Earnings Call: Q4 2018

Apr 27, 2018

My name is Manaan Bei. Thank you very much for participation in the set of management presentation of Adaiji Sanku despite your busy schedule. Thank you very much indeed. M. Today, we have made announcement of the consolidated results of the fiscal year 2017, and I'm going to make a presentation based on the handouts today. This is the contents today: consolidated the performance of the fiscal year twenty seventeen and progress of the fourth midterm business plans and the forecast of the performance in FY 2018. And after that, we will take questions from the floor. So first of all, I would like to start with the consolidated business performance. This is the overview. The revenue was 9 and 60,200,000,000.0 yen the 5,100,000,000.0 yen increase from last year or 0.5% increase of the revenue. Cost of sales reduced by 3,400,000,000.0 yen from last year. SG and A expenses, JPY 600,000,000 reduction and R and D expenses will be explained later on, but it increased by JPY 21,700,000,000.0, including the special items. As a result, operating profit was JPY 76,300,000,000.0 yen reduction by 12,600,000,000.0 yen from same time last year, profit declined by 14.2% and profit before tax reduced by 6,800,000,000.0 yen from last year, yen 81,000,000,000. And the profit attributable to the owners of the company was 60,300,000,000.0 yen a 6,800,000,000.0 yen increase or 12,700,000,000.0 yen increase of the profit. The OpEx actually was 110.86 yen per dollar, 2.44 yen depreciation and 129.7 yen per euro. That is yen depreciation by 10.86. Now I'd like to give you the factors of ups and downs of the performance from last year. And revenue increased by 5,100,000,000.0 yen from last year, and I'd like to give you the breakdown of the main business unit in the following. Starting with the domestic pharma, Vaccine and OTC in Japan, the Olmedtech hypertension product had a reduction of the profit revenue, but Lexiana, the antiplatelet, made a good growth and Inabio, the anti influenza viruses and also PLAYRIA, also the process with the new indication of RA, made a good expansion of the sales. And Dachi Centro S. Pharm, mainly the authorized generics such as Etelmisartan, Omisartan under rosuvastatin, they made a significant growth of the revenue. In Japan as a whole, we had an increase of the sales by JPY 38,500,000,000.0. Next overseas, excluding the impact by the ForEx. The DSI, Daijisentro Inc. In The States, they have omecetown, hypertension and Welchol type two diabetes and hypercholesterolemia treatment drugs. And Effient, antiplatelet agents, those had a reduction of this revenue. And they had a significant reduction of the revenue by 69,200,000,000.0 yen And Lutepold have injected for iron deficiency anemia and generics IV. Those increased the sales by 15,000,000,000 yen The GeCentral Europe had a decline of the revenue of almost certain. However, LexiAnna made a good growth with 1,800,000,000.0 yen increase of the revenue. And ASKA in Jarvisia and Central South America, they had an increase of the revenue by 5,000,000,000 yen And due to ForEx, we had increased revenue by 14,000,000,000 yen as a whole. This is the operating profit ups and down and its factors behind. And revenue, as I said earlier, had incremental sales up by 14,000,000,000 yen due to ForEx impact, and we have the increase of 5,100,000,000.0 yen altogether. And we have expenses excluding the ForEx and the special items. Cost of goods had increased by 18,600,000,000.0 yen due to the cost rate increase and omecetam patent expiry. And SG and A increased by 700,000,000.0 yen And R and D expenses reduced by 6,900,000,000.0 yen due to the biograppling trials of and costs increased by 12,100,000,000.0 yen due to ForEx. That includes 3.3% cost of goods and SG and A, 5.9% and R and D, 2,900,000,000.0 yen Special items have reduced. For the special items, we have a reduction of the cost by 6,800,000,000.0 yen from last excluding those ForEx and the special items, we had a decline of the profit by 21,300,000,000.0 yen And this is the details of the special items. In the last year, fiscal year, we put up the impairment losses for vaccine and restructuring in Europe. We had a cost increase by 40,400,000,000.0 yen This year, we made the sales of the intangible fixed asset, which reduced the cost by 6,100,000,000.0 yen However, we had intangible asset impairment for CL-one thousand and eight, and we put up the restructuring cost in The States, which put up the expenses by 33,600,000,000.0 yen So we have a reduction of the expenses by 6,800,000,000.0 yen from last year. This is the profit attributable to donors of the company. Operating profit, including the ForEx and the special items, were declined by 12,600,000,000.0 yen And financial income and expenses, we had 5,900,000,000.0 yen reduction of the expenses due to the ForEx gain and gross impairment due to yen depreciation, and we have income tax as well. And in 2016, we had impairment by vaccinations with the tax effect not applied to some of the cost, which pushed down the tax rate. However, in 2017, due to The U. S. Tax rate reduction, we had a tax rate reduced and then we had a reduction of the 19.1% of the corporate taxes. And for noncontrolling interests, for 2016, we had current losses of KDSV quite big, but we have a Kitazato Institute noncontrolling interest being for the contribution side. Therefore, 2017, KDSV profit and loss improved and profit reduced by 5.5%. And then profit to the auto of the company was 60,300,000,000.0 yen that is the increase from by 6,800,000,000.0 yen last year. And this is yen basis ups and down of the sales, including the impact by the ForEx. Patent cliff impact by Omisoft, DSI, The U. S. Had a significant reduction of the revenue. But in other business unit, they had increased revenue as compared to the last year. And this is the main product revenues. In Japan, Lexiana made a significant growth of the sales. Innavio Polaria also made a solid growth of the sales. But next June, due to the special expansion repricing effect, they were hesitant of purchasing the product. And also memory grew most stagnantly now. So that was only a slight increase due to for the memory. And longlisting products, we have quite a few of them struggling today as compared to last year. And this is the progress of the fourth midterm business plan. These are the agenda for this section. Let's start with edoxaban. This is the revenue of edoxaban and target of mid term business plan for 2020. Since its launch, edoxaban has been making the solid expansion of the sales in Japan, Europe and Asia. The target for the mid term is 120,000,000,000 yen revenue by 2020, and 2018 target is 105,000,000,000 yen globally. And this is the DOAG market situation, the global market situation, including edoxaban. The back graph shows the transition of the annual sales of the DOACs. Line graphs shows the DOAC ratio as out of the WAFARIN and DOAC together. That shows the progress of the switches from the WafaaRain to DOAC. The DOAC market size have been on the expansion trend in the last five years, and the cumulative sales up until December 2017 was reaching nearly 2,000,000,000,000 yen Line graph shows the switches from one frame to two arc. That is making steady progress, together with market expansion, now reaching to 40%. And this shows the DOAC market in Japan and Germany, which is the two leading sales countries. Likewise, in the global market, in those two countries, the market size is growing steadily. I'd like to now talk about the quarterly sales transitions of our Japanese store market. In the last one year, the LUXIANA share grew steadily, and it is narrowing the gap to the top two products. And in 2018, we are aiming to get the two market share. This slide shows LUXIANA's new patient prescription share here in Japan. So LUXIANA has kept one new patient share since March 2017, and its share exceeds 40% as of March 2018. By maintaining one share in new patient, LUXIANA will be in good position to achieve one share in terms of revenue as well. This slide shows the situation of LUXIANA in two markets: Germany, the largest European dog market and South Korea, in which the brand share is increasing rapidly. LUXIANA revenue share is steadily expanding month on month basis in both of these markets. As of January 2018, the share has reached 10.5 percent in Germany and 23.1% in South Korea. In South Korea, just like in Japan, LUXIANA is catching up very closely into one two brand. So this slide presents share in other countries in addition to Japan, Germany and South Korea. In Europe, we see steady growth of LUXIANA in Germany, Belgium, Italy and Spain. In Asia, it is doing very well in South Korea and Taiwan. So this is now the Daiusankyo's how Daiusankyo envisions growth of edoxaban as blockbuster assets. Expansion of number of markets or countries we launched in LCM, the life cycle management will be key for growth. Edoxaban is already launched and approved in more than 20 countries, approximately 95% of global market potentials. In 2017, edoxaban was launched in six additional countries, including Portugal and approved in three additional countries, including Brazil. And also, many clinical studies and clinical researches are ongoing so as to maximize brand value. We have established a new brand mark for edoxaban clinical research program encompassing so many edoxaban related studies called EdoSure. In 2017, we launched Lixiana OD tablet in Japan, which is the first OD tablet throwback in Japan. This is the EdoShare brand image. First of all, the name EdoShare is coined from two words, edoxaban and assurance. By generating evidence through life cycle management of edoxaban, EdoSure, the program brand mark, represents DaiSankyo's commitment to deliver further assurance to patients and doctors about anticoagulation therapy using edoxaban. We hope to leverage this brand mock to enhance the brand's image of the product as we pursue our effort to maximize value of the product. Now this is a list of main ongoing randomized controlled trials with Doxavan. In 2017, ENsURE AF study results led to update of summary of SNPC in Europe regarding method of administration in patients with non babular atrial fibrillation undergoing cardioversions. In Hokusai VTE cancer study, edoxaban became the first DOAC to demonstrate noninferiority to standard of care in EU and U. S. Dolteperin. The presentation of the study result was given in ASH 2017. As for the clinical researchers, in 2017, patient enrollment progressed smoothly in two studies, Aetna AF and ANAPHISE. Aetna AF is real world surveillance of edoxapan treatment and routine clinical practice in atrial fibrillation. And ANAPHISE is an observational study in seventy years or older atrial fibrillation patients in Japan. We plan to disclose baseline data of these two studies in fiscal year twenty eighteen. Now we'd like to show you the Japan business. This slide indicates the midterm business plan target and our progress. The target is to grow sales of six key products, excluding Lexiana, to $243,000,000,000 yen by 2020. In fiscal year twenty seventeen, the sales has increased versus the previous previous year to 212,800,000,000.0 yen However, in fiscal year twenty eighteen, we project this figure to maintain at the same level at $212,000,000,000 yen So some factors that changed from our original assumptions were Nexium's repricing due to sales expansion and slowing down of memories growth and delaying obtaining Effient's additional indication in brain. But after fiscal year twenty nineteen, we will continue our effort to put this back on expected growth track with an aim to meet the midterm business plan target. So in fiscal year twenty nineteen, we have executed on the cycle for sustainable growth. As part of our effort to continuously launch our original products, we filed submission for milagabaline and esixeranone and obtained approval for additional indication of malaria and launched Nalurapid and Narusas. In fiscal year twenty sixteen, DaiSanKyo was ranked number one sales revenue in Japanese ethical pharmaceutical market. And for six consecutive years, RMR was ranked number one in anterior surveys. With our in licensed products, we launched additional indication with BIMPAT as well as CANALIA combination target tablet. As for milagabulin, based on two Phase III studies in post herpetic neuralgia and diabetic peripheral neuropathic pain, we filed submission for treatment in peripheral neuropathic pain in February in Japan. As for ezogisaranone, based on Japanese Phase III study, in February, we filed an NDA submission for treatment of hypertension. And as of 1300 today, we have released our financial results. And alongside with that, we have announced that Dai Sankyo will reorganize Kitazaso Dai Sankyo vaccine subsidiary specializing in manufacturing starting from April 2019, and we plan to name the company Dai Sankyo Biotech. This new structure will enable Dai Sankyo to ensure stable supply of vaccine and also to enhance manufacturing capabilities of biologics as well by building on the KDSB's know how nurtured through its experience with vaccines. So as we would like to enforce. And after April, DaiSanke VaTEC will be a new manufacturing company under Supply Chain unit and is expected to contribute to the group through improving supply and quality by enforcing its GMP system, and we aim to strengthen the supply chain system and structure within the group through this reorganization. So now it's a U. S. Business. DSI's midterm business midterm objective was to establish pain franchise and achieve sales revenue exceeding 100,000,000,000 yen by 2020. We have revisited the increasingly difficult opioid market situation in The U. S, and decision was made to return all rights regarding CL-one hundred eight And midoglobulin's development, which was ongoing in U. S. And EU, has failed. Therefore, we have revisited The U. S. Pain business. Given the complex market environment surrounding opioids in U. S, we are committed to marketing our three main pain care products, Mobantik, Morfaband and Roxabond, in a responsible manner while responsible responding to patient needs. We have established so called commitments in pain care, which is a program dedicated to awareness and education around responsible pain management. So in response to the set business environment changes and in preparation for for upcoming oncology pipeline, we restructured U. S. Commercial organizations as a reduced headcount by about two eighty or onefour in U. S. Commercial organization, including sales force and home office. So this is the LUPOINT business, midterm business plan target and progress. And with major focus on IV iron franchise with BENEFERS and injectables and generic injectable franchise in fiscal year twenty seventeen, reports revenue reached JPY 100,000,000,000 level versus JPY 150,000,000,000 target set for 2020 midterm plan. This is the iron IV franchise. The benefit indicated for IDA associated with the CKD as well as LENJECTOPA indicated for the iron deficiency anemia associated with various diseases in addition to CKD, those two products are offered by Louis de Poult, and they have shares of more than 75% with those products two products in the market. They have a confirmed position as a leading company in the iron markets being in The United States. In order to maximize the product values of the Indiecta par, we have various actions. In 2017, Lutopold and DSI have made consolidated sales team together. In addition to the oncologists and the hematocologists, which have been promoted so far, they now started promotional activities for GI and OBGYN specialists who deal with those iron deficiency anemia. For further indication expansion in the future, we are now having a Phase III trial, Heart FID, targeting the heart failure patients with the iron deficiency complication. The generic injectable franchise has more than 50 products in their lineup. In order to have a sustainable growth, it is important to continue the launches of the new products one after another. In 2017, we launched five products and filed for 12 products. And for 2018, we will aim six launches and seven filing. Next, oncology business start up and establishments. According to midterm plans, we have the target of 300,000,000,000 yen business of the oncology by 2025. And DS-eight thousand two hundred and one ADC franchise, AMOF franchise, we have a steady progress of the early development products. In order to launch the oncology products such as this 08/2001, we have improved internal organizations. And we have completed restructuring of the organization as well as the recruitment of the global leaders. Under the strong leadership of those leaders, the development, manufacturing and sales department collaborate with each other so that they are prepared for the launches across the organizations. And we are also ahead of the schedule in terms of the shifting of the internal resources into oncology. On the R and D Day last year, we said that we are going to intensively allocate the R and D resources in oncology areas, 60% in research and 70% in development by 2020. And starting with the budget for 2018, we are allocating 50% in all researches and 70% in development that is also ahead of the schedule in the oncology development. In order to strengthen the oncology development, we are reviewing the development organization mainly in The U. S. Until now, we had independent three organizations, Specialty Medicine Development in charge of this cardiovascular and others and regulatory and oncology developments. But now we put the oncology regulatory right below the oncology development so that they can develop plans and implement the regulatory strategy specifically for the oncology, and they can strengthen the capability of the oncology development. Likewise, SM regulatory will be below the SM development, and we will streamline SM as well as strengthen the development. And CB and other clinical development will be consolidated and streamlined so that we can allocate more into the oncology. So let me talk about our results in 2017 oncology. In addition to AADC and ALLO franchise, we are going to start up the breakthrough science as a third pillar that was explained on R and D Day. Out of those three pillars, we are going to deliver seven NMEs in eight years by 2025. That is the 2025 vision for Kasuo Enterprise. So let's talk about deliverables of DS-eight thousand one hundred eighty two-one. So as for the Phase I trial started in August 2015, we made a presentation about its progress in main society and conferences like ASCO and ESMO. For breast cancer, the compound was designated as breakthrough therapy in August by FDA, and we studied the Phase II pivotal study in October. And gastric, we studied the Phase II pivotal from November. And in March, it was designated as Haki Gake by MHLW for the CLC. Phase II started in March. And for the partnership matters, we have a collaboration with a new BMS for nivolumab combination and niratinevu combination in the preclinical trials are also pursued with Puma. And we have a collaboration with Memorial Sloan Kettering Cancer Center. And in terms of the three ADC U3-fourteen oh two breast cancer trials that started in December 2016, and that is making good progress. And U3-fourteen oh two lung cancer that started in January and also the TROP-two ADC DS1062 trial has started in February. And for generating new ADC for research, we have a collaboration and option contract for ADC with glycoprotein company for bancoma antibody. This is a franchise, tuzatinib second line AML trial and QUANTUM trial. We have completed enrollment by August, and we are going to get the top line results in the first quarter this year. And DS-thirty two, we have talked about the quiselteniboo concomitant trials, but we're going to talk about ASAGIJIM trial. And we presented non Hodgkin lymphoma interim results in ASH in December for ES-three thousand two hundred and one. And we have a collaboration with the FDA, Anderson Cancer Center for Research Collaboration, so that we will confirm the combination results with other compounds of ours and others, and we will have many clinical researches that preclinical. And for AML, we can combine the other target drugs with a different MOA so that we can find new treatment options. TS-three thousand and thirty two Phase I monotherapy has confirmed its activity for AML, and it's also established its safety profile initially. And DS-three32, we have many trials going on for AML at the with other choosing in other countries. And having those trials, we can pursue new treatment modalities. And also on the left, it shows the preclinical trials utilizing human AIM LZD graft model of rats, mouse, and this is the results of the combination therapy using DS-three thousand and thirty two and Azan Xinqing. As compared to the control, we can see the mono results, efficacy of anti cancer, ZDS-thirty two, TLO, but we can also see the additive activity as well. And this is the breakthrough science results. We have a TGCT, ptisidaltinib, and we showed we disclosed the supply result in October from ENLIVEN. And for the oncology viruses treatment, the ES1647 and G47 delta, we have a designation for the orphan drug and regenerative medicine in July. And DS-twelve oh five XL inhibitor, combination with osimeletinib, is checked out in the preclinical studies for osimilitinib resistance acquisition delays, and we made a presentation at ESMO. And we are going to start a clinical trial soon. And this is the future oncology project. And this is the latest development plan for DS-eight thousand two hundred and one. And blue and pink shows the breast cancer trials, and I'd like to explain this progress. Phase II and Phase III of breast cancer, the relationship between the two is shown on the slide. On the left, pivotal Phase II is now going on for the accelerated and the conditional approval. On the right hand side, pivotal Phase II and Phase III, that confirms its results. And it is the trial to establish the evidence for the overall survival. And the other Phase III and right bottom box, that is the TDM-one and head to head trial aiming for the second line treatment for recurrent breast cancer. Those two Phase III will start in second quarter. And this is the recurrent breast cancer subtype classification and SOC based on that classification and DS-eight 201 targets in a simplified fashion. In addition to HER2 positive, we have the HER2 low expression patient as well, and Phase III for them is now under consideration. So now I would like to highlight the green and orange portion, which is the update on colon cancer and lung cancer studies. This is the Phase II study design in colorectal cancer. As already explained in R and D Day, this study was already initiated in March and non small cell lung cancer study is planned to commence in the first quarter. And this non small cell lung cancer study is a bit different from other studies because it enrolls hard to mutate subjects in a separate cohort. There are data suggesting that there is quite a few lung cancer patients who are hard to mutants. Finally, the timing of the next oncology data disclosure in June at ASCO Chicago U. A. Presentation on DS-eight 201 Phase I study updates and E3-fourteen preliminary study in breast cancer Phase onetwo have been accepted. Presentation on DS82001 is expected to be oral on the June 1. And also at San Antonio Breast Answers Symposium in December 2017, we already reported that in HER2, a low response rate was thirty one percent. But Antoine said that important and interesting updates are awaited in June ASCO. And also, we also plan to share results of the Institutional Lung Disease Adjudication Committee assessment. Incidentally, on June, at nine a. M. Japan time, we're scheduling a conference call from ASCO to review details of presentation in ASCO. Presentation will be given by Antoine san. Now about our initiative to transform SoCs. At Dansenko, we are undertaking various activities with the aim to enrich our pipelines with innovative projects that can potentially change our standard of care. One of the special focus is regenerative medicine and cell therapy. In 2017, in order to strengthen R and D structure, we established the Cell Therapy Lab. We also advanced some activities such as in licensing alliance like KTE C19, a CAR T therapy, a heart cell for severe ischemic heart failure and KAPSCO, capillary stem cells and iPS derived CAR T cardiomailocyte sheet. I'd like to today give you some update about KTE C19 project. CAR T therapy is an autologous genetically modified T cells expressing CAR, chimeric antigen receptor. When CAR molecule recognizes CD19 antigen and tumor cells, they transmit activation signals to T cells, then which can then kill cancer cells. In U. S, we have already achieved approval was already given. But also in Japan, we will start a Phase II study in refractory relapsed large B cell lymphoma. In preparation for this Japan study, as for the preparation, PMTA consultation to initiate clinical study has already been complete. And also, logistic process to expedite dosing is under construction as well. And as a part of that, we signed clinical supply manufacturing contract with Kitachi Chemicals. And dosing to patient will start from latter half of this fiscal year. And regarding DS-five thousand one hundred forty one, the top line result has been released on Wednesday, although expression of dystrophin protein was only partially identified in some patients, skipping of Exon forty five was clearly confirmed in all subjects, and there were no safety concerns as well. The study will continue with study period extended to forty eight weeks. We are committed to advance this project so that we can deliver this new treatment option to patients suffering from the muscular dystrophy as early as possible. Now I'd like to talk about enhancing profit generating capabilities. One of our midterm plan target is to push forward with massive cost reduction and streamline measures on a group wide basis. Enhancing procurement, our target was to generate 50,000,000,000 yen savings on a cumulative basis during the midterm plan period from for Indirect Materials. So far, of 13,200,000,000.0 yen and 18,200,000,000.0 yen in 2016 and 2017, respectively, was achieved. For Optimization and Manufacturing System, we closed Hiratsuka plant of Dai Saika Chemical Pharma. And also sales organization in U. S. Was restructured in line with our strategic review of our U. S. Pain business as well. And related to R and D, we closed Daisenko India Nisubio Pharma. And streamlining of assets and enhancing capital efficiency is important, and we are reducing cross sharing shares. In fiscal year twenty nineteen, additional nine stocks worth 14,400,000,000.0 yen was sold. We will further reduce to an appropriate level going forward. Now about shareholder returns. In the midterm plan, our shareholder returns policy called for more than 90 yen per share annual ordinary dividends, payment and flexible acquisition of our own shares and total return ratio of 100% or more during the period of the plan. In fiscal year twenty seventeen, the ordinary dividend was 70 yen per share and treasury stock acquisition was 50,000,000,000 yen As a result, total return ratio was 159.1% on a single year basis and 169.2 on a two year cumulative basis. We will carry on the same effort in accordance to this policy. Now fiscal year twenty eighteen consolidated forecast will be explained. And so the forecast for fiscal year twenty eighteen is sales revenue yen $910,000,000,000 and operating profit of 98,000,000,000 yen We project substantial revenue decline. However, operating profit is projected to increase versus previous year because in fiscal year twenty seventeen, there were special factors, including impaired net loss. So this is a comparison versus 2017, excluding special factors. In terms of revenues, due to the impact of coming from old miss Autumn's patent cliff and from price revisions in Japan, we project $910,000,000,000 yen a decline of 5.2% or 50,200,000,000.0 yen In terms of cost of sales, a decrease of 17,000,000,000 yen is projected in association with decline in revenue. And in terms of SG and A, a decrease of 5,400,000,000.0 yen is projected coming from U. S. Sales restructuring and cost and continued cost down efforts. And in terms of R and D expenses, we project an increase of 4,100,000,000 due to investment required for investment of studies in DS-eight thousand two hundred and one and U. 14 2002 as well as some new studies. In face of increased advance investments in oncology, R and D and for business infrastructures. Continuous efforts for cost reduction and streamlining of assets will be pursued. However, impact of patent cliff and price revision is quite substantial. Therefore, operating profit of 78,000,000,000 yen a 29% reduction versus previous year is projected for fiscal year twenty eighteen. Now let's talk about our review of five year business plan. Edoxaban is growing in momentum beyond initial target. And DS8201 and other ADC franchise as well as AML franchise projects are progressing smoothly. So that means that we are steadily taking steps forward toward meeting our Vision 2025, becoming a global pharma innovator with competitive advantage in oncology. However, due mainly to U. S. Pain business, including CL-one hundred eight and myelodulin failure situation, it's now difficult to achieve the initial target. Although we have enjoyed steady growth in Japan business until today, the recent drug price system overhaul is causing huge cloud of uncertainty to our business environment here in Japan as well. So as mentioned, substantial impact from Pig and Clift and price provision is expected in fiscal twenty eighteen. And operating profit is projected to fall below five year business plan target of 100,000,000,000 yen So amidst adverse internal and external changes affecting profitability, DaiSanKu is examining initiatives to support business profitability. So upon finalization, those measures and new financial targets will be announced. That's all for my presentations. Please refer to the appendix materials for further details later for yourselves. So after this, we'd like to entertain some questions from the floor. Thank you very much. Now we'd like to take questions from the floor. So those here will be answered by Doctor. Manabe as well as Mr. Nakayama, the President and and Mr. Sai, CFO and Doctor. Glen Gomley, Global Head R and D Senior Executive Officer. So depending on the type of questions, those members will answer the question, respectively. And when you ask questions, please tell us your name and where you're from, please. So please start with the gentleman in the middle. Second row, please. Citigroup, Mediguchi. I was thinking about many questions, but I'd like to confirm your last statement. So revisiting your five year business plans, although it is not written on the slides, but important measures will be reviewed. And then after that, you said you're going to make a disclosure, you're going to talk about it. I don't think you can tell us at the moment. However, apparently, those numbers are not going to be achieved. Therefore, the numbers here as shown today are rather low, but are those measures to be including the measures for those? And how do you could you explain what you said in the last sentence, please? So back to your question. At the moment, the business management under Nakayama, we are visiting those business plans. So he is going to answer the question. I have two sides. One is that mid- and long term perspective, we need to accelerate growth potential, and we need to have actions as well as the actions to improve the profits, and we are working on that at the moment. Please wait. So when one is decided, are you going to tell us, right? And second question, DMD drug. And of course, details of the data is not disclosed at the moment. However, as compared to the current drugs, what is the percentage of the Western blot, for instance? So codentation is a bit used using Western blot. However, it is still being considered because the amount of the expression is still very low. And those preceding drugs, they go only up to a certain percentage single digits, so it will be lower. So the present drugs is lower in terms of the expression, but it is lower. We are seeing some expressions. So there are expressions. However, for some of the patients, we are seeing less of those than expectation, but messenger DNA area, it has been already revealed mRNA. And eduxaban, seeing the numbers, the shares are kind of stagnating, I think. But globally, Europe and Japan altogether, it is growing, and we're seeing expansion. And usually, after those growth curve plateau usually, but you're trying to reach one and two now. And how far do you think you can go after those two drags? And then on the left graph, the last two points two dots of the red line may seem plateaued, but like onethree or onefour dots before that point of time has been on the good growth. I think it will continue. So it is a kind of transient effect of the end of the fiscal year effect, I think. So next question, please. In the front, towards the right, please. UBS SECI. On Page 72, again, the red dot in the middle, you talk about the deterioration of Japanese business environment. So all along, you enjoyed number one share in the Japanese pharmaceutical market, and you are up to maintain that. So kind of given that, you have the ambition to maintain number one share in Japan as well even if the business environment is deteriorating. Or are you going to review that? Well, I think we may have to examine, but this target wouldn't change just because the business environment deteriorated. But the robustness of that or the maybe the growth expected may need to be expected for the Japanese market as well for Dai Sankyo, right? And also, the you talked about the measures to support profitability as well in the toward the middle in the box. And so in terms of you may not know what you will be doing with the headcounts as well. So for this purpose, we're going to seek and explore all possibilities, including headcounts as well. Okay. And regarding 8201 as well, this is the third line based breast cancer in U. S. When is the filing coming for breast cancer in U. S? Do you have that time line, a kind of a good estimate for that timing for submission? So you recall that at our R and D Day, Antoine Iver highlighted a very aggressive UNIDENTIFIED program in third line breast cancer with eight thousand two hundred and one. He said that and I confirm that we are on track for 2020 as a reasonable time. However, he also indicated that we were taking every opportunity to see if that could be accelerated. We're not prepared to commit to an acceleration today, but I believe that the data continues to look stronger and stronger. You'll see that again, I think, in the ASCO meetings that Navi San referred to, and we'll hopefully, you'll be able to take a look at that and convince yourself that this is looking really quite exciting. Thank you. In regard to 08/2001, the combination with nibolumab, I think starting from January to March initially, but is this behind from the original estimates? And also on the bottom, also IO combination opportunities, probably you don't have specifics, but can we also consider that these the combination development is also on track as well? We think that in addition to 8,201 being used by itself, there's a very exciting opportunity to combine it with immune oncology checkpoints. We have a very strong relationship with Bristol Myers Squibb that you referred to and that will be our lead combination. But we also believe that there are other checkpoint inhibitors that will be valuable. We're in the process of arranging those collaborations with various companies, but we're not in a position yet to outline those, but I would say they are very much on track and looking very good. So let me follow-up. So in your press release last August, so you indicated NIBOR and the AT-two zero one combination study will be initiated in the calendar first quarter this year. So I'm wondering there may be some delay or any issues? So I don't see any issues. I think we have two companies that are developing their programs very aggressively. We're working together to make sure that our partnership is good for both of us. Maybe it takes a little bit longer, but not much and it's on track as far as I am concerned. Maybe a slight delay from what you remember, but not much. So the gentleman in the back, Monthly mix, much is key. So that is antibiotic, that's the question about my question is about why are you going to make it a whole subsidiary for the manufacturing only biosimilars? And perhaps you maybe have a plan to receive orders from other companies for biosimilar productions. Do you have an idea? So in terms of when it is established, I explained it with the slides. But one is, as we put them under the supply chain department, that chemical pharma, pro pharma, it has a very good GMP based site. Therefore, in the supply chain, we can use them to make a good and stable supply and GMP, good quality. And also new company, Biotics, they have many technologies, biologics, and we want to share the information in the supply chain so that finally, we want to optimize the supply chain on the whole. That is the aim. And in addition to that, well, Japanese market going forward is rather not transparent, as you said. You have a plan to revisit your sales force organization in Japan, too, like in The U. S? Well, in terms of the outlook, either mid- and long term perspective, we have to clarify what is being unfolded, and then we will find the optimized fashion, optimized way of having that in the future. And you said that number one, to be number one, that is your continuous goal going forward. But of course, there should be the competitors' situation today. So they probably you need to have various actions to make in order to be number one. But rather than the numbers, as you said, today, but like do you have plans for M and A, for instance, to look for the scales or size going forward? Well, we say the one as our aim, but most important thing is we want to become number one in quality in terms of quality and quantity. Therefore, in result, the patent products, we want to we prefer to have them, those patent proprietary products, which attract other people. So in order if we can make ourselves be attractive that way with many of those attractive product like that, then we can attract other companies as well, and we will be able to achieve both revenue and profit as results. UNIDENTIFIED Toward the middle, toward the back. Tokyo Asset Acknowledgment. My name is Mizuta. And I have several. So regarding OTC in Japan as well, how is that positioned today? And I would like to know your future prospects related to OTC business. So will you be pursuing growth? Or do you expect growth from OTC business here in Japan? So this is a midterm challenge, one of midterm challenges. So allow me to respond. Here in Japan, so we have the Ethical Generic Wax ine and OTC. So we have four major businesses. So we have an extensive diversification of businesses. And given that, that was a key part of our strategies going forward. But on a midterm basis, we need to think what is maybe valid. But then, originally, so the ethical pharmaceutical was done and then they become switch OTC. And because of that, we wanted to make a good maybe circulations between the two and receive synergies and including Loxynines and others. I think the circulation is going well so far between Ethical Product and OTCs. But within the new business market environment, I don't know how they're effective with four. And regarding the Doxaban, so you have a life cycle management activities to generate and accumulate data. So you have many data generation activities. And based on this, will you be leveraging that to grow The U. S. Maybe business as well? Would that be possible to leverage those data that you generate for U. S? Yes. What we have presented is LCM related edoxaban to LCM activities to maximize edoxaban's product values. That directly would not be directly related to submission in The U. S. In U. S, that market situation continues. So we still project tough situation in U. S. And also regarding so IIT for 1647 is there. And so if you replace gene, I think you can use it for all kinds of indications. So it's like a platform. So do you the right? Is it for only the indications or for the whole of the platform regarding your ownership of rights? So you're referring to the cancer oncolytic virus, I think was the question. So I think you're right, that does represent a platform. It's more than just a single drug. This is our first indication. So our ability to genetically modify the virus to be able to attack only the cancer cells and not normal cells. It's been carefully designed for that one disease. But if it is successful, we certainly would be very aggressive in pursuing other ways that an oncolytic virus could be used. REPRESENTATIVE:] question, please. Morgan Stanley, Murao Company. So speaking of the reviews of various matters of the businesses, so when can we expect you to tell us about your new outlook? That way, we can be sort of be ready for your talk. So I prefer as soon as we can, but it involves a third party as well some extent. Therefore, we conservatively speaking by the second quarter results presentation day or by that time, we'd like to bet early as possible. But I don't want to stick to the short term performance so much. But according to the talk today, I'm expecting various action plans and measures going forward. But guidance today for this fiscal year today might have an outlook going forward, which is a kind of downside possibility with some of the, for instance, impairments and so forth being put into, right? Well, I think we're expecting going up upside, not downside, when we design new measures. So you're going to add a set of the actions which will be starting to be effective toward the end of the year, right? Of course, we need to wait for the other party because it has to be to mature before we tell them tell the story to you. And back to SPA, OTC issues. And what is the in terms of the positioning of the SPA, are you going to radically review the positioning of the SPA? Because in this particular industry, there are many movements. It's pricing of generics, that is the very point in this area. For instance, a spin off, is that a possibility? We are not telling any specific items, but we are watching very carefully how the industry goes out and unfold going forward. Depending on the situation, our action will come. So ROE 8% target. So according to the current profit level, it is a pretty tough target, but you're not going to retract or revisit or change the ROE 8% target, right? Well, it is the future story, but we want to make we want to clear that. But also 100% shareholders' return, that is something we want to stick to as well, but we think that we are going to keep that percentage. Other questions? On the front, toward the right, please. My name is Sakai from Credit Suisse. So in The U. S, you restructured headcount. I would like to ask you some related questions. So you said that you've executed, so some sort of maybe cost expense has been accrued. I'd like to know some related expenses you have or costs you have accrued in association with restructuring. And also on Page 35, Rigdport business is mentioned. And its business environment will probably also change as well. There will be more competitions around. And also, this may not be directly related, but also biosimilars, the ESSAs, so in the renal disease. The pricing related environment will also change as well. So given that you've talked about reviewing the Japanese business, I think your the target for 2020 is very high. And your the reports contribution is very high. So you need to project it right. Otherwise, you're going to kind of maybe face some So huge there are some competitions already. And so related to that, our strategies is also reviewed. But we have already obtained some shares because we go ahead of others. And regarding the iron deficient anemia, there are so many patients. And I think there's potential for more treatments even if competitors come around. So in terms of I think there's further potential to expand the market even with the competitions comes around. So I think there's good and bad things about having a competition. And also, there's a bar chart on Page 36. And so it is becoming sluggish somehow, reports figures. So there's also a potential for line indications as well. So we need to put in the right strategies so that in 2020, we can meet JPY 150,000,000,000. So we're contemplating some strategies so that we can expand and also meet these figures? And also, what about the costs you've incurred and calculated? And you didn't disclose that. You said that calculation is already complete. Have you disclosed the cost related to restructuring? We don't disclose. And also, maybe Lunberg's legacy in Delhi, you have won 60,000,000,000 yen in litigations. Is this being disposed? Well, yes, it's underway. And we are also negotiating and also some legal procedures are underway. So once you're ready, we can we'll be able to disclose, but not today. Thank you. REPRESENTATIVE:] Other questions, please. Ebisawa speaking. So Daichi Central SFA, as you said earlier, so EIZAR has an element of EIZAR being going away. And your company, EIZAR, both companies contract out manufacturing to other companies because of that. Well, with the general products prices coming down so much, it is probably difficult to sustain the businesses in this environment. But you have AG today. But whilst continuing with AG, you would like to continue the new businesses as well. Is that what you want to do? Or do you like to do something like LMET, giving away the businesses to other party, for instance? What is your plan going forward? So in the pricing situation like that, AG is one of the path that we should pursue, and we want to grow mainly in this area, and we are negotiating with several companies in this area. And depending on the negotiation, if you get more orders going forward, your business will continue, right? So if with AG businesses, we can try to grow steadily. And we've had some success cases in the past. Therefore, if this will evaluate it, I think we can get another one, too. But also, pricing going forward is something we should watch for, including the prices for AG. On the left. My name is Eli from Merrill Lynch. Thank you very much for your explanation. Regarding 8,201, DSA 08/2021, so hard to low Phase III development strategies. I was wondering what is the strategies for hard to low Phase III EDTA-one. So Glen will explain, but as a reference, we have some materials. And you can see where you are aiming for, so can we kind of project that? So on the right top, so hard to within hard to negative, there's hard to low. And so and also, on the bottom, we have a box including that. And right now, we're kind of contemplating our strategy, sirs. So if you need to know more about details, Glen Sun can give you further explanation. So with 08/2001, we are very aggressively challenging the conventional use of an antibody drug conjugate. We know that Kadcyla from Roche has been developed in patients who have failed therapy and we are now doing our Phase II trial in patients who have failed Kadcyla, the post TDM-one. We are then at the same time developing a program to go head to head against the TDM-one or Kadcyla program. These are both positioning of 8201 in what you would consider a very conventional use of an antibody drug conjugate. What we are also observing is that there are many patients who have very low expression of HERG2, so low that Kadcyla does not appear to be very effective, it's not indicated. And it's our belief that because of the bystander effect, because of the very potent payload and our very unique linker system that our drug will be effective in that entire population of patients that are not indicated. We've got early data and as Doctor. Manabe indicated at ASCO, we plan to update you on the potential use in HER2 low. What this diagram on your screen tells you is that there are a whole group of patients that have in the past never been considered appropriate for this kind of therapy, we think we can redefine the classification of breast cancer treatment in a way it's never been done before, but I'll need to show you that data in a few months to convince you. REPRESENTATIVE:] And also within regarding ASCO presentation, Phase I study in HER2LO will be presented in ASCO. And I was wanted to get some sense of the data compared to what's already available. What new information we expect in HAR2LO with a Phase I study? Is there something that you can share for now? So I cannot share additional data today. You've seen some of the very early cuts of our data and it looks very promising, but it's on a very small sample size. And I think what you want to see is that sample size increased to a large enough number to be convincing. At ASCO, I'd like to show you the increased sample size and how we're doing with the efficacy. But today is probably not a good day for us to do that. You will also see at ASCO as Doctor. Manabi mentioned that we will be giving you preliminary results for the U3-fourteen oh two. This is our HERG3 compound in breast cancer. So the question you might have is, is eight thousand two hundred and one just one drug or is it a platform that can be used in many different ways by changing the antibody? Here's our first example where we've changed from HER2 to HER3. And at ASCO, I think we'll convince you that this is getting even more exciting than it is today. And also, so regarding U3-fourteen oh two, it's so do you have maybe do will you be sharing some efficacy data in HER2 low? So in we will be showing AE-two zero one, HER2 low efficacy data, and then we will be showing you the HERG3 ADC data that we have to date. And so depending on the enrolled subjects, it really depends what we can share in the ASCO. May I? As to the Sakai san's question earlier, asking about expenses for the restructuring, not included, but it sounded like it is not included, but it is inclusive of that. Page eight has numbers. Yen 2,800,000,000.0 actual expenses are included for the restructuring manpower. So other questions, please? Hashiguchi speaking. I have one question, 8,201. What is the basic principle idea for the future development? According to today's explanation, for the mutations with overexpression of HER2, those are the basic the audience of the drug. But HER2 mutation patients, for instance, what do you think about the development of the products for those patients? The Roche product is, for instance, for the mutation patients. For the mutation patients, they have a probably higher efficacy for the patients. And gene sequences will be more often used going forward. And therefore, the patients with the potential efficacy can be discovered quite easily, thanks to the gene sequencing going forward. What do you think about it? So I'll answer the question and Glenn can add later on. So HER2 mutation, so we are thinking about starting with the lung cancer as well because we are seeing that in many cancer types. But as biomarkers, the lung is most progressed in a way. So in a COC area, that's what we can start with that for mutation. Glenn, can you add? So I know you've been following this story very closely. And what you've seen is this has gone from a single observation to now a clinical development program that includes breast cancer, it includes multiple conditions within breast cancer, gastric cancer, now colorectal cancer, non small cell lung cancer, three or four IO combinations. And we are now engaged in partnerships with other companies who have antibodies that we believe could be combined with our platform and produce efficacy in diseases that we never thought possible before. The question you're asking now is can we expand that science into mutated forms? It is something we are thinking very carefully about. We are working through that idea, but we have to execute what we just showed you flawlessly. We need to deliver all of these trials. And you also may remember that Doctor. Hiver at R and D Day said that we now have new payloads and new linkers that we've developed and he gave you a hint that those new payloads may be significantly more powerful than our current topoisomerase. So the program is exploding in possibilities. It is moving extremely rapidly that we have shifted our resources almost entirely to make sure this can get done. And now of course, you're beginning to think what else can you do. That's a great idea. One step at a time, we will get to that answer as soon as we can. REPRESENTATIVE:] Are there any further questions from the floor? On the middle, toward the middle, please. So my name is Onishi from Toyo Economics. I have two questions for you. One is the pain business in U. S, yen 100,000,000,000 target versus that you're going to fall go short, so you're going to revisit. And probably you had an expected development expenses. So how much do you plan today? And also, you said that you're going to maybe accelerate the investments on the oncology. Are those connected? So originally, with we've discontinued melogabalin development. And also, CL-one hundred eight was returned. So those two were the planned development, and they were both discontinued. So there would be no additionals coming going forward. So regarding those portions, those that you did in expense, those are not large in terms of figures. Milocabalin discontinuation is there, so it's not so large. And also, my next question is Takeda has such large acquisitions. And seeing that, I was wondering, at Dai Sankyo, I was kind of seeing how you perceive. Given the competitions, do you think that move will impact you? And also, as you review, that sort of business environment change, did you kind of incorporate that as maybe a risk or threat? So maybe everyone has different perceptions and impressions. So allow me to speak and then pass over to Nakayama san later on if needed. And I've been staying in these industries, and I've been perceiving Takeda's strategies, and I had friends there. My impression is that I think Takeda's strategies has is changing and a bit different from Daiichankyo's. So I think their strategy is totally different from ours. That's my impression. And also regarding their move in M and A, noncash stocks are being utilized. And I was wondering how that will settle going forward. So we are Japan origin global pharma, and we're taking on similar challenges. So we're going to monitor. So I am think we welcome that they will be doing good as same Japanese pharma. So I am not in a position to talk about their negotiations. But so the internal assets needs to be leveraged to commercialize products and also to acquire external assets as well. So I think that basic things is quite similar in Dai Sankyo as well. So eight thousand two hundred and one franchise will be accelerated and including other internal assets and opportunities as well and also looking for opportunities to acquire something from external. So it's I think what they're doing is nothing new, but they use treasury stocks. And in terms of measures, I think they may generate some varieties of results. So we're kind of want to extend best wishes. Well, I think we've exhausted by two of us. UNIDENTIFIED Other questions, please? The gentleman in the back, please. I'm Ms. Seung Ho from Total Kite Asset Management. The DMD, so some for some patients, you had expressions confirmed. But depending on where you took the biopsy from, even for one patient, sometimes you had that expressed, others not. That can be possible. What do you think? Is it possible? That possibility cannot be denied. However, thinking about condition of the patient, we cannot take those biopsies very frequently. And also as expressions in the well, protein expressed in the myoskeletal area. And then at the moment, we only took a small amount, only a part expressed. Therefore, frequency and also a question of protein, unless that goes up enough, it is kind of difficult to bring that knowledge to the actual product. Thank you very much. Other questions, please? Are there any further questions from the floor? If not, we are ready to announce the closing of this session. Thank you very much for your