Takeda Pharmaceutical Company Limited

Thank you very much for joining us out of your busy schedule today for the earnings call for second quarter fiscal 2023 of Takeda Pharmaceutical Company Limited. I am going to be the moderator today, O'Reilly, the head of IR. Let me explain about a language setting. At the bottom of the Zoom window, there is a language button. If you wish to listen to Japanese, please choose Japanese. And if you wish to listen to English, please choose English. If you just wish to listen to live audio, please turn it off. Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meeting, meaning of the Private Securities Legislation 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 regarding forward-looking statements and our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and reconciliations with comparable IFRS financial measures are included in appendix 2 of the presentation. Let's get started with the presentation today. CEO and President, Christophe Weber, and President of R&D, Andy Plump, and Chief Financial Officer, Hasta Sarugas, will be making presentations each. And then we will open the floor for questions. Let's get started. Christophe, over to you.

Thank you, Chris. Thank you, everyone, for joining us today. It's a real pleasure to be with you all. At Takeda, our vision is to discover and deliver life-transforming treatments guided by our commitment to patients, our people, and the planet. This purpose-led approach is at the core of our strategy to deliver long-term value creation for our stakeholders. We are rapidly embracing the use of data, technology, and AI, transforming the company across all functions. We'll provide more details on this remarkable change next year. Our performance in the first half of fiscal year 2023, while facing two setbacks with our pipeline, further demonstrate our progress in executing on our strategy as we look to maximize our portfolio, advance our pipeline, and deliver on our commitments. Turning to slide five, our first semester performance underscores the strength of our core business and our ability to deliver life transforming treatment to patients and communities. Looking at our financial results, revenue for the period was 2.1 trillion yen or 14.1 billion US dollar. Year-over-year growth at a constant exchange rate was 1.4%, driven by momentum in our growth on launch product, which represents 42% of our total revenue and grew at 13% at a constant exchange rate. At actual exchange rate, our top-line growth was plus 6.4%. This top-line growth is despite generics for Vyvanse launching in the US after our patent expiry in August. To date, the impact of Generic's and Vivant's market share has been broadly in line with our expectation. Corporating profit was 588.8 billion yen, or 3.9 billion US dollars, with a decline versus prior year of 9.5%. The year-over-year decline is in line with expectation and reflect the impact of loss of exclusivity for higher margin products, lower coronavirus vaccines demand, as well as our strategic investment in R&D and data and technology to ensure that Takeda long-term competitiveness. Core EPS for the period was 261 yen. On a reported basis, operating profit on EPS were impacted by large non-core items booked in the second quarter, including impairment of intangible assets related to Xquivity and Alofizel. While very unfortunate for patients and material to the company, the two setbacks triggering these impairments don't impact our strategy for delivering a near-term return to growth and long-term sustainable value for shareholders. Costa will go into this item in more detail later in the presentation. Turning to the outlook for the remainder of the fiscal year, we are raising full year revenue on core EPS forecast to reflect updated Forex and tax rate assumptions. We are on track to our management guidance for core growth at a constant exchange rate, and there is no change to our guidance. There is also no change to our full year free cash flow forecast of 400 to 500 billion yen. On a reported basis, we are lowering full year profit forecast due to the impact of the non-core item booked in the second quarter. On slide six, we are advancing our innovative portfolio to reach new patient population, address unmet needs, and provide new treatment options to improve patient outcome and quality of life. Last month, we received FDA approval for the subcutaneous administration of Antivio for maintenance therapy in moderate to severely active ulcerative colitis. This makes Antivio the only FDA-approved biologics in ulcerative colitis that offer patients a choice of two types of administration. We expect Antivio subcutaneous to be available in the U.S. by the end of October, and we are fully committed to the success of its launch. I will come back to Antivio progress and growth outlook on the next slide. The FDA is also evaluating our application for subcutaneous administration of Antivio for the treatment of Crohn's disease, and we expect a decision in the first half of fiscal year 2024. Our dengue vaccine, Scudengia, continues to be recognized as a critical step forward in the fight against dengue fever. Last month, the WHO Strategic Advisory Group of Experts on Immunization recommended its use in high dengue burden and transmission areas for children aged six to 16, where it believes the vaccines will have the greatest public health impact. Other milestones in the first half of the year include approval of Qubitru as our first subcutaneous immunoglobulin product in Japan, delivering on our commitment to reach patients with high unmet needs. And in our oncology portfolio, Acetris received a label extension in Europe for stage 3 patients as a first-line treatment for Hodgkin lymphoma. The approval was based on updated positive overall survival results from the phase 3 echelon 1 study for stage 3 and 4 Hodgkin lymphoma, which demonstrated the first significant improvement in overall survival in two decades in stage 3 and 4 Hodgkin lymphoma. Moving to the right side of the slide to look at progress in our innovative pipeline. In September, we resubmitted tax 721 to the US FDA for the treatment for eosinophilic esophagitis. We expect a decision from the FDA during the first half of calendar year 2024. Also in September, we announced positive top-line results from our phase 2B trial of TAC279 for active psoriatic arthritis. This is a significant milestone in our effort to develop a new treatment option for patients with this debilitating condition. We had a number of filings in Japan in the first half, with frucutinib filed for previously treated metastatic colorectal cancer and TAC755 filed for CTTP. We are pleased to have entered an exclusive licensing agreement with Immunogen to develop and commercialize miavituximab for FR-alpha positive ovarian cancer in Japan. But we also faced some headwinds. In October, we made the voluntary decision to withdraw Excivity in the US based on the outcome of the EXCLAIM-2 confirmatory trial and discussion with the FDA. We are discussing next steps with regulators in other countries where EXCIVITY is available as we intend to initiate voluntary withdrawal globally. Patients are our top priority and EXCIVITY remains available to be prescribed in the US while we work with the FDA to formally withdraw within an appropriate timeframe. The withdrawal decision on timeline outside of the US will vary by country. Also in October, we announced that the Phase III ADMIRE-CD2 study of alofizel for the treatment of complex Crohn perianal fistula did not meet its primary endpoint. The study was designed to support a filing in the US, and we are currently evaluating next steps. Importantly, the safety profile was consistent with prior studies, and there were no new safety signals identified. These events highlight the inherent risk in research and development, but as a company focused on delivering life-transforming treatment to patients, we must continue to challenge ourselves at the forefront of innovation. Andy will speak further about our pipeline later in the presentation. Turning now to Antivio growth and outlook on slide seven. In the first half of fiscal year 23, Antivio continued its growth trajectory, increasing market share globally. In the U.S., Antiviu maintains the lead as number one in inflammatory bowel disease overall, as well as in IBD by a naive new start. Volume growth remains strong in the EU, in Europe, at approximately 15%, outperforming the overall IBD advanced therapy market despite pricing headwinds. In the U.S., the IBD market is growing, but diagnosis and advanced therapy initiation remains suppressed compared with the 2016-2019 period, so pre-COVID. Patient data suggests that new diagnosis still haven't recovered to pre-COVID level. Nevertheless, the majority of moderate to severe patients remain untreated or on a conventional therapy. So we continue to see significant opportunities and our commercial organization is working very hard to expand our leadership in this area. Moving to the right side of the slide, a near and long-term growth catalyst. The U.S. approval of the subcutaneous administration for maintenance therapy in ulcerative colitis was a major milestone, making Antivio the only FDA-approved biologic in ulcerative colitis that offered patients a choice of two types of administration. Subcontinuous therapies are estimated to represent approximately 35 to 40% of the total U.S. IBD market. So this is a very significant milestone that will allow us to access this new market segment. We expect Anti-View Pen to be available in the U.S. by the end of October, and we are fully committed to the success of its launch. The FDA is also evaluating our application for subcontinuous administration of Ontario for Crohn's disease. A decision is expected later this fiscal year. We are pursuing new ongoing life cycle management to enhance long-term growth and making significant investment in both ulcerative colitis and Crohn's disease studies to support targets of disease clearance and transmural healing. And we are initiating new studies to support the scientific community to investigate the potential role of combination therapies to break the efficacy sailing with vedolizumab as a backbone. Healthcare professionals and patients are continuing to see the benefit and value that Antiviu offer in IBD, and we remain confident with our peak revenue forecast at $7.5 to $9 billion, with no change to biosimilar entry assumption timing, potentially as late as 2032. On slide eight, Qdenga continues to be recognized as an important development in the fight against dengue fever. We are seeing strong initial demand in private market in endemic countries, as well as strong launches in travel market led by the EU. This makes us optimistic considering that public vaccination program has not started yet. CUNENGA has already launched in dengue endemic countries, Indonesia, Brazil, and Thailand, and recently received approval in Colombia. We expect launch in Argentina in the third quarter of this fiscal year. The vaccine is available in 16 European countries and travel recommendations support its use to help protect travelers to dengue-endemic areas. And we are pursuing private and public partnership with government, institutional businesses, NGOs, and manufacturers to expand access. Last month, the WHO Strategic Advisory Group of Experts on Immunization, or SAGE, recommended its use in high dengue burden and transmission area for children aged six to 16. SAGE assessed that the recommendation in this population would have the greatest public health impact as the vaccines could be administered to children prior to the time in which they are at the greatest likelihood of possible dengue-related hospitalization. The evaluation was based on data from CUDENGA clinical programs with more than 28,000 participants. The recommendation is significant because it will ultimately provide overarching guidance to countries around the world on how and when to implement vaccines into their public vaccination programs and lay the foundation for access to vaccines worldwide, particularly in developing countries. In countries where Qdenga is ultimately approved, it is now up to national authorities to consider the SAGE recommendation and decide how Qdenga should be used locally. Now I'd like to turn to our high level outlook for the near, medium, and long term. Our strategy remain on track as we enter the second half of the fiscal year. 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 products. We also see significant potential in our late stage pipeline assets. We achieved significant data and regulatory milestone this year and anticipate a number of additional pipeline milestone in the second semesters. Following generic competition for Vyvanse, which is impacting revenue and profit growth in this fiscal year and also in 2024, we will have limited loss of exclusivity exposure until the launch of Antivio biosimilars, which could occur as late as 2032. The momentum from 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 cooperating profit margins 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, our strategy remains on track and we are maintaining our management guidance for the full year. We continue to progress our pipeline and manage our on-market portfolio 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. I will now pass it on to Andy to talk about our pipeline progress. Thank you.

Thank you very much, Christoph, and a big hello to everyone on today's call. If we can go to the next slide, please. We've made solid progress advancing our pipeline this quarter, as you just heard from Christoph. I'll take this opportunity to dive a bit deeper into several of the updates that Christoph just provided. Dr. Pat 279 read out positive phase to be data for the treatment of psoriatic arthritis. Based on these positive data, we will advance tattoo seven nine to a phase three development program for psoriatic arthritis in fiscal year two thousand and twenty four. The full results will be presented at the meeting of the American College of Rheumatology in November as a late breaker abstract. The Subcutaneous Administration of Intivio received a significant approval in the U.S. this quarter for maintenance therapy in adults with ulcerative colitis. This new route of administration provides an additional way for patients to benefit from Intivio at home. Intivio Subcutaneous Administration has also been filed for the treatment of adults with Crohn's disease in the U.S. and is currently under review by the FDA with potential approval in fiscal year 2024. In Japan, antivio subcutaneous administration is now available for both UC and Crohn's disease following successful approvals in fiscal year 2023. As you just heard from Krzysztof, Gdanga received a very important recommendation from the World Health Organization's advisory group endorsing public vaccination programs in countries with high dengue burden in children ages 6 to 16 years. We expect the WHO to update its guidelines shortly based upon these recommendations and look forward to continuing discussions with public health authorities in dengue endemic countries. The resubmission of TAC 721 for eosinophilic esophagitis, or EOE, to the FDA is an essential milestone for this program, as well as for patients. I will describe the process that led to this filing later in the presentation. Momentum this quarter also came from two new additions to our pipeline. We licensed TAC212 from AcuraStem. TAC212 is an intrathecal antisense oligonucleotide targeting PIK5 for the treatment of amyotrophic lateral sclerosis or ALS. We look forward to bringing this near IND ready program to the clinic in the very near future. We also licensed from Immunogen Japan rights to Mervituximab, a promising antibody drug conjugate targeting folate receptor alpha positive ovarian cancer. In addition to these major updates, we also faced a couple of headwinds this past quarter. As Christoph just alluded to, we announced that alofacil did not meet the primary endpoint in the ADMIRE-2 study. The results are disappointing, particularly given the robust benefits previously demonstrated in the ADMIRE-1 phase three study, which served as the basis for approval in Europe and Japan. We continue to believe in the benefits demonstrated by Alofacel in ADMIRE-1, as well as in other trials, such as the positive Japanese pivotal study and the INSPIRE registry, an 800 patient European real world body of evidence. In addition, last quarter we announced that the confirmatory trial for excivity in EGF receptor exon 20 insertion positive non-small cell lung cancer hit futility. We intend to initiate a global voluntary withdrawal of excivity. If you can go to the next slide, please. Depicted here are exciting late stage programs. TAC 279, our highest priority program, has posted the first in a series of phase three protocols for psoriasis on clinicaltrials.gov and is on track to begin enrollment very soon. We believe that TAC 279 is a potential best-in-class oral therapy for psoriasis. As previously mentioned, based on the Phase 2b readout and psoriatic arthritis, we will move forward TAC 279 into a second pivotal Phase 3 development program early in fiscal year 2024. We're also accelerating development of TAC279 in Crohn's disease, ulcerative colitis, and systemic lupus erythematosus, as well as exploring a range of other potential indications. These expansion opportunities are being developed in parallel with psoriasis and psoriatic arthritis. A new addition to the late-stage pipeline is now TAC2721, which was filed in the US for EOE, and I'll talk about that on the next slide. PAK721 is a viscous topical steroid specifically designed to locally treat EOE. You can see on the right side of this slide the significant responses at week 12 on both histology and symptoms, the co-primary endpoints of this pivotal trial. The clinical response in these patients started as early as week four. There's a high unmet medical need in the US for an oral treatment option that can act rapidly and locally in the esophagus. There's only one approved agent for EOE in the US, a systemic biologic that showed significant benefits at 24 weeks. The strong data and remaining unmet need in the US spurred significant grassroots support for TAC 721 from the GI and EOE community. We have been collaborating with these communities to uncover additional benefits. We have now revised our NDA submission package with additional data analyses focused at week 12 and are cautiously optimistic for our filing of 721 for the treatment of EOE. Next slide, please. Here we show our promising mid-stage pipeline. We continue to be energized by recent developments in our orexin franchise. We believe orexin receptor 2 agonists have the potential to be the first agents to address the underlying cause of narcolepsy type 1, offering the potential for functional cures. TAC861 has completed enrollment well ahead of schedule in two phase 2b trials that started in January of 2023. Combined, the narcolepsy type 1 and type 2 phase 2B trials have enrolled approximately 180 patients. TAC861 is a more potent agent that may provide efficacy at a much lower dose than previously tested oral erection agonists. It significantly reduces the potential for adverse effects, including liver toxicity, which tends to be dose-related. The external reviews conducted by the Drug Monitoring Committee confirmed that no liver toxicity signals have been observed. We continue to see nearly all patients who complete the trials enrolling in the long-term extension study, which can extend up to 102 weeks. We remain on track to make a final go-no-go decision to advance TAC861 to phase three in type one narcolepsy and type two narcolepsy in the first half of calendar year 2024. We are also on track to file an IND for our next-generation oral orexin receptor 2 agonist later this fiscal year. Additional oral orexin receptor 2 agonists will allow us to expand into a range of more prevalent disorders with sleep-wake cycle disruptions to fully explore the potential of these agents. Mezogidimab is our fully humanized anti-CD38 monoclonal antibody that has been studied across several rare autoimmune and inflammatory diseases. Mezogidimab depletes plasma cells, resulting in substantial and durable reduction of pathogenic immunoglobulins, leading to potentially meaningful improvements in IgG and IgA-mediated autoimmune diseases. In addition, there is a suggestion that mezagitamab improves the rapidity of the clinical response in immune thrombocytopenic purpura, or ITP, by eliminating CD38-positive immune effector cells, which are directly responsible for platelet destruction. Later this fiscal year, we are looking forward to emerging data in IgA nephropathy and ITP. Go to the next slide, please. Here are select regulatory approvals in Phase III readouts for fiscal year 2023. In addition to updates described previously for subcutaneous intibio and alofascele, Kudanga received approval in Colombia this quarter. This is the fifth endemic country that has approved Kudanga. With the potential approval of PAC 721 later this fiscal year, we now have an opportunity to receive three new molecular entity approvals in the U.S. in fiscal year 2023. This next quarter, we expect to hear a decision in the U.S. about fuquintinib, our selective oral VEGF inhibitor for metastatic colorectal cancer. And we also expect to hear the FDA's response to our submission of PAK755 and ADAMTS13 enzyme replacement therapy for the treatment of congenital thrombotic thrombocytopedic purpura, or CTTP. Approval for this rare pediatric disease would fulfill a major unmet medical need. Thank you very much. And I will now turn it over to Costa.