Chugai Pharmaceutical

Thank you very much for taking time out of your very busy schedules to attend our first quarter FY2026 earnings call. My name is Miyata from Corporate Communication and IR department, and I'll be serving as the moderator today. Thank you for your kind attention. The session will be conducted via Zoom webinar. We will proceed according with the agenda shown on page 3 of the presentation material. The briefing will be conducted in Japanese, but we will have simultaneous interpretation in English also available. Please click the interpretation icon at the bottom of your screen and select either Japanese or English. for your preferred language. Questions will be taken together after all the presentations have been concluded. The Q&A session is scheduled for approximately 30 minutes. Please note that participants' microphones will remain muted during the presentation. First, Dr. Okuda to provide an overview of the first quarter of FY2026. I am Okuda, President and CEO I would like to give an overview of the first quarter of FY2026. Please refer to slide 5 in the material at hand. In the first quarter of FY2026, both domestic and overseas product sales progressed steadily, resulting in both increase in revenue and profit. Growth was driven mainly by Libra exports to Roche, as well as increased NEM Lubio exports to and higher low-income from Kaldurma. As a result, compared with the same period last year, revenue increased by 11.5%, operating profit by 17.1%, and quarterly profit by 19.6%. As such, first quarter got off to a smooth start in line with our initial expectations. Details of the revenue will be covered on the next slide, slide 6. This shows the year-on-year changes in revenue compared with the same period last year. Revenue grew by 33.2 billion yen, up 11.5%. I will walk through the items from left to right. Domestically, despite the negative impact of the NHI drug price revision and generics penetration, mainstay products as well as new products performed well, resulting in an increase of 8.4 billion yen. Overseas, while export unit price declined, The increase from volume and foreign exchange effects more than offset this, resulting in an increase of 23.4 billion yen. In particular, Hemlibra exports to Russia and Nemrubio exports to Galderma increased significantly, marking solid progress. Other revenues increased year on year, primarily due to higher royalty income related to Nemrubio, despite a decrease in one-time income. domestic sales, overseas sales, and other revenues all increase achieving overall revenue growth.

Please move on to the next slide. I would like to explain about the key progress made in the first quarter. Regarding exit 007, we plan to initiate two phase three trials In the second quarter, aiming for a regulatory filing in 2028, we have discontinued development for SMA and FSHD. On the other hand, Based on the clinical results obtained, we believe this will not impact development for obesity, where the target myostatin is highly prevalent. Therefore, we will proceed with the Phase II trial. As for N-Spring, we presented the result of the meteoroid study in MOG-AD at the American Academy of Neurology in April. Further details will be provided later in Mr. Cassano's section. Regarding Ghirardestrant, while numerical improvement in PFS was observed in the Persevera study for the first-line HR-positive breast cancer, the primary endpoint was not met. Consequently, we have discontinued development for the first-line setting. Meanwhile, based on the results of the Evera and Lidera studies, which have already achieved their primary endpoints. We aim to file for the second to third-line adjuvant treatment for HR-positive breast cancer within 2026. For DOC52, we have commenced an in-house Phase 2 study targeting celiac disease. Overall, progress remains on track toward achieving a record number of regulatory findings. Next is Phase 8. I will discuss new product launches and indications. In February, we launched Elevides, Japan's first gene therapy for DMD. We are truly pleased to be able to provide Elevides patients with DMD, a hereditally muscular disease that has been difficult to treat. And in March, the combination therapy of Lusimil and Poli-B became the first in the world to receive approval in Japan for relapsed or reflective large B-cell lymphoma. We also launched a subcutaneous formulation for Lusimil and obtained approval for an auto-injector formulation for in spring. And regarding out licensed products, Orgofor Glypron, the brand name Foundeo, was approved and launched in the U.S. as a treatment for obesity. Foundeo is the only one steady oral GLP-1 receptor agonist. that can be taken at any time without any restrictions of food or water intake. Applications for approval are currently pending in over 40 countries for obesity and type 2 diabetes, and we look forward to contributing to further to patients worldwide. For pneumonia, we anticipate a further growth. especially as Galderma has raised its peak sales projection to over $4 billion. Finally, I will explain the composition of the Board of Directors. We have launched a new management structure, having newly appointed Ms. Kinuko Mutani, a medical expert as an independent external director and a member of the nominating committee. To ensure prompt and decisive management decision-making, the Board maintains an appropriate balance of diversity, including expertise and gender, as well as an optimal scale. We'll continue to strive for further enhancement of our corporate governance. That's all. Thank you.

Next, we have Makusa. We will ask him to provide FY2026. Q1, Overview of Development Pipeline. Thank you very much. I am a head of Project Lifecycle Management Unit. Please refer to slide 11 in the materials. These are the topics for Q1. I will go through them from the top. There's one launch, Elevides. A microdystrophin gene therapy has been launched as the first regenerative medicine product in Japan for DNA. The five approvals in spring has received approval for a new dosage form, an oral injector, which we expect to improve convenience for the patients. A once-daily oral GLP-1 receptor agonist that can be taken without restrictions on food or fluid intake is our in-house innovation. Our licensee, Eli Lilly, has received approval in the United States for obesity and has begun commercialization. Lunsumio and the Polivy combination therapy has also received approval as indication extension for relapse or refractory therapy. large B cell lymphoma. There's one finding. We have submitted a regulatory application for the ocular implant for Ranibizumab. A finding for Ranibizumab formulation dedicated to ocular implant delivery is also planned within the year. Four studies have started. has initiated phase 3 studies for two types of PIC3CA mutation, breast cancer respectively. CT388 is a long-acting GLP-1, GIP receptor agonist. And the phase 3 study was initiated for obesity without type 2 diabetes. In our in-house, DONG52 started Phase II study for celiac disease. There are four pipeline removals. N-Spring has been removed from the pipeline following Roche's decision to discontinue Phase II clinical trial for DMT-D for strategic reasons. GYMMA329, in light of the results of the Manatee study development for spinal cancer, Muscular atrophy has been discontinued, and based on the results of a maneuver study, development of FSHT has been discontinued.

Ticentric.

Based on the results of the Imbrave 251 study, development for hepatocellular carcinoma, second line, has been discontinued. Chiridescent. Based on the results of the Persevera, Study Development for First-Line Hormone Receptor Positive Breast Cancer has been discontinued. Moving on to the second page of the topics. First readout, FANDAIO, a G4 study, is a trial evaluating the risk of cardiovascular events in patients with the type 2 diabetes at high cardiovascular risk. The results demonstrated non-inferiority versus insulin-glargine meeting the primary endpoint. Our licensee, Eli Lilly, plans to submit a filing for Samdeo for type 2 diabetes by the end of the second quarter under Commissioner's National Priority Voucher, or CNPV. Regarding Congress publications, I will provide further details on next 007 and spring later in this presentation. For Nemluvio, results from a Phase II study in children aged 2 to 11 with atopic dermatitis were presented at the American Academy of Dermatology. Favorable skin clearance and itch control, similar to adults and adolescents, were confirmed in the pediatric population as well. Regarding orphan drug designation, Glucetamab has received the designation for large B-cell lymphoma. We exercised an option right under joint research agreement concluded in 2025 and obtained a license for Araris Biotech's preparatory ADC-linked payload technology, or Aralink. We aim to combine this with our antibody engineering capabilities to create innovative ADC. I now would turn to key milestones for 2026. The underlined and in bold fonts reflect changes since the previous earnings announcement, and I have described them already so far. Preparation for phase three studies for next 007 are well underway.

Next, I will present the results from Part C of the Phase 1-2 Next Stage Study for NEXT-007, which were announced at the European Hematology Association Congress in February. This is the first set of data for patients with hemophilia A, both with and without inhibitors, who switched from emesizumab to NEXT-007 with a loading dose and no washout period. Consistent with Part B, which targeted emicizumab-naive patients, the result demonstrated favorable tolerability when switching from emicizumab to NXC007 without the washout period. In the high-dose cohort, blood concentrations reached levels expected to provide coagulation factor VIII activity equivalent to normal levels, and no bleeds requiring treatment were observed. The fact that favorable tolerability was demonstrated when switching from emesizumab to Nex007 without a washout period is a significant finding for advancing safety assessments during the switching process. We are developing Nex007 with the ambitious goal of achieving coagulation potential equivalent to that of people without hemophilia. Working closely with Roche, we are steadily preparing for the three Phase III clinical trials scheduled to begin this year, and we remain committed to delivering this treatment to patients as soon as possible. Next slide, please. I will present the study results for Enspring, which targeted adult and adolescent patients with relapsing MOGAD. And in the global phase three clinical trial for MOGAD, subtralizumab significantly reduced the risk of new MOGAD relapse achieving the primary endpoint. It demonstrated that it reduced the risk of relapse by 68% compared to placebo in the time to first relapse. Regarding safety, consistent with the data already established in the approved NMOSD indication, no new safety concerns were identified and favorable tolerability was confirmed. Currently, there are no existing therapies approved for MOGAD. With no established standard of care, there are high expectations for this study, as it is the first to verify efficacy in a prospective randomized controlled trial. Furthermore, for this indication, we have obtained orphan drug and sakigake designations in Japan, and we plan to file for approval within this year. We look forward to delivering these new treatment options to patients as soon as possible. These data were presented at the American Academy of Neurology annual meeting held last week. In recognition of this significance and high impact, it was selected as a presentation topic for the pre-AAN press conference. Next slide, please. I will discuss our upcoming filing schedule. Projects marked with a light blue star are newly added, while those with a green star indicate a change in the scheduled filing year. And in this update, we have also subdivided projects previously disclosed as 2028 and beyond into 2028 and 2029 and beyond. For NEXT-007, we plan to file for haemophilia A in 2028. Regarding inabolizib, for which two phase III trials have been initiated, we also plan to file in 2028 for each. Additionally, for anisepatide, we expect to file in 2029 or later. These subsequent slides are attached as reference. Please refer to them as necessary. This concludes my presentation.

Next.

FY2026Q1 Consolidated Financial Review provided by CFO Taniguchi. Hello. I will discuss the financial results for the first quarter of FY2026. I'm Taniguchi, CFO. Let me start by sharing the panel. The first quarter revenue came to 321.7 billion yen, up 33.2 billion or 11.5% year-on-year. Core operating profit also increased by 23.8 billion or plus 17.1 cents to 163.3 billion. I will now walk you through the details in sequence, starting with the revenue product sales. Product sales were 291.6 billion yen, up 31.9 billion yen, or 12.3% year-on-year. Looking at the migration, domestic sales came to 111.4 billion yen, up 8%. the 8.4 billion yen or 8.2% year-on-year. New products and mainstay products performed well, fully absorbing the impacts of the NHI drug price revision and generic drug penetration. Overseas, exports of mainstay products to Russia continue to perform strongly, reaching 180.1 billion yen, up 23.4 billion yen or 14.8%. 9% year-on-year have Libra, and have increased.

Also, royalty, this part, increased quite a bit.

One time, slightly come down, but the royalty income from Galderma related to Nemluvio increased on a whole. It was positive. Moving on to cost items. Cost of sales was 92.3 billion yen, an increase of 4.8 billion yen, or 5.5% increase year-on-year. Now, this increase in absolute terms reflects the growth in product sales themselves. The cost of sales ratio declined by 2.0% points year-on-year to 31.7%, which reflects increase in hemlobular with slightly low cost of sales. So, in the background, I had some effect. R&D expenses increased by 1.2 billion yen year-on-year to 41.9 billion yen driven by investments in drug discovery and early-stage development and advancement of development projects. SG&A expenses. A significant increase in new product-related promotional expenses in first quarter for Lunsumio In addition, enterprise taxes and accruals for bonuses linked to profit levels also increased. The enterprise taxes is local tax, resulting in a year-on-year increase of 3.9 billion yen to 24.9 billion yen. From the second quarter onwards, however, SGA, SG&A is expected to turn Lower year-on-year, and at the year-end, it's projected to be around 1.2 billion yen below prior year, in line with our published forecast. As a result, operating profit increased by 23.8 billion yen year-on-year to 163.3 billion yen, and the operating margin rose by 2.4 percentage points year-on-year to 5,200. 0.8% net income as the tax was 118.6 billion yen, an increase of 19.4 billion yen or 19.6% increase. This is the breakdown of changes in product sales. Domestic oncology sales was 65.7 billion yen, up to 0.6 billion yen or 4.9% year-on-year. Key factors increased politely following approval of the combination therapy with Lansumio in March, steady growth of mainstay product Tesco, which more than offset the decline in Progetta, and strong launch of new product Lansumio. So those were the positive drivers. And on the other hand, lasting, continue to decline due to NHI drug price revision and generics. Specialty area, 55.7 billion yen, up 5.8 billion yen, or 11.8% year-on-year. In addition to main state products, SAHEM Libra and Prodismo, a new product, also recorded sales growth. Overseas product sales were 180.1 billion yen, up 23.4 billion yen, or 14.9% year-on-year, a significant increase by Hem Library. This is the quarterly trends in P&L items. Due to revenue recognition timing differences arising from exports at timing, there's trends to some quarter to quarter ups and downs. For overseas sales as well, volume growth significantly exceeded the decline in export unit prices, and this was further supplemented by a positive foreign exchange impact, contributing to the increase. So that led to the total amount of increase, 23.8 billion.

Breakdown.

I would like to be very brief. So this is the quarter-based change in profits. There are ups and downs, but compared to first quarter last year, we have a positive operating profit, and you can see the background why this is the case. This is about the revenue, the quarterly trend. Again, exports. not necessarily gives us the same amount each month. So that leads to some variability, but if you compare first quarter with first quarter, this is what we have. Overseas, domestic, we are seeing a well-balanced increase in all of those segments.

So as of the first quarter, what has been the progress so far against the initial plan? Both revenue, profit, compared to last year, the progress rate are relatively higher. Normally, the progress tends to be low in the first quarter. However, it's trending above last year's level. Next page talks about per segment, per product progress. And we are showing you the progress as of last first quarter. Across different products, the progress has been trending above last year's level. Next shows the impacts of FX. Last year's exchange rate and this year's exchange rate shows 10 yen difference. And because of this 10 yen, weaker yen, we had impact of 11.6 billion yen in terms of revenue and 9.8 billion yen in terms of OP, both positive. Next, moving on to the balance sheet. First of all, a total asset of... The end of last December, it went up by 203 billion yen and achieved 265.1 billion yen. We had a payment of tax and a payment of special dividend. And in terms of the working capital, we had a collection of the AR in the first quarter as the a result that total asset reduced. However, in terms of the net asset, as it says here, it decreased by 118 billion yen to 1,907,000,000,000 yen. And the rate of decrease in net assets was smaller compared to that of total assets and the equity ratio attributable to owners of the parent rose to 84.2%. In terms of operating the cash flow, it was 203.3 billion yen. However, we had a payment of the corporate tax and the payment of the special dividend, and it was actually negative. And next is the adjustment of core and non-core. So, adjustment items would include the recognition of intangible asset in accordance with the licensing in. And also, we have some depreciation of cost. And the business reconstruction restructuring cost would include the replacement of ERP, you know, SAP. So, upgrading the operational platform required for bullion yen. And next page, list up the capex that are already approved internally, and it shows plans going forward. With this, I would like to conclude my part. Thank you very much.

We will now move on to the QA session. For QA, Takano, who is the head of sales division, will also join. In order to accommodate as many questions as possible, we kindly ask that each person limit their questions to two. Please note that the audio of your questions together with the presentations may be published on our website at a later date. Now, once again, for language selection, please click the interpretation icon at the bottom of your screen and select either English or Japanese. Now, if this setting is not selected, your voice may not be heard. So we will now begin taking questions. Please click the hand, electronic hand button at the bottom of the Zoom webinar screen. When it is your turn, your name will be called. The secretariat will request that you unmute them. Please unmute your microphone, state your company name and your name, and then ask a question. If you wish to withdraw your question, please click the lower hand button. From Citi Group, Yamaguchi-san, you're first, please.

Hello, can you hear me?

Yes, we can. Hello, I am Yamaguchi with Citi Group. My first question is to Taniguchi-san. You have talked about the overall progress of the entire Q1. In comparison to your forecast, I mean, the impression is that the news were all good. Am I right to understand that the current situation is better than what you had expected or is right on track? Yes, short response, we were right on track and we had expected this. But, of course, there are fluctuations. And Libra, for example, did work considerably well overseas. From that point of view, there are good news. We are not, however, in the position of making any changes to publish forecasts. Thank you very much. Second question has to do with Nemorubio. Export volume as well as royalty payment, both doing well. You are not giving specific numbers, so we will have to discuss. Zama also is above the account. So, locally speaking, for Q1, this was better than what you had expected, or was it what you had expected? Well, we say this is what we had expected, because... We always plan conservatively from a rational point of view, but looking at Q1 track record, it's within the range that we had expected. So if you were conservative, this seems more... Well, we cannot really say anything definitive unless we see the situation beyond the second quarter, but it wasn't bad. Okay, it wasn't bad for the first quarter. Thank you very much.

Next, from J.P. Morgan Securities, Mr. Wakawa, please. Yes, I am Wakawa speaking from J.P. Morgan. Regarding the export sales, I have a question. Can you provide a name for those two products? The reason why these two are doing better than your expectation is because the sales is trending well in the market, especially for Himuraibara. You are expecting single-digit growth. And if the actual sales is strong, I think your plan is to is going to be overshot. But how should I look at it? Thank you very much for your question. The first quarter, every year, showed some purchasing patterns. But this purchasing pattern is quite confusing every year in the first quarter. So is this outperforming trend going to continue for the rest of the year? If I tell you so, I may sound too optimistic. So we say low, you know, single-digit as our expectation, and this remains unchanged. In that case, from second quarter onward, we may see some ups and downs. And if A single-digit growth expectation is not becoming the reality, and we expect outperformance. I think we need to look at this thing from Roche's perspective and the two guys' perspective. I can't talk about Roche's number in my own position, but the two guys' export can vary. but we do have visibility into coming six months. So, based on such, the actual results from second quarter onward will be somewhat quite similar to our current forecast. Thank you. My second question is regarding GMC-29. In your presentation, you said SMA-FSHD development didn't work out. But for obesity, you said that there will be no impact. Can you give us more colors on that? And color rock after rock? You know, their trial is going well for obesity irritation. So what is the difference in your compound against the scarlet rock apotegrelumab? Is it coming from the difference in, you know, inhibition activity? Thank you very much for your question. Kusano would like to respond to your question. Now, development on obesity, is it going to be okay? SMA, FSHD, two trials in phase two, you know, when we look at their result, reduction of myostatin has already been confirmed, and the increase of muscular mass and improvement of motor function, we couldn't show consistent result, and we were not sure about the efficacy. Now, for FSHD and SMA, those like neuromuscular disease, when it comes to that, increase in muscle mass does not directly link to the improvement of the motor function improvement. That's a difficult point. And myostatin volume itself tends to be lower in the patient compared to the healthy people. So that's why it's said to be very difficult to prove the efficacy of the drug in such target audience. And now when it comes to obesity, it's a chronic metabolic disease. So the damage on nerve and damage on muscle, we don't believe that will lead to this disease. So, and incretin, which is a combination drug, will induce the reduction in energy consumption. If GYM329, maintenance of muscle or increase of muscle would expect or would lead to the increase of the energy consumption. So, we are not looking into the improvement of motor function of muscle. So, we believe this obesity trial has probability of success. And regarding color rocks compound, you know, this increase in muscle volume and improvement of motor function are not really linked directly in this type of disease. And gym 3 to 9 in phase 3 trial. This is phase 2 trial, different from scholar log. And patient background is also different. So we can't make head-to-head comparison. And primary endpoint and assessment for the motor function is different between us and theirs. Thank you very much. That's all.

Thank you. Thank you very much for that information. My first question has to do with what Taniguchi-san said. This is the Galderma Royalty. This seems to have had a major impact. When are you going to announce this as a separate line item? Of course, we will be following different criteria. Also, there are criteria led by auditors, and we will follow their timing, so I'm not going to give you details. I believe that, however, this year is not the best timing. Your materiality standard is 5% or 10%? No, we're not disclosing that. The second question is to Dr. Okuda. This has to do with how you intend to use cash, especially late-phase pipeline. Your own discovered products from the outside appears to be somewhere in a transition, which means that other companies do try to introduce licensing products. to fill the gap. I do understand that you are very actively pursuing this, but maybe you should announce this more. Thank you for your question. How we intend to use the cash at hand. Within Chubai Pharmaceutical Company, we position this as a very important strategic decision. First of all, innovative pharmaceutical development capability, we would like to very actively invest in acquiring that kind of capacity. So that's one. And in addition to developing innovative products, we want to also invest in delivery of that. For example, what you have just mentioned, late phase development products or those close to launch. So product candidate introduction close to market is something that we're thinking about. Now, in addition to R&D investment, there could be other capex for enhancing our production, and there could be investments in order to maintain ecological aspects and also return to shareholders. So those three we want to make sure are in balance as we make the most investments.

Proper decisions.

Opportunistic decisions mean, I believe, thinking about every possible avenue from a strategic point of view. Thank you.

Next is from Morgan Stanley, MUFG Securities. Mr. Muraoka, please. Hello. I am Muraoka from Morgan Stanley, MUFG. Can you hear me okay? Yes, thank you. I have a question regarding IMO. Three months ago, I was, you know, I was looking at the initial, you know, guidance number three months ago, and I have a question to Mr. Taniguchi. The increase in exports and the royalty income coming from non-Russian partners, and Calderma, YOY, you know, 20 billion yen revenue increase. If I take all those numbers and do this, you know, mass royalty rate, 11 to 12 percent, and the supply of product, 30 to 35 percent, and... It seems like the condition of this business is almost comparable to the business with Roche and sounds really nice. Am I missing out something or am I correct? Thank you very much, Mr. Muraoka, for your question. Now, we cannot disclose details. However, arms, well, with the arms and lengths principle in the license agreement with Roche and, you know, contract with Galdemar and the others, you know, basically our contracts are based on the arms and lengths principle in a very fair manner and license transaction has been almost like standardized in this pharmaceutical industry, and we've licensed this out in late stage, and in terms of the rate, it's a tiered structure, so toward the end of the year, normally revenue tends to go up, and license income also tends to go up, and that's all I can tell you. In terms of the product supply, when I do my must, I get 30% to 35% as a number, but it has just been launched. So the inventory in Garzelma was not actively piled up. Am I correct to understand that export has been progressing a little excessively? Well, it depends on Garzelma's policy. We have a commitment period specified in the contract. We call it firm order. And we basically follow this firm order. So I can't comment on the inventory policy. Thank you very much. Now, I have a question only for Gupix. I don't think I can answer. But 1,200... prescriptions in week one compared to this fiscal year's plan, how do you think of this? I know this is too early question to ask, but how do you interpret this number? I think this is a good result, but I would like to understand how you see the result or progress so far. Thank you. Of course, we do have internal budget. We have assumption as well.

And it's just been launched.

So, I don't think it is appropriate to mention any interpretation of ours when, you know, things go on and progress, we may be able to make some comments, but so far, you know, the available data or numbers are quite limited, so understood. Thank you.

Thank you. From Macaulay Capital, Tony Renson, please.

Oh, can you hear me?

Yes, I can hear you.

Okay, thank you for taking my question. Congratulations, very strong first quarter. My first question is for Kusano-san. So congrats that you are starting the DUNC 52 trial, phase two trial in celiac disease. Is this phase two trial registration or can it be used for regulatory approval? Assuming it is not, Can you explain to us your current thinking of the Phase 3 programs for regulatory approval? How many trials are you thinking? How large are these trials? And what are the endpoints you have in mind for this disease where we don't have current approved drugs? Thank you.

Thank you very much for your question related to DONG52. Yes, we have started our Phase 2 study. This is for active celiac disease randomized double-blind placebo-controlled study. And so, yes, we believe that this is a pivotal study that can be used for filing. This is looking at GI tract improvement and also celiac disease. This is looking at a reduction in symptoms. We are thinking about enrolling 90-plus patients, and we hope to make sure that we get good data. For studies beyond that, we will have to wait until the outcome of Philadelphia is true. to think about what we want to do for the subsequent program. So I would keep from talking about that right now. Thank you.

Okay. Thank you. So the FA-2 file is registrational.

Thank you.

This, of course, is Phase 2, so it's not that this is going to become part of the dossier. What we're saying is that we would like to look at the outcome of the Phase 2 to think about the program going forward.

Okay. Thank you very much. The next question is for Taniguchi. So this is about the royalty associated with Eli Lilly's Fondale. So this launch, everyone is paying a lot of attention to. Could you just remind us when will you receive, has Eli Lilly indicated to you when they will pay you the Fondale royalty? Will that be on a quarterly basis? will there be a one-quarter lag? So, in other words, they will pay you the first quarter royalty in the second quarter.

Yeah, thank you.

Thank you very much for the question. Details of the contract, I cannot disclose. But, of course, then... we understand that the approval came on the 6th of April, so for the first quarter, of course, it's not posted. Now, we, of course, calculate based on our own estimate, and so when they start receiving payments, that is going to be reflected in our dose, too.

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

Thank you.

Next is from Daiwa Securities. Mr. Hashiguchi, please. Hello, this is Hashiguchi. My first question is related to elevators. On 20th of February is the launch date. Your full-year guidance is targeting at 12 billion yen. How do you see the progress so far? Initially, you had taken safety measures. There are many things that you need to do before the actual launch, but what is the feedback from the Healthcare Institute and the patients so far? I am Takano. I'm the head of sales, and I would like to respond to your question. Televisions have been launched in the Pediatric Society of Neurology, and we have been working closely, and we are always focusing on the safety. This month, we are expecting the treatment to start on several cases, but we've been basically focusing on the safety measures. But we have been receiving a lot of strong inquiries so far. And we are now looking into the detailed feedback from the clinical practice. And So, including NHI drug pricing, and we believe the sales and performance will progress smoothly. Okay. In about the second question, on page 16, you said that 2028, there are two indications to be submitted for approval, 122 and 132. There are two phase three studies, and I think their results will be used. Japan's Phase 1-2 study and Western Inabo 1-2-0 study are going to be bridged so that Nabupiro resistance patient targeted therapy may be filed earlier than planned. Or do you think the fastest possible timing for launch is still 2028? Thank you very much, Hashiguchi-san, for your question regarding INAVOLI-SIB. Currently, we are conducting a brief chamber study, and we do not disclose our plan for finding submission. endocrinology-resistant and HER2-positive phase 3 are initiated, and that's why we are disclosing the timing for the filing design. Although you haven't disclosed, however, you're pursuing the possibility of making a filing based on the bridging study. Are you trying to bring forward the submission timing? Well, although I cannot comment on the timing, however, our aim is to bring this medicine to the breast cancer patients as much or as soon as possible. Thank you very much.

That's all. Thank you very much.

My question is to Kusano-san. About the Jim 329 and some other person has already asked it. She has a look in SMA phase 3 positive. Of course, patient inclusion criteria and primary endpoints were different. Can you give more details about why those differences or how those differences in patient inclusion and endpoints have led to differences in outcome? Thank you very much for asking the question. These are two separate questions. two different studies, so it's difficult to compare them head-to-head, but, for example, There are differences in primary endpoint, which is exercise tolerance. For example, SCAR-ROG surface 3, we're looking at expanded Hammersmith enhanced functional assessment. In our study, we're looking at N30 exercise function assessment. There are differences in the motion as well as sensitivity and scope of motor functions, so it's difficult to compare them. In extended, the Hammersmith focuses more on SMA. It's more of a large, for example, trunk. Trunk mobility is like standing and walking and running. Very... major activities as needed for daily life. SFM32 is a more cross, this is more dexterity using the fingers. that's important in day-to-day activities. This is used across myoneurological conditions. So it's quite difficult to compare the outcome of these two studies. Thank you. I understand that. But what you have provided does tell us that these are very different assessments. Can you give us a background why you have chosen MSM32 as assessment scale? Thank you for the question. Based on past data, as well as exchanges with key opinion leaders, we have, of course, assessed what is best. I have another question about DONG52. Now, celiac disease. I am still learning about celiac disease. but it seems that compared between mild and severe, there's considerable differences in conditions of patients. Donk52, what types of patients are you targeting to develop your drug? Thank you very much for Donk52 questions. We will be looking at the outcome of studies to decide who to target. We will be looking at very highly active celiac disease to see improvements in that gut situation. Thank you. We regret that time is drawing to a close, so the next question will be the final.

Mr. Ueda from Goldman Sachs Securities, please. Hello, my name is Ueda from Goldman Sachs. I have just one question. In terms of the GP margin trend, I would like to understand better. So in Q1, basically, cost ratio for the product is within your expectation. And for the fourth quarter or on full-year basis, it seems like this number is expected to go up. Is that because as of the first quarter, The progress of domestic products is slow, while percentage contribution coming from export to outside Japan is high. Or is there any other special factor? And I feel like your export business is trending well. you know, quite well within a certain range. And if the trend goes on, I think your profitability will improve over time. Am I correct? Thank you very much. This is Taniguchi speaking.

Hemlibra?

Wait. What is the percentage of Hemlibra going forward? That's very important. It's more like how much decline do we see in Actemra? the export of Hem Libra, you know, is followed internally, and also we have an assumption for coming six months. And based on the current schedule cost ratio, you know, our target is 34.9% toward the end of the year, and probably this will be the most probable level. Thank you very much. That's it.

This concludes the first quarter FY2026 earnings briefing. For questions that we were unable to address due to time constraints, please contact Corporate Communication and IR Department. The telephone number and email address are provided on the final slide of the presentation material. Thank you very much for taking time to join us today, taking time out of your very busy schedules. Thank you this concludes the session.