Thank you very much for joining us for Takeda's FY 2023 Q3 earnings announcement, despite the busy schedule . I'm MC today. I'm O'Reilly, head of IR. First of all, I would like to explain about the language. Please find the language button at the bottom of Zoom window. If you wish to listen in Japanese, please choose Japanese. If in English, please choose English. If you want to listen to the original language, please turn it off.
Select English in the Zoom language select button. Honjitsu no call dewa, Beikoku no 1995 nen.
Before starting, I'd like to remind everyone that we'll be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F and our other SEC filings. Please also refer to the important notice on page two of the presentation regarding forward-looking statements and our non-IFRS financial measures, which will also be discussed during this call. Definitions of our non-IFRS measures and the reconciliations with the comparable IFRS financial measures are included in the appendix to the presentation. Without further ado, we would like to start the presentation today. We have our President and CEO, Christophe Weber, R&D President, Andy Plump, and the Chief Financial Officer, Costa Saroukos, presenting today, followed by a Q&A session.
Now let us begin.
Christophe, please go ahead.
Thank you, Chris, and thank you everyone for joining our third quarter earnings call for fiscal year 2023. Our vision at Takeda is to discover and deliver life-transforming treatments, guided by our commitment to patients, our people, and the planet. This purpose-led approach is at the core of our strategy for sustained growth and long-term value creation for our stakeholders. Our performance in the third quarter of fiscal year 2023 further demonstrate our progress in executing on that strategy as we look ahead to a return to top line, profit, and margin growth. Our top line continued to be driven by the strong momentum of our Growth and Launch product , which now represents 43% of total revenue, and which grew at 2.7% year to date at constant exchange rate.
In Q3 year to date, core revenue was JPY 3.2 trillion, with flat growth at constant exchange rate compared with the same period in the previous year. This is despite significant loss of exclusivity impact, primarily from Vyvanse in the U.S. and Azilva in Japan. On an actual exchange rate basis, revenue grew 4.6%. Core operating profit was JPY 865.6 billion, with a decline of 12.7% at constant exchange rate, reflecting the loss of exclusivity on high margin product, as well as our investment in R&D and advanced technology to secure long-term competitiveness. At actual exchange rate, our core operating profit declined by 9.3%. Despite this, we remain on track to exceed JPY 1 trillion core operating profit for the full year.
On a reported basis, operating profit on EPS were impacted by non-core items, including impairment of intangible assets, which were mostly booked in the second quarter. As you know, we provide full year management guidance for core growth at constant exchange rate, and I am pleased to report that our year-to-date core performance continued to be in line with expectation, keeping us well on track to our management guidance for the year. On the next slide, we are confident in our R&D strategy, and we continue to advance highly innovative, life-transforming medicines for patients affected by rare or more prevalent disease in our core therapy areas. Our pipeline delivered well in the third quarter, with two new molecules approved in the United States, FRUZAQLA for previously treated metastatic colorectal cancer, and ADZYNMA for an ultra-rare blood clotting disorder called congenital thrombotic thrombocytopenic purpura, or cTTP.
FRUZAQLA, which we acquired through an exclusive license agreement with HUTCHMED in March last year, is the first and only targeted therapy approved for metastatic colorectal cancer, regardless of biomarker status in more than a decade. In fact, the unmet need is so significant that FRUZAQLA was available within 24 hours following FDA approval, with the first prescription received the day after approval. I want to acknowledge here the work of our oncology team in preparing for the launch and giving these patients hope. Regarding ADZYNMA, this is the first and only therapy of its kind for the treatment of cTTP, an ultra-rare blood clotting disorder. Its approval and launch are significant milestones for this rare disease community, which we are proud to continue focusing on.
Since the second quarter, since Q2, we have also made strong progress in our existing portfolio with important lifecycle management approval for our growth and launch product. LIVTENCITY is now approved in China for refractory post-transplant CMV. Patients in China now have access to this therapy that can enable sustained and effective treatment against post-transplant cytomegalovirus infection, which could save an organ or a life that might otherwise be lost.... In November, the European Union approved TAKHZYRO for pediatric patients with hereditary angioedema. It is the first and only long-term prophylactic treatment for this rare disease available in the EU for patients under the age of six. And in January, we had some fantastic progress in our plasma-derived therapy portfolio, with three approvals for our immunoglobulin portfolio for chronic inflammatory demyelinating polyradiculoneuropathy, or CIDP, a rare disorder affecting the peripheral nervous system.
HYQVIA, the only facilitated subcutaneous IG, was approved by both the U.S. FDA and the European Commission for maintenance treatment of CIDP, and Gammagard Liquid was approved by the FDA for IV treatment of CIDP. We are also expanding our late-stage pipeline through targeted business development. Just a few hours ago, we announced a collaboration and license agreement with Protagonist Therapeutics for the development and commercialization of rusfertide, an investigational therapy in rare hematology. Rusfertide is currently in phase III development for polycythemia vera, a rare chronic blood disorder. This agreement fits well within our overall business strategy, leveraging our rare disease and hemophilia franchise. Turning to the next slide, I'd like to provide an update on two important products in our growth and launch portfolio, ENTYVIO and QDENGA.
ENTYVIO is our number one product by revenue, and it continues to outperform the IBD market, with year-to-date revenue growth of 7%, with a slight growth acceleration in Q3. It has maintained its lead in the U.S. as the most prescribed treatment for IBD overall, as well as for IBD bio, bio-naive new starts. It is achieving mid-teen percentage patient growth in Europe, driven mostly by our subcutaneous administration. In November, we also launched the ENTYVIO Pen in the U.S. for maintenance therapy in moderate to severely active ulcerative colitis. Subcutaneous therapies are estimated to represent approximately 35%-40% of the total U.S. IBD market, so this launch is a very significant milestone in enabling us to access this segment while providing more flexibility and choice to patients.
ENTYVIO is now the only branded therapeutics with both IV and subcutaneous maintenance option, and we are seeing a high degree of interest among healthcare professional. I'm happy to share some market research data with you. 98% of surveyed healthcare professionals are aware of the ENTYVIO Pen, and 94% expressed willingness to prescribe it in the next six months. We expect an FDA decision on the ENTYVIO Pen in Crohn's disease early in fiscal year 2024. Shifting now to QDENGA, we are very encouraged by how our launch has been progressing globally. To date, we have launched the vaccine in 21 countries, including most recently, Argentina. QDENGA is available in 17 European countries, and travel recommendations support its use to help protect travelers to dengue endemic areas.
There has been a strong initial demand in private markets where QDENGA has launched, and now we are seeing progress toward inclusion in national immunization program, too. In December 2023, Brazil National Commission for the Incorporation of Health Technology recommended QDENGA for inclusion in the national immunization program. Subsequently, the Brazilian government has decided to initiate some focused vaccination program in areas with high dengue incidence rates. We are also in productive discussion with government in other endemic countries, and we are pursuing private and public partnership with government, institutional businesses, NGOs, and manufacturer to expand access. We are committed to our goal of reaching a total manufacturing capacity of 100 million doses per year to comprehensively address the growing burden of dengue infection. Turning to our high-level outlook for the near, medium, and long term.
As we have entered the final quarter of this fiscal year, we are confident in our business strategy and are committed to growth and shareholder return. Based on our current assumption, we still expect to return to revenue, profit, and margin growth in the near term, driven largely by the continued expansion of our growth and launch product. We have achieved significant regulatory milestones since Q2, in the form of new product approval and important indication expansion for the existing portfolio, and we continue to see significant potential in our late-stage pipeline. Generic competition for Vyvanse and Azilva continue to impact revenue and profit growth this fiscal year. However, once that impact has washed out, we'll have limited loss of exclusivity exposure until the launch of ENTYVIO biosimilar, which could occur as late as 2032 in the U.S.
Momentum for our growth and launch products, combined with our continued investment in R&D, will drive progress in the medium and long term. Looking ahead, we are committed to returning to core operating profit margin in the low- to mid-30s%, supported by our Growth and Launch product s, cost control, and value creation enabled by data and technology, including AI. We believe AI has the potential to create significant, scalable, and sustainable value at Takeda. It will enable us to improve efficiency across our entire value chain, including in R&D, manufacturing, patient engagement, and business operations.... We believe that data and technology and AI will completely change how we operate as a company, and we are moving at full speed across the value chain to implement digital and AI tools and applications. We'll share more detail on this topic in our future presentation.
Looking ahead, we'll continue to evaluate asset-specific business development opportunities to further enhance our pipeline and reinforce our growth profile. Our BD strategy has been proving successful, with the approval and launch of FRUZAQLA and the positive progress of TAK-279 through this pipeline this fiscal year. This approach to innovation, combined with a robust clinical pipeline of potential best-in-class or first-in-class asset, will position Takeda well for the long-term growth. Finally, our progressive dividend policy of increasing or maintaining the dividend each year will allow us to continue to return value to shareholders. In closing, we are confident about the path we are on. Our year-to-date performance demonstrates the strong momentum in our growth and launch product, the potential in our pipeline, and solid execution against our business strategy.
With the approval and launch of two new therapies this quarter in the U.S., and multiple life cycle management approval around the world, we are very much confident that the strength of our commercial execution, combined with the potential of our pipeline, will help to fuel our long-term growth. And this brings us back to the vision that drives us: to discover and deliver life-transforming treatment, guided by our commitment to patients, our people on the planet. With that, I will now turn the call over to Andy to update you on our pipeline. Thank you.
Thank you very much, Christophe, and hello to everyone on today's call. If we can go to the next slide, please. We've had a very successful quarter, delivering some major milestones while continuing to build momentum across our pipeline. Here are a few examples of the significant pipeline achievements from the third quarter. As Christophe mentioned, ADZYNMA and FRUZAQLA, two new molecular entities, have received approval in the United States. ADZYNMA is a recombinant ADAMTS13 protein designed to replace the missing enzyme, which causes patients living with congenital TTP to face serious, life-threatening health challenges. This approval is based on ADZYNMA's favorable efficacy profile, notably a 60% reduction in the incidence of thrombocytopenic events versus plasma-based therapies. In fact, Takeda was awarded a priority review voucher for this approval as it addresses a major unmet need in patients with this rare pediatric disease.
We are also evaluating ADZYNMA in a phase II- B study in immune thrombotic thrombocytopenic purpura, or iTTP, which is a significantly more prevalent disease. FRUZAQLA, an oral VEGF inhibitor, was approved in the U.S. for certain patients with previously treated metastatic colorectal cancer. It demonstrated a significant improvement in overall survival with a manageable safety profile, and not surprisingly, initial commercial uptake has been quite strong. In addition, we continue to rapidly advance the development of our allosteric TYK2 inhibitor, TAK-279, initiating the Latitude clinical trial program with two phase III psoriasis trials that are enrolling well. Following the presentation of positive and very exciting psoriatic arthritis phase II-B data at the American College of Rheumatology, we plan to initiate enrollment in the Latitude psoriatic arthritis phase III program in fiscal year 2024.
To support the development of TAK-279 in inflammatory bowel disease, we aligned with the FDA on the clinical trial design for phase II-B studies in Crohn's disease and ulcerative colitis, utilizing much higher doses than studied in psoriasis or psoriatic arthritis. 279 is our leading pipeline priority, and we continue to make steady progress as we work to bring this potentially best-in-class treatment to patients. In the third quarter, we also delivered important indication and geographic expansions for our growth and launch products. As Christophe just mentioned, in the U.S., Gammagard Liquid and HYQVIA received their first approvals for induction and maintenance of CIDP, respectively. With these approvals, we can now offer treatment for patients with this rare, acquired, immune-mediated neuromuscular disorder throughout their journey. HYQVIA was also just approved for CIDP maintenance in the E.U. We also continue to expand our pipeline with targeted late-stage deals.
A few hours ago, we announced a worldwide licensing collaboration agreement with Protagonist Therapeutics for rusfertide. Now, rusfertide is a first-in-class hepcidin mimetic in a pivotal phase III trial for the treatment of polycythemia vera, a rare chronic blood disorder that affects as many as 160,000 patients in the United States. The rusfertide phase III trial is expected to complete enrollment soon and will add to our growing late-stage pipeline. If we can get to the next slide, please. Our late-stage pipeline reflects Takeda's commitment to develop life-transforming medicines for rare and more prevalent diseases. As I mentioned, TAK-279 is enrolling patients in two phase III psoriasis trials. Because psoriasis trials have historically lacked representations from patients of color, we are proactively taking steps for the TAK-279 Latitude psoriasis program to reflect unprecedented patient diversity.
TAK-279 is a potential best-in-class oral therapy for psoriasis and will start a phase III head-to-head trial against upadacitinib in 2024. Let me take a step back to remind everyone that Takeda is an industry leader with more than 70 years of experience working in rare diseases and hematology. We remain deeply committed to researching and developing life-transforming medicines, many of which will treat patients with rare diseases in our core therapeutic areas of neuroscience, GI, and inflammation. Moreover, our plasma-derived therapies organization continues to pursue transformational therapies in rare diseases, while our oncology team remains focused on cancers with high unmet medical needs across a range of patient populations.
Now, in keeping with our emphasis on collaboration, we will continue to partner with the healthcare providers and communities who support these patients, while also exploring late-stage business development opportunities like the Protagonist partnership announced just recently, leveraging our deep commercial expertise to bring transformative therapies to patients with rare diseases. And finally, Takeda continuously prioritizes our portfolio to direct resources to our most promising therapies. For example, we have decided to discontinue development of modakafusp alfa. This is a strategic decision based on a number of factors, including the existing dataset, the rapidly evolving multiple myeloma treatment landscape, and the long development timelines. Takeda remains committed to oncology and will continue to develop therapies across hematologic and solid tumors. Next slide, please.
We are rapidly advancing our exciting midstage pipeline and anticipate that a number of these programs will progress to phase III pivotal development in the coming year. Orexin agonists have the potential to be the first agents to address the underlying cause of narcolepsy Type 1, offering the potential for functional cures. TAK-861, our lead orexin agonist, completed enrollment well ahead of schedule in two phase II-B trials that began in January 2023. Combined, the TAK-861 narcolepsy Type 1 and Type 2 trials have enrolled approximately 180 patients. Nearly all who completed the trial enrolled in the long-term extension study. These phase II studies and the long-term extension study will help inform the TAK-861 phase III program.
As a reminder, TAK-861 is a more potent agent that may provide efficacy at a much lower dose than our previously tested oral orexin agonist, significantly reducing the potential for adverse effects, including liver toxicity, which tends to be dose-related. Multiple external reviews by the Data Safety Monitoring Committee confirmed that no liver toxicity signals have appeared in the TAK-861 phase II trials. We are on track to make a final go, no-go decision to advance TAK-861 to phase III in narcolepsy this fiscal year, and we are planning the phase III program at-risk to maintain momentum. Mezigdomab, our fully humanized anti-CD38 monoclonal antibody, that is being studied across several rare autoimmune inflammatory diseases. It works by depleting plasma cells and plasmablasts, resulting in a number of beneficial immunomodulatory effects.
We are excited by mezigdomab's mechanism of action, and we look forward to presenting data in ITP and IgA nephropathy at medical conferences later this year. Next slide, please. As you can see, the third quarter was a product-productive quarter with two NME approvals for ADZYNMA and for FRUZAQLA, important indication expansions for TAKHZYRO, HYQVIA, and Gammagard, and positive phase III data for marilixabat in Japan, for which we will seek approval later this year. Takeda has generated considerable pipeline momentum in fiscal year 2023, and as you'll see next, there's much more to come in fiscal year 2024. Next slide, please. In the coming months, we anticipate several meaningful potential approvals and phase III readouts.
These include lifecycle expansion opportunities for ENTYVIO subcutaneous for Crohn's disease, potential inclusive approval for first-line Philadelphia-positive acute lymphoblastic leukemia in the United States, and the potential approval for TAK-721 in the U.S. for eosinophilic esophagitis. In addition, there will be two phase III readouts for soticlestat in Dravet syndrome and Lennox-Gastaut syndrome, two rare pediatric epilepsies, which may allow for filing in 2024. As I mentioned earlier, our teams remain laser-focused on developing TAK-279 in the first four major indications while exploring development in others. Our pipeline is maturing, with five new molecular entities in phase III development awaiting first approvals. In addition to these five global phase III NME programs, we have prioritized a group of registration-enabling regional development programs outside of the United States.
Key data readouts in our exciting, exciting midstage pipeline and targeted business development opportunities will continue to add to our maturing late-stage portfolio. We look, we look forward to important midstage milestones in the development of our orexin franchise, like the phase II-B study readouts of TAK-861 and the phase I start for our next-generation oral orexin agonist, TAK-360. And as mentioned, mezigdomab's coming ITP and IgA nephropathy data will allow us to make a data-driven, go, no-go decision to phase III. Across our pipeline, we will continue leveraging data, digital, and technology to develop programs faster and increase our probability of success. Now, for example, we started phase II-B trials of TAK-861 within two weeks of completing phase I-B by planning at risk. We also leveraged site selection tools trained with our deep site and investigator experience from previous orexin trials.
For the TAK-861 phase II-B studies, we used a proprietary in-house digital tool that provides real-time site performance data to analyze and manage enrollment, allowing us to complete this study five months ahead of plan. This tool, specifically designed for clinical trial execution, also helped us to improve site selection, screen patients, and to provide real-time data review, data monitoring, and data cleanup. We will continue utilizing digital tools and proprietary data to help us make critical decisions to advance and deliver our pipeline to patients. Given the strong momentum of our mid to late-stage pipeline, Takeda plans to host an R&D event in fiscal year 2024 to provide an update on our strategy, present deep dives into our flagship programs, and share more about our data, digital, and technology efforts. Thank you very much, and now I will turn it over to Costa.
Thank you, Andy, and hello, everyone. This is Costa Saroukos speaking. Today, I'll walk you through the financial highlights of our fiscal 2023 Q3 year-to-date results. Starting with the top line, revenue was JPY 3.2 trillion, or $22.8 billion, which is flat versus prior year at constant exchange rate, or 4.6% on an actual basis, including FX upside from the depreciation of the yen. We have started to see significant erosion of Vyvanse since generics entered into the U.S. market in August 2023. But offsetting the Vyvanse decline was continued growth of our growth and launch products. These now represent 43% of total revenue and grew 12.7% at constant exchange rate.
Core operating profit was JPY 865.6 billion, or $6.1 billion, with a core operating profit margin of approximately 27%. Reporting operating profit was JPY 224.1 billion, reflecting the significant impact of non-cash impairment losses and other non-core items that were primarily booked in Q2. Core EPS was JPY 412 , and reported EPS was JPY 94 . Moving to cash flow, we continue to see strong cash generation from the business, with operating cash flow of JPY 437.8 billion, or $3.1 billion year to date. Free cash flow was JPY 36.3 billion, which reflects almost JPY 300 billion of cash out for acquisitions and in-licensing so far this fiscal year, including the bills for TAK-279 and FRUZAQLA.
We maintain a resilient financial base with 100% of outstanding debt at fixed interest rates, and I'm pleased to share that our weighted average fixed interest rate has improved from approximately 2% to 1.6%, driven by debt paydown of $1.5 billion year to date. With regards to the outlook for full-year fiscal 2023, we continue to track well towards our management guidance for performance at a constant exchange rate. There is no change to our full-year management guidance and no change to our full-year P&L forecasts. However, it's important to note that there is potential upside to revenue and core operating profit if current FX rates continue.
Also, I want to emphasize that we are not changing our full-year free cash flow forecast of JPY 400 billion-JPY 500 billion, with some working capital phasing that has impacted us year-to-date, expected to unwind in Q4. On slide 16, let me run through our Q3 year-to-date financial performance in more detail. Starting with our core result, on the right-hand side, you can see that revenue was JPY 3.2 trillion, with growth of 4.6%, all flat at constant exchange rate, with our growth and launch products offsetting the significant loss of exclusivity impact. Core operating profit was JPY 865.6 billion, a decline of 9.3% on an actual basis, or 12.7% on a constant exchange rate.
This reflects the impact of generic competition for high-margin products such as Vyvanse, Velcade, Dexilant, and Azilva, as well as lower COVID-19 vaccine revenue. Meanwhile, we have continued to make the necessary investments in R&D and data and technology to secure the long-term success of the business. Core net profit declined by 12.2% at constant exchange rate, and core EPS was JPY 412. On the left-hand side of the slide, you can see our reported results. Reported revenue is the same as core revenue. Reported operating profit was significantly impacted by large non-core items that we booked in Q2. These are reflected in our reported operating profit results of JPY 224.1 billion, or a year-on-year decline of 44.2%. Reported net profit and reported EPS declined approximately 49%, reflecting the decline in reported operating profit.
Operating cash flow was JPY 437.8 billion, lower than prior year due to working capital phasing as well as the Vyvanse generic impact. Free cash flow reflected our cash payments for TAK-279 and FRUZAQLA, but there is no change to our full year forecast of JPY 400 billion-JPY 500 billion. On Slide 17, I would like to highlight the performance of our growth and launch products, which are the key drivers of top line performance. These products generated 43% of total revenue Q3 year-to-date, with 12.7% growth at constant exchange rate. Within our five key business areas, GI grew at 4% at a constant exchange rate, a slowdown versus last year, impacted by generic entry of Dexilant in the U.S. in January 2023.
Our largest product, ENTYVIO, continues to perform well, with growth of 7%, outperforming the overall IBD market, and initial feedback on the ENTYVIO Pen-subcutaneous launch has been positive. In rare diseases, TAKHZYRO continues its strong momentum, with growth of 12%, having successfully launched in over 50 countries, and with sustained demand in the U.S. Uptake of LIVTENCITY continues to be strong, and I'm also happy to highlight the new launch of ADZYNMA, the first and only enzyme replacement therapy for cTTP. Although the cTTP indication is a niche commercial opportunity, this new approval is extremely meaningful for patients suffering from this disease. PDT Immunology continues to deliver outstanding growth of 16%, including 18% growth of immunoglobulin and 7% growth of albumin. Both our IG and albumin products continue to see strong demand.
We have continued to expand our plasma donation center footprint with our global network now exceeding 250 centers. And we have seen donor compensation continue on a downward trend since fiscal year 2022, after significant increases during the pandemic. We now modulate compensation in a highly segmented way, while achieving the volumes to deliver our commitments to our patients. Together with initiatives to improve efficiency across the PDT value chain, this has enabled us to improve PDT margins year-on-year in fiscal year 2023, for the first time since the pandemic. Next is oncology, which continues to decline as a result of Velcade generics. However, the timing of loss of exclusivity in May 2022 means that the impact should wash out by the end of this fiscal year.
Also, I would like to highlight another new product, FRUZAQLA, which launched in November 2023 in the U.S. for the treatment of patients with metastatic colorectal cancer. The launch is off to a strong start, having treated the first patient just 24 hours after the approval. Neuroscience declined -6% as a result of Vyvanse generics launching in the U.S. after patent expiry in August 2023. To date, brand share erosion of Vyvanse has been slightly milder than initially anticipated due to constraints of generic supply. We expect this situation to ease towards the end of this fiscal year, but it does mean we have slightly increased our full year assumption for Vyvanse revenue. Finally, the other segment is declining due to lower revenue from COVID-19 vaccines and generic competition to Azilva in Japan.
However, this other segment also includes our dengue vaccine, QDENGA, which is seeing strong initial demand in both endemic and travel markets. Over the next three slides, I'll walk you through some waterfalls to better explain the moving pieces in our Q3 year-to-date performance versus prior year. Starting with revenue on Slide 18, you can see that versus prior year, our growth and launch products were the main reason we were able to maintain flat growth at constant exchange rate, despite JPY 133.3 billion of loss of exclusivity headwinds, as well as lower coronavirus vaccine revenue compared to prior year. On top of this, we had an FX tailwind due to the depreciation of the yen, taking our top line growth on an actual basis to 4.6%. Moving to the year-on-year operating profit bridge on Slide 19.
Here you can see how loss of exclusivity and the coronavirus vaccine decline are having a larger impact on profit compared to revenue due to their higher margins. On the investment side, we continue to allocate resources to R&D to support high potential programs such as TAK-279 and our Orexin franchise. R&D spend increased 7.3% year-to-date on a constant exchange rate basis, but this does reflect some phasing, and we still aim to land the full year with a mid-single digit increase. We also continue to make substantial investments in data and technology, including AI, across the value chain. We believe these investments will have a transformational impact on Takeda's long-term competitiveness and play an important role in our return to growth, and therefore we continue to allocate capital in these areas.
All these factors combined resulted in our first half core operating profit decline of 12.7% on a constant exchange rate basis, or 9.3% decline when factoring in the benefit of FX. I would also highlight that although the depreciation of the yen had a significant upside impact on our revenue, the benefit to profit is less pronounced. This is because of our substantial overseas expenses, and in fact, depreciation of the yen versus the euro is actually negative to profits due to our higher proportion of cost of goods in euro. Next is slide 20, which explains the major items impacting our reported operating profit versus prior year. In addition to the decline in core operating profit, we had a sizable increase in impairment of intangible assets, which year-to-date totaled JPY 119.3 billion .
Most of this was already booked in Q2, when we recognized impairments related to the negative phase III study readout of Alofisel, and the voluntary global withdrawal of Exkivity. In addition, we have higher restructuring costs this year related to exiting AAV gene therapy and consolidating our office footprint. All these items combined led to the reported operating profit decline of -44.2%. Moving to slide 21 and our outlook for full year fiscal 2023. Based on our year-to-date performance, we do not see the need to make any changes to our management guidance at this time. We still anticipate low single digit percentage decline in revenue, low tens percentage decline in core operating profit, and low twenties percentage decline in core EPS, all on a constant exchange rate basis.
We are also keeping our reported and core forecast on an actual FX basis unchanged. There is some potential upside to revenue and operating profit if current FX rates continue, and we've included a currency sensitivity chart on slide A-19 in the appendix for your reference. Our free cash flow forecast is unchanged at JPY 400 billion-JPY 500 billion, with some of the working capital phasing I mentioned earlier, expected to unwind in Q4, and we remain committed to paying the fiscal year 2023 dividend of JPY 188. On Slide 22, we show our updated debt maturity ladder. By the end of December, we had prepaid all of the $1.5 billion of bonds maturing this fiscal year, which brought our weighted average interest rate down to 1.6%.
As a reminder, 100% of our debt is at fixed rates, with an average maturity of approximately eight years. I would also highlight that our repayment obligations in fiscal year 2024 and fiscal year 2025 are minimal, which means we have flexibility in how we allocate cash over the next couple of years, including potentially prepaying some of the fiscal year 2026 maturities. To close out on the presentation on Slide 23, I'd like to reemphasize that we are well on track towards our full year management guidance. We have been preparing for the loss of exclusivity headwinds we face in fiscal year 2023 for many years. We have confidence in our portfolio and pipeline to deliver a return to growth in the near term, and we will continue to allocate capital with discipline as we focus on delivering sustainable growth and competitive shareholder returns.
I'd like to now hand it back to Christophe. Thank you.
Thank you, Costa. As you might have seen, earlier today, we announced that after 20 years working abroad, Costa has decided to return home to Australia to be closer to his family. He will step down as Chief Financial Officer on April 1, and remain with the company as a board director until June 28, 2024. Milano Furuta, who is currently President of Takeda's Japan Pharma Business Unit, will succeed Costa as CFO, effective April 1, 2024. Costa joined Takeda in 2015 as the CFO of the UK Business Unit, and he was appointed Global CFO in April 2018, at the time of Takeda's proposed acquisition of Shire. Since then, he has been instrumental in Takeda's transformation into a global biopharmaceutical company, and he is handing over an exceptional finance organization.
Costa has been a trusted colleague to me, the TET, and the board, and I wish him all the best as he returns to his home country. I'm very pleased that Milano Furuta will succeed Costa as Global CFO, to continue to drive our strategy forward and deliver growth on shareholder return. Milano is a longtime Takeda colleague with a deep understanding of Takeda's business and culture. He has held a number of leadership role at Takeda around the world. Prior to joining Takeda in 2010, Milano worked as an equity research analyst at an investment management firm in the United States. He began his career in 2000 in banking and private equity investment in Japan, where he was involved with several type of financial transactions, including leveraged buyout and debt restructuring.
Prior to becoming President of the Japan Pharma Business Unit, Milano served for two years as Corporate Strategy Officer and Chief of Staff. He has been a member of the Takeda executive team for the last five years. I would like to invite Costa and Milano to say a few words. Costa, would you like to go first?
Thank you, Christophe, for the kind words. It's been an incredible journey and a true privilege to work at Takeda for the best part of a decade, in particular, the past six years as the global CFO. It's been a point of pride to come to work every day at a company with a deeply rooted values-based culture, and with colleagues who really put patients at the center of everything we do. I'm immensely proud, I'm immensely proud of what we've accomplished through a period of unprecedented transformation and growth for Takeda. But as Christophe said, after 20 years working abroad, I'm ready to move back to Australia to be closer to my family. Until the end of March, my focus will be on delivering our management guidance for fiscal year 2023, and ensuring we are set up for success in fiscal year 2024.
I will also be working closely with Milano on the transition. I would truly like to thank you all for your support and friendship, and I wish Takeda and you all the best. I'll pass it now over to Milano for a few words. Thank you, all.
Thank you, Christophe, and thank you, Costa. Hi, everyone. My name is Milano, and First of all, I would like to congratulate Costa for all the great achievement he has been delivered in the past six years, and I'm, like, really honored to be the part of the organizat-I mean, financial organization, and in the future, leading the finance organization. And then, looking forward to meeting you, to many of you after April. And I have been, as Christophe said, I have been as a member of the Takeda executive team members for the past five years, and I'm fully aligned with Takeda's strategy, especially for the investment, for the growth, and then ensure for the returns.
But after April 1st, I'm very much looking forward to meeting you all and listen and discover the new chapter. Thank you.
Now, we would like to entertain questions from the participants. Christophe, Andy, and Costa, Milano will be answering. In addition, U.S. President Julie Kim will be participating. If you want to ask a question, please raise hand. Please press the raise hand button. If you're in English channel, please ask in English. In Japanese channel, then please ask in Japanese. If you're in the original channel, then you can use any language. You can ask up to two questions up front. First question from Citigroup, Yamaguchi-san. Please go ahead.
Can you hear me?
Yes. Yes, now we hear you.
Thank you. Thank you. Thank you. So this is Yamaguchi from Citi. I would like to make briefly two questions. The first question is regarding ENTYVIO. Is it true that the ENTYVIO Q3 sales in the dollar term is growing a bit compared to QoQ, but at the same time, at the ma-, it's still sort of a high single digit growth. So can you give us some current situation, how the new patient situation is? And also you talk about SC, but can you give us some penetration ratio of SQ, SQ- SC, sorry, if you have one. So first one is regarding ENTYVIO. The second one is that the Orexin POC timing. You talk about this fiscal year, meaning by the end of March.
I thought it looks a little bit expedited, but I thought it was like April to June. So, is it fair to say that you are going to decide by March? Then, how are you going to share some data with us after this decision? And if this decision will be a public announcement, because it's gonna be interesting, the data. And that's the second question. So timing and why it is expedited? I think if it's, if it is expedited. Thank you. And that's two questions. Thank you very much.
Great. Thank you, Yamaguchi-san. So the first question on ENTYVIO, in terms of the market evolution and uptake of the ENTYVIO Pen, I'd like to ask Julie to comment on that. And then the second question on orexin, timing and the communications around that, I'd like to ask Andy to comment on that one.
Thank you, Yamaguchi-san, for the question. In regards to ENTYVIO, let me talk a little bit about overall our position as well as subQ. So from an overall perspective, in terms of new patient starts, as Christophe mentioned, we still remain the market leader in terms of IBD bio-naive new patient starts. And particularly in UC, I'm pleased to share that our, our share grew by 1.1% in UC over the last 12 months, and that is a significant growth within that indication. So when you look at the start of ENTYVIO Pen in the U.S., please remember that new patients have to be have an induction period on IV first. So at this point, it's very early to say what the patient uptake has been on ENTYVIO Pen.
But as Christophe mentioned, we're very pleased with the information to date in terms of the awareness of Pen among our HCPs, our target HCPs. And I'm also happy to share that we've recently signed an agreement with one of the big three national PBMs, as well as signing agreements with five regional,
... regional plans as well. So very pleased with the direction of progress, and we hope to share more detailed information on patient uptake with the pen at a future call.
Thank you.
Yeah, Yamaguchi-san, it's Andy. So good evening. You're correct, the Orexin program has accelerated. So you'll remember, we started the two phase II-B studies for TAK-861 in type 1 narcolepsy and type 2 narcolepsy in January of last year, on the heels of our finishing our phase I program in just December. So we had accelerated the start of that study. Our expectation was that that study would take about 18 months to fully enroll and complete, and we ended up completing it in under 12 months. So that study, both studies, the type 1 and type 2 narcolepsy studies, have completed enrollment, and we're waiting to see data. And correct, we'll be making a decision this fiscal year before March to move forward with the phase III program.
We're planning the phase III program at rest because of our enthusiasm. You know, the excitement, the ability to enroll the study quickly stems from probably a number of different factors. One is the excitement that patients and investigators have over this mechanism. The second is our experience now in narcolepsy, and the third, as I mentioned, are new tools that we're leveraging to accelerate our clinical trials. So we're very excited to move that forward. In terms of when and how data will be presented, we're still working through that internally.
Thank you.
Thank you, Yamaguchi-san, for the question. So the next question will be from Seiji Wakao, from JP Morgan. Wakao-san, please go ahead.
Hi, can you hear me?
Yes. Yes, we hear you.
I have two questions. First, about the safety profile of TAK-861. So I understand that there has been no hepatotoxicity or vision problems with TAK-861. On the other hand, you have commented at our conference that TAK-861 needs to be checked for CV risk. I'd like to understand more on this point. Should we be cautious about the CV risk of TAK-861, or is it not a big issue? This is the first, and secondly, the gross margin on the three months of third quarter. Third quarter gross margin seems to be declining compared to second quarter. Could you please explain this? And is this as planned? And how should we consider the gross margin in the fourth quarter?
This is the second question.
Great. Thank you, Wakao-san. So the first question on TAK-861, safety, on the hepatotoxicity, the visual side effects, but also specifically on CV risk. I'd like to ask Andy to comment on that. And then the second question on gross margin in Q3, the reasons for the gross margin decline and also the outlook for Q4. I'd like to ask Costa to comment on that.
Thanks, Chris, and thanks, Wakao-san. In order to fully understand the safety profile of TAK-861, we need to look at the full data set. What I can say is that, based on the blinded data, we don't see any evidence of visual disturbances. Based on the blinded data and the data safety monitoring board looking at unblinded data, we don't see any evidence of liver toxicity. And in terms of cardiovascular risk, it's something that we have a deep understanding of, and at this point, don't have concerns that that's going to be a significant issue for this program.
Thank you.
Hi. Thank you, Wakao-san, for your question. Typically, we prefer to look at year to date because of fluctuations and phasing on a quarter-by-quarter basis. So year to date, the gross profit margin has declined from a reported basis by 2.1%. It's on target to our internal forecast. It's predominantly driven by the loss of exclusivity headwinds. You know, we have a higher loss of exclusivity margins for products like Vyvanse, Velcade, Azilva, and less revenue for COVID vaccines. The growth in launch products, although they're growing quite considerably at 12.7%, they're still not at the level to offset the loss of exclusivity headwinds.
But overall, the 2.1% decline versus prior years is on track to our internal forecasts and externally. Thank you.
Thank you.
Okay, the next question we'd like to take from Mike Nedelcovych from Cowen. Please unmute and ask your question.
Great. Thank you for the questions. I have two. The first is, broadly on the oncology segment. You've had some wins and some setbacks in this area, but I think it's fair to say that this segment lacks what could be considered a flagship product or pipeline candidate. Would you disagree with that statement? And what oncology asset do you think deserves more attention than it perhaps receives? And then my second question is on QDENGA. You've made impressive progress so far. How should we think about the path from here to potential $2 billion in peak sales? Will growth come in big boluses as government contracts are signed, or will it be more linear and gradual? Thank you.
Great. Thank you, Mike. So the question on QDENGA, I'd like to ask Christophe to take that one. On the oncology, the portfolio in the pipeline, perhaps Christophe can comment on that, and then Andy can follow up with some pipeline comments.
... And thank you, Michael. I think, well, the QDENGA, it's a combination actually, because of the private market. So when you introduce the vaccines in the private market, that's a bit more linear. So it's a we can modelize the takeoff, but the big volume is more national immunization program, and that's more nonlinear, if you like, because suddenly, if a country like Brazil, for example, want to introduce a very vast immunization program, obviously, you will have a sort of big jump when that happens. So that's why it's notoriously quite difficult to actually forecast long term this type of vaccines.
Now, the $1.6 billion-$2 billion peak is really correlated to our ability to reach the 100 million dose per annum production capability. We are not there yet, but we are very, very actively looking at expanding our own manufacturing capacity in our site in Singen, in Germany. We have a current CMO, and we are in discussion with other potential partner to go to this 100 million dose as quickly as possible. As you know, the data has been even stronger than what we expected, the approval, the label also. Frankly, today, the demand is greater than the supply on these vaccines. So we are, you know, very actively looking at expanding our manufacturing capacity.
On the oncology, we had some win, we had some setbacks. We want to be a leader in oncology. We are not there yet, so we are very much active on that. There are actually in our pipeline, they are less, they are less advanced than some other assets like 861 and 279 in phase IIIs are not there yet. We have a couple of pipeline asset in our pipeline, which are very promising. Perhaps Andy can say a few words about these assets.
Yeah, thanks, Christophe, and thanks, Mike. And I'll mention that, you know, having worked in R&D for 25 years, it in some ways the most exciting therapeutic area, but also the most challenging that I've been involved in, has been oncology. And, you know, we know that the. If we look at the investment in oncology in the venture world, if we look at the amount of NIH and academic research that's focused on oncology, there isn't an area where we spend more and where we understand more. And there also isn't an area where we face as many challenges. The failure rates in oncology continue to be amongst the highest in the industry. So, I don't think it's just us. I think this is the field.
On the flip side, the opportunity to change patients' lives and the revenue potential is just immense. And so we're really committed to oncology. We're really excited about our pipeline. We still haven't had that breakthrough product, but I think, as you know, it can happen very quickly. We have a handful of programs in mid-stage development right now. Subasumstat is the lead. We have two STING agonists. We have two T-cell engagers that came in through a company that we bought a few years ago that we had helped to create, called Maverick Therapeutics. And then we have a number of programs in early development, and we have our cell therapy engine.
So we feel that we're making the right investments in oncology, and the key now is to leverage the excellence that we're building in development and just bring these programs to decisions. I'll mention that just Monday, we actually brought in a new oncology R&D head, P.K. Morrow, who's a real deep expert, highly experienced across oncology and multiple modalities. So we're really looking forward to PK taking the reins and carrying, you know, carrying our oncology efforts forward, Mike.
Thank you.
Great. Thank you, Mike. Okay, so the next question we're gonna take from Shinichiro Muraoka, from Morgan Stanley. Muraoka-san, please go ahead and ask your question.
Hello. This is Muraoka, Morgan Stanley. Thank you for this opportunity. My first question is to Christophe. Next fiscal year, how do we look at this? Well, FX is positive right now, Vyvanse is not declining as fast. And based on the situation, how do we look at the next year? Three months ago, you said next fiscal year was going to be tough, but three months have passed since then. Have you changed your mind about what would happen in the next fiscal year or not? That's my first question. And my second question is about the TAK-279 pipeline. UC and CD, high-dose phase II-B , is going to start. And I want to know the pathway until filing or approval.
After phase II-B , phase III will be conducted first, and then for UC and CD, you will file separately, or is there a pathway that would accelerate this process? Those are my questions. Thank you.
Okay, thank you, Muraoka-san. So the first question to Christophe on thoughts for next fiscal year, fiscal year 2024. Q2, you said it would be a tight year. Has anything changed over the past three months since your previous comments on FY 2024 outlook? And then the second question on TAK-279, on the path to submission in ulcerative colitis and Crohn's disease, will we need to do a phase III study in both of those indications after the phase II-B ? So what is the path to submission in those indications? I'd like to ask Andy to take that question.
... Thank you, Chris. Thank you, Muraoka-san. You know, obviously, we'll give a precise guidance on next year, on fiscal year 2024 in May, but what we described earlier remain valid. It will be a tight year. It will be... We can describe it as flattish year, flattish, perhaps slightly positive or slightly negative. We need to see how Vyvanse is evolving still in the next three months. But it will be a flattish year, certainly in both revenue and correcting profit margin, because the way to see it is that the first semester will still be a declining semester because of the generic introduction of Vyvanse in August 2023. So you see it will impact the first semester.
On the other end, the second semester, it will be on the like for like, if you like. So there will be much less generic impact and headwinds in the second semester. That's why overall, the year will be flattish, but we'll provide precise guidance in May. Thank you.
Moraka-san, maybe I can dive in and walk you just briefly through the strategy for TAK-279. So first and foremost is to push forward in this continuum of psoriasis and psoriatic arthritis, where we have strong proof of concept. Our hope is that the psoriasis phase III program, which is enrolling quite well, we can accelerate, bring that to market in the 2025-2027 range. Shortly thereafter, we'll start our phase III studies in psoriatic arthritis, the Latitude program. Shortly after approval in psoriasis, we're looking forward to approval in psoriatic arthritis. And as we've discussed, this is a continuum of disease, and we strongly believe that TAK-279 will be a best-in-class. This year, we'll start a head-to-head in psoriasis against upadacitinib to demonstrate that experimentally.
So we're very excited about pushing that psoria- psoriasis, psoriatic arthritis spectrum forward as rapidly as possible. For IBD, you know, it may be getting a little bit ahead of ourselves to start to predict approval timelines. I think the first inflection for us is really demonstrating that a TYK2 inhibitor can be effective in Crohn's disease and ulcerative colitis. We believe strongly, based on the genetic data that exists, based on the role that TYK2 plays in cytokine signaling, based on robust animal model data, we really believe that with a higher dose, we can be efficacious, but it's incumbent on us to demonstrate that in clinical trials. So first and foremost is getting the phase II-B studies off the ground. The Crohn's study should start in the next couple of months, UC study shortly thereafter.
And then if those studies are successful, we, you know, we're... That's our plan. The acceleration path, unfortunately, IBD is a somewhat of a long development track. The acceleration path is through excellence in clinical trial execution, and that's something, as I mentioned, with 861, we feel we're really getting a handle on with the model that we have in place and with the digital and technology tools that we're starting to implement in our development programs. If everything goes well, I think we'll be looking at approvals in IBD by the end of this decade.
Thank you, Muraoka-san, for the question.
Thank you very much.
Next question, moving on, I'd like to call on Hiroyuki Matsubara from Nomura. Matsubara-san, please unmute and ask your question.
Hi, Nomura Securities Matsubara.
Matsubara from Nomura Securities. Do you hear me? Yes. First question about TAKHZYRO. Oral and switchback, and Ionis is developing new nucleic acid, and the efficacy seems better than TAKHZYRO. What do you think of this? And the next generation orexin and the potential of the next generation, and what's the difference between the next generation compound and TAK-861?
How we're seeing the competitive landscape evolving, including both switchback from ORLADEYO, but also next line of therapies coming through. I'd like to ask Julie perhaps to comment on that. And then the next question on the next generation orexin agonist, how are we positioning that vis-a-vis TAK-861? I'd like Andy to comment on that.
Thank you, Matsubara-san, for the question. In regards to TAKHZYRO, when you look at the patient switching from ORLADEYO, we have seen patients switch back to TAKHZYRO. Again, TAKHZYRO has very strong efficacy and safety data proven over multiple years, and so that, that has been the reason why patients switch back to TAKHZYRO from ORLADEYO. The convenience of the oral does not trump the stronger efficacy that TAKHZYRO presents. In regards to new entrants, you were mentioning, in particular, garadacimab. What we've seen from the data that's been shared thus far, it does seem to have efficacy that is similar to TAKHZYRO.
But again, we believe that with TAKHZYRO's strong position in the marketplace, we have market share leadership, particularly in the prophylaxis segment of HAE, that long performance in terms of efficacy and safety is a benefit for TAKHZYRO.
Matsubara-san, on the next generation orexin, oral orexin agonist, TAK-360, which is going to have its IND filed in the next several weeks. It's an entirely novel structure relative to TAK-861, in novel properties, potency, PK, et cetera. How we position that, to a large extent, will depend on the datasets that we'll see in the near future on TAK-861. But there are lots of possibilities and it's something that we hope we'll be able to share during an extended discussion at an R&D event that we're planning for later in 2024.
Thank you. Okay, let's move on to the next question. I'd like to call upon Miyabi Yamakita-san. Yamakita-san from Jefferies, please unmute and ask your question. It looks like the hand has been lowered, so I'd like to move on to the next question from Macquarie. So if Tony Ren from Macquarie is still on the line, please go ahead, unmute and ask your question.
There we go. Okay.
Hello, is that you, Tony? We're unable to hear you.
Hi, this is Tony Ren from Macquarie.
Oh, hi. Yes, Tony. Yes, we can hear you.
Oh, okay. Perfect. Yeah. Okay. Yeah, sorry. Yeah. So, couple of questions. So, first off about the licensing of Protagonist Therapeutics, rusfertide. Just wanna get a sense from you about your expectation of this asset. When do you think it's gonna launch? What's the peak sales estimate? So that's on rusfertide. The other one is that, I wanna go back to, I wanna go back to ENTYVIO again. So basically, I always think about ENTYVIO as the market size in terms of the size of the pie, which is determined by the number of colonoscopy procedures being performed. Wanna see how that's trending after COVID.
And then, the other one is that I did notice, I think on slide number 27, there was a bit of a market share decline, compared to the second quarter slides. So just wanna get some clarity on that.
Okay. Julie, would you like to take both of those questions, perhaps?
Sure. Thanks, Tony, for the questions. In terms of rusfertide, we've not provided peak market share data yet. We will do that in the future. In terms of when we expect launch, as Andy mentioned, currently the product is in phase III clinical trials. We do understand that the trial is enrolling quite well, so it'll still be a few years before we see launch, but again, we will provide more details later on, in terms of rusfertide. For the questions in regards to ENTYVIO, as I mentioned earlier, in terms of first-line treatment, where ENTYVIO is strong, we still maintain our market share leadership position. Where we have seen some market share loss is in second line and further.
This is where the new, competitive entrants, have come in, and that's typically where they come in, second line and beyond. And so you are correct in that overall, it has led to a slight market share decline, but we remain quite strong in first line.
Okay, thank you very much.
Thank you, Tony. And I think Yamakita-san from Jefferies is back. Yamakita-san, or if that's Steve Barker, perhaps, if you'd like to unmute and ask a question, please.
Yes, it's Steve Barker from Jefferies. Thanks very much for taking my questions. My first question is related to QDENGA. I'm looking at the geographic split of the sales to date, and it looks like it's about 70% weighted towards emerging markets. I was wondering if you expected that to continue or whether the weight of emerging markets would be higher in future. And then also, potential $2 billion peak sales, related to 100 million doses. Should we assume that you're aiming for an average sales price of about $20 per dose? And then my second question is related to margins. You are aiming to get your core OPM back up, well, back up to low-to-mid- 30s%, ultimately.
I was hoping you could help us understand the path to that high level of profitability in terms of improvements for cost ratios and GPM. Where is the improvement likely to come from? Thank you.
Great. Thank you, Steve, for those questions. So the question on QDENGA and the revenue split and also average cost of dose, and then also the return to low- to mid-30s . I'd like to ask Christophe to comment on both of those questions.
Thank you, Steve. I think on QDENGA-
... well, as we progress, the most of the revenue will come from emerging countries. So in fact, it will come from endemic countries and the countries which are initiating a national immunization program. Right now, we are more in the private market and the travel market, and so, I think the large volume type of demand will come later from, endemic countries. And, I think of- obviously, you can do the ratio between, you know, the 100 million dose and the $2 billion. So yeah, I mean, on average, we will be around that type of, of price per dose. I mean, today, in the private market in Indonesia, we, we launched at $26 per dose in Indonesia, and typically, the national immunization program at a, at a low, lower price when we contract with government. So,...
And that was our intent. Our intent was to make these vaccines to create access and to—this is a very innovative vaccines, but we want these vaccines to be bring in, to be brought into immunization program rapidly, and so that—that's that's our strategy. Regarding return to low- to mid-30s core operating profit margin, we'll give more detail in May about the path to get there, which will—it will be a combination of revenue return to growth, and our Growth and Launch product gross margin is high, because they are highly innovative medicine, so that will help. It will be about leveraging technology, AI, and gain productivity, and it will be also cost control.
So it will be a combination of all three, but in May, we'll give more indication about how and how quickly we'll go back to low- to mid-30s . Thank you.
Thanks very much.