Takeda Pharmaceutical Company Limited

Thank you very much for joining us for Takeda's FY23 Q3 earnings announcement despite this schedule. And I'm the MC today. I'm O'Reilly, head of IR. First of all, I would like to explain about the language. Please find the language button at the bottom of the Zoom window. If you wish to listen in Japanese, please choose Japanese. If in English, please choose English. If you want to listen to the original language, please turn it off. Before starting, I'd like to remind everyone that we'll 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 our actual results to differ materially are discussed in our most recent Form 25F and our other SEC filings. Please also refer to the important notice on page two 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 recommendations, reconciliations with comparable IFRS finance measures are included in the appendix to the presentation. Without further ado, we would like to start the presentation today. We have President and CEO, Christophe Weber, R&D President, Andy Plumb, and the Chief Financial Officer, Costa Sarucos, presenting today, followed by a Q&A session. Now, let us begin. Christophe, please go ahead.

Thank you, Chris, and thank you, everyone, for joining our third quarter earning call for Fiscal Year 23. Our vision at Takeda 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 for sustained growth and long-term value creation for our stakeholders. Our performance in the third quarter of fiscal year 23 further demonstrates our progress in executing on that strategy as we look ahead to a return to top line, profit, and margin growth. Our top line continues to be driven by the strong momentum of our growth and launch product, which now represents 43% of total revenue and which grew at 2.7% year-to-date at constant exchange rate. In Q3 year-to-date, core revenue was 3.2 trillion yen, with flat growth at constant exchange rate compared with the same period in the previous year. And this is despite significant loss of exclusivity impact, primarily from Vyvanse in the US and Azilva in Japan. On an actual exchange rate basis, revenue grew 4.6%. Co-operating profit was 865.6 billion yen, with a decline of 12.7% at constant exchange rate, reflecting the loss of exclusivity on high margin product, as well as our investment in R&D and data on technology to secure long-term competitiveness. At actual exchange rate, our co-operating profit declined by 9.3%. Despite this, we remain on track to exceed 1 trillion yen co-operating profit for the full year. On a reported basis, operating profit and EPS were impacted by non-core items, including impairment of intangible assets, which were mostly booked in the second quarter. As you know, we provide full year management guidance for core growth at constant exchange rate, and I am pleased to report that our year-to-date core performance continues to be in line with expectations, keeping us well on track to our management guidance for the year. On the next slide, we are confident in our R&D strategy, and we continue to advance highly innovative, life-transforming medicines for patients affected by rare or more prevalent disease in our core therapy areas. Our pipeline delivered well in the third quarter with two new molecules approval in the United States, Fruzaclav for previously treated metastatic colorectal cancer, and Adzyma for an ultra-rare blood clotting disorder called congenital thrombotic thrombocytopenic papilla, or CTTP. Prezaclar, which we acquired through an exclusive license agreement with HodgeMed in March last year, is the first and only targeted therapy approved for metastatic colorectal cancer, regardless of biomarker status, in more than a decade. In fact, the unmet need is so significant that Frisacla was available within 24 hours following FDA approval, with the first prescription received the day after approval. I want to acknowledge here the work of our oncology team in preparing for the launch and giving these patients hope. Regarding adzyma, this is the first and only therapy of its kind for the treatment of CTTP, an ultra-rare blood clotting disorder. Its approval and launch are significant milestones for this rare disease community, which we are proud to continue focusing on. Since the second quarter, since Q2, we have also made strong progress in our existing portfolio with important lifecycle management approval for our growth and launch product. LiftenCity is now approved in China for refractory post-transplant CMV. Patients in China now have access to this therapy that can enable sustained and effective treatment against post-transplant cytomegalovirus infection, which could save an organ or a life that might otherwise be lost. In November, the European Union approved Taxaro for pediatric patients with hereditary angioedema. It is the first and only long-term prophylactic treatment for this rare disease available in the EU for patients under the age of six. And in January, we had some fantastic progress in our plasma-derived therapy portfolio, with three approvals for our immunoglobulin portfolio for chronic inflammatory demyelinating polyurethral neuropathy, or CIDP, a rare disorder affecting the peripheral nervous system. IQVR, the only facilitated subcutaneous IgE, was approved by both the US FDA and the European Commission for maintenance treatment of CIDP, and GammaGard Liquid was approved by the FDA for IV treatment of CIDP. We are also expanding our late-stage pipeline through targeted business development. Just a few hours ago, we announced a collaboration and license agreement with Protagonist Therapeutics for the development and commercialization of Rusvertide, an investigational therapy in rare hematology. Rusvertide is currently in phase three development for polycythemia vera, a rare chronic blood disorder. This agreement fits well within our overall business strategy, leveraging our rare disease and hemophilia franchise. Turning to the next slide, I'd like to provide an update on two important products in our growth and launch portfolio, Antivio and Qdengar. Antivio is our number one product by revenue, and it continues to outperform the IBD market with year-to-date revenue growth of 7%, with a slight growth acceleration in Q3. It has maintained its lead in the U.S. as the most prescribed treatment for IBD overall, as well as for IBD by a naive new start. And it is achieving mid-teen percentage patient growth in Europe, driven mostly by our supervenous administration. In November, we also launched the AntivioPen in the U.S. for maintenance therapy in moderate to severely active ulcerative colitis. Subcontinuous therapies are estimated to represent approximately 35 to 40% of the total US IBD market. So this launch is a very significant milestone in enabling us to access this segment while providing more flexibility and choice to patients. Antivio is now the only branded therapeutics with both IV and subcontinuous maintenance option, and we are seeing a high degree of interest among healthcare professionals. I'm happy to share some market research data with you. 98% of surveyed health care professionals are aware of the anti-VO pen, and 94% express willingness to prescribe it in the next six months. We expect an FDA decision on the anti-VO pen in Crohn's disease early in fiscal year 24. Shifting now to Kudanga, we are very encouraged by how our launch has been progressing globally. To date, we have launched the vaccine in 21 countries, including most recently Argentina. CUDENGA is available in 17 European countries, and travel recommendations support its use to help protect travelers to dengue-endemic areas. There has been a strong initial demand in private markets where CUDENGA has launched, and now we are seeing progress toward inclusion in national immunization programs too. In December 23, Brazil National Commission for the Incorporation of Health Technology recommended Cudenga for inclusion in the national immunization program. Subsequently, the Brazilian government has decided to initiate some focused vaccination program in areas with high dengue incidence rates. We are also in productive discussion with government in other endemic countries, and we are pursuing private and public partnership with government, institutional businesses, NGOs, and manufacturer to expand access. We are committed to our goal of reaching a total manufacturing capacity of 100 million dose per year to comprehensively address the growing burden of dengue infection. Turning to our high-level outlook for the near, medium, and long term, as we have entered the final quarter of this fiscal year, we are confident in our business strategy and are committed to growth and shareholder return. Based on our current assumption, we still 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 have achieved significant regulatory milestones since Q2 in the form of new product approval and important indication expansion for the existing portfolio. And we continue to see significant potential in our late stage pipeline. Generic competition for Vyvanse and Azilva continue to impact revenue and profit growth this fiscal year. However, Once that impact has washed out, we'll have limited loss of exclusivity exposure until the launch of Ontiview Biosimilar, which could occur as late as 2032 in the US. 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 are committed to returning to cooperative profit margin in the low to mid 30s, supported by our growth and launch product, cost control, and value creation enabled by data and technology, including AI. We believe AI has the potential to create significant, scalable, and sustainable value at Takeda. It will enable us to improve efficiency across our entire value chain, including in R&D, manufacturing, patient engagement, and business operation. We believe that data, technology, and AI will completely change how we operate as a company, and we are moving at full speed across the value chain to implement digital and AI tools and application. We'll share more detail on this topic in our future presentation. Looking ahead, we'll continue to evaluate asset-specific business development opportunities to further enhance our pipeline and reinforce our growth profile. Our BD strategy has been proving successful with the approval and launch of Frusacla and the positive progress of TAC279 through this pipeline this fiscal year. This approach to innovation combined with a robust clinical pipeline of potential best-in-class or first-in-class asset will position Takeda well for the long-term growth. 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, we are confident about the path we are on Our year-to-date performance demonstrates a strong momentum in our growth and launch product, the potential in our pipeline, and solid execution against our business strategy. With the approval and launch of two new therapies this quarter in the US and multiple lifecycle management approval around the world, we are very much confident 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 treatment guided by our commitment to patients, our people on the planet. With that, I will now turn the call over to Andy to update you on our pipeline. Thank you.

Thank you very much, Christophe. And hello to everyone on today's call. If we can go to the next slide, please. We've had a very successful quarter, delivering some major milestones while continuing to build momentum across our pipeline. Here are a few examples of the significant pipeline achievements from the third quarter. As Christoph mentioned, at Zinma and Frusakla, two new molecular entities have received approval in the United States. Adzinma is a recombinant ADAMTS13 protein designed to replace the missing enzyme which causes patients living with congenital TTP to face serious life-threatening health challenges. This approval is based on Adzinma's favorable efficacy profile notably a 60% reduction in the incidence of thrombocytopenic events versus plasma-based therapies. In fact, Takeda was awarded a priority review voucher for this approval as it addresses a major unmet need in patients with this rare pediatric disease. We were also evaluating adzyma in a Phase IIb study in immune thrombotic thrombocytopenic purpura, or ITTP, which is a significantly more prevalent disease. Prezacla, an oral VEGF inhibitor, was approved in the U.S. for certain patients with previously treated metastatic colorectal cancer. It demonstrated a significant improvement in overall survival with a manageable safety profile, and not surprisingly, initial commercial uptake has been quite strong. In addition, we continue to rapidly advance the development of our allosteric TIK2 inhibitor, TAK279, initiating the Latitude Clinical Trial Program with two Phase III psoriasis trials that are enrolling well. Following the presentation of positive and very exciting psoriatic arthritis Phase IIb data at the American College of Rheumatology, we plan to initiate enrollment in the Latitude Psoriatic Arthritis Phase III program in fiscal year 2024. To support the development of TAC279 in inflammatory bowel disease, we aligned with the FDA on the clinical trial design for Phase IIb studies in Crohn's disease and ulcerative colitis, utilizing much higher doses than studied in psoriasis or psoriatic arthritis. TAC279 is our leading pipeline priority, and we continue to make steady progress as we work to bring this potentially best-in-class treatment to patients. In the third quarter, we also delivered important indication and geographic expansions for our growth and launch products. As Christoph just mentioned, in the US, GammaGuard Liquid and Hycuvia received their first approvals for induction and maintenance of CIDP, respectively. With these approvals, we can now offer treatment for patients with this rare acquired immune-mediated neuromuscular disorder throughout their journey. Hycuvia was also just approved for CIDP maintenance in the EU. We also continue to expand our pipeline with targeted late-stage deals. A few hours ago, we announced a worldwide license and collaboration agreement with Protagonist Therapeutics for resveratide. Now, resveratide is a first-in-class hepcidin mimetic in a pivotal phase three trial for the treatment of polycythemia vera, a rare chronic blood disorder that affects as many as 160,000 patients in the United States. The resveratide phase three trial is expected to complete enrollment soon and will add to our growing late stage pipeline. If we can get to the next slide, please. Our late stage pipeline reflects Takeda's commitment to develop life transforming medicines for rare and more prevalent diseases. As I mentioned, TAC279 is enrolling patients in two phase three psoriasis trials. Because psoriasis trials have historically lacked representations from patients of color, we are proactively taking steps for the TAC-279 Latitude Psoriasis Program to reflect unprecedented patient diversity. TAC-279 is a potential best-in-class oral therapy for psoriasis and will start a Phase III head-to-head trial against Ducravacitinib in 2024. Now, let me take a step back to remind everyone that Takeda is an industry leader with more than 70 years of experience working in rare diseases and hematology. We remain deeply committed to researching and developing life-transforming medicines, many of which will treat patients with rare diseases in our core therapeutic areas of neuroscience, GI, and inflammation. Moreover, our plasma-derived therapies organization continues to pursue transformational therapies in rare diseases, while our oncology team remains focused on cancers with high unmet medical needs across a range of patient populations. Now, in keeping with our emphasis on collaboration, we will continue to partner with the healthcare providers and communities who support these patients, while also exploring late-stage business development opportunities like the protagonist partnership announced just recently, leveraging our deep commercial expertise to bring transformative therapies to patients with rare diseases. And finally, Takeda continuously prioritizes our portfolio to direct resources to our most promising therapies. For example, we have decided to discontinue development of modacifus balfa. This is a strategic decision based on a number of factors, including the existing data set, the rapidly evolving multiple myeloma treatment landscape, and the long development timelines. Decatur remains committed to oncology and will continue to develop therapies across hematologic and solid tumors. Next slide, please. We are rapidly advancing our exciting mid-stage pipeline and anticipate that a number of these programs will progress to phase three pivotal development in the coming year. Erexin 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, our lead erexin agonist, completed enrollment well ahead of schedule in two Phase IIb trials that began in January 2023. Combined, the TAC861 narcolepsy type 1 and type 2 trials have enrolled approximately 180 patients. nearly all who completed the trial enrolled in the long-term extension study. These Phase II studies and the long-term extension study will help inform the TAC861 Phase III program. As a reminder, TAC861 is a more potent agent that may provide efficacy at a much lower dose than our previously tested oral orexin agonist, significantly reducing the potential for adverse effects, including liver toxicity, which tends to be dose-related. Multiple external reviews by the Data Safety Monitoring Committee confirmed that no liver toxicity signals have appeared in the TAC861 Phase II trials. We are on track to make a final go-no-go decision to advance TAC861 to Phase III in narcolepsy this fiscal year, and we are planning the Phase III program at risk to maintain momentum. Mezogidimab, our fully humanized anti-CD38 monoclonal antibody, is being studied across several rare autoimmune inflammatory diseases. It works by depleting plasma cells and plasma blasts, resulting in a number of beneficial immunomodulatory effects. We are excited by mezogidimab's mechanism of action, and we look forward to presenting data in ITP and IgA nephropathy at medical conferences later this year. Next slide, please. As you can see, the third quarter was a productive quarter with two NME approvals for Edzinma and for Fruzakla, important indication expansions for Taxairo, Hycubia, and GammaGuard, and positive Phase III data for Maralixibat in Japan, for which we will seek approval later this year. Takeda has generated considerable pipeline momentum in fiscal year 2023, and as you'll see next, there's much more to come in fiscal year 2024. Next slide, please. In the coming months, we anticipate several meaningful potential approvals and phase three readouts. These include life cycle expansion opportunities for intibio sub-Q for Crohn's disease, potential occlusive approval for first-line Philadelphia positive acute lymphoblastic leukemia in the United States, and the potential approval for TAC721 in the U.S. for eosinophilic esophagitis. In addition, there will be two phase three readouts for ceticlostat and Dravet syndrome and Lennox-Gastaut syndrome, two rare pediatric epilepsies, which may allow for filing in 2024. As I mentioned earlier, our teams remain laser-focused on developing TAC-279 in the first four major indications while exploring development in others. Our pipeline is maturing, with five new molecular entities in Phase III development awaiting first approvals. In addition to these five global Phase III NME programs, we have prioritized a group of registration-enabling regional development programs outside of the United States. Key data readouts in our exciting mid-stage pipeline and targeted business development opportunities will continue to add to our maturing late-stage portfolio. We look forward to important mid-stage milestones in the development of our orexin franchise, like the Phase 2b study readouts of TAC861 and the Phase 1 start for our next-generation oral orexin agonist, TAC360. And as mentioned, mezogidamab's coming ITP and IgA nephropathy data will allow us to make a data-driven, go-no-go decision to Phase III. Across our pipeline, we will continue leveraging data, digital, and technology to develop programs faster and increase our probability of success. Now, for example, we started Phase IIb trials of PAK861 within two weeks of completing Phase Ib by planning at risk. We also leverage site selection tools trained with our deep site and investigator experience from previous erection trials. For the TAC 861 Phase 2B studies, we used a proprietary in-house digital tool that provides real-time site performance data to analyze and manage enrollment. allowing us to complete the study five months ahead of plan. This tool, specifically designed for clinical trial execution, also helped us to improve site selection, screen patients, and to provide real-time data review, data monitoring, and data cleanup. We will continue utilizing digital tools and proprietary data to help us make critical decisions to advance and deliver our pipeline to patients. Given the strong momentum of our mid- to late-stage pipeline, Decata plans to host an R&D event in fiscal year 2024 to provide an update on our strategy, present deep dives into our flagship programs, and share more about our data, digital, and technology efforts. Thank you very much, and now I will turn it over to Kosta.