Daiichi Sankyo Co Ltd Ord

Ladies and gentlemen, thank you very much for your patience. Now we would like to start FI 2025 third quarter financial results presentation. I am from corporate communication. My name is Asakura. I will be facilitating today's session. In this presentation, we are going to use Japanese and English. We have simultaneous interpretation service available. Please click on the interpretation icon at the bottom of the screen and please select the language of your choice. If you choose original audio, you should be able to hear original audio. And then on the Zoom screen, on the live streaming, we are going to put up Japanese presentation material. we have uploaded Japanese and English presentation material in our library on our corporate website whenever necessary please feel free to download the material Today's presenters are Mr. Ogawa, Senior Executive Officer, CFO, Mr. Abe, Head of R&D Division, and Mr. Ken Keller, Head of Global Oncology Business. Now, Ogawa and Abe are going to take you through the financial results for the third quarter FI 2025, and then we are going to open the floor for the Q&A. Today's session will be recorded. I would like to ask for your cooperation. Now, Ogawa-san, please.

This is Ogawa. Thank you for participating in Daichi Sankyo's earnings briefing today, despite your busy schedule. Now I will explain the consolidated financial results for the third quarter of fiscal year 2025, announced at 15 o'clock today, based on the materials. Please look at slide 3. The content I will discuss today is as follows. Fiscal year 2025, third quarter consolidated financial results, business update, research and development update. The research and development update will be explained by ABI, head of the R&D unit. We will take your questions at the end. Please look at slide 4. These are the highlights of the current earnings. Our flagship products, the anti-cancer agents, Enherz and Datorway, continued to grow steadily, and revenue increased significantly. The cost-of-sales ratio improved compared to the second quarter, and core operating profit increased by 8.8% year-on-year. No additional major temporary expenses were incurred in the third quarter. There are no changes to the fiscal year 2025 consolidated earnings forecast from the October announcement. Please note that as reference information, the latest sales forecasts for each product are listed in the supplementary earnings materials. Although there are some movements in individual products, there is no change in total revenue from the October announcement. Please look at slide 5. This slide shows an overview of the fiscal year 2025 third quarter consolidated financial results. The revenue was 1,533.5 billion yen, an increase of 165.9 billion yen, or 12.1% year-on-year. Cost of sales increased by 13.8 billion yen year-on-year, SG&A expenses increased by 93.7 billion yen, and R&D expenses increased by 38.1 billion yen. As a result, core operating profit was 249.2 billion yen, an increase of 20.2 billion yen, or 8.8% year-on-year. Operating profit, including temporary income and expenses, was 233.8 billion yen, a decrease of 14.5 billion yen, or 5.9% year-on-year, and profit attributable to owners of the company was 200... 17.4 billion yen, an increase of 8.8 billion yen, or 4.2% year-on-year. Regarding actual exchange rates, the dollar was 148.75 yen, a yen appreciation of 3.81 yen compared to the same period last year, and the euro was 171.84 yen, a yen depreciation of 7.02 yen compared to the same period last year. Please look at slide 6. From here, I will explain the factors for increases and decreases compared to the same period last year. Revenue increased by 165.9 billion yen year on year. And I will explain the breakdown by business unit. First, for the Japan business unit and others. Sales of lateral way. Belsomla for the treatment of insomnia, and Lixiana, direct oral anticoagulant, and Tarije, the pain treatment drug, increased. On the other hand, sales of Inavio, influenza treatment drug, decreased, and unrealized profit on inventory of Daichi Sankyo ESFA was recorded as realized profit in the previous period, resulting in a revenue increase of 10.7 billion yen. The actual increase or decrease in the vaccine business, which is affected by seasonal demand after provision for returns, was an increase of 300 million yen. Next, I will explain the overseas business units. Here, the foreign exchange impact is excluded. Oncology business increased by ¥113.3 billion due to growth in sales of Enhatsu and contribution of Datoru to sales. American Regent decreased by 24.3 billion yen due to the impact of a generic entry for the iron deficiency anemia treatment, Vinafa, and the impact of price competition for Injectifa. EU speciality business increased by 13.6 billion yen due to growth in sales of Niremdo Nustandi for the treatment of hypercholesterolemia. ASCA business responsible for Asia and Latin America increased by 35 billion yen as NHTSA grew mainly in China and Brazil. Contract upfront payments and development sales milestones related to partnerships with AstraZeneca and US Mark in the third quarter resulted in an increase of 20.9 billion yen. We received development milestone income from AstraZeneca associated with approval for first-line treatment of HER2-positive breast cancer in the U.S. for Destiny Breast 09 and received a second upfront payment from U.S. Mark for RDXT, which were recorded as sales revenue. The foreign exchange impact on revenue decrease was ¥3.3 billion overall. Slide 7 shows the factors for increase and decrease in core operating profit. I've explained a 20.2 billion yen increase by item. As explained earlier, revenue increased by 165.9 billion yen, including a foreign exchange impact decrease of 3.3 billion yen. Next, regarding cost of sales and expenses. Excluding a foreign exchange impact, cost of sales increased by 12.4 billion yen due to increased revenue and the recording of inventory valuation losses for Enhatsu and others in the second quarter. SG&A expenses increased by 100.3 billion yen, mainly due to an increase in profit sharing with AstraZeneca. R&D expenses increased by 42.6 billion yen due to increased R&D investment associated with development progress of 5 GXT ADCs. The expense decrease due to foreign exchange impact was 9.7 billion yen in total, and the actual increase in core operating profit, excluding Forex, impact was 13.8 billion yen.

Next, on slide 8, I will explain the profit attributable to owners of the company. As explained earlier, core operating profit increased by 20.2 billion yen, including the impact of Forex. Regarding temporary revenue and expenses, Again, as explained at the second quarter briefing in late October, same period last year included temporary income from the sale of shares in Daichi Sankyo SFA. However, this year, we don't have such impact. Although there were incomes related to litigation with former shareholders of Rambaxi, overall income decreased. Furthermore, there was a ¥34.7 billion negative impact due to CMO compensation fee associated with the change in the launch timing of Har3DXD, as well as write-down of inventories of Datraway and Har3DXD. Financial income and expenses contributed positively to earnings by 9.5 billion yen mainly due to improved FX gains and losses. Income taxes and so on decreased by 13.9 billion yen reflecting lower pre-tax income and a lower effective tax rate compared to the same period last year. As a result, profit attributable to owners of the company increased by 8.8 billion yen year-on-year to 217.4 billion yen. Next is business update. Please turn to slide 10. This slide shows the sales performance of Enhartu. Global product sales for the third quarter of FY2025 increased by 102.4 billion yen year-on-year to 506.8 billion yen. New patient share remains number one in all major countries and regions for existing indications such as breast cancer, gastric cancer, and lung cancer. Regarding the new indications, we've started promotion for first-line treatment of HER2-positive breast cancer in the U.S. last December, driving growth in new patient share. In China, we've initiated promotion for hormone-positive heart 2 low or ultra-low chemo-naive breast cancer patients in December, followed by promotion for second-line treatment of heart 2 positive gastric cancer in January. The NCCN guideline has seen new additions and updates for multiple cancer types. First, N-HER2 has been newly added as a Category 1 recommendation for adjuvant therapy in HER2-positive breast cancer with high recurrence risk. For HER2-positive metastatic breast cancer, HER2 monotherapy was already recommended as first-line therapy based on data from the DESTINY Breast 03 trial, a second-line trial which demonstrated extremely high efficacy. Additionally, based on data from the DESTINY Breast 09 trial, combination therapy with pertuzumab has been newly added with a Category 2A recommendation. For HER2-positive uterine cancer, in addition to existing recommendations for endometrial cancer, N-HER2 has been newly listed with a Category 2A recommendation for endometrial carcinosarcoma. For HER2-positive esophageal and gastric cancers, the recommendation level has been elevated from Category 2A to Category 1. NHAR2 is already listed in the NCCN guidelines for numerous cancer types and is recommended for use. We'll continue to generate data to pursue further new listings and category updates. Next, I will explain the sales status of Datraway. Please refer to slide 11. Global product sales for the third quarter fiscal 2025 reached 31.6 billion yen, representing 83.8% of the October forecast. In addition to steady market penetration for the breast cancer indication in Japan and in the US, the lung cancer indication rapidly gained market traction in the US, significantly increasing the number of new patients. Globally, prescriptions were issued to over 3,000 cumulative patients, approximately 1.5 times more than the end of the previous quarter. Sales growth significantly exceeded expectations in both the U.S. and Japan, with lung cancer indication particularly driving sales in the U.S. Given these circumstances, we've updated our four-year forecast to 47 billion yen, up by 9.2 billion yen from the October forecast. For both breast cancer and lung cancer, prescriptions have expanded beyond projections. This is primarily due to much higher than expected unmet needs, especially in the third line and later, leading to prescriptions for more patients than expected. Additionally, awareness among healthcare professionals regarding AE management, such as stomatitis and dry eye, an area where we have focused on since the launch, has increased and experience is being accumulated. Furthermore, Dr. Wei has seen new additions and updates in the NCCN guidelines. For triple negative breast cancer, it's been newly added as a category 2A recommendation for first-line treatment. For EGFR-mutated MS-COC, recommended EGFR mutation coverage has been expanded from the existing category to A-listing, widening the opportunity for that way to make further contribution. We'll continue to pursue further market penetration in existing sales regions and expand into new countries and regions while advancing efforts to obtain new indications. We're committed to delivering NHER2 and Dr. Wei to as many patients as possible who need these medications. Slide 12 shows an update on a C-Gen U.S. patent dispute related to our ADC. Last December, the U.S. Court of Appeals for the Federal Circuit issued a ruling reversing the district court's decision that ordered us to pay damages and royalties to Cijun, finding that Cijun's U.S. patent was invalid. The court issued a ruling affirming the U.S. Patent and Trademark Office's decision that CJEN's U.S. patent is invalid, dismissing CJEN's appeal. We highly value this ruling by the court.

Slide 13 is for the explanation.

Slide 13 is information about the briefing session. On April 8th, Japan time, we will hold the sixth five-year business plan briefing. Once details are finalized, we will inform you. From here, this is the R&D update. I will hand it over to Abe, head of R&D.

Thank you.

This is Abe. I will talk about the R&D update. First, I will explain about 5 DXD ADCs. Next slide, please. In December last year, in HER2, in combination therapy with perituzumab, obtained approval for the first-line treatment of the patients with HER2-positive, unresectable, or metastatic breast cancer in the U.S., As you know, this indication, based on the DPO9 study, was approved under Breakthrough Therapy Designation, Priority Review, and Real-Time Oncology Review Program. Regulatory filings have also been accepted in Japan, China, and Europe, and through Project Orbis, multiple regulatory authorities are proceeding with reviews. Next, please. I will talk about the final analysis results of the DESTINY breast O3 study presented at the San Antonio Breast Cancer Symposium in December last year. This is a phase 3 study that compared and verified the efficacy and safety of NHERZ and TDM1 for second-line treatment of HER2-positive breast cancer. As you can see in Enhards Group, the median OS was 56.4 months and estimated 5-year survival rate was 48.1%, showing long-term significant efficacy compared to the TDM1 Group's median OS of 42.7 months and estimated 5-year survival rate of 36.9%. In addition, No new safety findings were observed through long-term follow-up, and the incidence rate of ILT adjudicated to be drug-related in the Enhatsu group was 17.5%, with no grade 4 or 5 ILT observed. This indication has already been approved and launched in many countries and regions, including Japan, the U.S. and Europe. But these results reconfirmed Einheits's consistent, sustained efficacy and long-term safety and substantiated its contribution to improving survival. Next, please. This slide summarizes updates toward expanding indications for Enhatsu. Enhatsu is making steady progress in expanding indications in various countries and regions centered around breast cancer. And in December last year, based on the results of the DBO5 proposed neoadjuvant therapy for HER2-positive breast cancer with high recurrence risk, It received breakthrough therapy designation in the U.S. Also in December, based on the results of DBO-6, approval was obtained in China for the indication of chemotherapy-naive hormone receptor-positive anti-H2O or H2O breast cancer. And this month, based on the results of DG04, approval was obtained in China for the indication of second and later line treatments for HER2-positive gastric cancer. Previously in China, third line treatment for HER2-positive gastric cancer had conditional approval, but with this approval, full approval has been obtained for second and later line treatment. Next, please. This slide shows the progress of each N-HER2 study. Aiming to contribute to more HER2-expressing cancers, we started a destiny-long 06 in October last year, targeting first-line treatment of HER2 overexpressing non-squamous NS-CLC. And in December last year, we started the randomized phase of Destiny Ovarian 01, targeting first-line maintenance therapy for HER2-expressing ovarian cancer, and Destiny Endometrial O2, evaluating adjuvant therapy for HER2-expressing endometrial cancer. Next slide, please. From here, this is the progress of a natural way. Data from the tropion breast O2 trial targeting TNPC not eligible for PD-1, PD-L1 inhibitor treatment was presented at ESMO in October last year. Based on this data, filings for approval were submitted in Europe and China and were accepted in December last year. Procedures toward filing are also progressing in other countries and regions. For TNPC, as shown in the table on the left, in addition to the TB02, three Phase III studies are ongoing in early stage and recurrent metastatic stage. Next, please.

This slide introduces new phase 3 trial. The tropion lung 17 trial compares dactyrate monotherapy with docetaxel in patients with non-squamous NSCLC in second line or later setting. Building on insights from prior studies such as tropion lung O1, we target at patients with trop2 MMR biomarker positive. This trial aims to expand the treatment opportunity for natural way monotherapy in NSCOC. Next slide. This slide introduces the latest status of the ongoing DatoA trials. The first is the Tropion Lung O7 trial, which targets first-line treatment for non-square-mose NSCLC with PD-L1 expression below 50%. This trial had not previously applied the TROP2 NMR biomarker, but following a protocol amendment, PFS and OS in the TROP2 NMR positive population were newly added as primary endpoint. The second is a tropion lung 12 study. This is an adjuvant therapy trial for stage 1 NSCLC with ctDNA-positive or high-risk pathological features, evaluating a combination therapy with real vagus stomach. Regarding this trial, due to complexity of study operation, we've decided to discontinue patient recruitment. No new safety concerns were identified, and there is no impact on other natural wave trials. Next slide, please. From here onward, I would like to talk about the progress of next wave. For azarmia, we are preparing a phase 1 trial combining darolutamide with azarmia for M-metastatic CPRC. Regarding DS9606, a modified PBD-ADC targeting Clodin 6, we've decided to discontinue its in-house development following a strategic portfolio review. Meanwhile, DS3610, a sting agonist ADC introduced at last year's Science and Technology Day, commenced its first in-human trial in November last year. This slide shows that Ezarmia received Prime Minister's Award. Zermia was approved in Japan in 2022 for the treatment of relapsed refractory adult T-cell leukemia lymphoma, and in 2024 for relapsed or refractory peripheral T-cell lymphoma. Japan was the first in the world to obtain approval. This time, in recognition of healthcare contribution through establishing a new cancer therapy targeting EZH1-2 epigenetic regulation, we've received the Prime Minister's Award at the ACE Japan Medical Research and Development Awards, following NHAR2's award at the sixth ceremony. We are extremely pleased that a drug independently developed by Daiichi Sankyo is contributing to patients' treatment and that its achievement has been recognized by the society. Finally, news flow from now onward. Regarding upcoming regulatory decisions, we anticipate a review result for Destiny Breast 11 trial from the U.S. FDA in the first half of next fiscal year. As for the upcoming key data readouts, for the DESTINY Lung O4 trial of NHER2 for the first-line therapy of HER2-mutated NSCLC, data is expected in the first half of next fiscal year. For the Tropion Lung O7 and Lung O8 trials of DATRAWAY for first line of NSCLC, data is expected in the second half of next fiscal year. Furthermore, advanced trial data is now expected in the second half of calendar year 2026. Additionally, data from tropion lung 15 trial, which targets EGFR-mutated NSCLC after osmortinib, is still expected in the next fiscal year as previously planned. Slide 29 and onward are appendix. Please take a look at those slides later. That's all from myself.

Thank you. We would like to now start a Q&A session. You may ask a question, either in Japanese or English. And if you have questions, more than one, please ask one question at a time. And please be cooperative to limit the maximum number of questions per person to two. If you have any questions, please press the raise hand button on the screen. The first question is from Yamaguchi-san, Citi Group. Please.

Can you hear me? Thank you. You're not hearing the sound. So the sound is back now to the translation line.

Sorry, we missed the question from Yamaguchi-san. Regarding 9606, we stated that our in-house development will be discontinued. As we proceeded in our development, we had the result, and regarding MPBD itself, its utility was confirmed. And then how should we do moving forward? We may have an option taking partnership with other companies who may be interested in out-licensing of this asset, but in-house development will be discontinued. Therefore, Regarding MPBD technology, its usefulness has been confirmed. Therefore, the subsequent research is ongoing. Therefore, changing the targets, the clinical programs will continue. That is our policy. Thank you. Thank you. I'm sorry, but including the competition for clothing, Regarding 9606, given the strategic value, you decided not to do it on your own. Is that right? In Jamcell 2 more, we had a positive result. So there is a room of making more development in that area. But given the portfolio perspective, we decided not to continue the in-house development in this field. I see. Thank you. Another question.

is Enhatsu Marketing first line starting from December

Promotion started, and I'm not sure if it's already appearing quantitatively in the numbers, but what is your feeling in the market? DB09, marketing promotional activities, how effective the activities are producing the results. Thank you for your question. Regarding DB09, comment status, Ken Keller is going to give you a comment, please.

Yes, thank you very much for the question. So Destiny Breast 09, which is the first line HER2 positive metastatic breast cancer indication, it's been launched in the U.S. The team is now educating our oncology customers in the U.S. The data, as you know, is really outstanding. It's being received very, very well. I would expect the adoption to be very, very quick. At this point, the oncology community knows and heard to very well. They're comfortable with it, and with this data, I think they will embrace it very quickly.

Do you have some sense of penetration rate as of today, or it's too early to say?

It is too early to say what it is. We just launched it really just a little while ago, and so we'll be able to provide you with more information. and about a quarter from now.

Thank you very much.

That's all. Next question is from Daiwa Securities. Hashiguchi-san, please. Yes, this is Hashiguchi speaking. My first question is related to Japan-Europe sales situation. So this time you have made a downward revision of your forecast slightly compared to the original forecast. What's going on? uh what is going differently what is the background for you to take your forecast downward can you explain about the reason and the background for that yes i would like to make one comment first and then i would like to ask ken killer to make some additional comments in europe We are seeing some adjustment when we look at the quarter on quarter situation in Europe. There has been a change to the ERP system. As a result, we had to do some shipment in the second quarter, and that was affecting the quarterly sales. But I would like to ask Ken Keller to comment on the situation in Europe and sales from a four-year sales perspective.

Thank you very much. When we look at Inher2 in Europe, we're in a situation where, all of the countries have launched the HER2 positive second-line metastatic breast cancer indication. And the market share, the penetration, has already achieved a very, very high level. And so we see continued growth in that setting. But now as we look forward, we're going to see substantial growth in Europe as the different countries obtain access for the HER2 low indication. We've got the HER2 low indication in most countries in Europe, but now we're working through the typical reimbursement approval. As these occur, you'll see an acceleration of growth in Europe.

Thank you so much.

For Japan, what's the situation in Japan? Yes, let me respond to that question regarding Japan. Last year in April, we had seen some impact. NHI drug price revision Just before the start timing in April, we had seen some last-minute demand, and that impact still lingered. Overall, in HART 2, future growth trajectory in Japan remains unchanged. Okay, thank you very much. Next, Dr. Wei, NSCLC Phase 3 trial progress. That's what I would like to understand. A panzer study. was changed from the first half to the second half in terms of the timing. And for TL07, your disclosure was always saying that FY2026, but AstraZeneca is saying first half of the calendar year. And in your fiscal year, latter half, you've made a timing change to the latter half of your fiscal year and what is the reason behind this uh timing change thank you very much mr hashibuchi first regarding avanzar enrollment has been complete and with the event With the incidence of event, we understand that there has been change made, and that's all we know. And for TL078, we've disclosed second half of this fiscal year, so it's still being in line with our initial plan. Thank you. Regarding 07, primary endpoint was added this time, and so when you get the overall primary endpoint data, I guess you are going to make a disclosure. Is that the case? Or if you can collect the data on the already set endpoint, are you going to disclose those endpoints first, or like all of them all together? Thank you very much for your question. Regarding O7, NMR biomarker has been added to primary endpoint, as we have explained, and next year second half, PFS data is expected to be disclosed. So whenever we have event, we are going to make a disclosure. And as we have experienced at Avanza, when event becomes long or takes longer, then the timing of the disclosure may come later. But when that happens, we are going to communicate to you. This time's protocol amendment, With regard to that, we've had a lot of sufficient discussion. And what's more important here is that we are going to get the positive study results. So we do our best and we continue this study. Thank you very much. That's all from me.

Next question.

Next question is Seki-san from UBS, please.

This is Seki.

UBS, thank you for your presentations. My first question is about the follow-up question of TN07. There are four primary endpoints now, is that right? And then what is the hierarchy of statistical analysis and how should we consider the alpha? And T08 and T10, don't you have to change their primary endpoints? Thank you for your questions. Whether or not, in total, there are four endpoints. In ITT and NMR positive population, PFS and OS will be evaluated as primary endpoints. And as a result, how we will be leading to defining, we will consider risks and benefits taking a look at the study results and make a strategy for finding. Therefore, at this point in time, which is going to be included or not, I may have to expect that anything is not yet definite. Therefore, I'd like to reserve my comment this time. But based upon data, we will proceed our finding. What about 08 and 01? Regarding TL08, we are also having discussion and we are currently considering to include NMR as of today. And if we decide and added this change, then we will also let you know. We don't have any idea at the moment to make such an aggressive change. Thank you. Second question is the inventory write-down on the balance sheet. I think it was towards the end of the year, and it increased remarkably. What are the items contributed to that increase? And like the past case, don't we have to worry about any potential write-off of inventories? Thank you for your question. At this point in time, there is no potential impairment we anticipate. So that's one point. And for Enhatsu and Dattoway, overall, they are accelerating the growth globally. And especially the stock takings are accumulating in the U.S. for the purpose of growth. And that is affecting most. That's all. Thank you. Thank you very much.

Next question is from B of A Securities. Ma Megano-san, please. Hello, I am Man Megano from B of A Securities. I would like to make one clarification on IDX. Phase 3 trial received a clinical hold, but I I heard that this clinical study was reconvened, recommenced. Is that the case? I think it was a trial to support the filing. Can you tell me whether you've submitted the filing already or not? Yes, thank you very much for your question, and sorry that we've concerned you. IDXD, we've received the partial clinical hold, and it's been lifted already. However, I would like to explain the current situation. ED8 LANG02 study shows ILD-serious may have ILD serious cases, and our R&D team came to realize that, and we stopped the patient recruitment, and we made a report to the FDA, and then FDA has issued partial clinical hold, and that's been already disclosed. Sorry, that's been already lifted. But in the meantime, ourselves and Merck decided to have more strict risk management for ILD. So ILD high-risk patient. are now excluded from the trial and we have more strict inclusion criteria independent data monitoring data is looking at the safety and efficacy data more frequently and on top of that Participating investigators and clinical site staff are receiving additional education and updated training, amendment of protocol, ILD symptoms and ILD management. are now more thoroughly implemented with those pressure clinical hold spin lifted. And for ED801 study submission, what is the impact on the filing? There is no impact on such filing. So we are having a discussion with the regulatory authorities in different countries and regions. And we stick to the original timeline. That's all.

Thank you.

One more question. You're going to announce MTP, Mid-Term Business Plan, in April. And with regard to Datraway, I'm sure this is a growth driver for you. But now you have Avanza trial, and in the second half, you're going to have top-line result. And in Mid-Term Business Plan, Dr. Wei's assumption. How should we expect Dr. Wei's assumption to be laid out in the MTP? Thank you very much for your question. Well, we would like to make a detailed presentation on MTP when we make announcement, so I can't make detailed comment at this point of time, but that's your way study result, such as advanced study result and the others. We'll make a big difference in coming five years business. So when we make announcement of MTP, We will explain about the assumptions and the scenario on which MTPs have been formulated. We would like to offer you as much explanation as possible. Yes, thank you very much.

Next question is Ueda-san, Goldman Sachs Securities, please.

This is Ueda, Goldman Sachs.

Thank you. I have a question about clinical trials of Datoroe. This time, Tropion RAN07 QCS biomarkers were used. As a result, enrollment increased in terms of number of patients and the data effect to the data announcement timing or do you think that you still need to review all those? And also, for 08 study, biomarker usage is now under review, and if you decide to use it, then should we anticipate that the timing of announcement will be changing? Thank you for your question. Regarding the timing, this time, the enrolled patients numbers have been increased and already we completed enrollment therefore there is no delay anticipated it's already complete but as we experienced with Avanza If any events happen and causing any delay, we will let you know. So for the enrollment of the patients compared to the original plan, we added on NMR and we have already completed the enrollment. Did I answer to your question? Yes, thank you. And it's the same situation for 08? Regarding 08, as of today, I'm sorry I cannot comment in details, but a similar strategy is taken to move forward. I understood. Thank you. My second question is about Enhatsu indication expansion impact. First, in the first-line treatment, as you expand indication more, I think the sales will be accelerated. And already in the U.S., DB09, positive results have been disclosed, and as a result, do you see already some positive impact in the clinical practice, or can we expect more acceleration of the sales expansion? And DB05 and 11? those approvals are also expected. And number of patients seems to be big, but given the number of cycles of treatment, I may consider 09 contribution may be big, or If actual or the target population expands and if the clinical practices are conducted more efficiently, then there will be also a major contribution expected from 11th result. Which way do you consider? For this question, Ken Kera will answer to your question.

So if I heard the question correctly, we're already seeing some spontaneous use in Destiny Breast 09 from almost the moment when that data became public. So we are seeing people adopting it and using it already, even though commercially we've launched this just a little while ago. As we project out to the early stage breast cancer settings of Destiny Breast 11 and 05, in these early settings, the goal is cure. And both of these studies provide standard of care changing new data. And I expect them and everything we're hearing from the community is that they will it will be embraced very, very quickly. Did that answer your question?

Thank you very much. That's all for me. Thank you very much.

Next question. It's from JP Morgan Securities. Mr. Wakao, please. Hello, this is Wakao from JP Morgan. My first question is as follows. This time you didn't have a temporary expense. But was there any special factor? And then for the CMO compensation fee, I thought that there is something which is still under negotiation. What's the status right now? Temporary expense that we disclose. And on top of that, is there anything else? The answer is no. And going forward, with regard to the CMO compensation, fee we did if we scrutinize the situation and when something comes up we are going to disclose but at this point of time we don't we haven't identified any outstanding our remaining compensation fee that we need to pay to cmo when are we going to see the conclusion of this We are having an ongoing discussion with CMO, and we cannot determine when is the expected timing of the conclusion of this negotiation. TL 07 and 08, you are now adding NMR biomarker. And can you explain about the background, why you've decided to do so? I understand that you're trying to improve the probability of success. But if you're confident... In the result of that two-way, I don't think it was necessary, but what's the reason behind? Thank you very much for your question. We've had a lot of internal discussion on that. And at one point of time, we thought that, you know, this biomarker is not necessary. But pembrolizumab and DatoDXD, as we have experienced in breast cancer, these two are good match. And for lung cancer, In lung cancer, patients are hetero, based on our experience. So NMR biomarker in lung cancer is very critical. That's one of the reasons. And although you haven't asked this, but TL17 NMR biomarker study is going to take place so in the area of lung cancer with the existence of biomarker you know we can offer better benefit to the patients and in 0708 by using biomarker we can enhance the probability of success that's why we've decided to add biomarker in the protocol that's all from me thank you So I understand that you've discussed with FDA on this. And for NMR positive population, if you meet endpoint, I would understand that you can successfully make submission. And of course, depending on the data, but I think you can get approval from FDA. Yes, we've consulted with FDA before we amended protocol. And it all depends on how good our clinical trial result is. Thank you very much. MTP is to be announced in April. The other day in the JP Morgan Health Care Conference, CEO mentioned regarding the profit. outlook into five years. So in five years from now, you have a sales milestone for Enhartu and you have Cliff with Lixiana. So the profit somewhat may decline. However, if things go well, you can make some growth. And I think that's the outline of the message of you. But can you explain about that once again? Well, we've got to the next MTP to be announced in April. I am very sorry, but we cannot offer you any detailed comments because we are having an ongoing discussion to formulate MTP. Rixiana, LOE, inject stuffers being impacted by generic. You know, you understand those things quite well. Those would be the downside factor, negative factors. So with 5 ADC growth, we are hoping to catch up or compensate those, you know, decline as much as possible. And that's all I can tell you for now. But we are still committed to improve profitability and that's the baseline for the next MTP. Understood. Thank you very much.

Next question is Mura Okasa, Morgan Stanley, MUFG Securities, please.

Thank you. I'm Raoka from Morgan Stanley.

I have a follow-up question about Wakao-san's conference-related item. I'd like to understand the wording exactly. Did you say decline or slight decline? And I think it depends on how much inclusion you assumed. And if you included that conservatively, is it a decline or slight decline? Could you share that part once again with us? Thank you. In terms of wording, the word we used is slight decline. and overcoming the factors against the profit, we will be putting ourselves back on track for growth. In that context, this wording was used. But how much, I'm sorry, we cannot talk about it specifically, but at any rate, there'd be some directions, negative direction, putting us down side, but I would like to recover from that as much as possible, and all those measures will be incorporated in our five-year business plan. So if it is a slight decline, then I think naturally thinking you should be able to achieve a V-shaped recovery after that. Thank you very much. Another question.

It's a smuggling point.

Are you going to make acquisition by the time of next five-year business plan? And how many deals at what scale? Well, excuse me, what you're asking about is to acquire external assets? Yes, yes. Thank you. At this point in time, we don't have anything that we can talk about. But again, in our five-year business plan, We look at our pipeline, especially in early stage pipelines if there are anything which we can expect working as a complementary would like to pursue. toward the growth during the five-year business plan and beyond we'd like to explore externally any good candidates of assets so that strategy is unchanged and before the announcement of april the announcement of the five-year business plan, nothing is now moving at the moment in this regard. Thank you very much. And just one more point. Actually, your stock price went down much, but it came back quite quickly. Did you conduct a buyback, share buyback? It was a sharp decline and recovery. So I think probably in the next week you will disclose whether you conducted the share buyback or not. But could you comment regarding the share buyback as we have been talking about it? We will take into the stock price and others and we make comprehensive review and make a decision. And so far, on a monthly basis, we have the timely disclosure in the first operating day. And on that timing, we will continue disclosing the information. Thank you very much. I wish you also pay attention to your company stock price. Thank you.

Next question is from Bernstein Sogi-san.

Thank you very much.

Regarding TL07 and 08, I have a question. NMR biomarker is now added in the primary hand and the point, and I think this is good news. Regarding this, I have two questions. Regarding 07-08, it was a combination with Key Truder, and you use NMR, and then this will increase the probability of success. I think it will have a big commercial impact because you can combine with standard of care Keytruda 0708 for those two studies. I think you are done with the patient recruitment and within 12 months, the result will be presented. So you have come to this end. Now you are making an amendment. But you've got the kind of like a consensus from the FDA. Does that mean that FDA understands the significance of NMR as a biomarker? Thank you very much. In terms of the marketability, I would like to ask Ken Keller to make some comment, and I would like to respond to your second part of your question, how FDA sees the significance of NMR. Well, this relates to the discussion of contents of FDA, so I can't make any comment, but by including biomarker, Our intention is to improve the probability of success of this trial. That was the main intention, and please allow me to repeat that point once again. And depending on the result, study result, you know, we will consult with FDA and figure out how we want to do with the finding.

And the question in terms of adding in and working with the standard of care, you are absolutely correct. Catruda is clearly the market leader, and we've got a number of first-line non-small cell lung cancer studies with Catruda, and also, to remind you, we've got the Avanzar study with Mphimsi, which is AstraZeneca's IO drug. So we feel that whatever the preference is of that specific oncologist, We're adding Datroi in a way that is very convenient, and it should lead to very quick confidence in our drug, adding to whatever they prefer.

Thank you so much.

Next, regarding MTP, regarding the healthcare conference hosted by JP Morgan. I know you're announcing MTP in April, so you can't talk much about it now, but slight decline, as you say. with regard to profit it's not margin are you talking about absolute amount is that correct not margin and also when the profit declines the driver behind is i guess the aggressive r d cost assumption so in your case 5 ADC has many trials and you have partners. So with regard to the R&D cost, I would assume that with AstraZeneca, Merck, you've already, I guess, made alignment on the cost. And I don't think you alone cannot make adjustment or changes by yourself. Correct? With regard to the future R&D spending splitting R&D cost between us and the partner has been determined so we stick to that which study is to be debt by who this is different in different trial and when we've made agreement and then we just stick to the cost split structure we've predetermined with the partner during the mtp period how are we going to control r d cost i think that's what you wanted to understand so with to that end we have trials where we work with partners and we have developments that we take care of all by ourselves So in coming five years, what are going to be, you know, which project are we going to prioritize? That project, the prioritization and the resource allocation needs to be well managed. Okay. I have a follow-up question. In next three years, well, in next three years, not five years, Am I correct to understand that you've already had a lot of discussion with your partners as to what kind of trials are going to take place for what product? Yes, depending on the product, we are in a different stage. And for each product, we have a formulated joint team. So, rest assured, we have sufficient discussion going on between us and our partner through the joint team. And we stick to the priority that we decide on.

The last question is from Tony Rensan from Macquarie. Please go ahead.

Can you guys hear me?

Yes.

Okay, I thank you for the opportunity to ask the last couple of questions. So, I want to go back to your Clawdon 6 ADC, the decision to discontinue DS9606. My question is about the construct of the modified PBD. You mentioned its clinical utility has by now been established. Can I confirm that the decision, because I also noticed your peer company, Chugai, also discontinued a Clotin-6 T-cell engager in October. Yes. Can I confirm that it might be an issue with the target of Clotin-6? Can you also give us, in a sense, about the toxicity of the modified PDV construct? So that's my first question. Thank you.

Thank you for your question. Regarding MPPT, in terms of technology, yes, we confirmed that technology utility, as I mentioned earlier. And the reason we selected clothing 6, there are several reasons. Therefore, we expected in this asset, but there are things that turned out as it's expected or unexpected. And in terms of science contents, We'll be discussing it in some medical conferences, so allow me not to touch upon those. But in terms of utility in the germ cell tumors, if we can confirm the efficacy, then technology-wise, it should be very good. And for that point, we could confirm. And also, side effect was manageable as well. Therefore, amongst the difficult, challenging technology of PPD, we believe that our technology utility level is high. And talking about the protein-6 in germ cell tumors, can it be developed for this particular type of tumor? Well, I think it is possible. Therefore, any companies interested in this may consider development, including in-line sensing. But what about the business viabilities or in terms of portfolio? Well, given our business portfolio overall, we decided to discontinue. That is a background reason. Did I answer to your question?

Yes, yeah, answered very well. Thank you. I was mostly concerned about toxicity. My second and the last question is about your CapEx plan. So Nikkei Asia reported that you guys were considering spending 300 Japanese yen. That is close to $2 billion U.S. on CapEx, right, in four different countries, Germany, Japan, U.S., and China. This obviously feels pretty big in relation to the $800 billion in CapEx you guys already disclosed in the last five-year plan. Can I confirm that this $300 billion is in addition to, above and beyond the $800 billion already committed? Yes.

Thank you for your question about our CAPEX.

Well, it is not a new additional investment. So what we announced As we have been explaining so far, within the range that we have been already talking about, this spending will be incurred. Therefore, there is nothing new, nothing additional to the CARPEX that we have already announced.

Okay, so it is part of the $800 billion already announced.

Yes, sorry.

I am not familiar with the article's detailed contents, but yes, your understanding is correct.

Okay, very good.

Thank you very much. Thank you very much.

So with that, we'd like to conclude today's earnings call. Thank you for your participation today.