Daiichi Sankyo Co Ltd Ord

Thank you very much for waiting. From now on, we would like to start Daiichi Sankyo FY2023 Q1 financial results presentation. I serve as today's moderator. I am Masakura from the corporate communication. First, about the language. Today, we are going to utilize both Japanese and English, and we have a simultaneous interpretation. So please click the interpreter icon at the bottom of the Zoom and select from Japanese, English, or off. If you select off, then you will hear the original voice. Zoom and live transmission, we will show the Japanese presentation materials, and the Japanese and English presentation material can be downloaded from the corporate website via library financial results presentation material. Today's presenter will be Executive Officer and CFO Ogawa, Executive Officer, Head of R&D Unit Takasaki, and Head of Global R&D Takeshita. First, Ogawa and Takasaki will explain about FY2023 Q1 financial results and others, and we would like to entertain questions. Now, today's meeting will be recorded. Then we would like to start. Ogawa-san, please.

Ogawa speaking. Thank you very much for joining Daiichi Sankyo's financial results presentation out of a very busy schedule today. I'm going to explain our FY2023 first quarter financial results we announced at 1pm on Monday, July 31st JST based on our presentation materials. Please turn to page 3. This is the agenda for today. We will cover FY2023 first quarter consolidated financial results, business update, and R&D update in that order. R&D update will be explained by Wataru Takasaki, Head of Japan R&D. We will entertain your questions at the end. Please turn to page 4. This is an overview of FY2023 first quarter consolidated results. Revenue increased by ¥70.5 billion or 25.2% year-on-year to reach ¥350.8 billion. Cost of sales increased by ¥18.9 billion from the previous year. SG&A expenses rose by ¥39.3 billion, and R&D expenditure increased by ¥2.2 billion year-on-year. As a result, core operating profit increased by ¥10.1 billion or 29.4% year-on-year to reach ¥44.5 billion. Operating profit, including temporary gains and losses, increased to ¥44 billion, up ¥9.7 billion or 28.1% year-on-year Profit attributable to owners of the company increased by 38.2 billion yen or 202.4% year-on-year to reach 57 billion yen. As for the actual currency rates, the US dollar was 137.37 yen, the yen depreciated by 7.80 yen against the dollar year-on-year. The euro was 149.46 yen, the yen depreciated by 11.36 yen against the euro. Please turn to page 5. From here, let me explain positive and negative factors for revenue compared to the previous year. Revenue increased by 70.5 billion yen year-on-year. I'd like to explain its breakdown by business unit. First, in Japan business, revenue increased by 12.2 billion yen. as sales increased for direct oral anticoagulant Lixiana, pain treatment Alije, anti-cancer agent Enhert, anti-platelet agent Effient, and Daiichi Sankyo Healthcare. Next, let me explain our overseas business units. Forex Impact is excluded here. In oncology business, revenue increased by 39.1 billion yen due to the growth of N-herd in the United States and Europe. As for American regent, sales decreased for iron deficiency anemia treatment injectifer, but sales increased for iron deficiency anemia treatment venifer. So American regent revenue increased by 0.8 billion yen. Revenue for EU specialty business increased by 1.2 billion yen as sales increased for Dixiana and hypercholesterolemia treatment Nidemdo Nustendi. In ASCA business, responsible for Asia, South and Central American region, revenue rose by 6.9 billion yen due to the growth of Enhut centering on in Brazil. Forex impact increased our revenue by a total of 11.5 billion yen. Page 6 shows positive and negative factors for core operating profit. Let me explain the profit increase of ¥10.1 billion by item. As I explained earlier, revenue increased by 70.5 billion yen, including the increase of 11.5 billion yen due to forex impact. Next, I will explain cost of sales and expense items excluding forex impact. Cost of sales increased by 15.6 billion yen due to the revenue increase. SG&E expenses increased by ¥34.1 billion due to an increase in NHERT-related profit sharing with AstraZeneca, etc. R&D expenditures remained flat year on year. Cost increased due to Forex impact by a total of ¥11.5 billion. Core operating profit increased by ¥10 billion, excluding Forex impact. Next, page 7 shows positive and negative factors for profit attributable to owners of the company. As I explained earlier, co-operating profit increased by ¥10.1 billion, including forex impact. Financial income, expenses, etc. increased our profit by ¥13 billion year on year due to improvement in forex gains losses and investment securities valuation gains losses, as well as increase in interest income. income taxes, etc. decreased by 15.4 billion yen year-on-year as we book tax expenses by using the simplified method in our quarterly account settlement. Also, due to the impact of the tax effect accounting associated with the decision to transfer Daiichi Sankyo ESFA, the first quarter income tax was minus 4.9 billion yen. As a result, profit attributable to owners of the company increased by 38.2 billion yen year-on-year to 57 billion yen. Page 8 and 9 show revenue increase or decrease in Japanese yen by business unit and major product in Japan. Earlier, on page 5, I explained the situation of each unit by excluding the forex impact, but here we are showing the results including the forex impact.

Next, I would like to give a business update. Slide 11 shows the breakdown of Enhato revenue. In the first quarter of FY2023, product sales increased ¥50.4 billion year-on-year to ¥81.7 billion due to growth in the U.S., Europe, and other regions. The sales situation in each country and region will be explained later. Regulatory milestone payment in the first quarter of fiscal 2023 was 2.1 billion yen down by 1.3 billion yen compared to the regulatory milestone achieved last year, which was booked as a sales revenue for the equivalent amount during the period since the contract signage till the achievement of the milestone. As a result, Enhata revenue, including upfront payments with related payment and development and sales milestone payments, increased by 49.2 billion yen to 86.6 billion yen in the first quarter of FY2023. For the fall year of FY2023, we forecast the revenue to be at 368.6 billion yen, an increase of 110.2 billion yen year-on-year, no change from the April figures. From slide 12, for two slides, the sales performance of Enhatu in each country and region will be explained. First situation in the US and Europe. Sales in the US were 51.6 billion yen, up by 31.5 billion yen, or $375 million from the same period last year. The current indications are as shown here. So market shares for each indication are also favorable. The share of new patients with second-line HER2-positive breast cancer is about 50%, maintaining the top share. Post-chemo breast cancer with HER2-low also showed a strong growth, maintaining its number one position with new patient share growing further to nearly 60%. To positive gastric cancer in second line also maintained its number one position with approximately 50% of new patient share. To mutant NSCLC second line treatment maintained its top position with approximately 60% of new patient share. europe shows a steady performance product sales in the first quarter of fy 2023 were up 11.1 billion yen to 17.8 billion yen or The new patient share in each marketed country and region is also expanding steadily. The new patient share with HER2-positive breast cancer in second-line treatment is approximately 60% in France, in the upper 40% range in Germany, and in the 50% in Spain, maintaining the top positions. In addition, in France and Germany, the share of new patients with HER2 low breast cancer treated with chemotherapy grew to mid-40% range and the mid-30% range, respectively, achieving the top position. As for other progresses, with a product launch in Italy in July, we have achieved launches in five major countries in Europe. Slide 13 shows the sales status of N-HER2 in Japan and the Asuka region. In Japan, the product sales for the first quarter of fiscal year 2023 were 4.4 billion yen, up by 1.9 billion yen from the same period of previous year. The current indications are as shown here. The share of new patients in each indication is steadily increasing, and in the second-line treatment of HER2-positive breast cancer, it increased to the mid-30% range, capturing the top share. HATU low treated with chemotherapy also saw a steady uptake. The share of HATU positive gastric cancer in the third line grew to the 60% level, solidifying its number one position. The product sales of the first quarter in the Asuka region increased by 5.8 billion yen year on year. standing at 8.0 billion yen. The product sales in the Asuka region include revenues from co-promotion in Hong Kong and other markets by AstraZeneca. Sales in the region have been favorable, with significant revenue growth mainly in Brazil. As for other progresses, the product was launched in China in June for the second-line treatment of HER2-positive breast cancer, and in July it was approved for the treatment of breast cancer in HER2-low patients previously treated with chemotherapy, and the promotion activities have started. In China, as in the case in the United States and Europe, the product will be co-promoted with AstraZeneca, but AstraZeneca will recognize the product sales and we will record 50% of gross profit as co-promotion revenue. We will continue to work for further market penetration and expansion of the country's regions, as well as to obtain new indications so that we can deliver NHAT to as many patients as possible who need it. In slide 14, I will present our initiatives related to profit growth for current business and products in Japan. In October of 2019, we launched the anti-cancer agent Vansilita for the indication of relapsed or refractory FLT3 ITD mutation positive acute myeloid leukemia, or AML. And in May this year, we obtained a partial change approval for the AML first-line therapy, including untreated patients in addition to the relapsed or refractory patients. In May, we also launched OD tablets, a new formulation of the pain treatment Taolijie, which has been marketed since 2019. We will further enhance our contribution to patients by strengthening our product portfolio. In May, we concluded a stock transfer agreement with Daiichi Sankyo Esfa Company Limited as part of a transformation into a profit structure focused on patented drugs. Transferree is Qual Holdings and the transfer price is 25 billion yen. On October 1st, 2023, 30% of the shares held by the company and on April 1st, 2024, 21% will be transferred. The execution date of the share transfer of the remaining 49% will be determined through separate discussions. I now hand over to Mr. Takasaki, General Manager of R&D Division, who will give you an update on R&D.

Takasaki speaking. I'm going to talk about R&D update. First, an update on five ADCs, five DXDADCs. Page 17 shows our R&D strategy. Due to higher potential of DS7300 and DS6000 as our growth driver candidates following the three ADCs, we have changed our R&D strategy from three and alpha to five DXDADCs. and next wave since April 2023. We plan to actively spend R&D expenditure also for promising pipelines in addition to the three ADCs to promote sustainable growth. From the next slide, I will explain the progress of the five DXD ADCs. Please turn to page 18. Regarding NHERT, we have built evidence first in breast cancer and expanded indications to various other tumor types as well. This page shows the results of Phase 2 Destiny CRC02 study in HER2-positive metastatic CRC, which we presented at ASCO this year. In this study, we evaluated two doses, 5.4 mg per kg and 6.4 mg per kg. Promising efficacy was confirmed with ORR of 37.8% with 5.4 mg per kg and 27.5% with 6.4 mg per kg. Safety was comparable to the known profile. There was no ILD case of grade 3 or above in the 5.4 mg per kg arm. The efficacy and safety profile of both cohorts favors the 5.4 mg per kilo dose, so 5.4 mg per kilo was selected as the optimal dose. Also, anti-tumor activity was observed in patients with and without RAS mutation at the 5.4 mg per kilo dose. Please turn to page 19. Let me explain the interim analysis results of another NHERT study, DESTINY PANTUMER02, in HER2-expressing solid tumors. We presented the results at ASCO this year. NHERT was studied in advanced solid tumors in the second-line settings and beyond where HER2-directed therapies are not yet available, such as cervical, endometrial, ovarian, and medially tract cancers. ORR, our primary endpoint, was 37.1% in all patients and 61.3% in patients with IHC3+. Clinically meaningful activity was confirmed in both groups. Efficacy was sustained with median DOR of 11.8 months in all patients and 22.1 months in patients with IHC3+. Safety was comparable to the known profile. As for IOD, one grade 3 event and one grade 5 event were observed, but the rest were grade 1 or 2. As is shown on page 20, top-line results from the primary analysis of DESTINY Pantuma 02 study were obtained in July 2023. Like the interim analysis, NHERT continued to show durable responses for ORR and DOR. For both PFS and OS as secondary endpoints, clinically meaningful results were demonstrated. No new safety signals were identified. All grade IOD was generally consistent with prior clinical trials. The details of the data will be presented at an upcoming medical meeting in the future. Based on this data, discussions with health authorities are ongoing. On page 21, I will explain the progress of DatoDxD. Tropion-Lang02 is a Phase 1b study to evaluate the doublet combination of DatoDXT and Pembrolizumab and a triplet with additional platinum chemotherapy in NSCLC patients in the first-line settings as well as the second-line settings and beyond. At ASCO this year, we presented the data shown on this page. ORR in all patients was 38% in the doublet arm and 49% in the triplet arm. In the first line patients, the doublet and the triplet arms demonstrated encouraging anti-tumor activity of 50% and 57% respectively. On the other hand, as of now, the incidence of IOD was higher than Datto DXC's other studies but most of the events were predominantly grade 1 or 2. Currently, no new safety signals were identified, and the trend of the events was comparable to the non-safety profile of DatoDXT. The efficacy and safety data is still preliminary, so we will continue to implement the study carefully and accumulate the data. Next, on page 22, I will explain the progress of Tropion Lung-01 study. This is a phase 3 study to evaluate the efficacy and safety of DatoDXT compared to docetaxel, the current standard of care, in about 600 previously treated advanced or metastatic NSCOC second-line or third-line patients with or without actionable genomic alteration. We disclosed primary endpoint PFS final analysis data and OS interim analysis data in July this year. The DATO DXD arm demonstrated statistically significant improvement in PFS compared to the docetaxel arm. As for OS, the other primary endpoint, the DatoDXT arm demonstrated the trend of an initial improvement compared to the Dosetaxel arm, but did not show a statistically significant improvement in the interim analysis. We will continue to implement the study and evaluate OS in the final analysis. In this study, no new safety signals were identified. The trend was similar to the results of other data studies. Grade 5 IOD events were observed, but the majority of the reported IOD events were Grade 1 or 2, generally consistent with prior clinical studies. Right now, we are sharing the details and proceeding to file the study data with the regulatory authorities.

Slide 23 shows the progress of the Harthana Lang 01 study for HER3-DXD. At the FY2022 Q4 earnings call, we reported that the HER3-DXD 5.6 milligrams per kilograms arm showed efficacy in patients with metastatic or locally advanced EGFR-mutated NSCLC and that no new safety concerns were identified. Details of this data will be reported at September WCLC. We are preparing for regular resubmission in the US in the second half of this fiscal year. In HER3-DXD, Phase 3 Herthina Lung 02 study for the second-line treatment of NSCLC with EGFR mutations and a Phase 1B study evaluating the efficacy of HER3-DXD in combination with osimertinib are ongoing. Slide 24 provides other progress on 5-DXD ADCs. First of all, in HARTU, in June, we initiated a combination study with DS-1103, an anti-serum alpha antibody. Also this month, based on data from the DESTINY Breast Xerox trial, the drug was approved in China for the treatment of breast cancer with low HARTU expression in patients previously treated with chemotherapy. In April, DS7300 received the rare drug designation from the US FDA for the treatment for SCLC. From slide 25, I will provide an update on next slide. The slide 26 introduces a new DXD-ADC that is scheduled to enter clinical trials. DS-3939 is an ADC developed by combining the anti-TAMAC1 antibody, a license from the Glycotope GmbH with our DXD-ADC technology, and has a DAR of 8. The target, TA mark 1, is a transmembrane mutsin that is overexpressed in various types of cancer. The first in-human phase 1-2 study is planned to be initiated in the second quarter of this fiscal year. Please see slide 27. I would like to introduce another new project. DS1471 is an antibody targeting CD147. CD147 forms complexes with other factors, and while it is involved in the embryogenesis and wound feeling in normal tissues, it also plays an important role in cancer cell survival. DS1471 downregulates this complex, thereby inducing cellular stress response and atopic cancer cell death. Phase 1 trial is scheduled to begin in the second half of this fiscal year. Slide 28 shows other progress of next wave. Bamflita was approved for the first-line treatment of FLT3 ITD mutation positive AML and acquired approvals in May this year in Japan and in July in the United States. Ezarmia, the top-line results of the Phase II study in patients with relapsed or refractory PT-CL were obtained in June. The results will be presented at a future society meeting. DS5670 COVID-19 mRNA vaccine is undergoing a booster vaccination study for Omicron strain. In May, a Phase 3 study started in healthy volunteers aged 12 years and older, as well as Phase 2-3 study for children aged between 5 to 11 years. DS-7011, an anti-TLR7 antibody for the treatment of systemic lupus erythematos, or SLE, a phase 1b2 study was initiated this month. Finally, DS-2325, which is being developed for Nadirson syndrome, received a rare pediatric disease designation from the US FDA in May. Slide 29 and onwards show the future news flow. Slide 30. First, upcoming conference presentations, expected approvals and key data availability. At the WCLC in September, in addition to the Herthorne Lung-01 trial data mentioned earlier, the primary analysis data from the Destiny Lung-02 study targeting NSCLC with HER2 mutation and interim data from the Tropion Lung-04 study in first line and later, for the NSCLC without actionable genome alteration will be presented. The booster vaccination of DS5670 original strain is expected to be approved in the second quarter of this fiscal year. The destiny breast 06 of and how to study in chemotherapy naive hormone receptor positive and how to low breast and tropion breast 01 study of that or DXD were previously expected to be available in the first half of the current fiscal year. But it is likely that the data will be available in the second half of the year. The change in timeline is due to the event-driven nature of the study, and the studies per se are progressing well. Slide 31 and the rest are the appendix. Please refer to it later for a list of milestones and pipelines. And that is all with my presentation.

Now we'd like to go into Q&A session. Let me explain how you can ask questions. If you have a question, please press the raise hand button at the bottom of the Zoom screen. I will name you one by one. When your name is called, please unmute yourself and ask your question. If you're done, please press the lower hand button and mute yourself again. Anyone with a question, please.

First, Mr. Muraoka from Morgan Stanley Securities, please.

Hello, Muraoka from Morgan Stanley. Can you hear me? Yes, we can hear you. Thank you very much.

Datto Tropion Rang 01.

You are moving toward filing, so there is a full possibility that you can get the approval. The details will be presented at an academic society meeting, so we have to wait. There's going to be a major academic society meeting in October, so we can hear the results before the second quarter results announcement.

Yes. Yes, Ken Takashita here, head of R&D. And I can take this question. We have not yet announced the plans for when the data will be shown at a conference. But once we have those plans, then we'll be ready to announce it to you at a later date. Thank you.

Understood. Thank you very much.

I like that the DB 06 with regard to the data in the past in AHA2, well, the event is not accumulated. However, when you look into it, I think that the drug is better than the control and we are expecting the same. But Mr. Takeshita, Mr. Takasaki, do you expect the same?

These are event-driven clinical trials. I think these events are subject to influence by many, many, many factors. So it is a bit tricky to read into what the clinical trial data might be based on this change in our timelines.

Thank you.

Lastly, regarding the transfer of Daiichi Sankyo ESFA, when it was decided, looking at the press release, the operating profit was around 10 billion yen. It was very profitable. I was surprised. Annualized profit is going to decline by 10 billion yen because of the sales of this company.

May I respond to that question?

Ogawa speaking. Regarding ESFA, The current way of transactions will continue for some time, then we will book the sales until March 2024. In 2024 and beyond, no decision has been made. In the longer term, profit will decrease by 10 billion yen or so. Is my understanding correct, roughly speaking, or because of some transactions, it's not going to be a big decline?

Right.

From April 2024 and beyond, how to book the profits is still to be confirmed, so nothing has been decided yet. Understood. That's all from me.

Thank you very much. Yes, from the JP Morgan. About the Trumpion-Lang01 results, there are three questions that I would like to pose. The first question being, well, the AstraZeneca explanation meeting is where I attended yesterday. And it seems that they had a very strong aggressive behavior. And I think that because of that, the US share price has gone up. and i would like to confirm whether the data reading is the same as astrazeneca astrazeneca has a self-confidence of the data and in addition to that with regard to the sales safety profile the risk benefit is well balanced that is what they said but on this point do you think the same thing you agree

Yes, there's a very close discussion and partnership between Gaito Sankyo and AstraZeneca. And we have extensively discussed the results. And I think it's very fair to say that from both sides, we are in alignment with how we feel about the data.

Thank you very much. Secondly, OS final analysis data and how to handle that data. If you are to file with the current data, OS is still in the interim analysis. If you are to file with that data, in the end, OS results must be submitted or the current data would be enough to file and get the approval.

that at the current state with the interim analysis, the overall survival data is immature. But we have not announced our regulatory strategy about whether or not OAS data is required or not. Once we are ready to disclose that information, then we will certainly relay that to all of you. Thank you very much.

The last question. So, with regard to the presentation material from you, that the cleaning meaningful, this phrase is included and also the encouraging, this phrase is also utilized. And then the Trumpian language 01, the cleaning, not clinical meaningful, but you mentioned encouraging, you used the word encouraging. So, cleaning meaningful, why these words were not utilized. And then also in the first place, looking at the data, I believe, is it okay to consider that you selected encouraging? Because if it's very good, then cleaning are meaningful. And then the encouraging is a little bit downgraded.

that question. I think it's very important to mention that TEL 101 is positive data from a statistical perspective. That's very important to note. But the interpretation of the clinically meaningfulness is dependent on the totality of the data available for these studies. And really the stakeholder expectations of what's considered meaningful from a risk-benefit perspective. So I don't want to be in a situation where we're trying to hear, define what a clinical meaningful is from our perspective, because ultimately it's going to be a data-driven decision based off for all the stakeholders, based on what we will be showing in terms of the data at a future conference and ultimately regulatory agencies and also of course the the final publication of the data is now interim analysis data

There is no statistically significant difference. That's why you cannot use the wording clinical meaningful. The current PFS and the interim analysis OS is not the complete data. That's why you didn't use that wording clinical meaningful, no?

on your part, and it's difficult for me to confirm the details of our regulatory strategy and how we view our clinical data yet. Once we're ready to do that, we will certainly inform you of that.

Thank you very much. That's all from me. Thank you. We would like to move on to the next from the ECT Group Securities Yamaguchi-san, please. Well, my name is Yamaguchi from Citi. Do you hear me? Yes, I can hear you. Well, my host went down, so I'm sorry if I missed your explanation, but the first HER3-DXD submission in the second half, I believe that it hasn't changed. So that upline was available a while ago. And so interactions with a regulatory body was already conducted. And if so, were there any feedbacks? So first, whether there was any discussions with the authority.

Interactions with the health authorities. And based on that, we are proceeding with our plans to file the data for submission and approval.

So that means at the present moment, with the current data available, it is possible for you to submit.

Thank you very much.

As for TL1, I have a question, a few questions about Datto. Regarding Datto, you're preparing to file. That's the change of the status this time. Any interaction with the regulatory authorities? And then you're coming to the state. As I asked earlier, based on the currently available data, it's possible to file your submission and whether to submit OS data or not, that's not disclosed yet, correct?

We have not informed you about whether or not OS data is or is not required for this submission. It's only that we're going to submit.

Thank you very much.

Lastly, about the performance per se, the NHER2, well, the growth achievement is about 25% than the annual. Of course, it is an upward overachievement. Maybe the effects have some kind of influence, but then it seems that the NHER2 will overachieve for a full year. Is it okay to understand that way? You know, so for the full year assumption. We haven't changed our view. And of course we would like to look at how it is going and if there's any big changes. And then accordingly we would like to give an update and let you know. So how do you see it at the present moment? We think I didn't have to. At the present moment, well, figure wise, well, we have already announced that, so that's the way. So overall, like it has a steady and good going. So from the indication and from the perspective of region and the country and growth in the country, it's in the positive direction. OK, thank you very much.

Next, Mr. Hashiguchi from Daiwa Securities, please.

Hashiguchi speaking. Thank you very much. My first question is about Tropion Lang01 and DatoDXT.

In April, there was an update of your mid-term business plan.

Compared to your assumptions there, how was the situation? Not good or not bad, any gap?

As of now, we're not disclosing the information right now.

We will review the data further. As Takeshita mentioned, we will check the status of interactions and discussions with the regulatory authorities. And once we see the timing more clearly, We will give you an update on that. There is a progress, that's for sure. But how to judge the details of the progress? We are going to examine the details and we'll share it with you at a later timing. Thank you very much.

Another point that I would like to ask is with regard to the ENHAD, Destiny embraced the 06 study. The top line result? acquisition was changed, and what are the factors? Already the interim analysis was carried out, and so the significant differences was expected. However, this time there was no significant differences, so you would like to wait until the next analysis. Is that a possibility?

No, this is just a planned analysis that's already factored into the DB06 clinical trial. And as I said earlier, it is an event-driven event, a time point for the analysis. And we're just waiting for those events to happen.

So the timing of the scheduled analysis

has changed compared to your initial forecast, correct?

Yes, it's a number of events.

Yes, thank you. That's all from me. Next.

So Mr. Sakai from the Credit Suisse Securities. Sakai from the Credit Suisse. Can you hear me? Yes, we can hear you. Thank you. Well, Mr. Ogawa, you are a presenter as CFO, so I would like to ask a question to you about the DS shares. My quarterly performance, maybe there's no people who are investing based on this quarterly performance, but still I would like to ask for the past one, two years when the NH2 was launched, I think the volatility on a quarterly basis, so not against the full year, but it seems that there's a variety and fluctuations between the quarterly. And then because it seems that the profit is recorded despite the R&D product, so taking that into consideration vis-à-vis the quarterly performance. I am not going to say that please give us guidance, but I think maybe you have to do the expectation control. Like Lung01, because of that, there was a volatility in the share price. So I think that everybody is very much interested in the news flow from your company. So as a CFO, what is your opinion? Well, thank you very much for your question. So that on quarterly basis we are announcing the performance, but then there is a high volatility. Yes, we do recognize that. So not only with regard to the content of the announcement, but the top line results announcement as well as the data result is affecting the volatility. We do recognize that in order to mitigate that, whether to do the expectation control. Yes, I we do understand that it is very important and thank you very much for the precious advice and into the future. Well, within the IR activities that we would like to communicate duly and then also at the same time when we will be able to publicize, we would like to do so in order to minimize the level of volatility and at the present moment. Well, it's not that we have a certain countermeasures that we think of. However, as much as possible, we would like to give the information, and we also would like to be aware of the timing to release the information. OK, thank you very much.

One more question about HER3. You will proceed to filing. As was mentioned in the previous question, it shouldn't be the play of the words. Her three study results, clinically meaningful, is the expression you were using. Regarding 01 study, no such wordings, so there was a big reaction from the market. What do you think? We are not asking about whether the clinical study results were good or bad. This may be one of the expectation management. What do you think? Maybe this question may go to Takeshita-san perhaps.

These two trials that you mentioned, TL01 and HL01, are very different studies with different endpoints, different study design. So I think in both cases, the interpretation of the clinical data and whether it's clinically meaningful or not, again, is dependent on how all of us view the totality of the data. And when I say all of us, I'm not talking just about Diet Sankyo, but of course the investigators, physicians, and the regulatory agencies. So I think it's for these reasons, It's difficult to say why something is clinically meaningful in one situation or another until we can all see the data ourselves and decide whether or not something is meaningful.

Okay, we understood. Thank you very much.

Next, from the Sanford C. Van Steyn, Sugi from the Van Steyn. In HATU, in HATU, like in China, in HATU, This year the approval is acquired, but what about the sales? I think it's OK to understand that you have a minimum sales close to nil. And then NRDL2 listing is whether you are trying to get that and then do the negotiations. And I think it is okay to consider that unless you have the listing, there's not going to be any sales. Well, thank you very much for your question. Oh, in HATU, in the first quarter, The sales, as for us, well, is the revenue from the co-promotion in China, and we are booking in China. So it is going to be 0.9 billion, or 900 million yen, and it is recorded. NRDL, even though it is before that, it is possible to record the sales. And then, so actually, we are actually booking as the sales revenue from the co-promotion activities.

Sorry, my question was not so clear, perhaps.

Thank you very much. 0.9 billion yen. Thank you for your answer. As the revenue or sales level, NRDL listing is part of a strategy to begin with. And before listing in the NRDL, 0.9 billion yen in China compared to the scale of Enherd is a small amount. Is that going to be the amount are you expecting for the future as well? Thank you for your question. NRDL listing, including the timing of inclusion, you are asking this question. How to positive breast cancer, second line. We already submitted for inclusion in the NRDL. The timing of the inclusion in the NRDL, We are not in a position to answer the question right now. HER2 Law was approved in July. This year's NRDL negotiation cycle The timing is out of the scope in terms of the timing, so it's going to be for the future timing for filing or NLDL listing. Did I answer your question? Yes.

Now about the tax rate. So the tax rate you mentioned that compared to last year is low or the negative tax rate. At this or into the future, into the next quarter, how shall we forecast? Well, is there any guidance that we can look at? Thank you very much for your question. Well, at the time of the quality performance as the simple methodology like we booked or recorded, and there's two factors which I would like to explain. So the first is the R&D and also that the expenses there was a very big tax deduction or the deduction from the tax and then the ESFA the stock transaction and because of there was a deferred tax account and that is why there is a fact impact and then also the latter that is about the stock transfer of the ESFA and it's the negative impact of the corporate tax is going to remain for the whole year. So originally in 2023, at the time of the forecast of the performance, the tax rate was expected to be 15%. However, actually that it is going to be less than 15% taking into consideration this ESFA. So the ESFA influence will be within the range of 5 to 6%. Okay, thank you very much.

As for the expenditure, the tax credit or deduction, it's part of the 15% rate you assumed initially. That's because of the shift of the timing. So it's included. Thank you very much. Next. Yaku Keizai publisher, Ms. Hasegawa, please. Can you hear me? Yes. There was a panel committee at MHW. They're going to discuss your vaccine for approval. If it's approved, what is their plan to purchase as the central government? Takasaki, would you like to respond to that? This evening, there's going to be a deliberation at MHLW, as you know well. On our end, we will wait for the results of their discussions. And what we can say only right now is that we will wait for the results and address that for the purchase by the central government, an agreement or contract. Is there anything you're discussing with MHLW? is closely discussing with us. And what we have agreed upon between the two parties, we are not in a stage to disclose right now. So please wait for future information.

Now about this purchase, do you plan to really have a strong request from your company? Well, not only with regard to the purchase, but at the present moment, the Omicron, the Wuhan vaccine for the bivalent at the present moment, Well, we would like to contribute to the welfare of the Japanese people. So from that aspect, we are actually discussing so we are not narrowing the focus in our discussions, but we have a very wide discussions with a wide focus with the MHLW. Okay, thank you very much.

It's now time to finish this meeting.

We'd like to close this financial results presentation meeting. Thank you very much for your attendance.