Eisai Co Ltd

Thank you very much for attending the briefing session by ASI Company Limited. We will now begin financial results and business update session by ASI Company Limited for Q2 fiscal 2025. Today, this is held in hybrid format, combining in-person attendance and virtual attendance. For those attending in person, we have distributed a flash report financial results, and a deck of slide presentation. Those of you who are participating virtually, please download these materials from the website. The presenter today is Mr. Haruo Naito, representative corporate officer and chief executive officer. Mr. Naito, CEO, please.

Haruo Naito, CEO, Let me begin our presentation for the first half of FY 2025. So let me look at the results for the first half. As you see at the very first bullet point, in organic business of us, pharmaceutical business has shown steady growth. In profits as well, most of the profits are from the frontline business, which is pharmaceutical business. and we could achieve increase in both revenue and profits. I believe that that is the most important point that I wanted to share with you today. And regarding our forecast for the full year results, I believe that there are various opinions So if when we see the stock price trend after announcement, I was disappointed. However, I believe that there are some requirements for the second half that is written in the second bullet point. Anti-tau antibody and narcolepsy treatment. These are the two next generation neurology area promising projects of Azai into which We are making investment of resources into this because clinical trials and studies are now reaching the peak. And on top of that, there are structural reforms in Europe. And in line with such structural reforms, there will be various expenses to be incurred. Therefore, we do not intend to revise the full year forecast. So we did not make any revisions to the full year forecast. In the red box, revenue was 400 billion yen. Compared to the previous year, given the stronger yen trend, we could achieve about 4 percent increase in revenue. And as I said earlier, in the next line, pharmaceutical business revenue, 393.3 is shown here. And most of the 400 billion yen in revenue was generated from our organic business. Cost of sales. given the impact of domestic drug price revision and changes in the product mix? were offset, and the cost of sales was managed within the planned range. Gross profit was increased by about 3.0 percentage points from a year earlier. R&D expenses accounted for 18.9 percent of the revenue. Therefore, R&D expenses were managed under 20 percent of the revenue. We were able to manage these expenses. As such, one of the reasons for this was the clinical study expenses for the can be have peaked out, which have started to show decline. And in the previous year, There was some restructuring, including the headcount reduction. Therefore, R&D expenses ratio to the revenue was controlled within 20%. Now, for SD&A expenses, increased by 3.6%. As you see below this line, Renvima grew very steadily. Therefore, expenses regarding shared profit of renvima paid to milk increased, and H&A related to R&D. We are still in the phase. of increasing the resource investment into . Therefore, operating profit was 34.4 billion yen, which has shown the significant increase of 23.6 percent from the previous year. And operating profit estimated for the full year is reported to be 54.5 billion yen, and most of which is going to be generated from pharmaceutical business. So in other words, the profit structure of Eizai has shifted to be more dependent on the organic business in order to increase and record profits. And we have started such a transformation of a profit structure during this first half and this fiscal year. The pharmaceutical business is grown by three global brand products. Rekembe, which has grown 153% year-on-year. We believe that this was a significant growth. It's about 2.5 times the size recorded last year. And the details of this will be explained later. And for Renvima, in main markets for us in the United States, there was a negative impact of Inflation Reduction Act. There was some suppression caused by this act, but this negative impact was offset. And for all the cancer types, we were able to grow LENVIMA business. Therefore, LENVIMA has been able to maintain its growth so far. And a day ago as well, the impact of drug price reduction in Japan was offset, and 15 percent growth was shown. Now looking at the breakdown of changes in operating profit, 27.8 billion yen last year. Gross profit increased 9.1 billion yen R&D expenses because of the reasons I mentioned earlier was controlled better by 6.2 billion yen SG&A expenses. increased 7.1 billion yen, thus reducing the operating profit. And the other income and expenses include some changes from the previous year, therefore, recorded minus 1.7 billion yen. Operating profit was 34.4 billion yen, up 24 percent year-on-year. Today, I would like to focus on the Canby, but I prepared just one sheet of this slide for LENVIMA. Since its launch, 10 years have passed, and it has been approved in 81 countries and marketed in those countries. And already, we have been able to contribute to 570, 580 thousands of patients in the world, and it has been indicated for seven indications in five cancer types. And due to the favorable court decision and settlement agreements to resolve litigation over the high-purity patients in the U.S., Generic versions of Renvima will not be launched until July 1, 2030. As you see, 166.5 billion yen was the total revenue, but you can see in this pie chart, sales by cancer type is shown here. And the largest revenue is generated from the indication of RCC, which has been the driver of growth. For RCC, there are two studies which have been conducted together with milk, LightSpark011 study and LightSpark012. With these two studies, the top one is for second line of RCC, Lenvima with Velazutifan, medicals, the anti-cancer treatment, combined with Lenvima. And a primary endpoint was the extension of progression-free survival. This primary endpoint was already met. And together with regulatory authorities, including FDA, discussions for preparation of the potential submission have begun. And the bottom one is the first-line trial for RCC. And this is based upon the assessment evaluation of the triplet. Pembrolizumab Keytruda was added to the above-mentioned combination. and with the same regimen conducted in the first line study for RCC and compared to that favorable results were obtained and ISMO was the place where the results were published. And these studies are ongoing steadily in this expansion of the label based upon this base RCC indication So we believe that this is going to be a very positive factor for further driving the revenue. Rekenbi has been recently approved in Canada. Therefore, Rekenbi has been approved in 51 countries and territories. So the requirements to be the truly global product have been met through building such a foundation. For us, we understand that Alzheimer's disease is a progressive disease and maybe potentially fatal disease. Therefore, removal of A beta plaque is confirmed through amyloid beta PET. But it is not the end of a treatment, and the neurodegeneration process will continue, and the cognitive decline will continue. That has been shown by data. Therefore, for this kind of a disease, the early initiation of treatment and maintenance of treatment should be continued. And that is the key to treat such disease. And that is the key point that we have been continuing to have in our mind. And I believe that this has expanded the basis for this treatment, as you see. The administration methods are shown at the bottom. During the first 18 months after initiation treatment was started, the IV once every two weeks are provided. And after that, maintenance treatment period will be started. And in the past, there was only one option to dose through IV once a month, but this time, The Lecambi iClick self-administration method is approved and launched with a great option of once a week dosing. Therefore, it has made maintenance treatment much easier through the launch of a Lecambi iClick. Now, value proposition by Lecambi is being enhanced regarding administration period and dosing, as I said earlier, in the genre of maintenance treatment that has been cultivated by Lecambi. And when it comes to safety, particularly incidence of ARIA based upon the real-world data in the United States and also Japan's all-case surveillance, including over 10,000 patients, Based upon such a large-scale data, the incidence of ARIA and its severity or seriousness of ARIA are all within expectation, described in label. So we did not belittle the importance of ARIA. However, based upon this safety data, we believe that ARIA can be manageable. That has been confirmed. And now if you turn to efficacy aspect, above all, CLARITY-AD has been conducted for the, during the open label extension study for four years, and CDR-SB's difference against the placebo over 48 months, and this is the difference from the reference of ADONI, and the CDR difference has been expanded to three times or four times So, toxic substance is shown to be being removed through disease-modifying effect of this drug in your brain. That has been shown by this data. And AIC was the place at the U.S. real data, two-year real-world data was shown. And 8.8 out of 10 was shown in terms of satisfaction score. And 87 percent of the patients were continuing the Can-B treatment. and 84% of patients had not progressed to the next stage of the disease. Such very quite robust data results were obtained from this real-world evidence. And in the daily lives, how cognitive function has been maintained or improved, humanized message was utilized in order to show that in an easy-to-understand manner in explanation to patients. Now, you can see here the first half results in revenue of Rekenbi. Please look at the very bottom line. 41.1 billion yen was recorded as the global revenue, which was 153 percent of the results recorded in the previous year. As we have been reporting to you, in China, due to the geopolitical risk, the stockpiling for the period until the end of this calendar year. By the end of December, distributors have purchased to secure the inventory up until the end of calendar year. Therefore, 7.7 billion yen was recorded in Q1. And in parenthesis, you can see the actual demand excluding such stockpiling by distributors in China are recorded. And the 2.7 billion yen was recorded in the Q2, and the 5.1 billion yen in the total first half. So, considering all these, 38.3 billion yen was recorded based upon China's actual demand basis. Even with this 135 percent, a very high growth ratio was recorded from a year earlier. In all regions, high growth were recorded, exceeding plans for all regions. And 76.5 billion yen has been shown here as the forecast for full year. And our progress to date against this forecast exceeded 50 percent. Therefore, we are deepening our confidence in achieving this full year forecast. Now, turning to the Canby iClick. I have brought this with me here. This was the first ever commercial unit produced. This is the real thing, real product, very valuable products. I would like to decorate this in frame or box in my office. So this is the memorable and commemorative first ever product. And this was launched on October 6th this year. And what are the benefits? For patients, first, the patients or care partners are able to administer at their home within approximately 15 seconds or so on the average, and they don't have to drive or visit the infusion centers in person. We believe that this will be a great benefit for them. For medical institutions, on the other hand, they don't have to do a lot of monitoring or preparation for IV infusion, securing chairs. or monitoring by nurses or healthcare providers involved in the administration, these medical resources can be reduced. This will be a significant saving, and they will be able to expand the capacity to accept new patients. Since the launch, at the time of our launch, we started the Lecambi Companion Program. The iClick is to be covered under Medicare Part D. The reimbursement shall be conducted by private insurer, although they are still under the supervision of CMS. But private insurers will be in charge of the reimbursement, and private insurers have set the cycle of formulary introduction at 15 months. Therefore, in January 2027, the formal formulary will be putting this Rekembe iClick on their list. And there is a program called the medical exception process in the meantime until the iClick will be put on the formulary. So under this medical exception process, the reimbursement can be allowed, and this has been used widely in the United States. And this process will be applied to the CanBe iClick as well. Information and support related to this process are provided by our area reimbursement managers. And our nurse educators are providing in-person or online support to patients for dosing and providing demo kits for dosing training. This is the demo kits. And the four weeks have passed since the launch. And iClick initial delivery has been conducted at 34 facilities in the U.S. And demo kits for administration training were provided to 341 facilities, and they have started preparations for use. And medical exception process under which I believe that most of the patients have applied for this, and we anticipate a smooth reimbursement process to be conducted under this process. So as regards to the reimbursement for the can be I click we do not have any concerns and we believe that the reimbursement process will be smoothly conducted regarding initiation treatment for I click during the first 18 months. And submission for this initiation treatment has been conducted, started in the United States, and a rolling submission process has been utilized. And the last such submission will be conducted in December this year. we were expecting to receive priority review status if that is approved. And then in six months, approval may be provided. In first quarter of FY2026, for both initiation treatment and maintenance treatment, For both periods of treatment, there can be iClick may be utilized for dosing. So that is approaching. And in Japan, we are prioritizing the submission for the initiation treatment for SCAI. This will be conducted by the end of this December. On the right-hand side, you can see that this iClick has been selected by Time magazine as one of the best inventions of 2025. Now, another topic I would like to talk about is the confirmatory tests using BBM in the United States. There has been a significant advancement during the past six months. In July, AIC was held in Toronto, Canada. Alzheimer's Association of the U.S. put forth BBM clinical practice guideline. And BBM tests with 90 percent or a higher sensitivity and a specificity can be recommended for confirmatory amyloid beta diagnosis that has been proposed and published through this guideline. And Fujirebio's BBM was approved before this. Based upon the composite score, this BBM was granted the ABD clearance, and this achieved the above criteria of 90 percent or higher sensitivity and specificity. Under this practice guideline, Fujirebio's BBM is now allowed to be used as confirmatory diagnosis. LabCorp and Quest Diagnostics or other leading clinical laboratory companies in the U.S. have introduced this as a test item. Therefore, confirmatory testing has been started utilizing this BBM. C2N as well, based upon different methodology, submitted FDA regulatory filing for BBM. And Medicare's CMS for Medicare, a new national payment rate of $128 per test for BBM has been decided, and it will be applied as effective from January 2026. That has been already announced. We believe that this will drive the use of BBM further. as a tailwind. Currently, already, for amyloid beta confirmatory tests, about 10 percent of such tests are estimated to be conducted utilizing BBM. In the box, outside of the box triage test, Roche BBM using PTAU-181 was granted IVD clearance. This is particularly for PCP primary care physicians. who may use this for triage. Now, I am showing rather complicated diagram. I'm afraid, but I'd like to use this for explanation. What I'd like to say is by introduction of BBM test, amyloid beta tests, particularly confirmatory tests, and how the number of such tests and the number of positive cases will change up until FY2027. Rather, based upon the robust data, We would like to present our estimates. First of all, please look at the bottom blue line, solid line. This shows the number of amyloid beta confirmatory tests based on BBM. This shows the trend of increase in the number of such tests. If you look at the FY 2025, as I said earlier, about 10% of the confirmatory tests is being conducted using BBM. And then over 26, and particularly after 2026, with higher likelihood, the BBM-based conformity tests are expected to increase. And next, please look at the orange solid line. This shows the number of amyloid beta confirmatory tests using PET and the CSF only. So during FY2024, PET and the CSF were the only approaches for the amyloid beta confirmatory tests. So this shows the trend of number of such tests based upon the conventional methods. And once the BBM confirmatory tests are launched and then orange lines or curve will be less steep and a purple solid line shows the number of amyloid beta confirmatory tests of all three metals pet csf and bbm the total number of confirmatory tests are shown and above that if you look at the red solid line preclinical triage utilizing the ones like Russia's BBM. And the total number of BBM tests is shown here for both triage and confirmatory tests, and this has shown an exponential increase. Based upon these, If you look at the pink bar first, the pale pink bar shows the amyloid beta positive, the confirmatory test, the total number shows. for 2024, only PET and CSS were used. And in 2025, the BBM is added. And going forward, the number will increase. And a pink arrow shows the number of amyloid beta positive cases, which is expected to be increasing. and the number of confirmed tests as well as the positivity rate are also considered to be increasing. And the positivity rate was 50% in 2024, but in 2027, it's expected to be reaching 80% as positivity rate. Why? In triage or pre-screening, BBM will be used and the PET-CSF positivity rate. will be between 50 percent to 70 percent, and then that is the one step to increase the positivity rate. And BBM confirmatory tests becomes available, and then, for example, PCPs will be able to utilize this for diagnosing and ordering the tests and the results of the test will return to them, and their proficiency will be enhanced. Before ordering the confirmatory test on BBM, the confirmatory test precision for the cognitive function test will be increased, so their proficiency level will be enhanced. Based upon this, the positivity rate is expected to reach 80 percent or so, so amyloid beta cases will increase significantly. And actually, there has been quite a high correlation between these numbers and growth rate of Rekembe. I believe that this is another evidence to show that Rekembe is expected to grow further towards FY27.

At the AD day the other day, we've presented that there are three options for modified AD continuum that only Azai can deliver. I would just like to share with you once again the gist of this. First, with the current lecambi, suppression of cognitive decline after AD onset. The biggest characteristic here is long-term administration. We have 48-month long-term data. Efficacy was demonstrated, and expansion of efficacy was demonstrated. Why is that possible? It is shown in the third bullet point. There is low immunogenicity neutralizing antibody incidence of leucanumab. This allows for long-term administration. Because of this advantage due to property, it is possible to suppress cognitive decline after AD onset. And before MCI, the earliest stage, preclinical AD or stage, is tested in the trial shown in the middle. The biggest characteristic of our trial is shown in the second bullet point. Pure clinical AD patients are selected. Global CDR is zero. Not 0.5, but zero. A-beta accumulation is measured with A-beta PET. It is greater than 40 centiloid. This is pure ad as determined under the guidelines. patients are selected in this trial. That is showing the precision and accuracy of a preclinical AD trial. This duration of a preclinical AD stage is very long, so low immunogenicity and neutralizing antibody incidence can be utilized for long-term administration. And the final bullet point, data endpoint, is PAC-5. preclinical AD clinical conditions or symptoms are most precisely reflected in PAC-5. Such endpoint is used. And this is also based on the guidelines determined by FDA and EMA. And therefore, this is very legitimate. For regulatory purposes, we have conducted a phase three study. That is the characteristic of a HED-345 study. And finally, combination with etalanetag. This goes without saying that there are two major pathologies of A-beta and tau. We are able to approach both. This is a treatment that is epoch-making in that sense. We are aiming to maintain cognitive function after AD onset. This cannot be done by anyone in the world. No one can come near us. This is the unique option that is available from ASI. has obtained clinical proof of mechanism with DIAD population. 202 study with sporadic AD is enrolling patients steadily, biomarker is used mainly for optimal dose and target population, biomarker evaluation is used mainly. This is a study design which is quite epoch-making in that sense. And the first data readout is expected in fiscal 2027. As for preclinical, data readout from phase three is scheduled for fiscal 2028. Preclinical AD, what is preclinical AD? This shows the summary concept. Early AD is shown on the left. Prevalence is 240 million people. That is the estimated prevalence. A large number of people are estimated to have early AD. preclinical AD, and in order to calculate people who are eligible for ADDMT, we use phase three study criteria, and number of patients eligible for ADDMT is estimated to be 2.3 million people. What I am trying to say is that we also have a very large potential market in preclinical AD. It is quite near us. In addition to early AD, there is a huge market potential of preclinical AD, which is right in front of us. Now, nationwide in the United States, national education program is being held. One thousand people participated. Shown on this photograph left to our patient and family, they are smiling. And three people on the right side are U.S. leading AD experts. We have a very large body of data, and they were confirmed once again. We also have iClick, a breakthrough administration method. These were discussed in this program with many people responding actively. On the right side, this is a medical program. This is on the concept of smoldering Alzheimer's disease. A.D. continues to smolder. Plaque removal is not the end of the story. Toxic species continue to increase. Continuous treatment, therefore, is necessary. Such campaign is continued. Another major initiative is targeting PCPs, primary care physicians. primary care physicians are very important. Many MCI patients first visit PCPs, and there should be correct diagnosis and speedy referral to specialists in order for treatment to start. So in the second half, PCP specializing representatives are assigned 3,500 targeted PCPs. are the primary targets. The key message is shown as an example on the right side. This is the cover of the brochure. Early referral can mean early intervention with Lecambi. Early referral to specialists. And that would mean early intervention with Lecambi. That is the message. And therefore, PCPs. We'll have to be able to quite accurately diagnose MCIs and refer patients to nearby IDNs, which is a group of clinics with a number of specialists. There should be quick referral to such institutions. We would like to help PCPs by establishing a standard procedure for referral, and ICLIC and BBM developments will also be a strong tailwind. For similar purpose, to promote treatment, we have a targeted DTC TV campaign. This is not a normal TV campaign, but it's targeted. Who are the targets? Early AD diagnosed patients. These patients are not taking the next steps such as the tests or informed consent. That is understood to be the case. So targeted DTC TV campaigns were conducted. We were able to see good results in the first half. We will double the effort. so that there will be next steps taken by the patients to move on to informed consent and actual infusion. This campaign has already started. In other markets, we are also seeing good progress. In Japan, initial introduction There are 800 initial treatment facilities and there are 1,600 follow-up facilities. Eight hundred initial treatment facilities will be treating for the initial six months. And as shown in the middle of this, we have done TV campaigns to increase awareness of the disease. About one in three of Japanese population is aware of MCI now, what MCI is as a disease. And such disease awareness initiative campaigns effects are shown. This is wonderful. And 330,000 have visited specialists. Close to 30,000 have received ABA tests. The speed of referral from PCPs to specialists has also increased by about fourfold. On the right side, they can be in China, in Faton. through collaboration with GAD Health, is a digital platform for promoting visits to clinicians and diagnosis and follow-up. Infartone is now used by 620,000 people, and cumulative consultation number is 26,000. Digital means is used to build a pathway, and much progress is seen. And next point is extremely important. In China, currently, we are focusing on self-pay market towards the market with self-pay patients we are promoting. But for true expansion, it is important to be listed on the NRDL. Chinese government recently decided to leverage private commercial insurance for innovative drugs. Such a new scheme is being introduced or proposed by Chinese government. We would like to respond to this. And in China, we would like to improve our access to very huge market in China. As for Europe, Lecambi in Europe, in Germany and in Austria, we were able to launch very smoothly. In Germany, the drug is reimbursed at discretionary price. In Europe, commercial medical activities, the first bullet point, it mentions CAP, Controlled Access Program. is obligated in all European countries by the authority. And what needs to be done here is that prescribing doctors and prescribing facilities have to satisfy certain conditions as prescribed under CAP. So conditions satisfying doctors and facilities need to be registered. And Lecambi can be prescribed in these registered facilities. That is the scheme. 350 facilities, 420 doctors are registered. Number of facilities registered and number of doctors registered, there is no limit for Lecambi. There has to be prior registration for certain products. In that sense, large clinics and specialists are starting to prescribe smoothly. And I have three more slides before I end. ASI's mission in AD is to make AD diagnosis and treatment familiar for patients and encouraging their standardization and widespread adoption. iClick and BBM are the potential two innovations to achieve this. This example was seen in rheumatoid arthritis. BBMs appeared. Major disease-modifying drugs instead of IVs were made available. SEAI formulation emerged, leading to major transformation. So this could be repeated. We see great potential in both early AD and preclinical AD. With that, I would like to conclude, and thank you very much for your kind attention. We will now move on to Q&A session. We will be entertaining questions from analysts and investors before entertaining questions from the members of the media. If you have a question, please give us your name and affiliation before your question. If you have a question, please raise your hand. Attendee seated in the fourth row, please.