I am Miyata from Corporate Communications and IR. I would like to serve as your moderator today. Today, we have an on-site presentation as well as a Zoom webinar. Today's agenda is on the screen in the venue, as well as on the screen of the web streaming. Today's conference is going to be held in Japanese, but through the Zoom webinar, you'll be able to listen to the simultaneous interpretation in English. Please choose the interpretation icon at the bottom of the screen, and if you would like to listen Japanese, please select Japanese, and if you would like to listen to English, please select English. After selecting the language of your choice, please mute the original audio. Before each speaker's presentation, we will allow you to capture the screen. Questions will be taken after all the presentations are over. We have half an hour for Q&A.
Please ask your questions actively. During the presentation, your audio is muted. Please understand. Now, Dr. Okuda is going to present the financial year 2024 second quarter overview and refinement of five reforms on TOP I 2030. If you'd like to capture the screen, this is your time to do so. Now, Okuda-san, the floor is yours.
I am Okuda. I am President and CEO. First, I would like to look back on the first half performance of the year, and I would like to talk about TOP I 2030, our strategy, and refinement of five reforms on TOP I 2030. Please turn to page 5 of your material. So, the first half performance progressed very nicely on track. The revenue, compared to the last year, was -4.6%.
This was a marked improvement compared to the big negative growth of the first half, first quarter of 24.1%. It's because of the RONAPREVE supply to the government of JPY 81.2 billion in the first quarter of the last year. Operating profit and net income, despite of the declining revenue, increased by more than 10%. This is, thanks to the good performance of exports to Roche, especially HEMLIBRA. HEMLIBRA export grew quite dramatically. Because of the product mix change, the operating margin was 47.5%, which is a high profitability. So thus, the progress in the first half was very good, and for the full year, we expect record high operating profit as well as record high net income. Next slide, page 6, please. Our core business is nicely growing according to this chart.
This is looking at factors affecting the difference of the top line compared to the same period of last year. Excluding RONAPREVE, the revenue increased by JPY 54.4 billion or 10.9%. So let's go from the left. The domestic sales. New products and mainstay products grew very nicely, but there was a negative impact of NHI drug price revisions. Due to that, domestic sales declined by JPY 15.2 billion. Overseas sales increased significantly by higher sales volume, and Forex impact surpassing the decline in export unit price, and overseas sales increased by JPY 59 billion. Especially, HEMLIBRA and ACTEMRA progressed very well in terms of exports. And other revenue increased mainly due to the increase in HEMLIBRA-related royalty income as well as one-time income. As a result of that, our core business grew very nicely, except for RONAPREVE factor.
In recent years, HEMLIBRA has contributed to the overall performance of Chugai for some years, and I am putting together the progress in hemophilia A treatment by HEMLIBRA. We have solid data of efficacy and safety. Evidence has been accumulated for over years. This is the strength of HEMLIBRA. Especially, we have rich real-world evidence, and this gives a sense of comfort to patients and patients' families as well as healthcare professionals. We consider having such real-world evidence to be very important. Since the first clinical trial, it's been over 10 years, and overall, across the world. Over 26,000 patients are using HEMLIBRA for the treatment of hemophilia A. We now have more than 100 papers published, including the data of more than 10,000 patients. We have real-world clinical evidence, which is very robust in terms of both efficacy and safety.
Top right, we are looking at HAVEN I to IV long-term analysis results. This is our integrated results. More than 80% of the patients had annual bleeding of zero for a long time. From the real-world data of the advanced nations, compared to the previous treatment, HEMLIBRA increased the zero bleeding rate, meaning that HEMLIBRA is providing stable prophylaxis of bleeding events in hemophilia patients. Also, there was a reduction, a significant reduction of the annual joint bleeding rate, as you can see at the bottom of the slide. In terms of safety, we have real-world safety data over a long period of time of over 1,000 patients. Just like in clinical trials, we were able to confirm a very favorable safety profile of the product.
We have always listened to the voices of patients and patients' families, as well as the healthcare professionals, and worked on improving the convenience of the administration of HEMLIBRA. Going forward, we would like to work on improving the convenience of the administration even further, and we are now working on the development of an auto-injector for this product. Thus, HEMLIBRA has a lot of real-world evidence for a long time, and based on the experience of the use of this product, we have been able to confirm a high level of satisfaction on the part of the patients as well as the healthcare professionals. We do believe that this can lead to further competitive advantage. We will continue to commit to hemophilia, including NXT007. We would like to continue to increase the value of our portfolio in hemophilia.
From the next slide, I would like to talk about the refinement of five reforms of TOP I 2030. TOP I 2030 is a 10-year strategy through the backcasting from the 2030 vision. And this is a long-term strategy, and it has been three years since the start of this strategy, so we thought we should stop here to review the progress so far, and what kind of external environment shifts are taking place, and what kind of execution progress is being confirmed in the internal environment. And given such review, for the remainder of the seven years, what do we have to do and how do we have to do things, and at what speed, in order to achieve the vision of 2030?
So first, on the external environment, at the top left, on the left, the value that pharmaceutical innovation brings to society remains unchanged. This assumption has not changed. But on the other hand, drug discovery and generative AI and digital technologies, we have seen a lot of advancement in those technologies, and due to that, the importance of open innovation has risen even farther. Now let's talk about the strategy execution of Chugai. R&D output doubling and launch of Chugai product every year, globally, without compromising the quality. These are the two, two important goals of Top I. In these regards, we have been able to confirm a steady progress, and many projects have had some progress. And of course, we have hit some difficulties, but five reforms have been advanced quite steadily.
Looking back on the past three and a half years, we do believe that we don't have to change the goal and outline of TOP I 2030. We do believe that this is a robust strategy, but at the same time, we do understand this is quite a challenging goal. Business as usual will not be able to lead us to achieving the goal. But at the same time, on the contrary, we now have quite a lot of confidence in terms of achieving this goal, because we can now identify what kind of tactics need to be changed in order to achieve this target through our review this time. Meaning that, we can now refine the reforms that are required to achieve the target.
Out of the five reforms, I would like to focus on drug discovery, development, pharmaceutical technology, which are all very important to achieve the goal of TOP I strategy. Well, this is about refinement of the function of RED reform. We have the two important strategic pillars which have not been changed. The red letters represent minor changes. To the left, global first-class drug discovery. In this pillar, we now have maximization of the value of development projects by pursuing translational research and pharmaceutical technologies. And to the right, in the pillar of futuristic business model, we now have development of PHC solutions. This is refined, redefined. Looking back on the progress of R&D progress, we have defined what kind of challenges need to be overcome. Drug discovery, development, pharmaceutical technology, I would like to look into each modality. First, about antibody.
As the new technology has been advanced, we now have proprietary antibody engineering technology, based on which a lot of projects have moved on to the clinical stage, and we are now simultaneously developing different indications. We are using digital and robotics, and we have been able to improve the efficiency of drug discovery to a certain extent. But we do believe that in terms of the progress of many of the projects which are in the early clinical stage, we still have some room for improvement. Next is mid-size molecule. LUNA18 oral absorption has been confirmed. Mid-size molecule modality now has a better probability of success. But at the same time, or on the other hand, POC has not been achieved yet. For mid-size molecule, a lot of non-clinical projects have made advancement. They are close to portfolio in.
In terms of the pharmaceutical technology, in terms of the development of that, there has been a lot of progress in terms of difficult mid-size molecule with high activity and high difficulty. But compared to antibody, the speed is slower for pharmaceutical technology of mid-size molecules, so we need to create a platform and accelerate the development. In the past 3.5 years, we now can identify common challenges. We have a lot of projects which are in the early stage clinical development, but they are still taking too much time. We need to accelerate the early stage clinical development even further. We need to reduce the time of development and improve the probability of success even further, and identify the potential of the value as early as possible and concentrate our resources, meaning that strategic prioritization is required.
If you think about the long-term growth of Chugai, we need to further polish new modality in drug discovery, and we should be able to generate molecules at a stage of drug discovery, which are close to the perfection as much as possible.
Like this, while we have had a number of achievements, the challenges that we have to overcome have become visible. Based on this, we have refined respective reforms. In drug discovery, to clarify the direction of reforms, we have revised the descriptions based on our R&D principles. However, our basic strategy remains unchanged, that is to pursue the multimodality drug discovery. R&D principle is what articulates the success factors that led to the development of competitive products such as HEMLIBRA and Alecensa. This includes technology-driven drug discovery and quality-centric drug discovery. With these two as the pillars, we set open innovation as the third pillar. The box at the center shows the direction of each specific initiative, and their goals are shown to the right.
As we have always done so, we will commit to the drug discovery, which nobody else but we are able to do more than ever. We will target the molecule which nobody else could target. We'll do the drug discovery, which will realize the MOA, which nobody could ever think of. One of the examples is middle molecule. To keep our competitive advantages, we will further our technological development. To double the output, we will select the molecule with high level of completedness as a development candidate. Combined with human predictive technology, we will aim to achieve high clinical success probabilities. At the same time, we will leverage external innovations and drive Chugai's unique technological development and drug discoveries. These reforms will not only contribute to doubling the R&D outputs up to 2030, but will also form the foundation for growth beyond 2030.
As you can see, we have refined the reforms and targets for each of the early stage and late stage developments. In order for us to be able to make the judgments about project values as at the early stage, we will create the science-based, appropriate clinical development options, planning and execution. As was explained earlier, in the past, it was too time-consuming for us to estimate the values of the projects in the early clinical, so we will set the highly probable go or no-go criteria so as to make agile judgments. We will focus resources in the promising projects, and by running this challenging challenge cycle quickly, we'd like to double the output while keeping the quality. This is critical in order for us to achieve the TOP I goals. These are the drug development reforms that have been refined.
In pursuit of the global standard, we'd like to refine for the antibody and for the middle molecule as well, we will have to pursue the global technology. As for production, not only the cost competitiveness, but we will have to consider the factors of the robust supply system, that is the stable supply factor. These are the four goals shown on the right-hand side. The second development period is that this is the period from the selection of the candidate compounds up to the submission of the clinical trials. We'd like to benchmark against the top level companies in the world, and for each of the antibody and middle molecule, we have set these targets up to 2030. We will pursue to enhance our competitiveness in all of the quality, speed, cost, and drug development fronts.
I have explained about the refinement of the reforms and as for the RED functions. Next slide shows the five reforms summaries, including the functions other than RED. And the portions shown in red are the changes that we have made this time. I will skip the explanations about the functions other than RED. As for the progress and challenge of each reform and about the refinements, we have attached additional slides, so please refer to the slides as necessary. Based on the refinement, we have revisited the mid-term plan milestones, and I have added some slides at the end. I will skip the explanations, but we have made the disclosures limited to the following three. First one is towards the achievement of the TOP I 2030, the ones have that have the strategic importance.
The second one is the one with which the clear endpoints evaluation metrics have been identified. The third one is the ones that the investors have high interest in. This is the last slide. Reflecting the TOP I 2030, when we reflect the first three years of TOP I, we have started to make the focused investment into the R&D under RED Shift. The number of POC transitions and P1 transitions, compared to the past 10 years, the number has increased. So we have started to see the signs of changes. But on the other hand, as for the originally anticipated initiatives, we have started to see the gap against the targets, so we will have to accelerate further the RED Shift.
As for the pharmaceutical development, this is a long-term effort, so we may not see the outcomes immediately, but with the acceleration of initiatives, we believe that the outcomes will be expanded further. This slide shows a curve. As you can see, the curve becomes steeper, and that reflects the image that I just explained. With the size of our business, it is a very high target to launch the global product each and every year. But we will not only pursue the numbers, we would like to work towards the realization of the sustainable medicine with high level and focused on patients. We'd like to overcome the unmet medical needs one by one. We'd like to keep producing the values that are truly sought out by patients. So we will not compromise, ever, never compromise the high degree of completedness.
Utilizing our science and technological capabilities, we would like to keep producing the innovations to address the challenges, unmet needs. And TOP I includes the I. I stands for innovator and I, and that means that each one of us will own the reform challenges. Each and every employee will transform themselves in order to do what they are supposed to do and what they are trying to do. And that will create the autonomy, and the autonomy will become a chain to create the strength and synergy of the organization. And after achieving the reforms, we believe that the achievement of our ultimate goals will become visible. So we'd like to start anew to become the true innovator of the world and do our best towards that end. That concludes my speech.
Now I'd like to ask, Kusano-san, to give a presentation on the pipeline. We will change the page of the slide. This is the time for the screen capture. Now, Dr. Kusano, please.
Now, I am Kusano from Project Lifecycle Management Unit. I'd like to give you an update on the development pipeline. Please turn to slide page 24. This shows the second quarter topics regarding launch, approval, and filing. Apart from Alecensa approval in China and CellCept approval, other topics have already been announced. PIASKY is the fifth antibody drug developed in-house by Chugai for PNH, and it was launched in Japan ahead of the rest of the world, and it has been approved in the U.S., and it has received a recommendation for approval in Europe.
Mitchga, this has been launched in Japan for the treatment of atopic dermatitis in children and prurigo nodularis. Alecensa has been approved in Europe and China as an adjuvant treatment for ALK-positive early-stage non-small cell lung cancer, following the U.S. As the first ALK inhibitor for this indication, it has begun contributing to the treatment of patients around the world. Avutometinib, in combination with defactinib, has begun rolling submissions in the U.S. for the treatment of KRAS mutated recurrent low-grade serous ovarian cancer. As for initiation of study, 2 of them are Chugai in-house developed drugs, and 2 others are the products developed by Roche. GYM329, for that, the phase 1 clinical trial has begun by Roche for obesity. DONQ52, the clinical trials to evaluate the pharmacological effects of wheat intake in patients with celiac disease have started. I would like to turn to this later on.
ASO Factor B is for IgA nephropathy, and global phase III trials have started. Zilebesiran, this has begun phase I clinical trials in Japan for the treatment of hypertension. There are five items removed from the pipeline. Tiragolumab and Tecentriq in combination with chemotherapy, which has already been announced, and including this, there are five items. PIASKY, an in-house developed drug, this was excluded from the pipeline as a part of the portfolio review of Roche. For lupus nephritis, the study development was discontinued for this indication, therefore, this is now removed from the pipeline. The development of Tecentriq plus Avastin was discontinued following results from the IMbrave050 trial, evaluating the adjuvant treatment of hepatocellular carcinoma. Development of Migoprotafib, an in-licensed product from Roche, has been discontinued due to the termination of the collaboration and license agreement between Roche and Relay Therapeutics.
Development of pralsetinib, also in-licensed from Roche, was discontinued due to the expiration of the global collaboration agreement between Roche and Blueprint Medicines. Two items for medical conference have already been announced. AP306, an oral phosphate transporter inhibitor, already licensed out to Alebund Pharmaceuticals, has received breakthrough therapy designation in China for the treatment of hyperphosphatemia in patients with chronic kidney disease.
The major R&D events for 2024 were shown in the previous earnings call, and the progress since then is shown in bold and underlined. Next, I will explain RAY121, which is being developed for the treatment of autoimmune diseases. This is the first time I am explaining this project, including its mechanism of action. RAY121 is a recycling antibody that selectively binds to complement C1s to suppress complement pathway CP. It is expected to be more effective and safer than C3 and C5, and other downstream pathway inhibitors in diseases in which the classical pathway is the predominant contributor of the multiple complement pathways. RAY121 offers convenience by reducing dosage and frequency of administration through our proprietary recycling antibody technology. In the P1a study conducted to date in healthy adults, we have confirmed sustained suppression of the complement classical pathway and a favorable safety profile.
The newly initiated global phase 1b basket study, which is about to start for six autoimmune diseases, is positioned as a flagship study in RAY121. This is the first time in the world that such a broad range of diseases have been studied in a single protocol outside of the oncology field. We will pursue the maximization of product values from an early stage through the simultaneous development for multiple disease indications. Next, I would like to explain about our newly initiated study for DONQ52. DONQ52 is a multi-specific antibody that binds to more than 25 different gluten peptide complexes, which are the main causative agents of celiac disease. Patient enrollment was completed in May of this year for the P1A and B study to evaluate safety and PK in patients with celiac disease.
Again, DONQ52 is a multi-specific antibody that binds to more than 25 different gluten peptide complexes, which are the main causative agents of celiac disease. Patient enrollment was completed in May of this year for the P1A and B study to evaluate safety and PK in patients with celiac disease. The newly initiated P1C study is a 3-day wheat challenge study for patients with celiac disease. It will evaluate pharmacological effects in addition to safety and pharmacokinetics. We will evaluate the inhibitory effect of DONQ52 on the immune response induced by wheat ingestion, and confirm the usefulness of DONQ52 in celiac disease. Other submissions are planned. The red stars indicate new additions, and green stars indicate projects for expanded indications this year. The year of submissions for some studies has been changed based on the progress of the studies.
Several reference materials are attached below, which we hope you will refer to as appropriate. That concludes my presentation. Thank you very much.
Next is from Taniguchi-san, talking about financial year 2024, second quarter interim consolidated financial overview. This is a time for a screen capture.
May I start?
Yes, please go ahead.
I am Taniguchi, I am CFO of the company. Very nice to meet you. I would like to give you a presentation for the performance of the second quarter on the Core basis. First, revenue. It declined by 4.6%, or JPY 26.8 billion, to JPY 552.9 billion. Operating profit increased by 13.3% to JPY 30.8 billion to JPY 262.8 billion. The big factor for revenue decline was because of the absence of supply of RONAPREVE for COVID-19 that was booked in the first quarter of last year.
Excluding the RONAPREVE factor, the revenue actually grew. Next, let's take a look at the breakdown of the revenue. First, sales. It was JPY 485.5 billion. This was a decline of JPY 37.5 billion, or 7.2%. Looking at different segments or regions, and domestic sales, as I said, because of the RONAPREVE impact, it was -JPY 96.4 billion. Excluding RONAPREVE, it was only the decline of JPY 15.2 billion. And this decline was due to the NHI drug price revisions and the market penetration of generic drugs. Overseas, HEMLIBRA export was very good, and compared to the last year, it was the increase of JPY 59 billion, or 28.2%. And other revenue, HEMLIBRA royalty income increased, and also lump sum income increased.
Due to that, other revenue was JPY 67.3 billion. This was an increase of JPY 10.7 billion, or 18.9%. Next, on expenses, cost of sales was JPY 160.2 billion, and this is a decline of 33.9%, or JPY 82.1 billion. And because of the elimination of RONAPREVE, with the cost of high cost of sales, and relatively speaking, products with low cost of sales are now dominant. And due to that, the cost of sales ratio improved by 30.3% to 33%. And the research and development, because of the research projects and early-stage development project moving on nicely, it increased by JPY 7.5 billion.
Selling, general and administration, we pursue efficiency improvement, and we were able to suppress the increase only by JPY 1.6 billion against the backdrop of inflation and labor cost increase. Operating income, there was a Bonviva transfer of products, revenue, last year, and because of, that factor, it decreased by JPY 15.4 billion. Operating profit increased by JPY 30.8 billion to JPY 262.8 billion. Operating margin improved by 7.5% to 47.5%. Net income increased by 10.6% or JPY 18.1 billion to JPY 189.5 billion. Next is, the breakdown of sales increase or decrease. First, oncology domestic market.
Compared to the last year, year-on-year, it was a decline of JPY 7.7 billion or 6.1%. It's due to the penetration of generics. Avastin sales declined. On the other hand, PHESGO, which is a new product, absorbed such a decline of the sales of Perjeta and Herceptin. The specialty declined by JPY 88.7 billion or 47.4%. RONAPREVE, which I discussed already, was one of the factor, and Tamiflu also declined. Due to these two products, it was negatively affected. If you exclude these two factors, specialty product sales was more or less the same level, at the same level compared to the last year. NHI price revision impact was there, but new products such as VABYSMO grew quite nicely.
Overseas, at the top in gray, the sales increased due to HEMLIBRA as well as Enspryng. And as a result of that, there was an increase of JPY 59 billion or 28.2%. Next, operating profit decrease or increase factors. So compared to previously, we are giving you more information. Starting from the left, looking at domestic sales. As you can see, NHI drug price revisions were there, and the RONAPREVE impact were quite huge in terms of the negative impact. And overseas, export unit price declined, but actually, sales volume increased, and Forex exchange, a positive impact, compensated for the export unit price decline, leading to higher operating profit. And then, other revenue increase was by JPY 10.7 billion. Royalty income of HEMLIBRA and other lump sum income of milestone income and et cetera are included.
Cost of sales ratio improved due to product mix, and this was a very big positive push factor of operating profit. Next, let's take a look at the costs and profit by quarter. This is a breakdown and development over time. The timing shift of export timing, the quarter by quarter, there may be some fluctuations. But if you look at only at the comparison of the second quarter this year and the second quarter last year, as you can see, operating profit increased by JPY 34.1 billion. As I said already, there are certain positive factors. Export is one of such positive factors.
So if you look at the sales, restructure of revenue by quarter, as you can see, if you compare only the second quarter year-on-year, because of the export, the sales increase, as you can see, revenue increased. Next page. And this is looking at the progress against the forecast announced at the beginning of this year. First, domestic sales. As you can see, the progress to the far right of the last year are described. And because of the RONAPREVE, 56.2% was the progress last year, which was quite high. This year, at this point in time, it's 47.7%, which is below 50%. But as the sales activities are going to be higher towards the end of the year, so this is within our expectation.
On the other hand, overseas sales, ACTEMRA and HEMLIBRA exports are progressing very well. Therefore, we are at the progress ratio of 57.5%. Other revenue at this point in time is 45.5%. Relatively speaking, it may look a little slower, but HEMLIBRA royalty rate is going to go up depending on the cumulative sales of the year, which is a tiered structure. Therefore, towards the end of the year, the sales or income royalty income of HEMLIBRA is going to go up. So more or less, we are on track for expenses as well. Now, let's take a look at the progress against the forecast for each product.
Of course, so there are ups and downs and variations for different products, but overall, across the segment, we are on track in terms of the progress, status for the domestic sales. But on the other hand, overseas, actually, it's 57.5%, as I mentioned already. Bottom right, overseas sales are doing very well. And of course, there are still some uncertainties remaining. There is a possibility that these numbers exceed our forecast. Next is the Forex impact. Since last time, we have renewed the slide contents, and we're showing the quarterly assumed rate and actual rate on the right-hand side.
... and we have conducted that more detailed analysis, and results are here, that foreign currency denominated exportation and importation and royalty, 80% of that is hedged or through the forward FX contracts in the previous year. But, due to the adoption of the hedge accounting, 20%, remaining portion is in an open position, and this is the portion that is exposed to the, Forex fluctuation, and it's the variance from the, assumption at the beginning of the year. As for the assumed rate for the Q2, we, we have seen JPY 3.1 billion in positive impact on the operating profit. And as for the, revenue side, where the, forward, FX contract is not, done, the, actual rate, was, more favorable than the assumed rate.
As for the forward FX contracts allocated to the revenues and costs, and the allocated rate, it changes from month to month. For the assumed rate for the quarter and for the full year, there is a slight variance. The left-hand side, the comparison against the actual rate, and this is the Forex impact. Based on our business structure, the yen depreciation will produce a positive impact in the revenues, and that will cause a negative impact on the expenses. The net position, we are seeing a significant positive impact on the operating profit basis. Compared to last year, we have the positive impact of JPY 39.7 billion on the cumulative basis at the end of the second quarter.
As for the P&L, the total assets stood at JPY 2,060.2 billion. Compared to the previous year, at the end of the previous year, there was an increase in the cash and cash equivalent, and there was an increase in the account receivables. It was an increase from, by JPY 126.1 billion from the end of last year. As for the net asset as well, due to the net own capital accumulation due to profit, it stood at JPY 1,751.7 billion.
As a result, the shareholders' equity ratio remained at the very high level of 85%, and the net cash increased by JPY 76.7 billion from the end of last year and stood at JPY 815.7 billion as of the end of June. And this slide shows the factors that contributed to the results. The cash in from the operating profit, and from here, we deducted the net working capital increase and the decline in the investment, decline due to investment. The operating free cash flow stood at JPY 169.5 billion, and from here we deducted corporate tax and dividend, et cetera. And over the past six months, the cash increased by JPY 76.7 billion. This slide shows the IFRS base actual and core actuals.
So these are the adjustments made. Starting this year, the business restructuring expenses... Well, right now, we are working to renew the operation and business core systems company-wide. So we recorded JPY 3.3 billion as the business reconstruction expenses. And next is the qualitative and quantitative information for the Chugai-originated global products and the current situations and full year guidance and qualitative comments are provided just for your reference. Next shows the major five Chugai-originated products and out-licensing scheme to Roche, whether or not there is a royalty or the burden of the selling and general expenses. I believe that the same information was shown two to three years ago. And next is the CapEx at the end.
No major change has been observed from the first quarter of this year, and the bio drug substance manufacturing building related CapEx and the Ukima factories related CapEx are included. And as for the R&D CapEx and investments, in order to improve the facilities, we are planning to spend more than JPY 100 billion in terms of CapEx and to respond to the improvement of the environment-related requirements. That concludes my explanation. Thank you.
We will move on to the Q&A, question and answer session.
We are joined by Hidaka, who is the Executive Vice President in charge of sales. I would like to request that you limit the number of the questions you ask to two. Thank you for your cooperation in advance. The audio material of the Q&A session, together with the presentation, will be posted on our website on a later date. First, we would like to take questions from the participants in the venue and take questions from the participants over the Zoom webinar. Now, if you are here and would like to ask your question, please raise your hand, and please wait for the microphone and identify yourself with your name and your affiliation.
Thank you. I am Muraoka from Morgan Stanley. So my first question is about the company performance.
It was a stellar second quarter, and one big factor is export of HEMLIBRA and ACTEMRA. The third quarter and beyond, is there going to be any repercussion? Looking at the numbers of Roche, ACTEMRA may go further up, but HEMLIBRA probably not. This quarter looked a little bit weaker for HEMLIBRA as well. That's my own impression. So for HEMLIBRA and ACTEMRA exports, the third quarter and beyond, what are your thoughts?
First, I'd like to begin. In terms of the local sales, I'd like to talk about that, and then expectations for exports, Taniguchi, CFO, will answer. HEMLIBRA sales... first quarter of this year in the United States, it was a negative growth, and it's because of the purchasing pattern on the part of the pharmacies.
And if you look at the second quarter in the United States, it was a growth of 3%, so it's quite a steady growth. And January to June, there was a growth of 1%, plus 1%. And Europe and internationally, excluding Japan, U.S., and Europe, the growth of the international market is quite significant, driving the overall growth of HEMLIBRA, and overall, the growth rate is 7%. So, in terms of the local sales, HEMLIBRA is growing. And ACTEMRA local sales, compared to the same period last year, it's a plus 3% growth rate. Europe biosimilars have been launched, and in the United States, biosimilars have been launched. And how they are going to penetrate the market, it's difficult to read, but they are quite weak.
So towards the latter half of the year, what would be the biosimilar penetration?
This is something that we need to monitor and watch out for.
So these are the local sales, and what about the exports?
And there is a timing shift, so CFO is going to answer your question.
So first, about HEMLIBRA. The third quarter and beyond, we do not expect any worsening of the situation. International sales, inventories, needs to be stocked because of the long supply chain and because of the government tendering, there are certain fluctuations. Therefore, in terms of the exports from our company, we do believe that international sales is going to be quite solid going forward.
As for ACTEMRA, there is a delay of biosimilar penetration, and I think this delay in biosimilar penetration is more than we expected, and our exports are growing accordingly, more than we expected. So, compared to the forecast, we do not believe we have any concerns to achieve the forecast.
So HEMLIBRA exports, Taniguchi-san, what you said is, we do not have to be concerned about the sales of HEMLIBRA or export of HEMLIBRA.
For ACTEMRA also, looking at the sales of HEMLIBRA in the US, there may be weaker pressure going forward, but we don't have to be worried about that.
Yes, for exports, we don't have to be worried about HEMLIBRA or ACTEMRA.
In 2025 or beyond, that's after six months, is there going to be any repercussion in 2025 or beyond? Is there such a risk?
Well, as for the plan for the next year, we have to work on the plan for the next year from now on. As for ACTEMRA, of course, the penetration of biosimilars is going to be progressing, which has to be incorporated. But HEMLIBRA, international sales is still expanding, therefore, I do believe this momentum is going to continue. So that's our expectation.
No risk of reduced inventory?
Well, this is really beyond our time frame, so we can't really say anything about that, but there is still a trend of volume increase. Thank you. So the second question is about R&D or in-licensing, planning for in-licensing. Opt in, Carmot of Roche, GLP-1, two of them, injectable as well as oral, had good results just the other day.
So, what are your plans for opting in those products to the Japanese market? This is an often asked question by overseas investors. So how are you going to incorporate these products, Roche GLP-1 products, into your strategy in Japan?
Thank you for your question, Muraoka-san. Kusano would like to answer your question.
So, Roche acquired this subcutaneous once-weekly administration GLP-1 and GIP agonist, CT-388, and once-daily oral GLP-1 agonist, CT-996. The phase I top-line data was announced by Roche. And for both studies, and this is just a very initial data, but they look very good, attractive data, that is. But having said that, these are the results of phase 1 trials, and only the top-line results are being announced as of now.
So, I would really like to refrain from making any evaluation of the potential of these products going forward. We would have to monitor the follow-up data going forward. In terms of licensing in, we can't really give you any details just yet. But generally speaking, Roche developed the products. We have the development and marketing first refusal rights in Japanese market. And therefore, we have to consider what is the domestic market for these products and evaluate the products accordingly. Not just for these products, but for all of the products. Each product is... Well, we can't really give you any answer in terms of the probability of licensing in of those products from Roche.
orforglipron, what about compared to orforglipron? In terms of GYM maximization, how should we understand these Roche products?
Well, Kusano would like to continue to answer your question. Chugai developed a product which has been licensed out to Roche, GYM329. For Eli Lilly and Company, we have licensed out orforglipron to Eli Lilly and Company. This presents a new treatment option to patients, and these products may create a big value going forward. We have high expectations for that. Incretin, they have started already, and anti-obesity development is in full-fledged now on their side. GYM329, first, as has been explained already, Roche has started development, and we would like to really watch the phase one data for GYM329. We would like to tap into the characteristics of GYM329. Latent myostatin is the target.
It's a sweeping antibody, and so muscle mass or muscle strength can be improved quite dramatically by that. That is a potential. And the subcutaneous every once in four weeks, this presents a lot of convenience. And there is a lot of potential in combination with other incretin. So there are many different potentials existing for GYM329. So Chugai and Roche are looking at very wide portfolio of the products. And for those patients who are complicated with obesity, we'll be able to address a wide variety of patients in that regard. There is such a potential. It's not just about the widening of the access, but type two diabetes or myocardial infarction, cardiovascular complications, cerebral vascular complications, all of these can be addressed with this kind of a product.
Those patients who are waiting for treatment or, who have concerns about, the event of complications, we may be able to give a lot of value to these patients. So we'd like to explore a variety of potential together with Roche. What about the orforglipron 996? Well, as for orforglipron, phase 2 trials are ongoing right now, and probably next year, the results of the phase 2 trials are going to come out. So let's take a look at the results of this data and evaluate the product. Thank you very much.
Thank you very much. The person sitting in the second row.
This is Matsubara from Nomura Securities. Thank you very much for taking my question. First question is with regard to VABYSMO. When you look at the materials to Roche, the U.S., Europe, the growth is very strong. But on the other hand, it seems like there is not much growth in Japan compared to, United States and Europe. And, for those patients, that didn't have the efficacy with the existing drugs, well, how are you gonna drive the sales, in the clinical scenes with this product?
Thank you very much for the question. I'd like to explain the Japanese status with regard to VABYSMO. At the end of March, the RVO indication was added, and, at that time, we saw a significant change in terms of the revenue curve.
The revenue growth itself has been driven. As was mentioned before, this is for patients for whom the existing drugs didn't have any efficacies. But at this point in time, the evaluation of safety has been confirmed. For those patients who are using it for the first time, this has been adopted widely. On the other hand, the long-term safety with Japanese and efficacy-related data with Japanese have started to have been announced at the conferences. After two years, the improvement on efficacy in the eyesight is expected to be continue. So, this is what was not existent in the past. So I believe that this will contribute to the treatment of RBO continuously in the future. So we'd like to promote this with that in mind.
So right now you are seeing more new patients adopting this. Next is with regard to HEMLIBRA and Pfizer's, and the gene therapy, and they're delivering good results out of the clinical trials. So, will they become the threat to the HEMLIBRA? So what's your take on that?
So the question asked right now, this is not just about Japan, but this question applies to the global international. As for the point mentioned, RSDH, the international conference, the phase 3 data was announced. And comparison of the results that come out of different studies is considered as a taboo, and this is not appropriate. But as far as we look at the data, M8 efficacy compared to the efficacy of HEMLIBRA, this is not seems to be the case. As was explained with regard to HEMLIBRA, more than 26,000 patients have administered the drug, and the long-term efficacy and evidence, safety-related evidence, have been established. And for those patients who are going through the treatment, when they are satisfied with the treatment, there is hesitancy shown by the patients to change the drugs.
So Mim8, going forward, we are not expecting that that Mim8 will cause a huge impact on HEMLIBRA. As for the gene therapy, as far as we know, as only a small number of patients have been administering the gene, therapy or have been taking the gene therapy, so we do not expect that to have a huge impact on our business.
I am Haruta from UBS Securities. I'd like to ask you a question about ACTEMRA versus biosimilars. So biosimilars, penetration is a little bit delayed, slower than expected. Do you have any further information about that? Why the delay? So IV, products are now launched, and, subcutaneous, products are now being approved. So is that correct? And what about, ACTEMRA exports? Subcutaneous biosimilars are going to come to the market going forward.
So, can you give us more details about the ACTEMRA overall situation?
So ACTEMRA biosimilar situation in the market, according to the public information, we are just, collecting public information just like you. So Fresenius Kabi, Fresenius Kabi has developed a biosimilar product, and they have launched, ACTEMRA biosimilar for both IV and subQ. Back in April of 2024, the product IV was launched in the United States, and as for subQ, it was, July 2nd, that was the launch date in the United States. And as for Europe, last year, at the beginning of November of 2023, IVSC, both IV and SC were launched. But which countries in Europe those products have been launched, we have not been able to confirm that information. But looking at the situation of ACTEMRA, the penetration of biosimilars is slower than we expected.
Biogen, Bio-Thera, biosimilars are there as well, and I think it's only IV. In the United States, May of 2024, this product was launched already in the US for IV, and June 24 in Europe, the product was launched. Sorry, that was the approval on June 24. So across Europe, this biosimilar is going to be launched one by one, I think. Celltrion is yet another company which has developed a biosimilar product for both IV and SC. They have filed on January 28, 2024 already, and in February 2024, they filed already in Europe as well. So that's as far as we know, but I think this is only public information. So as for exports, Taniguchi-san?
Yes, as for exports, our budget or expectations compared to that, we are actually exceeding.
And as I gave you an idea of the progress status, our progress is better than our forecast. So we may actually overachieve the target set at the beginning of the year. So the launch of biosimilars, because of our good results, we are assuming that the biosimilar penetration is slower than we expected. But I would like to refrain from making further comments. PHESGO start or launch is quite good in Japan as well. In terms of switching, you see it moving forward and globally, PHESGO, transfer to PHESGO has already been over 40%, or switch to PHESGO has been already over 40%. Can we expect the same in Japan as well? And Perjeta Herceptin, there can be some cannibalization.
But with a good penetration of PHESGO, hard to franchise-wise, net, net, I think it's going to be better than before. Is that right? Is that correct? Yes, switching to PHESGO and whether this is going to be positive. Yes, Herceptin and Perjeta are switching from original Herceptin and Perjeta to PHESGO, or, Herceptin plus Perjeta biosimilar, switching from that to PHESGO. So both can be expected, so this is going to be positive. And in terms of switching to PHESGO, it's within the line of our expectation or better than our expectation, in line or better. So where are we going to be landing? Of course, we have to monitor the situation, whether it's going to be, 40% or above. We would like to aim for a little higher than that.
The current situation, depending on hospitals, the situation may be very different. So, what are the focus of each hospital? Depending on that, the switching situation may differ from hospital to hospital. Some hospitals may switch all the patients to PHESGO, or depending on patients, especially those patients who have in combination with chemotherapy, it's not just a PHESGO, but the chemotherapy infusion time needs to be considered, therefore, they would probably like to continue with the conventional infusion. And then the conventional chemotherapy can give outpatient insurance points, but the subcutaneous injection cannot give outpatient points. So depending on what's the focus of each hospital, the situation may be different from hospital to hospital.
But the convenience is there, and I think more doctors are feeling the convenience of PESCO, so we would like to continue to promote this product strongly. Thank you very much.
Thank you. Other questions, please.
Please raise your hands if you have any questions. We now take questions from those participating on Zoom Webinar. Those who are participating through the tablet PCs and PCs, please click on the raise hand button at the bottom of the screen, and we will designate a person. And please turn off the mute and introduce yourself with your names and affiliations. And those who are participating through the phone, after the asterisk, please enter nine, and we will call out a person's name. So please introduce your name and affiliation, and ask questions. Those who would like to cancel, please press the asterisk again and followed by nine. J.P. Morgan, Mr. Wakao, please go ahead.
This is Wakao from J.P. Morgan. Thank you for taking my questions. First question will be HEMLIBRA export sales.
Please go ahead.
Can you hear me okay? Can you hear me? Can you hear me? Mr. Wakao, can you hear me?
Yes, I can hear you.
Can I ask my questions?
We're sorry, your audio is not coming through to the venue, so, let us work this out. Mr. Wakao, we were very sorry. Could you repeat your question?
Can you hear me okay now?
Yes, we can.
Apologies. Regarding the export revenue of HEMLIBRA, could you give us more details? If there is... Well, I understand that there is an upside compared to your plan, and quantitatively, how much upside did you see? If there is an up quarter in the second half, the second quarter progress is very good, so we are not sure how we can anticipate the full-year revenue. And the second quarter, the GP margin was very strong.
With regard to this, the export sales of HEMLIBRA, was that because of this that your GP margin was strong in the second quarter?
As for the full year forecast, it has been disclosed, and we said that there is a high probability that we are exceeding this. But in terms of how much we can expect in this third quarter and fourth quarter, we cannot provide you with the details at this point in time. But one thing we can tell you is that we have a strong momentum. With regard to the cost, for sure, with HEMLIBRA, well, with the RONAPREVE no longer coming into our revenue, and this has improved the GP margin, and HEMLIBRA grew significantly as well. And with the HEMLIBRA, the cost ratio improvement was significant. And please, let us refrain from giving you the breakdowns.
The third quarter and fourth quarter HEMLIBRA revenue details cannot be provided.
But in the second quarter, how much upside did you see with the HEMLIBRA? Can you tell us that?
As we mentioned before, the progress rate is 57 for HEMLIBRA, so please refer to that information. And how much upside we had, as of this end of the second quarter, please, utilize this information.
So the progress compared to the previous quarter, from the previous quarter, is equivalent to the upside. Thank you very much. And as part of the president's explanation, the top line, revisions, as for the middle molecule, where did you see the challenges? Can you elaborate on that once again? Well, I thought I heard the drug development, LUNA18, the POC data, the timing at which we will be able to see the POC data will be next year. Is my understanding correct?
Thank you, Mr. Wakao, for your question. As for the middle molecule, TOP I 2030 has been started, and LUNA18, the study has started. And the oral absorption in humans have been confirmed, and this increased the probability of success with the middle molecule. On the other hand, in 2024, POC achievement was one of the milestones, but we haven't reached that point. Within 2024, we are not being, we -- it seems like we are not getting the POC. And it has taken some time, and that was one of the challenges we faced.
For other projects, with the middle molecule, in the non-clinical side, we have certain progress with some of the projects. So overall, with regard to middle molecule, we have had solid progress. The other is that the drug development technologies, with regard to the middle molecule manufacturing technologies, we have considered significantly, and we have had solid progress with regard to that.
So LUNA, in early POC timing, has delayed from the original plan, but for the technical side of the efforts, there is not much delay. Is that right?
Yes. The oral absorption was confirmed, and the concept that we had with the middle molecule was now confirmed, and that was a big progress.
The LUNA18 POC is expected to be obtained next year, is that right?
Well, when it comes to when we will be able to obtain the POC, the information is not disclosed at this point in time. As soon as we are ready, we'd like to share the information, but, we'd like to say that, this 2025 or onwards. So when you said that this will be in 2024, with some delay, the early timing in 2025 is when we can expect. That was the early explanation. But according to what I have just heard, it could be possible that, this will be realized only in 2026. And, well, we have never articulated the clear timing from the Chugai. But, when it comes to obtaining the early POC or POC, this will depend on the progress of the project, and the status changes day by day.
So one of the learnings that we had this time is that the best timing of the project is assumed within the team, so we have the internal milestone. But there are some unexpected events. So, communicating all of these unexpected events to external parties is something that we'd like to refrain from at this point in time. Thank you very much.
Thank you. We are sorry about the audio problem. So from Bernstein Research, Miki Sogi, please.
Can you hear me? Yes, this is Sogi speaking. I have two questions. First, this is on the extension of Wakao-san's question. Okuda-san, in your presentation, you spoke about acceleration of the early stage clinical development, and there are challenges there, and you are going to respond to this problem. What kind of measures are you thinking of in order to respond to this problem of the acceleration of the early stage development?
TOP I 2030, we started it, and we have obtained major outcome, which means that from drug discovery to development stage, many of the projects are moved to a development stage, 8 of them all together. Many projects on the early stage development are there, but from your perspective, also, I assume that-
... they are not really moving to the next stage as quickly as we would like to see. For each project-wise, I'm not going to go into the details because of the competition, but we do believe that we need to accelerate each project in the early stage of development. So what should be done? We have some specific ideas. And so one is a clinical study design. No-go decision criteria when designing a clinical trial should be set clearer, and then conduct clinical trial towards that end.
When the results of the clinical trial are out, we do have scientific assessment to be to judge whether to go ahead or not, and if the hypothesis that we assume was not really backed up by the results of the clinical study, then we would have to say no. So we will have to make that judgment appropriately and earlier than before. And by doing that, we have a lot of projects in the early stage of development right now. And for some projects, we can concentrate more of our resources on some projects and accelerate some of those projects even further.
Thank you. So may I ask you another question?
So as a challenge, what you have defined is that once the data is out, it's too slow for you to make a decision to move on to the next step. Is that one of the reasons why you think you are too slow?
Well, yes, the data is obtained in many different forms, and go, no-go criteria set at the beginning. That has to be more scientific so that we can make a judgment on no-go, no-go more clearly.
Okay, understood. Another one is a question about HEMLIBRA. And so according to what you said, and looking at the results of Roche, overall sales growth, where I think your export overseas sales actually exceed the actual sales on the ground.
And Taniguchi-san already explained to us that the sales volume alone is not the factor, but internationally, sales is growing very strongly. And because of that, the inventory is increasing. That's how I understood the comments given by Taniguchi-san. So if that is correct, or is my understanding correct to begin with? And if that is the case, over time, international inventory is going to be stabilized, so to speak. Is my understanding correct?
Well, local sales growth is exceeded by our export sales. Yes, and if that is the case, yes, it's because of the inventory being built. But then, there are certain differences across different regions. Internationally, our growth is 32%. And internationally, unit prices are lower, but then the volume-wise, I think that is well compensated, and export sales are really increasing.
I think that is the background, but I can't really give you any further breakdown.
Understood. Thank you.
Thank you. Next, we will take questions from Mr. Hashiguchi from Daiwa Securities.
This is Hashiguchi. Thank you for taking my questions. Oncology innovations. With regard to this, TOP I 2030, this is the first time to hear the explanations about this. Compared to the past, the open innovation strengthening policy is where we felt—I felt difference from the past times. But after this, I haven't seen conspicuous progress. It's been just three years, so there is not much outcome that is publicized, and that's not a surprise. But the reflection made by Mr.—Dr. Okuda and the guidelines for the future, he rarely referred to the open innovations. And at this point in time, how do you evaluate the progress to date, and how are you going to take on these initiatives going forward?
The reason why you didn't mention this is because the resources internally have been bolstered, so the necessity of open innovation has come down, and that's what I felt it is about. So is my understanding correct?
Mr. Hashiguchi, thank you for your question. With regard to open innovation, TOP I 2030, this is one of the three key drivers, and we have focused on this for a while. And there are not many deals and projects that we are able to explain to the external stakeholders, but with regard to five reform, the third pillar for the drug discovery is about this. And external technologies will be leveraged-
... at the same time as the internal, technologies, and the target molecule technologies and our own technologies will be utilized. And to expand the scope of drug discovery, and we'd like to make sure this will generate outputs. While, Chugai Venture Fund, the corporate venture fund, was established this year, and it started its operations. Well, their activities have already started, and because of this, the startup in U.S., their information started to come through. And we cannot talk about the future, but based on the information we're getting from them, there could be some projects where we can collaborate, and we may be able to consider providing funds. And as that company grows, then, that will may create opportunities where Chugai will be able to collaborate.
Right now, we're in July, and J.P. Morgan Healthcare Conference, where we actually declared that this is something we are starting. But at this point in time, in terms of the flow of the information from them, we're getting a strong stream of information inflow. So, going forward, the open innovation through the collaboration with external stakeholders is something that we are expecting to see in the future out of these initiatives.
Thank you very much.
Thank you. From Bloomberg, Dan, please.
Thank you. So I would like to ask you about, Inflation Reduction Act, putting a lot of pressure on drug prices in the United States. What kind of impact are you seeing? And, presidential election is just around the corner. How is it going to affect your company going forward?
Thank you for your question. So the first question, I couldn't really hear that. Inflation Reduction Act in the United States, how is it affecting our products in the U.S.? Is that your question, I think? About IRA, I think, 10 of our products have already been designated, and more products are to be added this year. But so far, none of our products are being affected because of IRA. But depending on the size of the molecules, 9 years or 13 years after those years, a price negotiation may start.
This is a scheme proposed. So the drug discovery and development strategy of our company may be affected to a certain extent, and that has to be kept in our mind in coming up with our strategy. In terms of the presidential election, it's quite murky, the situation. So Biden has stepped down from the race. Harris is probably the candidate. So it's very difficult to see what is going to happen. But Republicans or Democrats, either way, in terms of drugs, I don't think any positive wind is blowing in the regard. So I think that's as far as I can say about the presidential election. Thank you. Thank you very much. So in terms of development, which may be affected going forward in the US, and that has to be kept in mind in the long run, right?
What are you saying is that, direction of the development, is that going to be affected, or prices? Well, small molecules with a smaller molecule or molecular weights, the exclusivity period is only nine years, so a price negotiation can take place earlier, much earlier. And this is generally speaking, drug discovery-wise, when we come up with new projects, and if it's a bigger molecules like antibodies, is that a better approach, or are we going to go for small molecules or mid-sized molecules? If we have options, which one should we go for? I think that is a kind of consideration we need to have. And IRA, I wonder whether this law or act is going to be kept intact. Of course, we have to take a look at that.
Depending on the rule of IRA, the strategy of drug discovery, should it be altered? Is that a good idea? That is a fundamental question. That's why I said it has to be kept at the back of our mind. There are certain needs on the part of the patients, and if our technology and science can satisfy those needs, we would like to go for it all the time. That's why I said, at the back of the mind, it has to be kept. That's all.
Thank you. Understood.
Thank you. We're sorry, but due to time constraint, we'd like to take the next question as the last question. Mr. Wada from SMBC Nikko Securities, please go ahead with your questions.
This is Wada from SMBC Nikko Securities. Can you hear me okay?
Yes.
Thank you. GYM329. Regarding GYM329, so the development is underway for the indication of obesity, but as activin receptor inhibitor, equal placebo Phase II, the good results are coming out. GYM329 is also with period. What is the positioning are you aiming at with GYM329? And right now, in phase I, what kind of data are you expecting out of the phase I at this point in time?
Mr. Wada, thank you for your question. This is Kusano. I will answer your question. First off, phase I, initiated by Roche, led by Roche. Let me briefly explain about this. Roche initiated the study, and the healthy, overweight people, the, PK, PD, and safety have been evaluated.
As you know, GYM329 with the combination with the drug, we are progressing the test, targeting that. And this time, we are utilizing the healthy, overweight adult people to evaluate the PK, PD, and safety. And based on the results of this study, we'd like to determine the endpoints in order for this to move on to phase II. With regard to the comparison with other drugs, as I mentioned before, GYM329, this is targeting the myostatin, the sweeping antibody. This is administered once every four weeks. And activin receptor. But there is another antibody for that. But as a result of non-clinical test, GYM329 has confirmed to have the efficacy to increase the muscles. Why we are seeing this result is that myostatin has similar proteins, and GDF11 is what it is called.
The structure is quite similar with this, especially the mature type and active type myostatin. Almost all of them, 90% of the structure is the same. So for the mature type and active type myostatin, and if the antibody targets that, a GDF11 is connected. The activin GDF antibody connects to that, and this will be neutralized with them. So GDF11 is captured. GDF11, after neutralize, if there is no problem, then that is okay. But with myostatin, the structure is similar. However, when it comes to increase the muscle, the mechanism is quite different, and it will have the negative mechanism, in my opinion. So the myostatin inhibitor, GYM329, GDF11 will not be inhibited, so we can expect a stronger efficacy. That is our hypothesis.
We are going to do further studies to validate the hypothesis, based on the results of the clinical trials. That's what we are currently thinking.
Thank you.
Thank you very much. With that, we're now approaching the end of the allocated time, so we'd like to conclude this Q&A session. With that, we'd like to close the earnings call for Chugai Pharmaceuticals for the second quarter of FY2024. For those questions which we weren't able to answer, we'd like to follow up individually. The last page of the presentation document shows the email address and phone numbers for your further questions. Thank you very much again for participating in this earnings call.