Astellas Pharma Inc.

Thank you very much for your joining with us. This is the FY25, the third quarter earnings goal. My name is Kato. I'm serving as the moderator for today. I am chief communications and IR officer. Today, following our presentation, we will proceed to the Q&A session. The presentation will follow the presentation materials available on our website. The session, including Q&A, will be conducted with simultaneous interpretation in Japanese and English, please note that we cannot guarantee the accuracy of the simultaneous interpretation. You may select your language from the menu on the Zoom webinar screen. If you choose the original language, you can view the presentation in the original audio without simultaneous interpretation. This is some notes for today's presentation. This material presentation and answers and statement by representatives for the company in the QA session includes forward-looking statements based on assumptions, benefits, or beliefs, rather, in light of the information currently available to management and subject to significant risks and uncertainties. Actual financial results may differ materially, depending on a number of factors. They contain information of pharmaceuticals, including compounds under development, but this information does not intend to make any representations or advertisements regarding the efficacy or effectiveness of these preparations. Promote unapproved uses in any fashion or provide medical advice of any kind. The participants for here today is Asushi Kitamura, CFO, Chief Financial Officer. Tadaki Taniguchi, CRO, Chief Research and Development Officer. Klaus Seuler, Chief Commercial and Medical Affairs, CCMAO. We have three of them with us here today. We start the presentation now. Kitamura-san, the floor is yours.

Hello, everyone. I am Atsushi Kitamura from Asteris Pharma Inc. Thank you very much for joining our FY2025 third quarter year-to-date financial results announcement meeting out of a very busy schedule today. This is a cautionary statement regarding forward-looking information. As this was explained by Kato earlier, I am not going to read this page. On page 3, I will explain the highlights of FI 2025 third quarter year-to-date financial results. Strong momentum from the first half of FI 2025 continues. Based on this, we have made another upward revision of our full-year forecast. Continuous strong growth of strategic brands by over 100 billion yen year on year has driven double-digit revenue growth. As for SG&A expenses, thanks to the robust progress of what we call SMT, Sustainable Margin Transformation, A company-wide cost optimization initiative, SG&A ratio improved by 2.7 percentage points year-on-year. Due to the growth of strategic brands and robust cost management through SMT, core operating profit rose significantly, up by 49% year-on-year. co-operating profit margin increased by 7.1 percentage points year-on-year to reach 27.6%. Based on this strong momentum, like the second quarter year-to-date results announcement, we made another upward revision of our full-year forecast by 70 billion yen for revenue, by 30 billion yen for co-operating profit, and by 100 billion yen for full operating profit, respectively. Regarding our pipeline, there were four major important progresses. For PADSEV, as part of life cycle management of strategic brands, development for MIBC muscle invasive bladder cancer made a substantial progress. The additional indication based on EV303 study was approved in the United States. Also in EV304 study, positive top line results were obtained. Regarding VILOI, promising combination data in gastric cancer was obtained. Phase III study for combination therapy is ongoing. As for focus area approach, for ASP3082, promising first-line PDAC data was obtained. We plan to start Phase III study by March. Furthermore, regarding ASP2138, POC was achieved in gastric cancer. Phase III study is now under preparation. Page 4 is the agenda for today. From the next page, I will explain these topics. Page 5 shows FI 2025 third quarter year-to-date financial results. Revenue and core operating profit respectively increased by about 150 billion yen year-on-year. Full operating profit increased significantly as well. Let me explain main items. Revenue reached 1 trillion 601.3 billion yen, up by 10.2% year-on-year. Corporate-in-profit rose to 442.1 billion yen, up by 48.6% year-on-year. The bottom half of this page shows our full basis results. Operating profit was 333.9 billion yen and profit was 248 billion yen. Both rose significantly year-on-year. Page 6 shows FI 2025 third quarter year-to-date results over main brands. Sales of all brands increased across the board, with strategic brand sales combined growing by over 100 billion yen in total year-on-year. First, third-quarter year-to-date sales of five strategic brands, namely Patsev, Izavei, Viroi, Vioza, and Zosparta, exceeded 350 billion yen in total. Substantially, up by ¥109.3 billion or 45% year-on-year, Padsafe and Viroi in particular drove the strong growth. We are expecting total sales of strategic brands as a whole to reach close to ¥500 billion on a full year basis. Also, these brands have high profitability and their growth made a great contribution to co-operating profit increase. We are expecting further growth to continue in FY2026 as well. Next, I will explain individual strategic brands and extended. Part 7. Sales increased to 162.6 billion yen, up by 45.6 billion yen, or 39% year-on-year. While robust global growth has been continuing, overall progress is exceeding our expectations, mainly driven by the strong trends in the United States and Europe. As a major progress in the third quarter, in November last year, based on EV303 study, the additional indication of cis-ineligible MIBC was approved in the United States. Uptake after approval is on track, and in December, PASSEV was included in the NCCN guideline many physicians are referring to. In addition, in EV304 study in CIS-eligible MIBC, positive top-line results were achieved. We are now preparing for filing a submission. MIBC is expected to drive further growth of PatSafe in FY2026. As for ISAFE, sales rose to 55.8 billion yen. up by 11.4 billion yen, or 26% year-on-year. New patient starts, which are important metrics, are steadily increasing. ISAVE continues to grow double-digit, quarter-on-quarter, both in terms of sales and volume. Although progress is in line with our expectations vis-à-vis our full-year forecast we updated in the second quarter, we continue to have high expectations on Isavay as one of the important growth drivers. With regards to Viroi, sales reached 46.1 billion yen, performing well at a pace higher than our full-year forecast we revised upward in the second quarter. Continuously from the first half, High chlodine-18 testing rates and lower-than-expected discontinuation rates are contributing to the overall good progress. We are meticulously conducting information provision activities about AE management. By focusing on the prevention of nausea and vomiting, particularly in the initial cycle, we believe we can reduce discontinuation and enhance treatment continuation rate. Regional footprint is expanding steadily, with approval in 48 countries and launches in 30 countries by now. Viroi, since launch, has been performing extremely well by now. We are expecting further growth also in FY2026 and beyond. Sales of Vioza increased to 35.2 billion yen, up by a 10.8 billion yen or 44% year-on-year, demonstrating a solid growth continuously. With recent new coverage starting in January this year, commercial lives covered expanded to about 80%. With improved access, we're expecting stable growth also into the future. A new non-hormonal drug was launched in the United States, but the launch impact as of now is in line with our assumptions. With the launch of another treatment in the same class, we are hoping that the market will expand further going forward. Regarding Zosparta, sales reached 53.5 billion yen. Overall, it's making steady progress. Top-line results are expected in the first half of calendar year 2026 for Phase 3 partial study with newly diagnosed AML as a potential new indication where we have high expectations as a future growth driver for Zosparta. If approved, we can offer this treatment option to a new patient population, so we're expecting contribution to sales. Last but not the least, Xtendi. Sales increased to 732.2 billion yen, up by 29.1 billion yen, or 4% year-on-year. Progress is exceeding expectations, driven by continued global demand growth. We're expecting Xtendi to reach its peak level in the current fiscal year. Page 7 is about cost items. SMT initiative is progressing ahead of a plan. We realized cost optimization of about 20 billion yen in total for SG&A expenses, earned expenditure, and cost of sales combined. We are fully on track to achieve FY2027 cost optimization target of 150 billion yen. Excluding U.S. extended co-promotion fees, SG&A cost ratio improved by 2.7 percentage points year-on-year. Let me explain a specific breakdown of SG&A costs and earned expenditure. SG&A expenses trended at a similar level compared to the previous year. SG&A cost ratio was 27%. As an SMT progress, we realized cost optimization of about 9 billion yen through continuous global organization restructuring, reduction of mature products related expenses and streamline IT infrastructure, etc. In addition to investments to maximize the potential of strategic brands driving our future growth, we will continue to make investments needed for SMT execution in order to realize further cost optimization from next fiscal year onward. and the expenditure decreased by 12.9% year-on-year. As the main factor behind, in addition to Forex Impact, we made progress in outsourcing cost reduction through insourcing development capabilities, including clinical trials, etc., under SMT, which led to cost optimization of about 8 billion yen. Furthermore, due to the completion of large clinical studies for strategic brands, clinical development costs decreased by about 9 billion yen, One-time co-development cost payments booked in FY2024, etc., was another factor for the year-on-year cost reduction. Up to the third quarter, we were in a transitional period, with the completion of large clinical studies for strategic brands, moving on to prepare for new late-stage development studies. From now on, we are planning to initiate multiple Phase III studies. From the fourth quarter and FY2026 onward, we are expecting investments to increase. aligned with the progression to late-stage development.

Page 8 is about the revised full-year forecast of FY 2025. Based on strong momentum, through the third quarter, we have again revised upward our full-year forecast for revenue, core, and full OPs. The core OP margin is expected to increase by 4.2 percentage points year-on-year to achieve 24.8%. Regarding foreign exchange assumptions, we have revised the full-year forecast exchange rates to 150 yen per U.S. dollar and 174 yen per euro. For the fourth quarter, we assume an exchange rate of 154 yen per U.S. dollar and 180 yen per euro. Revenue is projected to reach 2.1 trillion yen, an upward revision of 70 billion yen from the previous forecast. In the second quarter announcement, incorporating the upward revision of full-year forecast for Xtendi and Mirabegrum, as well as the impact of the change exchange rate assumptions. S&A expenses excluding U.S. core promotion fee for Xtendi are projected at 600 million yen, excluding the Forex impact. This is the similar level as the previous forecast. R&D expenses are projected at ¥315 billion, reflecting the prioritization of programs in the research phase. As a result, cooperating profit has been revised upward by ¥30 billion. From the previous forecast, we expect a cooperating profit to reach ¥520 billion, exceeding the ¥500 billion mark for the first time since Stella's inception. Next, full basis operating income. We have incorporated 30 billion yen into the latest focus under other income, including changes in the fair value of contingent conservation related to VILOI following the discontinuation of PDAC program booked in the third quarter. Additionally, we partially released 40 billion yen of other expenses, including an impairment loss risk previously booked at the start of the period, reflecting this in the latest forecast. As a result, full-year period in profit is projected at 340 billion yen. We will now discuss pipeline progress. Page 10, progress on key events expected in FY2054 of strategic products, strategic brands. Particularly significant advancement as shown in the center of the slide was approval in the U.S. last November for the expanded indication of PASF based on AV303 trial for cisplatin-ineligible MIBC patients. Noteworthy is the remarkable speed of disapproval, achieved just one month after the submission was accepted in October, more than four months ahead of the PRUFA date. Following the U.S., we submitted for this expanded indication in Europe in November and in Japan in January. Furthermore, the EV304 trial for cisplatin-eligible MRBC also made its primary and a point. Detailed data from this trial will be presented at the February ASCO-GU meeting. Very low data from the Phase II illustrious trial was presented at ASCO-GI in January. Details are provided on the following pages. As other updates, as noted in the table footer, we obtained favorable top-line results from the Phase III Starlight II study, the pivotal Japanese trial for VEOSA. We plan to submit for a regulatory approval in Japan after obtaining results from the Starlight III trial, evaluating long-term safety. Page 11 shows the latest status of V-Loy. We presented promising data at ASCO-GI, supporting its combination with immune checkpoint inhibitors plus chemotherapy. Cohort 4B of the phase 3 LASTRO trial evaluated the efficacy and safety of V-Loy in combination with nivolumab and chemotherapy for first-line treatment of gastric cancer. The median PFS, progression-free survival, the efficacy in a point was 14.8 months across the entire cohort, 18 months in patients with a clotting 18.2 high expression, and as indicated by the red line in the graph, 23.6 months in patients with both clotting 18.2 high and the CPS1 or higher. This significantly exceeded previously reported data for combination therapy with chemotherapy alone. Currently, the Phase III Lucerna trial is underway as a confirmatory study for the combination therapy. The Lucerna trial evaluates the efficacy and safety of the combination therapy of phylloepimbulism and chemotherapy in gastric cancer patients with clotting 18.2, high expression, and CPS 1 or higher who demonstrated the longest PFS in the illustral trial. And patient enrollment is progressing smoothly with interim analysis data expected to become available in FY27 or later. We anticipate that this combination therapy will further contribute to the treatment of gastric cancer, an area of high medical need, and maximize the product value or value. Page 12, regarding the focus area approach, we describe the progress of the flagship programs for each primary focus. For ASP3082, under-targeted protein degradation, clinical trial data for PDAC was presented at ASCO-GR in January. Details are provided on the following page. ASP2138 under immuno-oncology achieved clinical milestones by demonstrating proof of concept in gastrointestinal adenocarcinoma and GHEJ adenocarcinoma. This is based on the promising first-line data presented at ASMO last October. Preparations are underway to initiate the first three trials promptly. Clinical trials for ATA845 in gene regulation and ASP7317 in blindness and regeneration are progressing as planned, with the POC judgment still targeted by March. Page 13. Progress on ASP3082 and primary focus targeted protein degradation in Regarding ASP3082 for first-line PDAC pancreatic ductal adenocarcinoma treatment, promising data was presented as COGI, and we anticipate to initiate phase 3 by March. PDAC is a disease with a high amount medical need as a current standard chemotherapy-based treatment struggle to achieve sufficient efficacy. In evaluating ASP3082 in combination with chemotherapy as first-line treatment for PDAC, we observed a high anti-tumor activity on ORR, 58.3%, and DCR disease control rate of 83.3%. ORR stands for Objective Response Rate. The safety profile showed no major concerns yielding promising findings supporting further development in PDAC. Based on these results, preparations are underway for Phase III trial targeting first-line treatment of PDAC, scheduled to start by March. For NSCLC, development plans are being reviewed to initiate the registration of studies earlier. For colorectal cancer, POC judgment is anticipated by March. Regarding follow-on program progress, SB 5834, upon care as degradation induced, received first drug designation from the FDA for NSCLC. We anticipate this work will accelerate its development. ASP4396, which was being developed as a drug targeting the same K-RASG12T mutation as ASP3082, has been terminated based on data obtained to date. Going forward, we will focus development efforts on ASP3082, which has demonstrated promising data for this target. Page 14, today's summary. Strong momentum continued in the third quarter. Strategic brands maintained strong growth. Cost optimization through SMT progressed well, with the G&A ratio continuing to improve. Following the Q2 earnings announcement, we have made another upward revision of our full-year forecast of revenue by 70 billion yen, core OP by 30 billion yen, and full OP by 100 billion yen. Our pipeline also made a significant advancement. As for strategic brands, lifecycle management progressed notably for PartCF and Byloy. In the focus area approach, SB3082 and SB2138 progressed toward initiation of Phase III trials. We'll continue pursuing further profit growth and enhancing pipeline value. At the end, this is an update on upcoming events. Our annual sustainability meeting is scheduled for the 26th of this month. We present ASTELLA's sustainability philosophy-specific initiatives and the outcomes achieved through these efforts. We really encourage you to participate in it. Next, we plan to hold an R&D day in late March. This session will provide an in-depth explanation of our current R&D status and further direction. In late April, we will hold the FY25 earnings call. Then, in late May, we plan to hold a briefing on our next corporate strategic plan. We hope to demonstrate how ASTELUS will achieve sustainable growth beyond the expiration of extended exclusivity. Details for all these events will be announced as soon as they are finalized. We look forward to your continued interest. That's all from me. Thank you very much for your attention.