Takeda Pharmaceutical Company Limited

Thank you very much for joining our Fiscal Year 2021 Third Quarter Earnings Announcement. I am the moderator. I'm Chris Olairelli, the head of the global IR. And we have the interpretation button at the bottom of the Zoom. And if you'd like to listen to Japanese, please select the Japanese language. And if you'd like to listen to English, please select the English channel. And if you'd like to listen to the original audio, please turn the interpretation function off. Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20F and in our other SEC filings. Please also refer to the important notice on page 2 of the presentation material for today. Today, our presenters, as well as the people to answer the questions, we have Christophe Weber, President and CEO, and Andy Plump, R&D President, and Costa Sarucos, Chief Financial Officer, and Masato Iwasaki, Representative Director of Japan General Affairs, and Ramona Sequera, President, U.S. Business Unit and Global Portfolio Commercialization, and Julie Kim, President of Plasma Derived Therapies Business Unit. And first, we will have the presentation from Christophe, Andy, and Costa, and we'll have some time to taking questions from all of you. Let's get started.

Thank you, Chris, and thank you everyone on the phone for joining us today. If you could look at the slide four, At Takeda, our vision is to discover and deliver life-transforming treatments guided by our commitment to patients, our people, and the planet. And our growth strategy reflects that vision. And I am pleased to discuss with you another quarter of growth and progress. In the context of Omicron, I am so proud of the dedicated and patient-focused colleagues that live our values and work tirelessly to support our mission. This is an incredibly exciting time at Takeda. We are growing faster than ever with competitive scale and a diverse pipeline with approximately 40 molecules in clinical development. Our portfolio is growing as demonstrated by two new products approved in the past six months. As you will see today, our performance in the third quarter of fiscal year 2021 reinforced that we remain well positioned for long-term business growth. We are in a position of strength. We have solid margins. strong cash generation, and top-line growth driven by our 14 global brands. We have consistently delivered on the fundamentals, and this quarter is no exception, with year-to-date underlying revenue growth at plus 7.1% and reported revenue growth at 11%. This growth continues to be driven by Takeda's 14 global brands with underlying growth of 12% year-to-date and which we expect to rise to the mid-teens for full year results. Our diverse portfolio of 14 global brands represent an impressive 42% of our core revenue and should continue to grow. We expect significant revenue growth from our global brands over the near to medium term, particularly as we expand into new markets. Based on the strong third quarter result, we are upgrading our full fiscal year 2021 forecast for revenue, reported on core patent profit, reported on core EPS, and free cash flow. Our strong margins will continue to drive important cash flow, which allow us to invest in our growth drivers, while also paying down debt towards our target of low-tooth net debt to adjusted EBITDA by the end of fiscal year 2023. We are confident in our global R&D strategy. We continue to advance highly innovative, life-transforming medicines in oncology, rare genetic and hematology disease, neuroscience and gastroenterology, with strategic R&D investments in plasma-derived therapies and vaccines. And we are delivering with the recent approvals of LiftenCity and Excivity. And we just got the new indication approval just last week for Vervendi. Bovandi is the first and only routine prophylaxis to reduce the frequency of bleeding episodes in patients with severe type 3 von Willebrand disease receiving on-demand therapy. This approval is a significant advancement for those living with this serious disease. And just this week, we also received approval from the European Commission for a new indication for Antiviu. Antiviu is now approved for intravenous treatment of appropriate adult patients with moderately to severely active chronic prokaryotes. ANTIVIEW is the first treatment indicated for active chronic prokaryotes across the European Union. We continue to invest in developing cutting edge cell and gene therapies that have the potential to redefine how we treat serious and life-threatening disease. And we continue to actively enrich the pipeline through partnership and targeted acquisition that align with our core therapeutic areas. The planned acquisition of ADAPT biotherapeutics is a good example of this strategy in action. This is a valuable and strategic play for us, adding a novel antibody-based gamma-delta T-cell engager platform to Takeda's immuno-oncology portfolio. Following gamma-delta therapeutics and maverick therapeutics, ADAPTATE is the third immuno-oncology built-to-buy acquisition we announced in less than a year. We go where the science is. You can expect to see Takeda continue to establish strategic collaboration with innovative partners, complementing our world-class laboratories and capabilities. We truly believe that the strength of our portfolio and pipeline set Takeda apart and will fuel sustainable growth. On the next slide, I'd also like to share a few updates on our executive leadership team. This change will help Takeda continue to advance our commitment to transform the life of patients and grow our business at a global scale. First, we are in the midst of a digital evolution that will fundamentally shift how we develop and deliver medicines to patients. Unleashing the power of data and technology will be crucial to our next phase of growth. We are investing in this area, and I am pleased to announce that Gabriele Ricci has taken on a newly created role of Chief Data and Technology Officer. Gabriele previously led our data and technology effort within our PDT business unit, and he has a vision that will put Takeda at the forefront of this exciting new area. Next, we are increasing our focus on launching our new life transforming therapies. To do this, we are creating a new global portfolio division, bringing together critical global organizations to power our launch capability, such as global medical and global product launch strategy. The vaccines business unit, which we anticipate has important approvals ahead, will also be part of the global portfolio organization, together with the regional business units, including Europe and Canada, our China business unit, as well as emerging markets. The Global Portfolio Division will be led by Ramona Sequeira. Rajiv Vankaya, who has led the vaccines business, will leave Takeda to become the CEO of a venture-backed company focused on pandemic threats. Gary Dubin, currently head of our Vaccines Global Medical Office, has been promoted to lead this Global Vaccines Business Unit. And with that, Julie Kim will transition from her role of leading our global PDT business unit and will become the new president of our US business unit. Julie will focus on building momentum for our business in the US, obviously a very key market for our success. Giles Platt Ford will be named president of our PDT business unit, which will remain one of the growth drivers for Takeda over the coming years. His experience with Europe, Canada and emerging markets will be critical as we continue to expand our PDT business globally. Finally, I am pleased to share that Takako Oyabu will expand our leadership role as our Chief Global Corporate Affair and Sustainability Officer with the goal of accelerating our leadership in purpose-led sustainability. As our first Chief Sustainability Officer, I am confident that Takako will make a big impact in this important area. I am personally very energized by the path ahead and totally confident that this group of dynamic and visionary leaders will help take us to the next level. On the next slide, I would like to update you on our effort to mitigate the COVID-19 pandemic. And we are proud of the role we are playing to help bring vaccines to the people of Japan and are accelerating our efforts to meet the growing demand. We are partnering with Novavax in Japan for the development, manufacturing, and commercialization of TAG019, which is a COVID-19 vaccines candidate. We have also entered into an agreement with the government of Japan for the purchase of 150 million doses of TAG019. We are planning to distribute the first doses in Japan in early 2022, subject to regulatory approval. We also continue to deliver on our three-way agreement with Moderna and the government of Japan to import and distribute Moderna COVID-19 vaccines. To date, 50 million doses of Moderna vaccines have been imported to Japan, and we began importation of an additional 93 million booster doses from the beginning of 2022, making it a planned total of 143 million doses. On the next slide, I would like to talk about our recent pipeline wins, which deliver near-term momentum to our growth strategy, using Lifton City as an example. I'm very pleased to note once again that the FDA approved Lifton City in November 2021, right on the hill of the approval of XQVT in September. These approvals have demonstrated that we are successfully building a portfolio of new therapies, that are well positioned to not only drive Takeda future growth, but most importantly, make true impact in patient lives. Transplant organs provide patients a second chance at life, but are in limited supply. Imagine the loss of hope when a transplant fails. It is devastating to patients and their loved ones. LiftenCity is redefining the way C2 megalovirus infection is treated. It is the first and only treatment indicated for transplant recipients that are 12 and older with refractory cytomegalovirus infection and disease with or without resistance. Patients now have access to the only approved therapy that can enable sustained and effective treatment against post-transplant CMV infection, which could save an organ or a life that might otherwise be lost. We are seeing promising momentum. More than 150 patients have been treated already with Lift&City in the weeks following the launch, and demand is continuing to grow. This speaks to the unmet need and the unique value of Lift&City. Patient by patient, we are seeing the impact we are making. In fact, the team has shared inspiring stories of patients who are able to be home with their families for their holidays. Patients who would otherwise be vulnerable to CMV and unable to leave the hospitals now have hope on a better quality of life. This focus on the patient needs is what fuels our innovation strategy. We strive to transform lives. We do that by addressing what really matters to patients, caregivers, and care providers. In closing, we are confident about the path we are on. Our diverse portfolio will position us to continue to generate steady, organic top-line performance while also drive competitive margin and strong cash flow to fuel future innovation for patients. With the approval and launch of two new therapies in 2021, we are even more confident today that the strength of our commercial execution combined with the potential of our pipeline will help to fuel our long-term growth. And this brings us back to the vision that drives us to discover and deliver life-transforming treatments guided by our commitment to patients, our people, and the planet. With that, I would like to provide Andy with an opportunity to focus on our exciting R&D strategy. Andy?

Thank you very much, Christophe. If we can please move to the next slide, nine. We have had a number of significant pipeline events since October, starting with the U.S. approval for Liftensity, in resistant or refractory post-transplant CMV infection, as Christoph has mentioned. This is our second FDA approval this fiscal year, and notably the most FDA approvals Takeda has had since 2014. Additionally, we are proactively submitting our final four-and-a-half-year dengue vaccine data to the CHMP, as part of the EU medicines for all procedure designed to enable approval of high priority medicines in markets across the globe. These four and a half year data continue to support the overall benefit risk profile and reinforce our regulatory package. Now this will lead to a short pause in our review as we gather and submit in the coming months. We are very confident in the profile and public health benefits of our vaccine and continue to believe we will see an approval in fiscal year 2022. As previously disclosed, we receive a CRL from the FDA for eohelia in eosinophilic esophagitis, or EOE. Now, we had judged the overall benefit-risk profile for eohelia to be positive, and we were very keen to bring this therapeutic option to patients. After an extended set of interactions and analyses, FDA ultimately did not agree that our pivotal data supported registration. We have thus decided to discontinue Takeda's development of Eohylia. Now, please, let me provide a brief summary of events that have led to this decision in full transparency. In 2016, FDA granted a breakthrough designation for this program. In 2019, Eohelia completed and met the phase three induction study co-primary endpoint with statistical significance. In October 2020, we completed our rolling submission of the new drug application. And in December 2020, FDA granted a priority review. During the new drug application evaluation, we engaged in a series of data exchanges to that resulted in an extended review cycle, and importantly, a delayed action date. Following over a year, a year of active NDA review, which involved in-depth data requests and responses containing additional analyses, approximately six weeks ago in December, we received the CRL, which notified Decata that the NDA could not be approved based on the current data package. As part of the CRL, it was communicated that data from an additional clinical trial would be required to support an approval. After a deep and careful assessment of the evolving treatment landscape in EOE, as well as considerations including operational challenges required for an additional clinical study, we could not justify further Eohylia development. We do, however, remain fully committed to our R&D focus in GI diseases. Now, continuing on this slide, our geographic and label expansion efforts for our global and regional brands continue to progress well. As Christoph mentioned, we received an approval of VonVendi in the U.S. for von Willebrand disease prophylaxis. In Japan, we continue to advance the fight against the COVID-19 pandemic with approval for the 50-microgram booster of Spikevax the mRNA vaccine against COVID-19, and we submitted an NDA to the MHLW for our Novavax-partnered PAC-019. Additionally, again, as Christoph has alluded to, we received an EU approval for Antivio in acute inactive chronic pouchitis significantly earlier than had been expected. And finally, in business development, As Christoph mentioned earlier, we intend to acquire Adaptate Biotherapeutics, a Gamma Delta T-cell engager platform targeting solid tumors in oncology. Along with Maverick and Gamma Delta Therapeutics, Adaptate is our third build-to-buy acquisition this year, further enhancing our oncology ambitions. We believe build-to-buys are good deals because we work closely with the partner company throughout the build process. we know exactly what we are getting, the price we are paying, and the steps remaining to fully develop the technology platform. If we can go to the next slide, 10, please. As just mentioned, we received approval of von Wende as the first recombinant treatment for prophylaxis of adults with severe forms of von Willebrand disease. This label expansion to prophylaxis will greatly benefit patients with this disorder. As you can see on this slide from our phase three trial, where we compared bleeding rates in severe von Willebrand's disease patients on prophylactic von Vendi to on-demand treatment, we saw overall the median reduction for all bleeds was about 55%, for spontaneous bleeds about 76%, and for the particularly crippling joint bleeds, 100%. So if we can go to the next slide, 11, please. Our R&D strategy is working, and it's beginning to deliver on our ambitious aspirations. As another example of our strong Takeda laboratories, we have added a promising new targeted sting agonist, TAC500, to our early stage oncology pipeline. As we've noted, 90% of our pipeline did not exist six years ago. Decatur's R&D engine is advancing an ambitious stream of next-generation therapies, as you will continue to see in the coming months and years. If we can go to the next slide, 12, please. Okay, let's focus now on our late-stage pipeline. This view highlights 10 of our late-stage approval and expansion opportunities for the coming years. We start at the bottom with the recent FDA approvals of Excivity, and liftensity in the U.S. Moving up the chart, we have filed TAC-019 in Japan. Next, our dengue vaccine, TAC-003, as mentioned, is currently under review with various dengue-endemic countries and with the European authorities. We anticipate a decision in fiscal year 2022. Next, with TAC-755, Sotiklostat, and TAC-611, we expect near-term Pivotal readouts, potentially providing transformative treatments for targeted patient populations with high unmet needs. And finally, again, moving up on this chart, three of our wave two programs are starting pivotal trials this or next year. We recently presented exciting early data at ASH from Odaka Fusp Alpha in extensively pretreated multiple myeloma patients. TAC 999, our collaboration with Arrowhead, in alpha-1 antitrypsin-associated liver disease, will be starting phase three development in the coming year. And Pabinifusp Alpha, our collaboration with JCR Pharmaceuticals to address neuronopathic and somatic symptoms in Hunter syndrome patients has already begun enrolling in its global phase three study. We can expect potential approvals for these new stage ups to our late development pipeline between 2025 and 2027. Going forward, we see great potential to further enrich our pipeline and are excited by our robust partnership network. We will continue to access and nurture innovation by integrating collaborations in emerging areas of science with our own world-class laboratories to deliver sustainable innovation. We will also complement our exciting and maturing pipeline with selective late stage in licensing, as we have done with JCR and Arrowhead. If we can go to the next slide, 13, please. And as you can see here, there is more to come as we continue to de-risk our early development programs. I'd like to highlight five high potential molecules that will have important proof of concept readouts in the coming two years, including our longer lasting oral orexin agonist, TAC861, and first in class cancer therapy, Subasumstat. These are just the first of many wave two molecules of a rich and transformative early stage pipeline being continuously filled through partnerships and our own powerful research engine. I want to underscore the importance of having built an innovative R&D engine that will continue to generate new opportunities going forward. Our pipeline is dynamic in nature. We follow the science. Some of our programs have faced unexpected challenges, but we are encouraged by the emergence of strong proof-of-concept data in programs like Modaka for Spalfa. And we expect to further fortify our pivotal pipeline with more and more positive data inflections. I can say with a high level of confidence that as we continue to advance our development programs and generate new data, the value of our pivotal stage pipeline will continue to increase. I'll now hand it over to you, Costa.