitiligo is underappreciated now, it's just like psoriasis 15 years ago, where people didn't think there was any need for treatments there, and that's grown into a massive market. I think there's a great opportunity here. Patients are motivated when it comes to the anti-IL-15 program, you know, there's only been one molecule approved. It's a topical JAK that can only treat 10% of your body, and vitiligo is a whole body disorder. You know, a systemic therapy is what's needed. There's oral JAKs that are being developed right now. You know, that's a daily pill you take, and there's the baggage of the JAKs with their profile. We come in, I think, with a very, a good option for patients, where you have a good safety profile, with a, you know, we hope good efficacy that's gonna be stacked up against the JAKs. There's the convenience factor after that, so if you get a very well-tolerated, safe treatment with a subcutaneous shot every three months, you're now treating those patients who need systemic therapy conveniently. You know, the study is a proof of concept. It's 24 weeks. In those 24 weeks, you get only two shots of our anti-IL-15, one on day zero and one on, at 12 weeks. We follow them for the normal, endpoints, the facial VASI you mentioned. You know, facial VASI 75 is the regulatory endpoint and the total VASI. You know, the patients we brought into the study are very similar to the patients you see in a normal registrational program. You have a certain level of facial VASI at baseline and a certain amount of total body. That's important because the topical that's out there was targeted really to a more mild population. These systemic therapies are now at the moderate to severe level. Your comment about, like, comparing this to psoriasis and maybe 20 years ago psoriasis, I'm curious how well in the medical literature is segmentation characterized for those with more moderate to severe disease or perhaps a facial component to disease. I imagine these are going to be the most highly motivated to seek out systemic treatment. I wonder from that 3 million, you know, is this 20, is this 50% that have this perhaps more severe disease phenotype that would be motivated to treat? Yeah, I mean, I can't give you a number today, but, you know, as we've seen, that will progress. The more disease awareness there is, the more that people learn that there's treatments, the numbers just keep growing. It will start obviously with the people who are most disturbed by the facial. The things that you see in your hands and your arms are also disturbing to patients. That number will continue to grow, in my experience, where it'll be probably a bigger market than we anticipate right now. Yeah, I think psoriasis is 30% on advanced therapy, that could be potentially a proxy for a million patients. That's how it starts. Yeah. The more severe You can use that as a proxy, you'll see the more moderate people look for treatments. 24-week endpoint, that's about halfway through what will be a phase III endpoint, which will be a full year. Can you talk a little bit about how this disease manifests over a 52-week period? Is it more of a slower onset, it takes time to accumulate to show clinical benefit in a clinical trial? What I'm asking ultimately is what can investors how to think about 24-week data and stacking that up in terms of the clinical benefit other drugs see at 24 versus 52-week? Yeah. To start off with actually, that's one of the nice things about this indication. It's a very clear pathway to registration. It's been shown how we do this. We know what we have to do. You know, if you had a good molecule, you can move quickly. Traditionally you do about 24 weeks in your phase II, so you can get your signal, get an idea of where you're going. To your point, it does continue to get better in general. When you look at the JAKs and you look at the topical JAKs, it gets back to the disease mechanism. Vitiligo is a destruction of the melanocytes that produce the color in your skin, and when you shut down the T cells that are causing the destruction, it takes time for those melanocytes to then repopulate the skin. They usually grow out from the follicles and then repigment. There's probably gonna be a defined theoretical rate at which it gets better. Although phase II is a 24-week readout and you should see an effect by 24 weeks, it'll continue to get better at 48 weeks. as those melanocytes continue to repopulate the skin. We expect that to happen as well. I imagine there's going to be a desire for investors to benchmark this to upadacitinib, which is the oral JAK that's out there. Does an oral JAK work faster on this disease versus, say, how IL-15 might work? That could be relevant to how you look at 24-week data. Yeah, that's a good point. There's a total difference in the activity of these different classes. JAKs are a more immediate, fairly broad suppression of the immune response. IL-15, the cytokine, is a key cytokine in the way that, you know, vitiligo and celiac disease behave. You know, IL-15 is driving the expansion and the migration of these intraepithelial lymphocytes into the skin. While JAKs is a daily suppression in a broad sense of the inflammation, IL-15 could be considered potentially in the future as a disease modifier, where you're blocking the cytokine that's driving those pathogenic cells into the skin and then preventing them from being resonant in the skin. You're stopping the cells from even being there. That could be more of a long-term effect potentially, but it could be really modifying the disease pathology. They're very different, and IL-15's a little bit more targeted in the way that it's gonna be treating vitiligo. Okay. A couple quarters ago, there was potential to file this if everything went well, 2031 to 2034. Now it's 2031. Yeah. What I'm wondering is what's changed now being 2031? Is it that you feel more confident about the data and how fast you can recruit a study 'cause people will be excited about what the drug offers, or is there something different about how you're thinking about trial design that could be faster? I think it's all the above, and I think that, you know, the key thing is that, you know, we hit an inflection point where, you know, we have a very extensive phase I program for this molecule that we've been running. You know, we've been running proof of concept studies in celiac disease, and we're seeing, you know, the biomarkers we need to believe, and we're confident in the dose and the exposure. You know, we have defined the PK/PD when you're looking at free IL-15, which we measure uniquely in this program, as well as the NK cells. We have a very good idea of the dose range that we need to interrogate. Like you had alluded to, vitiligo is a very clear pathway. You know, the endpoints that we see, you know, in the absence of any safety issues, we can move very quickly here knowing where we need to go. It's a totality of the data we're seeing and the confidence we have in the pathway forward, that's largely why we structured the Royalty Pharma deal. on vitiligo, 'cause it's something you can easily calculate. Okay. Yeah. Now you also have celiac as an indication to develop for this drug, and does the royalty deal contemplate financing for celiac? The, I think the trial that's ongoing is a gluten challenge type of study. What can be gleaned from that? I know investors will look to with this mechanism. Amgen had a less potent drug that didn't work in the clinic, how much confidence you can glean from this type of study, I believe that the measurement you look at is the, what, villous- The crypt atrophy efficacy measure. villus-to-crypt, yeah. Is that a registrational endpoint? Yes. Yeah, there's a lot there, and you're right. We based the deal with Royalty Pharma on the vitiligo, but it, you know, the long-term payout, it does include, you know, the total package of IL-15. You know, getting to the disease itself, celiac disease and vitiligo are very similar in the, you know, in the driving characteristics. You can think of the skin as the outward-facing epithelium and the gut as the inward-facing epithelium. It's these T cells that the IL-15 are expanding and driving to these surfaces. There's a lot of overlap. In fact, there are a certain number of patients who have both diseases at the same time. There's a lot of evidence that our anti-IL-15 is working in both of the diseases. You know, I mentioned that we're very potent, have a great half-life. We've also done a lot of preclinical work, especially in celiac disease, where we actually looked at non-human primates, where 1% of those animals actually generate celiac disease. We've done some great preclinical work where, with the molecule that shows that you can block the migration of those pathogenic cells into the epithelium, reverse antibodies, and actually, you know, really protect their gut. We're seeing that we saw that in our first proof of concept study with our celiac program, where, you know, looking at a biomarker called FABP, fatty acid binding protein, we protected the gut from actual insults with the molecule. In fact, over time, if you overread the data a little bit, you can actually think that we are treating a underlying smoldering celiac that these patients had. That was really strong biomarker data. in the first proof of concept. The second one that we'll read out in the second half of this year is a placebo-controlled proof of concept in 50 patients, and we're looking at biopsies of the gut at the baseline and at eight weeks after a six-week challenge with 3 g of gluten. That'll be a great, you know, proof of concept showing that we can achieve that regulatory endpoint to answer your question. You want to show gut histology changes, and you want to show patient-reported outcomes in a phase III study. Those two things, we'll have a very good sense going into phase II and III with celiac after this study. Okay. I'm realizing that my entire discussion guide is all about your branded efforts. I wanted to step back and just ask: How are you spending your time between the branded R&D effort versus the generic R&D effort? As we think about Teva, which has a lineage. generic pharmaceuticals, I'm just sort of wondering where the R&D effort really is being put. Is it more of a selective approach? You know, as in this year, Revlimid coming out of the numbers. Yeah. Right? You rebase your U.S. generics business, which is very small now as a percentage of your total business. I just wonder, you know, on the go-forward R&D operation and where you're spending your time, just curious if you can kind of frame that? Yeah. The fun thing for me is, you know, I've got all of it under my in my shop in R&D. I've got a head of biosimilars, I've got a head of generics, and I've got a head of innovative medicines. It's been a great experience over the last three years because one of the things I found, I always kind of thought this was true, but I really have found that there's a lot of synergies that we get out of the knowledge base from our generics work, from our biosimilars, that we apply every day to our innovative group. I will say this, I've been saying this for three years, we have one of the best device groups I've ever seen. You know, I've been at a lot of big pharma companies. This group really knows how to make devices. We actually can make other people's devices better. We have extraordinary formulation capabilities. You throw that on top of this wonderful discovery we have in Sydney where they make excellent antibodies. They can protein engineer anything. You know, when I have a problem on formulations, frequently I don't go to my innovative head, I go to my generics head. If I have a device problem, I talk to the generics guys. The, you know, the production and the biologics capabilities that we have from biosimilars and our knowledge base there can easily be applied Yeah to all these programs. There's a lot of synergies for me. If I could squeak in one generics question then, right? Like, when we think about the GLP-1 opportunity. Yeah right? There's seemingly some parallels to insulins in my mind, right? basal insulins, price came down. No generic could ever be sold at scale. at the pricing, you know, that was where it evolved to. The concern with GLP-1s is that pricing is coming down and is expected to come down even more, such that when semaglutide or tirzepatide is available generically with the patents, you know, can you make money in that business and put all the money into making that at scale? Where do you guys stand? You never went after insulins, you know, as it pertains to GLP-1, which is the hot topic within generics. Yeah. I mean, I'm, I'll just kind of speak off the cuff here a little bit about GLP-1s. We've actually gotten the first GLP-1 generics approved. I think that's a very strong business case for us to move forward treating them as generics. I know we got a lot of questions two or three years ago about, you know, you should get into the GLP-1s. You should, you know, be innovative in that space. We consciously didn't do that, and that was actually an excellent decision because a lot of the investment we would have had to put into a GLP-1 program would be taking away from the opportunities we have on all this other plate we have. Yeah. you know, I'm happy to look back and say that was a great move. We played the way we should play in GLP-1s, and that's what we'll do. Okay. Let's shift gears to your TL1A program. Sure. Really good data, maintenance data, in both UC, and I don't think you have the maintenance data yet in Crohn's, but you have the UC data. We have both. Maintenance in both. Now as we look ahead, there's a couple dynamics playing out. We're seeing competitor combinations in the I&I world, and Merck has phase III data for its TL1A. Where is your focus in terms of development and thinking ahead to, like, the next step? 'Cause I&I is a very dynamic marketplace. Do you think single agent has a pretty viable opportunity in front of it, or do you see kind of the space evolving more to combos and you wanna, like, establish a solid monotherapy profile and then ultimately playing for combinations? Yeah. I'll start off by saying I&I is a great space to be in. I mean, it's got one of the largest growth potentials of all therapeutic areas, so does neuroscience. Our focus at Teva in neuroscience and I&I is a great place to be. We've built a lot of muscle now, not only in the development space, but in the commercial space as well. Getting on to, you know, what the opportunity here for duvakitug is, I'll start off with the basics. The fundamentals are great on duvakitug. We think we have the most potent TL1A. We have the most selective TL1A. We have the lowest anti-drug antibodies that have been reported out there right now. We had numerically the best in-induction data in both Crohn's and ulcerative colitis in the TL1A space, and now we just showed the maintenance data as our first milestone this year, again, showing numerically very high numbers, not only best in class, potentially best in disease. The opportunity for monotherapy for duvakitug is big. We're great to have the phase III studies going with Sanofi. They're ahead of schedule on the enrollment at this point. We're gonna continue to press making sure that we launch on time and within the pack. I think that ulcerative colitis will be in the magical 18-month window of launch. We will also probably be maybe second in the Crohn's disease space. We're right in there, and I think at the end of the day, you know, efficacy is king. I'll answer your question about combination therapies, but monotherapy has so much to be shown, to show, going into the launch of this new class of drug. It's a totally new biologic class because remember, people with Crohn's disease and Ulcerative Colitis frequently, about half of them, fail their therapy after one year, and this is a chronic disease. You know, there's over 4 million people with IBD, and they're all cycling through therapy as they fail. You know, 20% of the Ulcerative Colitis still get surgery, 70% of people with Crohn's disease are still getting surgery. There's a lot we can do for these people right now with a new monotherapy class, so that's a focus. Having said that, you know, looking towards the future, you know, I'm a guy who always believes in combination therapies across multiple therapeutic areas. I think there's a lot of opportunity there. You know, as we bring together different classes, TL1A actually right now looks like a great class to combine with because the, you know, the safety profile is strong at this point and, you know, if that continues, combining them in different ways is a great idea. That's all envisioned within the Sanofi partnership. If you were to, say, advance a molecule with bispecific properties that targets both TL1A and, say, integrin or some other common mechanism, is that all envisioned and that would roll up within the Sanofi partnership? We're free to do that, and they're actually doing that, and we're actually doing it as well. It's actually a pathway we both can interrogate. To be honest, our group in Sydney is very good at it. We're filing an IND for TSLP IL-13 at the end of this year. That knowledge base and our ability to combine these different targets, remember, we make all these biosimilars too, we can bring many things together very rapidly in a very robust way. Just wanna be clear here. If Sanofi were the one to develop it, right, would that be a risk to you now that they move forward with their bispecific, or is that envisioned within the partnership? I don't wanna get into the details of partnership, but there's freedom to operate. Yeah. Okay. Maybe with respect to phase II proof of concept studies, where are you guys at in terms of exploring other indications? I know some competitors are, if you can just remind us where the effort is. Yeah, that reminds me of IL-15 too. I'll do TL1A first. We've already, you know, have our plans together for the next two indications with Sanofi. We'll be announcing it probably later this year. You know, the way we approach it is for TL1A, I mean, it's so interesting this class where it's an amplifier of many different cytokine pathways. It's not just hitting one, it's an amplifier. The potential is, you know, in T2s, non-T2s, or even fibrotic disease areas because this is also a unique class in the fact that it has a direct potential impact on fibrotic cells. That's something we always kind of hoped anti-inflammatories would do, but this one has a potential direct effect. We bucket them in those big categories and we're, you know, we're gonna be choosing our indications in a way that follows the science, has the biggest market potential, maybe builds the label as broadly as possible and as quick as possible to develop. Okay. Your alpha-synuclein, the oral agent. Yeah It's easier to say than emrusolmin. emrusolmin, that's correct. You got a phase II futility analysis later this year. Yeah. It's a really tough to treat population. It's been a graveyard for drug development. Yeah for others. I just wonder the significance of surviving a futility analysis, right? 'Cause we should expect the control arm, the placebo group. Yeah to pretty rapidly deteriorate. Yeah. If you can survive a futility analysis, can you speak to that and how that de-risks this maybe versus other disease categories where you survive a futility analysis? Yeah. There's, so there's a number of good points you made there, and it starts with the disease area itself. It is a very rapid disease. You can see these people decline very quickly in a study. There's some differentiating factors here. I think that, you know, you mentioned it as being a kind of a graveyard of a drug development. You know, I think that we have to make better molecules, and I think emrusolmin is the first molecule, which is a small molecule. It's brain penetrant, and it gets to the very genesis of this alpha-synuclein protein aggregate. It blocks it at the very beginning. It's not an antibody that's trying to mop up the stuff that's been released and is, you know, killing other brain cells. You know, it's great that we've seen some trends in efficacy with antibodies out there, but I'm hopeful that a small molecule that gets to the very upstream genesis of the problem could have a significant impact. Again, this is a high unmet medical need. They progress very quickly. The futility analysis will tell us whether we're in the game. I wouldn't belittle it, but we're moving very quickly. We're making sure that this study is as robust as possible with big sample size, because if it hits, this will be the one You know, my regulatory guy and I say all the time, "If it works, we'll be the first one to ask for accelerated approval," 'cause these people need treatment desperately. Yep. You know, 50% of them are in a wheelchair at five years. Most of them have passed away by 10. Yep. Yeah. The injectable options, which are RNA targeted, and I believe there is some antibody approaches too. There's RNA targeting, there's antibodies, and there's actually also a iron chelator, I think, out there. I don't think the antibodies are using any sort of brain shuttling technology. The RNA targeted, questionable as intrathecal injections, whether they're crossing, getting into the brain, right? Is the premise here that an oral agent is the best approach to crossing blood-brain barrier and achieving target knockdown, which you can't measure in a clinical setting? Yeah. Yeah. You're pointing out all the challenges of this disease area right now, and why a small molecule that's brain penetrant is really, has the potential to have hopefully the greatest impact. All the other ones have a challenge. You know, certainly antibody penetration across the blood-brain barrier is a challenge. You know, that has a long way to go. Yep. Okay. Well, looking forward to the update there. You also have phase III data in asthma for duvakitug. Oh, yeah. A program that doesn't get a lot of discussion. I'm glad you brought it up. It seems very de-risked, right? Yeah. You take a steroid and a SABA, and we- Yeah we've got validation for that approach from AstraZeneca's AIRSUPRA. Maybe talk a little bit about your phase III design, how it's different, and how you see your approach as ultimately differentiated versus AIRSUPRA. Yeah. I really like this program because it illustrates a lot of the great things that we, you know, we can do at Teva. Teva makes a lot of inhalers. We're very good at developing them. They're a lot harder than you think. This actually, duvakitug inhaler, it epitomizes, you know, what we do best. You know, we put two drugs in a dry powder inhaler, advanced technology that makes a device that's very easy to use. You just click it open, and you inhale whenever you want, and close it up. You know, this is in contrast to an MDI, a metered dose inhaler, which is the typical spray that you inhale, you have to inhale and coordinate at the same time, and sometimes you have to use a big spacer if you're a little kid and can't inhale right. It really is a convenient device that doesn't require a lot of cleaning, and it's easy to use, and it's particularly well-suited for kids. Getting to the study, which is a great big study that Teva's running that's got pediatrics, adolescents, and adults in it. It's probably the biggest study that had all three patients population in it. It'll get us a good label, 'cause remember, 25% of the entire population is pediatrics, and you'll have a great device. We'll let the market be developed by our competitors, but we'll come in I think, with a better label and a better device. Where are the guidelines now on ICS/SABA? That's actually, I'm glad you brought that up. This is the first time I've ever launched or developed a drug in the guidelines. That's a great place to be. You know, I. The science makes a lot of sense. It's a matter of getting to the clinician now, but we're very excited by it. I think that for a long-acting injectable that's supposed to create Yeah for a large part of it. Great. We're at time, so thank you, Eric, for joining us. Very much appreciate