Astellas Pharma Inc

Thank you very much for your attendance on this Q3 Y2D FY24 Financial Results Announcement Meeting. I'm going to serve as a moderator. I'm Chief Communications and IR Officer, Ikeda. We make a presentation first, and after that, we'll have a Q&A session. The presentation is given based upon the presentation material posted on our website, including a Q&A. The simultaneous translation for both Japanese and English are provided. For simultaneous translation, the accuracy cannot be guaranteed by the company. You can select the language from Zoom webinar screen menu. If you select the original language, then you can hear the original sounds without the interpreter's voices. This is some disclaimer. This material or presentation 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 as 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. This information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations. Now, let me introduce you, the participants here, the Asushi Kitamura CFO, Chief Financial Officer. Can't you tell the yours to go shitaka chief scientific officer? Medical Tanto Tadaki Taniguchi, chief medical officer. How might talk about class silver chief commercial officer? We have these four representatives here now. Akitamura simply start the presentation.

Hello, everyone.

I'm Atsushi Kitamura from Astellas Pharma Inc. Thank you very much for joining our FY2024 third quarter year-to-date 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'm 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 highlights of FI2024 third quarter year-to-date financial results. Revenue increased substantially year-on-year by 22%. Sales of strategic brands as a whole expanded to over 240 billion yen in total, with growth of about 140 billion yen year-on-year. As for SG&A expenses, excluding U.S. extended co-promotion fees, SG&A ratio improved by 4 percentage points year-on-year, driven by robust growth progress of sustainable margin transformation, or SMT, initiatives to pursue company-wide cost optimization. Core operating profit increased significantly year-on-year by 44%, driven by the growth of Xtendi and strategic brands, as well as the contribution of SMT cost optimization. As was announced in the press release on the 24th of January, we made an upward revision of a four-year forecast for revenue by 100 billion yen and core operating profit by 70 billion yen based on robust core business progress. I will explain the details of a revised forecast on page 9. On page 5, I will explain FI2024 third quarter year-to-date financial results. Revenue reached 1,453,000,000 yen, up by 22% year-on-year. Core operating profit rose to 297.5 billion yen, up by 44% year-on-year. 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 third quarter. We booked 180.5 billion yen as impairment losses on intangible assets for Isovay XUS, AT466, IOTA, etc. As for impairment losses for Isovay XUS, we re-evaluated based on our decision to withdraw regulatory application in Europe. Based on our discussions with CHMP by now and the competitive situation, We conducted a reassessment from various perspectives, such as target countries for filing or submission, the probability of approval, and timelines. We have conducted a review of the asset value based on a conservative scenario. As a result, we booked an impairment loss of 115.1 billion yen. I will explain the details of the latest status of regulatory activities outside of the United States on page 12. 8466 is a gene therapy program for myotonic dystrophy. In R&D, we optimize technology to be utilized. So there is a possibility that we can create highly effective therapeutic candidates. But the development timeline and the competitive environment have changed from our initial assumptions. Based on these circumstances, we have conducted a review of the asset value. As a result, we booked an impairment loss of 51.8 billion yen. Regarding IOTA, we examined the project related to its implantable medical devices. As a result, we booked an impairment loss of 8 billion yen on intangible assets of the projects that we decided to terminate. As a result, operating profit was minus 22.5 billion yen. On page 6, I've explained FI2024 third quarter year-to-date results for extended and strategic brands. First, about Xtendi, global sales increased to 703.1 billion yen, up by 143.1 billion yen, or 26% year-on-year. In the United States, M0 CSBC performance and its ripple effects on other indications exceeded expectations, while sales in other regions expanded as expected. reflecting the overperformance in the United States. We revised our four-year forecast once again following the revision in the second quarter. In line with our guidance from before, we are factoring in the anticipated negative impact from US IRA Medicare Part D redesign in the fourth quarter forecast without major changes in our assumptions. The impact from medical party redesign is expected to continue also in FI 2025. We will internally assess the specific level of impact based on the fourth quarter situation. Next time when we announce FI 2024 four-year results, we will provide our guidance of FI 2025 outlook, so please wait till then. Sales of strategic brands supporting our future growth expanded to over 240 billion yen in total, with a growth of nearly 140 billion yen year on year. Furthermore, the profit margin of these strategic brands is also high, substantially contributing to sales and also to the overall profit growth. We believe that we are fully on track to achieve a four-year forecast of over 340 billion yen, building confidence towards FY 2025 target of 500 billion yen. Let me explain individual strategic plans as well. I will explain the details of PADSEF, ISAVE and Viroi on the next page. Global sales of PatSafe increased to 117 billion yen, up by 61.4 billion yen, or 110% year-on-year, growing more than two-folds. Aizabay was launched in the United States less than one and a half years ago, but its sales expanded to 44.4 billion yen. Global sales of Veoza reached 24.4 billion yen, making a steady growth. We are continuing to identify initiatives with a focus on ROI and working on them with priority. We are expecting a linear sales growth going forward as well. As for Vailoi, since its launch in Japan in June last year, the number of launched countries has steadily increased, and its global sales reached 4.9 billion yen. Regarding Zospata, global sales increased to 53.1 billion yen, up by 11.8 billion yen, or 29% year-on-year. Sales expanded in all launched regions. We're expecting continued moderate growth going forward as well. On page 7, I will explain business update for PADSEV, ISAVE and VAIGOI. First, about PADSEV. Ex-US regions such as Japan and Europe grew strongly in line with our four-year forecast that we revised upward when we announced our second quarter year-to-date results, driving strong quarterly global growth. First line MUC indication is demonstrating an extremely strong uptake. We are hoping this will serve as a growth driver to increase our future sales. Regional expansion of the first line MUC indication is making steady progress. The number of countries with approval increased to 16 in total, up by five from the second quarter. We're expecting further increase in countries with approval and reimbursement initiation. In the United States, first line MUC share continues to be at a high level, with both new patient start and market share approaching 55%. On the other hand, market share expansion is slightly lower than our initial assumptions, so we visited a four-year forecast. Based on the recent progress status, we reviewed market share and growth rate assumptions and made a slightly downward adjustment. Having said so, volume is increasing steadily, and there is no change in our outlook for continued moderate growth trend going forward. As we mentioned when we announced our second quarter year-to-date results, going forward, we are expecting overall sales growth to be driven by ex-US performance and anticipating continued solid global growth as a whole. We have high expectations on PADSEF as an important growth driver also in FY 2025. Furthermore, the next potential growth opportunity is the additional indication of MIBC, Muscle Invasive Bladder Cancer. There is no change in our outlook to obtain top-line results within FY 2025. After approval, we are hoping that it will boost sales growth for Partsev.