Welcome to the Teva's Fourth Quarter and Full Year 2022 Earnings Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to hand the conference over to our first speaker today, Ran Meir, Senior Vice President, Head of Investor Relations. Please go ahead.

Thank you, Nadia. Thank you, everyone, for joining us today. We hope you have had an opportunity to review our press release, which was issued earlier this morning. A copy of the press release as well as the copy of the slides being presented on this call can be found on our website at tevapharm.com. Please review our forward-looking statements on Slide 2. Additional information regarding these statements and our non-GAAP financial measures is available on our earnings release and in our SEC Form 10-K and 10-Q. To begin today's call, Richard Francis, Teva's CEO, will provide an overview of Teva’s 2022 results and business performance, recent events and priorities going forward. Our CFO, Eli Kalif, will follow up for reviewing the financial results in more detail, including our 2022 financial outlook. Joining Richard and Eli on the call today is Sven Dethlefs, Head of North America business, who will be available during the question-and-answer session that will follow the presentation. Please note that today's call will run approximately one hour. And with that, I will now turn the call over to Richard. Richard, if you would, please?

Thank you, Ran, and welcome, everyone. I'm excited to be here today, and I'd like to start by saying, it was great meeting many of you in San Francisco JPMorgan last month. And I look forward to getting to know Teva shareholders, investors and analysts, so that you can have an open dialogue going forward. I'm excited to be here because there's a lot of opportunity at Teva. The team has done a tremendous work to get the company back to a solid foundation. And now there's an opportunity to get back to growth. Before I start my review of Teva's 2022 results and discuss our guidance for 2023, I would like to update you that I've already initiated a strategic review process with my leadership team. Our teams are already hitting the ground running, and we are working hard on analyzing some of the core strategic questions, how the segments we operate are going to evolve over time. And we understand what options we have. It's going to be a very clear, purposeful strategy with real intent behind it. Every function, every dollar should follow that strategy going forward. Once the work is down around midyear, I'll come back with the team and we'll present that to the market. Now let's move on to some highlights for 2022. We ended 2022 with revenues of $14.9 billion, and adjusted EBITDA of $4.6 billion. GAAP diluted loss per share was $2.12, and non-GAAP diluted earnings per share was $2.52. You should note that our revenues were still affected by the strengthening of the U.S. dollar during the fourth quarter. And we are, therefore, still seeing significant headwinds from exchange rate movements on our revenues. We had a net impact of $780 million for the full year compared to 2021. Free cash…

Thank you, Richard, and good morning and good afternoon to everyone. I'll begin my review of our 2022 financial results with my main focus being on the fourth quarter performance. This will be followed by an introduction to our 2023 non-GAAP outlook and some of the important assumptions behind it. Beginning on Slide 16. I would like to start with our Q4 GAAP performance. Revenues in the fourth quarter of 2022 were $3.9 billion, representing a decrease of 5% or an increase of 1% in local currency terms compared to the fourth quarter of 2021. This increase was mainly due to higher revenue from Anda, generic products in our Europe segment, AUSTEDO and AJOVY, partially offset by lower revenue from generics products and certain respiratory products in our North America segment as well as COPAXONE. In Q4 2022, we recorded a GAAP operating loss of $855 million compared to operating income of $78 million in Q4 2021, with a net loss of $1.2 billion compared to $159 million in Q4 2021 and a GAAP loss per share of $1.10 compared to $0.14 in the same period a year ago. GAAP operating loss, net loss and loss per share were mainly due to goodwill impairment charges in the fourth quarter of 2022, partially offset by lower legal settlement and loss contingencies. The goodwill impairment charges were mainly related to exchange rate fluctuations in our International Markets and updated projections in our Teva’s API business. The strengthening of the U.S. dollar versus other currencies during the fourth quarter of 2022, including hedging effects, negatively impacted our revenue and GAAP operating income by $270 million and $132 million, respectively, compared to the fourth quarter of 2021. Turning to Slide 17. You can see that the total non-GAAP adjustment in the fourth quarter of…

Thanks, Eli. Before moving to the Q&A, I'd just like to summarize some key points. So I'm happy with the progress that has been made so far, and I want to congratulate the entire team, all my colleagues across the globe on a solid Q4 and full year 2022. AUSTEDO and AJOVY continue to drive growth. And as I mentioned before, there is still a large unmet need that will drive growth in the future for AUSTEDO in the U.S. and AJOVY continues to see good traction, particularly in Europe and International Markets. We have strong performance in Europe and International Markets and our European business is steadily growing with leadership positions in most markets. We have an exciting pipeline across innovative medicines, biosimilars and generics. And these interesting and differentiated assets will set us up for future growth. We remain committed to our long-term financial goals around growth, improving margins and driving down debt. And finally, I look forward to sharing with you sometime in mid-year our updated strategy to ensure how we can position Teva for long-term success. With that, thank you for listening. I'll now hand you back to the operator for Q&A.

Nadia, we are ready for the Q&A, please.

Now we'll start the Q&A session. The first question comes now from the line of Umer Raffat from Evercore ISI.

Umer here. A couple of things, if I may. First, on guidance, I think there's a little bit of confusion on how much Humira is in the number. And I guess, said differently, what people are really focused on is, is it still a growth year off of '22, if there was no Humira? That was first. Second, I wanted to touch up on the TL1A program a little bit. Could you tell us if the asthma trial was a complete zero? I know it was terminated. And also for the IBD Phase 2 you initiated in August last year, how is the recruiting tracking? And could you be in a position to take an interim analysis on 14-week data perhaps later in 2022, which could inform a more accelerated Phase 3 start, just given how competitive this could get?

Umer, thanks for the question. So on the guidance, as I mentioned, we do have Humira that is risk adjusted. And I think your question was if we don't have Humira, will we still be able to drive growth. And I think I'll have Eli contribute, but what I would say is we have a number of opportunities to drive revenue in 2023. Humira is part of that. But obviously, we also talked about AUSTEDO, we've also got UZEDY, and we have other pipeline products that we haven't highlighted in this call. It is an important part, but we've risk adjusted it to take into account the uncertainty. But maybe I'll let Eli give some more color.

Yes, Umer, you see the range that we have there, and you can look on the midpoint versus the '22 revenue, so you can see kind of a modest increase, and I will say that to echo Richard, what he mentioned, Humira is in the guidance and is risk adjusted. And we have a few others, elements that might potentially hedge that element if it will not come through.

Thanks, Eli. And then going on to your question on the TL1A. I am sort of glad you put up because I think this highlights some of the interesting assets we do have in our pipeline, which we’ll, as I said, fully discuss in midyear when we do a review of our pipeline and let people see some of the things that I'm excited about. But to try and answer your question, we have initiated a clinical Phase 2 basket trial that started in August of 2022 in ulcerative colitis and Crohn's disease. So that is underway. I can't give much more information than that. But as I said, midyear, we'll probably be able to go into a lot more detail on the clinical development plans for that asset and some of the others.

And the next question comes from the line of Gary Nachman from BMO.

Okay. Great. So Richard, you have a clear strategy of building out your biosimilar capabilities while a competitor decided to sell off its biosimilar…

Gary, your line is open.

Yes, can you hear me?

Hey, Gary. I don’t know what’s going on. Please stick with us.

That's okay. So I'll start over. So you have a clear strategy of building out your biosimilar capabilities while a competitor decided to sell off its biosimilar business. So how much more critical mass do you need to maximize value in that market long term? And then how do you see market formation, particularly with Humira biosimilars and the benefit of having an interchangeable available? How does that impact your payer discussions? If you could give us some color on that. And then just on the generics business, Richard, will you be able to get back to $1 billion per quarter or so in North America, that was previously a target the company had. Just talk about some of the dynamics there, and you think you'll be able to stabilize that business? Will it continue to decline maybe talk a little bit at a high level about the pipeline and maybe how that could return that business to growth over time?

Thanks, Gary. Thanks for your questions and sticking with us on the technical issues. So on the biosimilar one, I'll take a stab at these questions and also maybe tag team it with Sven, my colleague. So on the biosimilar, I don't want to comment on other companies' strategies. We're focused on our own. But what I would say is, and I've got a history here, I do believe in the biosimilar opportunity in the market, and I think it's significant. And I think it's significant in the U.S., and I think it's significant in Europe and the rest of the world. I do believe it has an opportunity to drive growth over the short, medium and potential long term. I do think to answer one of your parts of your question, it does require you to have a deep pipeline. And I think one of the things is you've got to be able to continuously launch biosimilar products as they become available. And so I think the team have done a good job here in building out a pipeline. We want to make sure we continue to do that. We want to make sure we continue to have a geographical spread of that pipeline as we go forward. But yes, I see biosimilars as an opportunity to drive growth in the short and medium term. Now when we talk about the market formation of biosimilar Humira, what I would say is let's not forget the size of the price here. This is over $17 billion in the U.S. I was part of the introduction of Humira into the European market. So this is a big asset where I think payers and healthcare authorities can garner some significant savings. I think that's going to bear out over time. I'll let…

Thanks, Gary. I think you were interested in Humira market formation and the benefit of interchangeability. So in what concerns market formation, I think we will go through three phases. Phase 1 is right now because Amgen already entered the market with a non-interchangeable Humira biosimilar. Then we have the next inflection point, which will be our market entry it's July 1. And then we see a clear transition towards biosimilars with the formulary changes that come in 2024. So there will be basically three phases for the Humira market formation. I believe we are well positioned. We have discussions with all our customers on the July 1 date. Our customers very well recognize the importance of interchangeability, and I believe it has become even more important since FDA has guided to this year staying on formulary. And if you have [API], the originator on formulary, of course, you need an interchangeable biosimilar to really drive uptake of biosimilar generics in this space. And we also did recently market research on the question of pull-through with pharmacists and HCPs. And here, we also saw that interchangeability is actually well known in this professional community and especially HCPs look for interchangeability designation when writing a biosimilar other than Humira. So I believe, overall, our product profile is quite strong. We have high concentration, citrate-free interchangeable product. We are working towards FDA approval. And for that reason, I believe we can participate in this Phase 2 market formation starting in July. And adding to Richard's comments about the complex generics of the U.S. generics business and our run rate, so the run rate was $3.75 billion in 2021 and $3.55 billion in 2022. Our focus is now this year on creating a Humira success and, of course, to bring more complex generics to the market because what we've seen in our portfolio is despite the hurdles that you have for FDA approval with complex generics, they show themselves to be very resilient and drive longer-term value and especially when we look at our gross margin structure, you can see how important complex generics became over the last years. So for this year, we talk about, especially Forteo as an opportunity, Xulane as a second opportunity and then the other complex generics that we also talked about in the previous years, such as RESTASIS or Sandostatin. And then we have a couple of other complex generics in the pipeline potentially to be launched in 2023 if we get FDA approval.

We’ll now take our next question. This is from the line of Glen Santangelo from Jefferies.

Hey, Eli, I just wanted to unpack the revenue guidance a little bit more, if I could. I mean essentially, last quarter, you guided fiscal '22 revenues of $14.8 billion to $15.4 billion. And now you're kind of just rolling that same guidance on '23. And obviously, you're building in some contributions from the growth in AUSTEDO and some risk-adjusted contributions from UZEDY and Humira. So I was wondering if you could just talk about the offsets to that -- to those numbers, to that growth. Will it be the same in '23 as it was in '22? Should we expect sort of a similar type of deceleration in the U.S. generics business and a similar type of runoff in COPAXONE? Or is there something else we should be thinking about, for example, like FX playing a bigger role?

Okay. Thank you, Glen, for the question. So a few dynamics in that range. First of all, if you look on the midpoint 15.1%, you will see versus '22 kind of a modest growth, call it like 2% but this is based on a risk adjusted in terms of several launches mostly related with North America. Now if you think about the combination of AUSTEDO, AJOVY and COPAXONE, that's actually around $70 million higher than how we came in '22. And we believe that there is still modest opportunities both in AJOVY and AUSTEDO as we're actually running now the trend on the TRx. And so that's one element. And then a few other elements really related to our stabilized business in Europe in terms of generics and OTC. We see there also kind of a modest growth, and we live in kind of an environment which is very volatile in terms of FX, and we keep kind of enough spread in order to make sure that we're capturing any potential rebounding in terms of mostly on the euro appreciation versus ours.

Okay. Maybe if I could just ask one quick follow-up question on the balance sheet. Richard. You sort of seem to suggest that debt reduction remains a primary focus, but how do you think more broadly about the leverage situation, right? Because as Eli sort of talked about in his prepared remarks, right, there's significant maturities coming up in the next sort of few years that are at or above the level of free cash flow you're generating now and ultimately, there's going to be some opioid payments that are going to have to be made. So how do you think about getting that debt down to those sort of 2027 targets, just sort of given the current level of cash flow that you're generating, how should we think about that over the next couple of years in '23 in particular?

Thanks for the follow-on question, Glen. And what I'd say before I hand over to Eli is we think and plan about our debt and repayment of the debt thoroughly and long term. So the way we think about some of the payments we have to pay in '23, '24 and '25, we've been working on for some time. So firstly, just to give you that background. And maybe, Eli, if you could go into more specifics about that?

Okay. Yes, Glen. So looking mostly on liquidity and free cash flow and the debt. So I will start by -- if you look on the guidance we gave for the free cash flow, 1.7 to 2.1, that midpoint 1.9, if you compare it to where we end in '22, call it, around 15% kind of a reduction, this is mostly related to the fact that we are considering coming back to the market to address our '25 maturity debt take. And that means that we will -- according to the current interest rate environment, we'll need to step up in our fund expenses. So this element that I mentioned already in my prepared remarks, this is a third out of this, I would say, a decrease. Other elements according to the ongoing development with the time lines on the opioid settlement, we see ourselves paying the first payment, and that's actually modeled in our free cash flow generation into Q3 '23. And this is around incremental additional $300 million versus what we paid in '22. So this is kind of the dynamic on that midpoint. Now if you look on the lower end, it's actually 1.7, part of the refinancing that we're planning in '23, actually planning to actually get a bit lower debt take for '23, '24 and '25 to the level of 1.7, 1.8 in order to make sure that we have enough cushions to drive the business mostly because of those developments that I mentioned. And as I mentioned in my prepared remarks, we have ongoing actions going on our working capital. And that cash conversion improvement in the last three years mainly coming from those elements. So high level, in terms of liquidity, we see ourselves really strongly positioned in order to -- the ability to start the debt as well to meet our commitments in terms of obligations, mostly with the coming of settlement.

We will now take our next question. This is from the line of Jason Gerberry from Bank of America.

Just wanted to follow up on that free cash flow comment, I think that you used the term incremental for the $300 million of added opioid costs, but I think you had some payments for opioids in 2022. So should we think about that as like the $300 million plus what was kind of the run rate of payments in 2022? Or just the total of about $300 million of opioid-related payments? And then on the '23 guidance element, I just wanted to ask the Humira question a little bit differently. So everybody is saying '23 is going to be more of a modest year of biosimilar Humira uptake. But if you were able to get the interchangeability, mindful that you're giving guidance on a risk-adjusted basis, but is there a big upside scenario? Or is it too early to say and you need to kind of get to July contracting before you can kind of comment on that.

Okay. Thank you, Jason. Thanks for the question. I think I'll hand you, obviously, the opioids and the cash to Eli and then Sven can talk about the opportunity with Humira and some of the variables in that. So Eli, first.

Yes. So Jason, thanks for the questions. I will clarify. As you recall, we had already before getting to that mature development on the nationwide, we already stated that we settled. And during 2022, we paid already around $130 million in our free cash flow. And that amount will have kind of carryover of around $150 million for next year. Now this is not including the $300 million nationwide that we will need to pay in -- according to the current trajectory of the process in Q3 2023. So you can actually model around $430 million to $450 million that's going to be paid for opioid this year. Is it clear?

Yes, that's clear. Thank you for clarifying that.

Yes, okay.

Okay. Humira, our plan and the risk adjustment that we took, I think that was the topic. So first of all, we plan as having an interchangeable product in July, so that we get approval for it. Just as a reminder, the weekly process by the FDA for the interchangeable Humira from our partner, Alvotech, has been concluded and the outstanding issue for approval is now the site inspection that was scheduled for March 6. So we expect if the site inspection will be successful, we get approval for both BLAs that are with the FDA. [Technical Difficulty] The guidance that we have. So is there an upside? Of course, there's an upside if we sign all the contracts, and we have a limited number of competition within these contracts. We are quite confident that we can generate pull-through because of the product profile. But we have to wait and see for the next step, and I would say we take it step by step. We're quite confident in approval. We also are quite confident in our ability to supply the market with the required volumes. So that's all on track.

Jason, I know that we were down for -- it's okay, is that what you need?

Yes. Thanks.

So we’ll now move to our next question. This is from Balaji Prasad from Barclays.

Richard, you have articulated the importance of biosimilars for Teva over the next few years. And as I look at the long-term guidance that you provided of mid-single digits, I want to understand the role of specialty segments within this, especially as we look at the pipeline and the late-stage assets in specialty as parts? And secondly, coming to this year's guidance, excluding FX and biosimilar Humira, are there any other major variables which influenced the $600 million revenue or $400 million EBITDA spread?

Thanks for the question. I'll take the first part and then maybe tag team with Eli on the second part. So I think your question was around sort of drive growth to our specialty portfolio going forward. So let me sort of touch a bit upon that. I think I highlighted within the call already that the opportunity we still see around AUSTEDO and AJOVY, particularly when you look about the patient numbers that that still are not being treated, I think the opportunity is significant to bring that therapy to a lot more patients. So I see that as a major driver and AJOVY as a driver that can probably be worthwhile outside the U.S. as we expand more into Europe and the international market because of the introduction of the oral therapies into the U.S. But then I will touch upon the pipeline as well. So you said the risperidone product, we have olanzapine, that product that's gone into Phase 3 clinical trials. So I think -- and then we have our innovative pipeline which we'll talk about midyear, which I see more as the medium term. But excited about it. I think that could bring some significant growth going forward, obviously, if that gets through the clinical development phase. So I think we have a number of assets already. And that's not mentioned some of the complex generics that Sven spoke about earlier, which we're still waiting for FDA approval. So I think we're well positioned with our pipeline across specialty, biosimilars and complex generics. Obviously, the challenge always is making sure we get those to markets in a timely fashion, and that's what we're going to be working hard on. Now with regard to the spread on the revenue, I'll let Eli take that and I think your comments are about you understand the FX, you understand the biosimilars, but what else is driving that. So Eli, if you could help you clarity there?

Yes. So Balaji, thanks for the question. Yes, when you drive the kind of range when you start the year, you look on -- mostly on programs that require risk adjustments. So in addition to Humira in the U.S. generics, we have a few of them that risk adjusted. So they might come and be better than what we expect. So this is part of that range and also the solid business that we have with Europe generics and OTC even considering, I would say, the average of current run rate in '22 that we see this one, also with a great potential. So this is -- those two elements, I would say, also part of those range.

We will now take our next question. This is from the line of Elliot Wilbur from Raymond James.

Maybe I could ask Sven to just follow up on the last question with respect to sort of the range of possibilities within the North American Generics segment in 2023 and specifically thinking about new product launch opportunities. If there's anything you can highlight in terms of date certain items or launches with certainty pursuant to settlements, and then maybe specifically just some of the complex generics that could enter the equation in 2023? I know we've -- I feel like we've been talking about teriparatide and cyclosporine for three presidential administrations here. And obviously, the FDA has been slow on complex generics, but any additional clarity you could add there with respect to the new product dynamic in 2023 would be helpful. And then for Richard, outside of the reiteration of the company's prior long-term financial targets, wondering if the strategic review or the updated strategic plan, in fact, could modify any of those parameters and thinking specifically about the 2027 debt-to-EBITDA target of 2x. Certainly seems like financial markets, equity holders will be much more comfortable with a higher leverage ratio, 2.5x to 3x and if they were comfortable with the company's use of discretionary capital in terms of pursuing pipeline enhancement initiatives in additional strategic investments. So I'm wondering if there's maybe some flexibility, particularly with respect to that parameter would free up quite a bit of cash flow for reinvestment into pipeline and longer-term growth assets

Thanks for the two questions, Elliot, So look, I'll go in the order you deliver them. So I'll ask Sven to answer one around the almost complex generics approvals that you've been experiencing through the last three presidential campaigns.

Yes. So the usual suspects -- thanks for the question, Elliot. So U.S. generics this year, overall, we'll see a weak patent expiring year. So this year doesn't have a lot of, let's say, launches that are naturally driven by patent expiry dates. It will be more driven by FDA approvals and settlement entries. As you also pointed out, Humira, we already talked about. For TO, we received this year that we answered to the FDA. We are working with them closely to sort out this issue. Just as a reminder, this product has been launched many years ago in Europe already with EMA approval and we know how to manufacture it, of course. And I believe the product is high quality and that we will get the FDA around to give us approval. Then we have the reentry of Revlimid, of course, due to our settlement date that is working on an annual cycle. So when we enter this market with a higher volume allocation within the settlement with BMS. And then we have, of course, Xulane, which is a new drug on the list for launch this year. And then I have a couple of other products that we say, prepare for launch, assuming that we get FDA approval. But since we have made some experiences with the FDA about how difficult it is to get complex generics approved. I don't want to give you a certain let's say, now I think once we get approval, we will communicate more around that. But overall, I can say, let's say, complex generics are still quite attractive for us because if you analyze in the classical 80-20 analysis, our gross margin and the cash contribution within the generics portfolio, complex generics are certainly a major stabilizer in our business in North America. You also see that our price decline is quite stable in the base business. So that has improved over the last year, and we don't expect the organic changes in that space. So overall, I would say, U.S. generics will be up if we get all the approvals that we discuss on a regular basis in these calls.

Thank you, Sven. And then to ask you a question about the framing of debt and the EBITDA target we gave in 2027 and flexibility around that, if I heard you correctly Elliot. So look, we're in the midst of doing our strategic review and understanding our plan going forward. And that's a strategy that's going to deliver growth. That's the whole point of putting that strategy together. I think what we think is important and what is the team has worked hard on is to get credibility around our debt and on the payment of it over the last few years. And so we don't want to squander that too quickly. So I think as we work through the strategic review and understand the opportunities and the need for capital both within the company to reallocate resources to drive some of our pipeline on our market products as well as to do some BD&L, we need to think about that. But I'd also like to say that I think we think we have the ability to pay down that debt in the fashion that we've outlined and still be able to have some capital to allocate to drive the company back to growth. But we're in the midst of that, but I appreciate your point of view and your question to challenge that. And we'll be able to give a bit more clarity on that midyear.

We'll now take our next question. This is from the line of Chris Schott from JPMorgan.

Just two for me. I guess, first, maybe, Eli, how should we be thinking about gross margins this year. I know you're targeting flat OpEx, but just maybe a little bit more color on the components of OpEx as we think about '23? And the second one was just kind of a bigger picture question on the biosimilar business. As you talked about this -- as this continues to ramp and it's an important growth driver for Teva. I guess there's a continued kind of partner-centric approach make the most sense for the company or would these be capabilities you would want to develop, I guess, to be more in-house over time as you think about kind of really trying to maximize the value of this opportunity.

Thanks, Chris. Thanks for the question. So Eli, you take the first one and then I can chime in with a few on the second.

Thanks, Chris, for the question. So we end up '22 around 54% gross margin. And actually, when we are looking on '23, we're going to see a bit higher, I would say, additional 0.3%. And one of the things that we need to remember that the macroeconomic headwinds actually, overall, if you look on the numbers, hit us around 2% on our revenues, call it around $300 million. With all the activities that we've already done and all those, I would say, optimization that were part of our long-term financial targets to expand our margin there has helped us, as I mentioned in my prepared remarks, we partially offset the elements. Now there is also a kind of element on revenue mix, and you can actually see that the -- with the growth of AUSTEDO and as well on AJOVY and a few other elements that we are actually working on, we're going to see a very modest increase but not more to the level of [54.5%], I would say, in '23, which means that our ability to keep the current level on the OpEx will stay the same and the residual amount will flow through the OP margin.

Thanks, Eli. So on the biosimilars. So I think the question, Chris, was around as we move forward, we see it as a growth driver. Is this continued partner strategy or not. So firstly, let me clarify that although we have a good and productive partnership with Alvotech, which is delivering a nice pipeline, we also have, I think, it's six in-house biosimilars that we've developed ourselves. And going back to a comment I made on an earlier question. What I think is important with biosimilars is that we have a broad and deep pipeline that we can address most of these large biologics when they come off patent. And to do that, to do that effectively from a capital allocation point of view, I think it's a combination. It's a combination of partnering and it's a combination of doing some things in-house. And so that's what I see going forward. That combination, just to make sure we have the right pipeline and we're launching the products at the right time. Thanks for your question, Chris.

And we will now take our final question. And the last question is from Rishi Parekh from JPMorgan.

I just want to confirm a few things and then talk about -- or ask a few questions on your balance sheet. With regards to your free cash flow, that $1.7 billion to $2.1 billion, I want to confirm that, that includes the $450 million of opioid payments? Or is it a different number?

Yes, it's including.

Okay. Great. And then with regards to your maturities, if I heard you correctly, I think you said that you're going to address your '23, '24 and '25 maturities, which is different than what you have said at the JPMorgan conference. I was hoping that you could just walk us through what led to that change? Is it something related to your free cash flow or something related just to the interest rate environment, but I would love to just have you walk through that.

Yes. So when we actually set the market, you will appreciate that the interest rate environment is higher than what we expected to tender on our debt take, and that means that we will have an impact on our -- that will flow through impact on our free cash flow. This is one. The second thing is that as we move forward and we see ourselves now more inside of positive momentum with the opioid, we actually want to make sure that we have enough cushion to manage that liability. And coming back to your first question, and that's actually already embedded there. So we used to have kind of a 2.1, 2, 1.9 range on the debt take. Currently, the '23 is 2.1, '24 is 1.9. We're going to take it lower a bit in order to make sure that we have enough cushion there to manage it, and it will be part of the upcoming refinancing, which majority will be focused on the debt take of '25.

And then with the drop-down in your AR financing next year to $500 million, one, can you walk us through why it's declining by $500 million next year? And is that also affecting your thoughts around how you're looking to address your debt maturities this year?

Yes. So I don't understand the drop on the AR for next year. Where you're actually considering that one? But I can mention the dynamics. This year, in terms of working capital, we were able to optimize our outstanding tables as well DSO. And that actually offset part of inventory increase in order to support our production plan for mostly for the first half of the year.

Yes. Sorry, I was just referring to the new AR facility that you entered into. I think it's $1 billion through November of this year, and then it drops to $500 million from November '23 onwards to November '25. And I was just hoping for an explanation behind that drop?

Yes. So actually, the facility is around $1 billion. We are not using the full of it. We use the 800 million as an opportunity for us to be flexible on that program by actually initiating further enhancement on other elements of working capital that will allow us to be more flexible and you reduce that program going forward.

Okay. Great. I follow with my direct questions later.

Thank you for your questions. I'd like to thank everybody for the questions and interest in the call today. And I'd like to also apologize for some of the technical issues at the start. That's always out of our control, but I appreciate you bearing with us. And on that, I'd like to close the call. Once again, thank you for your interest and look forward to talking to you on future calls.

Thank you. This does conclude the conference for today. Thank you for participating, and you may now disconnect.