Chugai Pharmaceutical

Thank you very much for coming over to conference on financial results for the second quarter for the year ending in December 2025. I will be leading today's session. I am Miyata from Corporate Communications Ayo Departments. So today we have the participants of the venue as well as on the Zoom. And today's agenda is shown on a screen at the venue as well as on page 3 of the presentation materials. and today's conference will be conducted in japanese but we are also providing english on zoom webinar as a simultaneous interpretation please select the language that you wish to listen to please click the interpretation mark at the bottom of the screen and select either japanese or english And then you can also mute the original audio to listen to the language that you've chosen only. And before each presentation, we'll have time for the screen capture. So please make use of the time. And we'll take your questions after all the presentations are completed. We plan on spending for about half an hour for Q&A session. So feel free to ask your questions. And during the presentation, your sound will be unmuted. So now we want to pass the floor over to Ms. Okuda to talk about overview of the second quarter results. So we'll stop the screen for a while, so please use this time for screen capture.

So now we would like to begin the presentation. I am Okuda, CEO of the company. I would like to explain about our financial result for the second quarter of 2025. Please take a look at page 5 of your handout. In the second quarter of 2025, domestic and overseas product sales increased, resulting in increased revenue and profit. Compared to the previous year, revenue increased by 4.6%, operating profit increased by 3.5%, and net income increased by 2.1%. Given the steady progress made in the first half of the year, we expect to achieve our full year forecast. I will explain the details of revenue on next slide. Compared to the same period last year, revenue increased by 25.6 billion yen, up by 4.6%. The breakdown is explained from left to right. Domestic sales were negatively impacted by NHI drug price revisions and the penetration of generics. However, sales of new products such as Fesco, Piascai, as well as mainstay product Babismo increased by 6.1 billion yen. Overseas sales increased by ¥19.7 billion, and increases due to export volume and exchange rate and so forth far outweighed the impact of a decrease in export prices. In particular, exports of Actimera to Roche increased significantly. Next, I would like to explain about R&D. This slide shows the status of important R&D milestone achievements this year for in-house developed products. First, regarding our goal for Lipron, our licensee Eva Liddy announced the success of a global phase 3 trial for type 2 diabetes in April this year and presented the result of that trial at the American Diabetes Association in June. As a result, we believe that the probability of success in development in diabetes and obesity has increased. We have confirmed the POC for NEXT-007. Based on this data, development is progressing with a decision to start a global phase 3 trial from 2026. In addition, new in-house projects, Mint91 and the Media Molecule Project OF00 have begun Phase 1 trials, as long-term management decisions aimed at accelerating early development in a flexible and strategic manner, we have decided to discontinue in-house development of five projects out of our in-house pipeline that are in early stage. I will explain this in more detail in the next slide.

Since the launch of TopEye 2030 in 2021, we have increased the new projects through the redshift. As a result, in the past four years, we have enriched our early-stage projects with nine projects of in-house discovered products entering clinical trials. On the other hand, some projects were taking time to develop, As a result of prioritizing our in-house pipeline products in the early development stage, based on the data obtained to date and the overall status of our portfolio, we have decided to suspend in-house development of five projects, Luna18, Sail66, Soft10, SDA551, and AIME109. This decision will enable us to focus resources on much higher priority projects, increasing the likelihood of achieving the goals set in TOP-I 2030. Let me now cover LUNA18 and the mid-size molecule project. and confirmed oral absorbability, an important concept for the midsize molecule platform. Furthermore, the biomarker analysis of tumor issue and adverse event profile suggested that LUNA18 was delivered to cells. On the other hand, concerns have risen that the pan-RAS GDP inhibitor LUNA18 does not have a sufficient therapeutic window in clinical trials compared to competing products. According to the data accumulated from clinical trials of this agent and the promising clinical trial results of competitors' PAN-RAS GDP inhibitors, we have decided to shift our focus to the development of OBE-00, a KRAS-selective inhibitor that is likely to demonstrate a competitive advantage over LUNA-18. OBE00 is targeting solid tumors, and Phase 1 trials began in June. So, Kusano will provide more details later. In addition to OB00, progress is being made with the mid-size molecule portfolio as a whole, including a new project moving into the preclinical development stage for non-cancer indication targeting acute heart failure. In order to meet unmet medical needs, we will continue to focus on the development of media molecule drugs, which is the third modality. Finally, I would like to touch on our new investments. In order to strengthen our pharmaceutical manufacturing process development functions that apply Chugai's proprietary technologies, we have decided to build a new research building, UKX, at the Ukima site. The total investment amount is 80 billion yen. will introduce environmentally friendly equipment, such as equipment to reduce fluorocarbons and CO2 emissions. In order to advance the promising drug candidate substances continuously produced from drug discovery research to clinical development, it is essential to quickly establish a manufacturing method for them as pharmaceuticals. So we are confident that the construction of this new research building would further strengthen the foundation for doubling r d output which is the goal of top by 2030. this is a summary of what of my explanation and this is all for me next i would like to invite xano to explain about the status of the development pipeline