Teva: Dance With The One Who Brought You
With the acquisition of Actavis Generics, Teva is returning its focus to the business that made the company great in the first place.
TEVA PHARMACEUTICAL INDUSTRIES LTD.
5 Basel St., P.O. Box 3190
Petach Tikva 4951033, Israel
Telephone: +972-3-914-8171
Website: tevapharm.com
BEST-SELLING PRODUCTS
| Product | 2015 Sales | 2014 Sales |
|---|---|---|
| Generics – U.S. | $4,793 | $4,418 |
| Copaxone | $4,023 | $4,237 |
| Generics – Europe | $2,706 | $3,148 |
| Generics – RoW | $2,047 | $2,248 |
| OTC | $994 | $996 |
| Treanda | $741 | $767 |
| ProAir | $549 | $478 |
| Women’s Health | $461 | $504 |
| Qvar | $392 | $286 |
| Azilect | $384 | $428 |
| Nuvigil | $373 | $388 |
All sales are in millions of dollars.
FINANCIAL PERFORMANCE
| 2015 | 2014 | |
|---|---|---|
| Revenue | $19,652 | $20,272 |
| Net profit | $1,597 | $3,042 |
| Diluted EPS | $1.82 | $3.56 |
| R&D expense | $1,525 | $1,488 |
| 1H 2016 | 1H 2015 | |
|---|---|---|
| Revenue | $9,848 | $9,948 |
| Net profit | $875 | $983 |
| Diluted EPS | $0.82 | $1.15 |
| R&D expense | $764 | $718 |
In millions of dollars, except EPS
Since passing $20 billion in revenue for the first time in 2012, Teva Pharmaceutical Industries’ top line has declined every year. With no obvious blockbusters in the pipeline poised to ride to the rescue, it would appear that the company’s leadership decided to double down on the business that made Teva’s name in the first place: generics. The company spent several months in 2015 attempting to take over the generics company Mylan N.V.; when that did not work out, Teva agreed to acquire Actavis Generics, Allergan’s generics business, for more than $40 billion in cash and stock. Already the world’s largest producer and seller of generic drugs, Teva just bought itself even bigger.
“We have brought together two leading businesses with complementary strengths, R&D capabilities, product pipelines and portfolios, geographical footprints, operational networks, and cultures,” says Erez Vigodman, Teva’s president and CEO. “The result is a stronger, more competitive Teva, well positioned to thrive in an evolving global marketplace.”
Teva’s top-line revenue in 2015 was $19.65 billion, down 3.1 percent compared with the previous year but up 4 percent in local currency terms. Net income was cut nearly in half, from $3.04 billion to $1.6 billion, though this was partially due to significant additional litigation reserves and restructuring expenses. Earnings per share also fell accordingly, from $3.56 to $1.82. In the first half of 2016, top-line revenue slipped another 1 percent to $9.85 billion, with net income down about 11 percent to $875 million and EPS down 33 cents to $0.82.
Product Performance
Teva’s portfolio of generic medicines generated total sales of $9.55 billion in 2015, down 2.7 percent compared with the previous year. In the United States, generic sales rose 8.5 percent to $4.79 billion due to the 2015 exclusive launch of esomeprazole (the generic equivalent of Nexium) and the launch of aripiprazole (the generic equivalent of Abilify), as well as other products that were sold in 2015 that were not sold in 2014. This increase was partially offset by lower sales of the generic versions of Pulmicort, Xeloda, Niaspan, and Lovaza. Teva led the U.S. generic market in total prescriptions and new prescriptions, with about 473 million total prescriptions, representing 13.1 percent of total U.S. generic prescriptions.
Sales of Teva’s generic products in Europe dropped 14 percent in 2015 to $2.71 billion. Most of this was due to weakening European currencies; according to company leaders, European generic sales only decreased 1 percent for the year in local currency terms. In the rest of the world, Teva’s generic sales declined by 8.9 percent to $2.05 billion. Again, weakening local currencies were largely to blame; in local currency terms, revenue actually rose by 6 percent.
In the first half of 2016, Teva’s worldwide generic sales were $4.46 billion, a decrease of 12.2 percent. In the United States, generic sales declined by 32.4 percent to $1.87 billion, primarily due to the loss of exclusivity on aripiprazole (the generic equivalent of Abilify) and esomeprazole (the generic equivalent of Nexium) as well as a decline in sales of budesonide (the generic equivalent of Pulmicort), capecitabine (the generic equivalent of Xeloda) and omega-3-acid ethyl esters (the generic equivalent of Lovaza), due to increased competition. In Europe, generic sales declined 1 percent to $1.33 billion. In the rest of the world, generic sales rose 29.5 percent to $1.27 billion, primarily due to the launch of Teva’s new business venture with Takeda in Japan.
The multiple sclerosis medicine Copaxone, Teva’s leading branded product, generated $4.02 billion in sales in 2015, down 5.1 percent compared with the previous year. According to company executives, this was due to lower tender orders in Russia and decreased volume in Europe; U.S. Copaxone sales actually rose 4 percent. In the first half of 2016, sales of Copaxone rose 8.5 percent to $2.15 billion. As of the end of the second quarter, Copaxone remains the leading MS therapy both in the United States and worldwide.
Placing second among Teva’s branded products in 2015 was the oncology drug Treanda, which generated sales of $741 million, a decline of 3.4 percent. According to company executives, this was mainly due to lower volumes caused by wholesalers’ inventory management in the fourth quarter of 2014.
In January, Teva and Eagle Pharmaceuticals Inc. announced the commercial availability of Bendeka (bendamustine hydrochloride) injection, a liquid, low-volume (50 mL) and short-time 10-minute infusion formulation of bendamustine. Bendeka is approved for the treatment of patients with chronic lymphocytic leukemia and for the treatment of patients with indolent B-cell non-Hodgkin lymphoma that has progressed during or within six months of treatment with rituximab or a rituximab-containing regimen.
“With the launch of Bendeka, Teva furthers our commitment to providing treatment options for patients with these rare forms of cancer,” says Paul Rittman, senior VP and general manager, Teva Oncology. “We believe Bendeka represents an important benefit to both patients and healthcare providers, and are pleased it is now available. Based on the product profile, we expect Bendeka to replace Treanda liquid.”
In March, sales of the liquid formulation of Treanda were suspended. In the first half of 2016, sales of Treanda/Bendeka rose 7.7 percent to $362 million.
The short acting beta agonist ProAir, indicated for the treatment or prevention of bronchospasm, generated $549 million in sales for Teva in 2015, an improvement of 14.9 percent. According to company executives, this was primarily due to volume growth. In the first half of 2016, sales of ProAir rose another 22.2 percent to $308 million. As of the end of the second quarter, the product held a prescription market share of 47.9 percent among short acting beta agonists.
In April, FDA approved ProAir RespiClick (albuterol sulfate) Inhalation Powder for the treatment or prevention of bronchospasm in children 4 to 11 years of age with reversible obstructive airway disease and for the prevention of exercise-induced bronchospasm. ProAir RespiClick was approved by FDA for use in patients 12 years of age and older in March 2015 and remains the only breath-activated, multi-dose, dry powder, short-acting beta-agonist inhaler available in the United States.
The pediatric approval of ProAir RespiClick comes after FDA’s review of data from Teva’s Phase III clinical trial program that evaluated the safety and efficacy of the treatment in patients as young as 4 years of age living with asthma. The data demonstrated that treatment with ProAir RespiClick resulted in significantly greater improvement in forced expiratory volume compared to placebo. The most common adverse events associated with treatment with ProAir RespiClick included upper respiratory infections, mouth and throat pain, and vomiting.
Qvar, a maintenance treatment for asthma, brought in sales of $392 million in 2015, an improvement of 37.1 percent. This, company leaders say, was due to pricing variances and volume increases. In the first half of 2016, Qvar sales rose another 38.1 percent to $250 million. As of the end of the second quarter, Qvar placed second among inhaled corticosteroids in the United States, with 37.9 percent of all prescriptions.
The Parkinson’s disease drug Azilect generated sales of $384 million in 2015, a decline of 10.3 percent. The decrease in sales, company leaders say, reflected the impact of generic competition in Europe as well as a slowdown in sales to Lundbeck prior to the transfer of the product back to Teva in early 2016, partially offset by an increase in U.S. revenue. Teva expects generic competition in the United States to begin in early 2017. In the first half of 2016, sales of Azilect were $221 million, an improvement of 4.2 percent.
Nuvigil, indicated for the treatment of excessive sleepiness associated with narcolepsy and certain other disorders, generated $373 million in sales in 2015, down 3.9 percent from the previous year. According to company leaders, this was due to a general market decline. In the first half of 2016, Nuvigil sales fell another 12.5 percent to $154 million; a generic version of the drug was launched in June.
Acquisitions & Collaborations
In January, Teva and Checkpoint Therapeutics Inc., a Fortress Biotech company, announced a license agreement under which Checkpoint will obtain the exclusive worldwide rights to develop and commercialize CEP-8983 and its small molecule prodrug, CEP-9722, an oral poly (ADP-ribose) polymerase inhibitor in early clinical development for solid tumors. CEP-9722 is a novel, orally active, small molecule selective inhibitor of PARP-1 and PARP-2 enzymes that will be developed by Checkpoint as both a monotherapy and in combination with other anti-cancer agents, including Checkpoint’s novel immuno-oncology and checkpoint inhibitor antibodies currently in development.
“Teva is committed to facilitating the development of its early clinical stage oncology programs, which hold promise for the oncology community, by identifying targeted opportunities with companies who have unique R&D capabilities in this therapeutic area,” says Michael Hayden, M.D., Ph.D., president of global R&D and chief scientific officer at Teva. “We believe Checkpoint’s development capabilities, in combination with its immuno-oncology antibodies already under development, will enable these molecules to move forward with future potential for patients.”
In February, Teva and AbCellera entered into a collaborative research agreement whereby AbCellera will apply its high-throughput single cell antibody platform for the discovery of rare monoclonal antibodies. Under the terms of the agreement, AbCellera receives an upfront payment and research payments, and is eligible to receive undisclosed downstream milestones associated with the development and approval of therapeutic antibodies.
“We are pleased to work with AbCellera utilizing this company’s novel biologics technology,” Dr. Hayden says. “This agreement will be complementary to our existing antibody discovery process with the potential to strengthen Teva’s capabilities in novel biologics discovery.”
In March, Teva and Takeda Pharmaceutical Co. announced the establishment of Teva Takeda Yakuhin Ltd. At the same time, Hiroshi Matsumori was named CEO and president of Teva Pharma Japan Inc. Matsumori has more than 34 years of diverse experience in the pharmaceutical industry including in the generics and LLP businesses, the core business of the newly established business venture. He assumed this position on April 25, 2016, and will be based in Nagoya. As a result of this strategic move, Takeda and Teva leaders hope to meet the wide-ranging needs of patients and growing importance of generics in Japan through the provision of off-patent drugs.
“We are very much looking forward to the new business venture with Takeda as our partner in Japan and we welcome Mr. Matsumori as the newly appointed CEO, whose extensive knowledge in the generics and LLP businesses will help position the company for future success,” says Siggi Olafsson, president and CEO of global generic medicines, Teva. “Japan is one of the fastest growing generics markets in the world, and we expect its high growth to continue driven by social requirements such as increased patients’ needs for a stable supply of affordable high quality medicines and reduction of healthcare expenditures. We believe that we can contribute to the healthcare industry, medical professionals and most important, patients in Japan.”
In August, Teva announced the completion of the acquisition of Actavis Generics, Allergan’s generics business. Allergan received $33.43 billion in cash and about 100 million Teva shares. With the acquisition, Teva now has about 338 product registrations pending FDA approval and holds the leading position in first-to-file opportunities with about 115 pending ANDAs in the United States. In Europe, after divestitures, Teva will have a pipeline capable of more than 5,000 launches across the region. In growth markets including, Asia, Africa, Latin America, Middle East, Russia, and CIS, there are now about 600 pending product approvals. Overall, Teva is planning for 1,500 generic launches globally in 2017. Offering access to the world’s largest drug cabinet – with more than 1,800 medicines and 16,000 products – Teva now has a commercial presence across 80 markets, including a top-three leadership position in more than 40 markets and global leadership in all key global markets. The Actavis Generics business generated about $6.38 billion in revenue and $1.31 billion in operating income for Allergan in 2015.
“The acquisition of Actavis Generics comes at a time when Teva is stronger than ever – in both our generics and specialty businesses,” Vigodman says. “Through our acquisition of Actavis Generics, we are creating a new Teva with a strong foundation, significantly enhanced financial profile, and more diversified revenue sources and profit streams backed by strong product development engines in both generics and specialty. This is a platform that is expected to generate multi-year top-line and bottom-line growth as well as significant cash flow.”
Since the acquisition agreement was announced in July 2015, company leaders say integration teams at Teva and Actavis Generics have been working to plan for integration of the two companies in order to ensure that the combined company would be fully operational immediately upon the closing of the transaction. As a result of these actions, executives expect that Teva will begin to capitalize on the benefits offered by the acquisition of Actavis Generics starting immediately.
“Our ability to close a transaction of this size successfully and be operational on ‘Day One’ is a true testament to the dedication of the integration planning teams at both companies,” says Richard Daniell, chief integration officer, Teva. “Because business continuity was a primary objective throughout the integration process, our leaders and colleagues are in a position to quickly build on Teva’s solid financial foundation, operational discipline, and diverse product base to continue to improve our performance.”
Also in August, Teva entered into a definitive agreement to purchase Allergan’s Anda Inc., the 4th largest distributor of generic pharmaceuticals in the United States, for $500 million. Anda distributes generic, brand, specialty, and over-the-counter pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics, and physician offices across the United States. For full year 2016, Anda is expected to generate more than $1 billion in third-party net revenue. As part of the deal, Teva will acquire distribution centers in Olive Branch, Miss.; Weston, Fla.; and Groveport, Ohio, with a total of more than 650 employees.
“Anda is a natural fit into our business in general and our extensive supply chain network in particular,” Olafsson says. “We believe Anda is truly a unique company which further enhances the offerings that Teva can provide. This strategic move enables us and our customers to improve capabilities and flexibility given the changes the pharmaceutical industry is currently undergoing, in order to provide access to more patients throughout the country. Additionally, both Teva and Anda’s customers will benefit from our ability as the largest producer of medicines in the world to leverage our size and scale.”
Recent Approvals/In The Pipeline
During January, Teva and Active Biotech announced the discontinuation of higher doses of laquinimod in two ongoing studies in multiple sclerosis after the occurrence of cardiovascular events, none of which was fatal, in eight patients. The change came at the recommendation of the data monitoring committee overseeing two active clinical studies in MS. The DMC identified an imbalance in the number of cardiovascular events in the studies. Seven events were observed in patients receiving laquinimod daily at 1.2 mg for treatment of relapsing-remitting MS in the CONCERTO trial. No events occurred in the 0.6mg or placebo groups. CONCERTO has 2,199 patients with 3,070 years of patient experience. One event was observed in the 1.5mg daily-dose arm of the ARPEGGIO trial in primary-progressive MS. ARPEGGIO has enrolled 191 patients and has 35 years of patient experience. Teva is notifying trial sites to discontinue the higher doses immediately in both trials and will encourage participants to continue follow ups.
In March, FDA approved Cinqair (reslizumab) Injection, an interleukin 5 antagonist monoclonal antibody (IgG4 kappa) indicated for add-on maintenance treatment of patients with severe asthma aged 18 years and older, and with an eosinophilic phenotype. Cinqair is administered by intravenous infusion at a weight-based dose of 3 mg/kg once every four weeks.
“Teva’s specialty medicines pipeline is centered on developing therapies to address the unmet needs of patients, healthcare providers, caregivers, and payers in our key therapeutic areas of focus,” Dr. Hayden says. “We are proud to demonstrate our commitment to advancing the treatment of respiratory disease with the development of Cinqair, a targeted therapy for a specific subset of patients with severe asthma, a disease which can present significant treatment challenges that are not adequately addressed by currently available medicines.”
The FDA approval of Cinqair was based on review of efficacy and safety data from Teva’s global development program in asthma. The clinical trial program consisted of five placebo-controlled studies, which demonstrated the efficacy and safety profile in a population of 1,028 adult and adolescent asthma patients treated with Cinqair 3 mg/kg that were inadequately controlled with inhaled corticosteroid-based therapies. Three of these studies constituted the Phase III program in patients with asthma and elevated blood eosinophils. They demonstrated that treatment with Cinqair was associated with reduction in asthma exacerbations of up to 59 percent as well as significant improvement in lung function, symptoms, and asthma-related quality of life. The most common adverse reaction (incidence greater than or equal to two percent) in patients treated with Cinqair was oropharyngeal pain. Anaphylaxis was reported at a rate of 0.3 percent in the placebo-controlled studies. An imbalance in malignancy was observed in the Phase III trials. The observed malignancies were diverse in nature and were diagnosed within less than six months of exposure to Cinqair. The European Commission subsequently granted approval to Cinqair under the trade name Cinqaero in August.
In April, Teva announced new data from the Phase III placebo-controlled and randomized First Time Use of SD-809 in Huntington Disease (First-HD) study evaluating the efficacy, safety, and tolerability of SD-809 (deutetrabenazine) for the treatment of chorea associated with Huntington disease. A total of 90 patients were enrolled in the First-HD study for evaluation over 13 weeks. Patients underwent dose titration over the initial 8 weeks of treatment followed by 4 weeks of maintenance therapy. The overall treatment period was 12 weeks, followed by a 1-week washout period. The Phase III First-HD study data showed that deutetrabenazine improved chorea. The most common adverse reactions reported (≥5% and greater than placebo) were: somnolence, dry mouth, diarrhea, insomnia, and fatigue.
“With limited options for patients living with Huntington disease, there is a great need for therapies,” Dr. Hayden says. “We are proud to present this data as part of Teva’s commitment to research in HD.”
During June, FDA accepted for review Teva’s new drug applications for two products for adolescent and adult patients with asthma. The first, fluticasone propionate/salmeterol, is a fixed-dose combo inhaled corticosteroid and long-acting beta agonist delivered via Teva’s RespiClick breath-actuated, multi-dose dry powder inhaler. The second, fluticasone propionate, is an ICS monotherapy also delivered via the RespiClick device.
“The FDA acceptance of these two flings represents an exciting time for Teva’s specialty respiratory medicines business as we integrate both fixed dose combination and monotherapy into our core, breath-actuated RespiClick device,” says Tushar Shah, M.D., senior VP, Teva Global Respiratory Research and Development. “By utilizing our RespiClick inhaler platform, we will be able to deliver these established medications at a lower dosage while eliminating the need for hand-breath coordination during inhalation. We are pleased to proceed with the review of these applications, aiming to ultimately provide a complete breath-actuated asthma management system to help meet the needs of patients with asthma.”
The NDAs for fluticasone propionate/salmeterol RespiClick and fluticasone propionate RespiClick are supported by data from Teva’s clinical development program, including data from three Phase III trials which evaluated the efficacy and safety of the treatments in adolescent and adult patients with asthma. In the double-blind studies, both therapies showed clinically relevant and greater benefit compared with placebo in the improvement of lung function as measured by Forced Expiratory Volume in one second. Safety profiles for fluticasone propionate/salmeterol RespiClick and fluticasone propionate RespiClick were found to be generally comparable to placebo and the majority of adverse events were mild to moderate in severity.
In September, Teva announced top-line results from the exploratory Phase II PRIDE-HD study. This was a 52-week, dose-ranging trial of pridopidine twice daily versus placebo, in the treatment of Huntington disease. The study was directed at measuring improvement in motor function and the effect on HD progression. An unusually high placebo effect, extending beyond that expected from previous studies, limited the ability to determine treatment effects on assessments of HD motor scores. Evidence of symptomatic impact, however, was seen in the early stage HD patient sub-population, with improvement in Total Motor Score and dystonia observed at 26 and 52 weeks in this patient sub-set (stage 1 HD) at specific doses.
The discovery of pridopidine’s previously unknown mode of action as a potent agonist of the Sigma 1 Receptor resulted in a change in PRIDE-HD study design, from a 26-week study focused on symptoms to a 52-week study focused on exploring potential impact on disease progression, as measured by Total Functional Capacity. TFC is the most widely accepted and validated tool for assessing disease stage in HD. It has been used as the endpoint in more than 10 previous clinical trials of drugs seeking to demonstrate an impact on HD progression, none of which were successful.
This study showed a statistically significant impact on the endpoint of disease progression at 52 weeks following treatment with pridopidine at certain doses versus placebo, as measured by TFC. The effect of pridopidine was further evident in a sub-population of patients with early stage HD, an effect first observed at 26 weeks. Improvements were seen for early stage HD patients in elements that make up TFC, such as ability to undertake domestic chores, activities of daily living and impact on ability to manage finances. Patients’ mobility and ability to move around may have contributed to improved TFC scores, with multiple ambulation-related endpoints (such as gait, walking, ability to get up from sitting and walk, and stair climbing) demonstrating trends favoring pridopidine.
“I am encouraged by these results, which provide us with clear insights into the approach to be taken in Phase III development,” Dr. Hayden says. “My obvious hope is that this will provide the HD community with a medicine capable of slowing down the progression of this devastating disease.”
