Welcome to another episode of Bloomberg Intelligence's Vanguards of Healthcare podcast, where we speak with leaders at the forefront of change in the healthcare sector.

I'm and Hunter van Kirk, Senior by a pharmaceutical analyst at Bloomberg Intelligence, which is the in house equity research division of Bloomberg.

I'm very pleased to be welcome to welcome today's guest, Eric Hughes, Executive vice president of Global R and D and Chief Medical Officer at Teva Pharmaceuticals.

Eric, you joined Teva just over three years ago.

Can we start by walking through your background and what let you led you to the company?

Sure, thank you for having me today, Anne, Hunter.

It is great talking with you, and it's great to be able to talk about you know, Ted's pivot to growth over the last three year has been quite exciting.

But you know a little bit about me first, I need to say that I come from a family of geeks.

We're a bunch of scientists, a long line of chemists.

But you know, for me, you know, in my training becoming an infectious disease physician and I did an mvphd a Yale.

The thing that I loved the most about the last twenty five years is my You know, I fell in love with drug development.

I started at Bristol Myers squib doing some first and human work and phase one work and did some great things and hepatitis C.

But then progressed on through a number of big form of companies over the years, including Sharing, Plow, Merk, Novartes, Vertex, and now finally at Teva.

It's been a great journey.

I love what I do.

Using science to change the practice of medicine is probably the best thing I could ever have done with my career.

Fantastic And coming from that background, how did you build this R and D engine at what was traditionally associated as as a large generic company?

Yeah, yeah, I mean one of the things that I've discovered over the years, you know, I first fell in love with drug development, and you know, learned the process of going from first in human all the way through registration and launch, and I learned a little bit about leadership, and then I really got interested in organizational structure.

To my surprise, over the years, I've done you know, a number of different efforts a number of companies along the way.

So when I came to Teva, that prepared me quite a bit for you know, what I see as my ultimate dream job of coming into a company with a great culture but in need of change and organization.

And it was, you know, it was like amount of clay that we were able to, you know, form into this modern drug development matrix that we have here.

And let's let's.

Dig down into that a little bit.

What did the R and D structure look like when you arrived and how have you shaped it now?

Yeah, so when I got here, you know, it was really siloed.

It wasn't really organized as a modern drug development matrix as I always like to say.

You know, drug development, I like to say, is a very complex process.

It requires multiple different disciplines and expertise.

So it's not a top down structure.

It's a team of scientists who have to work together in a matrix.

So to capitalize on that, the first thing I did was just, you know, do the organizational chart have business units of generics, biosimilars and innovative medicines and have all the common functions driving that drug development across all of them.

So that was simply a way of facilitating some of the great things that have all the expertise we have across the disciplines, but then break down those silas and get that culture of mindset of working together and collaboration and learning from one another to really accelerate what we have.

And you talk about this culture, how can the company leverage its culture as it transforms itself into an innovative powerhouse.

Yeah, culture is everything.

You know.

One of the great things about TeV is its basic culture is fantastic.

It's a group of very compassionate people who are in it for helping patients.

But they were at a moment of change.

They knew they needed to change.

So culture only changes when there's a desire to do it.

So, you know, Teva was just coming out of its austere years, you know, doing cost cutting.

So about four years ago when I came and there was this willingness to change.

Having that culture mindset of collaboration, of willing to do great things.

Willing to change their mindset and go from cost cutting to acceleration was the real mindset shift, and that was a big focus.

You know, just moving names around on an organizational chart is one thing, but to actually have it work, you have to have the culture that drives it.

So let's dig into that pipeline a bit more.

Just this morning, you announced filing an NDA for your extended release injectible suspension for schizophrenia.

Would you walk us through development of this and some other key assets in your pipeline.

Yeah, So today was a great day to have this conversation because we just had our announcement that we're very proud of.

This is our Alonza pine Lai long acting injectible for schizophrenia.

This builds on our franchise that we're developing on top of Uzetti, which is a respiradown long acting injectable, and you know, we're very excited about this.

This is one of the first of our long line now of compounds in late development that we're very excited about.

And I'd just like to say that, you know, for schizophrenia, you know, the great thing is that we can treat this disease.

The challenges is a very difficult and impactful disease.

But the challenge for these patients are their ability to hear to the medications that work.

So taking a pill every day is hard for patients with schidzophreny.

Of it's hard for all of us.

These long acting injectables though, make it very simple to get the right exposure to a drug and you know you have it for the next month.

So we're excited by alonzop and LAI is a very convenient formulation where it's subcutaneous, no oral supplementation, no titrations.

It's really an easy way to get the proper treatment in an area where there are no really strong options for LAI.

So I think we're just going to build on the success of our long acting respirit on new zetti and now with this new option for alanzapine, where we're really excited about it, and it's a great day to have the submission go down to the FDA.

And let's keep going there.

Tell us about some of the other there's maybe five highlighted assets that we look at a lot.

Would you walk us through all of them?

Yeah, So I'm happy to because one of the great things when I first got here was not the opportunity not to the opportunity to really build and organize and drive the culture at tet R and D, but also there was a great pipeline here that no one talked about much before on the innovative space.

You know, Teva is known historically as a generics and biosimilar as company, which is an incredibly strong foundation.

But we have a great late stage pipeline.

So you know, we talked about alonzopine lai.

The phase three data was right where we expected to be both on efficacy and safety.

But the next thing is duvakey took, which is a homegrown antibody for anti til one A, which is a rand new class of biologic that you know, is very exciting because this is a potential, you know, multiple indication molecule that we brought forward in ul sort of clitus and crones and we had very strong data at the end of last year.

And what's exciting about this is it's not a biologic that's hitting just one particular cytokind pathway.

It's really blocking a cidikind that amplifies many different pathways and potentially has a direct effect on fibrosis.

So we're excited by the possibilities of multiple different inflammatory indications in the future, maybe even anti true fibrotic indications.

But this is a great drug that's now in phase three for all sort of clients and Chrohn's disease with our partner Santa Fe.

So that's one great program.

In addition to lines of being, our third Phase three program is our DARI program.

That's our dual action rescue inhaler program.

This is an inhaler.

It's a dry powder inhaler that's for the treatment of asthma.

And I think that it's important for people to now know that the guidelines indicate that for an asthma exacerbation, you shouldn't just be taking out beuterol, you should actually be taking a steroid as a component of your rescue inhaler.

And we're really excited to be bringing forward what we think is a differentiated product.

It's a dry powder inhaler.

It's really easy to use for for kids.

You don't have to coordinate your inhalation and and your dose metering.

But it also will have pediatrics in our Phase RE study, not only pediatrics but also adolescents.

And that's important because this is going to be the first dual action rescue inhaler that will have the pediatrics in its indication and we will probably have one of the largest pediatric and adolescents sampling in our Phase RE study of any of the programs before us.

So we're very excited about treating you know, the eleven million people out there who have asthma exacerbations every year, you know.

So those are three great Phase three programs.

If you look at our Phase two programs, I'm equally excited about our anti aisle fifteen program.

We're bringing that forward in two proof of concepts, one for coeliac disease, which is a real unmet medical need for people who have to, you know, avoid gluten all day long, and viteligo, which is another impactful disease on the you know, the the social ice and the depression you might get just from the appearance of your skin, which we had no systemic therapies for.

So that's a great program.

You know.

Aisle fifteen is thought to be a key CIDO kind in both of those diseases, and there's more indications we can bring antio fifteen foward.

And last, but not least, one of the greatest unmet medical needs we're working on in Phase two right now is our m Rousselman program.

This is a small molecule that's brain penetrant and gets into the cells and attacks a protein called alphas nucleon And that's important because the disease we're studying it in right now is called multiple system atrophy or MSA, and this is a devastating disease.

Ten years after diagnosis, most of these folks have unfortunately passed away and it's just a relentless neurologic degenerative disease.

And we are hoping to attack that.

The cause of the disease alphas nucleon at its very beginning when it starts to aggregate and sell brain cells and kill those cells.

And we're blocking not only hopefully the generation of the intracellular but the memorane bound and that alphasniculan that gets out of the cells and attacks other cells in the brain.

So we think we have a differentiated product and we're really excited the studies enrolling as quickly as it is.

That is an exciting lineup.

Let's dig into the asset selection.

That can be a turkey art, you know, particularly in the neurospace.

How did you select these assets and how do you work towards the best probability of success there?

Yeah, so you know, the strategy is super important here at Tevin R and D Group.

You know, we focus on neuroscience, which is our heritage is very strong in this area.

You know, copacsone is one of our great molecules in our innovative past.

We've built on that with osteto for tart of dyscnesia and Huntington's disease.

We also have a program if a jovie for migraine and we are, as I mentioned before, usetti in the marketplace for schizophrenia.

So we have a strong in market portfolio in neuroscience and we're building upon that.

You know, we collaborated to in licensed Emersolman years ago, which is another thing that we do a lot of nowadays, is partnerships with partners for development as well as funding.

But I also mentioned that we focus on immunoscience as well.

We have a fantastic laboratory down in Sydney, Australia.

They have real expertise on antibody development and protein engineering and you can see it throughout these our pipeline where duviki took is probably a potential best in class, first in class molecule, just like Antiisle fifteen is a homegrown molecule that's the most potent, probably the best PK out there for antiil fifteen, and we have many other molecules that are in development in our antibody capability, is it not to mention another program for PD one, OL two and oncology.

So you know what that does is drive how we think about our development and our focus.

So neuroscience is a great area that we can build upon.

We will probably do mostly BD for small molecules because we don't do the development, but we'll rapidly partner and in licensed molecules in neuroscience, while our immunoscience group is really something that's mostly home grown, but we also look for bad opportunities there as well.

So you've talked about these partnerships and licensing opportunities.

Do you see this as a path forward really for the market overall?

Yeah?

Yeah, So for me, you know, one of the greatest accomplishments we've done over the last three years is the number of partnerships and deals that we've done to really accelerate our pipeline.

You know, I think at Teva it was a strategy of necessity, but I think it's a paradigm which how we will be moving forward and how many other companies will probably do their development.

So I'll just run through some of those partnerships, you know, one of the big ones we did when I first got here was the one with Santa Fie, great partner.

You know, what it's doing with our duvakey Took program is really expanding our bandwidth in the development because it's a multi indication potential in the future, and it's also a great partnership on the costs as well, so we do a fifty to fifty on the cost and the revenue.

So that's a great partner.

The really worked hand in hand from the beginning because what they facilitated was the fastest phase two to phase three transition of everyone in that class right now.

So we're very happy about the ability to accelerate and really you know, capitalize on the best of both companies.

After that, you know, we've done a number of funding deals where you know, abbing Worth and Launch Therapeutics collaborated with us on our DARI program.

They brought not only funding but also bandwidth and expertise on the execution of you know, asthma studies, which is you know, a great example of collaboration, you know, with a Wantope and Lai.

We did a deal with with Royalty Pharma where they were able to give us the funding where we could really accelerate that program, and that that we pulled that program in six months faster than we thought.

So these partnerships have really been driving our speed, and you know, we'll do more of those partnerships.

I think that's an important paradigm for you know, guys like me in R and D who have to balance the budget while actually moving the things forward as quickly as possible.

It's it's important for the funding as well.

Absolutely, so it's everyone's favorite topic right now.

But how does AI fit into your drug development process?

Yeah?

So, you know, and when I think about AI, think about how we behave at TEPA when one of the things that Richard Francis and I talked about a lot with the investors were ruthless in our capital allocase.

So you know, budget's super important, but accelerating the programs is equally as important.

So you know, balancing those two things very very key to our success.

When it comes to AI.

I always say AI is fantastic, is going to change the world, but we have to focus what we use AI for because the goal is to speed the drug development and make the development faster and better for patients.

So I don't care what the AI is, but it's got to help me do what I do all day long to serve the patients that we're trying to help.

We have a lot of examples of things that we do.

You know, there's some really low hanging fruit that's you know, something we've already started on, like medical writing, you know, compiling a dossiers like we sent down today to FDA pharmacovigilance, you know, processing the large, large amount of safety data that's coming in every day around the globe.

You know, big data to me is a very important part about you know AI.

When you're generating loads and loads of data, you know you need to be able to look at it and learn from it.

You know.

The terrible secret and firm pharmaceutical development is a lot of the data we never get around to looking at.

We end up filing it away but not having the capabilities really interrogate it and analyze it.

So that's another good thing.

And the last thing I to add that we're doing is, you know, we've used AI in speeding the way in which we developed drugs, and I have a great example of that.

We have an anti TSLP aisle thirteen bispecific antibody, and it's a really fascinating antibody because each tip of the antibody binds either TSLP or AISLE thirteen and that's really remarkable.

I didn't even know you could do that, and you can't certainly make that in a mouse.

A mouse wouldn't make a drug like that if you if you immunize them.

What was what we did do was partner with biologic design and created an antibody in a computer from known science.

So that's one of our our mantra us here too, is we we're going to use known science to advance and make things better and potentially in combinations.

And this is a perfect example of that where you cut you know, six months to twelve months out of the development timeline by creating this in the computer and making better antibodies that you couldn't otherwise make.

So we use AI in many different ways at TETA.

That's fascinating and so kind of putting that into numbers, kind of what percentage of processes do you think are are AI appropriate right now?

And how do you see that growing in five ten years?

So it's just going to keep growing.

So I would say, you know, I can't even give you a number, but it's a it's not a majority at TETA yet, but we all see anywhere where you have lots of data or a clear process.

So I talked a lot about what we do in R and D, but in manufacturing and commercialization there's many different examples where wherever you have a lot of data and you need to process it, and even in the financial group, that will make everything much more efficient and rapid in the future.

So as systems and off the shelf technology is available, that will continue to infiltrate every aspect of the drug development process, not only in the R and D but beyond fantastic.

So, thinking about kind of across all therapeutic indications, what would you highlight as some of the biggest hurdles in drug success?

Well, you know, I think that the trend over the last couple of years is what we need to battle.

You know, drug development has become slower and more expensive, despite all the new technology we're bringing to bear.

And you know that's caused by many different reasons.

You know, increased regulatory scrutiny, more needs for quality, the more needs for you know, real treatment effects.

But I think that one of the things that TeV is going to be different and known for is that even though we're a thirty seven one thousand per company approximately and we have like close to sixteen billion dollars worth of revenue, we're in the unique position where we can stay really hyper focused on what we're doing.

You know, in my role as the head of R and D here, I am very granular with the teams.

I'm on calls every week, driving teams on enrollment and studies, looking at data as quickly as possible, being able to pivot on things that I see that they're bringing to me, and being able to make decisions very rapidly, and you know, drive programs forward.

You know, I do a lot of traveling too.

I go to sites, I find out, you know, what are the investigators saying about our programs and our compounds, and you know, tell me how the patients are doing.

I think that that ability to be like a biotech and a very large company is part of the secret sauce of what TeV is doing right now.

That's fascinating.

So from both a technology perspective, you highlighted some things that might make sense to acquire, but also as an overall asset perspective, what goes into your thought process there on sort of a make versus buy a develop internally or acquire decision.

Yeah, so the first thing I would say to that is, you know, drug development is a balance of both make versus buy.

In fact, we don't treat them differently.

We have a very clear portfolio prioritization process where you know you will get the market potential, the unme medical need, the regulatory possibility of success, you know, see the feasibility of the studies, and the regulatory endpoints.

You know, we have a very clear vision of how you should develop a drug, what you need to check the box for in each one of those categories.

And we apply those same rules to whether it's a homegrown ant a body in our great labs, or whether it's an opportunity that someone's brought to us from the outside.

You cannot treat them differently because then you're leaving capital on the table if you choose wrong.

But we look at them in an agnostic fashion and either whether it's inside or outside, will go as long as it fits our strategy of neuroscience and immunology.

And you did highlight you know a couple of specific things is there anything else to flag that would be interesting next editions for Teva?

I mean, we're I would over emphasize the fact that, you know, the additions that we will do at Teva.

You know, hopefully when we do those, you'll see that they were smart, they fit our strategy, and we stayed focused on what we do best in both our therapeutic areas of interest.

When you stray away from your therapeutic air of intagers, that's when you get in trouble.

You know.

One of the examples that I could contrast that to is, you know, we have this wonderful program.

It's an anti PD one aisle two.

This is a this is a molecule that brings attenuated aisle two to cancer cells that have PD one on that surface.

And in a simple way you can look at look at it as a compound that is like k trudan opt devo.

But k trudan opt devo are like taking your foot off the break of the immune cells.

Our program is bringing a signal that it's like putting your foot on the accelerator to those same cells.

And the reason I bring that up in contrast to the focus is, you know, we're not going to be an oncology company in a big way.

But we're going to bring these great assets forward and partner them because we have great science that we're bringing forward from the telelabs.

Absolutely, so kind of thinking about that, you know, how does Teva balance sort of this this R and D innovation engine with its its legacy generic business.

Are there some specific synergies to highlight there?

Yeah?

So when I first got here, to me, it's all drug development.

So you know, when you when you want to capitalize on the synergies there, to me was a natural thing because you know, the formulation work, the device work, the biologics work of generics and biosimilars can help inform and it has great expertise that we can apply to our innovative pipeline.

So you know, that modern drug development matrix that I talk about often facilitated those interactions.

We really kind of erase the silos in R and D and we see the synergies and the fruit of that labor every day.

Here.

You know, DARI program, which is an innovative program for asthma, uses a homegrown TEVID device for a dry powder and haler elantepine LI is a wonderful partnered formulation injectable that we can do very well from our formulation technology.

You know, there's a lot of synergies there, so that that foundation of the Generics and Biosimilars group is not only great for the science and the development of our innovative space, but it's also the foundation of our business right now, and it's super important to cheap that as efficient as possible.

Maybe sort of on of that, how do you think about life cycle extension versus you know, some of these true innovative products that you're that you're highlighting.

Well, I mean, that's that's a great example LCM life cycle management of our programs.

I can use a great example of Osteto, which is our you know, our flagship program right now for Tartar diskinesians doing very well.

One of the reasons it's doing well is because we have great pecane formulation guys who made once a day molecule with a fantastic titration pack.

So that sounds boring, but that was super important for you know, patients and caregivers to make sure that you know, we made it as simple as possible to get through people through the titration and then to the correct dose to really treat their tart of diskinnesia.

So that uses the power of our generics group on a innovative program and penetration into the market fantastic.

There's of course some very large exclusivity losses coming up in the generic market over the next decade.

How does Teva really really on both sides, both the generic and the innovative side.

How does Teva fit into that?

So the you know, we are masters of the loss of exclusivity.

You know, I've learned a lot about you know, generics and biosimilar since I came here about three and a half years ago, and it's it's an incredible machine of experts that really look at compounds.

From the day a compound succeeds in phase three, they're already looking at how to develop it as a generic or a biosimilar.

It's really quite an amazing education you can get at Teva.

And I bring that up because that's such a huge effort that we do here.

So when we talk about loees in the Generics and Biosimilars group, we pretty much cover all the value chain throughout.

You know, I always like to bring up some numbers for the generics group, because you know, ninety percent of all prescriptions in the US are a generics drug.

You know, one in fourteen is a Teva generic, and we take out about four hundred and fifty billion dollars worth of savings in generics from the system in twenty twenty four, so you know, it's a massive undertaking.

So that knowledge, our understanding of IP and you know, really bringing value and access to patients is something we take with great pride here.

That also helps us on our innovative space actually as well.

So when we when we review bad deals and we look at the you know, the background and the what we can see in a molecule, we're probably the best ones to assess that and understand what the loe of novel molecules are and it helps us fight, you know, for our innovative programs as well, So we have best of both worlds when it comes to that.

And how about upcoming to do for negotiations, could you speak to any of those.

Notion Negotiations are very important because I think that you know, one of the things about the generics in biosimilars development and review process with the regulators, you know, it's evolving.

It's not like the innovative space.

The innovative space has, in my observations and our team, you know, a very clear pathway, there's timelines, and there's a great collaboration that goes on in the innovative space.

In generics, it's it's much more.

There's many more programs.

I mean, we have five hundred generic programs or approved products in the world right now, but there's just such a huge influx in a huge flow of data all the time.

You know, we need to make the rules clearer and more transparent when we do work with the FDAs, and I think that they're listening to that, and I think that with the Kadufeno negotiations, it's going to be very important to bring that innovative mindset to the generics realm so that we can work with the regulators more efficiently and rapidly to bring these drugs forward, because, like I said, that's ninety percent of all prescriptions.

We should be bringing those forward with equal vigor.

We apply to the innovative space.

And we talked about partnerships before on the innovative side, how does the partnership equation change or not change on the generic and specifically, maybe biosimilar side.

Yeah, so we do partnerships and business development deals all the time in both the generics and the biosimilars.

I would focus on, you know, the strategy for biosimilars because that was one of one of the more important things we did in our Pivot to Growth strategy that we rolled out three years ago.

And that's the fact that you know, biosimilars are hard to make and it actually costs a lot of money to make them.

So to really maximize the value, our strategy is not to invest you know, the one hundred to two hundred million dollars it takes to develop a biosimilar, but we will partner with people in the development process and help them commercialize those And what that does is helps us lower the capital investment up front, but also increase our bandwidth or our breadth of biosimilars.

You know, we'll have one of the largest biosimilar portfolios out there, which helps us not only you know, back end the deal structure for our launch capabilities, but also maximizes the chances of success because as you can see in the US, it's very difficult to find out who's going to be the winner in biosimilar so the breadth of your portfolio is very important.

In contrast, Europe is more straightforward, the process is clear, and you know, your watch capabilities are more transparent.

So that's how we're balancing it, and I think that's the winning strategy for biosimilars.

Absolutely all right, and sort of taking all of that, how do you balance all of this development with your commercial colleagues.

Oh, that's a great question.

I'm glad you brought that up because you know, one of the things that I've been known to say, and I say it all the time, you know, when the commercial organization and the R and D organization is in lockstep, that's when the magic happens.

And that's when you know, you know, patients get drugs quickly, that's when the waunch goes well and people can really be excited by all the hard work they put into it.

So I work very closely with our commercial colleagues.

We try to make these a co ownership when we're developing a drug and when we're working on a launch and into life cycle management.

So I revel in that.

I love working with my partners, you know, Chris Fox in the US and Richard Daniels in Europe and mark ZIBAG and the rest of the world.

You know, working with them is critically important to make sure that you know, all the hard work of R and D, you know, sees success in the future fantastic.

Well, Eric, your your passion for drug development is clear and it's it's exciting to watch this transformation.

What are some of the kind of final thoughts and key features we should leave people with.

Yeah, I mean, the last three and a half years has been the best part of my career, to be honest, It's been a great opportunity to mold this organization into a modern drug development matrix.

It's been a lot of fun leveraging our internal expertise across our biosimilar as generics and innovative medicines.

You know, the culture that we've been emphasizing in this system that we've built is key.

You know, we've gone from maybe a conservative group to a real mindset shift where you know, we're empowering our teams to really move their programs forward.

And finally, you know, I think one of the things I'll be most proud of is that partnerships we've developed and the deals we've done over the last three years to really accelerate this growth.

You know, when I think about you know, what we're doing.

It's not a matter of how much whether we're going to grow, It's going to be how much we grow in the future.

Eric, it was a pleasure to sit down with you.

Thank you so much for your time today and sharing your story on Teva's R and D engine.

It's clear that the culture and the passion shines through and we're excited to see next steps from you.

I'm an Hunter van Kirk, and you've been listening to the Vanguards of Healthcare podcasts by Bloomberg Intelligence.

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