Eisai Co Ltd

Thank you very much for taking your time to join the financial results presentation by ASI Company Limited. It is now time we would like to start the financial results presentation session for Q1 fiscal 2025. Today, it will be held in a virtual format. Please download or look at the slides for the presentation on our website. Let me introduce the presenter today, Mr. Keisuke Naito, Representative Corporate Officer, Executive Vice President, COO, and Chief Growth Officer. Over to you, Mr. Naito.

Thank you very much for joining us today for our earnings call for the first quarter of fiscal year 2025. I am Keisuke Naito, COO and Chief Growth Officer. With many companies reporting their earnings around the same time, we have decided to hold this conference call entirely remotely in order to take into account the burden on the participants. Let's start. This shows today's agenda. We will give you the business update, and they can be under the name FEMA or will be updated. Next, during the first quarter of fiscal year 2025, revenue increased 7% year-on-year and profit increased 55%. First, the pharmaceutical business segment expanded due to growth in what we call three Ls, comprising limbema, there can be a limborexant or divagal, To 119% of the previous year, the efficiency improvements resulting from the structural reform is implemented since last year have contributed to this growth. There can be is making progress smoothly toward achieving the full year focus as pathway establishment Progress, the double-digit growth was achieved in Japan, the U.S., and China compared to the previous quarter. In the U.S., emerging surge towards demand expansion is underway, and preparations for market launch are progressing smoothly for SCAI maintenance therapy. Launch preparations for EU are also progressing smoothly. At AAIC, a high-quality and substantial quantity of data were presented, aiming at enhancing the value of the campaign, which I will explain later. The U.S. Alzheimer's Association has also published clinical guidelines for confirmatory tests using BBM, and progress toward amyloid beta confirmatory testing is being steadily made. Then, BIMA has grown by 7% based on CER, progress toward achieving the full-year forecast is proceeding smoothly. And we have made an important progress toward maximizing patient value, receiving a favorable decision in the high-purity patent infringement lawsuit. Here is the performance update. Next. Regarding the consolidated performance for the first quarter, we have secured increased revenue and profits while continuing proactive investment in the KEMBI through the expansion of the pharmaceutical business, and we are making steady progress towards achieving the full-year forecast. Revenue was 202.7 billion yen, absorbing a negative impact of 10.1 billion yen from foreign exchange rates, representing a 7% increase from the previous year. Revenue for the pharmaceutical business was 198.4 billion yen, with a 6% increase year-on-year due to the growth of the three Ls. Cost of sales was 42.6 billion yen, with a cost ratio of 21%, the same as the previous year. resulting in a gross profit of 160.1 billion yen, a 7% increase year-on-year. R&D expenses were 38.8 billion yen, 93% of the previous year's level, and accounted for 19.1% of revenue. Due to cost efficiency improvement, this ratio decreased by approximately 3 points from 22.1% in the previous year. SG&N expenses totaled ¥100.2 billion, an increase by 1% from a year earlier, including ¥36 billion in expenses regarding shared profit with NBMA paid to Melk. As a result, operating profit reached ¥20.7 billion, up 55% a year, and the net profit reached ¥15.3 billion, a 33% increase from the previous year. Profit for the period attributable to owners of the parent was 14.5 billion yen, up 37% year-on-year, with all lines of profit showing increases. Both revenue and profits made good starts for fiscal year 2025. Next. Regarding the analysis of factors affecting revenue transition, the top left shows the revenue of ¥189 billion for the first quarter of fiscal 2024, and the first quarter of fiscal 2025, as shown in the pink box on the upper right, Revenue from three Ls was 120.7 billion yen, up 19% year-on-year. This significantly drove the expansion of the pharmaceutical business, resulting in an increase of 11.9 billion yen in revenue. Lecambi was the biggest gross driver, with an increase of 16.9 billion yen from the previous year, Devigo and Lembima also grew by 1.6 billion and 0.4 billion yen respectively. As a result, revenue was 202.7 billion yen for the first quarter of fiscal 2025, up 7% year-on-year with an increase of 13.6 billion yen. Next. As for the breakdown of operating profit transition, revenue increased due to the growth of 3Ls, resulting in a 10.8 billion yen increase in gross profit. The R&D expense ratio to revenue decreased by 2.9 points. due to the revenue growth and the cost efficiency improvements through structural reforms. The SD&A expense ratio decreased by 3.2 points due to the revenue expansion driven by the growth of 3Ls, improvements in functional and organizational efficiency, and the impact of foreign exchange fluctuations. As a result, While continuing to invest proactively in the growth of the Camby, operating profit for the first quarter of fiscal 2025 increased by more than 1.5 times from the previous year to 20.7 billion yen, representing an increase of 7.3 billion yen per year. There are no changes to the consolidated financial forecast for fiscal year 2025 from the disclosure in May. Continuing from fiscal 2024, we are aiming to establish a foundation for stable earnings structure, targeting ROE of 8% by 2025, enhancing operational efficiency through structural reforms and strategic optimization of R&D resource allocation. And we aim to achieve revenue of 790 billion yen and operating profit of 54.5 billion yen. Next, I will explain the global business update for Rekenbi. Global revenue of Rekenbi for the first quarter was 23.1 billion yen. Sales in Japan, the U.S., China, and other regions all saw double-digit growth. In China, the results include one-time impacts of stockpiling by distributors in response to the risk of tariffs, but even excluding that, sales grew at a double-digit rate due to expanding demand. The number of markets where submission for approval has been filed is also steadily increasing, showing steady growth as a global drug. McKinby is advancing smoothly toward achieving fiscal 2025 sales forecast over 76.5 billion yen. Next slide, please. In the United States, there is emerging surge for demand expansion. Sales grew 20% on a constant exchange rate basis from the previous quarter. Amyloid beta tests are also increasing. BBM blood biomarker triage tests have grown by an average of more than 130%. and the amyloid beta positivity rate has increased. The number of PET or CSF tests conducted has also increased by an average of more than 120%. We are delivering humanized messages to healthcare professionals emphasizing how the CanBe treatment may help patients maintain who they are for longer, encapsulated in a message, you still can be with the CanBe, featuring the actual patient's treatment, treated with the CanBe, and incorporating empathy and differentiation into the CanBe treatment. The approval of IV maintenance treatment is confirmed to have a positive effect on the CanBe initial treatment. Regarding future growth factors, we launched a targeted DTC campaign, TV campaign, from June 9th. This campaign has been highly evaluated by healthcare professionals for its effectiveness in encouraging early medical consultations. By targeting patients who have received an early AD diagnosis, the DTC campaign is fostering the understanding of the can-be treatment and encouraging a positive attitude towards treatment. BBM clinical practice guideline was issued by the U.S. Alzheimer's Association at AIC 2025. For the first time, the association recommends BBM as a confirmatory diagnostic tool. We anticipate that BBM will be widely adopted as a triage test and confirmatory test in the society. The PUDUFA date for SCAI maintenance treatment is set for a very close date, August 31st. The introduction of easy-to-use SCAI has made home administration possible, significantly lowering the barriers to long-term continuous administration and may enable substantial reductions in medical costs associated with intravenous infusion. Preparations are steadily underway for a swift market launch following approval. Starting in the third quarter, we will begin an approach led by PCP-specialized MRs, focusing on areas where pathways have been established through IDN to strengthen coordination with PCPs. I believe you can see that such factors as targeted BDC, BBM, SCAI, and others are creating an emerging surge towards demand of expansion for Ekembi, and a progress towards achieving the full-year sales forecast is proceeding smoothly in the United States as well. Next slide, please. The differences between IV infusion and SCAR are summarized in the table below. Both IV infusion and SCAR are maintenance therapies, and they start after the initial 18-month treatment period. IV is administered once every four weeks, while SC is administered weekly. Administration time is one hour for IV and an average of 15 seconds for SCAI with ALT injector. IV is administered by HCPs at the hospitals or infusion centers, while SCAI is intended to be administered at home by the patient or caregiver. Some patients feel reassured by receiving recanvir treatment at the medical facility. On the other hand, there are also patients whose families have to drive them long distances to the hospital for treatment. For such patients, administration at home by the patient themselves or their caregivers offers the advantage of reducing the burden of hospital visits and enhancing the efficiency of healthcare resources. This approach is patient-centered and the introduction of SAI is considered an important move towards the demand expansion phase in the United States. Next slide, please. In Japan, progress is being made in establishing pathways and the demand continues to expand. Sales from wholesalers to medical institutions stood at 130% of the level of the previous quarter and in July saw a record high, demonstrating steady growth. Cooperation between primary care physicians and specialists is also progressing smoothly. And for patients who have undergone treatment for more than six months, 1,500 facilities have agreed to serve as follow-up facilities, enabling patients to receive treatment at nearby medical institutions that are more convenient for them. From the perspective of increasing the value of Rekembe, the significance of long-term administration has been discussed at Japan Academy of 80 meetings, and understanding of this has been deepened. As for future growth drivers, preparations are underway to add a new formulation of SCAI with a potential submission targeted for this fiscal year. Additionally, ongoing disease awareness campaigns are contributing to increase the awareness of MCI and encouraging patients to seek medical consultation. Currently, the second phase of the DTC campaign is underway. We are pleased to report that progress toward achieving this fiscal year's revenue forecast is proceeding smoothly.

In Europe, we are planning to prepare for launch in October. In Germany, preparation to meet European approval requirement is steadily underway. For six months, there will be reimbursement of discretionary pricing, after which economic evaluation for formal reimbursement pricing negotiations will follow. In France and Spain, we are preparing with the aim of starting early access program in the third quarter. In Europe as well, we will be building a pathway quickly to start contributing to patients. The other day, AAIC was held in Toronto, Canada. I would like to report to you the presentations made at AAIC. At AAIC, including SCAI-related data, a large volume of high-quality data were presented. 48-month long-term treatment effect, and real-world data confirming equivalence of SIAI, SCAI with IV maintenance dose and potential for safe administration at home by patients and caregivers were presented.