Daiichi Sankyo Co Ltd Ord

Kodama 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 the correction of FI 2025 consolidated financial results and the announcement of FI 2026 first quarter consolidated financial results based on presentation materials. Please turn to page 3. Today we are going to explain the correction of FI2025 financial results, the announcement of FI2026 first quarter financial results, FI2026 forecast, business update, and R&D update in that order. R&D update will be explained by Akihiro Inoguchi, Head of Development Function. We will entertain your questions at the end. Please turn to page 4. We submitted the correction of part of the consolidated financial results for the period ending in March 2026 to the Tokyo Stock Exchange today on the 31st of July 2026. This slide shows the correction we made. First, let me explain the background leading to the correction. After announcing the Tanshin report for the period ending in March 2026, in the fourth week of July 2026, during the process to analyze FI2026 first quarter financial results, we found unclear variance in the SG&A expense figures. We immediately investigated the cause and confirmed booking errors in accounts payable for suppliers, so we disclosed the correction of the relevant payables and related items. This is attributable to individual processing errors. We judge that this would not undermine the effectiveness of internal control for financial reporting as a whole. The statements of appeal and financial status are here as was announced in the timely disclosure. Now, we are checking the contents For the to be corrected in the security reports we submitted on June 19th, 2026. Once this is finalized, we will submit immediately. Please turn to page 5. Page 5 shows our main KPIs under the fifth five-year business plan. You can find the results after the correction. We'd like to express our sincere apology for causing inconvenience and concern to shareholders and investors. We are discussing measures to prevent the recurrence and we will continue to make efforts to strengthen our internal control. Next. I'd like to move on to explain the FI2026 first quarter results. Please turn to page 7. This is a summary of FI2026 first quarter results and FI2026 forecast update. In the first quarter, there was a significant increase in our revenue led by our mainstay products, Enhert and Dutterway product sales growth. So, we have been able to make a very good start in FY2026. On the other hand, operating profit decreased due to restructuring expenses related to EU Specialty Business Unit, etc. But excluding that impact, core operating profit increased. As for FI2026 forecast, we are revising our revenue forecast upward to ¥2,340,000,000 due to the yen's depreciation and stronger-than-expected product sales of Enherd in the United States. Due to the reversal of provision for losses related to cancellation of Odawara site investments, operating profit forecast is revised upward to ¥320,000,000. Please turn to page 8. This is an overview of FI2026 first quarter consolidated results. Revenue increased by ¥100.1 billion or 21.1% year-on-year to reach ¥574.7 billion. Cost of sales increased by ¥38.5 billion from the previous year, SG&E expenses rose by ¥45.9 billion, and earned expenditure increased by ¥9.5 billion year-on-year. We booked CMO compensation fee of 1 billion yen as foreign exchange rate fluctuations. As a result, co-operating profit increased by 6.3 billion yen or 6.2% year-on-year to reach 107.3 billion yen. Operating profit, including non-core income and expenses, decreased by 11.6 billion yen or 12.12% year-on-year to 85.1 billion yen. Profit attributable to owners of the company decreased by 16.9 billion yen year-on-year to reach 68.6 billion yen. As for the actual currency rates, the yen depreciated by 14.89 yen against the US dollar and by 21.57 yen against the euro in a year. Please turn to page 9. From here, let me explain positive and negative factors for revenue compared to the previous year. Revenue increased by 100.1 billion yen in a year. I will explain its breakdown by business unit. First, Japan Business Unit. Sales increased for anti-cancer agents Enhert and Dattaway and pain treatment Adige. But sales of direct oral anticoagulant Dixiana declined due to nearly 20% price cut in FY2026 NHI drug price revision. So, Japan business revenue decreased by 700 million yen in total. Next, let me explain our overseas business units. Here, Forex Impact is excluded. In oncology business, sales of Enhert and Datoray rose by 35.8 billion yen and 11.9 billion yen, respectively, due to their strong growth in the United States in particular, so revenue increased by 47.8 billion yen in total. As for American reagent, revenue declined by 11 billion yen due to revenue decrease for iron deficiency anemia treatments, vinofar and injectafar, and generic injectables. Revenue for EU specialty business increased by 2.2 billion yen as sales grew for hypercholesterolemia treatment, Nudemdo, Nustendi. In ASCA business responsible for Asia, South and Central American regions, revenue rose by 4.7 billion yen due to the growth of N-herd in the respective countries. As for upfront payment and regulatory sales milestone etc. related to alliance with AstraZeneca and U.S. Merck, we booked as revenue regulatory milestone payments associated with the approval of Enherd for breast cancer neoadjuvant and adjuvant therapies in the United States and solid tumors in Europe and the approval of Datorway for triple negative breast cancer in the United States. So, revenue increased by ¥15.2 billion. Forex impact increased our revenue by 41.9 billion yen in total.

Slide 10 shows the factors behind the change in operating profit. As explained earlier, revenue increased ¥100.1 billion, including the impact of foreign exchange. Next, let me explain cost of sales and expenses. Regarding cost of sales, other cost of sales increased due to higher costs associated with the increase in revenue and the recording of an inventory-related valuation loss. Adding the foreign exchange impact of the CMO compensation, cost of sales increased by a total of 38.5 billion yen. SG&A expenses increased 45.9 billion yen mainly due to an increase in the profit share paid to AstraZeneca. R&D expenses increased 9.5 billion yen Due to the impact of yen depreciation and increase in R&D investment associated with the development progress of the 5GXD ADCs and other programs, non-core expenses increased by a total of 17.2 billion yen, reflecting an increase due to EU Specialty Business Unit restructuring expenses and others offset by a decrease due to the reversal of the provision related to the cancellation of investment at Odawara plant. The forex impact on expenses was an increase of 12.7 billion in cost of sales, 10.9 billion in SG&A expenses and 8.6 billion in R&D expenses. for a total of 32.2 billion yen, including the impact of Forex operating profit decreased by 11.6 billion. Regarding our efforts toward achieving operational excellence, which underpins the strategy of the sixth five-year business plan, We are advancing company-wide identification of areas with room for improvement centered on the use of AI and optimization of procurement and outsourcing costs and will implement measures sequentially starting with the highest priority areas. Next, I will explain the change in profit attributable to the owners of the company. As explained earlier, operating profit decreased 11.6 billion yen. Financial income and expenses had a negative impact of 2.5 billion yen. Income taxes increased 2.8 billion yen due to a higher effective tax rate compared year-on-year. As a result, profit attributable to owners of the company decreased 16.9 billion yen year-on-year to 68.6 billion yen. Next, I will discuss the revision of the FY2026 consolidated earnings forecast. Please turn to slide 13. The foreign exchange rate assumptions from the second quarter onward are ¥155 to the US dollar and ¥180 to the euro. The impact of the yen's depreciation since the forecast announced in May is estimated to be an increase of approximately ¥40 billion in revenue and approximately ¥2 billion in operating profit. Compared with the forecast announced in May, revenue reflects a revision to the Enhatsu sales plan for the Asuka business unit, offset by the impact of yen depreciation, sales expansion led by Enhatsu in the US, and expanded sales of Niremudo Nostandi in the EU specialty unit. and is revised upward by ¥60 billion from the May forecast to ¥2.34 trillion. Cost of sales is expected to increase by ¥20 billion reflecting the upward revision to the revenue forecast, higher cost due to foreign exchange and recording of an inventory-related valuation loss. SG&A expenses are expected to increase by 40 billion yen due to the impact of the forex and an increase in the profit share associated with higher A-heart sales. R&D expenses, although affected by an increase due to foreign exchange, are maintained at 500 billion yen, the same as they may forecast, reflecting the timing shift of certain expenses and refinement of medical affairs expenses. As a result, core operating profit is maintained at 360 billion yen, The same as the May forecast. Operating profit is set at 320 billion yen, reflecting unexpected three-year decrease of 5 billion yen in non-core expense, resulting from the recording in the first quarter of the reversal of the provision related to the cancellation of investment at the Odawa plant as a reduction in non-core expenses. Profit before income tax is set at 334 billion yen, reflecting the revision to operating profit. Profit attributable to owners of the parentage set at 251 billion yen, reflecting an anticipated revision to the deductible amount of R&D expenses for tax purposes. Next, I will discuss the business update in slide 15. The slide shows the sales status. Global product sales in the fiscal quarter FY2026 increased ¥64 billion year-on-year to ¥219.2 billion. In the U.S., we obtained two new indications simultaneously in May, new adjuvant and adjuvant treatment of H2 positive breast cancer. In terms of sales growth, in addition to maintaining the number one new patient share in existing indications such as breast cancer, gastric cancer, and lung cancer in major countries and regions, as we have to date, a new patient share is steadily expanding in first-line treatment of HER2-positive breast cancer in the U.S. with more than one in three eligible patients. are now receiving treatment with Enhatsu. In addition, since beginning promotion as the only anti-HER2 ADC treatment for multiple HER2-positive solid tumors, prescriptions have steadily expanded due to very high AMET need, and this has come to drive sales growth in the U.S. The solid tumor indication received approval in Japan this past March and is steadily gaining market penetration. It also received approval in Europe in June this year, where promotion has begun. For some of the cancer types, including among the multiple HER2-positive solid tumors, multiple phase III trials are currently ongoing, and we expect these to contribute to future sales growth of EN-HER2. Regarding the NCCN guidelines, Enhatsu has been newly listed for neoadjuvant treatment of H2 positive breast cancer. Next, I will discuss Datoroei. Please turn to slide 16. Global product sales in the fiscal quarter of FY26 increased 15.3 billion yen year-on-year to 20.6 billion yen. Since launch, approximately 7,000 patients globally have been treated cumulatively, and market penetration is progressing steadily. New indications include hormone receptor-positive HER2-negative breast cancer in Brazil in March, first-line treatment for triple-negative breast cancer as the first anti-TROP2 ADC treatment for this indication, in the U.S. and Brazil in May, and this past week, approval for HFR-mutated NSCLC in Brazil, where promotion has begun. In addition, as announced in today's news press release, we have received approval for the first-line triple negative breast cancer in Europe. Cells continue to expand steadily in the existing indications of hormone receptor-positive, HER2-negative breast cancer and EGFR-mutated NSCLC. And in particular, Datraway maintains the No.1 patient share in third-line and later EGFR-mutated NSCLC, driving cells growth in the US. For triple-negative breast cancer, for which a promotion began in the US in May, We have already confirmed an increase in new patient prescriptions. In this first quarter, Enhatsu and Latraway together obtained three new indications, all of which are for breast cancer. Thank you very much. In the breast cancer field, we will continue to pursue further market penetration in existing regions and expand into new launch countries' regions, while pursuing new indications in order to deliver airheads and data away to as many patients as possible who need them. This concludes the business update. I will now hand over to Inoguchi, Head of R&D Division, for the R&D update.

Inoguchi speaking.