Daiichi Sankyo Co Ltd Ord

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 FY2024 first quarter financial results we announced at 1 p.m. on Wednesday, July 31st, JST, based on our presentation materials. Please turn to page 3. This is the agenda for today. We will cover FY2024 First Quarter Consolidated Financial Results, Business Update, and R&D Update in that order. R&D Update will be explained by Toshinori Agatsuma, Head of R&D Division. We will entertain your questions at the end. Please turn to page 4. This is an overview of FY2024 First Quarter Consolidated Results. Revenue increased by 85.3 billion yen or 24.3% year on year to reach 436.2 billion yen. Cost of sales increased by 1.4 billion yen from the previous year. SG&A expenses rose by 32 billion yen. An R&D expenditure increased by 23.5 billion yen year-on-year. As a result, core operating profit increased by 28.4 billion yen or 63.9% year-on-year to reach 72.9 billion yen. Operating profit, including temporary gains and losses, increased by 48.9 billion yen or 111.2% year-on-year to 93 billion yen. Profit attributable to owners of the company increased by 28.4 billion yen, or 49.8% eon-year, to reach 85.4 billion yen. As for the actual currency rates, the US dollar was 155.89 yen, the yen depreciated by 18.52 yen eon-year. The euro was 167.88 yen, the yen depreciated by 18.42 yen eon-year. Please turn to page 5. From here, let me explain positive and negative factors for our revenue compared to the previous year. Revenue increased by 85.3 billion yen a year. I will explain its breakdown by business unit. First, in Japan business unit. Due to the exclusion of Daiti Sankyo ESFA from consolidation, we no longer book sales of its products from April 2024. On the other hand, sales increased for direct oral anticoagulant Nixiana, anti-cancer agent Enhert, and pain treatment Adige, and Daiti Sankyo healthcare products. In addition, we booked realized gains on unrealized gains of inventory for Daiichi Sankyo ESFA products. So, revenue increased by 8.5 billion yen in Japan business unit as a whole. Next, let me explain our overseas business units. Forex impact is excluded here. In oncology business, revenue increased by 23.2 billion yen due to the growth of Enherd in the United States and Europe. As for American region, due to sales decrease for iron deficiency anemia treatment Vinofar, revenue decreased by 1.4 billion yen. Revenue for EU specialty business increased by 11.2 billion yen as sales rose for Lixiana and hypercholesterolemia treatment Nidamdo Nostendi. In ASCA business, responsible for Asia, South and Central American regions, revenue rose by 5.9 billion yen due to the growth of Enherd, mainly in Brazil. As for upfront payment and regulatory, sales milestone, etc., related to alliance with AstraZeneca and collaboration with U.S. Merck, We booked as revenue upfront payment related to a strategic collaboration with U.S. Merck for three DXD-ADC products including HER3-DXD, so revenue increased by 7.6 billion yen Forex impact increased our revenue by 30.4 billion yen in total Slide 6 shows the factors behind the change in core operating income

I will explain the items which contributed to the increase by 28.4 billion yen. As explained earlier, sales revenue increased by 85.3 billion yen, including an increase of 30.4 billion yen due to the effect of foreign exchange rates. First, I will explain about the cost of sales and expenses excluding the forex impact. Cost of sales decreased by 8 billion yen despite an increase in revenue due to an improvement in the cost of sales ratio resulting from an increase in sales of in-house developed products such as NH2 and a change in the products mix resulting from the elimination of sales of Daiichi Sankyo S-Fab products. SG&A expenses increased by 17.4 billion yen due to an increase in profit sharing with AstraZeneca for NH2. R&D expenses increased by 15.2 billion yen due to an increase in R&D investments, including an increase in R&D personnel in line with the progress of the development of 5DXT ADCs. The increase in expenses due to the impact of foreign exchange effects was 32.4 billion yen in total and the actual increase in co-operating profit excluding the forex impact was 30.4 billion yen. Next on slide 7, I will explain the increase and decrease in profit for the year. As explained earlier, co-operating profit increased by 28.4 billion yen including the forex impact. Temporary income and expenses increased by 20.5 billion yen year-on-year due to the recording of a gain on the transfer of Daiichi Sankyo ESFA shares and others. Financial income and expenses increased by 9.1 billion yen compared over the previous year due to an improvement in foreign exchange gains and losses. Corporate taxes increased by 29.7 billion yen year-on-year due to an increase in profit before tax, while income taxes decreased in the first quarter of the previous year due to the impact of the tax-effect accounting associated with a decision to transfer Daiichi Sankyo ESFA, which effect is absent this year. As a result, co-operating profit of the parent company increased by 28.4 billion yen

to 85.4 billion yen. Next, I would like to talk about business updates.

Please look at slide 9. This slide shows the sales of Enhatu. Product sales for the first quarter of FY 2024 achieved double-digit growth rates in all regions year-on-year, led by the sales growth mainly in second-line treatment of HER2-positive breast cancer and post-chemotherapy HER2-low breast cancer, resulting in an increase of 47.9 billion yen to 129.6 billion yen. In the U.S., sales increased 34% year-on-year to 68.9 billion yen. The company maintained the number one share of new patients for all indications of breast, gastric, and lung cancer. The share of new patients in the second-line treatment of HER2-positive breast cancer is in the upper 50% range, while that of HER2-low-expression breast cancer previously treated with chemotherapy is approximately 50%. We continue to contribute to the treatment of a large number of patients. Sales have also been steadily rising in several HER2-positive solid tumors for which we received approval and began promotion in April of this year. In the United States, as described in other progresses, NCCN guideline was updated in April and May of this year for 10 cancer types, including abiliary tract cancer. In Europe, sales increased 98% year-on-year to 35.2 billion yen. Sales grew steadily, especially in Germany, France, and Italy. The new patient share for its second line of HER2-positive breast cancer is over 60% in Germany and Italy, over 70% in France and Spain, maintaining the top position. The share of new patients with HER2 low-breast post-chemo increased to the 70% level in France and expanded to the 50% level in Germany and Italy and consolidating our number one position. In Japan, sales increased 78% year-on-year to 7.8 billion yen. The company has maintained and expanded its number one shares of new patients in all indications of breast cancer, gastric cancer, and lung cancer. Market penetration is steadily increasing with a share of new patients with HER2 positive in second line and post-chemo HER2 low breast cancer increasing to more than 50%. In the Asuka region, sales increased 122% year-on-year to 17.8 billion yen. Sales grew substantially, especially in Brazil and China. Product sales in the Asuka region include co-promotion revenues recorded by AstraZeneca in China, Hong Kong and others. We will continue our efforts to achieve further market penetration and expand the number of countries, regions for the product launch as well as to obtain new indications and provide NHER2 to as many patients as possible who need it. Next, from slide 10, I will discuss other initiatives in each region. Please look at slide 10.

First, an update in Japan. Anti-cancer agent Azormia, launched for the treatment of patients with relapsed or refractory adult T-cell leukemia lymphoma, ATLL, in 2022, was approved for the treatment of adult patients with relapsed or refractory peripheral T-cell lymphoma, PTCL, in June this year. In addition, in July, decision was made to transfer distribution rights of anti-insomnia treatment Belsomra from MSD to Diet Sankyo. We will be responsible for sales and promotional activities for Belsomra from October 1, 2024 onwards. Next, an update in EU. In May this year, cholesterol-lowering agent Niremdo-Nustendi was approved for treatments to reduce the risk of adverse cardiovascular events. With this approval, Niremdo-Nustendi has become the first and only non-statin LDL cholesterol-lowering treatment indicated for primary and secondary prevention of cardiovascular events. Page 11 shows major updates on patent disputes. Regarding the arbitration on our ADC technology, final award issued by an arbitrator has been finalized in May this year. The following month in June, based on the final award, CJEN has paid Daichi Sankyo about $47 million or about 7.5 billion yen in connection with the attorney's fees and costs. The payment has been booked as reversal of SG&A costs in FY2024 first quarter financial results. As for disputes regarding CJEN's U.S. patent, after we announced our financial results in April, there was an update on the PGR post-grant review decision. In January this year, the USPTO rendered a final written decision invalidating all challenged claims of Seijin's U.S. patent in the PGR. In May, Seijin filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit seeking revocation of this decision. This is the only Seijin patent cited in the lawsuit claiming infringement by Daichi Sankyo, which we are appealing. We will address the situation in order to maintain the PGR decision. From here on, we have R&D update. I will hand over to Toshinori Agatsuma, head of R&D division. Agatsuma speaking. I am going to talk about R&D update. First, an update on 5 DXD ADCs. Page 14 shows the main clinical studies and indications of DXDA disease in breast cancer. As a major progress in FI2024 first quarter, we obtained data from NHERD's Destiny Breast06 study in chemo-naive, HR-positive, HER2-low breast cancer patients and presented the data at ASCO 2024. I will explain the details on later slides. Regarding NHERT in HER2-positive breast cancer, first-line Destiny Breast 09 study in HER2-positive breast cancer, Destiny Breast 05 study as adjuvant therapy in high-risk patients, and Destiny Breast 11 study as neoadjuvant therapy are making steady progress. As for DATO-DXD, we found a submission based on Tropion Breast-01 study data in HR-positive HER2-negative breast cancer in the second-line and third-line settings. Review is ongoing in Japan, US, and Europe. As you can see, in the field of breast cancer, we are establishing new treatments and expanding indications to meet the unmet medical needs of more patients, and DXDA-DC's presence is increasing steadily. On page 15 and 16, I will explain Destiny Breast 06 study data represented at ASCO in germ. Destiny Breast 06 is a Phase III study evaluating the efficacy and safety of N-Hert compared to the treatment of physician's choice in patients with HR-positive, HER2-low or HER2-ultra-low breast cancer after one or more treatments of endocrine therapy. Destiny Breast06 study covers about 85% of HR-positive and HER2-negative breast cancer by previous definition, which consists of 60-65% of HER2-low patients and 20-25% of HER2-ultra-low patients, according to the estimation.

Please look at slide 16.

In the Destiny Breath 06 study, LH2 demonstrated statistically significant and clinical meaningful progression for survival, which is a primary endpoint. And in the study, the primary endpoint, the median PFS in HER2 low was 13.2 months with a hazard ratio of 0.62. The ITG population, a combination of patients with low HER2 and HER2 ultra low showed equally favorable results and safety findings were consistent with a known profile. Based on the results of the study, we are now preparing for submission for approval in Japan, the U.S., and Europe to establish a treatment for a wider range of early-stage HER2 low breast cancers. Slide 17 shows data from the interim analysis of the DESTINY BREAST-07 trial also presented at ASCO. In this study, a first-line pretreatment of HATU positive breast cancer in HATU demonstrated good efficacy and durability with and without pertuzumab. The objective response rate ORR for each arm was 76% for monotherapy and 84% for the combination arm. The safety profile of NH2 and pertuzumab combination were consistent with their individual known profiles. The data from this interim analysis provide further confidence for the ongoing Phase 3 Destiny Breast 09 study. We will proceed these studies to address unmet needs in HER2-positive breast cancer. Slide 18 provides an introduction to a new Phase III study of NHER2 in non-breast cancer types. Based on data from the Destiny Pan Tumor 02 and other studies, NHER2 has a cross-approval in the U.S. for HER2-positive metastatic solid tumors for patients who have received prior therapy and have no alternative treatment options. The Destiny BTC-01 study is a Phase III study that compares the efficacy and safety of NH2 alone or in combination with velvogostomic, a bispecific antibody which is in clinical development by AstraZeneca, and with chemotherapy for the first-line treatment of biliary tract cancer based on good outcome from Destiny Pan Tumor 02. The trial is scheduled to start in the first half of fiscal year 2024. Slide 19 shows the major clinical trials and indications for DXT-ADCs in lung cancer. In the lung cancer field, we are working to establish new treatments and expand educations with four compounds, NHATU, DATO-DXD, HER3-DXD, and IDXD. Today, I would like to explain the progress of the Tropion Lung 01 study, data from clinical trials leading to Tropion Lung 07 and Lung 08, and Lung 15, a new Phase 3 study. Please see slide 20, which describes the progress of the Tropion-Lang01 study. In Tropion-Lang01, data DXD demonstrated a statistically significant improvement in PFS compared to docetaxel in patients with non-squamous NSCLC in the second-line or later treatment group. The approval review based on this data is currently underway in Europe and the United States, and the PDUFA date in the United States is set for December 20th of this year. The primary analysis results of overall survival, OS, obtained in May of this year show the clinical meaningful improvement in non-squamous NSCLC. We remain confident that that DattoDxD will establish new treatment options for patients with non-squamous NS-CLC in the second line and beyond, and have submitted all OS data to the regulatory authorities and are continuing discussion to obtain approval.

On page 21, I will explain the results of Tropion Lung-02 study we presented at ASCO. Tropion Lung-02 is a Phase I study to evaluate the safety and tolerability of the doublet of DatoDXT and Pembrolizumab or the triplet with platinum-based chemotherapy in first-line NACLC without actionable genomic alterations. As is shown in the right table, we set cohorts in line with the degree of PD-L1 expression and evaluated the doublet and the triplet. We confirmed durable anti-tumor activity across all levels of PD-L1 expression in both arms. In particular, the doublet regimen in patients with PD-L1 expression of 50% or higher showed robust data in spite of the small sample size. No new safety signals were observed. As Phase III studies of DATO-DXD, Tropion-RAM-07 and Tropion-RAM-08 studies are ongoing by PD-L1 expression levels. We believe that the data strongly supports the continuation of these two studies. On page 22, I will explain our new Phase III study for DATO-DXD, Tropion-RAM-15 study. This is a study to evaluate the efficacy and safety of DatoDXT with or without osimertinib in EGFR-muted NSCLC in the second-line settings and beyond after prior osimertinib treatment. Primary endpoint is PFS, and the study will start in the first half of FY2024. Page 23 shows the review status of HER3-DXD in the United States. Based on Hircina Rang01 study data, our filing was accepted by FDA in December last year. FDA issued complete response letter for BLA in June this year. Due to findings pertaining to an inspection of a third-party manufacturing facility, FDA notified that they did not approve HER3-DXT by the PDUFA date June 26 this year The complete response letter did not identify any issues with the efficacy or safety data submitted Withdrawal and resubmission of the BLA is not required We will work closely with FDA and the manufacturer to address the feedback as quickly as possible A majority of regulatory submissions in countries and regions outside the United States will be done with upcoming Hircina-Lang02 study data as originally planned. Page 24 shows other progress of five DXD ADCs. I will explain the start of three new studies. First, HODATO-DXD. In May this year, tropion lung 10, a phase 3 combination study with nirvego stomach for PD-L1 expression of 50% or higher, NSCLC, first line, started. In addition, tropion lung 14, a phase 3 combination study with osimertinib for EGFR-muted NSCLC, first line, also started in May. As for IDXT, ID8Pantumor02, a Phase 2 study for sodic tumors in the second-line settings and beyond, started in May.

From page 25, I will explain the next wave progress.

Slide 26 shows the progress of each project. Valmetostat was approved in June of this year in Japan for the treatment of relapsed or refractory peripheral T-cell lymphoma. And Talish was approved in China for diabetic peripheral neuropathic pain or DPNP. And lastly for Diterona. Filing was accepted in Japan for Omicron strain booster vaccination in children aged 5 to 11 years. In May, the package insert was revised based on a notice issued by the Ministry of Health, Labor and Welfare allowing for a single administration to patients aged 12 years or older. In June, partial change application was accepted as a vaccine against the strain selected by MHLWs for the fiscal year. Next information on our upcoming IR events. Please see slide 28. Our IR events for WCLC and the European Society for Medical Oncology, ESMO, will be held virtually on September 17 at 9 p.m. Japan time. Ken Takeshita, Head of Global R&D and Head of Global Oncology of Clinical Development, Mark Rothstein, will be the speakers. The main presentations at both conferences will be announced in the news flow. Slide 29 and beyond show the future news flow. Please look at slide 30. The conference presentation scheduled is shown on the left. At WCLC in September, we will present the initial data of the Destiny Lang03 study and interim data of the ID8 Lang01 study. At ESMO, also held in September, we'll be presenting the gynecological cancer data of the tropion pantoma 03 study and the first data from the phase 1 study of DS9606, a second-generation ADC. I hope you're looking forward to them. The expected timing of major events is shown on the right. As shown in the middle, the Destiny Breast 06 study is expected to be approved in Japan and Europe in the first half of this year and the United States in the second half. In addition, the main data of Herthena Lung 02 for HER3-DXD is expected to be available in the first half of this year. Slide 31 and the rest are the appendix, so please refer to them later. That is about all from myself. From here, we will answer your questions. Thank you very much.

Now we are moving on to Q&A session. First, Mr. Yamaguchi from Citigroup Securities, please. First, I'd like to ask you about the progress of results. Of course, I do understand that there is some extraordinary profit, including gain on stock transfer of Taichi Sankyo ESFA as well as Forex Impact, but you are making a very good progress. Your company has a tendency of higher costs spent in the second quarter than the first quarter. But still, you are making a very good progress. Compared to your assumptions, good progress is being made. Correct? First, I appreciate your comment on the progress in the first quarter. Ogawa would like to respond. The first quarter was progressing well. It is true that good progress is being made. In some areas, we are exceeding the initial plan. Going forward, we will monitor the situation in the second and the third quarters. Business units have different upside and downside. We will identify those and will revise the forecast if necessary. Thank you. Secondly, I want to make a few confirmations about Datto DXD. Topline OS data is already presented. I assume the details of OS data will be presented at WCLC or ESMO, but it was not included in your event list. You have not yet decided to present OS data in detail, or is it going to be presented somewhere? Agatsuma would like to respond. Due to the embargo policy of the academic societies, we cannot share specifically which Congress right now, but we are planning to present at either of the upcoming meetings in autumn. Understood. You also talked about HER3DXD. I understand clearly that resubmission is not required. But some time has passed since the announcement. What's the current status? How much time is required to resolve the issue? From outside, I feel that it would not take a long time if resubmission is not necessary. When will be the timing of the approval of HER3-DXD in the United States? Ogawa would like to respond. How much time we are expecting until resolution of the issue? Currently, we are not in a state to answer that question specifically We are working closely with the manufacturing facility in question in order to resolve the issue as soon as possible That's all we can share for now As for sales forecast, as you can see in supplementary materials We have not made any revision. As of now, it's difficult to predict the timing. That's the reason why we try to update at an appropriate timing. That's all from me. Thank you very much. Next, Mr. Wakao from J.P. Morgan Securities, please. Wakawo from JP Morgan speaking. Thank you for your time. Thank you. In your response to Yamaguchi-san's questions, you mentioned that you will identify upside and downside and make a revision accordingly. Could you please elaborate on those upside and downside factors? I thought downside may mean that the approval of HER3-DXT could be delayed, resulting in a shift in the timing of sales. I appreciate your comment. Thank you. Thank you for your question. Ogawa would like to respond. We do not have information to give you a concrete explanation right now. But one possible downside risk could be seasonal products such as influenza and vaccine business. On the other hand, DB06 could be an upside. So going forward, we'd like to judge by taking into consideration the situation of HER3-DXD also. Understood. Thank you. For HER3-DXD, A possible change would be just sales based on the timing of approval, correct? Upfront payment related to US Merc's refusal rights or continuation of the development would not change according to your assumptions, right? You have not changed your assumptions from before, correct? Ogawa would like to respond. Right. We have not changed our assumptions from before. With the recent complete response letter, there is a question whether US Merck will exercise its right to opt out or not. How it will be related to this question, we cannot comment on our end. We have not changed our thinking from before. Understood. Also, I would like to know more about the progress of NHERT. The first quarter performance of NHERT exceeded your plan? In particular, it seems to me that the United States is making a solid progress. Which tumor type is growing? You explained cancer types across the board, but any particular tumor type that is growing? Thank you for your question. Ogawa would like to respond. With regards to NHERT, as is explained in supplementary materials, there is some difference in the progress rate by region. The progress rate in Europe is slightly lower compared to the original plan. In the United States, it's mostly progressing well. In Japan and ASCA, progress is exceeding the expectations. If there is any other comment I can make here, there was a question during a financial results presentation before regarding sales in already approved HER2-positive and HER2-low cancer based on DB03 and 04 studies. how we can grow cells as there is some room for further growth. At that time, we responded to that question. I could not make a good reply at that time according to my memory. Back then, we responded that doctors or prescribers will be classified through segmentation into high users, low users, non-users, and medium users. We could divide them into three or four categories, focus on medium users and low users, and implement promotion and education activities, as we explained before. This focus strategy is proving effective, as we are actually feeling. This is an example of HER2 positive cancer. We'd like to increase our market share also in HER2 low segment in the United States. Understood. But DB06 patient population is not increasing in number right now.

Correct? Ogawa will respond.

As for DB06, without the inclusion in NCCN guidelines, there will be no reimbursement, which is a big hurdle to clear, so we are not expecting a big impact to them. Do you have any idea about the timing when NHERT is included in NCCN guidelines? We cannot tell. As of now, we can just comment that we are hoping for an inclusion in the guidelines as soon as possible. Thank you. Understood. That's all from me. Thank you very much. Next, Mr. Hashiguchi from Daiwa Securities, please. Hashiguchi from Daiwa Security speaking. Thank you for your time. About your development strategy for EGFR-muted NSCLC, Datto DXD's Tropion Rang 14 study started and Tropion Rang 15 study will start. It seems that you are reinforcing development in this segment. Then, what will be the positioning of HER3-DXD? You partner with AstraZeneca for Datto and with US Merck for HER3. US Merck has just paid half of the upfront payment and can decide from now whether to pay the remaining half. You are increasing investment in Datto in this patient segment. I wonder how US Merck will perceive this. And I feel there is some risk here. What is your thought? And what kind of discussions are you having with US Merck right now? This will not be a risk factor for a decision by US Merck in October? I appreciate your comment on this. Thank you for your question. Agatsuma would like to respond. We believe that making efforts to deliver the best treatment to patients with unmet medical needs is regarded as a general principle We will first pursue that approach When data becomes available later, we would consider what kind of best contribution we can make and develop the overall strategy As of now, we have not been able to collect the data required for decision-making. That's why we are in a situation like this right now, so we will discuss later on. That's all from me. Understood. That's all from me. Thank you very much. Next, Mr. Muraoka from Morgan Stanley MUFG Securities, please. Muraoka from Morgan Stanley speaking. Can you hear me? Yes, we can hear you. Thank you. First, about tropion lung 07 and 08 studies. I am pleased that you showed your confidence once again today. What is the current timeline? It's not so clear to me. It was described somewhere that the Avanzar top-line results are anticipated in the second half of 2025. As for the timing of 07 and 08 study readout, there was a slight delay before, as I remember, but what is the current timeline you are assuming? Please let me know. Agatsuma would like to respond. The sequence of data readout would be AVANZAR, 07 study, and then 08 study in this order, according to a current plan, for now. That's all for me. 07 study data could become available in calendar year 2025 or FY 2025. Based on the current plan, Avanzar in 2025, 07 in 2026 and 08 in 2028. Understood. You are talking about calendar year, correct? Or fiscal year? Sorry, fiscal year. Okay, fiscal year. Understood. Thank you. One more question. I'd like to ask you about the future outlook of Vixiana as sales are growing. Regarding the timing of LOE, lifecycle and extension, and those possibilities in the markets in Japan and Europe, what should we assume? I believe you can absorb this with your ADCs sufficiently. Could you please share your current outlook? Ogawa would like to respond. With regards to Nixiana, Edoxaban, we are not disclosing the timing of LOE. As of now, we cannot comment on the timing and the relevant strategy. What about the possibility of growth with LCM? Can we have expectations or is it better not to expect so much there? Right now, we are doing what we can do as much as possible. There is nothing new we can comment beyond that. Understood. That's all from me. Thank you very much.

Next question, please. From the UBS Securities Miss Halter, please. Yes, UBS Securities Halter speaking. First, let me confirm a little bit about NH2. This year's plan includes mainly the progress of DB03 and 04 and Pantuma. Those are the main, and you said that DB06 has an upside, but let me confirm how much of this upside is included in the plan. Ogawa will answer. Thank you for your question. As for DB06, we are unable to predict the timing at all, so we are not expecting it to be included in the current forecast. In that sense, if the NCCN guidelines are published within the fiscal year, we hope for a positive impact. I understand. By the way, the timing of the application for DB06 in the United States is the second half of fiscal year 2024, but Japan and Europe are filing first. Is there any reason why the United States is not first, as I think it is an important market? Could you please repeat the question? The timing of the application in the United States is later than other regions, but I was wondering if there's any background or reasons to this. Agatsuma will answer this question. Well, this depends on the timing of application acceptance, and there were only differences in timing. Understood. So we don't need to worry too much about that. That's right. Understood. In regard on DatoDxD, Tropion Lang01 showed good results in non-squamous cases. PFS was extended by 2 months compared to chemotherapy, and OS also improved with clinical significance. Your company says that this is clinical significant, but is it something that oncologists can fully accept? Chemotherapy has had strong side effects up until now, and there have been no new treatments other than chemotherapy for non-squamous cancer, so I think that if that or DXD were to be introduced, it could be fully accepted. Could you please explain your thinking on this? Agatsuma will answer the question. We have actually heard various feedback from physicians and we agree with what you have pointed out. We believe that the results are meaningful and impactful. Have you heard anything about side effects or the advantages of DATL? There's nothing particularly unique about this study per se, and we believe that the safety profile is comparable to other studies. Understood. Thank you.

Next question is from Tony Renson from Macquarie. Please go ahead.

Hi there. Thank you for taking my questions. So the first two questions are on DATO, and then I have one for ENTER2. So the DATO questions are, so first of all, about TROPY on LAN01. So during the AstraZeneca briefing last week, so Susan Delbrius suggested that the FDA could possibly request an advisory committee meeting before the December 20th PDUFA date. Is this something that you guys can confirm? The other one is that I noticed on slide number 19 that you guys added the AVENZA study. I recall at the presentation at the ASCO in 2022 in Chicago, Kenichi Takashita-san told me that you guys were not participating in the Avanza study, and that was completely a study run by AstraZeneca. So has that changed? Are you guys now participating, paying for part of the Avanza study? So that's the two questions on data. So my question on NHER2 is about Destiny Breast 11. We understand that this trial is supposed to read out by the end of fiscal year 2024. Now, we also know that recently the FDA ODAC meeting on AstraZeneca's GM study suggested changes to trial protocol in the neoadjuvant setting, separating it from adjuvant setting. So has that changed your Destiny Breast 11 progress in any way? So that's my question on NHER2. Thank you.

Agatsuma will answer the question. I believe you asked me three questions. I would like to confirm them. The first one is about the possibility of holding an ODAC or an advisory board or advisory committee meeting. We are unable to inform you of the possibility of an ODAC at this time. We would appreciate your understanding. Regarding the second question about Avanzar, is it right? I understand that you are asking about Daichi Sankyo's position on this. Basically, this is a study led by AstraZeneca, and the form of the conduct of the study has not fundamentally changed. However, I think I have shown you a map of potential first-line therapies for lung cancer, and this is a study that is in a very important position within that disease map, so I have included it in the map this time. I'm sorry, could you repeat your third question, please?

Sure. So your Destiny Breast 11 trial, right, so it is in the neoadjuvant setting, right, of N HER2 before surgery, preoperative setting. So recently, when the FDA ODAC committee is reviewing AstraZeneca's study, it's a trial called the AGEON study, And they criticized AstraZeneca's trial design by combining the neoadjuvant therapy with adjuvant therapy and suggested changes to all the trials in the perioperative setting. So obviously, Destiny Breast 11 is a neoadjuvant trial. So is your Destiny Breast 11 affected by the ODAC recommendation on the AGEON study?

I guess you are asking if there has been any impact on our DB11 strategy following the ODAP recommendation on durvalumab in AZ. No, basically there has been no change. You're going to continue. Okay, perfect.

Yeah. Since I have the four, if I may just add on one more. So your next generation ADC, DS9606, we found online that there was a suggestion that the molecular target is Chladen 6. Is this something that you can confirm?

Chladen 6 is the target in this ADC.

Okay, perfect. Great.

Okay.

Thank you very much.

The next question is from Michael Nedeljkovic from TD Cohen. Please go ahead.

Hi. Thank you for the question. I have two. My first relates to DattoDxD. As has been noted, the pivotal frontline lung cancer trials are now well underway. Can you provide any insight into the biomarker plan? Have you, for example, built into the trials any predefined biomarker subgroups that could form the basis for a filing? And then my second question relates to your long-term R&D plans. You have built a world-class ADC platform. Are there any plans to apply this technology to therapeutic areas beyond oncology, for example, by testing ADCs in immunology?

Hagatsuma will answer your question. I will answer the second question first. I think your question was about how we are thinking about activities other than oncology in our strategy to create new ADC technologies within our long-term strategy. Regarding this question, we are developing technologies at the research level that utilize various payloads as new generation of ADCs. Some of these are, of course, oncology-related, and we are also working on those in other areas. As for your first question, I think you were asking about the status of biomarker preparations. AstraZeneca and Daiichi Sankyo are currently deepening discussions on this topic. We may be able to discuss this at an appropriate time in the future, but at this point, we are not able to talk about it.

The last question is from Simon Arango-Baccaro-san from Bernstein Research. Please go ahead.

Sorry, I'm Sogi. Sorry, I think the name was wrong. I am Sogi from Stanford C. Bernstein. I have a quick question. Regarding DATOS TL01, you said that OS was not statistically significant this time, but when I think about the hierarchy of statistical testing... This is not very positive. So I think that this is the reason why statistical testing of PFS or OS in non-squamous patients is not possible. Could you tell us if this could actually be an obstacle to the approval by the FDA? Agatsuma will answer. With regard to the OS in the TL01 study, the study was not designed to verify the statistical significance of subgroups in the first place. Because of this, we have used the term clinical significant effect. I would like to ask if there is a part that I did not answer? I understood very well. That is because of the study design. But do you think this could be a bottleneck during the FDA's review this time? I think the honest answer is that it is not something we can determine at this point in time, so we cannot say anything about it. I understand. Thank you very much. The data of TROP2, the DATO competitor in non-small cell lung cancer, was presented at ASCO, and the results showed that DATO works in non-squamous patients but not in squamous patients. While the data of Gilead's Toradelvi Merck and Kellens Mk2870 showed efficacy, which was not related to histology. Regarding these two products, they have the same antibody, which is different from DATOS, and that the linker is also a hydrolyzable linker, which is different group of products from DATOS, if I may say so. So what is your company's hypothesis regarding the difference in the expression of these different characteristics? This is a subject of great interest to us, and we are currently conducting research on it. On the other hand, we have not yet fully developed a plausible hypothesis. However, as you pointed out, Ms. Sogi, the link is different and the antibodies are also different. The data suggests that the overall pharmacokinetics of the candidate compounds are very different because of the different payloads. It is very interesting to see the impact of these compounds on non-squamous and squamous cancer. But we are not yet in a situation where we can conduct research with a solid scientific hypothesis. We are gathering information, therefore, from various angles, and we are working hard to formulate and verify a hypothesis that seems to be correct. One last thing, please. AstraZeneca mentioned at their R&D meeting the other day that they are going to use a new biomarker AI machine learning approach called continuous scoring. They said that this approach will specifically be applied to dato. We are waiting for the data to be announced within 12 months this year, but I think that this new biomarker approach will be very important for ADC targeting in the future. Since AstraZeneca is taking the lead in this area, are you considering this kind of a new biomarker approach for 3ADC in which Merck and your company are partners? Well, we are very interested in the identification of biomarkers or rather as an approach to creating a selection criteria. On the other hand, we don't know about the level of maturity of the technology yet to be used in clinical practice and we are currently in the process of verifying it in clinical settings. And we are interested in this as one of the possibilities, but I think we need to pursue the possibility of another biomarker as well. I understand. Thank you very much. Now that we have reached the end of the scheduled time, we will conclude the financial results presentation. Thank you very much.