Shionogi & Co Ltd

Thank you very much for your participation out of your very busy schedule. So we would like to start the first quarter closing meeting explanation. So I'd like to introduce the speakers today. So first of all, Mr. John Keller, Dr. Sinclair, Senior Executive Officer, Senior Vice President, R&D Sponsor Advisory Unit. And next, Dr. Toshinobu Iwasaki, Senior Executive Officer, Senior Vice President, Healthcare Business Supervisor Unit in the Pharmaceutical Commercial Department. And then, Dr. Koji Hanasaki, Executive Officer, Senior Vice President, Supply Supervisor Unit in the Global Business Division. Next, Noriyuki Kishida, Senior Executive Officer, Senior Vice President in Corporate Supervisory Unit, and Dr. Ryuichi Kiyama, Senior Executive Officer, Senior Vice President, Corporate Strategy Division, Dr. Takeki Uehara, Corporate Officer, Senior Vice President, Direct Development and Regulatory Science Division, and last, Ms. Masako Kudo. Vice President of Financial Accounting Department and Corporate Strategy Division. And first, Ms. Kuro will explain about the overview of the closing and Kiyama will explain the major activities and achievements for the first quarter. And then after that, we take a question and answer time. And we'd like to close at 7.30. 15, the maximum. So you can use the simultaneous interpretation function today. So in case you use the simultaneous interpretation, please find the global icon in the bottom of the screen and you can choose either English or Japanese. So let me start right away. So Ms. Kuro, please. So I am Kudo. I would like to explain the overview of the first quarter financial result. So on page 4, this is a highlight of the financial result. So for the first quarter of this year ended in 109.3 billion yen operating profit of 46.6 billion yen. Profit before taxes 55.7 billion yen. The quarterly profit of 42.6 billion yen. And EBITDA, which was newly set as KPI in the STS 2030 revision mid-term management plan, announced last month was 51.3 billion yen. In this slide, year-on-year increase rate is shown. And as you can see, both sales and profit increased significantly in all the categories, and both reached record high. in the first quarter of the fiscal year. On page 5, this is a consolidated financial result. So, since we do not disclose a forecast for the first quarter, this is a percentage of progress against the first half forecast, and they all exceed 50% showing the favorable progress. Regarding the foreign exchange rate, it then has depreciated More than expected, it resulted in a foreign exchange gain. Page 6, statement of P&L. For revenue first, as explained in the note, we received the upfront payment of about 25 billion yen for the transfer of ADHD drugs license. which was a significant increase over the previous year, but even excluding this, all business, both domestic and overseas, are progressing steadily. R&D expense increased 10.9% over the previous year due to the active promotion of COVID-19 and other major development projects as indicated in STS Phase 2 Median Term Management Plan. Financial income and cost. A total of 9.1 billion yen, a significant decrease of 18.8 billion yen from the previous year. This was due to the impact of the dividend from Vive company, which declined significantly in the first quarter, as the company received a one-time larger amount of previous year due to the delay in the payment period and the large increase due to the lump sum payment received in connection with the settlement with Gilead. But excluding this one-time effect, a dividend is on schedule and we expect to see the increase in the later portion of the dividend received in the full year compared to the previous year. And so the seemingly smaller percentage of increase from the operating income to income before income tax is due to these factors from beef that reduced the dividend. On next page 7 shows the sales revenue by business segment. For domestic sales of prescription drug for the period from April to June, totaled 14.5 million yen, significant increase over the previous year. Although the sales of intuneve has continued since this year, but the decrease was more than offset by Zocoba, a COVID treatment drug. and as one-time payment for the transfer of the license of ADHD drug, as I explained earlier, which resulted in a large increase of 141.6% year-on-year. Overseas subsidiary and exports also increased year-on-year due to the growth of Cephidocole in Europe and the U.S. The Chinese business is 23.4% of the first half forecasted. But it is as expected because normally second quarter forecast is larger. Royalty income from the HIV franchise grew significantly due to both actual sales and the impact of foreign exchange rate. And on the page 8, I will explain about sales revenue of a prescription drug in Japan. As I explained earlier, it is progressing nicely. The sales of COVID-19 related products and the influence the franchise reproduces. Products amounted to 7.1 billion yen, an increase of 7 billion yen from the previous year, and almost all of the increase was attributed to the sales of Zocoba. The current situation and the future prospect of Zocoba will be explained later on page 11. Next, page 9. This is the first quarter summary. Again, all the businesses are strong and the top line grew substantially year on year. Even excluding the one-time ADHD-related payment of about 25 billion yen, we believe that our earning power is still increasing. In addition to these, basic business is expected to remain strong. We believe that we will be able to achieve the first half forecast at this point, given the steady penetration of Zocoba in Japan. That concludes my explanation. Next, Aiki Yama will explain the major activities and achievements in the first quarter. On page 12, that is the current status of Zocoba in Japan and the progress of the development plan. Zocoba was launched for their general distribution four months ago, on March 31st, and its use in Japan has been steadily progressing since it was moved to Category 5 infectious disease in May. In the post-marketing surveillance conducted during the latter half of the emergency approval period, more than 70,000 patients have used the rack. As a result of the safety evaluation, no additional safety measures were deemed necessary in the derivation of the safety committee. Although the post-marketing surveillance has been completed, we will continue to report the corrected safety information on the regular basis. In addition, our general use results survey of 3,000 patients is underway to correct the secondary information on safety and efficacy under actual condition of use, and we have just received the first interim report. As disclosed in our website of health care professionals, a variety of data that is in line with actual clinical condition has been collected. And although it is only the interim report, the results are similar to those of the clinical trial in terms of efficacy and safety. The fact that more than 80% of the registered patients have no risk factors also reflects the current prescribing trend of Zocoba. And although the infection rate are on the rise, prescribing opportunities are expanding, especially for patients with no risk factors. The right-hand side shows the slide summarizes the progress of Zocoba development plan. The onset for prevention study and the pediatric study in Japan started the enrolling of the patient in June, and the studies is currently on progress. We will continue to accelerate the global expansion of the COVID in consultation with regulatory authorities in each country. In Taiwan, we have reported that we have filed EUA application, but EUA application has ended temporarily, so we will continue to accelerate global expansion in consultation with the regulatory authorities in other countries.

Page 12. This is about the progress of our vaccine business. Recombinant protein vaccine S268019 is under deliberation to the Pharma Second Subcommittee We are expediting our preparations so as to supply the vaccine as soon as it is approved. We are also working on life cycle management for additional indications for adolescents and school children. And in addition, we are preparing to start clinical trials for the monovalent vaccine for XBB strains recommended by WHO and MHLW after S268019 approval in Japan. On the right-hand side, the universal vaccine is progressing very well, and we hope to start a clinical trial in 2024. On page 13, we discuss progress in building a foundation for global expansion. In June, we acquired Cubex Biopharma, a US biostartup as a wholly owned subsidiary. It has strong R&D capabilities of antimicrobials and a diverse network with U.S. government organizations and experts. We believe that this acquisition will generate a wide range of synergies in our infectious disease business, such as strengthening R&D of antimicrobial agents and external collaborations. We also acquired exclusive global development, manufacturing, and marketing rights for zero-larbactam and beta-lactam antibiotics. When used in the combination with zero-lactam, beta-lactam antimicrobial can exit the broader spectrum activity against drug-resistant bacteria. Providing a new treatment option for drug-resistant bacteria will lead to an environment in which beta-lactam antibacterial agents can be prescribed with confidence, so we will continue the development. Next, on page 14, This shows the progress in milestones of major development projects. There are also investigator-initiated trials. But here, on this table, the company-initiated clinical trials are shown. On the right-hand side of the table, in red, these are the most current results of each project. Our focus is the anti-obesity drug 0309309 and the painkiller raciniferatoxin. We would like to have the presentation in the following slide on page 15. First, S309309. It is the new mechanism of action of the anti-obesity. the obesity drug, which is different from the now popular GLP receptor agonist. This uses a new MOA that inhibits MT82 monocular glycerol transphase. We are increasing the speed of the development as the top priority. The table shows the overview of the phase 2 trial underway in the US. Adults with BMI 30 or over are randomized in a placebo-controlled double-blind study Once daily, overall, S309, S309's efficacy and safety are verified. The primary endpoint is the change of body weight from the baseline to week 24. The secondary endpoint is the percentage of patients who had the weight loss of 5%, 10%, 15%, and 20% or more. And in this particular study, we built a POC and compared doses for the sake of the phase 3 trial. And then we will decide the best doses. So that purpose, we set to the three dosages. And as soon as we get to the POC and the optimal dosage, we would like to start a global phase three study. Next, on the right-hand side, and the next is Resiniferatoxin, licensed from Gurenental. It is an analgesic with a novel mechanism that acts on TRPV1 on sensory nerves projecting to the knee, causing strong desensitization and pain separation by causing sensory nerves to retract on the knee. Currently, hyaluronic acid injections, NSAIDs, acetaminophen, and opioids are the main drug therapies for patients with knee osteoarthritis in Japan, but the balance between the long-term efficacy and safety is necessary. A clinical trial so far has shown that once per six months administration to the knee joint, significantly reduces pain and improve the physical function as well as good safety and tolerability profiles. FDA has also designated it as a breakthrough therapy. These characteristics will make it a drug with great potential to become a new treatment option to meet the unmet needs of patients with knee osteoarthritis. Next, page 16. This is the HIV Business Progress Guide B GSK presented its financial result last week. This is an excerpt from that. The bar chart on the left shows the sales trend of the new products every quarter. The overall two drug regimen, Dobat and Jeruka, and the LA formulations, Cabinuba and Apertude, these four products are growing in terms of the sales and growing the entire HIV business. The line graph shows that that the sales of these four products as a percentage of the previous total sales of anti-HIV drugs, and it is up to 51% now. In LA formulations, which is very important for immediate to long-term growth, the treatment regimen, Cabinuba, increased the sales by 50 million pounds compared with the previous term. In solar study, in comparison to big therapy of Gilead, 90% of the subjects preferred Kabe Nuba to the orally taken daily products. And in many clinics in the United States, there are many patients who hope to start the prescription of Kabe Nuba. And the 70% or more of the patients prescribed with Kabe Nuba were switchers from the competitor's drug. This will give us a sense of confidence for the future growth. On the prevention side, Aperture in the US sales is trending positively, and then the European CHMP has a positive opinion for the approval. Next, the European Commission will make a decision on the approval, but this positive opinion is an important step for the approval. The BIB is going to have the explanatory meeting on HIV in late September, to talk about the update of the mid- to long-term strategy of primarily LA formulations. Page 17, this is about the human capital management for 2030 vision. Since the SD 2030 was developed, our colleagues and group understood the importance of proactively acquiring new capabilities that are necessary for growth, and we have engaged in at rescuing and retraining actively. Last July, we set up the Human Capital Strategy Office to execute initiatives to maximize human capital. We changed the HR and grading system to allow diverse people to thrive and to speed up the Shionagi's growth, and we started work-from-home and four-day workweek systems for a better work environment. And we also set up the joint venture for back office work with Accenture. We also developed the early retirement program to speed up the review of the talent portfolio. Going forward, we will hire people with specialist skills from outside and develop talents for globalization more. And we will do engagement to transform our corporate culture by addressing our future challenges. so that we can build a talent portfolio for further growth to ultimately embody 2030 vision. Lastly, at a return to shareholders, as a part of the financial strategy for STS Phase 2, the company decided to conduct a buyback and cancellation of its shares. The buyback is scheduled from August 1 to March 31, 2024, with an overall limit of 12.5 million shares of 75 billion yen. Taking the share price, which we think is undervalued, and the performance trends into account, we plan to obtain the largest ever number of shares. We will continue our efforts to strengthen shareholder returns and improve capital efficiency. My presentation will end here. Thank you very much.

Thank you.