Astellas Pharma Inc

Everyone, thank you so much for your participation in this financial results ended June 30th financial call. I'm going to serve as the moderator here for today. I'm Ikeda from Chief Communications and IR officer. Today we are going to give you the presentation first that is followed by a Q&A session. The presentation material is on the website. Including Q&A, a Japanese-English simultaneous translation is available. For the translation, the accuracy of that is not going to be guaranteed by ASTELLAS. The language can be selected from our Zoom webinar screen. If you select the original, then you can hear the original voice without the interpretation. service. This material or representation by representatives for the company and answers and statement by representatives for the company in the QA session includes forward-looking statements based on assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties. Actual financial results may differ materially depending on a number of factors. They contain information of pharmaceuticals including compounds under development. But the information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these variations from modern approved uses in any fashion, nor provide medical advice of any kind. Participants Atsushi Kitamura, CFO, CMO Tadaaki Taniguchi, CCO, Chief Commercial Officer Klaus Zehler. These three are participants from our end. Now, I would like to start the presentation. Kitamura-san, please start.

Hello, everyone. I'm Atsushi Kitamura from Asteris Pharma Inc. Thank you very much for joining our FY2024 First Quarter Financial Results Announcement Meeting out of a very busy schedule today. This is a cautionary statement regarding forward-looking information. As this was explained by Ikeda earlier, I am not going to read this page. Page 3 is the agenda for today. Starting from the next page, I will explain these topics in this order. On page 4, I will give you an overview of FI 2024 first quarter financial results. First, overall, we have made a solid start towards achieving the FI 2024 initial forecast. In the first quarter, revenue increased by 26% year-on-year. Externally contributed to overall revenue growth, driven especially by the United States. Sales of strategic brands as a whole expanded to 75 billion yen in total, increasing three times year on year with a robust growth of about additional 50 billion yen. SG&A and R&D expenses were invested as planned for future growth. In parallel, we executed timely cost management with a focus on ROI. Core operating profit increased year on year, with significant contributions from the expansion of extended and strategic plans. On page 5, I will explain FY2024 first quarter financial results. Revenue reached 473.1 billion yen, up by 26.2% year-on-year. Core operating profit rose to 88.3 billion yen, up by 20.5% year-on-year. Even excluding forex impact, revenue and profit increased. The bottom half of this page shows our full basis results. In the right bottom of the table, we included other expenses booked in the first quarter. We booked 5.5 billion yen because of fair value increase of contingent consideration for Zorbetaxima, mainly due to Forex impact. As a result, operating profit was 50.7 billion yen, up by 10.6% year-on-year. Profit increased to 37.6 billion yen, up by 13.5% year-on-year. On page 6, I will explain EFI 2024 first quarter results of extended and strategic plans. First, about Xtendi, global sales increased to ¥224.2 billion, up by ¥50.2 billion, or 29% year-on-year. Even excluding forex impact, Xtendi achieved about 16% growth. Global sales off to a strong start, driven by higher-than-expected US performance, in particular. In the United States, which has contributed the most to the overall sales expansion, in addition to the growth of the market as a whole, the penetration of the additional indication of M0 CSPC approved in November last year based on Embark study and its ripple effects on other indications have made great contributions, so demand exceeded expectations. In ex-US regions, demand was as expected or exceeded expectations. Sales of strategic brands supporting a future growth, namely Patsef, Izavei, Bioza, Vailoi, and Zospata, expanded to ¥75 billion in total, increasing three times year-on-year, with a robust growth of additional ¥50 billion approximately. PADSEF global sales increased to 38.4 billion yen, up by 23.2 billion yen, expanding substantially with a growth of 152%. As for Aizabe, first quarter sales were 12.7 billion yen, exceeding expectations. Demand growth was stronger than expected following J-code in April in particular. Increased confidence in its safety profile has also contributed to sales expansion. Global sales of Vioza reached 6.6 billion yen, making a steady growth in line with the initial forecast. Overall initiatives have progressed as planned, such as payer coverage and DTC efforts. Parts of ISAVAY and Vioza will be explained later in detail. Viroi was launched successfully in Japan in June. In just two weeks after its launch, we accessed first majority of target physicians. Information provision to physicians is making steady progress. There is a solid progress in available accounts for Viroi, including 18.2 testing penetration. We will focus on the penetration also in the second quarter and beyond. In the United States, established markets, international market, and China, we are anticipating approval sequentially from the second quarter onwards. We are expecting sales contribution after approval. Regarding DOSPATA, global sales increased to 17.3 billion yen, up by 33% year-on-year. Sales expanded in all regions. Continued steady growth is expected from the second quarter onwards as well. On page 7, I will explain business update for PADSEV and VIOZA. PADSEV achieved robust sales growth in all regions, driven by the United States and established markets in particular. Sales grew by 8.6 billion yen just in three months from the previous quarter. Quarterly growth rate is also making a solid progress. In the United States, sales increased by about $100 million year-on-year on a local currency basis, growing at 128%. Thanks to the penetration of EV302 study data with extremely favorable results presented at ESMA last year, first-line share expanded and contributed to sales growth. New patient share in the first-line settings is over 50%. We believe it's establishing its position of care. In ex-US regions, demand grew strongly in the second-line settings and beyond. Especially, established markets had a strong growth rate of 178% on a local currency basis. Outside of the United States, launched countries increased to 38, with reimbursement initiated in 17 countries. Regarding the additional first-line indication in Europe, CHMP adopted the positive opinion in July, and approval is expected by October. Also in Japan, we are anticipating approval within the third quarter. We are expecting contribution to sales after the respective approval. In addition, in China, approval of the indication is anticipated by the end of the second quarter. If approved, it's going to be a new launch in China. For PatSafe, as countries with first-line approval, new launched countries are increasing outside of the United States. In addition to the growth in the United States, we're expecting further sales expansion. With regards to Veoza, global sales grew steadily, mainly in the United States. In the three months from the previous quarter, global sales increased by 2.9 billion yen with a linear growth in line with the initial forecast. In the United States, payer coverage expanded as expected from 50% as of the end of March to over 60% as of the end of June. HCP's perception of Viosa market access is gradually improving thanks to the promotion of educational activities with direct information provision by field sales force and digital channels. As for DTC efforts, as was shown at the beginning of the year, initiatives with low ROI are being reduced or stopped so that we can invest with a focus on high ROI initiatives. We are trying to optimize DTC at any time. We believe we can aim to achieve profit early by continuing to promote initiatives with a focus on ROI. Partly due to the effectiveness of our DTC efforts, we are observing enhanced patient activation as well. According to market research results, we were able to confirm that the proportion of women who reported high intent to ask ACPs about Vioza has risen. Outside the United States, launched countries increased to 13, and we are expecting contribution to sales growth going forward. For Vioza, we are anticipating continued linear growth from the second quarter onwards, by promoting payer coverage and DTC steadily, mainly in the United States. On page 8, I will explain business update for Aizabay in the United States. Aizabay performance exceeded expectations with sales expansion particularly driven by the J-code and its safety profile. Sales increased to $82 million, up by $35 million, or 73%, in just three months from the previous quarter. It's growing at a speed higher than expected. Demand for an effective J-code in April exceeded expectations, igniting multiple new accounts. As of the end of June, Aizavei is available in over 1,200 Retina accounts. Market share in the previous quarter was about 25%, but based on market research, market share is estimated to have expanded to about 35% in the first quarter. between April and June. Given the fact that a competitor product was launched about six months earlier, we think that the number of new patients is increasing steadily. As for ASRS, the American Society of Retina Specialists, it's the world's largest academic society organization for retina specialists. Its annual meeting was held last month in Stockholm. the society surveyed more than 1,000 specialists on their selection of treatments. The survey results that were made public showed a higher utilization of Izave only over the competitor product only in clinical practice. Achieving these results in a third-party survey is further deepening our confidence in the competitiveness of Izave. By the end of June, over 85,000 vials have been shipped since launch, Furthermore, in July, the number of virus increased steadily and surpassed the milestone of 100,000 virus last week. Post-marketing safety profile remains consistent with clinical trial results. No new safety signals were observed. This offers higher confidence to prescribers to select Izave according to market research results. As for future expectations, the first quarter made a good progress, raising prospects for outperforming the initial forecast. On the other hand, we need to recognize that this is just a progress in the three months. We will consider reviewing our forecast based on the future progress and the latest outlook. We are expecting labor update by the third quarter. based on the two-year clinical study data, which includes 24-month efficacy, safety, and every-other-month dosing data. Aizawai has continued to make good progress since launch in the United States in September last year. We are expecting further sales expansion as a growth driver going forward as well.

Page 9. I will explain the cost items. As shown in the top row of the table, the cost of sales ratio to revenue is 19.3%. This is 0.9% points increase year-on-year because of one of factors including provision for U.S. Mira background inventory disposal due to generic entry and royalty payment adjustment. The SG&A expenses, excluding U.S. extended co-promotion fee, increased 17.5% year-on-year. Excluding the Forex impact, it increased 6.6% or about 8 billion yen. This is mainly due to an year-on-year increase of about 12 billion yen in promotional expenses for strategic brands, mainly Isovay and Vioza. The acquisition of Averik Bio had not been completed at the year-on-year time point, and therefore the costs related to Isovay had not been booked, which leads to this increase. On the other hand, mature products related to expenses such as Mira background decreased by about ¥4 billion year-on-year, and the global organizational restructuring in 2023 resulted in a decrease of SG&A expenses about ¥2 billion year-on-year. While investing is planned for future growth, we also revisited investments with a focus on ROI and managed expenses in a timely manner. As a result, during part of the shift to the growth phase, the SG&A to revenue ratio decreased by 2.3 percentage points year-on-year. R&D expenses increased 34.4% year-on-year. Excluding the forex impact, it increased by 23.6%, or about 15 billion yen. Also, mainly due to investments to strengthen the primary focus and R&D functions, it increased about 7 billion yen year-on-year. The booking of one-time co-development cost payments is another factor of this increase. This impact has already been factored in our initial forecast, and the R&D expenses have been as expected. I will now explain the new initiatives for sustainable growth. The progress of key expected events in FY2024 with respect to extended and strategic brands are described here on page 11. The update since the last financial results announcement is indicated in blue. Xtendi was approved in China in June for the additional indication of M1-CSPC metastatic castration-sensitive prostate cancer based on the China ARCHES study. As for PADSEV, for the additional indication of first-line locally advanced or metastatic urothelial carcinoma, the CHMP adapted the positive opinion based on the EV302 study. That is, in July. BILO will be explained on the next slide. There has been no major update on ISA in the past three months, and the regulatory review of the US labor updates and the application in the EU is still ongoing. For the EU regulatory submission, we received a day 180 list of questions from the CHMP in the first quarter following the standard timeline. We will continue to communicate with the authorities for the approval and will update you with the results when we receive the CHMP's opinion. Page 12, I will explain the latest status of Vailoi. We are actively pursuing life cycle management initiatives to maximize the value of Vailoi as a first-in-class anti-clotin 18.2 antibody. First, we are progressing toward the global launch of Vailoi for geographic expansion. In Japan, BILOI was launched on June 12. In the US, we resubmitted the application after receiving the complete response letter from the FDA in January. The submission was acknowledged on May 30, and the PRUFA date was set as November 9. Regarding EU, the positive CHMP opinion was adopted. on July 26, and the approval is expected by October. In China, the review of the dossier is still ongoing, and the regulatory decision is anticipated in the fourth quarter. Left bottom of the slide, the Phase II registration study for the pancreatic adenocarcinoma is ongoing. The patient enrollment was completed in March earlier than expected, and the top-line result is anticipated in the fourth quarter. As shown in the lower right-hand corner of the slide, we have also decided to conduct a new Phase III trial in combination with the CPI or immune checkpoint inhibitors and chemotherapy. In this study, for the first line, a treatment of gastric cancer in patients with a HER2-negative, Clotin-18.2-positive, CPS1 or higher, the efficacy and safety of zovirataximab or placebo in combination with immune checkpoint inhibitors and chemotherapy will be evaluated. The study is scheduled to start in the first half of calendar year 2025. Bylaw is currently approved for the combination with chemotherapy including 18.2 positive gastric cancer. In addition to this, we expect to make further contributions to the treatment of gastric cancer with high unmet medical needs by offering combination with an immune checkpoint inhibitor as a new treatment option for patients with high CPS. Page 13. Next is progress in focus area approach. Projects in the clinical trial stage with updates since the last financial announcement are shown in blue. ASP1570, Immune Oncology in the Primary Focus. An application of the post-representation in September was accepted by ESMO for the post-representation with early data, including part of the ongoing Phase 1 study. ASP213A was granted with orphan drug designation for pancreatic cancer from the FDA in June. For ASP, we published the information that this is a bispecific antibody targeting clouding 4 and CDR137. CLOUDIN4 is known to be highly expressed in various types of cancer. CD137 is expressed on the surface of activated T cells. We hypothesize that ASP1002 will enhance the antitumor response of T cells by binding CD137 positive T cells to CLOUDIN4 positive cancer cells. The first patient dose of ASP1012 was achieved in May. ASP30A2 is a targeted protein degradation based on data obtained in the monotherapy dose escalation cohort of the Phase 1 study. A dose expansion cohort was started. A presentation on the initial data from the Phase 1 study was accepted for oral presentation at ASIMO. We are considering holding a brief session on the presented data after the conference. We will inform you of the details as soon as they are finalized. ASP5502, our primary focus candidate for immune homeostasis, has entered a clinical trial phase. ASP5502 clinical development phase. ASP5502 is a low-molecule weight sting inhibitor that is expected to improve the symptoms of chronic autoimmune diseases by modulating the immune response pathway involving sting. We plan to conduct clinical trials. First, a full primary Sjogren's syndrome. The last slide on page 14 summarizes our progress in the first quarter of FY24. As shown on the left side of the slide, our strategic brands grew strongly, notably driven by PADSF and ISAVE. We also achieved several regulatory milestones for PADSF and VILOI. The focus area approach program also progressed, with early clinical data from ASP3082 and ASP1570 accepted for presentation at ASMO. We will continue to accumulate data to judge POCs and build a pipeline that will allow us for sustainable growth. As shown in the figure on the right, we expect total sales of strategic brands to grow to approximately 300 billion yen in FY24, and 500 billion yen in FY25. The first quarter total sales increased by about 50 billion yen year-on-year to 75 billion yen, and we are making steady progress toward achieving this goal. Overall, the first quarter was a quarter in which strategic brands moved into a growth phase, and the focus area program made progress toward the judgment of POC. We are off to a solid start toward achieving our full-year focus set at the beginning of the fiscal year. We will continue to make steady progress in the second quarter and beyond with a focus on achieving our goals. That is all from me. Thank you very much for your attention.