EFTA Document EFTA01784265

From: Richard Kahn Sent: Wednesday, August 24, 2016 7:35 PM To: jeffrey E. Subject: Fwd: TEVA...IPR Decision Coming By Thurs...I like the Risk/Reward (+10% vs -5%) not a great call by Amanda.. news out and =tock down 4.5% Richard Kahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 tel fax cel Begin forwarded message: From: =/b>"Ens, Amanda" Subject: =/b>RE: TEVA...IPR =ecision Coming By Thurs...I like the Risk/Reward (+10% vs -5%) Date: =/b>August 24, 2016 at 3:29:37 PM =DT To: =/b>Richard Kahn Rich, right after I sent this, the ruling came in earlier and was in fact unfavorable. The stock is down =bout 5% as we expected. From: Ens, Amanda Sent: Wednesday, August 24, 2016 3:20 PM To: 'Richard Kahn' Subject: TEVA...IPR Decision Coming By Thurs...I like =he Risk/Reward (+10% vs -5%) Rich, wanted to flag this for your attention. Our =iew is that there is good risk-reward for TEVA going into a patent =ecision expected tomorrow relating to its key drug Copaxone Copaxone US is —16% of sales, —21% globally)). If the decision =s unfavorable, we would likely look to add on any weakness. Our analyst =s already building in EFTA_R1_00105455 EFTA01784265 considerable Copaxone generics competition =tarting in 2017, as do most analysts, so our model is conservative vs. Teva's outook (company's outlook assumes =o generics through 2019.) TEVA is awaiting an inter partes (IPR) =ecision (expected by 25-Aug / Thursday) for Teva's Copaxone 40mg =x/week (3TW) multiple sclerosis drug. As a quick background, the IPR (filed by MYL/Amneal) =elates to 3 of the 5 outstanding patents for Copaxone 40mg ('250, =91413, '302). Note that PGR for patent '776 was rejected just =ast week (filed by MYL). On their recent 2Q results call, TEVA mgmt was =ncrementally more confident around their defensibility of its IP & =ees any potential generic launch (which would still be at risk in their =iew until all 5 patents are invalidated) not happening until 2H18 (see litigation timeline below). Note that our analyst =umant models generic competition in 2017 (as does most of Cons) - if he =ssumes 3TW generic entry in 2020 (vs base case of 2017), note his DCF =ould increase by $3/share (all else equal) — see note attached. As for the relevant =atents — note that an IPR decision will be based on the various =laims within each patent (3 in total) & unless all arguments from =he generic filers on the claims are granted, TEVA will be viewed as the =inner (given burden of proof is on the generics). Also note that the traditional P-IV challenge from =NTA/Sandoz/MYL/Amneal/Synthon/PFE/DRRD will kick off 26-Sep. ==> Net/net, a victory for TEVA likely sees a 10%+ move =igher in my view ($58ish) while a negative outcome likely sees 5% =ownside to around $50/sh (given a Cons already assumes generic competition coming next year). Copaxone Litigation =imeline (from 2Q Results Slidedeck) Scenario Analysis — BofAML 2 EFTA_R1_00105456 EFTA01784266 Daniel Lundquist Healthcare Specialist Sales Global Equities Bank of America Merrill Lynch One Bryant Park I New York, 10036 United States T: The power =f global connections"' Find all Conference =vents via the Following Link: https://gems.bankofamerica.com <https://gems.bankofamerica.com/> Disclaimer: This material was prepared by Sector Specialist Sales =ersonnel of Merrill Lynch and is subject to the terms available at the =ollowing link: http://corp.bankofamerica.com/business/smb/landing/emaildisclai=er/americas/global- markets This message, and any attachments, is for the intended =ecipient(s) only, may contain information that is privileged, =onfidential and/or proprietary and subject to important terms and =onditions available at http://www.bankofamerica.com/emaildisclaimer. If you =re not the intended recipient, please delete this message. 3 EFTA_R1_00105457 EFTA01784267 4 EFTA_R1_00105458 EFTA01784268