Teva leaps after announcing US opioids settlement

Teva  credit: Cineberg/Shutterstock
Teva credit: Cineberg/Shutterstock

The Israeli drug maker awaits ratification of a $4.35 billion settlement of claims related to opioid painkiller addiction. Its Q2 results beat market estimates.

Teva Pharmaceutical Industries (NYSE: TEVA; TASE: TEVA) reported overnight that it had reached agreement on a settlement amounting to up to $4.35 billion of claims relating to its role in the opioids affair in the US. The ball is now in the court of the states, local governments, and Native American tribes, which need to confirm the agreement, which is meant to settle thousands of claims against the Israeli drug maker alleging that it promoted the use of opioid painkillers without warning of the risk of addiction to them. Immediately after the announcement of the agreement, Teva’s share price leapt 17% in after-hours trading to $8.31, a price that will bring the company’s market cap form $7.93 billion to $9.3 billion and, if reflected in Tel Aviv, will boost the Tel Aviv 35 Index by 1%. So far this morning, Teva's share price on the Tel Aviv Stock Exchange is up 15.86% at NIS 28.85, and the Tel Aviv 35 Index is up 0.88%.

Between 1999 and 2009, nearly half a million people died in the US from overdoses of opioids and other causes directly connected to addiction to prescription drugs, according to federal government data.

Under the terms of the settlement, over the next thirteen years Teva will pay over $3 billion to states and local authorities, and another $100 million to Native American tribes. In addition, Teva will supply Narcan (naloxone), a drug designed to reverse opioid addiction, to a value of $1.2 billion over ten years. Teva said that the total settlement amount also covered previously agreed settlements with some states. The State of New York is not included in the settlement and continues to seek a separate judgment against the company. Teva’s announcement states that "Teva, New York State, and its subdivisions are engaged in ongoing settlement negotiations."

The announcement also states: "The agreement is also contingent upon Teva reaching an agreement with Allergan with respect to any indemnification obligations, and Allergan reaching a nationwide opioids settlement."

Teva says that the settlement will include no admission of wrongdoing, and that "it remains in our best interest to put these cases behind us and continue to focus on the patients we serve every day."

Meanwhile, Teva  brought forward the release of its quarterly financials, which were due to have been released this afternoon. The company reports non-GAAP earnings per share of $0.68 for the second quarter, above market estimates of $0.57. Revenue totaled $3.8 billion, which was also above the consensus estimate, which was $3.78 billion, although down 3% in comparison with the second quarter of 2021.

The company stated that exchange rate movements had impacted its revenue and earnings figures. "Exchange rate movements during the second quarter of 2022, net of hedging effects, negatively impacted our revenues by $162 million compared to the second quarter of 2021. Exchange rate movements during the second quarter of 2022, net of hedging effects, negatively impacted our GAAP and non-GAAP operating income by $6 million and $11 million, respectively, compared to the second quarter of 2021."

On a GAAP basis, Teva posted a net loss of $232 million for the quarter, which compares with a net profit of $207 million in the second quarter of 2021. It said that the loss was mainly caused by goodwill impairment charges and legal settlements and loss contingencies, partially offset by a tax benefit.

Teva has cut its full year revenue guidance from $15.4-16 billion to $15-15.6 billion, as it expects exchange rate fluctuations to continue. Earnings per share guidance remains at $2.40-2.60.

Teva CEO Kåre Schultz said, "In the second quarter Teva has delivered a solid performance, despite global macroeconomic headwinds. Our generic and OTC business benefitted from the gradual easing of COVID-19 restrictions in Europe and successful generic launches in the U.S. We also executed well on our key specialty brands, AUSTEDO and AJOVY, growing our overall market share. As fluctuations of foreign exchange rates persist, we have lowered our 2022 revenue outlook, while reaffirming our earnings and cash flow guidance.

"We are also pleased to have reached a nationwide agreement in principle, pending participation by states and subdivisions, to resolve the majority of our costly legacy opioids litigation, and importantly, make critical medicines available to those most impacted by the US opioid epidemic.

"With our strong foundation of generic and OTC business, our focused specialty pipeline and our significant biosimilar pipeline, we are strategically positioned to seize market opportunities and create long term growth."

Published by Globes, Israel business news - - on July 27, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Teva  credit: Cineberg/Shutterstock
Teva credit: Cineberg/Shutterstock
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018