Thank you. This is Yanagi, CFO, is speaking about financial part. Please look at Page 2. Here you see the consolidated statement of income P and L for the Q1. Based on our partnership model, we have overcome the impact by COVID-nineteen.
We have exceeded plan and achieved increase in both revenue and profit. Top line revenue was JPY165,600,000,000, up 8% from a year earlier. There were impacts of COVID-nineteen, drug price revision in Japan and foreign exchange rates, which was partly offset by royalty for tazemetostat and core Growth driver, BEMBA, increased revenue by JPY 10,000,000,000, leading to 8% increase in revenue from a year earlier. LENVIMA profitability is very high. That is to say cost ratio is very low.
And together with the business development project, cost ratio has been reduced to 23.1%. Gross profit was JPY 127,300,000,000 up 15% from a year earlier with double digit growth. And this total expenses Increase was contained within the increase in the gross profit, therefore, leading to a significant increase in profit. R and D expenses were JPY 30,500,000,000 up 4% from a year earlier. BAN2401 and other Next Generation Alzheimer's Disease Therapies, we made proactive investment into this pipeline and R and D expenses account for 18.4% of the revenue, in line with global players.
And actual gross R and D expense, including partners' reimbursement was 47,200,000,000 yen accounting for 28.5 percent of sales. We have continued to be one of the most proactively investing global pharma In R and D activities, SG and A expenses were JPY 64,900,000,000 up 8% from a year earlier. And this accounts for 39.2 percent of revenue. This is the SG and A expense ratio. This 5,000,000,000 yen increase in SG and A expenses, considering the shared profits paid to Merck for LENVIMA by increased by 5,600,000,000 yen.
Considering this, we have made a positive and proactive expense digit. And considering the cost for preparation for launch of Atypical and for maximization of contribution to patients are considered and the extended expenses excluding these shared profit impact was less than 30% of sales. Therefore, sound P and L has been maintained. And last year, other income and expenses included JPY 4,400,000,000 As gains on transfer of Eisai shares last year, which we do not have this year, and operating profit was 32,100,000,000 yen Over a 20% increase year on year and OP margin was 19.4% of the sales and in line with the global standard. Bottom line similarly achieved double digit growth.
For your reference, The average ROE was 14.4% over the 3 months, exceeding last year's ROE. Equity spread was 4.4 percent from residual profit, value creation was significantly achieved. And if you look at the balance sheet items, net TER was minus 0.25. From the end of March, Net year has declined a little bit, but this is because of the 6 months dividend was paid based on the operation for 3 months. Excluding MGI acquisition, the record high capital expenditure of 56,000,000,000 yen annually will be made this year.
With these positive investments, cash is declining a little bit. However, we will maintain net cash of 170,000,000,000 yen and equity ratio is 65%. Therefore, based on optimal capital structure, we have a leeway in financial structure. Based upon this financial integrity, credit agency, R and I has upgraded our rating From A to AA- for the first time in 5 years, based upon the financial integrity, We are going to overcome the impact of liquidity and liquidity given the COVID-nineteen impacts and the CapEx 16% integer and JPY 160 per share, which has been increased for the first time in 10 years last year. We are assured that we would be able to maintain all these investment expenditures with this strong balance sheet.
On next page, you see this On this waterfall chart, breakdown the revenue migration is provided. Last year, revenue was 154,000,000,000 yen. Growth drivers of LENVIMA and other global brands increased revenue by 8,900,000,000 yen. There were impacts of drug price division in Japan and discontinuing of sales of Belviq in Americas in Asia, contracts for Humira was discontinued in Taiwan, but Given the royalty increase for tazemetostat, revenue increased to 11,600,000,000 yen year on year to reach The JPY5.6 billion core business, pharmaceutical business revenue was 99% year on year. And considering the JPY3.8 billion impact by ForEx, The Pharmaceutical core business revenue was 101% of last fiscal year and excluding the impact of royalty for Tazemetostat, we have achieved increase in revenue.
Next page, Page 4. Here is the waterfall chart representing breakdown of operating profit migration. JPY 25,800,000,000 was recorded for OP last year And global brands increased profit by 10,200,000,000 yen in parallel with movements in revenue. There were impacts in Japan by drug price revision and also cost for the launch of Daybigot was recorded in Americas. And in China, overachieving the plan, A 3.1% increase was recorded for China.
R and D expenses were increased by 1,100,000,000 yen Centering on the development of next generation AD treatment and profit was increased by 6,300,000,000 yen year on year to reach 32,100,000,000 yen. On the right hand side, the reference box, you can see the R and D expenditures. As I said earlier, Including the reimbursement from partners, the expenditure was continued to be the Expenditures stayed at high level of JPY 47,200,000,000 almost flat from last year. And by segment, Pharmaceutical Business Operating profit was up 3% from a year earlier and considering the minus 1,100,000,000 yen as the impact of foreign exchange rate on a CRO basis of the Change rate on a CRO basis will be increased by 5% and excluding the metastatic impact, We have achieved increasing profit in the core operations. We have achieved increasing profits and significantly exceeding the target.
And that is all I have for the financial section for the Q1.
This is Ivan Cheung from Neurology Business Group. Today, I'll provide an update on the important progress of our urology franchise. Let me start with Alzheimer's disease on Slide 5. The annual AAIC, Alzheimer's Association International Conference just wrapped up last Friday. The pace of progress in the Alzheimer's disease field is more promising than ever And the search is now very different from over 20 years ago when we launched ARROCEP.
We now understand that The underlying disease pathophysiology starts many years before the onset of symptoms. We now understand that this disease It's a continuum driven by changes in the central pathophysiology of A amyloid, t Tau And neurodegeneration, meaning neuronal cell death and synaptic loss and potentially I, immunological dysfunction caused by over activated microglia. And we now understand that we have the ability to measure the biomarkers that characterize these ATIN pathophysiology, Not only through imaging, but also through CSF and blood biomarkers. In the bottom table, you can see in the red font that just in the past couple of years, New biomarkers have rapidly emerged and new risk genes are being identified. At Eisai, as seen in the middle of the slide, We are very excited that we have completely transformed our Alzheimer's disease pipeline based on this state of the art understanding of the AD continuum with novel therapeutic candidates that precisely target each component of the entire ATI and spectrum.
Later on, I'll provide an update on our 3 most advanced candidates, aducanumab, undercore development of Algine, BAN2401 also undergo development with Algene and E2814, a novel anti tau antibody. With this comprehensive yet targeted portfolio, our goal here in Eisai is not only to delay the progression of Alzheimer's disease, But to one day stop the progression of Alzheimer's disease. Moving to Slide 6. One of the big news last week at AAIC was a realization that blood based diagnostics are probably more imminent than expected as new findings are being published continuously. With regard to A, amyloid, we have ample evidence that Not only a blood test is feasible to diagnose Alzheimer's disease, but also blood A beta 40 to 40 ratio May detect Alzheimer's disease earlier in AD continuum than amyloid PET.
With regard to T, tau, The big news last week was the publications around blood P tau T217, which not only Could diagnose Alzheimer's disease as seen on the left hand side graph, but also could differentiate between Alzheimer's disease specific tau pathology versus non AD Tau pathology as shown on the right hand side graph. At Eisai, we are working closely with Sysmex To co develop a blood A beta measurement using Sysmex Hisco system, which we believe holds tremendous potential to realize a low cost and quick turnaround test And allows for simultaneous measurements of multiple biomarkers down the road, such as how. We are now incorporating clinical data From our MISSION AD studies to progress this blood ablation measurement towards regulatory submission, starting with Japan. Our logical here at eisido is to one day develop a blood panel test with multiple biomarkers so that we can enable early and individualized diagnosis across the AD continuum. Moving to Slide 7, all these scientific advances are now more crucial than ever because Alzheimer's disease It's an epidemic.
There are 50,000,000 people in the world living with dementia today and this number will only explode To over 80,000,000 people in 10 years, the annual cost of dementia globally is estimated to be over US1 $1,000,000,000,000 today And this number will double in 10 years. On the right hand side of the slide, you can see that if we can delay the progression of Alzheimer's disease by 5 years, The prevalence curve of Alzheimer's disease will almost flatten over the next 30 years and significant cost savings for the healthcare system could be realized. It is indeed more urgent than ever that we must bring a disease modifying therapy to patients around the world. Moving to Slide 8, we are very excited that our partner, Biogen, completed the BLA submission to the U. S.
FDA for the approval of aducanumab last month, which marks an important milestone of potentially bringing the first therapy to market To reduce a devastating clinical decline and meaningfully change the course of Alzheimer's disease. The submission followed ongoing collaboration with FDA And the data package includes positive results from the Phase 3 IMerge study, supporting data from the Phase 3 ENGAGE study And also positive results from the Phase 1b PRIME study. The FDA has up to 60 days from the submission date to decide whether to accept the application for review. And if accepted, we expect that the FDA will also inform us whether the BLA has been granted priority review designation. In Europe, Biogen held formal meetings with EMA and is now preparing for the MAA filing.
In Japan, Baozheng initiated interactions with the PMDA and is now preparing for a formal consultation meeting with the PMDA with a goal of submitting the JMDA application. Last but not least, we are continuing to strengthen our partnership with Biogen for the launch readiness of aducanumab, Increasing our collective engagement with medical experts, payers and various stakeholders in the Alzheimer's disease ecosystem. Together with our partner Biogen, we remain optimistic and are very excited about the prospect of bringing aducanumab to market. Moving to Slide 9, let me provide an update of BAN2401, which is undergoing a pivotal Phase 3 study, CLARITY AD in early Alzheimer's DC subjects. We are glad to report that we have successfully implemented a number of initiatives including home infusions, telemedicine and other digital transformation approaches to mitigate the risk caused by the COVID-nineteen pandemic, With our foremost priority being protecting the safety of the patients and the data integrity of this trial.
We're also glad to report that this study has been initiated in China since June. All these tremendous efforts allow us to stay on track to complete patient enrollment for this study this year and we eagerly look forward to the final readout of the results in the Q2 of FY 2022. Last week at AAIC, we also reported preliminary data from the open label extension OLE phase of Study 2 Area E incidence rates in the OLE phase so far are similar to the rates observed in the core study at below 10%. In addition, the OLE phase allows us to dose subjects who received placebo in the core study with a 10 milligram biweekly dose And take test scans of these subjects as early as 3 months. We are reassured by seeing meaningful amyloid reduction as early as the 3 month Time point upon treatment initiation as it underscores the importance of the dosing regimen of 10 milligram biweekly with no titration, Which is exactly the dosing regimen being deployed in a CLARITY AD Phase 3 study.
Next slide, moving to Slide 10. Our plan for BAN2401 is not limited to early Alzheimer's disease. We believe BAN2401 has potential to be used much earlier in the AD continuum. We are very excited about the initiation of the ahead 3, 4, 5 clinical study in In collaboration with ACPC last month, this clinical study plans to enroll 1400 participants with preclinical AD Into 2 double blind trials, the A3 trial, as you see on the left hand side, will enroll tentatively normal individuals With intermediate level of amyloid in their brains, I. E, they are in between amyloid negative and amyloid positive, the A45 trial, as you can see on the right hand side, We'll enroll cognitively normal individuals with elevated level of amyloid in their brains, I.
E. They are amyloid positive. The endpoints in the ACE3 trial are completely biomarker driven with amyloid PET being a primary endpoint, tau PET being a secondary endpoint and exploratory endpoints being a biomarker panel of CS7 blood biomarkers. The 845 trial We'll have a cognitive primary endpoint PAC-five, secondary endpoints with amyloid PET and tau PET and exploratory endpoints with A biomarker panel just like the A3 trial. This clinical study has been initiated in the U.
S. And will be expanding to many Countries such as Japan and Europe. We look forward to ramping up subject enrollment into AHEAD-three forty five in collaboration with ACTC As we're optimistic that BAN2401 made the late disease progression across a wide spectrum in the AD continuum from preclinical AD to early AD. Moving to Slide 11, let me now provide an update of our novel anti tau antibody, E2814. It's widely known that neurofibrillary tangles is one of the pathophysiological hallmarks of Alzheimer's disease.
Specifically in Alzheimer's disease, it is believed that the propagation of tau Pathology is mediated by tau species containing the microtubule binding region fragments, MTBR fragments, Since an increased amount of MTBR tau is found in the brains of CSF of Alzheimer's disease patients, E2814 is uniquely designed to target MTBR tau and capture extracellular MTBR tau fragments To prevent the accumulation and spread of tau seeds specifically in Alzheimer's disease patients. E2814 is progressing on track in a Phase 1 clinical study We are diligently working on accelerating the clinical development of E-twenty 14 targeting the AD continuum. Next slide on Slide 12, our vision at Eisai is not just medical innovations. Our ultimate goal is to become a medical societal innovator. We are very excited about last week's launch of the ESET brain performance app in Japan in collaboration with DNA.
We firmly believe that the ESID app is a foundational element of our dementia ecosystem platform, ESID. We envision EZ to be a bridge between the daily living domain as depicted on the left hand side, which aims to cultivate healthy habits to maintain brain performance And the medical domain is depicted on the right hand side, which aims to enable efficient early diagnosis and optimal treatment. The EZIP app Powered by AI algorithm allows individuals to record and visualize their brain and body health data and receive useful individualized information To improve their brain performance during their daily living, later this quarter, we plan to equip the E SIT app with a link to our Brain Performance Self Check tool, NONO. And then we plan to equip the EphysD app with connection to medical data in the medical domain such as Conigram that we're developing with Cogstate and various imaging and biomarker data in order to improve each individual patient's journey From diagnosis to treatment to monitoring. We look forward to creating new benefits to the society at large through the E*SID dementia ecosystem platform, Enabling wide adoption of brain performance checkup, lifestyle improvements, early detection and diagnosis in AD continuum and ultimately Eliminating the chasms associated with dementia in our society.
Moving to Slide 13, Let me now switch gears and provide an update on Dayvego, our newly launched treatment for insomnia. On June 1, we launched Dayvego in the U. S. And on July 6, we launched DaVigo in Japan. With the increase in fleet problems due to life changes caused by the COVID-nineteen pandemic, It's crucial to offer a new treatment option like Dayvego to patients and physicians.
With our enhanced digital capabilities, Even under the challenging COVID-nineteen pandemic situation, DayVigo is off to a promising start both in the U. S. And Japan. In the U. S, Our MRs, including the digital MR team, are finding themselves in high quality engagements with healthcare professionals about DaVigo.
And in just the 1st month, we secured DaVigo's placement into the national preferred formulary of the largest PBM in the country, Express Scripts, which covers 25,000,000 lives with 50% having no utilization management. In Japan, likely due to COVID-nineteen pandemic situation, The insomnia treatment market is expanding and the prescription volume overall from psychiatry departments is also expanding. Since launch, Daewi has been ranked number 1 in Japan in terms of the total volume of details to healthcare professionals, driven by our omni channel presence including a newly established digital MR team and web based consultation system. In addition, since launch, over 30,000 facilities have already purchased DaVi Go in Japan, mainly from psychiatry departments. Beyond the U.
S. And Japan, we are actively working on regulatory submissions to expand the availability of DVEGO worldwide. In addition, last week At AAIC, we presented DaVigo's Alzheimer's disease S word irregular sleep wake rhythm disorder data from the Phase 2 open label extension phase, Showing that AVE goes well tolerated among these Alzheimer's disease patients with long term treatment and the improvement based On the caregiver evaluated SDI sleep disorder inventory is maintained long term. We are now continuing to work on the design for the Phase 3 program for Dave Viggo and Alzheimer's disease patients suffering from SORT. Moving to Slide 14, this is my last slide.
Here you can see the robust mid to late stage pipeline from the neurology business group. For VICOMPA, We launched a fine granular formulation last month in Japan and we are continuing to make steady progress in various lifecycle management projects. Viacombe, together with DaVigo, aducanumab, BAN2401 and E21814, which I have updated earlier, Represent our 5 key growth drivers over the near to mid term. In addition, we have E2027, a PDA9 inhibitor in a Phase twothree study in dementia 3 bodies. Moreover, in our immunology portfolio, iritorum, A TLR4 antagonist was recently selected as the 1st immune modulation therapy to enter the remap COVID platform trial to address cytokine storm in hospitalized COVID-nineteen patients, E6742, a TLR7eight inhibitor Was recently selected by the Aemet Cycle grant program for clinical development in SLE.
In summary, We have a broad and deep pipeline with multiple assets of significant paradigm changing potential. Thank you very much for your time today. Let me now turn the presentation over to Mr. Yi Ke.
On oncology business, I would like to present. Please turn to Page 15. First, in oncology area, we have a pipeline concept, which I would like to explain first. At the top of the slide, It says cancer continuum discovers entire process from precancer stage to various advancement stages of the cancer. In terms of molecular cytology, there are various events in the background.
Lineage dependency driver, gene mutation, clone proliferations or all events related to cell proliferation, while microenvironment modulation and treatment resistance related to tumor malignancy. We are working to establish LENVIMA and LENVIMA KEYTRUDA combination as our backbone therapy. These target microenvironment and immunology. What about the earlier stage projects in our pipeline? E7438 and 2 others are shown in orange color.
These three themes target specific cell lines or lineage and driver gene mutation. With relatively small sample size clinical trial, it is possible to pursue development with higher probability of success. Below that is H3B6545. This aims to establish new treatment paradigm to overcome breast cancer hormone therapy resistance. E7386, which is CBT beta catenin inhibitor targets to enhance actions of LENVIMA and KEYTRUDA and to overcome resistance to treatment.
E1790, FGF is a driver gene and also involved in cancer microenvironment. E7389 and 2 items below are based on Halaven platform and these are drug discovery projects leveraging unique actions on microenvironment. As shown here, at various points in cancer continuum, The aim is to suppress cancer and to develop with high probability for success. Liquid Biopsy is mentioned on the slide With a blood sample to analyze our gene to trace change in cancer and to select appropriate treatment And to utilize that information in drug discovery, we will grow only
in importance. Liquid biopsy project is
pursued by Artskuba Research Institute. Please turn to Page 16. I would now like to report on the performance of LENVIMA from the Q1. First quarter revenue was JPY 34,700,000,000 from LENVIMA, increase of 40%. Americas account for more than 60% of total revenue of LENVIMA.
The region grew 56 percent. In HCC, we enjoyed the top share. And in the United States, endometrial cancer was approved, And this also helped achieve growth. In China, new scheme was introduced in patient assistance program, thereby increasing access for patients. In Japan, HCC, BC, LCB intermediate stage Patients not indicated for taste is now recommended to use LENVIMA as first treatment option.
Towards achieving JPY 158,000,000,000 annual revenue target, we were able to make a good start. Page 17 shows RCC treated with our combination with KEYTRUDA study 111 results were presented at ASCO for RCC Phase 2 study with LENVIMA KEYTRUDA combination. These patients are patients who progressed after receiving Anti PD-onePD L1 antibody treatment as shown on the left, majority of the patients have received the third line or beyond treatment. And in many cases, prior treatment for nivolumabib combination or PD-one antibody and anti Angiogenic agent combination. And despite that, as shown on the right, ORR was above 50% and duration of response was 1 year.
We were able to obtain favorable results. For your information, on the left, First line results from other drugs are shown. Study 111 includes patients who have refractory who had received multiple treatments including immunology treatment. So this is not an apple to apple comparison in terms of patient background, but we were able to achieve similar results. So we have high expectations for Phase 3 results On first line, in Phase III results top line Phase III top line results are expected before the end of the fiscal year And including 111 study data, we are going to take into consideration the possibility of submission.
Next is Page 18. HCC first line study 116 was also presented at ASCO. This is vima KEYTRUDA combination And this study was conducted in parallel with Phase 3 LEAP-two study. At Academic conferences, we have presented on the interim analysis of 116 study. Since results were favorable, we were also able to Recruit patients faster in LEAP-two study than originally scheduled.
And since final results from Study 116 was favorable, We tried to file for accelerated approval in the United States. We have received complete response letter from FDA, which pointed out the importance of showing superiority over existing therapy to meet this request. We reached a conclusion that Results from LEAP-two study, which shows which is a comparison with the existing LENVIMA treatment is necessary and have reached agreement with FDA. LPI of LEAP-two was completed in April. And from that point in time, we expect results from resulting about 1 year, and we would like to aim for early submission.
And LENVIMA monotherapy contribution is expanding in NCC guideline in the United States, it's guideline 1 and there is Also recommendation in BCLCB guideline and because of COVID-nineteen pandemic, there is also guideline to recommend Oral anticancer drug, which are all supportive of our drug. Next is Page 19. This is about Nelvima monotherapy. In Japan, we have filed for thymus carcinoma in Japan. The thymus carcinoma is a rare disease And the second line treatment does not have a standard of care treatment.
At National Cancer Center and at 7 other sites, Investigator initiated studies were conducted and favorable results were obtained as shown at the bottom of the chart. After consultation with the authority, we were able to receive orphan designation. Therefore, upon approval, we expect a reexamination period of 10 years. In high unmet needs indication, we believe that LENVIMA can make further contribution. Next is Slide 20, Progress in pipeline.
As shown on the left side, We have filed in Japan for tazemetostat for EZH2 gene mutation positive follicular lymphoma. EZH2 has been our focus as an epigenetic drug discovery target. We have been engaged in joint research with U. S. Company, Epizyme Inc.
Lineage dependency and driver gene mutation are the target or concept for this drug discovery. With a relatively small scale Phase 2 study, we filed a force of this approval. And We aim to become 1st in class and we have expectation that this will be our first ever precision medicine. On the left, E7386 is shown. This is also 1st in class.
Beta capelin is 1 of cancer big 4, which are 4 cancer causing proteins that are promising targets. In terms of microenvironment, EvoN has immune checkpoint inhibitor action and in terms of treatment resistance, LENVIMA resistant tumor vessels are inhibited In monotherapy and in combination with lenvimab, Phase 1 studies are conducted in parallel. Colorectal cancer and HCC are the targets. In both of the studies, initial antitumor activity was confirmed. High precision development and synergy between pipelines are pursued to offer a new treatment paradigm.
Next, Slide 21, please. This is development of a combination between LENVIMA and KEYTRUDA. After reaching alliance globally for LENVIMA with Merck in March 2018, we have agreed to conduct trials and all of them have been started so far. Those shown in green in the slide, these five studies I had completed patient enrollment, especially at the top RCC and the metro cancer HCC In Phase 1 and 2, as I have explained earlier, and we have been able to obtain Favorable results and to obtain early results from Phase 3, we are making preparations. And on the right bottom, case combination with for HCC, this was not included in the original contract, But after consultation with Merck, this was started about new programs and additional indications, Development teams of the 2 companies are actively considering to maximize the value of LENVIMA.
The collaboration between the two companies are making good progress. That concludes the presentation on oncology business. Now this is Yanagi, CFO, speaking once again. Full year outlook and overall summary of what I would like to offer now. Please turn to summary page on Page 22, consolidated financial forecast for fiscal 2020.
After flash report was announced in May, there had been no changes. Top line for the year It's 719,000,000,000 yen. This is 3% increase from the previous year, especially growth driver is LENVIMA And it will achieve above JPY 150,000,000,000 together with our milestone contribution to the top line is Around 220,000,000,000 yen including milestone contribution. Because of this LENVIMA contribution, cost of goods sold is decreased And gross profit is JPY 547,500,000,000, 5% increase. And from there, as the intention of the management, maximization of LENVIMA and next generation Alzheimer The disease patient preparation, we will be making advanced investments, R and D expenses, SG and A expenses We'll be growing by double digit.
Strategically, because of these strategic intentions, operating profit will be JPY 88,000,000,000. Again, R and D expenses are intellectual capital and labor cost is Human Capital Investment and therefore, these expenses can be considered investments. And therefore, before R and D expense, SG and A expense, operating profit, it will be above KRW360 1,000,000,000, a record high from the previous year in comparison to the previous year. Despite that, we still enjoy high profitability and Annual return on equity is 9.7%, equity spread is close to 2%. We would like to maintain our position as a value creator And shareholder equity is also at a record high level.
DOA is 6.7%. In 1 fiscal year, rather than dividend payout ratio that may be subject to fluctuation, We focus more on medium to long term dividend payout ratio and that is why we use DOE as a KPI. And from our financial standpoint, This is still a number with headroom and we are confident to achieve these numbers. Next Page 23. This is my last slide.
Overall summary is presented on this page. In this Q1, we were impacted by COVID-nineteen and drug price revision, but we were able to overcome these impacts and we're able to achieve increase in both revenue and profit. And at the same time, as Ivan Chan and Iike explained, in neurology business and in oncology business in core projects, we were able to make Good progress. As for annual projected performance for fiscal 2020, we aim to achieve Planned increase in revenue and gross margin position as a core. And moreover, based upon financial soundness, We would like to implement proactive investment to contribute to patients in the future and maximize the corporate value.
And we will continue to create value in the medium to long term. And therefore, we appreciate if our shareholders and investors can support Eisai from medium to long term perspective. With that, we would like to conclude the presentation on Q1 results. We
would like to take questions from participants who are joining in this conference from telephone system. You state, please press 1. And I am going to name you 1 by 1. We are registering those people who wish to ask questions. There was first person who accessed from Citigroup Securities.
Mr. Yamaguchi from Citigroup Global Markets, Japan, please have the floor. Can you hear? Yes. Can you hear me?
Yes. Thank you. My name is Yamaguchi. I'm from Citi. I have two questions.
First question, as CFO explained, the performance has been very strong. I understand that. But when it comes to breakdown, I think out licensing is Very significant. In Q1, I know that the performance forecast It's not disclosed, but it is written that you are expecting better than planned. So how better than the performance target.
And then in the medium term, do you think that there will be further incremental growth in performance? CFO Yanagi is going to respond. Yes. Q1 business plan itself It's not going to be disclosed every 3 months. So it is very hard to understand.
But when I said that we achieved the plan, at the outset, what is most important is gross profit. We could achieve and exceeded the plan for gross profit because of the product mix improvement Given the LENVIMA and tazemetostat royalty and over 10,000,000,000 yen in royalty for tazemetostat, it was slated into 1st for the Q4, but this was incurred in the Q1. But excluding the impact by dasemetostat, we could achieve the target. Furthermore, in R and D expenditures, on the contrary, the progress was slower than expected. And because of this situation, people couldn't visit the hospitals.
Early stage Enrollment in clinical trials in early stage have been delayed. In particular, SD and A Has been progressed in line with the business plan. So all in all, gross profit It was much better than planned and R and D expenditure has been delayed and SG and A expenses were better than plan in progress and in total less than 10,000,000,000 yen in the terms of increase of the expenses. So the gross profit increased and expenses were contained. Therefore, the profit aligned was exceeding the plan.
And for all those profit lines over exceeded the plan. And I think that there is much focus on tazemetostat royalty. Of course, it was beyond our plan. But even without this impact, we could achieve the target. As a matter of fact, JPY 11,500,000,000 is included on Page 4 in Bottom right box, and the 4,400,000,000 yen was recorded last year, again as a gain on transfer of share of mid Eisai and 5,600,000,000 yen for the increase of shared profit and also 1,100,000,000 yen In foreign exchange and in all, JPY12,200,000,000 was the impact and therefore by segment of Pharmaceutical business total should be referred to.
And you can see that there was the profit was increased by 3% from a year earlier. So this is the supplementary explanation for the overachievement of the plan. 2nd question is about aducanumab. Biogen is leading this program rather than Eisai. I understand that, but priority review is requested.
Biogen Applied for priority review and coupon, I don't know whether it is called a coupon, but Biogen had something like coupon for priority review That is included, but we do you think that there is a higher probability of obtaining priority review at Eisai? Thank you for your question. I would like to call upon Neurology Business Group President, Mr. Chan to respond.
Thank you very much for the question. As you may know, BaoGen has not commented on their plans For using their priority review voucher, specifically for and with regard to aducanumab, Please do note that aducanumab does have fast track status. And as both our G and A, if I have announced, We have requested priority review to the FDA. And as we hear back from the On the potential acceptance of filing, we will hear back about the priority review. I hope you understand our position.
Thank you.
Thank you very much. That's all. Next, we have
Mr. Wakao, can you hear me? Yes. This is Wakao from Mitsubishi speaking. Yes, we can hear you.
Thank you for taking my question. First question is a follow-up question To earlier discussion regarding SG and A, Q1 was according to the plan that was what you have explained. In the beginning of the year, I felt that some sizable amount was planned for SG and A cost. Aducanumab preparation expenses are included, I believe. So Is it correct to understand that some of the expenses will be spent in the second half?
So the pace of spending SG and A will Pickup in the second half. That is my first question. Mr. Yanagi, CFO, will respond. Regarding SG and A, This is according to the budget or slightly higher than the budget.
It's not underachieving and we are making good investment in a forward looking fashion related to LENVIMA with a mark we have profit sharing and this has increased by 5,600,000,000 yen And that is also having an effect. About your question, aducanumab for next generation Alzheimer drug and preparation to make a patient contribution will pick up in the second half And SG and A expense ratio in the Q1 was 39%, but 41% is the annualized forecast Vis a vis the sales and sales and milestone included, there will be accelerated pace in the second half. Current projection is that from the previous year, annually, SG and A will grow 15%, so that we can make future patient contribution and to maximize value over medium to long term. And so SG and A will increase in positive manner. That is our expectation.
I have a second question. This is about LENVIMA, EnkiTruda combination. You have received complete response letter from FDA. And with LEAP-two study result, I believe you will file At this timing, approval was not given. And What is the impact on milestone for LENVIMA in this fiscal year?
And what is the impact on the revenue? I was under the impression that you do not expect a large impact from the way you have presented. Oncology Business Group President, Mr. Eikeyi, will respond. Thank you for your question.
Regarding revenue this And the profit of LENVIMO for this fiscal year, we expect no impact. Phase III LEAP-two study results We're originally to be used for submission, but 116 study results were favorable and we took on the challenge of trying to apply without results. But regarding Revlima performance with monotherapy and endometrial cancer in the United States are growing and therefore, we Plan to achieve the budget. Thank you. And finally about aducanumab, I also have a short question.
According to Biogen conference call, there was a question regarding advisory committee and Biogen Responded that this is a drug of new mechanism of action. So there and they responded that There may be a revision regarding advisory committee. If you have any view, could you share your view with us? Mr. Chan will respond.
Thank you very much for the question. We are in agreement with Baojun that an advisory committee will not be unusual for The first potential disease modifying therapy for Alzheimer's disease and we await the FDA to make the determination on the potential for an advisory committee meeting. Thank you.
From Nomura Securities, Mr. Kotani from Nomura Securities. Can you hear me? Please ask the floor. This is Kotani of Nomura Securities speaking.
I have two questions about oncology. First one is, I think as has been explained, peak sales of LENVIMA. Could you please give us your take on this? In March 2018, when you signed the alliance with Merck and 500,000,000,000 yen was estimated. But starting from FY 'twenty one onward, indication was estimated to be expanded.
So after the end of the Phase 3 studies And what is the contribution for expansion of business? Breakthrough therapy will be just a mere factor for accelerating the development. RCC and HCC were not successful. That means that the acceleration could not be achieved. So therefore, it will not affect the peak sales projection.
But in ROC3 area, Opdivo, Davencio and KEYTRUDA combination therapies are available and At INCO-one study in HCC, I think peak sales We'll be affected in some way with emerging competitors' therapies getting available. Could you please give us your take? From Onpolo Kologi Business Group President, Mr. Iki is going to respond. Thank you very much for your Question, Mr.
Kotani. In March 2018, when we performed the strategic alliance with Merck, In 2025, peak sales was expected to exceed 500,000,000,000 yen at peak. That assumption, as you pointed out, Mr. Kotani, for example, accelerated approval in HCC was not factored in For Phase 3, we'll beat assumption for getting approval. So the 500,000,000,000 yen as The long term target has remained unchanged and there are no changes to the assumption supporting for that.
And in RCC, in particular, I know that it is a very competitive franchise and that was already factored in since 2 or 3 years ago. Therefore, in that sense, there is no big change made to their projections in medium term to long term. As you can see on Page 21, in 2018, when the alliance was started, The combination with space for HCC, which was not stipulated at the time of Alliance formation and that there are other indications, which are proactively considered between the 2 companies, which are not listed here on this page. And once we start embarking on these potential projects, we'd like to give you date. Thank you for your question.
Thank you. My second question is kind of a maniac question. Maybe that should be addressed by Doctor. Owa. And based upon the announcement on the results for the first quarter the 2nd quarter by the European and American Companies, and this is the 3rd And Pfizer, number 3 study, HR positive CDK inhibitor and the 3rd will be combined
And OS
was extended and this was has become available for the 3rd line and therefore, 3rd is getting up focus and intramuscular injection is used. So probably tablets will be appreciated. And on the Wanhai, And there is no ADR of the brachycardia and particularly and AstraZeneca brachycardia It should have been in place otherwise without brachycardia, you would have a concern. That is what they said. So I'd like to ask for your HB6545.
And I think the ADL may be very similar in brachycardia. And how do you think about The QT extension and Phase III studies have been studied by competitors. AVAROS SickViv combination is the only available option and with other competitors launching their therapies. And do you think that you can continue to be competitive enough? Oncology Science Specialist Doctor.
Owa is going to respond. Thank you very much, Mr. Kotani. Regarding brachycardia, I think you asked a question about brachycardia. Our concept is this is a kind of a class effect.
And As you may know, Roche compound, according to ASCO presentation, there was a presentation about The brachycardia and cardiovascular experts were retained. And if it is asymptomatic grade 1, grade 2 brachycardia and then for hormone line, The last line or even earlier line, it will be acceptable clinically. And we know that there are many investigators who accept that ADR. But if it comes to QT extension or any major impacts on the cardiovascular system, so It will be big problem. So those selection will be very important.
H3B, our H3B feature is as you know, eSR1 gene mutation drug therapy resistance to hormone therapy It's related to this gene mutation. I believe that there is a big differentiation factor. Different drugs I have different mechanisms or structures and ESR1 gene mutation, polyclonal, therefore, there are various mutations. So what are the features? And biomarker strategies will be very important for differentiating us.
And we are very much confident in that. So we are going to compete, fight and win against them. And parabosiclib combination, we have already started our project. Of course, although there is a delay, but we would like to utilize our technology in biomarker, and we would like to compete and win in the end. If I may supplement, UCED biomarker ASCO 2019, HCV6545, Sysmex liquid monitoring.
And I think that you are utilizing this technology to differentiate you, liquid technology. And I think that we are yet to disclose with whom we are going to partner. Likit biopsy will be utilized to CTD and A, we've utilized for detecting the mutations. That is what we are considering as first option. Thank you very much.
We have from Morgan Stanley MUFG Securities, Mr. Muraoka. Morgan Stanley MUFG Securities, Mr. Muraoka, can you hear me? Yes.
This is Muraoka speaking. Thank you for taking my questions. About Royalty Pharma, to recap, please Allow me to ask this question. Earlier, you've mentioned that instead of the Q3 as originally planned, it is included in the first Quarter, yen 102,000,000,000 is included. Let me confirm that.
It will not be yen102,000,000,000 per year. And about the timing of incurring these expenses, maybe I'm mistaken, but last year in November, Royalty Pharma after rights were transferred, looking at the press release, the transfer was In November 2019 and upfront of yen and up to US220 million dollars Maximum as an upside was mentioned in the press release. But in April to June quarter, why was there a Mr. Yanagi, CFO speaking about Clarity Pharma agreement. Agreement was reached in 2019 at the time of the agreement, 110,000,000 yen and then next milestone Another $110,000,000 and that was 2 revenues 2 streams of revenues that we booked In fiscal 2019, in terms of cash, not entire amount had already been received, but There were 210,000,000 receipts from Clarity Pharma in fiscal 2019, But there is another 110,000,000 yen milestone receipt for different indication in fiscal 2020.
So Royalty Pharma in terms of our relations with Royalty Pharma, there are 3 milestones, last of which is included in this quarter. In waterfall chart, 11,500,000,000 yen is one of the amounts indicated and the cash receipt It's not taking place yet. This is over a longer term. It is discounted back to present value And it's about $108,000,000 and it is translated into Japanese yen and therefore it is not exactly the same as 110,000,000 U. S.
Dollars and the amount is slightly different because of a present value discount. So it is rather complex, but To rehash, in fiscal 'nineteen, there were 210,000,000 milestone payment and 1 110,000,000 milestone in fiscal 2020. Thank you very much. One more question. Regarding China business, I believe in January to March quarter, there was Today, I forgot the deterioration of the business, but it seems that you have achieved dramatic fee shape recovery in China business.
In April to June quarter, do you believe that there was a bottom up of the revenue growth in China And it is now once again showing a momentum of achieving double digit growth. Would that be a fair characterization? Thank you for your question. Okada, responsible for China business, will respond. This is Okada speaking.
Thank you for your question. As you commented regarding China, Immediately after the outbreak of COVID-nineteen throughout the nation, there was a lockdown in China And especially for chronic diseases, there was a huge drop in demand for drugs. After the emergency declaration was lifted, market has recovered quickly and Our product also have a internal recovery. We are using digital technology as well. In comparison to pre COVID-nineteen situation, we are performing even better than pre COVID-nineteen situation, and we would like to make sure to maintain this momentum.
Thank you for your question. Thank you. One more question. LENVIMA April to June revenue was very strong, which is a very good news. But the Is there increase in inventory at the end of the supply channel?
Is this It's purely due to stronger demand. I would like to once again respond. This is Okamoto speaking. Prescriptions are growing in volume. It is not due to increase in inventory.
So Regarding BEMVIMA, this is not limited to China, but globally, is the situation the same? This is Iike speaking. Yes, the situation is the same globally. Month by month, May was down, but in June, overall, there was a recovery. This is not as a result of increase in inventory.
Thank you very much.
Although we have passed the time to end, but we have the last person from Goldman Sachs Securities, Mr. Weta, is going to be the last person to ask. Mr. Weta from Goldman Sachs Securities. I have only one question because of the time constraint.
On Page 6, blood test for diagnosis, I think you touched upon amyloid data. And in order for wider use of this, I think it will be very important. So when do you think that this will be realized in actual clinical practice so that this test can be used for amyloid beta. And for using this drug, an IVR E monitoring will be necessary. How would you Do this, like in clinical trial, do you need to have MRI for ARIA E monitoring?
Could you please elaborate on these? Thank you very much for your question. For your question, I would like to invite from Neurology Business Group, Mr. Kimura, who is in charge of science in the group. From Neurology Business Group, Kimura is responding to your question regarding blood biomarkers at AAIC Health last week.
The progress has been published and reported a lot. And now we are seeing a lot of publication of data from various sources. Of course, one good benefit of the blast biomarker, A beta 40 to The ratio is written here, but at the same time, other biomarkers like p Tau217 can be measured at the same time. And although we didn't touch upon this time, neuro filament test life chain can be monitored as well. So various factors can be measured at the same time.
And at submission or when do we expect that to be usable? Sysmex And other companies are collaborating with us, and we are talking with them so that we can find a way to introduce these the tests into the market as soon as possible on our side and also we are discussing with the regulatory authorities. Regarding the ARIA e monitoring, what is your take on this? Sorry, could you please repeat your question because it was harder to hear? ARIA E monitoring, Usually in clinical trials, you are using MRI and in real world clinical clinics, and until you needed to use MRI for But are there any other methods for monitoring ARIA E?
Kimura is responding to your question again. ARIA E, MRI is going to be the standard monitoring method for ARIA E. Having said that, we would like to find a way which will be more friendly to patients. We are exploring other ways, but now still MRI is still the standard method for monitoring ARIA Thank you. Thank you.
Understood. Yes, that's all I have. Thank you very much. Now it is time to conclude. We would like to end today's financial results presentation session.
Thank you very much for taking time out of your business schedule to