Astellas Pharma Inc.

Thank you very much for joining Astellas FY2026 first quarter year-to-date financial results announcement meeting out of a very busy schedule today. I am delighted to serve as an emcee today. I am Kato, Chief Communications and IR Officer. Thank you very much for your time. Today, after our presentation, we will move on to a Q&A session. We will explain based on the meeting material posted on our website. Including Q&A, simultaneous interpretation is available in Japanese and English. We cannot guarantee the accuracy of simultaneous translation, so thank you for your understanding. You can select language from your Zoom webinar screen menu. If you select the original sound, you can listen to the original sound without going through simultaneous translation. Precaution. This material or presentation by representatives for the company and answers and statement by representatives for the company in the Q&A session includes forward-looking statements based on assumptions and beliefs 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 on pharmaceuticals including compounds under development, but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations, promote unapproved uses in any fashion, nor provide medical advice of any kind. Let me introduce the participants from our company, CFO Atsushi Kitamura. Chief Research and Development Officer, Tadaki Taniguchi. Chief Commercial and Medical Affairs Officer, Klaus Thieder. So we have three executives attending today. We now try to go into presentation. Kitamura-san, please. Hello, everyone. I'm Atsushi Kitamura from Asselas Pharma Inc. Thank you very much for joining our FA2026 First Quarter Year-to-Date Financial Results Announcement Meeting after a very busy schedule today. This is a cautionary statement regarding forward-looking information. As this was explained by Kato earlier, I'm not going to read this page. On page 3, I will give you an overview of FI2026 first quarter year-to-date financial results. Toward record high full-year revenue and core operating profit, we made a strong first quarter progress. Revenue increased by 27% and core operating profit rose by 56% year-on-year. Both made a robust growth. Score operating profit margin increased by 6.4 percentage points year-on-year to 34.5%, exceeding 30%. Overall growth was driven by continuous strong strategic brands growth and by ensuring disciplined cost optimization. There were favorable FX impacts due to the yen's depreciation, but even excluding Forex impact, revenue and cooperating profit grew substantially by 15% and 38% respectively. A pipeline also made a solid progress. PatSafe, in its development for MIBC, muscle-invasive bladder cancer, was approved in Europe and the United States. Firing was made in Japan and China. Furthermore, Phase III study was initiated for bladder-sparing MIBC. PatSafe achieved multiple significant milestones. As for Viroi, in Phase 3, the SANA study, to evaluate combination with pembrolizumab and chemotherapy, target enrollment was achieved well ahead of schedule. Pharma Inc. Pharma Inc. Pharma Inc. Following last fiscal year, we were able to make a great start to FY2026 again. In addition to solid growth of strategic brands fueled by favorable Forex impact, revenue, co-operating profit, and full operating profit all grew substantially. As a result, quarterly results hit a record high since the establishment of Astellas. Let me explain main items. Revenue reached 640.9 billion yen, substantially up by 26.7% year-on-year. Cooperating profits significantly increased to 221.4 billion yen by 55.6% year-on-year. While continuing to steadily make investments necessary for future growth, we ensured disciplined cost management which enabled us to expand our profits substantially. The bottom half of this page shows our full basis results. Operating profit was 184.5 billion yen and profit was 141.8 billion yen, both increased by about two-fold compared to the previous year. Page 6 shows FI2026 first quarter year-to-date results over main brands. Strategic brands continue to maintain strong momentum, driving overall revenue and profit growth for Asterisks. First, sales of five strategic brands, namely Patsev, Isavay, Viroi, Vioza, and Zospata, exceeded 160 billion yen in total, substantially up by 48.3 billion yen, or 43% in a year. All strategic brands achieved robust growth. Patsev, in particular, exceeded the initial expectations. Other strategic brands are progressing as expected. The strong growth momentum of strategic brands is expected to continue throughout FY2026. Next, I will explain individual strategic brands and extended. As for part sales, sales increased to 75.5 billion yen, up by 20 billion yen or 36% year-on-year. Overall, global progress is exceeding our expectations, driven by strong penetration in global first-line metastatic uracereal cancer. In particular, penetration is accelerating in markets outside of the United States. In Europe, progress in reimbursements in many countries also led to sales expansion as well. Also, penetration of CIS ineligible MIBC in the United States also contributed to sales growth. In addition, recently we had important progress as well. Approval was granted for CIS ineligible MIBC in Europe in June and for CIS eligible MIBC in the United States in July. We are expecting a future sales contribution from these additional indications. On the other hand, market penetration is making rapid progress, particularly in the United States, so we are not assuming that the recent high growth rate will continue as is. In the future, along with expansion of penetration, the growth rate is expected to be milder gradually over time. Still, there is no change in our perception of growth potential part self. As an important product to continue to drive a status growth, mid- to long-term growth is expected. As for Isavay, sales rose to 27.2 billion yen, up by 11.2 billion yen, or 70% a year. In addition to a steady increase in new patient starts, adoption across the retina community is also making good progress. Isavay is achieving market leadership in GA, geographic atrophy. Also, we are strengthening awareness activities for both physicians and patients. We are continuing to work to drive awareness of the importance of early diagnosis and early treatment of GA. Furthermore, through DTC campaigns using insights from patients, we are trying to increase the diagnosis rate and the treatment rate as well. These initiatives are steadily resulting in achievements. Through market expansion and the progress of treatment penetration, growth momentum either way is expected to continue into the future. With regards to Viroi, sales reached 21.1 billion yen, up by 7.1 billion yen, or 51% year-on-year. Penetration of clothing 18 testing is continuing steadily. Based on that progress as a background, sales grew solidly in all regions. The current testing rate is over 90% in Japan. Also, in the United States and Germany, penetration is rising to the 70 to 80% level. Due to the increase in testing rates, prescription to appropriate patients is making steady progress. We are expecting solid growth of viral cells into the future. Sales of Vioza increased to 14.9 billion yen, up by 5.3 billion yen, or 55% year-on-year. Since last fiscal year, competitor product has entered the market, but the launch impact is just in line with assumptions. Vioza is continuing to grow steadily while holding the strong share position versus new competition in the United States. Regarding Zospata, sales reached 21.6 billion yen, up by 4.6 billion yen, or 27% year-on-year. Globally, steady growth is continuing. Extended sales increased to 276.6 billion yen, up by 43.6 billion yen, or 19% year-on-year. Forex Sandy, favorable forex impact from the yen's depreciation in particular, is contributing greatly to its sales increase. Excluding the forex impact, the growth rate is about 7%. This is a high progress rate vis-à-vis our full year forecast. As we said at the beginning of the year, towards the second half of FY2026, we are expecting a decrease in sales due to price reduction in the United States and the impact of patent expiry in some of the countries. so the first quarter progress is in line with our full-year forecast expectations. From the second quarter onwards, strategic brands are expected to have a higher presence as growth pillars and further drive a status revenue and profit growth strongly. Page 7 is about cost items. While we steadily executed investments necessary for future growth, we were able to manage SG&A expenses, excluding U.S. extended co-promotion fees and Forex impact, at a level similar to the previous year. As a result, also due to revenue increase, SG&A expense ratio improved by 3.5 percentage points year-on-year. Thanks to what we call SMT, Sustainable Margin Transformation, a company-wide cost optimization initiative, we realized cost optimization of about 8 billion yen a year for SG&A and expenditure and cost of sales combined. Next, let me explain a specific breakdown of SG&A costs and early expenditure. SG&A expenses, excluding Forex impact, almost remained flat, up by 0.1% year-on-year. While we increased our revenue substantially, we were able to hold SG&A expenses flat at a level similar to the previous year. While we increased investments for future growth, further growth of strategic brands, as an SMT initiative, we realized cost optimization of about 3 billion yen through efficiency benefits from global capability center establishment, AI and digital capabilities, etc. As a result, while fully executing investments for strategic brands, we were able to offset the increase through SMT cost optimization according to assessment.

Excluding the FedEx impact, R&D expenses increased by 5.9% year-on-year. In line with the steady progress in development, clinical development calls for our pipeline, primarily for such aggressive ASP2138 and ASP546C, increased by approximately 4 billion yen. Pharma Inc. Pharma Inc. Pharma Inc. Pharma Inc. Pharma Inc. Looking ahead with the Phase 3 initiation and the patient enrollment progress as clinical trial settlements, we expect a further increase of investment from the second quarter onwards. I will now explain our pipeline progress. On page 9, I will discuss progress of the life cycle management of our strategic brands. We have achieved significant milestones, notably the phase 3 trials for PADSF in MIBC and VILOI. Regarding PADSF, for cisplatin ineligible MIBC, we obtained approval in Europe in June based on the EV303 trials. Next, for cis-eligible MIBC, we filed in Japan in May based on the EV304 study, and in the U.S., we received approval in July, one month ahead of the PDUFA date. Furthermore, in China, based on both the EV303 and EV304 studies, filing was accepted in July. We also initiated the Phase III EV309 trial in June for bladder-sparing MIBC. For ISFA, the filing in China based on overseas clinical trial data was accepted in May. Regarding bylaw, the Phase III Luzona trial, which is evaluating the efficacy and safety of combination with pembrolizumab and chemotherapy, is currently underway. In July, we reached the target enrollment of 500 patients in approximately one year, 20 months ahead of the initial schedule. Pharma Inc. Pharma Inc. In April, Bioza met its primary endpoint in the StartLight 3 trial, which is evaluating long-term safety in Japanese women. We plan to do filing in Japan based on the results of this study in the second quarter. Page 10. I will discuss progress in our pipeline. In our CSP 2026, to accelerate pipeline growth, we set key derivatives to invest more aggressively in R&D and aim to initiate more than 10 Phase 3 or pivoted-out trials by FY 2030. Focusing particularly on those which have already achieved POC, highlighted in pink, we expect to initiate more than five H3 or pivotal trials by FY2027. We have recently begun patient enrollment in Phase 3, 4, 30-day aggressive as second-line or later treatment for NSCLC and for ASP2138 as first-line treatment for gastric cancer, making steady progress in line with CSP2026. Please refer to Page 33 and 34 of the appendix for details on the design of each study. We also announced new clinical trial data for several programs. We presented clinical trial data for Saturday Aggressive in BTC at the SMOGI meeting in July. Additionally, we presented data from the Phase II study of ASB546C in China at the ASCO meeting in June. Details are provided on the next two pages. We presented additional data from the Phase 1B trial of ASB7317 at ARVO meeting in May. Please refer to page 36 of the appendix for details on the data. Page 11 provides an update on the development of ASB546C. ASP-5460 is an antibody drug conjugate, or ADC, that targets clothing 18.2. Under an exclusive license agreement with Everpoint, Astellas holds the rights to develop and commercialize the compound worldwide, excluding mainland China, Hong Kong, Macau, and Taiwan. Currently, a global Phase 1b2 study led by Astellas is underway. Additionally, Phase 3 trial led by Evapoint for gastric cancer is ongoing in China. Pharma Inc. Pharma Inc. For gastric cancer, the objective response rate, or ORR, measure of efficacy was 65.4%, demonstrating a very high response rate that exceeded previously reported figures. Furthermore, the median progression-free survival, or PFS, was 5.7 months overall, and the median overall survival, or OS, was 11.7 months. Furthermore, in PDAC, the overall PRR was 26.7%, the median PFS was 4.1 months, and the median OOS was 10.0 months. These results confirm that drug-staggering clothing 18.2 demonstrated anti-tumor activity also in PDAC. Leveraging our leading position in clothing 18.2 targeted therapy established by Viloid and ASP2138, we will continue to accelerate the development of ASP546C. On page 12, I will explain the update of sedative aggressives development. We presented the preliminary clinical data from Phase I trials in BTC and gynecological cancers at SMOGI. Promising early anti-tumor activity was observed, and this was most pronounced in patients with BTC receiving second- to fourth-line treatments. Pharma Inc. Pharma Inc. Furthermore, as shown in the figure on the right, the median PFS was 4.8 months for BTC patients, 7.1 months for those receiving second- to fourth-line treatment, and 4.2 months for gynecologic cancer patients. We will announce our future development plans for care sheet of demutation-positive cancers, including BTC and gynecologic cancers, at the appropriate time once they are finalized. Page 13. I will now explain the expansion of primary focus. We have expanded the scope of primary focus, targeted protein degradation or TPD, into broader primary focus-induced proximity platform. Pharma Inc. Pharma Inc. In induced proximity, in addition to the target protein degradation we have been developing, we utilize modalities such as Riptac and molecular glue to intentionally bring two intercellular molecules, which would not normally interact, closer together. By creating new connections inside the cell, we are able to overcome barriers of traditional treatments, that is, to remove harmful proteins and regulate disease processes. Building on the insights and competitive advantages cultivated through TBD, we aim to unlock differentiated pipeline potential in hard-to-treat cancers with long-term growth. Page 14. Key takeaways of today's presentation. Following last fiscal year, we were able to get off to a great start this fiscal year as well. Revenue and profits grew significantly. Our strategic brands grew strongly and drove the growth of overall revenue and profits. We expect strong growth momentum to continue throughout FY2026. Furthermore, through rigorous discipline and cost optimization, we managed SG&A year-on-year. We believe we have successfully achieved both revenue and profitability growth. Our pipeline also made solid progress. We achieved several key milestones in lifecycle management of strategic grants. In PathSafe's MIBC development, in addition to obtaining multiple approvals and filings, we have initiated the Phase 3 EV309 study for blood sparing MIBC. By law, it has achieved enrollment of the target number of patients in the Phase III Luzona study evaluating pembrolizumab in combination with chemotherapy at a rate significantly faster than planned. We also made a steady progress toward the pipeline-driven growth strategy outlined in CSP 2026. We have begun patient enrollment in new Phase III studies for sedentary aggressive in NSCLC and for ASP2138 in gastric cancer. At the first quarter of the CSP2026, we believe we have built strong momentum toward achieving our targets. That concludes my presentation. Thank you for your attention.

That's all from us as a presentation. So we now would like to take questions from the audience. If you have a question, please press the raise hand button at the bottom of your Zoom screen. If you're joining from your smartphone, please tap details. Then raise hand will be shown, so please press it. I'm going to name you one by one. If your name is called, please unmute yourself on your screen. Mention your name and affiliation and ask us your questions. So now we'd like to open the floor for questions. First, Mr. Yamaguchi from Citigroup Securities, please. Yamaguchi from Citigroup Securities, can you hear me? Yes, we can hear you. Thank you. First, slide 6 shows the progress of main brands and also on the previous page as well. There was the Forex Impact Pathset, exceeded the impact extended, had an initial good start, so it's going to come down. So the tax amount is in line with the assumptions as I heard. But profit progress is very good, it seems. In the end, what about the difference compared to your initial assumptions or expectations? The progress rate seems to be very strong. Is my understanding correct? Please comment. Thank you very much. Your question is about the sales, not just the sales of strategic brands, but the progress of the business as a whole. What about the progress compared to the initial plan? Is that your question? Yes. FIA 2026. Yes. It's the first year in the CSP 2026. So following last year, a record high revenue and record high profit is what we'd like to achieve in the current fiscal year. The first quarter made a very strong progress, as you said, particularly in terms of revenue and sales. PatSafe had very good sales, and we had the cost management in line with the plan. So for us... The first quarter was very strong in our view. The progress rate is not just the one-fourth of the annual plan, but we still think that the first quarter was very strong in the second quarter and beyond. Thank you very much. Secondly, new primary focus is going to be induced proximity As explained, there is no specific pipeline yet. I haven't checked the details myself yet. TPD has an output for anti-cancer agents. Regarding the induced proximity, what about its therapeutic areas? What are you aiming for in this field? as an applied therapeutic area. We are very excited. Primary focus is going to be expanded. We can identify opportunities to create drugs, so this is very exciting. Rather than me talking about exciting topics, I'd like to hand over to Taniguchi to explain further. Thank you very much. Targeted protein degradation is going to be expanded to induced proximity. We had proteins We have binders bound to proteins, and that is making a lot of progress. Recently, target protein degradation, or RICTAC, molecular glue in these fields, research is progressing. Various target proteins can with the various modalities to pursue new treatments. That is going to be a focus. As for the induced proximity, it's going to be focused on the oncology fields and induced proximity technologies can be utilized first to This is