Teva bets on vitiligo drug in deal worth up to $500 million
Agreement with Royalty Pharma underscores shift toward branded medicines.
Israeli pharmaceutical company Teva has signed an agreement to accelerate the development of a drug that could ultimately generate hundreds of millions of dollars in revenue. The deal, signed with Royalty Pharma, will support the development of Teva’s vitiligo treatment, which is currently in the first phase of clinical trials.
Under the agreement, Royalty Pharma will pay Teva $75 million once the drug advances to Phase II trials, expected later this year. If the drug proceeds to the third and final phase of clinical development, Royalty has the option to make an additional payment of up to $425 million. In exchange, Royalty Pharma will receive royalties on future sales if the drug secures approval from the U.S. Food and Drug Administration.
The antibody, known as TEV-408, is also being tested in parallel for the treatment of celiac disease and has already reached Phase II trials for that indication.
The agreement aligns with Teva’s broader strategy under CEO Richard Francis to accelerate growth by shifting its focus away from generics and toward branded and innovative medicines. To increase the contribution of novel drugs to revenue more quickly, Teva has entered a series of development partnerships. In 2023, for example, it signed a collaboration agreement with Sanofi for what it described as its most promising drug candidate for Crohn’s disease and colitis. Under that deal, Sanofi committed up to $1.5 billion for development participation and future profit-sharing, contingent on regulatory approval.
While such partnerships dilute Teva’s share of future profits, they allow the company to speed up development timelines and reduce the risk of reaching the market behind competitors. Royalty Pharma operates as a specialized investment vehicle that identifies promising drug candidates and provides financing to accelerate their development. The company is publicly traded in New York with a market capitalization of roughly $23 billion.
Vitiligo is a chronic autoimmune skin disease characterized by loss of pigmentation, resulting in visible white patches on the skin. Estimates suggest that between 0.5% and 2% of the global population is affected, though many cases remain undiagnosed and untreated. For patients with pronounced symptoms, the disease often carries a significant psychological burden, including higher rates of depression and anxiety. Currently, treatment options are limited. There is only one approved topical therapy, which can be used on no more than 10% of the body’s surface and does not address the underlying cause of the disease. Teva’s drug, expected to be administered either as an injection or an oral medication, aims to treat the disease mechanism itself. Market estimates suggest it could generate up to $1 billion in annual sales.
Alongside the development agreement, Teva published updated forecasts for 2025 and 2026, which it is scheduled to present this week at J.P. Morgan’s annual healthcare investor conference, one of the most closely watched events in the pharmaceutical industry.
For 2025, the company reported a positive update: Teva received $500 million from Sanofi before year-end, earlier than expected, after some investors had anticipated the payment would be deferred to 2026. Nevertheless, 2025 is still expected to be another year of flat revenue, with sales projected at $16.8-17 billion, toward the lower end of the company’s guidance. Profitability, however, is expected to come in at the upper end of forecasts, with operating cash flow of $1.6-1.9 billion even before the Sanofi payment.
The outlook for 2026 is more mixed. Teva expects revenue to remain at roughly 2025 levels, or even decline slightly, though operating margins are forecast to improve from 27% to around 30%. Part of this improvement reflects a restructuring program that included layoffs of about 8% of the workforce. According to the company, the cost-cutting measures are expected to generate savings of roughly $500 million this year and $700 million in 2027, enabling free cash flow of approximately $2.7 billion in that year.
According to Sabina Levy, an analyst at Leader Capital Markets, the anticipated weakness in 2026 revenue stems primarily from the loss of sales from Revlimid, a drug expected to subtract about $1 billion from revenue. Levy estimates that Revlimid contributed roughly $350-400 million to Teva’s revenue in 2025. While this decline will weigh on the generics business, she expects growth in branded drugs to offset some of the impact, with an additional $500 million in revenue projected from Teva’s flagship medicines Austedo, Ajovy and Uzedy.
