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Executives

Kevin Mannix, Vice President Global Investor Relations

Michael Hayden - President of Global R&D and Chief Scientific Officer

Jon Isaacsohn - Chief Medical Officer

Elisabeth Kogan - Head of Generic R&D

Mary Ogle - Vice President of NTE Commercial

Jim Ottinger - Regulatory

Sharon Hausdorff - Intellectual Property and Legal

Analysts

Liav Abraham - Citi

Jason Gerberry - Leerink Swann

Andrew Finkelstein - Susquehanna Financial Group

David Maris - BMO Capital Markets

Gregg Gilbert - Merrill Lynch

Tim Chiang - CRT Capital

David Risinger - Morgan Stanley

Teva Pharmaceutical Industries Limited (TEVA) Teva in Focus New Therapeutic Entity from Process to Product Conference Call December 4, 2013 8:00 AM ET

Operator

Good day ladies and gentlemen and welcome to the Teva Pharmaceutical Industry Limited, Teva in Focus New Therapeutic Entity from Process to Product Conference Call. My name is Shawn and I’ll be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions).

As a reminder this call is being recorded for replay purposes. I would now like to turn the call over to Kevin Mannix, Vice President Global Investor Relations. Please proceed sir.

Kevin Mannix

Thank you, Shawn. Good morning and good afternoon, everyone. Thank you for joining us today for the second instalment of Teva’s in focus and new webinar series for the investment community focused on providing an in-depth view of Teva’s R&D strategies and progress in primary therapeutic areas in a format that is focused detailed and accessible.

Today’s webinar will provide an in-depth review of our new therapeutic entities or NTE program. The team will outline the global market and unmet needs for each product, highlight the approach and technologies we're using and give you the sense of what are the main products in the pipeline. I'm joined today by Dr. Michael Hayden Teva's President of Global R&D and Chief Scientific Officer, who will lead the webinar and will joined by members of Teva's R&D, regulatory and sales and marketing leadership. Michael and team will present for approximately one hour, for those of you who are unable to access the slide presentation through the webcast, you can download them directly from Teva's website at www.tevapharm.com.

Following the presentation, we will open the call for a question and answer period, which will run until approximately 9.30 am Eastern Time. Before we proceed, I'd like to remind everyone that the Safe Harbor language contained in today's presentation pertains in this call and webcast. Our discussions during this event will include forward looking statements. Actual results could differ materially from those projected in the forward-looking statements. With that I'll now turn the call over to Dr. Michael Hayden. Michael, if you would please?

Michel Hayden

Thank you Kevin and thanks to all on the line. Exactly one year ago, during our Teva's Investor Day we presented our NTE strategy. During this year significant progress has been made. During my interactions with many of you, you have raised numerous questions about the NTE process. These have included, can Teva identify sufficient number of new products that address unmet patient needs, will doctors prescribe them, will payers reimburse them, how will Teva commercialize them, what could be their peak fails?

The objective of today's webinar is to provide initial answers to some of these questions. We will do this by telling more about some of the products that are currently under development. So where are we today, 12 months of announcing the NTE strategy? Last year, we provided a target of 10 to 15 new products from the NTE program of 2013. We currently have 15 products including 14 products under development, the majority of which will be submitted for approval in the next three years. In addition we have in-licensed Adasuve an approved product that will be launched in early 2014. These products significantly bolster our existing pipeline in core therapeutic areas primarily the CNS. Beyond the product we have created the sustainable platform, an engine that should be enabling us to generate approximately 10 new programs each year. Where could this strategy take us? We believe that the NTE process will be an important growth driver for Teva and generate between 1 billion to 1.5 billion in 2018 and 3 billion by the end of this decade. These numbers are adjusted for risk.

We will start today’s webinar by briefly reviewing the strategy rationale for the NTE process at Teva. We will provide a brief overview of 15 new products including more detail on eight of them. We will then take a broader perspective and outline where we will be by 2018 and by the end of this decade.

Let’s begin, with the strategic rationale for the NTE strategy, the NTE process generates new specialty products, these products are both based on a known molecule that is formulated, delivered or used in a novel way to address a specific unmet patient need. The risk return profile of such products is attractive the products address a specific unmet need and can potentially generate high returns. The fact that they were based on a known molecule reduces the risk and cost of development. As you know developing a new chemical entity takes 10 to 15 years and may cost between $1 billion to $2 billion from discovery to approval. Development under the product based on a known molecule utilizes and radiate a shorter regulatory [route] 505(b)(2) in the U.S. that allows reference to establish datas after known molecule. This shortens the development timeline that reduces the cost.

The molecules that we currently have under development are expected to reach the market in three to six years and the cost of development in each of this is expected to be between $10 to $50 million. The risk of failure of these products is also expected to be lower than a new chemical entity. Based upon recent industry statistics, the chance of success in Phase III on NCE are around 40% while the chances of success of the product developed by the 505(b)(2) routes are significantly higher around 66%. When we look at our current portfolio of 15 products, about 60% of the products are expected to peak sales in the $100 to $300 million range, 40% are expected to peak sales above $300 million. So overall we expect the average products our peak sales of around $250 million.

We also expected to secure a substantial period of market exclusivity for products developed from the NTE process, we will use the combination of IP prediction and regulatory exclusivity. From an IP perspective many patent types can be obtained to cover products from our NTE progress, these include patent that cover formulation, dosage, indication and other threshold aspects of the product. This year alone we’ve already filed 11 new patent applications. From a regulatory perspective any development program that involves the clinical efficacy study derived the product with at least a three year regulatory exclusivity in the U.S. and this applies to most of the programs in our portfolio.

In case of the open indication a seven year exclusivity can be obtained in the U.S. and 10 years in Europe. If you just take a setback, the NTE process is targeting an attractive space between generics and NCEs with a relatively low-risk and development costs than NCEs combined with potentially significant increase for trend over the generic growth development process.

The question you might ask, is why is Teva distinctly position to succeed in this space? The development of product based on known molecules is not a new approach in the industry. Companies have been developing these products under the 505(b)(2) route, since they came into effect in 1999. However in general these programs have not usually on a large scale resulting in a few or a single success story.

Our process is differentiated by its scale and ambitions, it’s based on our established capabilities in generics and specialty drug development and the synergies created, when these capabilities are integrated in a single R&D organization. We are falling a newly created by the disciplined process with a very wide mix that generates in a value product ideas and when advancing them from context to markets. And this process is adequately resourced with a dedicated team and a committed budget. This reviews some of these aspects in more detail.

As you know Teva has a strong technological base that is fundamental to competitiveness in this space. It's primarily based on the skill set that is evolved over many years and our generic R&D group. We have more than 250 formulators. We have a large portfolio and have developed over a 1,000 molecules and are intimately familiar with its properties and their properties and characteristics. And we have a broader array of complex technologies in house from a long end release its improvement actions. And we have the people, the teams that are developing proprietary formulation approaches and a highly experienced injectable device development team.

As a product that we are developing our specialty products, their development requires preclinical, clinical and regulatory development capabilities all already established at Teva R&D. In addition, our specialty R&D team is providing crucial medical perspective and influx about unmet needs and evolving treatment paradigm.

Teva's specialty and generic R&D organizations were integrated in mid 2012, creating a very special and unique R&D organization with integrated generic and specialty skill sets. Our process to generate and evaluate these products concept is highly disciplined. We initially caused a wide mix to generate products ideas creating a steady stream of about 20 new product concepts each month. These product concepts are evaluated in a broad into disciplinary process with early involvement of commercial and payer inputs. The process combine both technologic experiments on the one hand and primary physician and payer research.

Today, we have evaluated over a 150 product concepts. Most in fact 90% of them has been disqualified along the way, out of this 15 products have emerged, 14 are currently under development and one product Adasuve was in-licensed and is about to be launched.

Let’s take now a closer look at the class of 2013. The First four products from the class of 2013 are abuse deterrent opioids, three tablets and one patch. You will hear a lot more about these later in the webinar. We’re also developing two extended release subcutaneous formulations of risperidone an antipsychotics schizophrenia. We will expand on these two products as well.

Earlier this year we announced the licensing of Adasuve. Adasuve is a novel inhaled formulation of loxapine, a known drug with a treatment on vegetation associated with schizophrenia and bipolar disorders. Adasuve has been approved by the FDA and will soon be launched by Teva in the U.S. We have two additional products that we will not have time to discuss today bringing the total of number of CNS assets to nine.

Outside of the CNS we will also briefly discuss two additional products a fixed dose combination glaucoma and a unique and novel product for Crohn’s disease to these which will join our immunology pipeline. The remaining four products are in HIV and details about them will be provided in the future.

I would like to introduce three of my colleagues who will provide further detail on several of the products under development, Dr. Jon Isaacsohn the Chief Medical Officer, Elisabeth Kogan, the Head of Generic R&D and Mary Ogle, the Vice President of NTE Commercial. For each product Jon will provide the medical perspective and now the product we are developing addresses an unmet need. Elisabeth will provide the R&D approach to technological challenges and Mary will present the commercial case.

I would like now to hand over the discussion to Jon, who will provide the medical perspective on the first four products under development.

Jon Isaacsohn

Thank you, Michael. The first four products that we are developing are abuse deterrent opioids. Opioids are the most prescribed medications for the treatment of both acute and chronic pain. In the past they have been using patients with pain related to cancer. However, over the course of the last 10 to 15 years their use has expanded and currently they are indicated for the treatment of chronic pain that is not necessarily due to cancer. This includes patients with chronic back pain and other orthopedic and rheumatologic conditions. This expanded role of opioid has resulted in increasing the sales of opioid by greater than 300% over this period of time.

Here is a graph of the effects of opioid. As the concentration of opioids in the blood increases the analgesic or pain reliving effect is produced. With higher amounts in the blood a feeling of euphoria is produced. This feeling of euphoria is the core reason leading to addiction. With time higher and higher amounts are needed to achieve the state of euphoria and prevent with brutal symptoms. In order to achieve high opioid, levels multiple tablets can be taken simultaneously. Patients who are addicted to the effects of high dose opioid have found ways of extracting the opioid from the opioid tablets by crushing the tablet and snorting it through the nose or dissolving the tablets in the water or alcohol and injecting it intravenously. Patches can be chewed, sucked applied to abraded skin, heated and chemically manipulated for injection or brood as (inaudible).

In this graph, the blue line represents the concentration of opioid in the blood after receiving an oral tablet. This is the level needed for pain relief over an extended period of time.

By tampering with the tablet or the patch, a higher amount of opioid can be delivered which is able to induce the [statement] of euphoria. This can be seen with the purple line. Abuse of [opioid,] prescription opioid has become a major health problem in the U.S. As is evidenced from these numbers, the problems are staggering and increasing from year-to-year. In 2011, there were over 17,000 deaths related to an overdose of prescription opioids.

As the individuals use higher amounts of opioids to get the high, it’s not difficult to see how they can get to a blood concentration, high enough to cause respiratory depression and death. The [cause] of the healthcare system reflects this emerging epidemic.

In order to address the healthcare crises, the FDA has emphasize the importance of the developing abuse deterrent formulations of opioids and has earlier this year issued draft guidelines on what their expectations are for abuse deterrent formulations.

The FDA also barred generic versions of OxyContin without tamper-resistant properties. It is anticipated that by 2018, 50% of the opioid market in U.S. will contain abuse deterrent technology. In view of this clear need, we are developing a portfolio of abuse deterrent opioids based on a proprietary and differentiated abuse deterrent technology. In order to explain this technology, I will turn it over to Elisabeth Kogan, our Head of Generic R&D.

Elisabeth Kogan

Thank you, Jon. Teva has developed OraGuard, a proprietary technology for oral tablet in order to tamper the treat (inaudible) of abuse of opioids. Crush into a powder in order to snort or swallow, dissolve in water to inject or dose dumping when injected with alcohol. This technology enables development of both immediate release and sustained release for our product.

The technology is based on the use of multi-layer gel-forming polymer coating of the opioid particles that provides tablets with abuse determine properties. The OraGuard technology basically combines three physical and chemical values what we call gelling, barrier and matrix.

The objective is to regulate the drug release at the desire grade when used and prescribed and to better extraction of the drug from the product. Teva has granted and pending IP covering a proprietary OraGuard technology.

When the OraGuard is exported to small amount of fluid, it forms a gel preventing easy manipulation like for instance injection. As you can see from this graph, the presence of alcohol does not affect the release of the opioid. In blue, you can see the in vitro impact of alcohol on non-abuse deterrent extended release opioid of product that was pulled from the market.

After two hours 65% of the opioid was released in presence of alcohol compared to 18% without alcohol. In red, you can see the in vitro results of abuse deterrent extended release what we call program AD3. After two hours only 17% of the opioid is released in presence of alcohol. This is a very important feature for extended release products and user may inject such products when having had alcohol risking dose dumping.

In addition when an OraGuard tablet is crushed, polymer remains bound to opioid and it protects against crushing and snorting. Our in vitro assessment of the impact of snorting shows that only a small amount of drug would be delivered if crushed and snorted. The blue bar on the chart represents the conventional immediate release products which released 89% opioid after 10 minutes on dose snorting conditions. The red bar represents OraGuard abuse deterrent 1 immediate release which releases only 26% after 10 minutes on dose snorting conditions.

We believe that OraGuard is a unique abuse deterrent technology. When most abuse deterrent products utilize one to two deterrent mechanisms, OraGuard combines three physical and chemical barriers. As a result, OraGuard has a very good deterrent performance against the three most common ways of abuse crushing for snorting, IV extraction, dose dumping in alcohol. This was already demonstrated in a successful liking study with OraGuard extended release hydrocodone. In vitro data indicates that the deterrent effects also work for immediate release.

At the moment we have four NTEs in chart of 2013 based on abuse deterrent properties; Three oral tablets using OraGuard technology AD1, AD2 and AD3 and one patch using a different technology AD4. This is in addition to Teva’s CEP-33237 which is currently in Phase 3 with expected trial results in April 2014.

In January 2013, FDA issued a draft guidance on the regulatory path to approval of abuse deterrent opioids. We have been (inaudible) for the cause for PK and for what is called liking study which are studies in patients with opioid dependence to prove that they don’t like the product.

The three NTEs based on OraGuard technology AD1, AD2 and AD3 have a development program based on PK and liking study and do not require Phase 3. The in vitro wok is almost completed. And we expect to complete the PK studies in 2014 followed by the liking study. The objective is to submit these three products towards the end of 2015.

On the patch, the condition development in the prior PK, liking study and Phase 3 study. Submission is expected in 2018.

With that I would like to ask Mary Ogle to present the commercial perspective.

Mary Ogle

Thank you, Elisabeth. Our commercial approach to the NTE portfolio is just like any other commercial launch. Early in the process, we invest meaningful market research with both physicians care segments to earn insights and keep product attributes that will best track utilization at optimal pricing.

We conduct qualitative and quantitative market research with over 300 physicians which include a top 10 specialists and primary care physicians to understand the value in decision making process for product selection. And the reaction is overwhelmingly positive.

Physicians recognize the need for the effective products that would minimize the potential for opioid abuse. This [misuse] is top on mind when prescribing this class of pain medication due to the potential impact not only on the patients but on family members as well. Furthermore, physicians stated that abuse deterrents add another layer of protection and freedom to prescribe without the fear of abuse.

In addition to our physician research, we also stopped just 37 managed care decision makers throughout the United States, which include a representation from both national and regional account. These experts manage all large insurance segments which include commercial Medicare and Medicaid patients.

It was clear from our interviews that we conducted with our peers that they recognize the need for abuse deterrent opioid products due to the large economic burden on the healthcare budgets and the overall impact to the U.S. healthcare system. In our research, we specifically asked about acceptable price points for the abuse deterrent products we are developing. The research confirmed that we can expect to command brand like prices, currently in the range of $10 to $20 per day and they will be granted at either a Tier 2 or Tier 3 standard reimbursement level depending on contracting.

The rationale for this price acceptance was due to offset in indirect cost associated with emergency room visits, hospitalizations and increased office visits. The opioid market today is valued at over $8.2 billion and we project the market to reach $11.3 billion by 2023.

We anticipate growth [featuring] by new abuse deterrent formulations and turn into the market over the next 10 years. The abuse deterrent segment of the market is expected to be approximately of $5 billion by 2018 and over $7 billion by 2023.

Where will we compete in this multi-billion market? Over the next four years, Teva will launch five new abuse deterrent opioid products in segments covering 70% of the overall opioid market volume.

We have a clear map of the competitive landscape in each of these segments. And we expect to encounter one to three competing products. Based on the research conducted, we believe that we have a highly competitive offering. And in some of these segments, we can expect to be first or second to market.

We will have a broad portfolio of abuse deterrent opioids that will grant physicians prescribing flexibility and security, allowing them to focus on the patient rather than the negative consequences associated with misuse.

The OraGuard technology further differentiates that value proposition. Overall, we believe that Teva is positioned to a meaningful share of the overall abuse deterrent segment.

We intend to leverage our strong footprint in CNS as a platform to market the abuse deterrent products. Our commercial infrastructure in CNS is comprised of over 500 sales professionals. Of the 500, 70 sales professionals are currently solely dedicated to pain specialists focusing on our existing portfolio of pain products including Actiq, Fentora, and Amrix.

The pain team will be scaled up in order to adequately support the abuse deterrent portfolio at time of launch. In addition to our sales and marketing infrastructure, we will leverage our U.S. managed market teams to provide and ensure access in major markets.

In summary, we believe that the broad offering of side abuse deterrent products, the innovative technology and the strong commercial footprint places Teva in a strong position in this growing multi-billion dollar market.

Jon Isaacsohn

The next two products that we are going to present is long acting risperidone for the treatment of schizophrenia. Schizophrenia is a psychiatric disorder characterized by a breakdown of thought processes and by a deficit of typical emotional responses. The disease is chronic requiring long-term therapy. It is usually diagnosed in early adulthood and with treatment can be reasonably well controlled in most cases. However, the course is often punctuated by episodes of relapse, requiring emergency room business and sometimes hospitalization. The disease affects approximately 2.2 million individuals in the U.S. with the total healthcare cost of $63 billion.

The treatment of schizophrenia involves the use of antipsychotics medication of which the atypical group is the most commonly used. Risperidone is one of the most widely used atypical antipsychotics and is available in two dose forms, an oral formulation and an intramuscular injection given every two weeks.

The characteristic of schizophrenia treatment is the very high rated non-adherence to the prescribed regimen. Non-adherence has been found in different studies to be approximately 40% within the first year and 75% within the first two years of therapy. When patients stop taking their medication, they often relapse and require hospitalization.

The long acting injectables are clearly better than the oral antipsychotics for preventing relapses and re-hospitalizations. In fact in some studies, it has been demonstrated that there is a 60% reduction in hospitalization when patients are treated with long acting injectables.

Adherence is enhanced by virtue of the patient needing to come to a doctor’s office or clinic in order to receive the injection. These long acting injectables are also associated with less side effects, particularly the Parkinson movement’s impairments which are characteristic side effects of the antipsychotic drugs. The reason toward this is the lower concentrations of the drug in the blood compared to when they receive oral medications.

Because of the frequency of relapses after initiating therapy with the oral formulations, there is now accumulating data demonstrating the value of getting the long acting injectables as the initial treatment immediately after the diagnosis of schizophrenia is made and treatment is deemed necessary.

Despite these obvious advantages of the long acting injectables, they are actually not as widely used as they could be as there are many drawbacks. Patients and physicians are often reluctant to results from injections overall oral agents. The most widely prescribed long acting injectable is Risperdal Consta. It needs to be given every two weeks as an intramuscular injection usually into the buttock.

This particular medication requires 17 steps to reconstitute the formulation. Given these limitations, currently the long acting injectables are usually prescribed only after a patient has shown him or herself to be non-adherent to the oral regimen. Today approximately 10% of schizophrenic patients are receiving long acting injectables.

We have two formulations of risperidone, one that will be given once a month and the other one that can be given every three months. It will be administered by our subcutaneous injection, which is clearly less painful than an intramuscular injection.

The subcutaneous injection will be given into the arm or abdomen which is less intrusive. It will also be available as a syringe with minimal reconstitution steps. It is anticipated that by virtue of the more acceptable subcutaneous injection, the population of schizophrenic patients that will receive long acting injectables will be expanded.

Elisabeth will now provide certain detail on our long acting injectables.

Elisabeth Kogan

Well, Jon explained to you, our objective is to develop a significantly better long acting injectable product. The graph you can see is illustrative. The blue line represents a profile of Risperdal Consta, the approved long acting injectable; the red line represents our targeted profile.

We are targeting three main improvements. The first one is related to the 21 days lack of risperdal which return to eliminate in order to achieve to (inaudible) at day one, so eliminating the need for oral pre-treatment fees. The second advantage is to expand relief profile from two weeks to three months. The third advantage is that it should be given subcutaneously not intramuscularly. In Teva, we have established long acting release injection capabilities and passed on our [contract] generic strategy.

For risperidone, we have created multiple technologies to achieve a three month profile, both internal and external and have selected a very promising platform. Our solution is based on the cutting edge technology, co-developed with a partner, not micro share based.

The leading formulation prototype was chosen and in-vitro in-vivo correlation model has been established for the once a month product. Once a month release has been achieved in vitro and in initial preclinical studies. This formulation is awaited for the three month formulation which is under development with promising initial release profile.

In terms of next steps, we expect to complete the formulation prototype of the one month and three month products during the first half of 2014 and to start the PK in human late 2014 early ‘15. We plan for pre-clinical PK in Parkinson disease during ‘14, ‘15 followed by taking clinical programs starting in 2016. The targeted submission date is 2018 in both U.S. and Europe.

The main risks of this program are related to our ability to keep the balance of not exceeding the highest (inaudible) confrontation and not going below the minimal effective concentration for 90 days.

After screening multiple technologies, we believe we have selected the most promising platform and are moving ahead with this program.

We conducted in-depth quantitative market research with over 350 physicians in the U.S. and EU5. Our primary objective was to understand the acceptance, usage and the role of a three month subcutaneous injection in the treatment of schizophrenia patients. Our research confirmed high acceptance for three months subcutaneous risperidone molecule. Key reasons mentioned are the known molecule and the positive impact to patient adherence with potential for better patient outcomes.

The level of excitement was evident, comes like this is a game changer and potential for earlier treatment or indicative of many positive responses received in our research. Response from Payors was also positive. Payors are highly aware of the lack of adherence and cost associated with increase in relapse, emergency room visits and hospitalization.

The value proposition of a three month subcutaneous injection was recognized by payors as an advancement in the treatment of schizophrenia. A 10% to 20% premium over the total cost of a three month treatment regimen was current -- with current long acting injectables will be fully reimbursed with open formulary access.

In 2012, the antipsychotics market value was approximately $11 billion; by 2022 the market is expected to decline due to generic entrance into the oral segment. However, the long acting injectable segment is growing rapidly, driven by introduction of multiple new products and expected to reach more than $3 billion by 2017.

What will be the competitive landscape in the long acting injectables segment upon our expected launch in 2019? The long acting injectable market will be occupied by a few players, mostly focused on a once monthly formulation of intramuscular. Our research confirms that our product will be clearly differentiated from these products based on a dosing frequency and the subcutaneous route.

We also anticipate one competing agent with the three months dosing. The active compound will be paliperidone administered intramuscularly. Our products will be differentiated from the three months paliperidone on the less painful subcutaneous routes and the properties of risperidone with which the doctors have had extensive clinical experience.

Risperidone acting injectable subcutaneous represents a truly global opportunity for Teva. Currently we plan to utilize the current CNS sales and marketing infrastructure in the U.S. and the EU with 500 and 400 sales professionals respectively, with the potential to expand into other markets.

Our neuropsychiatry team has the successful track record in launching and driving sales for such products such as Nuvigil, Provigil and Clozapine. Our managed care team has extensive experience and relationships with key managed care organizations due to optimal pricing and permanent access upon launch.

In summary by 2017, we expect the long acting injection market to exceed $3 billion. Both physicians and payers have confirmed that Teva has a unique and differentiated products offering.

Combined with the strong commercial footprint, we believe that we are in a strong position to capture meaningful share in this multi-billion dollar market.

Jon Isaacsohn

The next product we are presenting is the fix dose combination of the prostaglandin agonist and the beta blocker for the treatment of glaucoma. Glaucoma is the progressive optic neuropathy caused mainly by increased intraocular pressure. It occurs in the elderly but can affect the younger individuals. In 2010, 2.7 million people in U.S. were diagnosed with glaucoma. It is anticipated that by 2020 with the aging of the population that about 3.6 million people in the U.S. will have glaucoma.

With prolonged elevation of intraocular pressure, the patient experiences progressive loss of vision, in fact glaucoma is the second largest reason for blindness in the western world. Treatments to lower ocular pressure can prevent the progressive loss of vision. As seen in this cartoon of the eye, glaucoma is caused by an imbalance in the inflow and outflow of fluid called aqueous humor in the inferior of the eyeball, relatively greater inflow and relatively lesser outflow of this fluid results in greater intraocular pressure which ultimately leads to optic nerve damage.

The initial treatment to address this imbalance is the use of a prostaglandin agonist, this increases is the outflow of fluid and there by reduces the intraocular pressure. If the prostaglandin agonist does not reduce the pressure adequately a beta blocker is added. The beta-blocker reduces the production of fluid and in this manner reduces the intraocular pressure. Glaucoma is a chronic disease that requires continued life-long treatment current treatment involves multiple administrations of eye drops each day and studies have shown that over the course of a year, approximately 30% of prescribed doses are mixed. It has also been shown that non-adherent increases with a number of administration each day.

In the U.S. prostaglandin agonist and beta blockers are prescribed separately and requires three administrations per day once for the prostaglandin agonist and twice a day for the beta blockers. Although the medications are given as drop into the eye some of the medication is absorbed into the systemic circulation. This is also in the pace with the beta-blocker eye drops this can cause side effects outside of the eye. With beta blocker, we see a slowing of the heart rate, reduction in blood pressure to peak and reduce performance during exercise. It can also be associated with reduced pulmonary function and difficulty with breeding particularly in elderly patients with underlying respiratory problems.

We are developing a once a day fixed dose combination of a standard dose of a prostaglandin agonist together with a low dose beta blocker. This innovative formulation enables us to achieve a similar efficacy to the standard doses with reduced systemic exposure to the beta blocker and therefore less side effects associated with the beta blocker. The use of this combination approach should also improve adherence to the prescribed regimen.

Elisabeth will now describe our development approach.

Elisabeth Kogan

NTE is another example of leveraging generic R&D formulation experience as fast as the integrated R&D strategy. In the space of technology, Teva already developed 20 products for the generic business comprising of solutions but also complex emulsions and suspensions.

We also had experience in developing both preservative and preservative free formulation. In addition, Teva has manufacturing capabilities in a wide range of fill and finish options for ophthalmic products including standard multi-dose bottle, blow, fill seal unit dose, preservative free multi-dose bottle. These technology platforms are being applied extensively to develop ophthalmic NTE.

We have already made good progress in formulation of these NTEs and have finalized and advanced prototype. Preclinical developments will start next month. The development strategy include the clinical development program with Phase I safety assessment, Phase II and Phase III. This will be done between 2015 and 2017. The submission is planned in 2018 in the U.S. it should be noted that additional NTE around the evaluation in the space of technology leveraging Teva’s existing capability. The goal is to create the best ever product in this space.

And I will provide the commercial approach for glaucoma in the fixed dose combination. The U.S. Glaucoma market is expected to grow from $2 billion in 2012 to close to $3 billion in 2023. The increasing demand for fixed dose combination is expected to shift to current treatment landscape. By 2023 the fixed dose combination segment is expected to reach $750 million in the U.S. sales alone.

Our research has validated high acceptance and medical need for the fixed dose combination we are developing. In fact 75% of all physician surveys stated a strong intent to prescribe due to a more convenient dosing schedules, better patient compliance and the improved safety profile. We expect to capture meaningful share with the fixed dose combination market in Glaucoma.

Payers acknowledge the improvement of a fixed dose combination for this patient population as well. This therapeutic area is viewed as an inexpensive managed market segment for the Payers and thus they have no major concerns for reimbursement today.

The ophthalmology market is a highly acceptable market to commercialize for promotion the targeted physician universe is approximately 22,000 in size requiring a small number of sales professionals to achieve commercial success. We will leverage our Teva select brand positions which has the strong track record of driving sales in specialty markets. We expect to grow our ophthalmology franchise of new products are identified.

Jon Isaacsohn

The next product that we are going to prevent is direct release 6 mercaptopurine for Crohn’s disease. Crohn’s disease is an auto immune disease characterize by inflammation of the lining of the intestine which spreads to involve deeper layers of the affected areas adopt. The inflammation results in abdominal pain, diarrhea, bleeding (inaudible) track and nutritional deficiencies, it then involve different areas of the digestive tracks in different people.

The treatment of Crohn’s disease is governed by disease severity the treatments of moderate Crohn’s disease involves the use of anti-inflammatory agents. In the setting of most severe disease immunosuppressive agents are usually needed. The most widely used immunosuppressive agents for the cases of moderate disease are 6-mercaptopurine and azathioprine.

6-mercaptopurine or 6-MP is an immunosuppressive agent that is very affected with a response rate of approximately 54%, interestingly 6-MP is actually approve for the treatment of acute lymphocytic leukemia that is widely used open label to treat Crohn’s disease.

The major drawback of treatment with the regular 6-MP is myelosuppression characterized by reductions in white and red blood cell counts. This can lead to a greater stability to infection and anemia it can also called liver function abnormalities.

Our formulation of direct release 6MP involves the targeted release of 6MP in the intestine with the minimal absorption into the systemic circulation. The formulation incorporates two formulation technologies. One that delays the release until the drug is in the intestine and the second that results in the rapid release of the drug once it is in the intestine. We have done some initial studies to evaluate the efficacy and safety of the direct release 6MP compared to the regular formulation of 6MP in patients with Crohn’s disease. In an exploratory Phase I study 11 patients received a single dose of either direct release 6MP or regular 6MP.

The concentrations in the plasma of the two formulations of the 6MP are shown in this graph. The regular 6MP in blue and the direct release 6MP in red. As exhibited, there is minimal absorption of the direct released 6MP into the systemic circulation indicating in this very preliminary study that the direct release 6MP does not enter into the systemic circulation in any meaningful amounts.

In a exploratory Phase II study, 24 patients were randomized to recieve either direct release 6MP or regular 6MP daily for 12 weeks. The end point was at the Crohn’s disease activity index as scoring system that is designed to evaluate the symptoms related to Crohn’s disease. This has been used to evaluate the effects of this addressable Crohn’s disease for many years.

The results of the study demonstrated as similar reduction in the Crohn’s disease activity index score from baseline to week 12 with both formulations of 6-MP. With the reduced absorption of direct release 6-MP demonstrated in the Phase I study. We expect the systemic immunosuppressive effects of the direct release 6-MP to be next.

Overall, we expect that the direct release 6-MP will have a safety advantage over the regular 6-MP that with a similar efficacy profile. The continued development of direct release 6-MP will involved another Phase I Pharmacokinetic study with multiple doses of direct release 6-MP compared to multiple doses of regular 6-MP to confirm the absence of significant absorption and the dose ranging Phase II study during 2014 through 2016. Phase III studies in Crohn’s disease and ulcerative colitis will be done to establish the safety and efficacy of direct release 6-MP during 2017 and 18 with a planned submission in 2019.

Direct release 6-MP could have a significant commercial potential. The global markets for Crohn’s disease and ulcerative colitis is $7 billion with the non-TNF segment, capturing $2 billion. It is anticipated that direct release 6-MP will capture a meaningful share of the non-TNF segments of the market.

Michael Hayden

Thank you Jon, Elisabeth and Mary for your clear presentations. I'd like to conclude today's webinar by taking a broader perspective on the NTE strategy. Exactly one year ago we introduced the NTE strategy has an approach to generate new products for our pipeline. During just one year 2013 this process has generated a total of 15 products, 14 organically grown at Teva and 1 in-licensed product the majority of these products are in our established therapeutic areas in the CNS and significantly strengthened our pipeline in CNS and pain.

The following chart shows our R&D programs in multiple sclerosis, neuropsychiatry and neurodegeneration. The gray bars represent our current pipeline product such as you can see the laquinimod in multiple sclerosis, pridopidine and the laquinimod in Huntington disease. The red bars represent the new products from the NTE process. Each bar starts when the product is expected to reach the market about one year following submission.

As you can see the NTE program from the class of 2013 has significantly strengthened our pipeline in this area you can see the same situation in pain. Here the NTE process again and the products are shown in red and you can see that the NTE process in pain just as these and other areas is an effective approach to expanding our pipeline in our core therapeutic areas.

The following chart shows the expected submissions of the 14 products under development overtime from the class of 2013. You can see we expect one submission in ‘14 five in ‘15 and so on. You can see the impact of the short developed timelines of the NTE projects, but the majority of these submission, eight of them occurring in the next three years.

Now in, 2013 we have generated new pipeline assets, but importantly, we also have put in place a platform, an engine that is capable of generating new product every year. Our target for 2014 is to generate approximately 10 new pipeline assets which will be repeated each year thereafter, and here you can see in red the expected dates of submission for our 2013, submission class in red and in blue those coming from the class of 2014, a total of eight submissions in 2015 and thereafter.

We believe that the NTE process will generate the total of approximately 30 new pipe line assets by the end of this decade. And what you can see here is the gray represents the class of the 2015 to 2017 submissions and this is added every year to the class of 2014 and before that class of 2015 submissions.

Now the sales potentials of these assets as we have outlined will be significant. Before adjustment for risk, we believe that these 50 top line assets for the process of 2013 to 17 have the potential to generate approximately $2 billion in 2018 and up to $5 billion by 2020.

However we are fully aware of fact that not all programs will make it to market, while development risk of NTEs is lower than that of the new chemical entity, the programs may fail for a variety of risks including technological optical, difficulty in formulations, issues in clinical development, regulatory, IP, limit exclusivity and also to competitive products. As we have embarked on each of these programs, we had clearly identified the specific risk associated and have already plans in place to mitigate them. Overall our estimates of eight on for 10 programs that we have now initiated, we expect about six to make it to market. So as we plan to initiate approximately 50 programs by 2017, we expect about 30 of them to reach the market.

Business translated in a risk adjusted way through an expected potential of about $1 billion to $1.5 billion in 2018 and conservatively $3 billion in 2020. We believe the NTE process will be a significant growth engine for our specialty business.

These revenue projections we believe are realistic, as long as we continue to generate new product that fundamentally address unmet patient needs. I think hopefully we’ll be able to provide you with some compliments that the engine is in place to do just that. We also detailed that we have provided you about the products from the class of 2013 illustrates how they may provide benefit to patients, importantly, improving efficacy, treatment outcome, reducing side-effects and improving the quality of the life.

In this way, they will also provide benefit to clinicians by allowing them to ensure that patients (inaudible) to treatment and reduce risk of misuse and inappropriate use, and of course as such that will provide benefit to payers for our reducing the overall cost of treatment and improving the quality of life of patients and this will be a contribution to the communities in which they live.

In summary, we believe that we are pursuing a differentiated model in the industry with an attractive risk return profile. The model is built on established expertise at Teva integrated now in another way. 2013 was a year of significant progress, during which we generated multiple new pipeline assets and created a platform to sustain this performance into the future. I want to thank you for your attention and we look forward to your questions.

I'd also like to introduce, we are joined by two of our other leaders in R&D, Jim Ottinger from Regulatory and Sharon Hausdorff from Intellectual Property and Legal who are there to provide on to hefty operations in those areas.

Question-and-Answer Session

Operator

Okay. (Operator Instructions). Okay. Your first question comes from the line of Liav Abraham from Citi. Please proceed.

Liav Abraham - Citi

Two more general and then one a little bit more specific on the glaucoma product. Firstly, on the competitive dynamics in the NTE space, Dr. Hayden, are you aware of other companies that are pursuing this? I'm aware of one privately held European company that is aggressively targeting this opportunity. And I would imagine that given a large number of molecules knocking around in large cap pharma they could be interested as well given the very attractive economics. How competitive do you think the space could become over the next three, five years do you think this is an issue at all?

The second question is on Payers dynamics, a lot of these products that you are targeting are in competitive markets where there will be significant generic competition by 2018 such as pain and CNS, you mentioned in your presentation some commentary from Payors. However, given an environment that is becoming more onerous, how confident are you that these products would be reimbursed in 2018 and beyond if approved?

And then thirdly on the glaucoma molecule I am assuming that you are targeting this as a second line therapy given the generalization of the of the prostaglandin? And what portion of the $750,000 fixed dose market do you think you could gain given that other companies also being aggressive in the space, such as [Array] for example with their ROCK/NET prostaglandin fixed dose molecule? Thanks very much.

Michael Hayden

Well thank you, Liav for that those terrific questions. In terms of the competition, yes, we are fully expecting increasing competition in this area. This is an obvious area to for companies that have products in their portfolio. However, we believe that we are very well suited to compete very effectively in this area. We are the only company that we are aware of that really has an integrated R&D organization. We have the largest portfolio of the area and have specialized technologies already in place.

We believe that that in an integrated organization and as we have seen this organization come to bear the energy and the creativity that comes from this adjacency has really been quite remarkable. So I believe that we will -- and we are not standing still, we are continuing to develop new technologies, the processes in place but we expect, but we expect competition. But we really believe that we have the people, the engine, the process and the idea and the technology to complete very effectively in this process.

In terms of Payers dynamics I am going to as Mary to make a comment and then also to perhaps comment on the glaucoma perspective, Jon Isaacsohn will comment on that.

Mary Ogle

Thank you. And thank you for your question in regards to the reimbursement. Every product that entered development has undergone extensive research for validation of the overall value proposition to the Payers and conformation of likely price points and the reimbursement status and that’s looking into the future. For each product we’ve put into development, we have conducted about 30 to 40 in depth interviews with Payors in the U.S. Europe and Latin America and Asia Pacific depending on the product.

The responses have been clearly validated and the products that we are putting forward into our pipeline have validated value from the Payers because of the fact that it’s based on innovations that will impact the burden of illness. So we can exhibit that through our value proposition and payers will link the innovation to impacting the burden of illness. They are communicating that they will both reimburse and provide access.

Michael Hayden

Jon, do you want to comment on the glaucoma product.

Jon Isaacsohn

In terms of your question as the second line therapy, clearly most of the patients who have glaucoma get started on treatment with the prostaglandin agonist. It is about 40% to 45% of those patients need a second agent added to the prostaglandin agonist and it is our -- we are anticipating that once we have combination product that enables the patient to take the beta blocker together with the prostaglandin agonist this will become the optimal go to drug for combination therapy rather than having to have the patient take the two drugs separately giving them having to do it three times a day.

So we are anticipating that this combination will be somewhat unique in the U.S. because it will not only provide the patient with a combination of the drops, but also with a lower dose beta-blocker and thereby reduce the side-effects profile associated with the beta-blocker therapy.

Michael Hayden

Operator, next question.

Operator

Thank you. And next question we have comes from the line of Jason Gerberry of Leerink Swann. Please proceed.

Jason Gerberry - Leerink Swann

Hi good morning, thanks for the presentation. I just have one question. Can you guys discuss the margin profile of a typical NTE, I think about some of the early products that you could launch, just wondering what might be the typical SG&A commitments with the products that you characterized let’s say have 250 million peak sale product and then whether we should be thinking about partnership royalties associated with some of these products. And the reason I ask is because at least with some Teva’s 505 J generics, the company’s employees. I think formulation technology external resource and royalty component was associated with those products. So just curious with the delivery technology that you are using is an internally sourced or externally resource? Thanks.

Michael Hayden

Hi thanks Jason. Let me try answer that question, I will ask Mary to comment. As we say, as we look at the mean peak sales certainly of $250 million and we’re looking at the cost of these products that are generally less than $50 million average of $30 million. We're looking at a very significant profit margin on these products. And primarily because a lot of the API is already in house, sometimes, most times the formulation expertise is already there and the cost for development is significantly minimized. I'll ask Mary to comment further

Mary Ogle

I would just underscore what you stated Mike and the fact that we are investing in these types -- I'd just say, we’re a traditional specialty market. So, we look at the market opportunity, the value, we do our analysis and we make the appropriate investments to have the maximum returns.

Jason Gerberry - Leerink Swann

If I could just follow-up then, would you say at least are the margins better or worse than say the corporate average as you forecast these products out?

Jon Isaacsohn

The margins of our NTE products are the best in our portfolio. So when you compare this, this gives us a margin that is significant. And that is really because the cost for development also really reduced and the time for development is reduced. So these are very significant margins. If you look at just class of 2013, we are looking at very significant profit margins based on the class of this. And it's actually better than any of our other portfolio.

Michael Hayden

Thanks for the question.

Operator

Thank you. Your next question comes from the line of Andrew Finkelstein of Susquehanna Financial Group. Please proceed.

Andrew Finkelstein - Susquehanna Financial Group

Thanks very much. Maybe you could talk a little bit about how you envision business development fitting into the NTE concept going forward? And then specifically, on some of the projections you've provided. I mean is it fair to think of the 1 billion to 1.5 billion target for 2018 as being mostly driven by the opioid products? And if so, could you talk little bit more about your expectations for that market in terms of where the volume of opioid prescribing is going given the introduction of abuse deterrents for a lot of different companies and also the increasing concerns about opioid prescribing and some of the restructuring that have been proposed? Thanks.

Jon Isaacsohn

Okay. So just thank you so much for that question. With regard to the role of business development, as you can see we brought in Adasuve this year, this is one of our products. and we are continuing to look very carefully for business development opportunities in multiple forms. It’s been very surprising to us and actually quite heartening is that we have numerous companies now coming to us and offering us NTE as part of this, in fact some companies that call themselves NTE companies, smaller products that they are really looking to partner with us on.

So the one is looking at products, some of these are in other companies and they are looking ways to commercialize these products such as Adasuve; the others are in technologies. There are some novel technologies that are very important that really give us opportunity, these are to have different ways to release product, different ways to formulate products. And we of course are very interested not only to further develop our internal technology but also to access companies around the world who have remarkable technologies that may certainly enhance this. So this is not in vintage here only it’s very much going to be a hybrid model. And we expect both next year and each year there will be new product coming in through our business development activities. Now regard to the opioids, I’m going to ask Mary again to comment just a little bit on the market for opioid and provide some perspective.

Mary Ogle

Absolutely, the opioid market, we project to be driven by 2018, primarily by the abuse deterrent entrance. When we take a look at the pipeline, it suggests more than 30 abuse deterrent products will be in development. So it’s reasonable to assume that the majority of growth will be driven by the conversion to abuse deterrents. And we will -- you are correct to assume, by 2018, we will have four abuse deterrents in the market at that point of time.

Michael Hayden

Operator, next question please.

Operator

Thank you. The next question comes from the line of David Maris of BMO Capital Markets. Please proceed.

David Maris - BMO Capital Markets

Good morning, Michael and Mary. Staying on the abuse resistant drugs, so there are huge markets on the one hand having just a small slice of them at a higher price will be great. But two questions. One drugs like (inaudible) have a lot of generics, so investors are concerned that payers won’t really pay for abuse resistant technology. And then the second is, Mary you just mention that there are going to be a number of competitors. How do two abuse resistant drugs differentiate against each other on the same compound or do you just put the market and kind of chip away at price a little bit?

Michel Hayden

Okay. Well, thank you David, let me just comment on the -- we will pay as pay with the abuse deterrent technology, I think I’ll ask Mary to comment on that and also how do we compare the abuse deterrent. And I think there are different technologies out there for abuse deterrents. We are really making -- there are three ways to create deterrents. These are typical chemical barriers and maybe agonist and antagonist combinations, so do have something like that. There may be a version technologies. But we believe that OraGuard has outstanding deterrents property. And I think we've already demonstrated that in our hydrocodone ER liking study. So first, we think that we will be differentiated in part through that OraGuard platform itself. But let Mary comment also about (inaudible) and how we really would get some price differential relative to generics.

Mary Ogle

So, yes, we use (inaudible) as one of our opioid as a price reference in our research. And it’s clear from the peers they recognize that those chronic patients that are -- have a history of abuse or success of abuse, both physicians and payers recognize the economic burden and U.S. is like Jon referenced earlier. It equates to $72 billion annually. For the physicians and the payers, the payers especially were able to look that if we would provide the OraGuard technology with the product, with equal advocacy to (inaudible) they would in fact reimburse at prices equal to that as a branded reference.

So and they were looking forward into the future, they really saw that there was opportunity with abuse deterrents offset this economic burden.

David Maris - BMO Capital Markets

Great. Well, thank you very much.

Michel Hayden

Thanks David.

Operator

Thank you for your question. And now I’d like to turn the call over to Kevin for a question from the web.

Kevin Mannix

Yes. We have a call, the question coming from Elliot Wilbur at Needham & Co. The question is a combination (inaudible) containing a prostaglandin have proven very challenging in terms of obtaining FDA approval with many notable high profile set-backs. Can you confirm that the prostaglandin agonist is or is not latanoprost and what is different about this combination that you believe gives you a higher probability of success?

Jon Isaacsohn

Okay. Well, thanks for that question. And it's very [permanent] because as is well known a number of combination products have not succeeded in the U.S. And the reason for that has been mostly due to the beta blocker component of the combination with the prostaglandin agonist. The addition of the beta blocker did not provide enough of a reduction in the intraocular pressure to offset the adverse events associated with the absorption of the beta blocker into the systemic circulation.

We believe that we have an innovative product that will allow us to achieve the threshold that the FDA has required in terms of the combination with the beta blocker in terms of the reduction of intraocular pressure. But the actual amount of beta blocker that we will use will be led. And so we anticipate that the overall risk benefit ratio will be favourable, unlike the combination product that have come to the FDA previously.

Kevin Mannix

Thank you, Jon.

Michael Hayden

Shawn, next question.

Operator

Thank you. The next question we have comes from the line of Gregg Gilbert of Merrill Lynch. Please proceed.

Gregg Gilbert - Merrill Lynch

Thank you, couple for Michael and one for Mary. Michael, since you're willing to put some risk adjusted revenues out there, can you also offer some spending guidance or guidelines over the next several years as it relates to NTEs and relative to the overall R&D budget? Secondly, on Risperidone as an example, is it your goal Michael to pursue an NTE or NTEs in addition to a generic route so that you have two bites at the apple based on what Teva does well? And for Mary, on the market research on Risperidone, did you ask those questions only based upon the once every three months product which is clearly more differentiated or did you also get similarly bullish responses on the once a month? Thanks.

Kevin Mannix

Michael? To the audience, my apologies, just one second.

Michel Hayden

Gregg, are you still there?

Gregg Gilbert - Merrill Lynch

Yes, did you get my questions?

Michel Hayden

I think so but let me try my best and you will tell if I am on track. I think you are asking about the current and overall spending and also how this is factored into our current R&D spend, is that the question?

Gregg Gilbert - Merrill Lynch

Yeah how much you are going to spend to get to the revenues you are projecting in 2018 so the investors can judge for themselves the return, possibilities et cetera? That’s the first one.

Michel Hayden

Yeah so let me just say that on per product we estimate the average is around 15 million, so that’s the need per product. Now it’s obviously over the years and so you can work it out. It depends, each product is going to have a different revenue per year -- different expense per year depending on the time taken to develop this. But we have a development timeline to get the submission of three to six years. And each of these products have a slightly different profile but you can average this out. So the guide range we have is from 10 some of them alone and some of them up to $50 million if they need additional clinical studies. And the costs for these are really for example very much within our existing budget for R&D. It’s a fully budgeted, the people, the cost, the clinical cost, the formulation cost this is already within our current budgets for R&D.

So the range is 10 to 50, the timeline range is about three to six years and the costs are fully incorporated into our budget.

Gregg Gilbert - Merrill Lynch

Okay. The Risperidone question was once you decide there is an NTE possibility in a given molecule, does that mean you won’t pursue aggressively the generic path on the existing products to get two bytes of the apple?

Michel Hayden

So, just I will answer and then I will ask Elisabeth to comment. No, I think we are looking at every opportunity. Our NTE products are differentiated by responding to particular unmet patient need. This does not mean that we are not going to be going aggressively and appropriately into the generic market where we believe again we can have some particular advantage. Elisabeth, do you want to comment?

Elisabeth Kogan

Yeah, (inaudible) Michael just said that we see these two products refer it on generic and refer it on NTE that’s two very different products, different technologies, different positioning in the market, so it’s not instead of.

Gregg Gilbert - Merrill Lynch

Okay, great. And Mary (inaudible) which is once every three months in the market research?

Mary Ogle

Yes, we put those once monthly and every third month into a research and we actually found and why we moved with the portfolio is because the two creative synergies opportunity, both for the patients, the physician flexibility and then of course financially was more profitable.

Michael Hayden

Shawn, next question please.

Operator

Okay. Thank you. The next question comes from the line of David Buck of Buckingham Research Group. Please proceed.

Unidentified Analyst

Hi. It’s [Jim Dawson] for David Buck. Could you discuss a little more in detail just on the IP protection for the NTE program and then also the NTE -- products from the NTE program expected, approval expected in the next two years, ‘14 and ‘15? Thank you.

Michel Hayden

Okay. So, let’s just talk on the IP protection and our approach, general approach to the IP protection. Sharon Hausdorff will answer that.

Sharon Hausdorff

Right. So every product that we assess in our committing program goes through our robust set of criteria for analysis. And one of those is obviously the potential for IP protection. And we’re targeting for each product to be filing patent application. We’re looking obviously to get the strongest patent protection possible including (inaudible) patents. And so far in 2013, we've already filed 11 patent applications and we intend to continue to build that portfolio with time.

Michel Hayden

Okay. And with regard to products approval, of course the first product is approved which is Adasuve, which will be in the market in 2014. We are continuing to file and we will have one submission again in 2014. We’re expecting to be on the market with launch date as early as 2016 with products particularly in the pain area, but I’m not going to go through which product but our earliest launching will be 2016. And we’re on track for that.

Unidentified Analyst

Okay. Thank you.

Operator

Thank you. The next question we have comes from the line of Tim Chiang of CRT Capital. Please proceed.

Tim Chiang - CRT Capital

Hi, Michael. What the 505(b)(2) strategy and how it relates to the abuse deterrent opioid plan that you have, how much comfort do you have that you'll meet all of the requirements for an abuse deterrent label?

Michel Hayden

I'm going to ask -- Jim Ottinger is on the phone. And Jim, do you want to comment on the 505(b)(2) strategy and also our ability to get some appropriate essentially label that includes abuse deterrents, Jim?

Jim Ottinger

Yes. Thank you for the question. So as you are aware, in 2013 FDA did issue guidance in this area. And we have development plans which have been designed to seek approval of both what is known as a Tier 1 and a Tier 3 claim as designed by FDA. The ultimate success and approval of these claims will of course depend on the data generated, but we're confident that we have a program put together that will achieve that goal.

Tim Chiang - CRT Capital

Just one quick follow-up to that now. I think there were four tiers of requirements that the FDA draft guidance talked about. Tier 3 was clinical studies. Now, are you guys planning to do clinical studies with your AD1 and AD2 products or not?

Michel Hayden

I'm going to ask Jon Isaacsohn just to comment on that because I think whilst we expect one Tier 2 we're also aiming for sometime a more stringent tier. Jon, do you want to comment on clinical study?

Jon Isaacsohn

The good news with respect to the abuse deterrent technologies is the guidance that the FDA put out. And in that guidance they include the necessity for a liking study. The liking study is the study where we actually demonstrate the abuse deterrent capabilities of the drug. And if the liking study is successful and as was mentioned earlier, we already have one of our abuse deterrent drugs that is currently undergoing in Phase 3. That liking study was successful using the OraGuard technology. And so we have every reason to believe that it will be successful for these NTEs as well. And with the liking study, we anticipate that we will get Tier 3 approval and the abuse deterrent aspect in the label.

Tim Chiang - CRT Capital

I see. Okay, great. Thank you very much.

Jon Isaacsohn

Tier 4 by the way is only necessary when we do the post marketing data.

Michael Hayden

Shawn?

Operator

Okay, thank you. The next question comes from the line of David Risinger of Morgan Stanley. Please proceed sir.

David Risinger - Morgan Stanley

Yes, thanks. Can you hear me?

Michel Hayden

Yes, we can hear you David. Good morning.

David Risinger - Morgan Stanley

Good morning. Thanks for taking my questions. The first question is with respect to the product that you will be launching in 2016; is that currently in Phase 3 trials or will that enter Phase 3 soon? Second, with respect to the NTE strategy, it seems like one could construe AD10 or your version of AD10 to be kind of like an NTE if it’s not granted pharmacy substitutability. My question is, when will you know whether you are launching mid to branded AD10 or a generic equivalent in light of the fact that I think you can launch in 18 months? Thank you.

Michel Hayden

Okay. Thank you, David. Let me just answer quickly just about the Phase 3 study, the launching. We are expecting not to need -- no need for Phase 3 study for some of our pain NTE. So, we are expecting to launch these in 2016 without Phase 3 study. So I am going to ask Elisabeth to comment on our (inaudible) development which we didn’t talk about (inaudible) our generic portfolio. Elisabeth? Operator, can you hear us?

Unidentified Speaker

David, could you mute your line?

David Risinger - Morgan Stanley

I’m sorry about that.

Michel Hayden

Elisabeth, if you could just comment on the AD10 product?

Elisabeth Kogan

Yes, so David, when we brand our NTE programs is when we bring significant clinical and medical benefit. When we are talking about small innovation, we still consider that as a generic. So our plan is to launch generic AD10 in 2015 as you know and then we are looking into further improvement in innovation of the AD10 but I will not comment more about that.

Michel Hayden

Thank you, Elisabeth. Operator, next question?

Operator

Okay, thank you. I would like to hand back to Kevin for a question from the webcast.

Kevin Mannix

Yes, we have a question from a previous participant who asked for some clarification, who says that 505(b)(2s) are generally consider brands that require promotion to capture market share. I was hoping for some clarification on how much spend might be associated with marketing these brands?

Sharon Hausdorff

Mary, I’ll take that question. Yeah you’re exactly correct, so the majority of our brands, they will require a promotion as a traditional brands launch in to the market. What we’re working to do and in our plans is the efficiency of our current infrastructure and we’re targeting about a 10% to 15% expense in sales and marketing.

Kevin Mannix

Thank you. We have another question through the web. This one comes from Steven (inaudible) IMS, who says there is no specific breakdown of geographic contribution in the forecast provided. However they were multiple mentions of the 505(b)(2) pathway as the route to approval. Does this mean that the market will focus or the market’s focus and potential of Teva’s NTE products is primarily the U.S.?

Michel Hayden

Okay. So thank you. I’ll just answer that. Whilst of course we have spoken about the 505(b)(2) pathway in the U.S., in fact just from a conceptual point of view, our NTE program is targeted to products in all geographies and we recognize they are different IP strategies and regulatory strategies and exclusivity strategies in different regions. And I’ll ask Mary just to comment on the geographic spread and dispersion about of our NTE products.

Mary Ogle

So, everything we do we look for the largest geographical footprint and today with the class of 2014, excuse me, 2013, we have 40% of our products actually have a global reach outside of the U.S. in addition to U.S.

Michel Hayden

Jim, did you want to comment just on the European regulatory path for some of these and also what kind of exclusivity we might get outside of the U.S.?

Jim Ottinger

Sure. Thanks for the opportunity to comment. So in developing these products, we are essentially seeking both advice from FDA and the European authorities. So, we've mentioned the 505(b)(2) pathway a lot, but in Europe there is a also a variety of pathways through which NTEs can be submitted and depending on how those products are submitted in Europe, we can get up to ten years of exclusivity on these products.

Michel Hayden

Thank you Jim.

Kevin Mannix

And I think that concludes the Q&A portion. I'll turn it back over to Michel Hayden.

Michel Hayden

Well, I just want to thank everybody for being online. I'm seeing that there were over 650 people either on WebEx or online. And we’re delighted that this has attracted so much attention from our analysts. In fact, I'm being told now there were 900. So, this is a very significant number.

I think we hope we have shared with you our excitement about this program. It builds on a lot of the strength and expertise that already was present in Teva and it's come through a very creative and innovative integration of our GX R&D, our generic R&D and our specialty R&D organization.

I think the engine is in place. We know the challenges going forward, we recognize the risks and we also look forward to additional business development activities. But we think we've provided a realistic perspective on where the NTE program is going. And we look forward to ongoing discussion with you as we interact with all of you in the near future in different locations. So, thank you for your attention. And we look forward to our ongoing dialog.

Kevin Mannix

Shawn, if you would please?

Operator

Thank you. A replay of the webcast will be available within 24 hours at the company's website at www.tevapharm.com. Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.

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