Astellas Pharma Inc

FY2025 First Quarter Financial Results Announcement Meeting organized by ASTEDASH Pharma Inc. I have a very busy schedule today. I'm serving as a facilitator today. I'm Chief Communications and IR Officer. Ikeda, thank you for your time. After our presentation, we will move on to the Q&A session. We will present based on the presentation material posted on the website under IR Meetings. Including Q&A session, we have simultaneous translation between Japanese and English. We cannot guarantee the accuracy of simultaneous translation. Thank you for understanding. You can choose the language from the Zoom webinar screen menu. If you select the original sound, you can listen to the original sound without going through the simultaneous translation. This is a disclaimer today. This material, oral presentation by representatives for the company and answers and statements by representatives for the company in the current 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 former protocols including compliance under development, but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations, promote unapproved uses in any fashion, nor provide medical advice of any kind to its participants. CFO Atsushi Kitamura CRO Tadaoki Tanibuchi Chief Commercial and Medical Affairs Officer Klaus Zieder We have three members from our company. So we'd like to go into a presentation. Kitamura-san, please. Hello, everyone. I'm Atsushi Kitamura from Estella Pharma, Inc. Thank you very much for joining our FY2025 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'm not going to read this page. On page 3, I will give you highlights of FI 2025 first quarter financial results. FI 2025 first quarter made an exceptional progress, outperforming expectations off to a good start. In the first quarter, revenue increased substantially year on year, with underlying growth of 10%, excluding forex impact. Strategic brands significantly drove overall revenue growth, with underlying growth of 57%, excluding forex impact. As for SG&A expenses, thanks to the steady progress of SMT, Sustainable Margin Transformation, our company-wide cost optimization initiative, SG&A ratio improved by 4.2 percentage points year-on-year. As a result, Core operating profit increased substantially year-on-year, with underlying growth rate of 69%, excluding forex impact. Core operating profit margin rose by 9.5% year-on-year to reach 28.1%. As for pipeline progress, ASP3082, a flagship program in primary focused targeted protein degradation, achieved POC, also in NSCOC, following POC in pancreatic duct adenocarcinoma, PDAC. Furthermore, in order to enhance leading position in holding 18.2, we concluded an exclusive license agreement with Everpoint. Page 4 is the agenda for today. From the next page, I will explain these topics. On page 5, I will give you an overview of FY2025 first quarter financial results. Revenue reached $5. 105.8 billion yen, up by 6.9% year-on-year. Core operating profit rose to 142.3 billion yen, up by 61.1% year-on-year. The Forex impact is shown on the right-hand side of the table. Forex had a negative impact on both revenue and core operating profit. Underlying growth rate excluding this impact was 10% for revenue, and 69% for core operating profit, demonstrating a stronger growth. 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. In response to determination of certain Zyforce-related programs, we reviewed asset value and booked impairment loss of 11.5 billion yen accordingly. In the end, operating profit was 94.6 billion yen, up by 86.8% year-on-year. Profit increased to 68.4 billion yen, up by 82% year-on-year. On page 6, I will explain FI 2025 first quarter results of our main products. Sales of strategic brands driving our growth, namely... Patsev, Aizadei, Dioza, Filoi, and Zospata exceeded 110 billion yen in just three months, substantially up by 36.7 billion yen, or 49% year-on-year. Underlying growth rate excluding Forbes Impact was 57%, showing a strong growth. Due to high profitability of these brands, They not just contributed to revenues, but also made a great contribution to profit growth on a consolidated basis as a whole. We are expecting this positive growth momentum to continue throughout FY2025. Let me also explain individual strategic plans. I will explain the details of Paxes, Isavay and Viroi on later slides. Global sales for PatServe increased to 55.5 billion yen, up by 17.1 billion yen, or 45% year-on-year. Robust growth momentum was achieved across all regions, with overall progress in line with expectations. As for Isovay, sales were 15.9 billion yen, up by 3.2 billion yen, or 25% year-on-year, achieving record high quarterly sales. Isovay has returned to growth trajectory after temporary growth slowdown in the second half of last fiscal year. Global sales of Vioza expanded in line with expectations to reach 9.6 billion yen up by 3 billion yen or 46% year-on-year. We are expecting steady growth moving forward as well. With regards to Viroi, global sales reached 14 billion yen. It has made an exceptional start exceeding expectations raising prospects for potential upside. Regarding Zostrata, global sales reached 17 billion yen, underlying growth excluding forex impact was 3%, making steady progress overall. As for Xtendi, global sales increased to 233 billion yen, up by 8.7 billion yen, or 4% year-on-year, with solid performance across all regions. With regards to ISAVEI, We organized an online meeting for investors and analysts on the 10th of July, Japan time. But I'd like to explain Isavay's first quarter progress in the United States once again on page 7. Sales of Isavay rose to $110 million, up by $29 million, or 35% year-on-year. After a temporary growth slowdown, As seen in the second half of the previous fiscal year, first quarter sales increased by 22% from the previous quarter with a return to growth trajectory. Isavay has continued to establish its position as the number one chosen treatment for new patient starts with GA, geographic atrophy. New patient start share is estimated at about 55% as the last six months average. This figure is calculated based on the insurance claims data, which represents Patients actually administered with Isavay, so we believe this reflects the real situation. Isavay is now available in over 2,000 retina accounts. Over 70,000 patients have been treated since launch. As we explained during the online meeting, in order to unlock GA market potential, we are promoting three drivers, educate retina specialists, educate patients, and educate upstream optometrists and ophthalmologists. Through these initiatives, we will further enhance GA diagnosis and treatment rates. We have been able to confirm that the solid growth trend is continuing also in July. We are expecting continued high growth in each quarter ahead. Also, a treated target patient population is expected to rise from the current 15% to over 35% by FY2029. On page 8, I will explain business update for Platyceps and Viral. First, about Platyceps. First-line metastatic urothelial cancer, MUC, is driving growth across all regions, and robust growth momentum has continued since last fiscal year. Particularly in ex-US region, first-line MUC uptake is progressing well. Sales rose substantially by 113% year-on-year. Also in the United States, underlying demand increased solidly by 12% year-on-year and by 7% quarter-on-quarter. The NCCN guidelines, which many physicians are referring to when they determine their prescription, were updated in March this year to position the combination therapy of POTSYS and Pembrolizumab as the only Category 1 therapy in MRUC as the first line therapy with the highest recommendation level which is also supporting the solid growth. First quarter sales include one-time inventory channel load benefit in the United States and China, both of which are in line with our plan. We are maintaining strong underlying growth, even excluding this impact. Overall, we are making progress as expected. Next, about siloing. Overall, we have made an exceptional start exceeding our expectations, raising prospects for outperforming the initial forecast. Thanks to our activities to proactively raise awareness and disseminate Clodium-18 testing, the testing rates are above benchmark for other biomarker tests. In addition, through appropriate information provision about potential AE management, discontinuation rate is also lower than our assumptions. These factors are contributing to the overall positive progress. We are also continuing to expand footprint steadily with launches in 25 countries by now. Particularly among them, Vital was launched in June in China with a big gastric cancer market. China launch was off to a strong uptake reflecting high armament medical use there. Aiming to ensure stable sufficient supply, we made strategic inventory build in the first quarter. Byboy is still in its initial stage after launch, but its progress to date is substantially exceeding our assumptions. We have high expectations for its further growth potential in the future. On page 9, I will explain cost items. Overall progress in costs as a whole was on track. Cost optimization through SMT has made steady progress. We realized cost optimization of about in total for SDNA expenses and R&D expenditure combined. Excluding U.S. extended co-promotion fees, SDNA expenses decreased by 7.7% year-on-year. Excluding Forex impact, SDNA cost fell by 2.6% from the previous year. SDNA ratio was 26.5%, improving by 4.2 percentage points year-on-year. As SMT progressed, we realized cost optimization of about 3 billion yen through continuous global organizational restructuring, reduction of mature products-related expenses and streamlining IT infrastructure, etc. In addition to investments to maximize the potential of strategic brands, we will continue to make investments needed for SMT execution in order to realize further cost optimization. On the expenditure decrease by 17.4% year-on-year, excluding Forex Impact, it was down by 13.2%. As a main factor behind, we made progress in outsourcing cost reduction through insourcing development capabilities including clinical trials, etc. under SMT, which led to cost of optimization of about 3 billion yen. Furthermore, due to the completion of large clinical studies, clinical development costs for strategic brands decreased by about 3 billion yen. In addition, runtime co-development cost payment booked in the first quarter of FIA 2024 was another factor for cost decrease year on year. In the second quarter onwards, we will expand the investments aligned with further expected primary focus PLC achievements From here, I will explain our pipeline progress. On page 11, I will explain the progress of strategic plans key events expected in FI 2025. Updates since the last financial results announcement are shown in blue. Regarding ISABAY, we had Phase 2 study top-line results data readout in Stargardt disease, where primary endpoint was not met. We will analyze the data in detail and determine our future direction. As for PADSIF, We comprehensively reviewed the data obtained so far from Phase II EV202 study in head and neck cancer and other solid tumors except for urothelial cancer, Phase I EV104 study in MIBC, non-muscle invasive bladder cancer. As a result, we decided to terminate our development for additional indications.

Please note that the current peak sales forecast for Isovay and PatSeptino include contributions from these indications. Therefore, we would like to emphasize that the results of this study are not expected to have an impact on the made-to-long-term sales outlook for other products. As future events, Isovay is awaiting regulatory decisions on its JNDA expected in the third quarter of 2023. Pat Staff is expected to have a readout of the internal analysis for both the Phase III EB303 and EB304 trials targeting MRBC in the second to fourth quarters. Pilar is expected to have a readout of the final analysis from the Phase II GLEAM trial for pancreatic ductal adenocarcinoma, or PDAC, in the second quarter. or notify you of any future updates when necessary. Other updates include the initiation of the Phase III Lysana study, rather, evaluating the efficacy and safety of viral in combination with pembrolizumab and chemotherapy were the first subjects to be ensured. PACE-12 provides an update on progress in the focus area approach. For each primary focus, progress made since the previous financial results announcement is highlighted in blue. ASP3082 in targeted protein degradation has achieved a proof of concept in non-small cell lung cancer. This marks the second PACE achievement following the PDAC. The next slide will provide an overview of the overall progress of the primary focus. As for ASP2138 in cancer immunotherapy, pre-spun trials for the post-judgment in FY25 is ongoing, with initial clinical data expected to be presented at ASMO in October. ASP7317 for blind dancing and erasure has published initial clinical data in May. Further details will be provided later. The current status of other programs is summarized in slide 28 of the Authentics. Page 13 provides an overview of progress in primary focus of targeted protein degradation. The flagship program, SB3082, has successfully achieved its second POC based on data from a first-line trial in non-small cell lung cancer second line and after. In conjunction with PDAC, discussions are ongoing toward early registration studies. The timeline for POC judgment for colorectal cancer remains unchanged with the second half of the FY25 targeted. We aim to present clinical trial data by the second half of the FY25. Following the POC judgment of ASP3802, We are actively advancing research and development of subsequent programs. SB5A34, the satellite from the top, was developed as a pan-K-RAS degrade targeting various K-RAS variants. In July, we obtained INT approval, enabling us to begin trials, aiming the first patient dose in the second quarter. We will provide further updates as they become available, including other programs. Page 14 describes the progress of ASB7317. ASB7317 is being developed as a replacement therapy for retinal epithelial pigment cells targeting the same indication as isobate GA secondary to AMD. The estimated number of GA patients worldwide is reported to be about 5 million. Currently, approved drugs are limited to complement inhibitors, and slowing disease progression of GA has been reported. ASP7317 is a direct replacement of retina, psoriasis, and pigment cells to damaged areas from outside of the body, potentially maintaining or restoring visual function. Currently, a phase 1B clinical trial for patients with GA patient is underway. and the initial data from this trial was presented at the Congress in May. Regarding safety to date, no intraocular inflammation has been reported in patients dosed with ASG7317, and no signs of cell rejection or graft failure have been observed. Regarding efficacy, The graph on the right shows the change in best corrected visual acuity with CVA over time in patients with a severe visual impairment following single dose of ASP7317 at an intermediate dose. Red indicates the steady eye, the eye that received the transplantation, and blue indicates the hollow eye, the other eye that did not receive the drug. During the 26-week observation period, study I showed a trend toward improved BCVA compared to the fellow I. Although the current data is limited to only three cases, we are proceeding with the planned enrollment of additional cases and remain on track to judge a POC in the second half of FY25. Page 15. is explaining the exclusive license agreement with EvoPoint, which we announced in a press release in May. Under this agreement, Acelis has obtained an exclusive license for the development and commercialization of XMW27011 worldwide, excluding mainland China, Hong Kong, Macau, and Taiwan. Note that our service has assigned the development compound number ASB546C to this asset, and this number will be used in future descriptions. The upfront payment under disagreement is $130 million, and the development milestones to be paid in the near term may be up to $70 million. Depending on the progress of the program, there may be additional milestone payments or royalties. ASD-5460 is an antibody drug conjugate, or ADC-targeting, of Clotin-18.2. The payload is a proprietary topoisomerase-1 inhibitor with an average drug-to-antibody ratio of 8. The linker that connects antibodies and drugs is Medlink's proprietary technology and is designed to be specifically clipped within tumor tissue. The FDA has granted fast-track destination for gastric cancer, and a phase 3 trial has recently commenced in China under the leadership of EverPoint. Astellas is currently planning to initiate a global phase 1B2 clinical trial. The figure on the right shows preliminary efficacy data from a phase 1B2 trial currently underway in China in patients with gastrointestinal GEJ adenocarcinoma. In this study, cases where 5% or more of tumor cells stained by immunohistochemistry were classified as clotin 18.2 positive. Compared to the reference value of 75% for biloy, patients with lower expression levels are also included for this study. As shown in the table, Doses exceeding 3 mg per kilo response rates exceeding 60% and disease control rates approaching 90% were observed. As shown in the figure, tumor regression was observed in most patients. The common treatment-related device events were hematologic and gastrointestinal disorders. Astellas has established a leading position, including 18.2 targeted therapy with VALOI and ASP2138. Through this collaboration, we have acquired a promising asset that further enhances this position. Going forward, we will validate the efficacy of ASP5460 in global clinical trials. Page 16. will explain the characteristics of each asset targeting gloating 18.2, including ASP546C, which was explained earlier. Finally, it is a monoclonal antibody that binds to gloating 18.2 on the surface of cancer cells, exerting an antitumor effect by activating immune cells that attack cancer. Clinical trials have demonstrated prolonged survival when used in combination with chemotherapy. For VILOI, as a first-in-class drug, activities promoting awareness over Clotin-18 testing have been executed, and it is aimed to become the standard of care for Clotin-18.2 positive gastric cancer. However, treatment is currently limited to patients with high expression, accounting for approximately 40% of gastric cancer patients. ASP213A is a bispecific antibody that binds to clothing 18.2 and CD3 on the surface of T-cells, and like by alloy, its antitumor affects and depends on the immune cells. By binding to CD3, it is expected to enhance the immune response by bringing T-cells and the clothing 18.2 expressing cancer cells into close proximity. Listen to symbol A. As high efficacy is demonstrated in the future clinical trials, it may be possible to expand the target population to include all clothing 18.2 positive patients, including those with low expression. Additionally, subcutaneous administration is currently being evaluated in clinical trials, and I think its usefulness is confirmed. It could provide more convenience for patients and healthcare institutions compared to IVs. SB546C is an ADC that exerts its antitumor effects through the direct action of the payload it carries. As shown in the previous slide, preliminary clinical data indicates a promising antitumor activity as a monotherapy. If further clinical trials are conducted globally and favorable data are obtained, we anticipate that a chemo-free arrangement may become possible. Furthermore, preliminary clinical data suggests that clothing 18.2% patients, including those with low expression, may be eligible for this treatment. We also believe there is potential to expand the indication to other tumor types beyond gastric and pancreatic, but that's all. That implies no more. As a front-runner in COVID-19 18.2 targeted therapy, we aim to maximize the value of VILO, and through advancing the involvement of ASP213A and ASP546C, we aim to provide multiple treatment options for a broader patient population. Page 17 summary of today's presentation. The first quarter of fiscal 2015 showed exceptional progress outperforming our expectations. We expect the positive momentum to continue throughout FY25. We expect our key strategic products to have continued strong momentum to drive overall revenue and profit growth. For the focus area approach, we will advance further POC judgment and flagship programs. We will accelerate research and development of primary focus, including follow-up programs in alignment with POC achievements. As for SMT, we will continue to pursue further cost optimization to generate growth investment and improve profit margin. Through these initiatives, we aim to achieve further profit growth throughout FY25 and enhance the value of our pipeline serving as a foundation for sustainable growth. While we have not revised our full-year focus in this earnings report, we plan to review our full-year focus in the second quarter earnings report, taking into account the strong performance through the first quarter and the progress for the future. That's all from me. Thank you very much for your attention.

That's all of our presentation today. We now would like to entertain questions from the audience. If you have a question... please press the raise hand button you can find at the bottom of the Zoom screen. If you're joining from your smartphone, if you tap details, raise hand function would be shown, so please press that. I'm going to name you one by one, so if your name, please unmute yourself on your screen, mention your name and your affiliation, and then ask your questions. Anyone with a question? Thank you for waiting. First, Mr. Yamaguchi from Citigroup Securities, please. Mr. Yamaguchi from Citigroup Securities. Can you hear me? No, we can hear you. Sorry. I'm Yamaguchi from Citigroup Securities. I have a few questions. Mr. Kitamura, you had a summary at the beginning and at the end. Q1 progressed very well. As for the cost, you said the cost was in line with the expectation. As for revenue, it was also in line with the expectations. There is some inventory available for some areas. Even excluding those factors, Q1 progress was very good as it seems. Is my understanding correct? Excluding special factors, is that in line with your assumptions or not? And you also talked about Q2. Could you explain once again? Thank you very much. First of all, first quarter was very strong. At the same time, overall, this was in line with expectations, but there are areas which is better than expected. Virally global performance, the speed of uptake externally was also very strong in its growth. On the cost side, in reality, SMT worked on certain measures, and we are harvesting its effectiveness ahead of the original schedule. So compared to our original forecast, this is working positively, better than expected, according to analysis. Thank you very much. As for extended, Medicare policy change could be affecting the product and since Q4, there was numerical guidance including such impact is still growing. The actual volume and the impact compared to the previous forecast, you are progressing well. So including the change of the policy is very important in this progress. First, I'd like to briefly give you a whole picture of Xtendi, and if there's anything additional, perhaps could mention. Xtendi is performing well, not just in the United States with medical party impact, but also globally as well. Our business is expanding with Xtendi, so that's the basis. Of course, in the United States, Medicare party impact exists. What's going to happen to the price is one question, but patient affordability issue, demand is very robust. In combination of these factors, we are maintaining the good performance.