Chugai Pharmaceutical

President and CEO, I will provide a summary of our 2025 performance and the outlook for 2026. Please refer to slide five. Regarding our full year results for 2025, revenues, operating profit, and net income all reached record highs on a core basis. Revenue reached 1,257.9 billion yen, exceeding our initial forecast by 5.7%. This was primarily driven by higher-than-expected exports of Actimura and Libra to Roche. Operating profits surpassed the 600 billion yen mark for the first time, representing our ninth consecutive year of profit growth. Operating profit margin also hit a record high of 49.5%. Moving to our 2026 earnings forecast, we anticipate another year of record-breaking results. We are projecting a revenue of ¥1,345,000,000 up 6.9% year-on-year and operating profit of ¥670,000,000 up 7.5% year-on-year. Fueled by growth in domestic product sales, royalty income, and other revenue streams. At the same time, we expect to maintain a high operating profit margin. The next slide illustrates our revenue trends. We expect revenue to increase by 87.1 billion yen or 6.9% compared to 2025. Domestic product sales are projected to raise by 25.6 billion yen, as steady growth of new and mainstay products outweighs the negative impacts of NHI price revision and generic competition. Overseas product sales are expected to remain flat year on year, while Nemluvio and Hemlibra will continue to grow. These gains will be offset by lower export unit prices and a decline in Actemra sales due to biosimilar entry. In contrast, other revenues are set to increase significantly, driven by higher royalty and profit share income from Namluvio and O4 Glupron and Hemlibra, alongside an increase in milestone payments. Next is page 8. I will discuss our dividend policy. Reflecting our strong 2025 performance, we plan a year-end dividend of 147 yen per share. This includes an ordinary dividend of 72 yen, up 22 yen from our initial forecast, and a 100th anniversary commemorative dividend of 75 yen. Combined with the interim dividend of 125 yen, the total annual dividend will be 272 yen per share. For 2026, consistent with our policy of targeting an average dividend payout ratio of 45% based on core EPS, we plan to increase the ordinary dividend by 10 yen from 2025, bringing the forecast annual dividend to 132 yen per share. Page 9. Moving on, I would like to review our 2025 management policies and priority items. Under strengthening red functions and value creation, we successfully confirmed the proof of concept for Next 007. Furthermore, we accelerated our focus strategy by deciding to collectively discontinue five in-house development projects and making go-no-go decisions on six others. Open innovation also progressed steadily, as evidenced by the conclusion of 12 new research and technical collaborations. We've seen a maximizing value of lifecycle management projects. Despite the delay in VDIS launch, we achieved several key milestones. This includes the successful Phase III results and subsequent filings for Oswald-Gluperon, and continued growth of domestic mainstay and new products and strategic in-licensing of Spar Centan from a third party. Regarding strengthening the foundation, while we face some challenges in meeting our 2030 midterm environmental goals, overall progress was smooth. Key highlights include the rollout of our new HR system and the launch of a company-wide initiative to accelerate business transformation using AI. This slide details the progress of our R&D project in early in-house development, Mint 91, and the midsize molecule of 001 transition to Phase 1, while GIN 329 for obesity moved into Phase 2. Late-stage development also saw significant progress for products expected to drive future domestic growth, including the addition of , the transition of to history, and positive trial data for . Additionally, we have successfully obtained regulatory approval for . As our project portfolio expanded through the redshift, we prioritized the selection and concentration of early-stage projects through collective discontinuations and rigorous go-no-go assistance. Consequently, the number of Phase I projects was reduced from 21 at the end of 2024 to 15, allowing us to focus our resources on high-priority candidates. With nine projects in Phase II and 28 in Phase III, we continue to maintain a robust and healthy pipeline. Three projects are currently under regulatory review with approvals expected within this year.

Next, page 11. We're going to review priority items for structuring the Hemophilia franchise development of Hemolibra autoinjector progress, and we confirmed proof of concept for next 007. We confirmed biological proof of concept and are steadily progressing toward initiating Phase II studies. Regarding RedVidis, two of our first gene therapy products, following a fatal case of acute liver failure in an overseas non-ambulatory patient, we strengthened safety measures while maintaining close coordination with relevant authorities. We aim for a prompt launch following Reimbursement approval for ambulatory patients aged 3 to 7 years. Regarding the new HR system launched last January, over 20% of all employees volunteered and proportion of job postings in annual personnel transfers exceeded initial target, reaching over 60%. We'll continue to promote employee autonomy in career development. Page 12. We will explain progress in the first five years of our 10-year top I-2030 plan regarding the first pillar, realizing global first-class drug discovery, drug discovery projects, and mid-size molecule pharmaceuticals made steady progress. We also accelerated external partnerships and investments to drive further innovation, including CDF investments and introduction of For the second pillar, building futuristic business model, we reorganized the value delivery functions of sales, medical, and safety. On the production front, we successfully supplied products to meet rapid demand fluctuations and established our own production infrastructure for the future. Simultaneously, we advanced company-wide DX, including projects for the launch of Aspire. Based on the progress over the past five years, we defined five targets for the latter half of 2030 to achieve annual launches of Chugai originated global products. We will enhance early stage development capabilities, including pharmaceuticals, while collaborating with partnering functions in Japan, U.S., Europe, and Singapore to pursue further drug discovery innovation. In production, we'll establish a stable supply system considering geopolitical risks to prepare for increased supply responsibilities accompanying the growth of in-house global products. Furthermore, in the newly entered CVM field and metabolism field, we will build systems and capabilities to enable advanced development. project management, safety, medical affairs, and sales activities that respond to the distinct characteristics of this field and changes in the external environment, thereby maximizing the value delivered to patients. To achieve these goals, we will advance the utilization of AI across the entire body chain and derive business transformation. We present the management policies and priority items for 2026, the first year of the LANA five-year period. The management policies are enhancing RET functions and creative value, maximizing value of LCM projects, and strengthening business foundations. The priority items are shown on the right. There are four of them. We'll continue to strengthen our hemophilia franchise by advancing development toward application for the Hemlibra autoinjector any initiating phase-through studies for NEXT-707. We also anticipate the highest number of domestic applications to date. These initiatives are expected to drive short- to medium-term growth in domestic sales. In particular, for Nunsunio, one of the products expected to achieve large-scale growth, we aim for early market penetration and combination therapy with Poli-B. We also ensure the successful launch of our new ERP system, Aspire, and promote the company-wide utilization of AI. Now, looking at the average annual trend in the number of Chugai-originated global products launched since 2001, the number has steadily increased in the past. Particularly over the last five years, the number of launches of in-house global products has increased, and these products will drive profit growth in the short to medium term. Furthermore, we anticipate that achieving the annual launch of in-house global products target set in top I-2030 will lead to further profit growth thereafter. Moving forward, we'll continue to leverage Shuga's unique drug discovery approach to advance drug discovery, including midsize molecules and develop new modalities, thereby expanding the creation of innovative new drugs that only Chugai can deliver. Through these efforts, we'll achieve the top I-2030 goals and realize sustainable growth beyond them. The next slide, page 16. Last but not least, regarding the opening of our U.S. partnering offices. We opened the Chugai U.S. Partnering Office in South San Francisco, commencing operations this month. It will explore, identify, evaluate, and promote collaborations with U.S. academia and venture companies. In addition to the U.S., we will strengthen our partnership network connecting Tokyo, London, and Singapore to advance global open innovation. Page 17, the last page, this shows the summary of what I said and that concludes my presentation.

We have the overview of development pipeline from Cusado. We apologize for the disturbance we had, and we will pause for a few moments at the very beginning of the session. I hope you will make use of that opportunity for a screen capture. Thank you. I am Kusano. I am with Project and Lifecycle Management Unit. Please refer to page 20 of the slides. This looks at our fourth quarter topics. I will go through these starting from the top. We secured two approvals. Tessentric obtained an indication expansion for unrespectable thymic cancer. Nunsumio was approved for a new subcutaneous injection formulation. On the filing side, there were also two key developments for our in-house product or for Glipron. Eli Lilly has filed an application in the United States for its use as an obesity treatment. Regarding Hacentric, we filed an application yesterday for its use as adjuvant therapy in MRD-positive bladder cancer. We also initiated the three phase three trials for Roche products. Tron Tinexmab for Alzheimer's disease, Xelabensiran for hypertension, and Giva Sarxuse for first-line non-small cell lung cancer. Additionally, Dibiracib received organ drug designation last December for KRAS G12C mutation positive unresectable advanced or recurrent NSCOC. There were two pipeline divisions. Based on the data accumulated to date, we have decided to discontinue the development of BRITEN for chronic diseases. Furthermore, the development of Ticentric for perioperative and SCOT was discontinued following the results of the I Am Power O30 trial. Details regarding recent publications, new contracts, and investments by Chugai Venture Fund are summarized on this slide. Moving on to the second page of topics, for our in-house product, PiaSky, we achieved positive results for Phase III trials for atypical hemolytic uremic syndrome. Orthoglyperon also met its primary endpoint in a switching trial following the administration of injectable incretins. Furthermore, I am pleased to announce that N-Spring met its primary endpoint in the phase three trial for myelin oligodendrocyte glycoprotein antibody-associated disease. Based on recent trial data, we plan to file for Ziva, Giri Desran, Daini Bisumab, and Spar-Sentan within 2026. Regarding academic conferences, there were three presentations. I will provide a more detailed update on Giri Desran later in this session. This is a summary of our major RFD events in 2025. My changes from the previous updates are underlined and shown in bold fonts. While a few items have been carried over to the next fiscal period, we consider these results to be generally highly satisfactory. In particular, looking back, the confirmation of POC for our in-house product, Next 007, a major milestone, and the decision to advance it to Phase 3 represent a significant progress. Next, I will discuss the major milestones for 2026. A key readout for our in-house portfolio is the Phase 3 trial of N-Spring for MOGAD. which, as recently announced, successfully met its primary endpoint. Regarding JIN 3-29, we will not refer to it by its international non-proprietary name, IMM, a new girl bard. We plan to announce results for three Phase II trials for amil-Globar this year. For SMA and FSHD trials, the data has already been collected, and we look forward to sharing the results with you soon. For Roche products, typical trial readouts are scheduled for Givaracid, Gira-Destran, Lunsivio and Cephexran. Regarding trial starts, we have listed those that have already been publicly disclosed. For next 007, we have the Schedule III, Phase III trials, including head-to-head comparison with the head-libra. We also plan to initiate a Phase II trial for DONC52 in celiac disease. Now I will present the results from two trials for Firi-Vestrant. First is the Evora trial, for hormone receptor positive for two negative breast cancer in patients previously treated with the CGK4-6 inhibitor. Although these results were presented at last year's ESMO Congress, I would like to review them with you today. Here, Destron is an oral selective estrogen receptor degrader, or SIRD. designed to inhibit estrogen receptor signaling regardless of the SR1 mutation status. It is expected to show efficacy even in tumors that have developed resistance to conventional endocrine therapies, including previous generation SIRS. In in vitro studies, it demonstrated higher cell proliferation inhibitory activity compared to other oral certs. Furthermore, the combination of giridescerant and mTOR inhibitor edarolimus is expected to provide superior anti-tumor activity compared to monotherapy by simultaneously inhibiting two key signaling pathways involved in hormones, receptor-positive breast cancer proliferation, and endocrine resistance. In the EVRA trial, this combination significantly improved the investigator-assessed PFS, the primary endpoint, in both the ESR1 mutation-positive and ITT populations. The therapy reduced the risk of disease progression or death by 62% in ESR mutation positive group and 44% in the ITT population. These results suggest that daguerreidespirant plus devirolimus could become a valuable new oral treatment option for patients previously treated with TDK4-6 inhibitors, a segment with limited effective alternatives regardless of their ESR1 mutation status.

Regarding the GILDESTRAN, I would like to introduce a data study which targeted ARCHIVAN therapy for hormone receptor-positive HER2-negative early stage breast cancer. This data was also presented at last year's San Antonio Breast Cancer Symposium. GILDESTRAN demonstrates stronger growth inhibitory effects than Estradiol E2 depletion or tamoxifen in ESR1 wild-type cell models with high estrogen receptor signaling activity and endocrine therapy sensitivity was shown by non-clinical data. Furthermore, in the Phase II study of neoadjuvant therapy for early breast cancer, dildesterone demonstrated superior proliferation inhibiting effects compared to aromatase inhibitors or tamoxifen. Based on these results, an interim analysis of the LIDERA comparing dildesterone monotherapy with standard endocrine therapy as adjuvant therapy for hormone receptor-positive HER2-negative early breast cancer showed a significant improvement in the primary endpoint of invasive disease-free survival, or IDFS, compared to standard endocrine therapy. In the internal analysis, this reduces the risk of recurrence or death by 30%. These results demonstrate that Gildesland offers the first benefit in approximately 20 years for a new endocrine therapy in early-stage breast cancer, demonstrating the potential to become the new standard of care for accident therapy in hormones receptor-positive HER2-negative early-stage breast cancer, which accounts for over 70% of early-stage breast cancer cases. Based on Evera and Lidera studies, we plan to file for approval for each this year, and look forward to delivering new treatment options to patients. Next, we'll introduce three examples of our efforts to promote open innovation for expanding our drug discovery engine. The first is our collaboration with Gero. Gero excels at identifying targets for ACE-related diseases using a platform that combines physics-based machine learning models with human dataset analysis. By combining JARO's identified targets with our proprietary antibody engineering technologies, we aim to create first-in-class therapies for age-related diseases. The second is ARALIS. we have entered into a joint research and license option agreement with Araris. The AraLink technologies features high stability in blood, preserves the inherent properties of antibodies, including pharmacokinetics, and can carry two or three payloads. By combining this with our antibody technologies, We aim to create highly differentiated ADCs that achieve a broader therapeutic window and enhanced efficacy. Third is Rani Therapeutics. The company possesses technologies enabling oral administration of biological products featuring painless drug delivery within the intestinal tracts, high drug delivery efficacy, and bioavailability comparable to subcutaneous injections. By combining this, again, with our various antibody technologies, we also aim to realize biological products with high convenience through weekly or monthly oral administration with efficacy comparable to intravenous subcutaneous injections. We will accelerate innovation by collaborating with partners, possessing target discoveries and modality technologies that synergize with our own. This slide shows market sales for major projects. Global sales are based on guidance from Roche or Gaudelama. There are no updates from previously disclosed figures. Within the domestic sales, the upper orange section represents our enhanced products, while the lower blue section represents Lush products. This slide shows the status of our portfolio across each modality. We continue to hold a robust pipeline of in-house developed projects, all progressing steadily. We are also pleased to announce that we have named our drug discovery technologies for mid-slide molecules our third pillar of focus, Snipe-Type. Snipe embodies the characteristics of our mid-sized molecules, high-precision binding to intracellular targets via oral administration. TIDE evokes the peptides that form the basis of this technology, while also expressing our aspiration for it to become a new trend in peptide drug discovery. We'll continue to focus on the continuous creation and development of our proprietary products or enhanced products, including midsize molecule drugs, to address unmet medical needs. These are projected submissions. Projects marked with light blue stars are newly added ones. Projects marked with green stars have changed Since the previous update, specifically for Gire Destrant, we are advancing the application for adjuvant therapy based on the LIDERA study that I mentioned to this year. The following slides are attached as reference materials. That concludes my presentation. Thank you.

Next, we will have from Taniguchi, presentation on FY 2025 Consolidated Financial Overview. We will pause at the very beginning of the presentation, so those of you who wish to take a capture, I'll please you this opportunity to do so.

Hello, I'm Taniguchi.

I look forward to working with you today. I would like to describe the full FY2025 consolidated financial review. As was mentioned by Dr. Okuda, I am pleased to report that cumulative revenue through the fourth quarter reached $1 trillion. 257.9 billion yen, up 7.5% year-on-year. Core operating profit also grew to 623.2 billion yen, a 12.1% increase. Now I will provide details of these results.

First, on the revenue.

the pharmaceutical product sales rose to 1 trillion 77.8 billion yen an 8.0 percent increase year on year by region domestic sales were 472.4 billion yen up 2.5 percent we had strong performance from new and mainstaying products effectively offsetting the impacts of generic penetration and NHI price revisions. Overseas sales reached 605.4 billion yen, up 12.8%, continuing to benefit from robust exports of mainstay products through Roche. Those are for product sales. Other revenues, including royalties here, increased by ¥7.4 billion year-on-year to ¥180.1 billion. While milestone income from third party declined compared to previous year, this was offset by an increase in Hemlibra royalties from Roche resulting in an overall year-on-year gain. Turning to expenses, cost of sales was 351.5 billion yen, up 4.0% year-on-year. But if you look at the cost ratio, Actimra, with relatively high ratio, has dropped slightly from previous year. So negative 1%. cost of sales ratio for pharmaceutical products improved by 1.3 percentage points to 32.6%. Regarding SG&A expenses, we successfully maintained these at 103.2 billion yen flat more or less year on year by driving efficiency to offset rising prices and labor costs. R&D expenses rose by ¥3.2 billion to ¥180.1 billion, primarily reflecting the impact of yen's depreciation. Other operating income saw a modest ¥2.7 billion decrease, mainly due to lower gains from product transfers. As a result, operating profit rose by 67.1 billion yen to 623.2 billion yen, with the operating profit margin expanding to 2.49.5%. Net income after taxes reached 451.0 billion yen, a 13.6%. Next, on the changes from last year in pharmaceutical sales, starting with domestic, at the very bottom, domestic oncology sales were 246.5 billion yen, a marginal decrease of 0.5% compared to the previous year. City growth in the new product, Vesco, more than offset the decline in Pergeta sales. Additionally, while Lunsumio is off to a strong start, Bastion sales declined due to generic competition. Specialty sales grew by 5.8% to 255.8 billion yen. There was, yes, NHI price revisions, but in addition to mainstay products, Libra, Actemra, and Spring, and BISMO, alongside new products, PSKI, all delivered steady growth. Overseas pharmaceutical sales grew 12.8% to 68.6 billion yen, primarily driven by strong exports of Libra and Actemra. Next summarizes a full-year export status to Russia of Hemlibra and Atemura. First, Hemlibra. Fourth quarter sales, the final quarter, if you look at that compared to last year, rose by 35.3 billion yen year-on-year. If you look at the full-year cumulative sales, that reached approximately 20 billion yen above our initial 300. 18.6 billion yen forecast.

Actimura.

Since biosimilar penetration has been slower than expected, if you look at just the fourth quarter, we have seen leading to a 0.6 billion yen year-on-year increase on the fourth quarter. Consequently, for the entire year, Actimura The forecast of 123 billion yen was exceeded by approximately 30 billion yen, so this was increased by about 30 billion yen. Next, the changes, this is like a factor analysis, changes in operating profit, starting with domestic segment on the left, as noted, there has been an impact of NHI price revision to drive higher operating profits. In the overseas segment, the more we have sales in the emerging markets, the unit price So volume growth significantly outweighed the impact of lower export unit prices combined with favorable foreign exchange movements. So these factors were key contributing to the growth of operating profit. The revenue also contributed to the profit increase primarily through higher Libra royalties. This is the breakdown of the increased profitability of 672.1. On a quarterly basis, we are comparing P&L trends. Because of the export timing,

There will be more ups and downs.

If you focus more on the sales, this is by quarter changes. As you can see, the export to overseas, again, because of timing of the product, disease timing, there will be ups and downs. Next is the HIPAA 2025, how the outcome actually landed. So how much of a gap there was to what we have expected. As you can see, both the sales and the profit. And for each segment, we have exceeded the projection. So it was greater than 100%. For the expenses itself, there were some pluses, but it's been slightly lower. So that led to overachieving the operating profit.

This is the by-product sales as compared to the forecast at the beginning of the year. The inventory situation has changed, and there was slight negative, but everything else, like Akutemura, overseas, Himalaya, overseas and domestic, overall, compared to our forecast, there was a positive number. Next page is the impact of foreign exchange rate fluctuations and performance. The actual rate was 161.2 yen, including the forward contracts. which is the basis for the sales recording, and 173.57 yen, so 12.50 yen depreciation. So there was an impact in terms of revenue, 49.6 billion yen plus, and 44.2 billion yen operating profit on the positive side. And this is the actual rate of the price, compared to the forecast rate. So 80% of the contracts are hedged in the previous year, so 20% are unhedged, and you use the actual rate, and there's change in exchange rate. So as a result, in 2025, there was a further depreciation of yen, so of 5.6 billion yen in sales and 3.6 billion yen in plus for operating profit was recorded. And the balance sheet, 2,468.6 billion yen, which is 260.2 billion yen increase. There is a capital, working capital increase and also net asset increase because of investments. And net assets have increased by 124.2 billion yen. Compared to total assets, there was a slight lower increase, but there was some interim payment, dividends, and had 82.1%, which is equity, shareholders' equity ratio, which is over 80%. And here you're talking about cash status. And last year, at the end of 2034, to 996.3 billion, but now there was a decrease of 160.6 billion yen and operating cash flow 452.1 billion. There was further positive size like income tax payment and dividend payments and 170 billion for special dividend was included. So cash increase was slightly suppressed in total. This shows the trends in ROIC and ROE, indicators of capital efficiency. We have been focusing on ROIC so far, but depending on the company, the definitions of ROIC may vary. So in our case, the denominator doesn't include cash, so ROIC has been at the higher level, 43.9% for this year, which is a 1% increase from year to year. And as for ROE, which is attracting more attention, And definitions are actually universal from company to company for denominator and numerator. And 22.1%, which is an increase from the year before. So this is ROE that is way exceeds the capital cost. And this is the fiscal earnings forecast. As Okuda said, as for revenues, or 6.9% increase to ¥1,345. cooperating profit to increase by 7.5% to 670 billion yen. That is our forecast. Domestic sales are expected to grow despite the headwinds from drug price revisions and general concentration. We are expecting 25.6 billion yen growth because of new products' growth, so 2.2% growth, which is exceeding the last year's growth. As for overseas exports for products, for Hemlaibrak, And in Bolivia, they are expected to increase, but there will be further marked impact from the biosimilars in Accademia. So there's 3.4 billion, slight decrease is expected. But for the other revenues, 64.9 billion yen increase is expected. from the previous year, but there will be some foreign exchange impact. The cost side is not going to change that much, so there is going to be a support for profit growth. And this is the slide for the pure product sales. Aside from the other revenues, Actemra is significantly negative, and Avastin, for various reasons, will remain in the negative territory, and Lusumio, on the other hand, which is a new product, is expected to grow significantly. And hemmelizer overseas will remain on the growth trajectory. And also this is a core and non-core adjustment. So previously, the intangible asset impairment and also restructuring cost and ERP, business foundation system introduction and restructuring cost, These are actually items for core and non-core adjustment items. But in the third quarter, there is also a discontinuation of five development products that will be recorded. And this is the capital investments currently approved internally. And last page is just for your reference. We have attached details regarding the status of our five Chugai originated global products. That concludes my presentation.

Thank you for your attention.

We will now move on to a Q&A session. We will also have Hidaka, who has the sales, and Takano, who is also representing marketing of the sales to join. Because we would like to have as many people ask questions, we would like to limit the number of questions to two per person. The content of the QA session will be uploaded later together with the presentation materials. We would like to take questions first from those in the room, in the venue, and then we will take questions via Zoom webinar. If you have a question, those of you who are in this room, please raise your hand and wait for the microphone to be brought to you. Please give your affiliation and your name before stating your question. Please. i would like to first of all ask about the uh and you said that on the poor base this group by double digits and based on a foreign currency, the nomination, I think it is also increased. But for this term, we can use that negative. What are your thoughts about the volume as well as unit price? How will this change from last year? And for volume, I'd like to know what your focus are for end-user sales and the fluctuations in inventory in Russia.

Thank you.

Thank you very much for the questions. For FY26 on a whole, you are correct. We expect a positive number, but if we do elemental breakdown analysis at the point in time, as for volume and the foreign exchange impact, we are not disclosing this at the moment. Now, at the JP Morgan conference, they talked about the single-digit growth, so positive growth, which means that we would like to replenish the inventory through our export. On the whole, Hemlibra guidance number has been as high

Thank you.

The second question, in Dr. Okuda's presentation, auto-injector filing for M-libra has been mentioned several times. I believe that this is a very important agent in terms of competitiveness. When do you expect this to become available?

Is it very close?

you still have some issues that needs to be resolved before that can take place. I would like to know more about the progress of this product. Thank you very much for asking about Hemlibrary AI. We are moving along very steadily in terms of development. We are not disclosing the dates, but we would like to provide Hemlibrary AI to the patients as quickly as possible. So we are doing everything possible to move things forward.

The person next to him, please. Yokoyama from Nikkei Medical. is what I'd like to ask about. So many companies are developing oral third drugs, but how do you look at the differentiation from computers? The inovolucive is going to be a set of those, and this is going to be significant with the combination of the inovolucive in breast cancer. But there is no schedule for fighting for inovolucive. How do you see this? Thank you very much for your question, Yokoyama-san. Other third products, comparison with those, as I said in the slide, in the in vitro test, compared to other third oral serum, proliferation suppression inhibitory activities were shown. And in the liverless study, Gildedestined and Velolimus combination therapy compared to the conventional standard of care, ESR1 positive patients In addition to that population, ESR1 non-mutant population, there was a PFS that is statistically significant achieved. So ESR, regardless of ESR1 mutation, there was efficacy that was proven in a third oral product. So the CKD inhibitor, Previously treated with CDK inhibitory patients had a bad prognosis, so there's a higher hope for that. And agravastrin and evalorins combination therapy. If you look at this, they are both oral drugs, so there's no injection required, so there's high convenience. And two different signal pathways can be inhibited simultaneously. So compared to monotherapy, there is higher anti-tumor effect expected. And also, compared to endocrine therapy, standard care at the interim analysis, primary endpoint was achieved. And for early breast cancer, as a new endocrine therapy, this is the first one in the last 20 years, a new benefit was brought about. So this could become an achievement standard of care. So there's a high hope. And more than 70% of early breast cancer is the target for this study. So, we are hoping that Ghirardestran can contribute to many patients. And as for INAVOLISIV, there is one study with a combination with INAVOLISIV by Roche, but at the moment, the combination of Ghirardestran and INAVOLISIV, there is no plan for a study with that. But with the study of Glycerin and Everolimus, what sort of strategy can work out will be something that we work with Lush. So that's not my question. ESR can be covered, but CD4 and 6 have to be suppressed. But there's studies overseas, but Japan has not participated. But phase 2 study will be done. in Japan, and there will be a bridging study. And at that time, the innovative can be used for the oral third study. So when will it be? Well, as for innovative, as you said, phase one study is now underway, and there will be bridging with overseas study data to file for approval. But at this moment, I'm sorry, but we're not in a position to disclose that timing. So the timing of filing has not been disclosed. And what you filed for yesterday, the bladder cancer, MRD-positive patients. So for all comers, NEVO can be used, and DILVA has been presented as part of the data. And so compared to other products, what would be the superiority of this drug? I'm not sure who this is addressed to. So it's a centric argument of the muscular invasive bladder. Thank you for your question. And compared to PFS, in OS, the primary, secondary endpoint, there was a statistically significant benefit that was proven. And in the serious monitoring, the artesolizumab, or we can identify patients that can benefit from artesolizumab, there could be avoidance of over-treatment. or personalized medicine can be done with the CDR approach. So if the patients with a lower risk can avoid over-treatment, that would be the benefit.

Thank you.

Thank you. We now would like to invite questions who are joining us through Zoom webinar. For those of you who are joining through PC or tablet PC, please click the hand, show hand icon at the bottom. We will call your name, and when we unmute you, please give your name and your affiliation. And if you want to cancel your question, then please use the button to lower your hand. From JP Morgan, Wakao-san, please. Thank you very much. Wakao with JP Morgan. Can you hear me? Yes. Yes, we can. The first question, first of my question is related to the royalty other than coming from Roche and also other revenues. Royalty from other than Roche. is for or for goliperon and the monizumab cells or increase thereof i believe uh am i right if that is the case uh ogre piperon has not been approved so i would like to know how you are incorporating that and we also expect the the cells to grow considerably i would like to have you comment on this This is Taniguchi speaking. Thank you, Wakao-san. Revenue stream from other than Roche, yes, is expanding in 26, and you are absolutely right in your understanding. That majority comes from those two product loyalties. That's true. But other sales revenue, in general terms, this is like milestone payment. Now, as for the content, this still is not disclosed, including of what we are filing today. We have introduced several assumptions and have reflected in what we are saying. I would like you to tell us about how you incorporate the Orgo Vibrion I think because the product is not out there, you must be exercising conservatism. Yes, for anything that is uncertain, our basic thinking is to make sure that we will use reasonable assumptions. Second question is about 45% dividend payout ratio. in the immediate long term will lead to greater profit and you are focused more on ROE which means that at some point in time in the future you will raise payout ratio there are no reasons for you not to are you discussing this internally of raising the ratio to above 45%, and if you have decided no, why? Thank you, Wakao-san, for that question. We have provided last year at this timing our capital allocation policies, and we wanted to target 45% stability. And so, dividend payment included is based on that. For the time being, we have no plans of revising or reviewing this. And I'm sure you understand that. Now, the question is, will we ever consider revisiting? Are we not going to revise this ever? But we cannot say anything definitive at this point in time. We'll be looking at the objective, Ali, our situation, as well as our financial conditions. Now, ROE, yes, we are looking at. Our cost of capital, and we have disclosed this, we consider to be about 7%, which means that our ROE is well above that. So it's not that we are going to make active adjustment of the capital. We don't think that we are at the situation where we need to boost our OE today. In any case, we should continue to maintain and try to strive for improvement of capital efficiency. Thank you. That's all I have.

From Morgan Stanley MEFC Securities, Mr. Muraoka, please.

Thank you.

I am Muraoka from Morgan Stanley. Can you hear me? Yes. Thank you. My question is also addressed to Taniguchi-san for the forecast or guidance for more detailed way of interpretation. Slide seven, the forecast by product. So overseas and others, there will be an increase of 70 billion yen, which is significant. Nemo and Lubimo exports were probably the biggest contributor. And if that's the case, then the royalties from entities other than Roche, the increase of 730 billion yen compared to Nemo would be larger. That's our guess. Is that something that is valid? Thank you very much for your question. Taniguchi speaking. For the breakdown of royalties, for the portions that are not from Arash, those two that you mentioned is overwhelmingly important. That's what I can tell you. But as for the allocation between these two, at the moment, we cannot answer that question. Also, for Glipla, it has not been launched yet. And you have to look at the timing of the launch, which is quite difficult discussion. So we remain undisclosed for the allocation. As for exports, as for Nemluvio exports, so this was recorded in the previous fiscal year, but for this fiscal year, we are still... continue to expect growth, and that has been incorporated in our guidance that we provided this time. Does that answer your question? So overseas, others, 32.6 billion, 170 billion, 17 billion year-on-year. It is mostly from non-billion, yes. And also the breakdown of this page is seven. The domestic and specialties and others sales, 33.3 billion. Year-on-year growth of 12 billion. Time flew. It's not going to grow. So what's included in this number? Earlier, you talked about P&L, cost of goods, cost of sales ratio that is assumed to increase. So maybe the products that are included here have higher cost of sales. So those that are not in the pipeline, but there is something that you are going to start to sell. That's my personal guess, but am I wrong? Thank you. For the cost of sales ratio compared to 25 in 2026, there's a positive growth. The background, there is a lot of factors. But if you compare domestic and overseas sales, the cost-of-sales ratio is much higher in domestic products. So this is related to products. So overseas, there's a ¥3.4 billion decline, to 20 billion increase for domestic sales. So domestic products ratio has increased, and that has brought up the cost of sales overall. As for more details, it is not disclosed, but you mentioned Tamiflu. There are various factors involved. the products that are not mentioned and that are expected to grow this year that are included in others so that those that are expected to grow are not in the pipeline or the filing schedule on page 289 those are not included in those schedules no no no no that's not the case there are some that are included so but all that are expected to be filed are anti-cancer drugs well hidaka of themselves speaking as you said there's still uncertainty a lot of uncertainty but uh they did this the gene therapy cells are incorporated to some extent and maybe that would satisfy your question okay thank you that's all thank you thank you next from city group Yamaguchi-san please yes can you hear can you hear me

Yes, thank you very much for this opportunity. At the very beginning, about the update of mid-term business plan, you talked about the production efficiency of blockbusters have improved from 0.3 to 0.6. My understanding, of course, is you are aiming for 1. Although there are different risks based on current pipeline, do you think that you are achieving what you can achieve? So what's your thoughts about this point six vis-a-vis 2026 and 2030? This is Okuruda speaking. Thank you, Imagoji-san, for your questions. You're looking at this slide, right? Looking back, In the 2000s, it was 0.1. So one per 20. In the 2010s, it tripled. And in the five years since we began the strategy 2030, we have actually launched three. You talked about Yamaguchi-san blockbusters, but this is about global in-house original product being successfully developed and launched. We have focused on antibody plus a small molecule that we have achieved launch targets between 2026 to 2030. So in the latter half of top I-30, top I-2030, Our strategy is to further increase this. We talk about mid-sized molecule, middle molecule. The white will gradually become more purple if we succeed. Beyond 2031, this could become like one every year or greater global launch. That will further drive growth or even better than that. With increased modality, there's this growth will increase because of the mid-sized molecule. Yes, we will look at antibody, small molecule, mid-molecule, and our imbalance. And we're talking about other modalities. We were discussing this in the TOPPAI 2030 strategy discussion. We hope to achieve multi-modality, so we're going to increase that. Well, thank you very much. The other question is your restaurant, which you have explained in length, so we have high expectations. What is your peak sales forecast? Or is it too early? Well, thank you for that question for your restaurant. We are not disclosing that. What would be the time in Japan? so the targeted market size. The number of patients or the existing market size is probably quite large, but I would like to know which segment you are targeting. If you don't have that information, if you could provide information later. Yes, we would like to confirm and get back to you. That's all I have. Thank you.

Thank you very much. From Macaulay Capital, Mr. Tony Wang, please.

Hi there.

Can you hear me?

Okay, perfect. Yeah, thank you for taking my questions. I wanted to... The first question I would like to ask is about your capex. You commented on the error risk partnership for ADCs, right? My understanding is that the capex can be very intensive for ADCs. In fact, one of your gear companies recently announced a very large CapEx project for their ADCs. So I just wanted to see how are you thinking about the CapEx related to the ADC drugs? Are you building the production capacity internally? Are you using CDMOs? Are you using facilities from Roche? Is this included in your CapEx budget for 2026? So that's my first question.

Thank you very much for your question, Mr. Tony Lei. As for the CapEx, the current status, Aralis and Chugai Pharmaceutical are now engaged in joint research. So we haven't discussed the CAPEX. We just engaged in joint research. Therefore, as for the 2026 in the CAPEX budget, this was not included.

Okay, very good. My second question is on the development of your GYM329 EmuGloBot in obesity. So the GYMINDA phase two trial of EmuGloBot in obesity, If we look at clinicaltrial.gov, the primary completion is August 2026. Can you confirm that you will be releasing Phase 2 results roughly around that time as well?

Phase 2 trial. Thank you very much for your question on that. So at the outset, as I said in the presentation, the result of the clinical study is going to be released by the end of this fiscal year.

Okay, very clear. Yeah, thank you very much.

Thank you very much.

From UBS Securities, we have Seki-san.

I'm Seki with UBS.

Can you hear me? Yes, we can. Thank you very much, and we congratulate you on an excellent performance. In other revenues, this royalty or milestone includes some items that are outside of Chugai's control. If the actual revenue, other revenue, Does that meet your target? What are some avenues that will change? Or don't we need to worry about this because you are being very conservative? Thank you very much, Seki-san. I am Taniguchi. The latter. We have exercised conservatism. But if it is so unexpected, We cannot negate the possibility that something will happen outside this, but how this will be absorbed within the entire portfolio, this is something that we will be communicating to you in the quarterly earnings call. So we will keep you appraised or updated within the profit planning. Thank you. The second question has to do with biological POC of DONC52. And I would like you to supplement my understanding. What does this mean? Phase one, like PBMC, like peripheral blood monocyte? Are you looking at that kind of response at the cell level? Thank you very much for that question about the DONC52. We have conducted what we call Phase 1C study. This is gluten. Celiac disease patients who are stable, after administering DONC52 in such patients for three days, we challenge them. with wheat and gluten-dependent immune response is what we are trying to induce. And then we give DONG52 to see if the gluten-dependent immune response can be suppressed. In this study, in addition to PK, we'll be looking at pharmacological action. The T cell activation suppression due to gluten ingestion is also looked into, as well as other biomarkers. What was the outcome of the three-day challenge study? We are now in the process of analyzing this, and when we are ready to publish data, we would like to do so. Thank you very much. That's all for me.

Thank you very much. Next, from SMBC NICCO Securities, Mr. Wada, please.

Are you there?

Yes, Wada from SMBC NICCO Security. Thank you. Let's also ask about DONC-52. So licensing out schedule, how do you look at that schedule and development? As you saw, Phase 2 study is going to be initiated. So as I heard, this is going to be licensed out to other companies. I think that is the main strategy. Maybe it would be the phase two timing that you're going to do that. But this is going to be, phase two is going to be performed by your own company, on your own. So what would be the timing of phase two? As you see it. So, Wada-san, thank you very much for your question. I'm done, 52. For licensing out strategy and timing of individual products, we cannot answer those questions. But phase two study that we announced this time would be performed by Chugai Pharmaceutical. Just for clarification, so in the RASH pipeline, this is in phase one. So you're not aligned with wash on this particular product, is that correct? Probably. This is not described in the Roche material or pipeline. We don't have the information that they have introduced this. So in the Roche pipeline, the two guys' projects are also described, but this doesn't show that they have licensed in our product. Thank you. As Yamaguchi-san asked, page 15, top I, 2030, one per year, global... product launch that is target and i'd like to ask about the strategy of research and development so from 2011 to 20 20.3 per year but 21 to 25.6 per year it has doubled but r d around 2015 80 billion yen was spent, and in 23, 160 billion, so this was doubled as well. So that's why the number of launches has been increased, I understand that, but between now and 2030, if you are to launch one per year, then 1.5 times R&D expenses will be required, So in order to achieve one launch per year, what is your expectation on the R&D expenses or spending? Okuda will answer that question first and then For the future R&D investments, I would like to ask Taniguchi to answer the question. So the R&D expenses and number of launches, whether they are correlated or linked, it's not necessarily the case. So the number of launches, what would be the function of this? So R&D, aside from R&D, but the cycle time of development, the speed of development, and probability of success, and those will be significant factors. So there is a timeline between R&D activities and launch of the product, so there is not that simple correlation. So as a principle for R&D activities, high-quality products have been developed. So this has been the case in the past, but with a higher probability of success, we came up with the molecule. And in Phase 3 development, the first indication has achieved 100% success probability. So that's a quality principle. has to be maintained or expanded while engaged in this drug development. So R&D expenses and number of launches are not directly related, necessary. But on the other hand, if you look at R&D expenses, It includes the personnel cost, and this is a very important resource to drive research. So this R&D expenses have been increased in accordance with the profit increase. So I'd like to ask the panelists to add up. Compared to 2025, 5.5% increase was recorded. That was a fact. But as Okuda said, So the productivity increase is something that we give priority and that is also true for R&D by utilizing AI and go or no-go decision will be further refined. So we are hoping to enhance the productivity. So it doesn't necessarily mean that R&D expenses are going to keep going up rapidly. and the target for percentage of r d expenses there's no such figure that we have in mind but as the projects make progress there could be increase in development expenses that could be the one that we might end up with but we're also all keeping an eye on productivity and efficiency so that we can maximize our efforts thank you

Thank you very much. Next, from Stanford Feinstein, Dogi-san, please. Thank you very much. About him, Libra, I have two questions. The first question is related to overseas sales. This time in 2026, the assumption on Swiss franc, I mean, you're expecting 6% depreciation of the yen. If that is your assumption, then Libra, if I understand the plan, is to decrease. Of course, sales in the international market, by Roche or by Libra, going up, but you said will lead to lower unit price even if the the volume increases the lower unit price will have greater effect so you're selling more but it is possible that the yen amount of export come down is that possible thank you very much Sogi-san this is Taniguchi speaking In LIBRA focus for this year, and you're asking about the breakdown, which of course is related to unit price, volume, and foreign exchange factors. I would like to keep from giving you any responses in detail, but it is true that there has been a foreign exchange effect positive. What about the net of that? Then we have the unit price multiplied by volume. Unit price actually has to do with the weighted average in the market previous year applied. So we will be looking at market price, and that sort of decides what the export price is going to be. Volume is something that's updated every term in emerging markets. not just the emerging market, but is possible that volume increase globally. This has happened in the past, so there's no reason to think that this will not happen in the future. And that multiplied by unit price will give us the results. Thank you very much. Also about the HEM Libra, and this is related to although the injector by launching this what levels of upside do you expect him Libra I believe has penetrated the market uptake has been great so who are the patients that have not been able to capture without the auto-injector. And I also would like to understand what Roche has in mind related to this. Thank you very much. I would like to respond. Auto-injector development from HemLibra, we have been striving with the aim of raising convenience of our patients. If we have auto-injector of HemLibra, we expect the uptake to increase But BIM8 competition could come up with a very convenient device. So please do understand that we are being a defensive, we're taking a defensive approach to that too. Thank you very much. Because of time, we would like to take one last question from Goldman Sachs. We have Ueda-san.

From Goldman Sachs. Weda from Goldman Sachs Securities. The first question is about the US partnering office that has been launched. So at the moment, in the previous activities, what were the challenges that you faced to trigger this, and what kind of effects are you expecting out of this initiative? Thank you for the question. Well, as for U.S. partnering office, this is located in South San Francisco in the West Coast, and it just started operation in Silicon Valley, and there are many bio-ventures and universities in the U.S. There are numerous universities located there. And of course, we can keep communication from Japan, but by physically locating in the area, bio-ventures and academia and venture capitals, we will have closer communication with those parties so that we can achieve open innovation. The drug discovery capabilities increase its primary purpose, but there will be effective results that we can expect. So that's why we've decided to locate our office in West Coast or South San Francisco. But ahead of this, there was a corporate venture capital that was established in 2023 in Boston. And it's been already two years since the start of the operation. And we went into venture communities. and from venture companies or start-up companies, there was a lot of information that we received. So as the technology reaches maturity, we could have a joint collaboration with those, and there's a link there as well. But it's not just in the US, but in Singapore there is similar function. And there's also a partnering function in London, and Tokyo headquarters has this function. So by establishing global partnering network, we are hoping to increase our drug discovery capabilities. That's our intention. Thank you. Thank you for the answer. I think we have run out of time, so I'd like to leave here. Thank you.

Thank you very much.

With that, we would like to conclude Shugai Pharmaceutical Fiscal Year 2025 Financial Results Presentation. We apologize for the difficulty you experienced at the first half of the presentation. We will provide backup information via web. If there are any questions, that you were not able to ask, please do contact us at the corporate IR. The phone number as well as mail address is shown on the last page of the presentation material. Thank you very much once again for joining us, taking time out of your very schedules.