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Teva taps new CFO, hikes legal set-aside to more than $1B as opioid deal falters

November 8, 2019
Life sciences

Aiming to settle the thousands of opioid lawsuits it faces, Teva has proposed an eye-popping $23 billion-plus deal with plaintiffs. So far, that offer hasn’t gained much traction, though, leaving the drugmaker with a legal overhang that just tops 10 figures.

Teva set aside another $468 million to cover its legal costs as it works to negotiate that settlement, bringing its total this year to more than $1.1 billion.

Teva’s outgoing CFO Mike McClellan––set to be replaced next month by Flex’s Eli Kalif––said Thursday that the amount represents the low end of Teva’s potential liabilities and could grow if a settlement is reached. “Our expectation is to eventually––once there’s a settlement––there will be much more clear number,” McClellan said during the company’s Q3 earnings call. “Nothing is more probable than what we’ve reserved.”

Late last month, Teva offered its more than $23 billion framework deal with four state attorneys general, hoping to escape thousands of lawsuits that have ensnared opioid makers and drug distributors for years. As part of that agreement, Teva offered up to $23 billion in donations of buprenorphine naloxone, an opioid addiction treatment, over the next 10 years. The offer also included $250 million in cash.

Although four states have tentatively signed on, not all of the plaintiffs are excited about the offer. Ohio AG Dave Yost, one vocal critic of drugmakers’ past opioid settlements, said the proposed deal “isn’t a framework, it’s a pile of lumber that’s been dropped on the construction site,” according to Reuters.

CEO Kare Schultz told analysts Thursday that he believed the framework would be in the best interest of plaintiffs and defendants, and prevent a free-for-all for settlement funds.

“If it’s not resolved this way, it becomes a complete random game for which county and city comes first in the sequence of suing and how much money they get,” Schultz said. “I think we need a holistic solution here, and I think it’s very much to the benefit of everyone to do it that way.”

If agreed upon, Teva’s settlement would easily become the largest on record for a drugmaker, topping Purdue’s offer of up to $12 billion to settle its own opioid overhang. The proposed Purdue settlement does include far more cash—some $3 billion provided by the founding Sackler family.

RELATED: Say hello to Roche’s worst-case scenario: Teva’s Rituxan biosim set to launch in U.S.

With its liabilities increasing, Teva is headlong into its predicted “trough year” as Copaxone copies nip at its drug sales and generic pricing headwinds have continued to drive down revenue.

North American sales of branded Copaxone hit $271 million in the third quarter––a whopping 41% decline from the same period last year. In Europe, Copaxone sales dipped 14% to $106 million.

The Israeli drugmaker will also soon have to do without McClellan, the exec who oversaw Teva’s ongoing $3 billion cost-cutting drive. He’ll be replaced by Kalif, the former senior VP of finance at Flex, Teva said Thursday.

On the whole, Teva’s revenue across its branded and generic drugs fell 6% to $4.26 billion.

Those Copaxone results are actually better than what Teva had previously forecast, but still left the drugmaker facing questions about what can drive future growth. With generics sales continuing to fall flat, could biosimilars be the answer?

Also on Thursday, Teva announced it would launch its biosim copy of Roche’s Rituxan, Truxima, next week. The rollout will mark its first foray into the U.S. biosim market.

Schultz said Teva is well-positioned to capture market share based on its aggressive pricing, Rituxan-matching oncology label and existing relationships in the cancer field. Moving ahead, Schultz said Teva would continue to target biosims in therapeutic areas where the drugmaker is already established.

“Longer term, we actually have an appetite for bringing specific biosimilars to the marketplace,” he said. “We firmly believe that, to be successful with biosims in the U.S., you need the commercial footprint to bring it to market. We also believe in the future that we will be able to do the same with many different biosimilars.”

That could be good news as Teva’s generics unit posted roughly flat sales in North America at $914 million. The company said it launched 39 new generics in the first nine months of the year and captured 10.6% of total generic prescriptions in the U.S., continuing its run as the largest player in the field.

By Kyle Blankenship

Source: Fierce Pharma

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