It is now time. We would like to now begin the briefing session on the financial results and business update of Eisai Company Limited. Today, we will be conducting the briefing session in hybrid format, including in-person attendance and online live streaming. For those of you who are attending in person, we have distributed consolidated financial report, reference data, and financial results presentation. If you are attending online, please refer to these materials on our website. Let me now introduce the speakers today. Mr. Haruo Naito, Representative Corporate Officer and CEO. Mr. Takuya Oyama, Vice President, CFO, and Chief IR Officer. First, Mr. Oyama, CFO, will present the financial results, after which Mr. Naito, CEO, will report on the overall business. Mr. Oyama, CFO, please.
Thank you very much for taking time out of your busy schedule to participate in this earnings call. Let me first share with you the financial highlights for fiscal year 2025. Next page. Revenue for fiscal year 2025 reached JPY 825.4 billion, up 4.6% year-on-year. The pharmaceutical business, which is our organic business, delivered a strong growth, driving consolidated revenue to a record high.
Operating profit was JPY 44.1 billion, down 18.8% year-on-year. Although there was a significant increase in the contribution of the pharmaceutical business to operating profit, OP declined due to factors such as decisions to forgo product out-licensing or divestiture, and the recognition of expenses related to structural reforms in Europe. For fiscal year 2026, we are projecting an increased revenue and a profit, with revenue of JPY 883.5 billion and operating profit of JPY 70 billion.
Regarding investments for growth, we have made two product in-licensing investments to support further growth. Furthermore, we plan to diversify our funding sources for future investments, including issuance of corporate bonds. Next page, please. This page provides details about our consolidated statement of income for fiscal year 2025. Revenue from the pharmaceutical business contributed significantly to the record high consolidated revenue of JPY 825.4 billion. Cost of sales was JPY 191.2 billion, and the cost of sales to revenue ratio was 23.2%, up 1.8 points from the previous year. This increase was due to changes in the product mix under the absence of out-licensing and divestitures that did not involve the cost of sales in the previous year, but it was largely controlled within the planned range.
As a result, gross profit was JPY 634.2 billion, a 2.2% increase year-on-year. R&D expenses decreased by 7.6% from a year earlier to JPY 158.7 billion as the cost for clinical trials for LEQEMBI have passed their peak. SG&A expenses totaled JPY 435.3 billion, up 6.7% year-on-year. This increase was due to factors such as proactive investment in LEQEMBI and the recognition of expenses related to structural reforms in Europe. As a result, operating profit was JPY 44.1 billion, down 18.8% from a year earlier, and the profit for the year was JPY 38.6 billion, down 17% year-on-year, both showing a decline in profits.
As I will explain in a later slide, we are now disclosing core operating profit. Core operating profit has expanded significantly due to the contribution of our organic business to operating profit. Next page. This page shows the revenue increase or decrease factors. As shown by the light blue bar, second from the left, our main product, 3 L's, LENVIMA, DAYVIGO, and LEQEMBI, grew by JPY 68.3 billion from the previous year, absorbing a JPY 6.6 billion decrease in revenue due to factors such as HALAVEN's LOE and others, resulting in a significant expansion of revenue in our pharmaceutical business. In other businesses, revenue decreased by JPY 25.8 billion due to the absence of the upfront payment and others related to the transfer of rights for Pariet in China, which took place in fiscal 2024.
As a result, revenue reached a record high of JPY 825.4 billion, an increase of JPY 36 billion year-on-year. Next page, please. This page shows the breakdown of operating profit transition. Due to strategic decisions to forgo product out-licensing or divestitures, as well as inventory valuation losses resulting from the discontinuation of Tazverik sales, both of which partially offset the effect of the growth of 3L products, gross profit increased by no more than JPY 13.6 billion. R&D expenses decreased by JPY 13 billion due to the fact that LEQEMBI clinical study expenses have peaked and are now declining, as well as the cost optimization resulting from structural reforms in the U.S. implemented in fiscal year 2024.
SG&A expenses increased by JPY 27.3 billion due to a proactive investment in LEQEMBI and one-time expenses related to structural reforms, mainly in Europe. Other income resulted in a decrease of JPY 9.5 billion, mainly due to the absence of temporary profit following the end of a global strategy collaboration with BMS, which was recorded in fiscal year 2024. As a result, operating profit amounted to JPY 44.1 billion. In the third quarter of fiscal year 2025, we reported operating profit of JPY 54.5 billion. At the time, we had anticipated a profit for the fourth quarter, expecting that income from product out-licensing or divestiture would offset the one-time expenses related to structural reforms in Europe.
However, following the third quarter earnings call, we decided to forgo product out-licensing and divestitures in light of changes in the domestic and international business environment. Additional restructuring costs, primarily in Europe, exceeded expectations, and we incurred an inventory valuation losses following the unexpected discontinuation of Tazverik sales. Consequently, OP for the fourth quarter resulted in a loss of JPY 10.3 billion. As will be explained in the later slide, core operating profit for fiscal year 2025, excluding temporary income and expense items, was JPY 50.1 billion, more than doubling compared to the previous year. In the fourth quarter of fiscal year 2025 alone, it improved over JPY 5 billion year-on-year. Next page shows the background and details regarding the introduction of core operating profit.
In our third quarter financial results, we referred to the profits from our organic business as a measure of normal or ordinary earnings power. We did not clearly define how to treat temporary income and expenses, nor did we disclose specific figures. We have now decided to disclose core operating profit as an indicator of our fundamental earnings. In preparing this disclosure, we have referenced the practices of our industry peers and clarified a definition from the perspective of objectivity and comparability. We exclude 5 items of temporary income and expense items not directly linked to future earnings from operating profit. For FY 2024 and 2025, we have identified three items subject to exclusion: product out-licensing or divestiture, disposal of tangible fixed assets, and the termination benefit costs, and have calculated a figure after excluding them.
As a result of these adjustments, core operating profit was calculated at JPY 23.8 billion for fiscal 2024 and JPY 50.1 billion for fiscal 2025, representing more than a two-fold increase and establishing a solid earnings base for fiscal year 2026 onward. Next page. In conjunction with the introduction of core operating profit, we are also reviewing our capital efficiency indicators. While the company has previously disclosed ROE targets, we are introducing adjusted ROIC as a metric that is more closely linked to medium to long-term corporate value. Adjusted ROIC is calculated using after-tax core operating profit, excluding the impact of foreign currency translation adjustments, which are not directly linked to operating activities, and adding net interest of bearing debt.
Since foreign currency translation adjustments account for approximately 30% of the company's equity, which had been undermining the comparability of ROE, we have excluded them from the calculation of adjusted ROIC. We estimate this figure to be 6.8% for FY 2025, and we aim for a range of 8%-10% over the medium to long term, which we will monitor alongside ROE. Next page, please. This page presents our consolidated financial forecast for FY 2026. We continue to pursue organic business growth centered on the 3L products, and we plan for a revenue to reach a record high of JPY 883.5 billion. While R&D expenses will increase due to focused allocation of resources to our next generation pipeline, we will control overall expenses at a rate in the high teens%.
Although we anticipate a efficiency improvement from structural reforms implemented in previous fiscal years, SG&A expenses are expected to increase slightly due to higher expenses regarding shared profit associated with the enhanced profitability of LEQEMBI. Our FY 2026 plan does not include one-time revenue. We are targeting operating profit and core operating profit of JPY 70 billion each. Our target for capital efficiency is the adjusted ROIC of 8.7%. Next page. To support further business growth, we executed two in-licensing investments in the oncology area during FY 2025. Preparations for the submission and the market launch are proceeding smoothly for both projects. To diversify our funding sources for future strategic investments, we are proceeding with preparations to issue corporate bonds.
We completed the shelf registration for bond issuance in March of this year, and plan to issue bonds at an appropriate time and scale, timing, taking into account market conditions. This concludes my part. CEO Naito will now provide you a business update.
Regarding the overall business, we would like to report to you. As we have heard 3L several times, what does this mean? This means LEQEMBI , DAYVIGO. Generic name of this is Lemborexant. Taking L from this. LENVIMA. These are the products which are supporting our business overall globally. Taking acronym of from these three products' names, we are calling this as 3 L. For your information, logo names, since ARICEPT, we always started the seven English alphabets constituting brand names since ARICEPT. What kind of products are we talking about?
For LEQEMBI , it is expected to be global number one anti-amyloid treatment. Actually, this is the global number one AAT. DAYVIGO is global number one in DORA category. DORA stands for Dual Orexin Receptor Antagonist. LENVIMA is now approved in the five cancer types. In these five types of cancer, this is the number one tyrosine kinase inhibitor. For all these three products, these are all global or world leaders currently, and all of these have been in-house developed, which we take pride in this fact that these have been in-house developed. Now recapping LENVIMA. This is an in-house developed oral multi-kinase inhibitor with seven indications in five cancer types. Expanding with monotherapy and combination therapies with KEYTRUDA, et cetera.
It has been 10 years since its launch, it has contributed to approximately 620,000 patients in 81 countries and territories over in the world. Please look at the left-hand side chart. JPY 342.5 billion was recorded as revenue, up 4% year-on-year from the previous year in fiscal year 2025. It has become a top brand for Eisai. The key markets are the U.S. On the right-hand side, in all regions, however, for FY 2025, it has been able to grow, particularly in the at RCC. Advanced renal cell carcinoma has driven the growth in the United States. It was including the RR-DTC, which was launched for the first, as the first indication in all the cancer types in the United States. LENVIMA could expand.
LITESPARK-011, studying on the combination therapy for Erleada plus LENVIMA for RCC. In this study, we have obtained the favorable results for the improvement in the PFS and ORR. It has shown to reduce the risk of disease progression or death by 30%. On or after treatment with an anti-PD-1 or PD-L1 therapy, it is expected as a treatment for patients with RCC whose disease has progressed after these prior treatment. U.S. FDA approval for action date is set for October 4, 2026. For Japan, we have also submitted. This year, JPY 345 billion, about 1% year-on-year growth is expected for this fiscal year. Next year, DAYVIGO. This is also to recap.
The natural or biological regulation of sleep and wakefulness is done by Orexin. Substance called orexin was found by Dr. Yanagisawa of Tsukuba University in Japan. As a target, the orexin receptor, once it is inhibited, it will induce sleep. Orexin receptor is once agonized, then wakefulness will be naturally induced. That is the nature of this target. DAYVIGO is the antagonist for orexin receptor, of course, from Tsukuba Laboratories. We developed this in-house, and this treatment has been approved in 27 countries worldwide. If you look at the graph on the left-hand side, for FY 2025, revenue was JPY 64.3 billion globally, which was up 20% year-on-year.
In key markets in Japan, our country, for this fiscal year, we expect to have the continued double-digit growth. What is happening in Japan? The number, we have been number one in share in terms of both the sales as well as the number of patients who are receiving this treatment. We have generic agents available in the market. However, including that for the insomnia treatment, including the, those generics, DAYVIGO is number one in share of the market. Now the disease awareness campaign is being launched with, in collaboration with Pokémon Sleep. As you can see, for all generations of population, it is said that the Japanese people are not sleeping very well.
If we can invite more patients with insomnia to seek the medical consultation, we are currently collaborating with Pokémon Sleep, and it has expanded steadily in Canada, China, Thailand as well. In the United States., this is not a relaunching. We are going to initiate new initiatives. This is called the telehealth, utilizing so-called IT technologies to replace real in-person, face-to-face services in order to provide a medical consultation and treatment and diagnosis in more than 30 states in the United States. Utilizing this, we are considering conducting relaunching of the product in Europe as well in the U.K. and EMA. We plan to submit for approval. Turning to LEQEMBI . Needless to say, it is a treatment for Alzheimer's disease. It is an anti-amyloid beta antibody for long-term treatment for early AD.
The polymer of amyloid beta, neurotoxic amyloid beta protofibrils, as well as plaque, both of which are targeted by this treatment. These are continued to be removed by these drugs. This is the only anti-amyloid treatment for suppressing both of these. For early AD, it has been approved in 53 countries and territories in the world. The track record, please look at the bar in the middle. Global revenue was JPY 88 billion, achieving almost double growth. JPY 44.6 billion in the U.S., JPY 24.4 billion in Japan, JPY 12.4 billion in China, and JPY 6.6 billion in the rest of the world.
For this fiscal year, we plan to achieve JPY 143.5 billion in revenue with 63% growth year-on-year, including the U.S. and other regions. We believe that there will be continued robust growth. Now regarding LEQEMBI. LEQEMBI is the number one AAD, anti-amyloid treatment. It is the top brand. In comparison to the second brand, more than double sales is achieved in Japan. In the United States, approximately 1.5x as much sales is achieved. It is the major AAD. Once again, I would like to reiterate this. In July 2023, in the United States, it was fully launched. It was a little less than three years ago. It has been a long time, and it has been a short time over the past three years, but it has only been three years after the full launch.
In the meantime, we have pursued a mission which is shown in these two lines: early initiation and long-term continuation of treatment. These are considered essential for slowing disease progression in the current AD treatment framework. It is considered to be the only way. We would like to improve awareness of this amongst the specialists and HCPs and others. We have spent all our efforts in the past three years on improving such awareness and at last I believe that there is a strong agreement to this. I have covered this a number of times.
This thinking is supported by important information which I would like to cover once again. First, Clarity AD open-label extension, 48 months. Active drug is given for extended period of time for 48 months. We have data. The top line is LEQEMBI group. The bottom two lines are natural progression groups. If you will, these are data from ADNI in the U.S. and BioFINDER in Europe. As you can see here, after 48 months, slowing of decline effect is sustained, and the gap between the natural progression or effect size is expanding.
Steadily, the target toxic substance is being removed from the brain. As shown by this data, we are arguing for a long-term continuation of treatment, and this is an important supporting information. In the middle shows that earlier initiation is better. The center left graphs are from the same Clarity AD OLE showing the results for low tau population with smaller accumulation of tau, MCI early stage, if you will. Looking at this, CDRSB no decline. Cognitive function deterioration is not seen in 69%. In the lower graph, CDRSB improvement. There are 56% of the patients showed improvement in cognitive function. Early initiation of treatment will bring about important treatment effect as shown by these data. On the right side, pre-specified biomarker endpoint is shown. Amyloid PET data. The plaque, how much plaque was removed is shown.
The point I would like to convey here is that LEQEMBI efficacy onset is quite early. The very left side, the red, reddish bar, this is after three months. After three months, in 24% of the patients receiving LEQEMBI , they have turned A beta negative state. The toxic substance has already been removed. They have reached that stage. Placebo group is shown in gray. In comparison to placebo group, this is a significant improvement.
LEQEMBI has a early onset of efficacy, as shown by this data. On the right side, on the far right, long-term continuation of the study, but in real world, how long are patients staying with LEQEMBI treatment? The top is the data from the U.S. After 18 months, close to 80% of the patients are continuing with LEQEMBI treatment. At 20 months, more than 70% are continuing with LEQEMBI .
After two years, as much as 67% of the patients are staying with LEQEMBI treatment. Long-term continuation of treatment is realized in the real world as well. At the bottom, the data of Tokyo Metropolitan Geriatric Hospital and Institute of Gerontology shows that in Japan, 84% of the patients are continuing LEQEMBI treatment at 18 months. Now, the topic today, the major topic today is the initiation of fundamental transformation in AD diagnosis and treatment started by LEQEMBI . There are two types of technological innovations, BBM, blood-based biomarker confirmatory usage, A beta confirmatory testing using BBM. Such technological innovation is one, and the other is LEQEMBI IQLIK, rather than infusion, which was a conventional method, auto-injector, self-administration, LEQEMBI IQLIK technological innovation.
These two technological innovations will be implemented in the society almost at the same time. That is the fundamental transformation. In the past, on several occasions, as I have stated on those occasions, within the AD treatment pathway, there are two rate limiting factors or two bottlenecks. One is A beta confirmatory diagnosis, how to give confirmatory diagnosis. Once treatment starts, infusion uses a lot of healthcare resources.
These two were bottlenecks. How do we remove these bottlenecks? On several occasions, I have discussed this. With the two technological innovations, these two key bottlenecks are removed. The pathway has been improved fundamentally in both speed and capacity, enabling more patients to receive treatment through simpler procedure with greater convenience. This, I believe, is revolutionary. A beta confirmatory diagnosis using BBM. This is now available. With that, what kind of value is created? Simplicity.
Conventional methods, PET and CSF, and new BBM confirmatory diagnosis. These three are compared in terms of economic burden, invasiveness, and ease of access. PET is not invasive, it is quite expensive as a diagnostic method. Medical institutions that have PET are also limited in number, which limits access. There will be a wait list, PET is also used in oncology diagnosis, it will have to be allocated. CSF, lumbar puncture is used to collect CSF, this is invasive. Economically, it is moderately burdensome. This medical technology technique can be used by healthcare professionals or in medical institutions that are limited in number, limiting access. BBM is low in terms of economic burden, it is now covered by insurance reimbursement in the United States, only blood sample is drawn, invasiveness is quite low.
Access is available in large size diagnostic companies. They are adding BBM as in the list of their confirmatory test. There is good access. Clinical diagnosis has become very simple, and there will be greater flow of patients seeking what they can be treatment. That is how we see this. I would like to show some actual data. On the left side, A beta 40 to 40 p-tau 181, p-tau 217. How many tests of these were conducted are shown. Pre-screening, triage, and confirmatory, both are included in the number of BBM tests shown in this graph from January 24th to January 26th. In just a year period, the number of tests increased by 12-fold. In half year interval, from January 24th, every six months it is doubling.
At a very rapid pace, BBM is increasing its penetration. The second bullet, A beta confirmatory test. CMS, the authority for insurance reimbursement, formally included BBM in the anti-amyloid therapy registry. Reimbursement has already started. AAIC guideline also recommends confirmatory BBM testing. If you could refer to the right side, out of all A beta confirmatory diagnosis, how much is done with BBM? That is shown in orange color. According to our estimate, about 15% was already a BBM in fiscal 2025. In this fiscal year, we believe that more BBMs for confirmatory diagnosis will be approved by the FDA. We believe there will be acceleration. By fiscal 2028 or there around, we believe that more than half of all A beta confirmatory diagnosis will be done with BBM.
At the right bottom, for one year, the number of patients receiving AD in one year has increased by 1.8-fold. There are numerous factors. DTC is carried out, and clinical effectiveness evidence is also playing a role. Without doubt, BBM and confirmatory diagnosis usage has provided tailwind. We believe that a full-scale growth of the AD market has started. The simplicity is the value that is acquired from BBM. To recap, A beta confirmatory diagnosis using BBM can significantly expand accessibility, and its cost effectiveness would greatly simplify AD diagnosis. Next. As for the treatment innovation, for transformation, we have LEQEMBI IQLIK. With IQLIK, the value that will be brought about is convenience. Conventional administration is IV infusion, and the flow is shown above. Patients will have to visit medical institutions.
Currently, around 1.5 hours to two hours of driving is required to visit medical institutions in the United States. Oftentimes, caregivers are driving the car to take patients to the medical institution. An infusion takes about one hour. This is followed by 30 minutes of follow-up. In the meantime, nurses are allocated to monitor infusion-related reaction. To go home, the same amount of time driving car is required. This is every two weeks for initiation stage and every four weeks during the maintenance period. What is the convenience that will be brought about by IQLIK? Throughout the whole duration of treatment at home, self-administration is possible, be it by patients themselves or by caregivers, safely, comfortably at home or at nursing homes, et cetera. It will be possible to receive administration, self-administration.
360 milligram auto-injector, one auto-injector once a week is used for maintenance. Approximately 15 seconds is the average injection time per injection. In initiation treatment, when this starts, will require 250 milligrams of two auto-injectors of 250 milligrams, but it will also be 15 seconds per injection, improving convenience by a wide margin. IQLIK maintenance therapy. This was approved in August of 2025, and what has been the effect of that approval that is shown in the two graphs. The point I would like to emphasize here is that IV and IQLIK can complement each other. Patients who are receiving IV may be switched to IQLIK, or IQLIK patients may be switched to IV treatment with a great degree of flexibility.
Flexible treatment options are offered. At left top, the orange part is IQLIK maintenance treatment incremental portion. Because of added convenience, this is increasing. The IV part, the blue part, is not decelerating. It continues to grow. IV IQLIK, they are comparable. It is possible to switch between the two. Such flexible treatment options, I believe, are welcome. That is what is shown here. IV IQLIK, for both, maintenance treatment, we are seeing increase in number of patients who are receiving IV or IQLIK maintenance treatment. On the right side, with the increasing, increase in maintenance adoptions, the graph shows that this has led to increase in patients receiving initial treatment using LEQEMBI.
After 18 months of initial treatment, there is greater degree of freedom regarding the treatment modalities, lowering the hurdle to seek LEQEMBI treatment. Currently, with initiation treatment, IV infusion is still used. However, IQLIK launch had the effect of increasing the number of patients receiving initial treatment of LEQEMBI . This is the projected impact of LEQEMBI IQLIK initiation treatment in the first year of launch. This is the estimated number of new patients. Between the competitive product regarding new patient, the share is around 50/50 according to our estimate. With LEQEMBI IQLIK initiation treatment after its approval, first, as shown in circle number one, we can expect market expansion with IQLIK. Circle two, we can expect increased share with LEQEMBI IQLIK.
The reason for seeing this is that IQLIK by far is very convenient in comparison to infusion. For initial treatment patients, it will lower the hurdle of seeking LEQEMBI treatment, it will also offer us a very important competitive edge, clearly. This is the expected impact. Currently, LEQEMBI SCAI regulatory status is as shown here. For maintenance treatment, as I stated earlier, it was approved by FDA in August 2025. Initiation treatment is designated for priority review. We recently received notification that PDUFA date was extended by three months, as we have informed you. The approval expectation is not at all affected by this in our view. Already, data had been submitted, we are not requested to submit additional data.
IV and SC switching, surrounding the switching between IV and SC data had already been submitted. Labeling words regarding the IV SC switch are being finalized, as we understand. What kind of interpretation is necessary in fixing that language, those are the inquiries, the types of inquiries that we are receiving, and we are providing information accordingly. This is not about the essence of what is being reviewed. Labeling language adjustment is requiring some time. That is our understanding of the situation. Therefore, we have no concern whatsoever about the approvability of LEQEMBI , IQLIK for LEQEMBI SCAI for initiation treatment. Three months is the ex-extension time, but the full duration may not be required. In the second quarter of this fiscal year, we expect approval in Japan and also in China.
We anticipate approval in Q4 of this fiscal year. Convenience is the value acquired. Once again, to summarize, IQLIK for maintenance treatment received FDA approval in August 2025 and has been successfully launched on the market. Currently, the insurance coverage through MAP is about 85% and introduced at approximately 600 facilities. PDUFA date, action date is extended, but we have no concerns about approvability. Once it is approved, all medical institutions are able to provide IQLIK initiation treatment, lowering the barrier to initiate treatment with LEQEMBI. Patients who may have hesitated to receive LEQEMBI treatment may seek to receive initial treatment with LEQEMBI. Enhanced convenience is expected to provide a competitive advantage.
As for China and EMEA, in China, commercial insurance innovative drug list was newly created, which includes LEQEMBI . Based on this, with various commercial insurance regarding coverage for LEQEMBI , discussions are underway. These types of insurance are called "Hui Min Bao." Under the guidance and support of the local governments, commercial insurance sell insurance and including in Beijing City, in 13 cities, LEQEMBI is on the list of insurance reimbursement.
Alipay has insurance platform called "Hao Yi Bao," and LEQEMBI is also included here. This is a commercial insurance covering high cost medical cost, and is available nationwide. As for Sui Xin Bao, this is Guangzhou-based program covering advanced medical treatments. This also includes LEQEMBI . In commercial insurance, but mainly through commercial insurance, improvement in access to treatment is achieved in China.
As for EMA in Germany, the U.K., Spain, and Italy, negotiations with authorities for reimbursement is ongoing. This is the overview of the pipeline. Alzheimer's disease is positioned within the neurodegenerative AD and continuum by Eisai, amyloid tau neurodegeneration. These are three pathologies. In all of these pathologies, we have promising pipeline that is true of only Eisai in the world.
LEQEMBI , I've discussed at length, and ahead, preclinical AD, AHEAD 3-45 is underway, and we expect top-line data fiscal 2028, tau Etalanetug. This is an excellent anti-MTBR tau antibody in our eyes. We have two studies, genetic Alzheimer's, hereditary Alzheimer's disease cohort, phase II, III study and sporadic AD phase II study. Both are underway smoothly, we expect a top-line data in the years as indicated here. As for neurodegenerative stage treatment E2511, TrkA.
Integrated Synapsis Regenerant study will start. As for orexin platform, in addition to Lemborexant, Ledasorexant, the agonist side of orexin for narcolepsy, study is underway smoothly. We expect top-line data this fiscal year. In oncology, LENVIMA, LITESPARK-0 11, RCC, and licensed in Taletrectinib for Europe and for Japan, serplulimab. Another licensed product, we expect to file submission in fiscal 2027, 2026, respectively, and also expect results for phase II study this fiscal year. I would like to summarize before I end. In fiscal 2025, driven by growth in the organic business centered on V3L products, revenue reached a record high and core operating profit increased significantly year-on-year. On the other hand, operating profit decreased due to factors such as decisions to forgo product out-licensing and divestitures.
In consideration of mid to long-term corporate value growth, as well as recognition of expense related to structure reforms in Europe, et cetera. In fiscal 2026, we aim to achieve record high revenue driven by continued sales growth, primarily in the 3L product. For LEQEMBI with SCAI and BBM in place, we expect it is entering a true expansion phase, and we aim to enhance business profitability through continued cost control and prioritize SG&A investment in key markets. In addition, we expect improved management efficiency as a result of structural reforms implemented in prior years, mainly in the U.S. and Europe in R&D. While controlling overall expenses, we will allocate resources to priority pipeline assets, including LEQEMBI in preclinical AD, Etalanetug, and ledasogaxane, and aim to achieve core operating profit of JPY 70 billion.
In parallel, we will execute proactive financing and promote investments for growth, including product in licensing, mainly in oncology, to accelerate pipeline enhancements through dual engine of in-house R&D and product in licensing. Through these initiatives, we aim to achieve revenue expansion driven by organic business and sustainability, sustainably enhance our corporate value. Now we would like to entertain questions. We would like to take questions from analysts and investors who are attending in person, and then, from analysts and investors attending virtually, and then, those who are attending in person from the media. If you have a question, please give us your name and organization name before your question. We would like to take as many questions as possible. In the interest of time, please limit the number of questions to one per person.
Now, I would like to ask, if you have a question, please raise your hand.
This is Wakao from JPMorgan. Thank you very much for your presentation. What I'd like to ask you is for the year under review, did not achieve the plan. Could you please explain why you were not able to achieve the plan? ROE was targeted at 8% level, in the third quarter result earnings, you mentioned that the level was above the consensus. OP is estimated to be 70%, JPY 70 billion compared to the third quarter earnings call. It seems to be lower. ROE 8%, to be achieved this year or next year. You said that this is going to be the target for medium to long term. I think that the projection of the company for the profit growth may have been changed. Could you please explain?
For that, the question, Mr. Oyama is going to explain.
Thank you very much for your question regarding the results below plan for fiscal year 2025. I believe you're asking about that previous fiscal year, regarding this, it depends on the original plan. Could you please show the page two? If I may, let me explain using this slide. Other income and expenses for the full year forecast, JPY 35.5 billion was planned. In addition, other income and expenses, JPY 9.5 billion was included. At the beginning of the year, the plan was to consider taking into account the one-time income to some extent. Up until the third quarter, these were not incurred.
The full year results included the other business results by the API sales or sales from subsidiaries are included, so almost nil excluding those in this line. When we made the announcement of the results for the third quarter, actually we were in the process of negotiating with the candidates. There were several of them. Due to the changes in the environment, as assumption, we thought that it's better rather than divesting these, but rather we should continue to keep this for supporting the business growth from next fiscal year onwards. One-time income was discontinued, and that is what we decided. These are the numbers that we have disclosed, JPY 8.7 billion related to the structural reforms, which was also disclosed in the financial reports.
The plan at the beginning of the year was less than half of this. On the other hand, because of the changes in the situation, actually the situation in Europe changed significantly compared to the original plan. The expenses related to the structural reform, or rather the scale of the structural reform there was much larger. Excluding the one-time income as well as the increased more structural reform cost than expectation were the major factors. Regarding your question about ROE 8%. As for this target of 8%, we thought that this should have included the impact of one-time income. When we explained this 8% level target for ROE for FY 2025, that's what we explained. Through thorough discussion internally, secure the one time.
There are some projects that are under the negotiation and there are some potential candidates, but we like to prioritize what we are able to see visibility, explaining there are some one time or maybe not, no one time. Rather than explaining it as such to investors, we believe that it is more important for us to go through the more visible plan and going through that process as a result, ultimately, we had to present this number not reaching the ROE 8%. Please understand that this commitment to ROE 8% stays unchanged. In addition, compared to the time, the actually the foreign currency translation gain has increased, JPY 310 billion of FX gain was recorded this year. This may have hampered the improvement in ROE.
The changes in the Forex rate cannot be controlled by us within our plan, but it may have contributed to the target of the companies, which is not reasonable. Therefore, I would like to say that we do not believe that we have changed our message to the market, but organic growth in the business will continue to be achieved in order to support the numbers.
If I may check with you, the gains on the sale which were in negotiation last year, the probability of realization of those negotiations is decreasing? Do you think there is any change to the projection of the profit growth, including the one-time impact?
I think you were talking about whether you were able to achieve the 8% ROE, but from next year onward, I believe that you are going to achieve the profit growth inclusive to that. Regarding the plan for next year onward, there will be another conference to be held on the 25th of this month to explain management strategy, but for organic business, we believe that we have secure base for growth conventionally. In order for us to achieve the short-term goals, one-time sale may have been considered for the future growth. Rather, we would like to seek the actions which will surely contribute to the medium to long-term growth. Please, I am sorry to say this, but please wait until the explanation on that 25th of May.
That means that there has been a change to the policy of the company, right?
Please wait until the conference. CEO Naito, please.
When it comes to the so-called individual pipeline assets, there are a divestiture or others, or existing brand sale or divestiture. We decided to forgo these. For our growth model, in which includes partnering, like with partnering with Merck for LENVIMA and partnering for LEQEMBI with Biogen. I believe that these are reasonable and good business models that should be adopted by the company for the future growth. Having the costs and having the profits. Such model for a pharma company like mid-sized pharma company like us is a reasonable growth model, in my opinion. We would like to continue to pursue such opportunities proactively.
Any revenue or income from these activities will be including some one-time revenue. These are considered to be organic, income. There are two separate understandings on these, incomes. I am very much looking forward to hearing, the management strategy conference, which seems to be very important. Within our pipeline, existing pipeline, there are promising potential items. I would say that there are several of them within the existing pipeline, so we are, duly considering these potentials.
Next, question, attendee seated in the front row on the side, right side, please.
I'm Hashiguchi from Daiwa Securities. I can see that you have high expectations regarding IQLIK. What is your view regarding the pricing to the extent that you're able to? Please comment on the pricing.
In maintenance therapy, it is expected that there may be switch between IV and SC. Not all patients may select IQLIK. I believe there are several reasons for this. Depending on the insurance plans of the patients, IQLIK may lead to higher economic burdens. In some cases, I understand that that is one of the reasons. With the conventional IV in initiation and maintenance treatment, the dose is the same, so on the whole, pricing does not change. With IQLIK, in initiation treatment, dosage is larger. Between IV and SC, if for same unit of dose, if the price is the same, then the economic burden may be felt strongly, more strongly by switching to IQLIK. This dosage is complex, and what is your view regarding the pricing? Mr. Haruna will respond to your question.
Thank you for your question. I'm Haruna, responsible for the U.S. I believe your question was regarding the United States. The concept is price parity. What we have in mind as a concept is price parity. Which means that the out-of-pocket payment for patients should be no different between IQLIK and IV infusion. You've mentioned drug pricing. IV therapy, patients have to pay for infusion procedure. It is not limited to the cost of the drug itself. We have to take into account total medical cost and keep the economic burden the same for patients. As CEO Mr. Naito mentioned earlier, even if there are repeated switches between IV and SC, there should not be any change in the patient's burden. That is what we are keeping in mind.
Thank you very much. That was very helpful.
Any other question? The person in the second row from the front.
This is Seki from UBS. Thank you very much for explanation. More promising news. Biogen tau ASO phase II results were announced by Biogen yesterday, tau pathway has been demonstrated to improve the cognitive function. Epoch-making news was announced. What is your view of this? aducanumab 202 study compared, except for a small number of patients, what is the possibility of the dose response?
Dr. Ido is going to respond.
I am in charge of R&D. My name is Ido. I am going to respond to your question. As has been commented by you, BIIB080 results are understood positively by us as well, which was a good data. According to the release, a primary endpoint CDRSB, dose response was not achieved. p-tau, CSF Tau included, that these biomarkers were shown to be significantly reduced and the suppression of cognitive decline were observed across all dose groups. This is going to be announced at AAIC. Including the Etalanetug anti-tau drug development, direction of such a drug development, including Etalanetug, it is supported strongly. Our Etalanetug over Eisai has been already explained several times. Considered to be very important for tau aggregation.
MTBR core region is the region to be bounded by this, so the propagation Tau seed will propagate. That is the most important part of the Tau pathology hypothesis and also Etalanetug over the high dose, and also the safety has been secured, including the high dose patients. The Tau propagating to the cortex, cerebral cortex, is considered to be affecting the cognitive function. But we have deepened our confidence in showing this mechanism to achieve this. Our IV infusion of Etalanetug and biomarker dynamics have been already shared. Based upon the dose response manner, we have been able to see this effect. At the DIAD or the familial Alzheimer's disease patients, severe Alzheimer's disease patients.
Last year, the TauP2 stabilization or decrease of TauP2 were also observed in these patients. Therefore, we have deepened our confidence in this drug. Thank you very much.
Except for the smaller number of patient, are there any dose response effect?
Separate from the biomarker response, yes. Inclusive of the cognitive function as well, we are going to monitor together with the biomarker.
He is asking ASO, a question about ASO. Are you asking about the Etalanetug?
Next, analyst, investors who are attending, virtually, they will be taking questions. First, Muraoka-san from Morgan Stanley, please unmute, and please proceed with your question.
Thank you. This is Muraoka from Morgan Stanley. I have one question about the guidance for this fiscal year. IQLIK, the approval was extended by three months. Does that mean that guidance is JPY 70 billion lower than your original expectation because of this extension approval date? That is how I see this favorably. Is that true? After approval successfully on August 24th, if that is approved, do you see a ramp up from September or from January? What do you currently anticipate?
Mr. Haruna will respond to your question.
Thank you for your question. Approval extension by three months or within three months. This means that we are able to make thorough preparations, so we positively consider this. After the actual launch, we believe that we can immediately see the effect. IQLIK is already on the market widely with a maintenance therapy. Once IQLIK initiation therapy becomes available, I believe the LEQEMBI growth will be accelerated. Regarding the plan, we consider slight modification possibility, but it will be limited.
Do you think that acceleration from January will be bigger than from September?
Thank you for that question. Regarding IQLIK, it is already receiving insurance reimbursement. In initial therapy, after launch through MEP, medical exception, we expect the insurance coverage to continue. Irrespective of the timing, we believe that LEQEMBI IQLIK growth will pick up.
Thank you very much.
From Citigroup Securities, Mr. Yamaguchi, please unmute.
Thank you. This is Yamaguchi of Citi. Can you hear me?
Yes, we can. Thank you.
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Next from Macquarie Capital Securities, Tony Ren. Could you please unmute and start asking question.
Hi, Tony Ren from Macquarie. Thank you for taking my question. I would like to also stay on the previous page on blood-based biomarkers, slide number 16. When I look at this slide, what struck me on the left-hand side was the very fast uptake of p-tau217, basically not p-tau181 not growing much. Could you explain to us why the p-tau217 experienced so much rapid growth? Also which companies are the vendors of this test? Thank you.
For your question, Mr. Haruna is going to respond.
Thank you very much for your question. On the left-hand side, the BBM tests and p-tau217 is growing so rapidly. Yes, this is partly because of the Fujirebio's p-tau217 was launched, so that has peaked. That has contributed to the peak. That is one reason, when it comes to penetration into the market, p-tau217 single test, it's simple and therefore it is increasing.
The data requested, the data source is a LabCorp and a Quest Diagnostics, but for Mayo Clinic and other institutions are not included in this data. Actual uptake, it should have been more than what is shown here in terms of the uptake in the market. We have a high expectation to this and, going forward, BBM confirmatory test, p-tau217 related tests will become available. Therefore, we think that the penetration in this part will be accelerated further. That is my answer. Thank you.
Very clear. Thank you very much.
From SMBC Nikko Securities, Mr. Wada, please.
Thank you. This is Wada from SMBC Nikko Securities. My question is on LEQEMBI in fiscal 2026, whether it will be profitable in fiscal 2026. Fiscal 2026 guidance has been, they can be expected to be making the best contribution in the increase in revenue and the cost of sales, SG&A growth is contained and operating growth in profitability is anticipated. What I'm concerned about is last year, in fiscal 2025, the operating profit has grown more. This may be partly due to investment in LEQEMBI. If that is similar this year, it may offset the increase in profit. Is that a possibility?
Mr. Oyama will respond.
Thank you for your question. LEQEMBI fiscal 2026, whether LEQEMBI will turn profitable. The original plan was that excluding R&D to achieve profitability, including R&D, we our plan does not foresee profitability in LEQEMBI. Regarding your question of increase in SG&A, please turn to page four once again. As shown on this page, proactive investment in LEQEMBI expense is JPY 20 billion, there is also structural reform cost that has accounted for a large portion. I would like to stress that once again. In fiscal 2026, excluding R&D, we expect LEQEMBI to become profitable, we believe that there will be substantial improvement in LEQEMBI profitability in fiscal 2026. I cannot give exact numbers at this juncture, however. Thank you.
Tokai Tokyo Intelligence Laboratory. Yoshida, please unmute.
Thank you. Tokai Tokyo, Yoshida speaking. Thank you for this opportunity for me to ask a question. Please open page 16. I have a question about the same page. On the right-hand side, BBM data, confirmatory tests performed, and the PET and the CSF for FY 2025 will account for about half of the total number of tests performed in the U.S. What is the reason for this? BBM diagnosis will increase in number, and it is going to be add-on increase on that. That is the perception I see. What I would like to say is on page 15, BBM, favorable aspects of BBM are conveyed from this table. If that is the case, I believe that the ratio of BBM tests will be getting larger, replacing the CSF or PET tests more optimistically.
Physicians actually unexpectedly, a large number of physicians still prefer PET imaging-based diagnosis or setting aside those, it is triage will be the main usage of the BBM. Then for the confirmatory testing, PET and CSF will still remain.
For your question, Mr. Haruna is going to respond.
Thank you very much for your question. Current status regarding CSFIs, declining slightly. Regarding PET, it stays almost flat since last fiscal year. For BBM, as we explained today. Going forward, what we assume as a company is PET will continue to stay flat and BBM will be accelerated. As you pointed out, BBM is less expensive and less invasive and good access is provided.
Going forward, we believe that BBM is going to the mainstream test method. On the other hand, at hospitals utilizing PET, they will be able to see and confirm the effects of the treatment through imaging. By conducting CSF tests, they will be able to have an access to the more detailed biomarkers, particularly at the teaching hospitals and academic hospitals. Not only BBM and PET, CSF, demand will still remain to some extent. Therefore, PCP or home doctors or neurologist, clinics, BBM is expected to expand. The teaching hospitals, PET, CSF, and BBM will continue to be utilized in combination while we see increase in all of them. Thank you.
Understood very well. Thank you very much.
Next, those of you who are in person, from the media, if you have question, please raise your hand. Attendee seated in the front row, please.
I'm Kozaki from Kokusai Yakuhin Joho. Thank you for the presentation. About Lecanemab treatment, cognitive function improvement, I think is the ultimate objective. Cochrane report the other day said that, and this is not limited to Lecanemab, but regarding amyloid antibody, amyloid antibody reduces amyloid, but cognitive function improvement is not sufficient according to this Cochrane report. In the future, what is your strategy? Will you try to see more improvement in cognitive function? Does that mean that preclinical intervention or tau modality used in combination? What is your outlook? Could you share with us how you see the current situation and what your future outlook is?
I'm not aware of the report that you've mentioned. Lecanemab, currently, I've shown 48-month data earlier. As shown in that data, progression is suppressed, and that is seen pathologically. Plaque is removed, but protofibril is still toxic, and therefore neural degeneration will advance in the presence of that. Abeta reduction and Abeta pathology, regarding these, we believe that Lecanemab is almost the ultimate drug.
As far as modalities are concerned, in the future, if small molecule oral drug becomes available, we are also considering such possibilities and preclinical usefulness. It may also offer preclinical usefulness, so switching to such oral modality may be required in the future. As you're aware of, the disease is a complex disease, and another major pathological factor is tau. Tau pathology part is also examined with Etalanetug in our case, and we believe that this is important in the propagation, and tau pathology trigger is Abeta protofibril. Abeta polymers may be also triggering tau pathology. In that case, Lecanemab and Etalanetug in combination may turn out to be useful. Going forward, we would like to pursue these in our consideration.
I would like to also ask, Dr. Ido to offer additional response.
Thank you. If I may, I would like to offer one additional comment regarding the Cochrane review that you've mentioned. Not only successful antibodies, but in the initial stage, solanezumab included, those targeting amyloid, all of the antibodies were included in the analysis. As CEO Mr. Naito explained, our lecanemab has shown significant efficacy in phase III based on human biology. We would also like to consider translating these results in small molecules in the future. Thank you very much.
Are there any questions? A person in the second row. The fifth row from the front, please.
This is Suzuki from Nihon Keizai, Nikkei. President Trump MFN program, regarding this, what kind of impact would you see on your business? What kind of a scenario are you envisioning regarding this matter?
For your question, Mr. Yasuno is going to respond.
Thank you very much for your question. I am in charge of our U.S. business. This is Yasuno speaking. Regarding MFN pricing, right? Yes. So far, Trump administration in the U.S. has announced plans including Medicare Part B, so-called GLOBE, and for Part D, GUARD, and for Medicaid. They have come up with some program. For Medicaid, it's a voluntary participation basis. For GLOBE and the GUARD, they just announced the plan or ideas.
Therefore, currently they have ended the public comment period, and we do not know whether they are going to put forward the final plan. Even in the case they are going to announce the final plan, what is going to be the contents? We are waiting for further information and are collecting information on this. Anyway, once we see more visibility on the U.S. government's plan, we are preparing for such potential initiatives. We do not believe that there will be any immediate impact from those plan. We are preparing in order to avoid any immediate impact.
For Medicaid, do you think that you are going to participate in that?
In under Medicaid, we do not have many products which are utilized heavily under Medicaid. We do not think that we are going to participate into Medicaid voluntarily. Thank you very much. Next question, please.
I am Horiguchi from Nikkan Yakugyo. Thank you for the presentation. The term ending March 2026 operating profits decline. I would like to ask question for clarification as to the reason why structural reform cost in Europe was larger than expected. What are the reasons that the structural reform cost increased? As for foregoing the strategic decision to divest a product, could you specify what product?
Mr. Oyama will respond.
Thank you for your question. As for structural reform cost in Europe, in the beginning of the fiscal year, since then, there were many changes, including reimbursements, and there were also uncertainties. What size to implement, there are differences in labor environment and legal system in each country. It was very difficult to estimate this very accurately. There was difficulty and also, because of the difficult differences in situations that led to bigger than expected structural reform costs. As for outlicensing, divestiture, because these involve potential partners, it's difficult to specify. It's not possible to mention names, but we were considering above, in Japan and outside of Japan, and if these are materialized, there would have been significant impact. Some were postponed, some were forgone completely. Thank you.
It's close to the ending time, so we are going to take the one last question. All right. Those of you who are raising your hand now will be addressed. The person, please have the floor.
Thank you very much. From Yakuji Nippo, Tomioka is speaking. If I may go into details in the reference material. On page three and page nine of the reference slides. For FY 2025 actual results for pharmaceutical business, main products, revenue in Japan. Relatively speaking and, looking at the top ranking, Jyseleca, MOVICOL are listed here. Jyseleca, compared to a year earlier, seems to be growing very significantly. It has been included in the top three. If you look at page nine, I cannot find Jyseleca here. Why is it? MOVICOL, for FY 2025 actual results, is ranked number six. Forecast for FY 2026, it is increase, improves to top three. 134.3% increase in profitability. Could you please explain why these are the case?
Mr. Yusa is going to explain. Excuse me, Mr. Iike is going to answer your question.
Regarding the Jyseleca, let me answer your question about the Jyseleca. In Japan, we have a partner, Gilead. We are co-promoting this drug with them. So far, we have been reporting track record actual results, but regarding forecast, because of the partner, we refrain from making any forecast from us.
I'm sorry, my understanding is not clear. I'm sorry, I haven't been covering a pharmaceutical company for long, so could you please teach me?
When we disclose the forecast, for some products, which can be determined by Eisai alone, but others by Eisai not alone. We are able to disclose the actual result, however, we are not able to disclose any forecast because of the partnering.
Understood. Another question is about Movicol. Based on the forecast, it has been increased to the top-ranking products. How do you analyze, and what is the reason for this?
Mr. Yusa is going to respond.
Sales of Movicol is increasing, and are you asking about the reason why we see such increase? Yes, I am in charge of our Japanese business, Yusa is saying. Regarding constipation market, GOOFICE and Movicol both grew for fiscal year 2025. The market itself grew significantly, and both of the drugs, compared to competitors' drugs, were very efficacious, and the safety profile was more favorable. That is highly evaluated. MOVICOL, when at the time of a testing, MOVICOL is utilized together with the testing agent. Therefore, the market is increasing. Compared to other companies' products, MOVICOL is increasing.
I'm sorry, again, for it is utilized in combination with tests. Could you please explain?
The lower digestive tract, MOVICOL, colorectal colonoscopy, patient have to excrete. In such case, MOVICOL is utilized for removing the feces. That's why we are seeing the increase in the sales.
Thank you very much. Another question. For the main body of the slide deck, could you please open page eight, selumetinib. For future development in Japan, by the end of fiscal year 2026, NSCLC, the submission is planned for FY 2026 in Japan. Could you please give us timeline for this? If possible, when do you expect to launch this product?
For your question, Dr. Ido is going to answer. Sorry, Mr. Yusa is going to respond.
Thank you very much for your question. In Japan, regarding selumetinib, schedule for getting approval is not disclosed yet. Having said that, for the first part of your question about the lung cell cancer, NSCLC, we have obtained favorable data already. In the early course, we believe we will be able to proceed with the development for this indication. Thank you very much.
Yes, next question, please.
I'm Izawa from The Asahi Shimbun. There was an earlier question, a follow-up question about an MFN price in the U.S. What is the impact? Is there going to be an impact of drug loss where there will be fewer new drugs launched in Japan as a result of MFN in the U.S.? Most favored nation price, we do not know the final outcome yet. For Eisai, in launching new products in Japan, do you expect any impact from MFN price policy in the U.S.? What is your outlook, please?
I'm not sure if I understood your question. If you could speak up, I will appreciate it.
Sorry, I am Izawa from The Asahi Shimbun. I have a question regarding MFN price in the U.S. We do not know the final outcome yet, but if MFN is introduced, does that lead to fewer drugs launched in Japan? That is a concern of some. Regarding the introduction of new products in Japan, what effect do you think there will be from MFN in the U.S.? Do you have any policies to address this?
Basically, as shown in our philosophy, so long as there are patients who need drugs, we deliver drugs. That is the mission of pharmaceutical company. To fulfill that mission, we make all efforts. That is our basic stance. Having said so, regarding life science innovation. The consideration for life sciences innovation is appropriate consideration being paid.
Depending on the government of each country, the consideration paid, oftentimes in the form of price setting, whether that is appropriate or not, there is a huge debate right now. In Japan as well, similar debate should take place. That is what I believe. Between the United States and the U.K., as a result of bilateral negotiations, the view of the U.K. about the consideration for innovation has undergone major change. In Japan, including drug price, the consideration for innovation should be discussed in many ways, in my view. Does this address your question?
Yes. Thank you.
We are conscious of time, so I would like to take this offline later. It is now time to end the briefing session. If you have additional questions, please contact IR or PR section. With that, we would like to end today's presentation session. Thank you once again for your time today.