Takeda Pharmaceutical Company Limited

Thank you very much for joining us today despite a very busy schedule for this FI23Q1 earnings announcement. My name is O'Reilly. I am the head of IR. I'll be the master of ceremony for today's meeting. Allow me to explain about the language setting. Please find the language button at the bottom of Zoom window. If you wish to listen in Japanese, please choose Japanese. If you wish to listen in English, please choose the English channel. And if you want to listen to the original, please turn that off. Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause 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 the page two of the presentation regarding forward-looking statements and our non-IRFS financial measures, which will also be discussed during this call. Definitions of our non-IRFS measures and reconciliations with our comparable IRFS financial measures are included in the appendix in the presentation. These are also the most important notices on the page two of the presentation material. Now we would like to start the presentation. Today we have President and CEO Christophe Weber, R&D President Andy Plumb, Chief Financial Officer Kostas Saroukos presenting to you. This will be followed by a Q&A session. Now we would like to begin.

Thank you, Chris. Thank you, everyone, for joining us today. It's a pleasure to be with you all. Our performance in the first quarter of this fiscal year again underscores the strength of our business and our ability to continue to deliver life-transforming treatments to patients and communities over the long term. Looking at our financial result, in the first three months of fiscal year 2023, revenue was 1.06 trillion yen. Year-over-year growth at a constant exchange rate was plus 3.7%. driven by momentum in our growth and launch products, which represent 40% of total revenue and grew in this first quarter at 16.2%. At actual exchange rate, our top-line growth was 8.9%. Our top-line performance contributed to cooperating profit of 326.3 billion yen. The year-over-year decline at constant exchange rates reflect the impact of loss of exclusivity and lower coronavirus vaccine demand, as well as our strategic investment in R&D and data and technology to ensure Takeda long-term competitiveness. Core EPS for the period was ¥150 flat versus prior year at a constant exchange rate. On a reported basis, EPS declined due to the impact of one-time financial income gains in the first quarter of last year. Our results at constant exchange rate are tracking well against our full year management guidance for fiscal year 23, and there is no change to our guidance at this time. Moving to the right of the slide, we are advancing our innovative pipeline to reach new patient population, address unmet needs, and provide new treatment options to improve patient outcome and quality of life. Our dengue vaccine, Scudenga, was recently approved in Argentina and Thailand, and we are pleased with the momentum we are seeing in both endemic and travel market. I will discuss Scudenga further on the next slide. In other regulatory development, we have filed GammaGard Liquid in the US for the treatment of chronic inflammatory demyelinating polyneuropathy, or CIDP. This follows on from the submission of IQVIA for CIDP in Q4 of last year. representing near-term indication expansion opportunities for two of the growth and launch product in our PDT immunology portfolio. We have also filed for kitinib in the US and Europe for previously treated metastatic colorectal cancer, receiving priority review designation in the US, Metastatic colorectal cancer remains an area of high unmet needs with poor outcomes and limited treatment options, and we are pleased to take a step further toward advancing treatment for patients. Priority review in the U.S. has also been granted for TAC755, for congenital thrombocytopenic purpura, or CTTP, and ultra-rare bleeding disorder, also with limited treatment options. In neuroscience, our ongoing phase 2B study of oral orexin agonist TAC861 for both narcolepsy type 1 and narcolepsy type 2 is progressing well on track. We believe in the transformative efficacy potential of our orexin programs, and this is supported by data published today in the New England Journal of Medicine from our discontinued study of TAC994. Andy will explain the details in a few minutes. We are proud of all this progress, which represents the potential of our portfolio to make a meaningful difference in the lives of patients and to serve communities around the world. Turning to updates on our dengue vaccines, CUDENGA. We are very early in the launch phase for CUDENGA, but we are encouraged by the positive momentum we are seeing in markets where it is now available. And we are already seeing early sign of higher than expected demand. We made significant progress in the last quarter with approval in Thailand and Argentina on our first launches in endemic countries, including Brazil and Indonesia. The vaccine's significant progress in endemic countries underscores its strong clinical data and the urgent need for safe and effective vaccines to prevent dengue fever. which is why we remain laser focused on endemic market, which make up roughly 80 to 85% of our projected peak sales of 1.6 to 2 billion US dollar. At the global level too, dengue prevalence has continued to grow. The World Health Organization reported just last week that there have been close to 3 million cases of dengue reported so far this year, already surpassing the 2.8 million cases registered for the entire year of 2022. In travel markets, we have continued to see country-level approval on launch across the EU following the EMEA broad approval late last year. In the US, we made a difficult decision to voluntarily withdraw our biologics license application filing due to FDA requests for additional data, including data that was not part of the previously agreed open protocol and which could not be addressed within the current review cycle. This decision will not affect our overall approach for tax 003 for Kudanga, which we believe can be extremely effective to limit the public health impact of dengue in endemic countries. Looking ahead, we are continuing to work closely with the WHO and look forward to the release of the recommendation from SAGE, the WHO Advisory Group, which is anticipated later this year. We are also in active discussion with a number of supranational procurement bodies, such as the Pan American Health Organization, relating to large-scale procurement following the WHO recommendation. To meet the vaccine's anticipated global demand, we have been expanding our manufacturing capabilities. We recently, in fact last week, celebrated the opening of a state-of-the-art building dedicated to drug substance manufacturing for our dengue vaccines in Singen, Germany. This was an important step in achieving our goal of end-to-end in-house production capability for CUDENGA by 2025 and achieving an annual supply capacity of around 100 million doses by the end of the decade. While we ramp up our manufacturing capabilities, we are exploring partnership with vaccines manufacturers, especially in endemic countries, to secure additional capacity to meet current and future supply needs. We look forward to continued momentum of these programs in 2023 and beyond. Now I'd like to turn to our high-level outlook for the near, medium and long term. Based on our current assumption for fiscal year 23, we expect to return to revenue, profit, and margin growth in the near term, driven largely by the continued expansion of our growth and launch product. We also see significant potential in our late-stage pipeline assets and anticipate significant data and regulatory milestones this year. Following the generic competition for vivance, which will impact revenue and profit growth in fiscal year 23, We will have limited loss of exclusivity exposure until the launch of Antiview biosimilars, which could occur as late as 2032. The momentum for our growth and launch product, combined with our continued investment in R&D, will drive progress in the medium and long term. Looking ahead, we remain committed to returning to co-operating profit margin in the low to mid 30s, supported by value creation enabled by data and technology, including AI. We will also continue to evaluate asset-specific business development opportunities to further enhance our pipeline and reinforce our growth profile. Finally, our progressive dividend policy of increasing or maintaining the dividend each year will allow us to continue to return value to shareholders. In closing, this quarter demonstrates that our growth strategy remains on track. We continue to deliver on our financial commitment to progress our pipeline and to create long-term value for our stakeholders while we fulfill our purpose of bringing better health for people and a brighter future for the world. With that, I will turn the call over to Andy to update you on our pipeline. Thank you.

Thank you very much, Christophe, and a big hello to everyone on today's call. If we go to the next slide, please. Our pipeline continues to advance, including considerable progress with ATT&CK 279 and Ericsson franchises, which we will describe later in this presentation. This quarter, the rest of our pipeline featured a number of incremental but important program milestones and a few small headwinds. As Christoph just mentioned, important regulatory milestones include filing for Quintinib in both the U.S. and EU for metastatic colorectal cancer, filing TAC-755 in, again, the U.S. and EU for congenital thrombotic thrombocytopenic purpura, or TTP, and filing GammaGuard liquid in the U.S. for chronic inflammatory demyelinating polyneuropathy, or CIDP. Frequentative and TAC-755 are granted priority reviews by the FDA, reflecting their potential for increased effectiveness and or better safety in areas of high unmet medical need. If approved, TAC-755 would be the first available therapy for routine prophylaxis in congenital TTP. Supporting these and other programs were a number of key publications and presentations. These include IQVIA's Phase III Advanced I study results demonstrating an approximate 10% relapse rate with IQVIA. This is the lowest relapse rate observed in CIDP maintenance studies across mechanisms. Frequentinib data from PRESCO2 was published in the Lancet and showed a greater than 30% increase in overall survival versus the control arm in patients with metastatic colorectal cancer. In June, TAC755 data were presented. These data demonstrate a reduction in the incidence of thrombocytopenia by 60% versus the standard of care, and no acute TTP events were observed. And also in June, updated data from the Phase II Sequoia study of Fazir Saran was presented at the European Association for the Study of Liver Congress, or ESOL. Fazir Saran continued to demonstrate a dose-dependent reduction in the pathological alpha-1 antitrypsin ZAAT protein in both serum and liver, leading to directional decreases in liver inflammation and fibrosis. We've started our phase three Redwood study earlier this year. Now headwinds this quarter include PAC 611 for metachromatic leukodystrophy, or MLD, which missed its primary and secondary endpoints in our phase two study. We are disappointed and wish to express our gratitude to the MLD children, parents, and caregivers. We're currently evaluating options, but given these outcomes, the program unfortunately is likely to be discontinued. Following a planned interim analysis, the Phase III EXCLAIM II trial was stopped for futility. The trial compared excivity monotherapy to chemotherapy in first-line non-small-cell lung cancer with exon 20 insertion mutations. We will be engaging with regulators regarding these data and determining next steps for the program. As a reminder, excivity demonstrated a median duration of response of 17.5 months and a median overall survival of 24 months in patients being treated in the second line who had progressed after chemotherapy. And lastly, as Christoph discussed, we had some positive and negative developments for Qdanga this quarter. It's very important to recognize that the unmet need for a dengue vaccine is not equally distributed around the world. We remain confident in the overall benefits of Qdenga. However, timing of approval may vary depending on local needs and experience. Finally, yesterday, as Christoph again mentioned, Phase 2b data from the first ever oral orexin receptor 2 agonist, TAC994, was published in the New England Journal of Medicine. Next slide, please. We conducted a phase 2B dose-ranging trial that tested three doses of TAC994 in an eight-week study with the option for patients to continue into an eight-week extension. The trial was stopped early due to liver toxicity. Now, even with a truncated study, the impressive efficacy data indicate orexin receptor 2 is a promising novel biologic target for patients with narcolepsy type 1. The mean wakefulness test scores range from 26 to 35 minutes on a placebo-adjusted basis. For benchmarking, currently marketed agents have shown a placebo-adjusted benefit of eight minutes or less. Similar effects were observed with the Epworth Sleepiness Scale, a subjective test used to measure daytime sleepiness in which patients were normalized to equivalent levels as those seen in healthy subjects at all doses. And weekly cataplexy rates were reduced or abolished, again, at all doses tested. We believe orexin-2 receptor agonists may be the first agents to address the underlying cause of narcolepsy type 1, offering the potential for functional cures. We are applying our learnings from TAC994 and our deep understanding of orexin biology as we advance the research and development for multiple orexin assets. For example, TAC861 has been enrolling ahead of schedule in two phase 2B trials that started in January of this year, one for narcolepsy type 1 and a second for narcolepsy type 2. TAC-861 is a more potent agent than TAC-994 and thus provides efficacy at a much lower dose, therefore significantly reducing the potential for adverse effects, including liver toxicity. We're very pleased to report that a recently conducted external review by the Data Safety Monitoring Committee confirmed no liver toxicity signals to date. In addition, nearly all of the patients that completed the trial to date have enrolled in the long-term extension study and will be followed for up to 102 weeks. We are expecting a go-no-go decision to advance to phase three in the next fiscal year. TAC925, our IV orexin receptor 2 agonist, showed exciting data earlier this year. In sedated healthy volunteers, TAC925 reversed opioid-induced respiratory depression and sedation without impacting pain control. The phase two trial has started and is on track to have proof of concept in fiscal year 2024, which will inform the registrational studies. Later this year, we plan to file an IND for our next generation oral orexin receptor two agonist. Our goal is to expand into additional indications by developing orexin agonists that are tailored to meet unmet patient needs and ultimately make a meaningful impact on patients' lives. Next slide, please. Depicted here are exciting late stage development programs. TAC 279, our highest priority, is on track to start a phase three program in psoriasis later this fiscal year. We continue to believe we have a best in class oral therapy for psoriasis. We will have a phase two B readout for psoriatic arthritis this fall and are preparing at risk to start a pivotal development program for these patients in fiscal year 2024. We are accelerating development of TAC279 additionally in Crohn's disease, ulcerative colitis, and systemic lupus erythematosus, as well as exploring a range of other indications. These expansion opportunities are being developed in parallel with psoriasis. Finally, we want to remind everyone that we have important lifecycle management approvals and data readouts later this year. These include potential approval of intivio subcutaneous in the U.S. for ulcerative colitis and alofacil phase 3 data for perianal fistulas. Life cycle management program milestones can be found in the appendix. And now at this point, thank you very much. I'll turn it over to Costa.