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Certain transactions | 9 Months Ended
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Sep. 30, 2024
Certain transactions | NOTE 2 – Certain transactions: The Company has entered into alliances and other arrangements with third parties to acquire rights to products it does not have, to access markets it does not operate in and to otherwise share development costs or business risks. The Company’s most significant agreements of this nature are summarized below. mAbxience In April 2024, Teva announced it entered into a strategic licensing agreement with mAbxience for a biosimilar candidate currently in development for the treatment of multiple oncology indications. Under the terms of the licensing agreement, mAbxience will develop and produce the biosimilar product and Teva will lead the regulatory processes and commercialization in multiple global markets, including Europe and the U.S. In September 2024, Teva and mAbxience entered into an amendment to the licensing agreement whereby, similar to the initial licensing agreement, mAbxience will lead the development and production of an anti-PD-1 oncology biosimilar candidate and Teva will manage regulatory approvals and oversee commercialization in the designated markets. Under the initial agreement, in the second quarter of 2024, Teva paid mAbxience upfront and milestone payments in a total amount of $20 million, which were recorded as R&D expenses. Pursuant to the amendment of the licensing agreement, in the third quarter of 2024 Teva recognized upfront and milestone payments in a total amount of $15 million as R&D expenses, of which $5 million were paid in October 2024, and the remaining is due by the end of 2024. mAbxience may be eligible for additional future development, regulatory and commercial milestone payments, in an aggregate amount of up to $320 million. Launch Therapeutics and Abingworth On March 28, 2024, Teva and Launch Therapeutics, Inc. (“Launch Therapeutics”) entered into a clinical collaboration agreement to further accelerate the clinical research program of Teva’s ICS-SABA (TEV-‘248). As part of this clinical collaboration agreement Teva also entered into a development funding agreement with funds affiliated with Abingworth LLP (“Abingworth”). Under the clinical collaboration agreement, Launch Therapeutics, a clinical development company backed by Abingworth and Carlyle, the global investment firm, will have the lead role in the operational execution and management of the planned clinical trials. Teva will retain primary responsibility for manufacturing, regulatory interactions in the U.S., and commercialization. ICS-SABA (TEV-’248) is currently in Phase 3 for the treatment of asthma symptoms addressing both immediate symptoms and long-term inflammation. Under the development funding agreement, Abingworth will provide Teva up to $150 million to fund ongoing development costs for ICS-SABA (TEV-‘248). In exchange and subject to regulatory approval, Teva will pay Abingworth a milestone payment in the amount actually funded by Abingworth up to $150 million, as well as success payments based on ICS-SABA (TEV-‘248) sales. During the third quarter of 2024, Teva recorded $20 million as reimbursement for R&D expenses incurred in connection with this agreement. Biolojic Design On November 26, 2023, Teva entered into a license agreement with Biolojic Design Ltd. (“Biolojic”), pursuant to which Teva received exclusive rights to develop, manufacture and globally commercialize a BD9 multibody for the potential treatment of Atopic Dermatitis and Asthma. In exchange, Teva paid an upfront payment in an amount of $10 million in January 2024, which was recorded as an R&D expense in the fourth quarter of 2023. Biolojic may be eligible to receive additional development and commercial milestone payments of up to approximately $500 million, over the next several years, based on the achievement of certain pre-clinical, clinical and regulatory milestones, with the majority of the payments based on future sales achievements. Royalty Pharma On November 9, 2023, Teva entered into a funding agreement with Royalty Pharma plc. (“Royalty Pharma”) to further accelerate the clinical research program for Teva’s olanzapine LAI (TEV-’749). Under the terms of the funding agreement, Royalty Pharma will provide Teva up to $100 million to fund ongoing development costs for olanzapine LAI (TEV-‘749), with an option to increase the total funding amount to $125 million, which expired in the second quarter of 2024. In exchange and subject to regulatory approval, Teva will pay Royalty Pharma a milestone payment in the amount actually funded by Royalty Pharma, paid over 5 years, in addition to royalties upon commercialization. Teva will continue to lead the development and commercialization of the product globally. During the fourth quarter of 2023, and the first, second and third quarters of 2024, Teva recorded $35 million, $27 million, $19 million and $18 million respectively, as reimbursement for R&D expenses incurred in connection with this agreement, which collectively amounted to the total funding Royalty Pharma was to provide Teva of $ 100 million. Olanzapine LAI (TEV-’749) is currently in Phase 3 for the treatment of schizophrenia (see also MedinCell transaction below). Sanofi On October 3, 2023, Teva entered into an exclusive collaboration with Sanofi to co-develop and co- commercialize Teva’s duvakitug (anti-TL1A, TEV-’574) asset, a novel anti-TL1A therapy for the treatment of ulcerative colitis and Crohn’s disease, two types of inflammatory bowel disease, which is currently in Phase 2b clinical trials. Under the terms of the collaboration agreement, in partial consideration of the licenses granted to Sanofi, Teva received an upfront payment of $500 million in the fourth quarter of 2023, recognized as revenue. Additionally, Teva may receive up to $1 billion in development and launch milestones. Each company will equally share the remaining development costs globally and net profits and losses in major markets, with other markets subject to a royalty arrangement, and Sanofi will lead the development of the Phase 3 program. Teva will lead commercialization of the product in Europe, Israel and specified other countries, and Sanofi will lead commercialization in North America, Japan, other parts of Asia and the rest of the world. MODAG In October 2021, Teva announced a license agreement with MODAG GmbH (“Modag”) providing Teva with an exclusive global license to develop, manufacture and commercialize Modag’s lead compound, emrusolmin (TEV-’286) and a related compound (TEV-’287). Emrusolmin (TEV-’286) was initially developed for the treatment of Multiple System Atrophy (“MSA”) and Parkinson’s disease, and has the potential to be applied to other treatments for neurodegenerative disorders, such as Alzheimer’s disease. Teva has initiated a Phase 2 clinical trial. In the fourth quarter of 2021, Teva made an upfront payment of $10 million to Modag, recorded as an R&D expense. Modag may be eligible for additional future development milestone payments, in an aggregate amount of up to $30 million, as well as future commercial milestones and royalties. Alvotech In August 2020, Teva entered into an agreement with biopharmaceutical company Alvotech for the exclusive commercialization in the U.S. of five biosimilar product candidates. The initial pipeline for this collaboration contained biosimilar candidates addressing multiple therapeutic areas, including proposed biosimilars to Humira ® (adalimumab) and Stelara ® (ustekinumab). Under the terms of the agreement, Alvotech is responsible for the development, registration and supply of the biosimilar product candidates and Teva will exclusively commercialize the products in the U.S. In July 2023, Alvotech and Teva amended their collaboration agreement, adding two new biosimilar candidates as well as line extensions of two current biosimilar candidates to their partnership. Teva made upfront and milestone payments in an aggregate amount of $78 million in 2020, 2021 and 2023. Teva made additional milestone payments of $27 million in the second quarter of 2024 and $19 million in the third quarter of 2024. Additional development and commercial milestone payments of up to approximately $380 million, in addition to royalty and milestone payments related to the amendment of the collaboration agreement entered into in July 2023, may be payable by Teva over the next few years. Teva and Alvotech will share revenue from the commercialization of these biosimilars. The amendment of the collaboration agreement entered into in July 2023 includes increased involvement by Teva regarding manufacturing and quality at Alvotech’s manufacturing facility. Additionally, pursuant to the amendment, on September 29, 2023, Teva purchased $40 million of subordinated convertible bonds of Alvotech. On June 26, 2024, Alvotech announced its intention to exercise its redemption rights and redeemed the convertible bonds for $44 million, including accrued interest, which were paid to Teva in July 2024. On February 24, 2024, Alvotech and Teva announced that the FDA approved SIMLANDI ® (adalimumab-ryvk) injection, as an interchangeable biosimilar to Humira ® , for the treatment of adult rheumatoid arthritis, juvenile idiopathic arthritis, adult psoriatic arthritis, adult ankylosing spondylitis, Crohn’s disease, adult ulcerative colitis, adult plaque psoriasis, adult hidradenitis suppurativa and adult uveitis. On April 17, 2024, Alvotech and Teva amended their collaboration agreement to enable the purchase by Quallent of a private label adalimumab-ryvk injection from Alvotech for the U.S. market, with Alvotech sharing profits with Teva on the private label sales. On May 20, 2024, Alvotech and Teva announced that SIMLANDI is available in the United States. With respect to the proposed biosimilar to Stelara ® , on June 12, 2023, Alvotech and Teva reached a settlement and license agreement with Johnson & Johnson, granting a licensed entry date in the U.S. no later than February 21, 2025. On April 16, 2024, Alvotech and Teva announced that the FDA approved SELARSDI TM (ustekinumab-aekn) injection for subcutaneous use, as a biosimilar to Stelara ® , for the treatment of moderate to severe plaque psoriasis and for active psoriatic arthritis in adults and pediatric patients six years and older, and on October 22, 2024, announced that the FDA approved SELARSDI in a new presentation, 130 mg/26 mL (5 mg/mL) solution in a single-dose vial for intravenous infusion, expanding its label to include treatment of adults with Crohn’s disease and ulcerative colitis. Takeda In December 2016, Teva entered into a license agreement with a subsidiary of Takeda Pharmaceutical Company Ltd. (“Takeda”), for the research, development, manufacture and commercialization of ATTENUKINE TM technology. Teva received a $30 million upfront payment and a milestone payment of $20 million in 2017. During the second quarter of 2022, Takeda initiated its Phase 2 study of modakafusp alfa (formerly TAK-573 or TEV ’573) and as a result paid Teva a milestone payment of $25 million, which was recognized as revenue in the second quarter of 2022. In April 2024, Takeda informed Teva of its intent to terminate the agreement with respect to such product candidate, which product rights will revert back to Teva in early 2025. Takeda continues to have rights under the license agreement with respect to other product candidates. MedinCell In November 2013, Teva entered into an agreement with MedinCell for the development and commercialization of multiple long-acting injectable (“LAI”) products. Teva leads the clinical development and regulatory process and is responsible for the commercialization of these products. The lead product is risperidone LAI (formerly known as TV-46000). On April 28, 2023, the FDA approved UZEDY ® (risperidone) extended-release injectable suspension for the treatment of schizophrenia in adults, which was launched in the U.S. in May 2023. MedinCell may be eligible for future sales-based milestones of up to $105 million with respect to UZEDY. Teva also pays MedinCell royalties on net sales. The second selected product candidate is olanzapine LAI (TEV-’749) for the treatment of schizophrenia. In the third quarter of 2022, Teva decided to progress development of the product to Phase 3 and, as a result, paid a $3 million milestone payment to MedinCell, which was recognized as R&D expenses. On May 8, 2024, Teva and MedinCell announced positive phase 3 efficacy results from a trial evaluating olanzapine LAI as a once-monthly subcutaneous long-acting injectable in adults with schizophrenia. Additional safety and efficacy results are planned in the first half of 2025. MedinCell may become eligible for further development and commercial milestones of up to $108 million, as well as royalties on sales of olanzapine LAI (TEV-’749). Assets and Liabilities Held for Sale: General Assets and liabilities held for sale as of September 30, 2024 and December 31, 2023, included certain businesses in Teva’s International Markets segment that are expected to be sold within the next year, mainly the business venture in Japan. In connection with the held for sale classification, in the first quarter of 2024, Teva recorded expenses of $577 million due to an expected loss upon sale, including $369 million of expected loss from reclassification of currency translation adjustments to the statements of income upon sale, in other assets impairments, restructuring and other items. In the second quarter of 2024, Teva recorded an additional expense of $67 million related to the expected loss from reclassification of currency translation adjustments referred to above. In the third quarter of 2024, Teva recorded a favorable adjustment of $83 million, primarily related to the change in expected loss from reclassification of currency translation adjustments referred to above. See note 12. The table below summarizes all of Teva’s assets and liabilities included as held for sale as of September 30, 2024 and December 31, 2023:
|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
|  | (U.S. $ in millions) |
Inventories |  |  | 169 |  |  |  | 12 |
Accounts receivables |  |  | 123 |  |  |  | — |
Goodwill |  |  | 48 |  |  |  | 30 |
Identifiable intangible assets, net |  |  | 67 |  |  |  | — |
Property, plant and equipment, net |  |  | 10 |  |  |  | 5 |
Other current and non-current assets |  |  | 40 |  |  |  | 23 |
Expected loss on sale* |  |  | (455 | ) |  |  | — |
Total assets of the disposal group classified as held for sale in the consolidated balance sheets |  | $ | 2 |  |  | $ | 70 |
Accounts payables |  |  | (76 | ) |  |  | — |
Other liabilities |  |  | (34 | ) |  |  | (13 | )
Expected loss on sale* |  |  | (106 | ) |  |  | — |
Total liabilities of the disposal group classified as held for sale in the consolidated balance sheets |  | $ | (216 | ) |  | $ | (13 | )
* | Includes an expected loss from reclassification of currency translation adjustments to the consolidated statements of income (loss) upon sale.

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- Definition This element may be used for the entire related party transactions disclosure as a single block of text. Disclosure may include: business acquisitions, agreements with related parties, significant cooperation agreements, the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References No definition available. + Details
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