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.

I am going to talk about R&D update. Please turn to page 18. First, I will explain our research policy under the sixth five-year business plan. We define Breakthrough Generating Technology, or BGT, as Daiichi Sankyo's proprietary innovative technology to deliver more innovative medicines to patients faster. DX-ADC is our first BGT. Under the 5th Fibre Business Plan, we positioned 5 DX-ADCs, N-Hert, Dutroway, Her3-DXD, I-DXD, and R-DXD, as important assets and focused on their development. Including DS-3939 and DS-3790, we have seven DXDA DCs. Also, during the six five-year business plan period, these assets will continue to drive our growth. On the other hand, during the fifth five-year business plan, out of the development candidates which we called Next Wave, we also identified what could be the core technologies in the future. Based on our science and technology, in the coming five years, we will identify multiple technology platforms which could become Next BGTs, and we will nurture them into innovative drugs with which we can contribute to patients. We will use future financial results presentations and other occasions to share the progress, so please count on us. Next, I will give you an update on each product. From page 19, I will use two pages to report the progress of NHERT. In May this year, as an indication expansion to HER2-positive early breast cancer, N-Herd obtained two approvals in the neoadjuvant and adjuvant settings in the United States. In the neoadjuvant settings, based on Destiny Breast 11 study data, Four cycles of NHERT followed by four cycles of THP can be administered to patients with HER2-positive stage 2 or stage 3 breast cancer. In China, the same indication was approved in March this year. In the adjuvant settings, based on breast All five study data, 14 cycles of NHERT can be administered to breast cancer patients with residual invasive disease following neoadjuvant chemotherapy including anti-HERT2 therapy. Based on these approvals, in the United States, for HER2-positive breast cancer, we can offer N-HERT as a treatment option to cover treatment lines from early stage to metastatic stage. We are very pleased to be able to contribute to more patients with HER2-positive breast cancer. Page 20 shows regulatory updates for NHERT in a tumor agnostic indication. Based on the results of DESTINY PANTUMER 02 and other studies, approval was granted in June this year for HER2-positive solid tumors in Europe. Accordingly, We obtained tumor agnostic approval across the three major markets in Japan, U.S. and Europe. Also in China, based on the results of DESTINY Pantuma 03 as the bridging study, etc., the application is now under review. From page 21, I will explain the progress of Datoroei. According to Tropion breast 02 study data, Dutraway improved median PFS by 5.3 months and median OS by 5 months compared to chemotherapy and demonstrated the statistically significant clinically Based on the study results, in May this year, in the United States, that railway was approved for patients with first-line metastatic or unresectable TNBC who are not candidate for PD-1, PD-L1 inhibitor therapy. As an update, as Kodama mentioned in the business update, the same indication was also approved in Europe as well. Regulatory submissions for the same medication are now under review in Japan and China. On page 22, I will share new phase 3 studies. Tropion urothelial 04 is an adjuvant study for MIUC post-surgery. to investigate dataway plus real vagal stomach compared to standard of care. In the first non-urothelial carcinoma cohort of the preceding Tropion Pantuma 03 study, dataway plus real vagal stomach delivered favorable results. and ORR of 68.2% and 12-month BFS rate of 73.5%. We will continue the study so that this combination therapy as a treatment option can contribute to address high unmet medical needs in urothelial carcinoma.

Slide 23 introduces a new project entering phase 1 trials. DS1025 is a novel ADC that targets CD25 positive regulatory T cells, activating anti-tumor immunity by eliminating regulatory T cells within the tumor. It applies DXT-ADC technology to an anti-CD25 antibody and carries a cytotoxic payload optimized for immuno-oncology. In preclinical studies, we have confirmed a reduction in intratumoral regulatory T cells, activation of cytotoxic T cells, and antitumor efficacy. We plan to begin a first-in-human trial in solid tumors in the first half of this fiscal year. Slide 24 shows the progress on our next wave products. Mimrit, an MMR vaccine for the prevention of measles, mumps, and rubella, received approval in Japan this May. Banfrita received approval in China this past June for first-line treatment of FLIT3 ITD-mutated AML. Finally, the news flow going forward. Please turn to slide 25. For Enhatsu's Destiny Breast 09 trial, we expect to receive regulatory decisions in Europe in the first half of this fiscal year. For IDXD, we expect to receive a regulatory decision from the US FDA on the Ideate Rang 01 trial in the second half of this fiscal year. Regarding the expected timing for obtaining key data in the near future, the expected timing for Enhatsu's Destiny Rang 04 trial and Datteway's Tropion Rang 15 and Avanza trials remains unchanged from before. On the other hand, the expected timing for Tropion Lang 07 data is now FY2027. As for major planned conference presentations, at ESMO, we plan to present the first data from the melanoma cohort of the Harthina Pantumor O1 trial, an update on the ideate Lung O1 trial, an update on the Phase II dose optimization part of the Rejoice Ovarian O1 study, and data from the Velvacizumab combination cohort, of the dose escalation part of the Rejoice Ovarian O2 study. Slide 26 onwards is appendix, so please review it at your leisure time. That concludes my presentation. Thank you.

From here on, we are moving on to a Q&A session. First, Mr. Yamaguchi from City Group Securities, please. Can you hear me?

Yes, we can hear you.

Yamaguchi from Citigroup Securities. Thank you very much. My first question goes to Kodama-san. Regarding the change of your results forecast, sales revenue are increasing. and inventory assets related processing was also included. Could you elaborate on this point, the details on the value or the amount? This is just for Q1. So could you explain this portion, please? Thank you for your question. regarding the revision of our forecast and inventory assets and also the valuation loss included in the COGS. Thank you for your question. As you know, in the Q1, this is being booked and these are the main items. Regarding the multiple products, we had some Errors in the manufacturing and some which did not meet specifications. We had variation losses for these products and also the losses for disposal. This is the upper side of the billion yen level as a size.

Thank you.

Understood. My second question is to Kera-san. IDXD, I think the October 10th was a PDUFA, and of course, until then, you don't know whether it's approved. But if it's approved, I think we'll be starting for the first time co-promotion with MARC. Could you share with us, give us a comment, what is the preparation status now?

Thank you for your question. So correct, the PDUFA date is in October. The first indication will be for small cell lung cancer. This is a group of patients with a very high unmet need. The work that we're doing with Merck today is to work and educate the key opinion leaders Thank you for joining us. The mechanism of action, the clinical trial, and how best to use this drug.

Thank you.

Thank you very much. Next, UBS Securities. Mr. Seki, please. Seki from UBS. Thank you for the presentation.

My first question goes to Kodama-san.

The correction of the results in the past, why in May, You didn't identify this issue in the analysis, but why in the fourth week of July? So I have doubt about the effectiveness of internal control. Why you process this as an individual event? And there is a decrease of expenses by a 29%. In the current quarter, you increased the SGA by 15 billion yen to 535 billion yen. So usually when you develop the budget, you compare to the previous year. Why there is an increase by 200 billion yen in this line? Is this really the operational excellence? I'd like to ask you. Thank you for your question. Regarding the correction of the FI2025 financial results, the process to identify this problem is as follows. Last week, we were analyzing the results for the first quarter of FI2026. We were analyzing the increase or decrease compared to the previous fiscal year. There was some Thank you for your time. based on the size of expenses and the mistake this time and also the amount for the item was quite large with the error so unfortunately in our analysis we couldn't discover this problem so there were various Figures are being included or excluded, and we couldn't identify this in reality. One more question. Is, to compare to the previous fiscal year, the increase in the current fiscal year? So it seems that there's an increase by 100 billion yen because of 535 billion yen. After revision... 434.2 billion yen after revision.

4342, which line is the figure in the supplemental material?

Quarterly data.

Let me check the figure.

This is on page 15 in the supplementary material. And this is the quarterly data. You're talking about page 15, right?

Allow me to check the figures.

and we will try to explain to you. Sorry for that. Thank you very much.

My second question goes to Inokuchi-san. TL07 study, top-line results is postponed to be available in FY2027. Previously, it was available, supposed to be available in the second half of FY26. Could you give us more details? What's going on? Thank you for your question. Regarding the TL-07 top line available timing, I'd like to explain the background reasons. Regarding this study, in the primary endpoint, biomarkers are going to be used. And as we incorporate this biomarker, we revisited the schedule, and then we found that the top-line results will be available in the next fiscal year. That is the process. Thank you very much.

Next, Goldman Sachs Securities, Mr. Weda, please. Ueda are from Goldman Sachs Securities.

My first question regarding the COGS, ADC,

The forecast and outlook is being revised, so I have a question. At Odawara site, you cancelled investments, and there is a reversal of the cost, and what about the CMO compensation fees? In the first quarter, it was not emerging so much. So what is going to be your schedule for this? And what about the possibility of potential fluctuations about the reversal or provision for losses related to cancellation of Odawara site investments? So regarding the COGS, the reversal or provision for losses related to cancellation of Odawara site investment, you'd like to know the reason why and also the future outlook of our CMA compensation fees. First, The reversal or provision of losses related to cancellation of Odawara-side investments at the end of last fiscal year. In our outlook back then, we booked a provision, but we had discussions with suppliers and also based on that, We booked the reversal or provision of losses related to Odawara site investment cancellation. We refined the figures after the discussions. That's the background. Next, CMO compensation fee provision. 1 billion yen is being booked. We booked in the previous fiscal year the provision, and because of the forex fluctuation, that's now factored in. And 80 billion yen is the guidance for FY2026. This year, later this year, from the end of this year to the beginning of next year, in FY2028, manufacturing orders will be coming firm. So the amount is going to be finalized in that process. So regarding the booking, it's going to be in the third quarter or beyond, according to our current outlook. Regarding the amount, 80 billion yen is the guidance and there is no element to change this forecast. Thank you very much.

The second question also goes to, I think, Kodama-san regarding SG&A expenses outlook. In your plan, other than profit share, regarding the other SGA expenses, there is a strategic investment expenditure mentioned. And as of the first quarter, how much is this? And in the full year basis, what will be the signs of the amount? And in the next year and onward, I don't think something will be continuing. Therefore, do you consider, or is it okay for us to consider this as just a one-time expense? Thank you for your question. SG&A expenses in the consolidated earnings forecast, and that is regarding the strategic and human resource-related investment. Regarding the contents, that question was asked. Regarding DX and IT, within the operational excellence, we state the effective use of AI, and also within the recent involvement of talent the human capital or We have been investing more into our employees and we are also investing in terms of education toward the reskilling of our people personnel to be engaged in highly advanced work and in the future with AI investment and operational excellencies would like to generate the benefit but in this fiscal year we started to make Thank you very much. Thank you very much. and saving the cost. Therefore, in the future, we would like to see an offset. So, currently, it is conducted as advanced investment and we don't plan to expand this in the scale from the next year onward, but this will not be ending in this fiscal year only. and our target is to produce the effect from this next fiscal year and onward. Thank you very much. Thank you.

That's all from me.

Next, JP Morgan Securities. Mr. Wakao, please.

Wakao from JP Morgan speaking.

Thank you for this opportunity. My first question. On page 13, I have a question to Kodama-san. As Yamaguchi-san said, the valuation loss for inventory assets, which products are tied to this and what about the amount, and also the corporate tax, revision of the tax deduction for R&D expenses. The profit forecast was right upward up to the operating profit. But because of this, there is some downward revision. So I'd like to know the background. Thank you for your question. First about the valuation loss for inventory assets. And you'd like to know the breakdown by product. And number two is corporate tax. The tax rate is worsening. And why negative?

And you'd like to know the reason why.

First, the inventory assets. Regarding the products, it's not being disclosed. We have our own manufacturing, but also we are using CMO to manufacture on our own. Non-compliance to quality occurred. That's why we are booking valuation losses. It's the upper side of the two digit in Oku Yen. Second question is about corporate tax. Regarding the R&D expense deduction, there are different things under different tax systems in different countries. We have this mainly in Japan and the United States. In the group, Daiichi Sankyo Japan, DSI, in our group, the corporate tax, the size of the profit for individual companies, would determine the slot to be able to be eligible for the deduction. Comparing this fiscal year and the previous fiscal year, the profit in Japan, and if you look at the size of profit in Japan, because of intercompany transactions, it's smaller slightly. Because of this, the profit mix would result in the less deductions. In this point, we couldn't incorporate this fully in a full-year forecast and where we will have profits during the fiscal year. There is a slight difference compared to the initial forecast. That's why this is occurring. Sorry, it may be difficult to understand. Thank you very much. I have a follow-up question.

Talking about inventory assets, I understand that you do not identify each specific item, but is it ADC-related ones? Because last year, I think there was also a valuation loss recorded regarding ADC-related assets. Therefore, I am concerned whether or not there is any structural-related issues going on. Well, ADC is included, although it's not everything, but partly it includes the items relating to ADC. Thank you. My second question is to Inokuchi-san. Avanza study. Within this year I think we will see some results and originally my understanding is that the PFS final analysis will be planned and the intermediate analysis will be conducted and then after that, awaiting for the final analysis results, you together with AstraZeneca will try to make a filing for approval. And if the OS at the final analysis timing, that endpoint is met, that would be fine, but probably it's not matured yet at that timing. Therefore, with PFS data only, do you think that, are you confident? that will be able to make filing for approval given the current environmental changes. I have a slight question whether or not it is possible to make filing for approval with only PFS data. Thank you for your question regarding Avanza study data. Regarding the data assessment, I think the question was made. As you know, PFS is one of the endpoints, and we are planning to get the study results. That's unchanged. And depending upon the OS data readout, I think we will make a comprehensive decision, but without having OS data, wouldn't it be working? I think we cannot make any comments on that particular point at this point in time. Basically, we look at PFS and OS data from a comprehensive viewpoint and consulting with the authorities We will discuss whether or not we will be able to move on to the filing for approval. I see. Thank you very much. That's all.

Next, Morgan Stanley, MUFG Securities. Mr. Murauka, please.

Thank you very much.

Muraoka from Morgan Stanley speaking.

First, I have a question to Kodama-san.

As for revenues and sales per product, you revised the sales forecast for Enheart in Asuka region. There is a decrease by ¥13 billion in Asuka. Given the forex rate, there is a substantial decrease in Asuka region as a whole. Revenue declined. What's happening there? I couldn't understand fully. The first quarter results are not too bad. What is going to happen into the future?

Thank you for your question.

Enheart sales forecast in the Asuka region is now revised downward and you'd like to know more about it. In Asuka region, China, Brazil are the main countries in terms of sales. In China, competition is intensifying. Local ADCs just sold in China and we have to compete and there is such a competition and the impact was larger than we anticipated. As for Brazil, there are various factors. A particularly big factor behind is as follows. There is a treatment network and hospital network where Enhert is prescribed a lot. That hospital network itself had a worsening financial situation, it seems. And treatment is not making a lot of progress. and purchasing the product for treatment are now becoming stagnant, as I'm hearing. And how much this impact is going to be prolonged, it's difficult to predict. But looking at the current situation, We are factoring in this impact on a four-year basis. So these are the two major reasons. So can I assume that you were conservative in factoring this into your forecast, or is this really a very difficult issue? Well, it's difficult to say. Regarding Brazil, If the environment is going to change, it's going to increase. So, in that sense, I hope we can be conservative, but honestly speaking, we cannot really know. In China, this may be a structural factor. Okay, understood.

Another question is to Inokuchi-san. RDXD, this time at ESMO. Rejoice Ovarian 01 additional data will be presented. And with those data, then are you going to enter into the preparation of the filing for approval? Because for RDXD, we haven't heard much about your preparation for filing. So what's necessary for you to start preparation for filing? Thank you for your question for RDXD data. Phase 2 dose optimization part will be presented at ESMO. As you know, this Phase 2 study will be providing us the data that will be a key data for us to proceed our development moving forward. At the same time, regarding our fighting strategy that's under review now, therefore, at the time that we'll be able to share, would like to talk more about the details of the strategy. So is it better for us to wait until we will be able to hear from you the filing strategy? At this point in time, we are still reviewing, including the filing strategy. I see. Thank you very much.

Next, Bernstein Securities, Ms. Sogi, please.

Thank you very much.

First, I have a question to Kodama-san.

Guidance Update, SGA Expenses,

and strategic investments are one of the factors for the rising costs. So, costs per cell are increasing or is this because of the Forex impact? Or you have to do more? And you booked a restructuring cost in Europe. This means the headcount is reduced and next fiscal year and beyond, There will be a good impact on your cost. This positive impact will emerge when and what is going to be the size and the level on an annual basis. Thank you for your question. The first question is, Other SGA costs and the reason behind for the increase may include forex impact, according to your view. And one more point is the restructuring in Europe. What about the impact on next fiscal year and beyond, and when we can see its effect? Regarding the SGA expenses and the forex impact, thank you for your question. I couldn't explain that point earlier. There is the forex impact fully reflected here. There is an increase in reality, so both are the factors behind. Regarding the second point, restructuring in Europe and its impact, We will begin to see its effect later in the fiscal year. As for the size of the impact in value, we don't have anything clear at hand right now, so once it's clear, we will share with you. It's going to be fully seen next fiscal year and beyond. And cardiovascular business in Europe is going to shrink. And organization is being shrunken accordingly. Thank you. Your understanding is correct. And we want to take measures earlier under these circumstances. That's why.

Another question is a question to Inokuchi-san. 0708, TL0708. First about 07. It is a three-arm study, and that way key through the plus platinum or doublet. Datore plus Kitruda. These are included as experimental alarms. Therefore, regardless of the first-line PDL status, this is going to be the largest indication, I think. And triplet and doublet, both regimens, may be approved as a result of this TL-07. Is this understanding correct? Thank you for your question. Regarding TL-07, As you said, there are two arms, doublet and triplet, and it depends on the results, but if both showing good results, positive results, then both will be available for treatment, in our view. Thank you very much. And regarding 08, Regarding zero-aid study, TROP2 QCS patient stratification analysis is not a part of primary endpoint, but I think it is one of the key secondary endpoints. And what I think a bit strange is that you have once explained about it as to the reason of not including it in the primary endpoint, because Keytruda is quite effective. in PD-L1 high population. But the efficacy of Key Trudeau, regardless of that, as on top, I think Datoruei is added. Therefore, evaluating the efficacy I think whether or not that key through die is effective at the baseline, I don't think it's much impacting. And if it's effective, then there will be even more difficult to gain any upside. But once again, allow me to ask you this question. In this 08, could you explain once more what is the reason that this is the position as a part of a key secondary endpoint? Thank you for your question. Regarding the inclusion of biomarkers in TL08 study that's included as a secondary endpoint, so you are right, there could be various different views on this point, but in high PD-L1 expressing subpopulation, Pembroke's treatment is SOC. And as a study design, we have a Pembroke rhythm of arm and Pembroke plus Dutrouvet combination. Those two are compared. So this is add-on study. From that viewpoint, as a primary endpoint in ITT, whether we will be able to expect a positive result, that is one of the background factor. I see. I am not fully convinced, but I understand. Thank you very much.

Next, driver's securities. Mr. Hashiguchi, please.

Hashiguchi speaking.

Thank you very much. I have a question to Inoguchi-san.

DS1025 originality is the topic of my question. CD25? This target regulatory T-cell will be depleted.

Several companies have been developing such a drug. Some came up with ADCs to take the challenge. ADCC activity can be reinforced.

to give it a try by some other companies.

And your drug discovery concept, where is it differentiated? And as for payload, DXDA-DC technology is being applied, but it's optimized for immuno-oncology.

What's common?

vis-à-vis the conventional DFT ADC, and what's different? And other compounds under development using a payload like this? Thank you. Your question is about DS1025. First, regarding this compound, conventional DFT ADC is not being used. As I explained, Our DICT ADC technology is the platform and the foundation, but this is an ADC optimized by targeting the immune cells. Regarding the detailed information about payloads and others, we are sorry to say that we are refraining from sharing. As for CD25 Treg, it's one of the important markers for Treg. So, DS1025 would Deplete immunosuppressive Treg cells in the tumor microenvironment. That's how this compound is being created with that objective.

That's all.

So based on that concept, other companies' products might have been developed. So what kind of differentiation are you expecting from 1025? I cannot elaborate on the detail in specifics, but we have built the ADC technologies. We have experiences and the insights, and that's a differentiating factor compared to other companies. Thank you very much. That's all from me.

There are some other people raising their hands, but we have passed the scheduled closing time. Therefore, with this, we'd like to conclude the earnings call. If you have more questions, please contact our IR unit. Thank you for your participation today. Thank you.