Good afternoon, everyone. Welcome to the J.P. Morgan Healthcare Conference. I'm Seiji Wakao, a Japan pharma analyst, and it's my pleasure to introduce Christophe Weber , CEO of Takeda, and welcome him to the conference. With that, let me hand it over to Christophe. Please go ahead.
Thank you. Hi, everyone. Great pleasure to be with you today. I won't talk about Venezuela. I will talk about Takeda's pipeline today mainly, and I hope it will be as exciting as the Venezuela situation. So, at Takeda, we focus on discovering and delivering life-transforming medicines. That has been really our focus for many years. We used to be in the different businesses: generic, OTC, but a few years ago, we decided to really focus on becoming an R&D-driven company and innovation-driven company. So, most of my presentation today will be about our late-stage pipeline. It took us a long time to deliver this late-stage pipeline. We did an R&D Day back in December, which lasted about five hours. So, my task today is to summarize that in 20 minutes. So, bear with me. So, see this presentation.
If you have not seen the R&D presentation, see this presentation as a teaser for you to go to see and to watch this R&D presentation that we did last December. So, it's really about focusing on these life-transforming medicines that we have been developing for many years. Takeda today has a scale to globally develop, in clinical development, globally commercialize this pipeline. So, this is something that we have been working on for so many years, is to reach that scale where we can do clinical trials in many, many countries where we can recruit patients. And we all know that patient recruitment is a big challenge for the industries. We have also the ability to launch these new medicines in the countries where we operate, about 80 countries, in a very competitive manner. So, that's also very important.
It's part of our agenda to launch this new product by ourselves. Sometimes we'll seek a partner, but we have the scale and the presence to launch this new product by ourselves. We also, over the year, increased our R&D investment. It's about $5 billion per year. Today, this is growing. We are limiting the growth, but this is the type of commitment that we have for our R&D and our pipeline development. Our pipeline, I focus on six late-stage assets. For every asset, I will explain what it is, how it is differentiated from the competition, again, very rapidly, and how we estimate today the revenue potential of these assets. Overall, this pipeline has a potential peak revenue between $10 billion and $20 billion. Between one-third and two-thirds of our current revenue at Takeda, which is about $30 billion. It's very material.
All these assets will be launched before the end of the decade. The top three, actually, will be launched in the next three years. It's actually a very present moment for us, even though we are waiting for the final readout for these assets, phase III readout. All of them are either in phase III or about to enter phase III. Let's start with TAK-861 . TAK-861 is an orexin agonist that we are developing for the treatment of narcolepsy type 1. The key with this type of treatment is to be able to mimic the natural orexin cycle. You can see the cycle here is that you wake up in the morning, the orexin will increase, will peak at around noon, midday, and then the orexin level will drop while we are about to start our sleeping pattern.
Narcolepsy type 1 patients don't have orexin anymore. So, here we have an orexin agonist which will replace the natural orexin. But the key is to mimic this natural cycle. If you don't, for example, if you keep a too high level of concentration later in the day, you might face side effects like insomnia. So, this is what we believe we have achieved with oveporexton. It's a BD product. We are testing multiple doses in phase III. But it's not a typical BD where you have morning and evening. Here, it's morning, midday. So, again, it's to mimic this cycle. And we believe that actually it might be important in the future for patients to be able to adjust when they take the second dose and at what dosage as well, in order to be closer to their natural orexin, what should be their natural orexin level.
We have assessed already in phase II the efficacy of this molecule in narcolepsy using many different scales, whether it is cataplexy level, excessive daytime sleepiness, cognitive symptoms. And the efficacy has been really fantastic in phase II. So, our goal now is to replicate that in phase III. So, I will go very quickly here, but basically, what we are demonstrating against this criteria is a normalization. So, it's almost a cure. In terms of efficacy, you are back to normal. So, on this, for example, Maintenance of Wakefulness Test, this test is putting the patient in a situation in a dark room and to see how long it takes for them to fall asleep. And if you stay awake for more than 20 minutes, you are back to normal. And you can see here that normal narcoleptic patients, they fall asleep after five, six minutes.
And here, with our treatment, they are back to normal. So, very high level of efficacy. And whether you look at other scales like the ESS scale, we are really seeing a normalization. If you are looking at the level of cataplexy, for example, which is a very traumatic event for this patient, we see a dramatic reduction with this product. Same with Psychomotor Vigilance Test . So, it has a benefit on the cognitive ability of the patient as well. And so, you have an increased cognition for this patient. So, there is absolutely no doubt that we have a very, very high level of efficacy with this treatment. We think it would be the first in class, for sure, potentially best in class orexin agonist. We are conducting two phase III right now. We are recruiting as quickly as possible.
So far, we have not seen serious side effects with this product. Obviously, the mimicking of this initial curve I was explaining earlier is very important, and we think we have achieved that. So, we are very excited about these programs. This is considered a rare disease, but it's not so rare. You have about 100,000 patients in the U.S. The challenge right now is that only half of these patients are diagnosed. Often, there is a misdiagnosis. Patients might be diagnosed with obstructive sleep apnea, for example, or other types of disease. The treatment rate is about 75%. So, we think that if you bring very innovative medicines like oveporexton, you can really change the diagnosis level and really help these patients who don't have a very good solution right now to treat narcolepsy.
Last thing I will mention is that we are looking at combining the molecule with a digital companion, monitoring sleep, for example, architecture, sleep quality. We are also looking at an AI-based algorithm to diagnose faster narcolepsy type 1 by analyzing the sleep pattern of this patient. We think that we will be able to do that. By recording sleep patterns, we will be able to diagnose better or to make the diagnosis of narcolepsy type 1 in the future. It will be one example, and this is our goal for every molecule, is to try to find a digital companion associated with these molecules. That's the first product that I wanted to showcase today. Potential for this product, $2 billion - $3 billion. Again, very excited. It's in phase III. We are recruiting the two phase III right now. Second product, zasocitinib.
We are developing it for psoriasis, psoriatic arthritis. We will develop it in IBD in the future. This is a TYK2 inhibitor. There is already one TYK2 today on the market, and we get that question all the time, so I prefer to address it upfront. This is a very different TYK2 from the current available TYK2. It is much more selective, and that has allowed us to have a higher dose in order to aim for higher efficacy without inhibiting the JAK receptors. You can see, if you compare the two, you can see that we are able to increase the dose, be constantly within 24 hours inhibiting the TYK2 while being very far from the level of inhibition on the JAK receptors, and we know that many side effects come with the JAK family.
That's why we have been able to develop a much higher dose with this product. It's very important. We have seen that in our phase II result, where if you look at the high dose at 30 milligrams, we were able to have a fairly good efficacy or even a much better efficacy than any oral treatment today in psoriasis with a PASI 100, for example, at 33% or PASI 90 at 46%. This is also a very exciting product for us. We are in phase III as well in psoriasis. In fact, we have fully recruited the trial. We think that this product, perhaps with other oral products which are in development, IL-23 oral, for example, could be the one really developing the oral segment in the psoriasis market. Today, the oral treatments don't have an efficacy, but very far from injectables.
And that's why the oral segment is only 16% of the psoriasis market today in terms of patient volume. We think that with this new class of oral, the oral segment could really double in the next 10 years and be a treatment of choice for patients with moderate psoriasis, for example. You start with an oral. If it works, you stay with an oral. Of course, if it doesn't work or if the efficacy is not enough, you will always have the option for injectables. But I think this is a different type of efficacy for an oral treatment. That's what we have seen in the phase II. That's what we want to demonstrate in the phase III. Third asset is rusfertide. This is a product that we are developing for a disease called polycythemia vera. This is actually a blood cancer. This is a very serious disease.
You have an overproliferation of red blood cells. And the mechanism of action is extremely well described. So, this is a product that we are very excited about. We have seen very good data. The way you measure the efficacy in this disease is that you look at the hematocrit, and you can see that we are able, with this treatment, to keep the hematocrit below the 45% level, which is what is considered necessary to have good control of the disease. And you can see that as soon as we stop the treatment, this is what the dark bar is showing. During the trial, at one stage, we stopped the treatment. Immediately, the hematocrit went back up. But then we were able to restart the treatment and carry on. So, we think that it is very promising for treating this disease. There are not many options today for patients.
The main options which exist today is a phlebotomy, which is very annoying and actually a very old technology as well. If a phlebotomy is not enough, there are some treatments available. But this one could really transform the way this disease is treated. This is also a rare disease, but I mean, 155,000 patients in the U.S., not so rare neither, and we think that that's really a treatment that could change the paradigm of treatment of this disease. I have three more to go. One is mezagitamab, also about to enter in phase III. This is a product that we are developing for IgAN, IgA nephropathy, and ITP. This is a CD38, which is depleting plasma cells. You can see on the right side that it has a very strong effect on IgA, and it has a lasting effect as well.
We have seen that even during a dosing-free period, we could see a maintaining of the depletion of the plasma cells. Potentially, this is a treatment that we could have some dosing-free period, for example. This is something that we will explore during the phase III. We have seen a very clear efficacy, whether you measure proteinuria or the renal function. We have not seen major side effects with this treatment. This CD38 actually was in our pipeline a long time ago in oncology. Now we are developing it for IgAN and the ITP indication. This is a competitive space. There is another CD38 in development. We think that our CD38 has different characteristics in terms of the impact it has on the different immunoglobulins, as I showed earlier. It is a very potent CD38. There are also other classes in development.
But we think that the lasting effect and the efficacy we are seeing is quite compelling in this disease. So, we are developing an IgAN, and also we'll develop it in the ITP indication. So, this is a molecule that could be developed in other indications as well that we will explore further. I won't talk about it today. But we are very excited about this molecule. fazirsiran is a si RNA that we are developing for a liver disease called AATD. This is the mechanism of action is degrading a molecule called Z- antitrypsin. It is a very clear mechanism of action. We have seen in phase II very strong evidence that it is depleting this protein which is accumulating in the liver. And that eventually, this is a disease which ends up with a liver transplant. It's a very serious disease.
Very excited about the phase III programs. It is not an easy recruitment because of the protocol design, but it could completely transform the way this disease is treated. Globally, there are about 250,000 patients in the world with this disease. It's actually a disease which is more prevalent in Asia, in the Asian population, compared to the Caucasian population. Again, here, the challenge is to be able to diagnose early the disease. Often, this disease is diagnosed very, very late in the process, so it might be too late. Once we have an efficacious treatment like that, we need to develop capabilities to diagnose earlier, start the treatment earlier before the liver is too much damaged by this accumulation of protein.
So, it will be a transformative treatment compared to what is existing today, which is nothing until you do a liver transplant, if you can, for this patient. And the last molecule that we just brought in through an in-licensing, and we are very excited about that, is a treatment for low-risk MDS. It is an inhibitor of Activin A and B. One thing that we are very excited about at elritercept is that it seems to be efficacious in RS-positive and RS-negative patients. And this is a clear differentiation of patient population. And so, there is already a product similar in this class available, but with a very low efficacy in RS-negative. So, our intent here is to develop this product in both populations, RS-positive and RS-negative. We'll start in third line and second line, and hopefully move into first line for this low-risk MDS patient.
And so, we just did this in-licensing deal with Keros Therapeutics, and we are very excited about that. Takeda has a very strong presence in hematology. We have been in the oncohematology for a very long time. So, it is really a great addition to our portfolio and pipeline. So, in a very rapid way, these are our six late-stage products. Again, if you need more information, you can find everything on our website. We have a five-hour presentation about 200 slides there if you need more details. And I will just finish my presentation by saying that for us, this is a very important moment because these six assets will be launched before 2030. In 2031, we will face biosimilars with our lead product, Entyvio, which will peak at around $7.5 billion -$9 billion of sales in 2031.
So, our goal is to have this pipeline launch and generating revenue to offset that decline from 2031 onwards. So, this is what we believe we can do with this pipeline. Of course, we'll not sit idle. We will continue to do some business development targeted, if we can find some in-licensing opportunity, because you never know. In R&D, you can face some setback. But we are fairly confident that we will be able to grow in spite of this biosimilar threat that will exist on our lead product. Between now and 2031, we'll grow because we have a very limited generic exposure. Once Vyvanse is off, Vyvanse is, for those who don't know very well Takeda, we have been facing generics of Vyvanse in the last two years. So, we are about to see the end of that, probably this year in 2025.
And then from then onwards until 2031, we have a very limited generic exposure. And we have 10 growth and launch products which generate about 50% of our revenue. And in the first semester of this year, they have been growing at 18%. So, we have a good growth outlook until 2031. And then we rely on this pipeline to continue to grow post-2031 once Entyvio will face these biosimilars. And so, very exciting time to be able to share with you this pipeline. We know that many of you will wait for the readout, the phase III readout. But at least you will pay more attention to this pipeline. And perhaps you wait or you don't. But we are very excited about this phase III readout.
What I will mention is that for the first three assets, oveporexton, zasocitinib, and rusfertide, we think that our probability of success is greater than 70%, based on the phase II data that I shared with you and the clear mechanism of action that we have seen. So, again, very excited and very happy to answer your question. Thank you very much.
Thank you, Christophe. Moving into Q&A session. In addition to Christophe, I'm pleased to announce that Milano Furuta, CFO, Andy Plump, President R&D, Teresa Bitetti, President Global Oncology Business Unit, Julie Kim, President U.S. Business Unit, and Christopher O'Reilly, Global Head of Investor Relations, will also be joining us. So, I'll kick off with my questions regarding zasocitinib. So, we believe that based on the results from the phase II trials so far, the probability of success for the phase III trials and approval is high.
On the other hand, considering the situation with the launch product, Sotyktu, we anticipate challenges in marketing. Could you share how you plan to achieve the target fixed sales of $3 billion -$6 billion for zasocitinib? Additionally, I'd like to know where your confidence lies in your strategy.
I'll start, and then Julie can comment further. But first, we think that zasocitinib will have a much higher efficacy than the current two on the market. That's very important because you need to have a much higher level of efficacy of current oral treatment. You need to be closer to the injectable's efficacy in order to have a good argument to get reimbursed and get access. There is a product profile dimension. There is also a tactical way of launching it. We'll make sure I mean, we have learned a lot from BMS experience. We'll prepare very well the launch and how we can address the access. Julie, do you want to comment further?
The only thing that I would add is that when you look at the range of possibilities with zasocitinib, as Christophe mentioned, first and foremost, we believe it's a better molecule. But second, the opportunity in the market to further grow the oral space with a more effective molecule is part of the growth story. So, the ability to grow that and the ability to grow advanced therapy as well.
Okay. Thank you. Please raise your hand if you have a question. Okay. So, next about zasocitinib, the potential for IBD. So, how do you view the potential of zasocitinib in IBD? Additionally, I'd like to understand the basis for your prospects regarding IBD.
IBD? You want to answer that, Andy?
Sure, sure. And then maybe Julie, you can comment a bit on the market consideration. So, I think the question was for zasocitinib, why we're enthusiastic about it for inflammatory bowel disease, ulcerative colitis, and Crohn's disease. So, there are three main reasons why we feel confident that a TYK2 inhibitor with the kind of profile that zasocitinib has should be effective in IBD. The first is human genetic evidence. There are one in 25 of you who are walking around with TYK2 allele that's essentially devoid of activity, which means that about one in 500 people in most populations are walking around with essentially no TYK2 activity. And human genetic studies have shown that those people are protected against both Crohn's disease and ulcerative colitis. The second reason is animal models. Colitis models respond to TYK2 inhibition.
And the third is that everything we know about these signaling pathways, IL-23 and others, when you inhibit these pathways using established antibody therapeutics, you treat these diseases. And all of those pathways signal at some level through TYK2. So, we think there's a high chance of activity in IBD. And one of the benefits that we have with zasocitinib is the ability to dose substantially up. Christoph showed in his presentation the concentration profiles, the 24-hour inhibition. We come close to 100% inhibition over a 24-hour period at our top doses. So, we're really excited to see the phase IIb data in 2026.
Thank you. Any question from the audience? All right. So, regarding our orexin franchise, you have TAK- 861 targeting NT1 and TAK-360 targeting NT2. Could you provide a detailed explanation of your orexin franchise strategy? Additionally, could you comment on why TAK-360 is not targeting NT1?
So, I'll start, and Andy can jump in. So, I've not talked about it, but we have another molecule, another orexin agonist called TAK-360. And TAK-861 will be developed for narcolepsy type 1 only. And the other one, TAK-360, will be developed for narcolepsy type 2 and other indications, like idiopathic insomnia, for example. And we made that choice because TAK-360 is a molecule where we can increase the dose. You need actually a higher dose for narcolepsy type 2 than narcolepsy type 1. And with TAK-861, we dedicated this product for narcolepsy type 1. We don't want to increase the dose with this molecule. You might remember, for those who are following Takeda for a long time, that we had some safety issues with the previous molecules. We learned from that.
And so, that we made that decision to develop two different molecules for narcolepsy type 1, where you have no orexin level, versus narcolepsy type 2, where you have orexin present, but you need to increase the dose.
Any questions? Okay. Also, could you comment on the competitive landscape for TAK- 861? Or is there a lot of same mechanism, same price product regarding TAK- 861? Sorry. So. TAK- 861, so orexin 2 agonist.
Yeah.
So, what is the advantage of this product compared to your competitors?
We think we'll be the first to launch first. That's a big advantage, especially with this level of efficacy. Because if you are a narcoleptic patient, and we are able to bring you to a level of normalization. We met this week with leaders in the field. The way he was describing the effect of TAK- 861, of our treatment, is that the light switch, the first dose, light switch, you are back to normal. Then we don't feel that there would be a lot of reason to change treatment. It's not like therapy where you have a suboptimal efficacy, so you change, you switch, et cetera. I think it could be a field where once you have found your treatment and you are back to normal, you keep it. The BD piece is interesting because the key is to mimic this curve.
If you achieve that with once a day, it's fantastic. But actually, the BD could be an option to tailor your treatment, not only the timing of the second dose, but also the dosage itself, in order to find the optimal efficacy. So, I think that that's really what we are aiming for. And yeah, it's a competitive field. But we think we are very well positioned to be one of the winners in the field.
Okay. Thank you. Any questions? Okay. So, regarding mezagitamab, I believe it's very unique in its targeting of CD38, with the potential for sustained lasting efficacy. In the coming years, new therapies such as APRIL antibodies developed by companies like Otsuka and Vera Therapeutics are expected to enter this area. How do you expect the dynamics of the IgAN market to shift? And what position do you anticipate for mezagitamab as a CD38 antibody?
I see. Okay. Sorry. We're just huddling around your question. So, IgAN is actually a very common disease with very poor existing therapies. It's a huge potential opportunities for patients that have IgA nephropathy. There are probably on the order of 200,000 of these patients. And the vast majority of these patients with their disease will progress. And many will end up with renal failure and renal transplant. So, there are huge unmet medical needs. The good news is that there are many different categories and classes of therapeutic modalities that are emerging. I would break them into two buckets. The first would be non-disease modifying agents. Like an example would be steroids or endothelin receptor antagonists in one bucket. And then the second, perhaps more exciting, would be the disease modifying agents. And these would fall into two classes.
There are the B-cell maturation agents, which we know as the APRIL-BAFF inhibitors, of which there are many. I think that there are eight actively in development, many in late-stage development. And then the CD38 class, of which there are two, of which mezagitamab is one. If we just focus in that latter class of therapeutics, I think based on what we know right now, and there's still a lot to learn from phase III data, I think we see equivalent efficacy is my guess where we'll land. Where we'll start to see differentiation is in safety and ease of administration. And I think that's where we have an opportunity with mezagitamab. Mezagitamab doesn't prevent the development of memory B-cells. And so, things like vaccine responses is not something we would expect mezagitamab to inhibit, which is possibly something that the other class might inhibit.
And then secondly, unique not just to this particular class differential, but even within the class, mezagitamab is a drug that we think can be given with a very significant dosing holiday. So, as opposed to somebody taking the drug every week or every month for the entire calendar year, you could take it for four, five, or six months with a six-month holiday. And given that many of these agents are administered in a hospital, that could be a huge potential advantage. So, as Christophe mentioned, we're very excited about this molecule. And we're looking for other potential indications that would play to its mechanism.
Market-wise, we acknowledge that we are not the first. We are behind. There is a lot of development going on, but we feel that the characteristics that Andy outlined are sufficiently attractive to make the investment and to develop it, and there are only two CD38 in development as well, so we are one of the two.
Okay. Any question? Please.
Yeah. Can you just repeat so that everybody?
Yes, sure. You have an exciting pipeline. But my question is about the existing portfolio. How do you see the plasma-derived products industry for Takeda going forward in the midst of all these new launches?
Yeah, sure. So, the plasma-derived therapy business represents about 20% of our revenue today. We are very pleased with actually the turnaround that we did since 2019 when we acquired this business. It's growing mid to high single digits every year. We have multiple products, but it's mainly immunoglobulin products, either IV or subcutaneous. And we think that this is a market where there will still be continuous demand. There are other competitors, new competitors for some indication. But this is still a domain where demand is greater than supply. And we think that that will not change for some time, if not for a long time. And so, for us, it's all about investing in this business, making sure that we innovate as well in terms of new formulation, new indication, yield improvement. For example, there is a lot of innovation in the process.
So, we have some level of R&D investment for doing that. And then being in the race, there are not so many suppliers of this plasma, but we see the demand growing. So, this is a high priority for us. And by the way, it's a different business. Of course, it's a different architecture, less R&D intensive, more capital intensive. But where the synergy exists is that there are reimbursed medicines. And often, people forget that. They think it's a completely different business, like an OTC business or animal health. No, there are reimbursed medicines. So, they are part of our portfolio of reimbursed medicine with payers.
Okay. Any other question? Okay. I have two minutes left.
Yes. One other question.
Okay. Please.
My question is around what you were doing about five years ago, doing a lot of investments on non-strategic products to pay the debt down. Are you guys still pursuing that? I know the debt has gone down significantly, but there's still a certain level of debt. So, what is your focus on launch products versus continue to do non-strategic divestments?
Yeah. Milano, you want to take that? Yeah.
Yeah. So, yes, five years ago, we did some portfolio rationalization, and we did some divestments on the non-strategic portfolio, and we think we completed it. We do some very small ones, but it's not much real. Our focus is more on the continued investment for the current portfolio, which are growing quite nicely, and then also investing for the R&D, also launching investments for the coming pipelines. In terms of balance sheet, yes, we do have some leverage. But even today, we have some loss of exclusivity impact of the Vyvanse, and then our profit level is kept a bit under pressure this year with this one. Our leverage ratio went up a little bit, but still within kind of EBITDA leverage ratio, and then that EBITDA leverage ratio is within more or less like a three.
We are expecting to bring back down to the low 2s.
Okay. Just about time. So, I'd like to close this Q&A session. Thank you for joining us. I appreciate your presentation and the Q&A. See you soon. Thank you.