Astellas Pharma Inc

Thank you very much for joining our FY2024 Financial Results Announcement meeting by Astellas Pharma Inc. out of a very busy schedule today. I'm delighted to serve as a moderator. I'm Ikeda, Chief Communications and IR Officer. Thank you for your time. Today, after presentation, we will move on to Q&A session. Presentation will be made based on the material posted on our website under the IR meeting section. We have simultaneous translation between Japanese and English, including Kyonei. We cannot guarantee the accuracy of the translation. Thank you for your understanding. You can choose the language from the menu on the Zoom webinar screen. If you select the original language, you can listen to the original sound without going through the translation. Disclaimer for today. This material or presentation by representatives for the company and their answers and statement in the Q&A session includes forward-looking statements based on assumptions and beliefs in light of 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 on pharmaceuticals, including compounds and development, but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations, promote unapproved use in any fashion, or provide medical advice of any kind. Let me introduce the participants. Naoki Okamura, Representative Director, President, and CEO. Chief Research and Development Officer, Tadaaki Taniguchi. Chief Commercial and Medical Affairs Officer, Klaus Zieder. And Chief Financial Officer, Atsushi Kitamura. We have four executives. We would like to have a presentation. Okamura-san, please. Ikeda-san, thank you very much. Hello, everyone. I'm Naoki Okamura from Astellas Pharma Inc. Thank you very much for joining our FI2024 Financial Results Announcement Meeting out of your 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 FI 2024 financial results. In FI 2024, revenue and core operating profit reached a record high since the establishment of Astellas. Revenue increased significantly year-on-year by 19%. Sales of strategic brands as a whole expanded to over 340 billion yen in total, with growth of about 180 billion yen year-on-year. As for SG&A expenses, excluding U.S. extended co-promotion fees, driven by Sustainable Margin Transformation, or SMT, our initiatives to pursue company-wide cost optimization, we achieved our cost optimization target of about 40 billion yen. and SG&A ratio improved by 3.1 percentage points year-on-year. Co-operating profit increased significantly year-on-year by 42%, driven by the growth of strategic brands as well as the continuation of SMT cost optimization. Co-operating profit margin went up by 3.3 percentage points year-on-year to reach 20.5%. On page 5, I will explain FI 2020 for financial results. Revenue reached 1,912.3 billion yen, up by 19.2% year-on-year. Co-operating profit rose to 392.4 billion yen, up by 41.7% year-on-year. Both revenue and co-operating profit exceeded our full-year forecast. The Forex impact is shown on the right-hand side of the table. There was a positive impact on revenue by 68.1 billion yen and on co-operating profit by 15.1 billion yen. The bottom half of this page shows our full basis results. In the right bottom of the table, we included other expenses booked in FY2024. This was explained when we announced the third quarter year-to-date results, so I will skip the details today. In the end, operating profit was 41 billion yen, up by 68.8% year-on-year. Profit increased to 50.7 billion yen, up by 197.7% year-on-year. On page 6, I will explain EFI 2024 financial results over main products. Sales of strategic brands of future growth drivers, namely Patsev, Isovay, Vioza, Viroi, and Zospata, more than doubled to approach 340 billion yen in total, with a growth of about 180 billion yen, or 110% in a year. Due to high profitability of these brands, they not just contributed to revenue, but also played a major role in driving the overall profit growth on a consolidated basis as well. Let me also explain individual strategic brands. I will explain the details of PADSEV, ISAVE, and VILOI later in FY 2025 Outlook section, including our sales forecast and progress status. Global sales of PatSafe increased to 164.1 billion yen, up by 78.7 billion yen, or 92% year-on-year, realizing nearly two-fold growth. Sales expanded in all regions where it's launched. The number of first-line metastatic ulcerative cancer approval countries has been increasing steadily, with rapid market penetration after approval. Isovay was launched in the United States just about one and a half years ago, but its sales expanded to 58.3 billion yen. Isovay was launched about six months later than the competitive product, but it has established its positioning as the first-line treatment for new patient starts since FY2024 second quarter. After November last year, its growth temporarily slowed down Due to the impact of CRL, complete response letter for label update submission, but in February, the label update was approved, and we have been able to confirm signs of the prescription expansion trend recovery since. Global sales of Vioza expanded to 33.8 billion yen. In addition to its growth in the United States, the number of countries where it's launched in the established and international markets has steadily expanded, contributing to sales growth. Globally, Vioza has already been approved in 43 countries and launched in 24 countries. As for Viroi, starting with the launch in Japan in June last year, the number of approval countries has increased steadily. Global sales reached 12.2 billion yen. Higher-than-expected rates of clothing 18.2 testing drove strong performance, with uptake exceeding expectations. Regarding Zospata, global sales increased to 68 billion yen, up by 12.9 billion yen, or 23% a year. Sales expanded steadily in all regions where it's marketed. Zospata is maintaining a high market share in the current indication of relapsed or reflectory AML. As for Xtendi, global sales increased to 912.3 billion yen, up by 161.8 billion yen, or 22% year-on-year. In all markets led by the United States, sales expanded. We believe global sales are reaching projected peak level. Impact from U.S. Medicare Part D redesign was mostly within our assumptions. Sales landed in line with our full-year forecast. On page 7, let me explain FI2024 SMT achievements. Through SMT initiatives, we achieved cost optimization target of ¥40 billion in FI2024. As a result, SG&A ratio excluding U.S. extended co-promotion fees improved to 30.9% down by 3.1 percentage points year-on-year. On the left side of this page, you can find our specific initiatives towards cost optimization and the achievements shown in four categories. First, in order to build critical in-house capability to reduce outsourcing, we promoted in-house clinical trials, etc., which were previously outsourced. This led to the optimization of about 5 billion yen a year. Number two, as for further efficiency of global operations, we made progress mainly in the use of digital and AI tools, with which we enhanced company-wide efficiency and optimized costs by about 6 billion yen a year. Third, In order to optimize selling expenses with ROI focus, we achieved cost optimization of about 27 billion yen in total. This includes 15 billion yen cost optimization by making progress in the global organization restructuring, about 10 billion yen by reducing mature products-related expenses, and about 2 billion yen by sharing sales promotion materials globally. In addition, we will promote continuous company-wide cost optimization as well. We were able to allocate these resources generated by SMT to growth investments for strategic brands and primary focus. SMT is a source of future investments, and we will continue to work on this in FI 2025 and beyond. We're expecting 120 to 150 billion yen recurring annual benefit in FI 2027. We will continue to promote each of these initiatives and ensure cost management with disciplines. On page 8, I will explain core operating profit growth drivers in FI 2024. FY2024 core operating profit increased significantly, up by ¥115.5 billion year-on-year. This graph shows year-on-year comparison of main factors affecting core operating profit shown on the horizontal axis. Starting from the left, expansion of highly profitable strategic brands made a contribution to profit growth the most. Next. Expansion of U.S. extended sales, shown in a yellow bar, also contributed. Also, half of the U.S. sales is booked as co-promotion fee, so all the sales growth has not necessarily been directly linked to profit contribution. Next, a bar in blue shows cost reduction and growth investments. Part of the resources generated by SMT cost optimization were allocated to growth investments for strategic brands and primary focus. As others, there was some impact from U.S. mirror background generics. Cooperating profit in the end reached 394.2 billion yen. Cooperating profit margin went up by 3.3 percentage points to 20.5%. From here, I will give you FI2024 pipeline update. On page 10, I will explain May brand's key events achieved in FY2024. Updates since the last financial results announcement are shown in blue. For ISAVAY, we obtained a label update approval in the United States in February. Restriction on the duration of dosing was lifted, enabling dosing of ISAVAY beyond 12 months. Also in Japan, based on the results of overseas clinical studies, including other data, we filed a submission by using the conditional approval system. As other updates, for PADSEF, we presented EV302 study follow-up data in first-line metastatic urothelial cancer at ASCO-GU in February. The updated data is included on page 42 and 43 in the appendix. With regards to Vioza, for application of approval in China, we started phase 2 study to evaluate efficacy and safety with 45 mg, which is the same as the approved dose in the United States and Europe. We achieved first subject first treatment in February. In FY2054, we achieved label, indication, and geographic expansion for ISFA, PADSF, and Viroi, our important growth drivers, and were able to make substantial progress towards product value maximization. On page 11 and 12, I've explained the update for ASP3082 and 8845, which have made particular progress in the last three months among focus area approach programs. The current status of each of the other programs is summarized on page 34 in the appendix. First, I've explained the progress of ASP3082, the flagship program of primary focus targeted protein degradation. SP30A2 is a protein degrader targeting KRAS G12D mutant. KRAS G12D mutation is seen at a high rate in tumors such as PDAC, pancreatic ductal adenocarcinoma, NSCLC, non-small cell lung cancer, and CRC, colorectal cancer. As a recent major progress, we achieved POC in PDAC based on second- and third-line data from Phase I data. This is the first POC achieved from primary focus, and we are very pleased to have been able to achieve an extremely important milestone. Based on these results, discussion is ongoing on how to proceed from now towards early implementation of a registrational study in PDAC. We will let you know a specific plan once we make a decision. In Phase 1 study, assessment in other cohorts is also ongoing in parallel. In PDAC, we assess in combination with chemotherapy in the first-line settings as well. In NSCLC, assessment is ongoing in the second-line settings and beyond. POC judgment is anticipated for the first half of FI 2025. Also, in CRC, assessment is ongoing in the second-line settings and beyond. POC judgment is anticipated for the second half of FI 2025. As for additional data presentation, we are aiming for the second half of FI 2025 once we decide on the timing we will let you know. With the achievement of POC this time, we are increasingly confident not only about the probability of success of ASP3082 individually, but also about the potential of TPD, targeted protein degradation, as a platform. We are hoping that TPD will be an effective means to overcome limitations of traditional small molecules and address undruggable targets. Going forward, in addition to SB3082, we will further accelerate research and development of follow-on programs as well. PAM KRAS Degrader targeting various KRAS mutants is in the IND preparation stage. We are aiming to start a clinical study within FI 2025. Also, we are conducting research targeting non-KRAS undruggable cancer-related proteins as well. We will actively combine internal capabilities with external collaborations and also work on the creation of new generation of potential protein degraders. On page 12, I will explain AT845, a flagship program for primary focus genetic regulation. AT845 is a recombinant AAV8 designed to specifically and continuously express HGAA, human acid alpha glucosidase genes in muscle. It's under development for Pompe disease. Pompe disease is a rare disease caused by GAA gene mutation with progressive muscle weakness and respiratory failure as main symptoms. Currently, as a standard of care, ERT enzyme replacement therapy is being used to administer deficient GAA enzyme formulations. ERT has various challenges, such as the need for chronic repeated infusions once every two weeks, secondary disease progression after two to three years on ERT, and substantial economic burden associated with hospital visits and drug infusions. To address these challenges, gene therapy with AT845 is expected to offer long-term improvement of disease conditions with a single dosing. At present, Phase 1-2 Fortis study is ongoing. We presented follow-up data on six participants at a congress in February. Participants are patients with late-onset Pompe disease receiving treatment with ERT. They can choose to discontinue ERT after AT845 administration. 5 out of the 6 participants in the study assessment chose to discontinue ERT. As is shown in the right diagram, we confirmed that even after ERT discontinuation, physical function endpoints such as forced vital capacity and 6-minute walk test have been maintained over 1 to 3 years, approximately. In addition, RMAT, Regenerative Medicine Advanced Therapy designation was granted by FDA in February. FDA grants RMAT designation if a regenerative medicine product demonstrates with preliminary clinical evidence the possibility to be able to meet unmet medical needs in serious diseases. If designated, opportunities for priority review and accelerated approval will be offered. For this study completed, the enrollment of all participants towards POC judgment in the second half of 2025 we are making progress in line with our plan. From here, I will explain FI 2025 outlook.

Page 14. Before explaining the outlook of FY25, I would like to explain the new organization launched on April 1st. The new structure is not based on original function, but rather on a patient access that will allow us to move forward with end-to-end activities from the early research stages through to marketing and lifecycle management. These roles are served by value creation, value in capital, value delivery, and value enablement. Value creation integrates the divisions of research development and primary focus leads and plays a role as an innovation engine to create value for patients. Taniguchi, who is here today, will serve as the function of overseeing this as the Chief Research and Development Officer. Baidu Delivery integrates commercial and medical affairs divisions while maintaining the independence of each function and aims to deliver value to patients through industry-leading customer engagement. The Chief Commercial and Medical Affairs Officer, Klaus, who is here today, will oversee this. As value enablement, various specialized functions such as corporate and manufacturing will work closely with value creation and value delivery to support activities along the patient axis. NFY 25 under this structure will further strengthen our agile and cross-functional operations and quickly and efficiently promote projects, brands, and other assets. On page 15, I will explain the outlook for FY 2025. We expect continued strong momentum in our strategic brands from FY 2024, driving over revenue and profit growth. In addition, we expect multiple data readouts from studies for life cycle management. In the focus area approach, we expect further POC judgment following ASP 3082. We focused a revenue increase in FY 2025 due to the expansion of our strategic brands. Underlying growth excluding negative forex impact is expanded to be 7%. SG&A expenses are expected to improve by 1.0 percentage point as we continue cost optimization through SMT. For R&D expenses, the investment will be expanded and primarily focused with achieved POC. Core P is focused to increase. Underlying growth excluding Forex impact will be double-digit growth of 11%. As for shareholder return, we are focusing dividend per share of 78 yen and increase of 4 yen. In anticipation of future profit growth, we focus dividend increase of 4 yen just like previous year. On page 16, I explain our forecast for main brands for FY 2025. We expect continued robust growth in our strategic brands in FY 2025 and a forecast of all sales of 470 billion yen and increase of 133.6 billion yen or 40% year-on-year. In underlying growth excluding forex impact, sales will increase by 50% to the level close to 500 billion yen year-on-year. In particular, we expect the ISABE, POTSEF, and Availoy to drive growth, and the details of these three products are explained in the subsequent slides. Our focus for Part CEP for FY 2025 is 200 billion yen, an increase of 35.9 billion yen or 22% year-on-year, and we expect strong and continuous growth. As of today, it is focused at 105 billion yen, a significant increase of 46.7 billion yen or 80% year-on-year. Following the U.S. level update, there are signs of an upward trend, and we expect strong growth in the future. Vioza is expected to make a steady global growth with a forecast of 50 billion yen, an increase of 16.2 billion yen, or 48% a year. In the U.S. and other launched markets, we anticipate the number of launched countries will increase in establishing international markets, which are expected to make a sales contribution. Vilo is focusing significant sales growth of 40 billion yen a year, an increase of 27.8 billion yen. We expect expansion in the U.S. and Japan, as well as post-launch sales contribution in China. So SPDR is expected to grow to 75 billion yen, an increase of 7 billion yen or 10% year-on-year, and we anticipate stable and continued growth in existing indications. Future growth drivers include additional indications for newly diagnosed AML, acute myeloid leukemia, for which we expect to receive top-line results in the first half of FY2026 and expect sales contribution after approval. Finally, for Xtendi, our FY2025 focus is 868.5% decrease year-on-year. In the U.S., although the negative impact of the Medicare Party redesign is expected, our outlook is to partially be offset by the volume increase due to improved access through a reduced patient out-of-pocket payment, resulting in only a significant, a slight, rather, slight decrease on a dollar basis. On the other hand, we expect continued growth in markets outside the U.S., and this growth will offset the negative impact in the U.S. Thus, on an underlying basis, excluding the Forex impact, global sales will be at a similar level as in FY24. Page 17, Business Update and Outlook for Part 7 of ILOI. First, Part 7 is expected to reach the 200 billion yen. The first-line MUC continues to be the largest growth driver, with first-line approved countries expanding to 21 as of April. And we anticipate further approval and reimbursement progress in FY 2025. All regions will contribute to sales expansion, especially Japan, China, and the international market are expected to scale toward impactful sales level. For the U.S., the growth is expected to be moderate in FY 2025 compared to other regions, reflecting already high first-line market share close to 55%. Growth opportunities in FY2026 and beyond include an additional indication for MIBC muscle invasive bladder cancer. We expect the readout from the interim analysis by the end of this year, and if the results are favorable, we will proceed to NDA submission. Once approved, we expect that it will help APARSEP grow further. Next, by Loy. We expect significant sales growth with further growth in the U.S. and Japan and contributions of from the expansion of launch countries. Since its launch in Japan last June, the number of approved countries has expanded to 43, and 15 of which the product was already launched. The regional expansion has been extremely successful so far, and a further increase of launched countries will be expected in FY25. In China, which has a large gastric cancer market, a launch is anticipated in the first quarter and we are expecting post-launch sales contribution. We are working to increase the testing rate of gloating 18.2 globally to expand market share. And Biolo is expected to be a key growth driver for sales expansion with an expectation of its full-scale contribution to sales. Page 18, Eyes of a Business Update and Outlook. In dollar basis, representing underlying growth, the FY25 forecast is $750 million, an increase of 96% year-on-year, nearly doubling. In FY2024, there was a temporary demand slowdown from November of last year to February of this year due to the impact of the CRL or Complete Response Letter. But since much after the revision, the trend has returned upward. Azaveh is already widely adapted by retinal treatment setting, and it has established itself as the first line in newly diagnosed GA, geographic atrophy. And after temporary decline, a new patient shared to the low 50% range last December due to the CLL, but it recovered to about 60% in February. Currently, more than 2,000 retina counts have adopted the drug, and more than 50,000 patients have been treated with Azave since its launch. The post-marketing safety profile remains consistent with the clinical trial results and has been well-received by physicians. In addition, we are beginning to see signs of improved diagnosis and treatment rates as a result of our DTC efforts, and we expect further market expansion in FY 2025. Although FY 2025 has just begun, we believe we are off to a good start for strong future growth, as we saw signs of growth momentum in March as well as April. While last fiscal year was an upfront investment phase for future growth, we expect to move into a full-fledged profit-generating phase in FY25 through further sales growth as well as optimization of ISAV to achieve high profitability and appropriate expenses levels. We are currently planning an IR event focusing on the progress of the U.S. business and its future prospects and are considering holding it in the first half of the fiscal year. We will provide further details when they are finalized. On page 19, we use an image to explain the profit contribution of strategic products. or strategic compliance. The pink and gray bars represent the total sales and related expenses of the strategic compliance, respectively, while the lighter and darker bars represent COCS and SG&A, respectively. Sales are expected to grow significantly with the continued growth of BASF and Zospot, as well as the full-scale growth of Vioza and Isovay, launched in FY2023, and by Loi in FY24. As for expenses, while COCSIS is expected to increase in line with sales growth, SG&A is planned to be maintained at a certain level with the cost optimization through SMT. Profit contribution from strategic brands were limited in FY23, but full-scale profit contributions began in FY24. Rapid growth is expected in the future, and from FY25 onward, we expect the sales expansion of strategic products to directly contribute to profit growth. Page 20, key events expected in FY25 for strategic brands are described. For ISFA, we expect the Phase II study readout for Stuttgart disease in the second quarter. A MHW decision on the JNDA is expected in the third quarter. As of Part 7, the Phase II EV302 study targeting very solid tumors other than urothelial carcinoma, the readout of the first-line head and neck cancer cohort is expected to be available in the second quarter. We also expect to have interim analysis data from both the Phase III EV303 and EV304 studies in muscle-invasive bladder cancer in the second and third quarters. If the data favorable, we plan to proceed with the submission for an additional indication based on this result. In addition, data from the Phase 1 IV-104 study in NMRBC, normal cell-based bladder cancer, is expected in the third quarter. For viral data from the final analysis of the Phase 2 GLEAM study in pancreatic ductitis carcinoma is expected in the second quarter. In the fiscal 2025, we expect to see data from a number of clinical trials for expanded indications, which we hope will be successful and lead to accelerated growth of our key strategic brands. Page 21 is the future outlook for our forecast. area approach. As we have reported, we plan to make POC judgment in each of our primary focus flagship programs by the end of FY25. ASP3082 achieved POC decision in pancreatic duct adenocarcinoma at the end of FY2024. And then in 2025, we expect to make POC judgment in nosomal cell lung cancer in the first half of the year. NSERC in the second half of the year. Other programs remain unchanged from the plans for FAR. ASB 2138 is expected to achieve POC judgment in the first half of the fiscal year and 88405 and ASB 7317 in the second half. ASP7317 will make a presentation including early data from the ongoing Phase 1B trial at the Retina Therapeutics Innovation Summit in May. We will then move into the conversions phase depending on the results of the POC judgment. We'll prioritize allocation of management resources to the primary focus that have successfully achieved the POC, and we'll accelerate R&D for the flagship and follow-on programs to increase pipeline value. We expect the multiple programs generated from our focus area approach to progress and contribute to post-extended LOE sales and generate sustainable growth. Page 22 is our full-year focus for FY2025. Revenue projected to be 1,930 billion yen, an increase of 17.7 billion yen year-on-year. On top of the sales decline of Stadia and Manila background, Forex negative impact is expected, but thanks to the strong growth of the strategic brands, we expect revenue increase. Excluding the Forex impact, underlying sales are expected to be 2 trillion 36 billion yen 7% increase and continue to expand steadily. In the litigation over the formulation patent of Mirabegron in the U.S., we have recently received a ruling in favor of the validity of our patent. The lawsuit is still ongoing, but in light of the ruling, we have assumed that no other generic products will enter the market for a certain period of time. SG&A is expected to be 805 billion yen, a decrease of 38 billion yen year-on-year. Of this amount, co-promotion expenses for extended in the U.S. are expected to shrink in line with the decline of sales. Therefore, the impact on profit will be partially mitigated. SG&A excluding co-promotion fee is expected to be 576 billion yen, a decrease of 14.5 billion yen year-on-year. Cost optimization of about 20 billion yen is expected through SMT. Owned expenses are expected to be 342 billion yen, an increase of 14.3 billion yen a year. Investments will be focused on lifecycle management of strategic brands and primary focus achieved POC. As a result, we expect growth to be 410 billion yen, an increase of 17.6 billion yen a year, and a co-operating margin to be 21.2%. up 0.7 percentage points over the previous year. On an underlying basis, excluding the forex impact, the growth will be 435 billion yen, double-digit growth of 11%. In consideration of potential business risks, we have factored in the impact of US tariffs and others to a certain extent in COPY. The lower on the slide shows a full basis focused. OP is projected to be 160 billion yen, an increase of 119 billion yen a year. The main adjustment item excluded from the core basis is amortization of intangible assets, which is anticipated to be about 140 billion yen. In addition, we have factored in other expenses of about 110 billion yen. This includes impairment loss risk over 60 billion yen, which is the same level as in the previous year. Initial focus as well as expenses related to reorganization and forex losses. Page 3, today's summary. In FY2024, we achieved a record high revenue and a core peak. We expect further growth in FY2025 with double-digit profit growth in the underlying basis. Our strategic plans expanded strongly in FY2024. In FY25, we expect them to grow further and enter a full-scale profit contribution phase. In the primary focus, we achieved our first POC with ASP83082, a targeted protein degradation. In FY2025, we will accelerate the development of ASP3082 and subsequent programs. In addition, we will continuously judge POC in other primary focus. In SMT, based on the positive results achieved in FY2024, we will pursue further cost optimization. Continuing the momentum of FY2024 and FY25, we will aim to further increase the value of the pipeline, which will be the foundation for further profitable and sustainable growth. That's all from me. Thank you very much for your attention. Okamura-san, thank you very much.

That's all as for our presentation. We now would like to entertain questions from the audience. If you have a question, Please press the raise hand button at the bottom of your Zoom screen. If you're joining from a smartphone, please tap details, and then the raise hand button will be shown, so please press it. The moderator will name you one by one, so once your name is called, please unmute yourself on your screen, mention your name and affiliation, and then ask your question. Anyone with a question? Thank you very much. Thank you for waiting. First, Mr. Yamaguchi from Citigroup Securities please. Can you hear me? Yes, we can hear you. Thank you very much. Yamaguchi from Citigroup Securities. First, I have a question about your forecast. You factored in a certain level of risks with regards to tariffs. What kind of risks were included? How much? You incorporated the risks of tariffs. You were the first company to do so. You have Ireland and other specific situations. How did you think and how much was included in your forecast? What are you planning to do? Could you briefly explain? Thank you for your question. We incorporated these factors, but it's still very rough calculation results only. This is very uncertain and with lots of uncertainties. So how should I explain? Forecasting the actual impact is currently very difficult. We are not doing business just on our own. We have business partners with whom we collaborate, and we have to understand the potential impact. We have to discuss the necessary measures, and we'd like to implement those measures when necessary. How much, for what, is not going to be mentioned? We don't have a granularity of information we can share today based on our analysis. Next, about Isavay, your forecast for Isavay prescriptions. because of CRL kind of stopped, and then there is a growth trend after that. So you are assuming 80% growth. And some think that's achievable, others think it's not going to be achievable. The competitor may have a higher penetration rate by now. So based on your feelings, this is your company's forecast looking at the trends. Patients who were kind of away or coming back while they're waiting, you have again a growth trend. Could you please explain the current status in more detail? Thank you for your question. In 2024, in the first half, I should say, the market penetration started. There is a slope of growth. Unfortunately, temporarily because of CRL, It kind of stopped, or there was a slowdown to decline. But in February, we got the approval. And one month later, if you look at the data in March, there was a declining trend. And then there is a growth trend again, according to our judgment. So after April, it's going to continue the growth like the slope in the first half last year, according to our outlook. If you look at the size of the market, this is mentioned a lot. Some time ago, there was no treatment option for this disease. So patients are underdiagnosed. If there is no treatment, even if there is a diagnosis, nothing can be done. So diagnosis did not make a lot of progress before. retina specialists, patients who have already seen retina specialists, then the usage will be promoted rapidly, but if patients are seen by eye doctors in the community or patients who haven't seen even such doctors yet, how they would be referred to specialists is going to be a challenge. So we would use DTC to, and we are increasing, continuing the disease awareness campaign. And just accessing the retina specialist would not be enough. Patients may not be able to come to specialists, so our customer engagement have to be considered for the better. Sorry, I spoke too much. Klaus may have something to add. Klaus, please.

Yes, let me perhaps explain a little bit what we think happened during the CRL period. As you mentioned, our growth trajectory before the complete response letter was extremely strong. And we know we had 60% new patient capture at the time that the CRL was issued. Then the new patient capture was one factor that we started stagnating because that dropped. It never dropped below 50%, but it dropped from the 60% down probably to 52% of new patient capture. Now that we have the label as of February, it very quickly resumed. So we know we are now already at 59%, which is why we can say that we are the number one prescribed agent in the United States since Q2 of last year. So one factor clearly was the acquisition of new patients, which simply slowed down after the CRL was issued because doctors were just uncertain of the label that we were going to get. The second factor, and you alluded to that, was that patients who were on drugs Doctors did not know exactly what to do. Remember, we launched a year and a half ago, and we had a label initially for 12 months. That means doctors came to us with a question, what do I do with patients once they reach 12 months? Will the payer reimburse after 12 months if it's off-label? Now, in real life... We don't know of any case where payers refused payment, but it created uncertainty for doctors. So they started sort of postponing the injection. At first, it was just a delay. And then we saw some switches happening, but we also saw simply people waiting, just waiting until the label came. you know also that we resubmitted very quickly. And that, to some doctors, gave confidence back. So they were willing to wait with the injection until the label came through. And then some other doctors simply continued to inject. And as I said, the payers continue to pay. So you see different behaviors in subsegments of the market. But if you add all of that up, a little bit of patient, you know, a drop from 60 to 52% in new patient capture, a little bit of delay, a tiny amount of switching. If you add all of that up, that is what you see on this curve as a stagnating zigzag line. Now comes the good news. As of March, and I just checked the April numbers, month to date, we are seeing a very strong rebound. So patients are coming back, doctors are resuming the injection, and we are very much on the same tangent, if you want, as we were before the CRL. So If you want, the whole curve, we believe, has simply shifted out over time. We have, if you want, lost four months of growth rate where we had a flat curve. But we're now back on track. And we believe that ISRV will continue to be the market leader that it was before the CRL.

Thank you very much. That's all. Thank you. Next, JP Morgan Securities. Mr. Wakao, please. Wakao speaking. JP Morgan. Thank you very much. First, it's about the patience. It's not about the quantitative question. But you are trying to make the supply chain for the products and especially the positioning of Ireland. you export from Ireland to United States and the percentage of those products in the US sales and those produced in Ireland. Those are traded with the price near to the cost of the production. So just a little bit of the markup is added for the export or loyalty is also added on top of that. That's what I want to know. And also each company, especially looking at the Western companies, the increase of inventory is currently what other Western companies are doing. Do you do the same thing? And also, you do not have manufacturing sites in the United States. Is there any possibility that you are going to establish a manufacturing site in the United States?

Yes, good.

Thank you for your question.

First of all, unfortunately, supply chain per product in detail is not a disclose, so we'd like to refrain from answering that question today. I think I can say this. The iron factory we have right now is planned for small molecules. So what's coming out of the Irish plant is the compounds are based on the small molecule technology in principle. What's the relationship with the cost of goods sold and how this is traded in transactions? This is a corporate secret, so we cannot disclose. Where is the IP? Including IP, loyalty, do we need to discuss including IP? So what do you think? So where do we have the IP? The countries with IP and other countries and affiliates, what is the economic condition between them? That's very confidential information for us, so I cannot respond to that question. And you said that we don't have manufacturing sites in the United States, but for gene therapy and cell therapies, We have GMP manufacturing facility in the United States, in reality, and because of the current circumstances, building a factory in the United States, it takes time, many years to build a factory, and it takes further many years to transfer the technology, so it's not going to be a very effective method. If it's to a certain degree, CDMO in the United States could be utilized. According to some, that could be one possible option. But still, it's not an industry to transfer the technology very easily. Once it's clear that what is going to happen to be in time, touching on the supply chain is not going to be a realistic solution. So what about the inventory buildup right now? It depends on the situation, so it depends on the features of the product we take necessary measures. Understood. Thank you very much. My second question about the SP3082, you're able to achieve a POC, which is great. But what kind of data do you have? I don't know. To support your long-term growth, I think that's an important aspect. What kind of data have you achieved? Maybe, what about the data in APDAC, pancreatic ductal adenocarcinoma? You have competitive products. So you have been able to capture data which is competitive. Let me briefly explain. Then Taniguchi is going to take over. Of course, in order to judge POC, we have the criteria even before the start of the studies. In that criteria, for example, TPD specific MOA, in humans have been reproduced. We have such parameters and various tumor types and the treatment results. We have several parameters, not only the ones which are being used, but including the competitive products and the development. We set the criteria that we need this much, for example. Then we check against the actual results to judge POC. So it's not post hoc. Because of the data, we don't decide what to do after looking at the data, as you understand. Next, Taniguchi-san, please. Next, from me, ASP3082 in pancreatic adenocarcinoma, POC. Let me explain. As you know, in the pancreas, pancreatic cancer, second line and the third line are treatments. Only chemotherapy has been approved for the second and the third line settings. And efficacy said to be less than 10% for the second line therapy. So tumor shrinkage could not be seen with the third line treatment right now. So unmet medical needs are very high in this segment. We have been able to collect very good data here, so we can move on to the next phase. That's our decision. As you know, last year in autumn at ESMO, 3082 initial data was presented. So you can check that for your reference. Regarding the data presentation, It will depend on the future situations, but later this year, in the second half perhaps, at the Congress, we want the abstract to be accepted. Once there is a decision, we'd like to share that with you. Thank you very much.

Some are under the development, so my question is what I think about that. So you look at that, and you would consider further. That's my understanding. The last one, Mira Begram, the litigation of the patent. My understanding is that in September, the decision will be made. Is this understanding right? And if you win this litigation, then the patent will be till March of 2030. It's just understanding, right? Well, first of all, the status of the litigation, let me sort it out. First of all, our formulation patent is decided to be effective. And based upon the two generic manufacturers, joined the market then. But we complained about decision making to the appeal court, and this was returned to the first court and litigation. And then they came up with the decision that our patent is valid. And currently, there are two generic manufacturers And the products infringing our formulation patent or not, or the compound patent or not, that is a different decision and litigation. So 2026, this is going to be decided by the... So, there is no consideration and a decision is made about the infringement of the patent so far. So, at least we are saying that our formulation patent is viable without waiting for the decision about that with a risk other generic manufacturers might not getting into the market. I don't think that percentage is not that high. And the two companies, generally companies currently, ultimately, if they receive the decision that that is the violation of their patent, then they have to pay of the business, from the business that they've gained during, before that decision-making. So that possibility is not really high. So all in all, based upon those factors, we came up with this forecast. Now, Mr. Weda from Goldman Sachs Securities. Weda from Goldman Sachs Securities. First question is about the status of Xtendi. January to March volume and also the price trend. And for the plan, especially in the United States, what is the current precondition assumption? For the price perspective, Medicare redesign. that leads to the increase of the burden from the manufacturer that leads to the negative impact. That is within just the 20% range of the burden from the manufacturer or that is expanding outside of the Medicare or is there any increase of the volume? Would you please share with us your track record? and also the way of thinking. So that I do not speak something not necessary, I would like to ask Klaus to make an explanation about this.

Yes, thank you for the question. I just want to emphasize we've had an impressive year with Xtandi, both in the United States and outside of the United States, with double-digit growth in essentially every region. Now, in the United States, which is your question, Yes, we have had the growth to net impact from the IRA Medicare redesign as of January 1st, 2025. So that decreases essentially our net price. But with the volume increase of 27% last year, And that volume increase over 12 months versus a gross to net impact of only one quarter, that is really what you see as a net effect for Xtandi in the United States. Now the volume growth will continue, maybe not at the same rate, because the Embark data that we published now almost a year and a half ago, that's when we got the approval, that of course will not drive growth forever. but we do foresee significant growth in the mid-teen level on a volume basis in the United States, also in FY25. Did that answer your question? Thank you.

Thank you very much. I have a follow-up question. What was your assumption in the plan?

For FY24, let me just confirm what your question is.

FY25 plan and assumptions.

The assumption on a volume basis for FY25 in the United States is a growth in the mid-teen, so middle of the... Middle between 10 and 20, the mid-teen range of growth on a volume basis. Of course, we are now carrying the growth to net impact that started 1st of January over a 12-month period. So that impact we will not be able to dodge. So that's why you see growth. on a net basis in revenue, you will see a flat picture in the United States. And on top of that, you have an FX effect, because as you know, the dollar is weakening versus the yen, so that will have a slight decrease in yen basis from the United States in FY25. So those are the three factors. mid-teen volume growth in the united states growth to net impact that started first of january carrying all the way through the fiscal year and then the fx rate from from the dollar to the yen thank you very much secondly capital allocation

Your current way of thinking is my second question. As of now, the peak sales forecast of your strategic brands has been kept at the same level compared to a year ago. The need for business investments and for your budget, you haven't changed your way of thinking. And 4 yen dividend increase can continue into the future. There is a transfer... transparency in the business environment, any impact on your capital allocation policy? Thank you for your question. From me, I'd like to talk about the capital allocation policy. There is no basic change in our capital allocation policy. That's my comment. But from before, Our top priority is the growth of a business and then a return to shareholders. The cash flow and profit for the future must be considered. And in a sustainable fashion, we'd like to increase the dividend payment. So if there is excess cash, of course, as a means to return to shareholders, we would have a share buyback. So these are the three stages in our policy, and that has not changed by now. On the other hand, for strategic brands, we look at the growth of strategic brands. Should we have another business development project? Of course, we are always watching. In that sense, Iverick Bio was acquired in a sense for our strategic plans at the time, the potential of those. And in order for us to grow continuously and sustainably into the future, we needed firepower. In relation to that, we decided that we need to acquire Iverick Bio. There can be a similar decision into the future. But in reality, if you look at the actual balance sheet, there is a lot of debt At the time of the acquisition of Iverick Bio, we don't have a lot of capabilities to borrow so much, so it's difficult to think that there's going to be a very big deal in the near future, as you can tell. Kitamura-san, anything to add? Thank you very much. As Okamura mentioned, We think the most important thing is to have a sustainable growth. We would make growth investments. That's the top priority. After the acquisition of Iverick Bio, we have debt. So as a challenge, how to create a balance sheet to realize this, that's a very important point. Last year, or two years ago, at the end of FY2023, after the acquisition of ivericbio, interest baronets and EBITDA Gloster leverage ratio was 3.4 times, but at the end of last year, it was down to 2.2 times. We'd like to strengthen our balance sheet to decrease the leverage, which we should aim for when necessary. If there is a potential big deal, we should be ready. So first, we'd like to strengthen our balance sheet, which we focus on right now. That's all from me.

Understood. Thank you very much. That's all from me. Thank you. Thank you. Next. Morgan Stanley, MUFG Securities. Mr. Muraoka, please. Thank you. Muraoka from Morgan Stanley. Capital allocation that is raised by Wetasan, and this is a follow-up. Three months ago, at the time of third quarter announcement, they face a new drug acquiring is under your consideration. I believe you talked about that. Relating to that and also this capital allocation matter, I would like you to make explanation with incorporating those two factors together What kind of image do we need to, is it better for us to have as a size of what you are trying to do? Thank you very much. It seems to me that there is a misunderstanding here. So let me work on that first of all. At the third quarter, it was not me that I made a presentation. But at the time of the third quarter announcement, what we are thinking is now going to be explained with my words. So far... The new primary focus is made or existing primary focus is added with the technology and assets so that primary focus can be stronger. That kind of business development deals are relatively larger in terms of the numbers. But in the past, we have EOSA and Avilo. Those are relatively risked assets. But afterwards, if you look at our business development activities, relatively advanced technology assets and technologies are trying to be captured, and the size is not that big. And those are coming. with a couple of deals. And now we have four primary focuses, and the flagship comes to the timing of the clinical POC judgment. So it's not something that we are continuously expanding, but for primary focus, we try to converge that based upon the POC judgment. So suppose there is some deal of the business development, early stage, innovative, something advanced. Rather than that, the project that is de-risked to a certain extent, But of course, it's difficult to achieve the contribution next year, two years later. So probably the early of 2030s, something is likely to contribute to our profit. That's the things that we are trying to identify. That's what we wanted to say at the time of the third quarter. On the other hand, de-risked and late phase development, project and contributing to our growth then in that case that is likely to be quite expensive and that kind of asset is quite limited in number and if we want to do such a deal it's going to be quite a competitive situation so considering that just like Hitamura explained a little while ago we would like to prepare our stamina first of all and when as a such kind of deal becomes available so that we can compete with our competitors we would like to have a sufficient capability, so we like to focus on preparing for that. For example, next month there's a very good deal, promising a deal for us, but we cannot acquire that with getting the borrowings, and in that case we cannot go for that because of current our capability. We have to prepare ourselves so that we can acquire the ideal that we really want to do. That's something currently Kitamura is working for, for the preparation. So the policy was not early but the late phase. But considering the current financial capability, those on late phase and competitive and very expensive, can we try to acquire that tomorrow? In reality, we cannot do that. That is the current status. Thank you very much. Part of growth is stagnant, and you are going to selling that outside to make cash. I thought you were thinking about something greater like that, but it's not so. The deal, what we are saying, is not such a bold deal. The part of that is what we develop, and with our hands, we would like to continue to provide that product to the patient. That's our mission that we think. Thank you. That's all from me. Thank you very much, Mr. Madoka.

Next, Nomura Securities, Matsubara-san, please. Matsubara from Nomura Securities. Can you hear me? Yes. Thank you very much. First, I have a question about Isovei. GA area increase suppression is important by dosing, but in terms of the visual acuity, over time, it would worsen, so some patients may decide to postpone dosing. In order to expand the market for the patients in the latter case, how are you going to appeal to such patients? What's your strategy? Thank you for your question. The details will be explained by Taniguchi, but What I can explain from my side is as follows. Patients with GA would lose the visual acuity in the center. In the visual acuity exam, they would have a disease condition which is not very good for the visual acuity test. Without the progression of the onset, they should receive the treatment. That's the ideal state of eye survey treatment, in my view. To do so, As we mentioned in the Q&A, disease awareness is important. Even if they are in early stage, they should be seen by doctors, and the doctors should think there are signs of GA, so they should be seen by specialists. Such a route should be established. I think that's going to be important. More scientifically and clinically, Taniguchi is going to explain such aspects. Thank you very much. how much patient's visual acuity is worsening, how much they should continue the treatment when their visual acuity is worsening. As Okamura explained, Either way, its effectiveness and efficacy, if you look at the other two data, you can tell its efficacy. In principle, GA progression can be prevented or suppressed. In the longer term, progression can be stopped or suppressed, which is important in the longer term. The impact of the visual acuity hopefully can be seen, but unfortunately, The center of the field of vision is very difficult to measure right now, so that cannot be done. For patients, still, their central visual acuity would worsen over time, which is a very big problem in their daily life. So for the portion with GA, if that area's growth should be suppressed with treatment clinically, that's very meaningful to prevent the progression of the GA area. As far as I see the data, if they can continue the treatment, the longer the better. The speed of the progression of GA can be suppressed in the end. It's going to be the discussion and the decision to be made between the patient and their physicians. The longer the progression can be suppressed, the bigger clinical benefit. Understood. Thank you. Additionally, I have another question regarding the 60% from February as the new patient start share. The trend is expanding according to the response to the other question. Now in March or by now, the new patient start share is increasing further.

So as I said, our lowest point was 52%. Our latest data point is already back up at 59%. And we'll gather more data and confirm in the next quarter. But honestly, there's no reason to believe that we should not stay at that 60% level as we did before the QRL. I think the real question is, is not so much our market share because we're a market leader and we'll stay market leader in this market. The real question is how do we now expand this market and how do we invest in DTC and in the right educational activities to make patients aware and make doctors aware of the opportunity this agent delivers to slow the progression of geographic atrophy so expanding the market is our main focus at this point

Thank you very much.

Second, sorry if I missed information. That is VILOI PDAC, so 25-second quarter analysis, and after that result become available around what time point do you think you are going to do the NTA? Well, VILOI PDAC, In accordance with the protocol, the study is ongoing. In the second quarter, the final analysis readout is planned to be available. Needless to say, for this as well, it's an event-driven study, so there might be a bit of the delay or difference from the expected timeline and looking at the result, we make the decision for the NDA timing. If the result is positive in the case as well as possible, we would like to do the NDA submission as early as possible. And like the case of 3082, for the pancreatic cancer, the current treatment is limited. So Claudine 18.2 antibody and also combination with the chemotherapy, that is the study for the pancreatic cancer. And as soon as the result is available, we would like to go for The best case is that in the second quarter, if the result is favorable, if there's a possibility that you are going to do NDA within this fiscal year, the end of fiscal year. Yes, of course, we are aiming at that. Thank you. That's all from me. Thank you, Mr. Matsubara. Next. I still want to see Eberstein. Ms. Sogi, please. Thank you very much. First of all, the question is about the guidance for the next year. Other expenses. You incorporate certain numbers, and they're There is no ones for the impairment likely to be included. So there is expectation that the one-time expenses for the reorganization might be included. Is this understanding right? And if that is right for HR calls, the positive impact will continue in FY26 and afterwards. Is this way of the understanding is appropriate? That's the question. Thank you for the question. Are you talking about the 110 billion yen breakdown? Yes. And also the HR cost impact FY26 and afterwards. First of all, FY2024, we took the same approach. And within this 2025, this project is likely to fail. We never expect a failure. But we see that it's likely to fail and that impairment is included. It's not that way. But we look at the past trend. And also, current intangible asset absolute value is used as a factor for the conservation. We have this level of the buffer. and then further more of the impairment would not take place. So that's the 60 billion yen of the World Park figure that was included in FY24 as well. So 110 billion minus 60 billion, so 50 billion is others. And that breakdown is going to be explained by Kitamura. The breakdown of the remaining 50 billion, that is not disclosed, but just like you pointed out, there is a population changes. operation changes that leads to the organizational changes, and our asset increases its value, so fair trade value, and also the forex changes. There are the same type of decisions that happened in the past, so certain level of the estimate is included. And also, the bigger changes of the operation and the benefit of that, well, this is reflected into SMT as well. What we have done last year is something that is sort of like a low-hanging fruit, but what we are trying to do now requires a certain period of time because that includes a certain level of the big transformation. So benefit is likely to be next year and afterwards, just like you pointed out. Thank you. Another question is Gene Therapy 8845. Within the muscular cells, the genes there are going to be treated with this treatment. But generally speaking, when it comes to gene therapy, like the myocyte, that is abundant in number, but efficacy on that is very difficult from gene therapy. But with this 8454 Pompe disease, Yeah, trying to develop this product. Is there any different approach for this 80845 compared to the conventional gene therapy? For the muscle disease gene therapy, what kind of challenges are you thinking and how do you view about the development for this field? Thank you very much, Ms.

Sugi. For Pompe disease, AT845, any difference compared to other gene therapies? There isn't a big difference compared to others. But as you know, Pompe disease is a progressive disease. The physical function will decline, including the vital capacity and respiratory function. It's a very serious disease. And as we showed you data earlier, including forced vital capacity, a six-minute walking test, based on these endpoints, Patients with Pompe disease, most of them are receiving ERT enzyme replacement therapy. Even if they discontinue ERT, the efficacy of this compound can continue up to, according to the follow-up data, for up to three years. And this is going to be a big benefit for the patients. ERT requires infusions once every two weeks. Pompe disease patients have difficulty in their physical conditions, but they have to go to the hospitals once every two weeks, which is very difficult for them to do so. With gene therapy, just with a single dose, a single treatment, efficacy can be sustained. And as long as that's going to be demonstrated successfully, there's going to be a big benefit for the patients. We have previous data as well. PD marker and the increase in the GAA was also seen. The sample size is small, so we cannot say anything definitive yet, but if you look at the data as a whole, FDA granted us with RMART designation. with USFDA and the health authorities in the respective countries. We will consult with them to promote the development at the fastest possible pace. Understood. Thank you very much. I have another question to you. Listening to your explanation, gene therapies, just a single treatment is going to be enough to replace the mutated or deficient genes. After that treatment, ERT treatment would continue after gene therapy? Any such possibility to continue ERT after gene therapy? Regarding that question, we cannot rule out that possibility, but if you look at patients and their family members and patients' advocacy groups and also physicians, according to them, the biggest burden is the ERT. As for ERT, if you continue the treatment, sometimes it's difficult to enjoy the efficacy anymore. There can be a secondary disease progression. So there's going to be a burden for the patients, not just physical burden, but economic burden would also be seen. So ideally speaking, a single treatment with gene therapy can be administered, and then they can be freed from the burden of ERT. That is going to be the most ideal and would bring a big benefit for the patients and their family members. Understood. Thank you very much. Ms. Sogi, thank you very much. Next. Diabetes Securities, Mr. Hashiguchi, please. Thank you very much. First question is about strategic plans and contribution to profit on page 19. And I'd like to ask you a question for the future in FIA 2026 and beyond. This fiscal year, cost in yen will decrease a bit, excluding a forex impact. It's going to remain flat, according to my understanding. It may depend on the situation of sales and revenues, as is mentioned on page 20. How much you can expand the indications is going to be important. When we think of the opportunities to expand indications for the future, just increasing SG&A costs would not happen, in my view, for the future. SG&A costs would remain flat at most. Rather, you would like to reduce the cost to regain the profits, to harvest the profits, correct? Thank you for the question. Overall, yes, that's the overall image. Indication expansion, we are not going to very far away place. So we don't need to create the sales force in a completely different field. If you look at the situation as a whole, we don't spend too many costs, but it would contribute to sales and revenues and it would contribute to profit as well. We can simplify in that way. If you look at the individual aspect, if you invest more, there can be higher return. For some products and indications, yes. Among the products we are not developing, there can be such indications, or rather, regarding the indications you have or indications you may be able to get in the near future. Thank you for your question. What are the development or the current indications we have? If we invest more, We can deliver them to more patients. If any, we are already doing so, if there is such a product and indication. Having said so, we don't have resources without any limitations. If we allocate resources, where to allocate such resources, that's decided by Klaus. Return on investment should be the highest, and high medical needs. We try to allocate resources there to deliver value to the patients. That's my belief.

Thank you very much. Another question is about tariff. Supply chain details cannot be disclosed. I understand that. But in this performance forecast, how the tariff matter is incorporated or factored in, the monetary value of the tariff impacts are factored in. What's the level? What's the size? And currently, the reciprocal tariff that is hold at this moment alone is factored in. or the raw materials and other materials where the tariff is applied is taken into consideration, or pharmaceutical products or intermediates currently considered tariff? Do you have a certain level of assumptions, and that is already also included with this forecast? First of all, from overall perspective, it's not only tariff, but there are risks handed there. for example, foreign exchange, and also the pharmaceutical products-related tariff or the direct material-related tariffs. So there are certain risks. And monetarily value-wise, at this moment, we cannot disclose specifically, but a certain risk scenario is prepared so that we can decide the number. And there are two things we can tell you here. First of all, of our framework is decided and if that is needed to be reflected into the forecast in that case, of course, it will be done so and that will be communicated to you. And I think the second matter here is more important. For example, there are, in that sense, areas that we cannot control on our own. We do in a very appropriate manner in the areas that we can control. Then what can we do? Well, the how we can incorporate the benefit of the cost reduction. So 2025 forecast, SMT benefit and favorable effect of that is incorporated. And what we are considering currently is to make it earlier, to realize it earlier to a greater extent. And Klaus is now calculating the number of the cells, and try to achieve that. So we all try to do the preparation for that kind of scenario. So that is where we put our most effort currently. Thank you. SMT 20 billion, as you said. For this as well, if things go better, this can be also bigger. Well, SMT itself, this is not the single-year activities. We have the mid-term target for the actions, of course. If we can realize earlier, we will do it earlier. That's all depending on our ways of executions. Thank you very much. That's all. Thank you very much. It's time, but just one last question. UBS Securities, Mr. Sakai, please. Thank you very much. UBS Sakai speaking. March 28th. Pfizer, for the investors in the US, IRA party design presentation was done by Pfizer to investors, and there, was talked about saying that this impact is really large. And probably all our people have already seen that materials. And there, this year, 16% I don't know if that is a discount of the price, but the reduction impact is 16%. That's what they disclosed. And against that, your current U.S. sales base is larger for this fiscal year. I think Klaus mentioned 16% is a volume, 20% minus for the price or the monetary value. Why there is a disk gap? What made disk gap? That's the first question for me.

Let me clarify the three factors that I see for Xtendi in the U.S. If your volume grows in the mid-teens and you have a growth to net impact in about the same order of magnitude, you will stay largely flat. And that's what we expect for Xtendi in the U.S. in dollar basis. we expect the gross to net impact, which is negative, and the volume increase, which is positive, to more or less cancel each other out. Then you have the FX impact, as I explained before, from the dollar to the yen.

Yeah, but there shouldn't be no Forex impact. I'm talking about local currency in the US.

And then you have a flat curve. I'm sorry? you have a flat evolution in the US in dollar basis because you're growing double digit in volume and you're taking a double digit hit in gross to net and the two cancel out more or less, not 100%, but more or less. Extending in the US in US dollars is flat from 24 to 25.

That's what you have factored in your forecast this year in the US.

Correct.

Okay, that's fine, thank you.

One more question, sorry to run over. It's not related to the financial results. The structure has substantially changed this time. Research development primary focus is now under one organization. The management also changed hands accordingly. What's your objective? Any big change in the direction? Going forward, I'd like to hear from Okamura-san in your own words. Thank you very much. In CSP 2018, before CSP 2021, we defined the value. Asterisks would create the value and deliver the value we create. We said that we would work on this. It doesn't mean that we haven't done this before. access pharmaceutical companies should have for management. Initially, we talked about regions to manage. Then functional capabilities would be enhanced. We reinforced the functional access. What happened as a result? Between the functions, there was a silo. There should have been overlaps to work in a cross-functional team to make a decision together, but we couldn't overcome the barriers between the two different functions in the past. So this time, those who create value, the so-called innovation engine, According to the site, those who are in charge of value creation and the value being created would be delivered to customers and particularly patients. That's the customer engagement responsibility for other people. According to this rough classification, brands, technologies, and farmers' role. When you want to introduce yourself as a farmer, I am a brand manager in Japan in charge of a brand. Region, product, and function would be mentioned. So region was the first access, and then we switched to function access. And then from here on, brand technology and project would be the first management access as events so that we can be agile. And when we say event access, it's difficult to communicate the meanings. We are a pharma company, luckily, so this is what we call the patient access. So those who don't speak Japanese, we can talk about patient access in the same meaning. That's why we are calling this patient access. Going back to your question, as you know, before research, we had a chief scientific officer to look at research. After the clinical studies, a chief medical officer was to oversee that area. Primary focus lead is the chief strategy officer to be reporting to because of the strategy. And those who create and deliver a value, we separate the two. Those in research, those in development, and those who develop strategy for primary focus, it's better for them to belong to the same organization. Then we don't have unnecessary conflicts. Chief research and development officer. These are the functions under that officer, needless to say. The chief strategy officer would not go there. CXO looking at research, CXO looking at the situation after development, either of the two would be the chief research and development officers. So now we decided to give this responsibility to Taniguchi. So productivity-related benchmarks have been introduced. Is it directly linked to the reorganization? Setting that aside, in clinical studies, when we execute clinical studies, there are a variety of parameters. IND would be accepted, and then first subject dosing, time to first subject dosing, for example. And how many patients would be enrolled over how much period? We have a variety of parameters as the benchmark for the industry. So we refer to that to measure our performance. And if we cannot measure, we cannot improve. So using these KPIs to change to higher quality operations, we have been making efforts this way all throughout. Thank you very much. Thank you very much. Thank you.

Thank you very much. I'm sure that you still have questions. There are people who are waiting for asking questions, but it's time. So with this, we would like to close today's meeting. Everyone, thank you very much for your joining with us. Thank you.