Good afternoon. My name is Manabe. Thank you very much for participation despite your busy schedule for our top management presentation of Daiichi Sankyo. At 1:00 P.M., we made announcement of the results of the second quarter FY 2017, of its consolidated results. Based on the handouts today, I'd like to present the information. This is the agenda today. I will cover the results of the second quarter FY 2017, revision of the consolidated result expectations for the fiscal year 2015, other main management update, and shareholders' returns. After that, Dr. Glenn Gormley, the Global Head of the R&D, is going to give you the update of the R&D activities. After that, we will take questions from the floor. Let's start with the second quarter results of the FY 2017. This is the outline of the results.
Consolidated revenue was JPY 469.4 billion, up by JPY 11.4 billion year-on-year, or 2.5% increase. Cost of sales increased by JPY 9.8 billion year-on-year. SG&A expenses declined by JPY 1.7 billion. R&D expenses will be explained later on, but it increased by JPY 27.8 billion, including special items. As a result, operating profit was JPY 48.8 billion, down by JPY 24.5 billion year-on-year, or 33.5% down. PBT was JPY 51.2 billion, down by JPY 20.7 billion. Profit attributable to owners of the company was JPY 34.3 billion. That was a decline by JPY 14.7 billion year-on-year, or 30% decline. Actual Forex exchange, 111.7 JPY for a dollar. That was yen depreciation by JPY 5.72. 126.29 JPY per euro. That was a yen depreciation of JPY 8.7. Let me explain the factors of ups and downs year-on-year.
Revenues increased by JPY 11.4 billion year-on-year, I will explain the breakdown as per the business units. First of all, Japanese businesses, pharma, vaccine, OTC. Olmetec hypertension product reduced its revenue. However, anticoagulation product, LIXIANA, made a good growth. Also, Nexium and PRALIA, osteoporosis product with the additional indication of rheumatoid arthritis. Those made increase of the sales. Daiichi Sankyo Espha made increase of the revenue, mainly with the authorized generics such as telmisartan, olmesartan, amlodipine, rosuvastatin. Daiichi Sankyo Healthcare also increased the revenue. Japan as a whole made an increase of the revenue by JPY 23.1 billion. Let me talk about overseas businesses. Those are the numbers excluding the impact by foreign exchanges. Daiichi Sankyo, Inc. in the U.S. had the decline of the revenue of olmesartan, hypertension, and Effient, anti-platelet. Thus, we had a decline of the revenue by JPY 30.4 billion.
Luitpold Pharmaceuticals, Inc. had a growth of the iron deficiency anemia, Injectafer, and the generics injectables. Thus, increase of the revenue by JPY 7.9 billion. Daiichi Sankyo Europe had a growth of LIXIANA. However, due to the decline of olmesartan, it had a revenue decline by JPY 1.2 billion. ASCA, Central South America and Asia, had an increase of the revenue by JPY 2.8 billion. Incremental sales due to the Forex was JPY 9.2 billion as a whole. This slide shows reasons behind ups and downs of the operating profit. The revenue had incremental sales by JPY 11.4 billion, including the JPY 9.2 increase by foreign exchange. Expenses excluding Forex associated and the special items are as follows. Cost of sales increased by JPY 13.2 billion due to the cost ratio increase by the product mix change because of the olmesartan exclusivity losses. SG&A increased by JPY 0.9 billion.
R&D expenses reduced by JPY 4.6 billion. The incremental cost increased by the foreign exchange factor by JPY 8.3 billion, including the cost of sales JPY 2.7, SG&A JPY 3.4, and R&D JPY 2.2 billion. Special items had incremental cost of JPY 18.1 billion as compared to the previous term, and details are explained in the next slide. Excluding the foreign exchange and the special items, we had virtually decline of the profit by JPY 7.3 billion. These are the details of the special items. In the previous term, we put up JPY 6 billion for restructuring cost for Europe. Cost increased. This term, we had sales of the fixed asset. We had a decline of the cost by JPY 6.1 billion, but we put up JPY 30.2 billion of the impairment losses of the intangible assets. JPY 18.1 cost increase.
Intangible assets are impairment of JPY 30.2 billion, includes CL-1008 return of the rights, which was JPY 27.8 billion.
Next, let me explain current profit. As already explained earlier, Forex, other extraordinary factor impact adjusted operating profit decreased by JPY 24.5 billion. In terms of financial income, expenses with improved Forex gain and losses, financial expense is reduced by JPY 3.8 billion. As indicated in the chart on the right, tax rate remains about the same year-on-year. With profit before tax decrease, corporate tax came down by JPY 6.7 billion. Further, incorporating non-controlling interest, current profit attributed to the parent company is JPY 34.3 billion. That is a decrease of JPY 14.7 billion year-on-year. This slide is showing major business unit revenue changes in Japanese yen. On slide six, Forex exclusive BU status was presented, but here, those are Forex inclusive performance. Japan business is surely growing in revenue year-on-year, and Daiichi Sankyo Healthcare is performing well.
Overseas, due to Olmetec and Effient, U.S. Daiichi Sankyo Inc. posted lower revenues, but U.S. Luitpold business revenue greatly increased. Daiichi Sankyo Europe, due to Forex impact, had a higher top line. ASCA business encompassing Asia, South and Central America grew in top line. Next, revenue changes of major products in Japan. This fiscal year, as in the previous year, major products like LIXIANA, Nexium, PRALIA are performing well. On the other hand, with the generic products' further market penetration, many long-listed products are struggling year-on-year. Now, let me explain our fiscal year 2017 revision of consolidated forecast. Up to the second quarter of this fiscal year, excluding CL-108 impairment loss, performance results are in line with the original forecast, and they are anticipated to remain so going forward.
We are going to take all potential management efforts and try to expand top line and bottom line, reducing expenses. Yet, we decided that it's difficult to offset all CL-108 impairment at present. Although utterly regrettable, we therefore decided to revise OP target to be JPY 75 billion for this fiscal year. From here, I'm going to give major management updates. edoxaban first. On this slide, including edoxaban, our changes in direct oral anticoagulant, DOAC, global market are presented. The bar graph indicate DOAC market size. In other words, DOAC products are total annual sales. The line graph is showing the ratio of DOAC prescription in total of warfarin and the DOAC prescriptions combined, indicating the progress of switch from warfarin to DOAC. DOAC market size has been expanding for the past five years, growing to be around JPY 1.7 trillion for one year period ending June this year.
As indicated by the graph, along with the market size expansion, switch from warfarin is surely progressing. However, DOAC prescription ratio is still below 40%. On this slide, I would like to make the same point, showing time series of DOAC market in Japan and Germany using JPY denomination. In both countries, the market is expanding, making DOAC annual market size about the same level, around JPY 140 billion. However, there is a notable difference in switch rate to DOAC from warfarin between the two countries. In Germany, DOAC ratio is already over 60%, while it stays a little more than 30% in Japan, making us think that we still have market potential in Japan.
Here, I'd like to show you the ups and downs of the sales shares over the quarters in the Japanese market for edoxaban. We sell this product with the name LIXIANA. Its share has expanded steadily, and in the second quarter, it reached 23.5%. It is approaching to the top two products. This slide shows the prescription shares of LIXIANA for new patients, unlike the sales share in the previous slide. These are the monthly shares. We believe it is important indicators leading for future expansion of the sales, and it occupies the top position since March, and it expanded to 38.6% as of September. Not just new patients, but I believe we can be number one for the shares of all patients, not just new patients. This is the situation of Germany, the largest drug market in Europe, as well as Korea.
In both countries, we have made a steady expansion of the sales shares over the months since the launch. As of August, it was 9.2% in Germany and 18.5% in Korea. This is the update of the U.S. pain businesses. We made a press release in August. With regard to CL-1008, we have decided to return all the rights back to Charleston Laboratories. We made a press release in June about mirogabalin. In a phase III trial for fibromyalgia patients in Europe and the U.S., we couldn't achieve the primary endpoint. We have those changes of the circumstances in-house. Also, we are seeing the social and the political situation changes around opioid in the U.S. Going forward, we will stay presently observing the situation, and we will carefully deploy the pain businesses with the MOVANTIK, MORPHABOND, and RoxyBond, the three products to respond needs of the pain patients.
This shows the commitment of the pain care at Daiichi Sankyo, Inc. In the U.S., opioid abuse is creating a big issue. Daiichi Sankyo, Inc. understands both the benefit of the use of the opioid in the healthcare field in the U.S., as well as the associated risks so that we declare the contribution to the pain care. This is the situation of the three products in the pain businesses in the U.S. As for the MOVANTIK, we try to improve the awareness of the opioid-induced constipations. Thus, we can expand the revenue. In terms of the MORPHABOND, that is the extended-release morphine with the abuse-deterrent property, it was launched this month. RoxyBond has the abuse-deterrent properties approved by the FDA, it is immediate-release opioid, we plan to launch it in 2018.
MORPHABOND and RoxyBond employ the technology so that it is difficult to adulterate the tablets for misuse and abuse. We will prevent misuse and abuse respond to the needs of the patients who require opioid. Update of the Japanese business next.
With UCB Japan, we are co-promoting anti-epilepsy agent, VIMPAT. In August, we received approval of additional monotherapy indication, in September, prescription period restriction is lifted. On the next page, let me show you expected expansion of patient types thanks to this additional indication. This graph shows estimated number of epilepsy patients, breaking them down based upon whether they are being treated or by age or by symptoms drug therapy effect. Before VIMPAT was prescribed only to non-responders to existent agents, VIMPAT was prescribed as part of combination therapy based on the indication. With this new additional monotherapy indication, partial onset seizure patients who are estimated to be about 400,000 in number will have access to the agent. In September, we launched CANALIA combo tablets. It is a combination between MTPC discovered and developed type 2 diabetes medicines drug TENELIA and CANAGLU.
It is the first DPP-4 inhibitor and SGLT2 inhibitor fixed-dose combination approved in Japan. DPP-4 inhibitor is prescribed in combination with SGLT2 inhibitor in 10% of the cases. CANALIA combination tablets address such combination needs with expected benefits like a reduced number of tablets to be taken improved dosing compliance for patients and healthcare professionals. As was the case for TENELIA, it is marketed by Daiichi Sankyo and co-promoted with MTPC jointly. On this page, I would like to report on in-house development status. mirogabalin could not, as mentioned earlier, achieve the primary endpoint in Western countries. However, in Japan and Asia, the postherpetic neuralgia, as well as diabetic peripheral neuropathic pain patients were evaluated for the efficacy, comparing the weekly average pain score with the control group as phase III studies. These attained the primary endpoint.
Also, as esaxerenone, when CS-3150 anti-hypertensive efficacy was evaluated in Japan phase III studies for its known inferiority of eplerenone in essential hypertensive patient population and achieved the primary endpoint. NDA submissions for both are planned in the fourth quarter of this fiscal year. If things work out well, they will contribute to future Japan business expansion. Next, shareholder returns. In current mid-term business plan, total return ratio of 100% or more, annual dividend amount of JPY 70 or more, and the flexible acquisition of own shares are clearly stated as our shareholder return policies. Pursuant to the policies today, we announced our share acquisitions. The program will start tomorrow as of November 1st and complete by March 23rd, 2018, with aggressive amount of acquisition costs up to JPY 50 billion. This is the end of my presentation.
Next, R&D updates are presented by our R&D head, Mr. Glenn Gormley. Glenn, please.
Thank you, Manabe-san. My name is Glenn Gormley, and I'm the Global Head of Research and Development at Daiichi Sankyo. Today, I'd like to provide you with an update on our research and development activities, which continue to provide an important growth engine for the company. Here's the agenda for today. I would like to start by highlighting our efforts to continuously improve the focus and the efficiency of the R&D unit. I'll then provide an update on several oncology programs, including our two most advanced antibody drug conjugate projects, DS-8201 and U3-1402, followed by a description of two new collaborations we've recently announced. I will then update you on the progress of esaxerenone, our newest drug for hypertension. I'll conclude with a brief update on several major milestone events that we're looking forward to and let you know about our plans for our next R&D day in December.
As our R&D pipeline has continued to expand, it's important that we stay focused on the most important projects that we believe have the potential to change the standard of care and provide significant benefits to patients. We also need to do this as efficiently as possible. To do this, we are using a three-step process. The first step is to carefully prioritize our projects to ensure we identify those that can have the biggest impact for patients. The second step is to selectively increase our investment in oncology, especially in the antibody drug conjugate and AML franchises. This will require that we reduce our investment in our CVM and other areas, continuing only the most important projects. We will also need to decrease our operational costs to allow more of our resources to go directly to projects.
The third step is to accelerate our clinical programs as much as possible using the focused investments. One consequence of this strategy is the need to out-license projects that do not align with our priorities. A recent example of this is our decision to out-license DS-5010, a selective RET inhibitor. I expect there will be other examples, including DS-6051, the NTRK ROS1 inhibitor, and DS-2969, a gyrase inhibitor for the treatment of Clostridium difficile infection. These are difficult decisions to make, but we must remain focused on our strategy to ensure that we can apply all the necessary resources to our top priorities. I would like to now provide you with an update on the two most important antibody drug conjugate projects. DS-8201, which uses a HER2 antibody, and U3-1402, which uses the HER3 antibody, patritumab.
Both antibodies are combined with the same linker and payload, which creates a unique platform technology that we anticipate will provide a significant competitive advantage in the field of antibody drug conjugates. The phase I study for DS-8201 consisted of two parts. Part one was the dose escalation phase, and part two was the dose expansion phase, which consisted of four groups of patients. At the 2017 ASCO meeting in Chicago, we presented the results of part one and the first three groups in part two, which focused on patients with breast and gastric cancer. These are referred to as Part 2A, 2B, and 2C on the right side of the slide. At the recent ESMO conference in Madrid, we presented for the first time the results of Part 2D, which looked at dose expansion in HER2-expressing solid tumors other than breast and gastric cancer.
At the time of the analysis, Part 2D of the dose expansion study for DS-8201 consisted of 25 patients with a mean age of 60 and a median number of prior treatments of three, although there was a wide range from zero to 10. 11 patients had colorectal cancer, six had non-small cell lung cancer, four had salivary cancer, and the remaining four patients consisted of Paget's disease, cholangiocarcinoma, and esophageal cancer. For Part 2D, the overall objective response rate was 31.8%, with the best response seen in patients with salivary cancer. The disease control rate was 81.8%, with slightly less efficacy observed in the patients with non-small cell lung cancer. A note at the bottom of the table indicates that three of the 25 patients did not have sufficient information to be evaluated for response.
This waterfall plot shows the maximum % change from baseline for the patients in Part 2D. The color of the bars indicates the degree of HER2 expression in the tumor by immunohistochemistry, with the blue bars indicating the highest level of expression, green bars indicating an intermediate level of expression, and orange bars indicating no detectable expression. The symbol above the bars indicates the patients who are continuing on treatment. As you see, tumor shrinkage was observed in most of the patients. The two patients on the far left side of the chart with some increase in tumor size had no detectable HER2 expression in the tumor. Here's an example of one of the patients who responded well to treatment. This is a 59-year-old male with colorectal cancer and significant liver metastasis, indicated by the red arrows on the left.
He had a high expression of HER2 by immunohistochemistry and was treated with 6.4 milligrams per kilo of DS-8201. On day 175, after eight cycles of treatment, the image on the right indicates a substantial reduction in the size of the liver metastasis. He was judged to have a partial response to treatment, clearly, it was a remarkable change. Next, I'd like to summarize the safety profile for this phase I study. For this analysis, we've included all 168 treated patients from Part 1 and from Part 2. In this table, we summarize all adverse events on treatment of any grade that occurred in more than 20% of patients. We observed that while many patients experienced Grade 1 adverse events, there were fewer Grade 2 or Grade 3 adverse events, and a low incidence of Grade 4 events, shown in the yellow shaded column.
There was no dose-limiting toxicity observed in the study. Based on our analysis of Part 2D of this phase I study, we can conclude that DS-8201 was well-tolerated and the maximum tolerated dose was not reached during dose escalation. The overall response rate was about 32%, and the disease control rate was about 82%. Most of the patients treated had tumor shrinkage and experienced an acceptable safety profile. The most important conclusion from these interim results is that further investigation of DS-8201 in HER2 positive expressing solid tumors beyond breast and gastric cancer is possible. DS-8201 is our highest priority project. Based on this, we are executing an aggressive development plan to fully explore the potential of this therapy. We have two phase II pivotal studies ongoing.
One in patients with breast cancer who have failed treatment with T-DM1, one in patients with gastric cancer who have failed treatment with Herceptin. These studies are tracking for a 2020 submission. We were very happy to hear that DS-8201 received breakthrough therapy designation from the FDA in late August for the breast cancer indication. Breakthrough therapy designation is designed to expedite the development and review of medicines in order to ensure that patients have access to new treatments as soon as possible. We also have three studies planned to start in the second half of this year. One in patients with HER2-positive breast or bladder cancer in combination with the BMS PD-1 inhibitor nivolumab. Another in patients with breast cancer who have a low expression of HER2 on their cancer. A third in patients with HER2-positive non-small cell lung cancer or colorectal cancer.
Finally, we're planning to explore the treatment of patients with HER2-positive breast cancer at earlier times in their care. I expect that any submission for these indications would be beyond 2021. U3-1402 is also one of our highest priority projects. This antibody drug conjugate is based on our own HER3 antibody, patritumab, developed at U3 Pharma and is combined with the same linker and payload used in DS-8201. We have a phase I study ongoing in patients with HER3-positive refractory or metastatic breast cancer, and we anticipate presenting the results in 2018. The phase II study should start in the first quarter of fiscal year 2018, with top-line results anticipated in the fourth quarter of fiscal year 2018. We also have plans for a phase I study in patients with EGFR mutated non-small cell lung cancer, recruitment should begin later this year.
Now I would like to highlight a new project that is about to enter the clinic with a unique mechanism of action. DS-1205 is an inhibitor of the transmembrane protein known as AXL. AXL is a tyrosine kinase, and upregulation of AXL is associated with a poor prognosis in several cancers. It appears that upregulation of AXL is one of the bypass mechanisms that leads to EGFR resistance in EGFR mutated non-small cell lung cancer. DS-1205 is an orally available, potent and selective small molecule inhibitor of AXL tyrosine kinase. I'd like to share with you some interesting data presented at ESMO in September that we believe supports the start of a phase I clinical trial later this year. This is an animal pharmacology study. A mouse xenograft model demonstrates that single-agent treatment with DS-1205, shown in the blue lines, has no effect on tumor growth.
The model also shows that osimertinib is effective in suppressing tumor growth, shown in the red line, but resistance develops after about 40 days of treatment. When DS-1205 is combined with osimertinib, shown in the pink lines, the combined treatment significantly delays the onset of resistance, and tumor growth continues to be suppressed. Our goal is to replicate this effect in a clinical study that will start later this year. We continue to establish new collaborations to support our antibody-drug conjugate and AML franchises. I would like to briefly describe two recently announced collaborations. One with Glycotope, based in Germany, and one with The University of Texas MD Anderson Cancer Center based in Houston, Texas. We are committed to establish partnerships that will allow us to apply our antibody-drug technology to new antibodies and new targets.
A good example of this is our new partnership with Glycotope to combine their antibody, PankoMab-GEX, with our linker and payload technology. PankoMab-GEX is a humanized monoclonal antibody that binds to the tumor-specific epitope of Mucin 1, which is highly expressed in ovarian, lung, and breast cancers, enabling it to differentiate between tumor Mucin 1 and non-tumor Mucin 1 epitopes. We've also established an important collaboration with The University of Texas MD Anderson Cancer Center. MD Anderson is one of the largest integrated academic centers in the U.S., specializing in the treatment of patients with leukemia. The goal of our collaboration is to accelerate the development of novel therapies for AML. This will be accomplished by conducting many preclinical phase I and phase II trials using our portfolio of compounds, plus other compounds from outside Daiichi Sankyo. The collaboration will also allow us to explore the development of novel biomarkers in AML.
Here's how the collaboration with MD Anderson will work. Daiichi Sankyo will contribute several compounds, including quizartinib, our FLT3 inhibitor, DS-3032, our MDM2 inhibitor, DS-3201, our EZH1/2 dual inhibitor, and PLX51107, our bromodomain inhibitor. MD Anderson will test these compounds in various combinations, including combinations with compounds from outside Daiichi Sankyo. If these combinations show potential in early clinical studies, the programs will transfer back to us for testing in appropriate pivotal registration trials. This approach takes advantage of the strengths of both of our organizations to greatly accelerate the development process. The real winners will be the patients who need new treatment options as quickly as possible. I hope you can see that we're making every effort to accelerate the development of our pipeline in a focused and efficient way.
We're looking forward to the San Antonio Breast Cancer Symposium in December, where we plan to release more data on DS-8201, including use in patients with low expression of HER2. We're also looking forward to the American Society of Hematology meeting, where we plan to release phase I data on DS-3201, the EZH dual inhibitor in patients with non-Hodgkin's lymphoma. I would like to briefly update you on an important project outside of oncology. This is esaxerenone, our mineralocorticoid receptor antagonist being developed for the treatment of hypertension and diabetic nephropathy. It is well established that activation of the mineralocorticoid receptor by aldosterone or other aldosterone-independent pathways leads to the development of high blood pressure. This is the basis for the successful development of angiotensin receptor blockers like olmesartan.
In patients with type 2 diabetes, activation of the mineralocorticoid receptor can cause damage to the kidney, leading to the progression of diabetic nephropathy. For the development of esaxerenone in the treatment of hypertension, we have now completed the phase III pivotal study evaluating efficacy and safety compared to Eplerenone. As Manabe-san has already mentioned, on September 25th, we reported that the top-line results indicate that the primary endpoint was achieved. We expect the detailed study results will be disclosed at a future scientific meeting. Based on the top-line results, we are planning for an NDA submission in Japan in the fourth quarter of fiscal year 2017. For the treatment of diabetic nephropathy, our phase III study is now underway, and we'll update you as the study progresses. On the next two slides, we've summarized the major R&D milestone events for fiscal year 2017.
New updates are shown in red, and those that are underlined have already been achieved. In the interest of time, I will only highlight the new events that I've not already covered today. At the top of the page, you see that the top-line results for the TGCT phase III study with pexidartinib was delayed by one quarter, and the outcome was released earlier today. At the bottom of the page, you see that we've initiated the phase I study with PLX2853 in advanced refractory solid tumors and non-Hodgkin's lymphoma. At the top of this page, you see that we're planning for an NDA submission for mirogabalin here in Japan in the fourth quarter of this year for the treatment of peripheral neuropathic pain. Finally, we'd like to let you know that we are planning to hold R&D Day on December 13th here at corporate headquarters.
On that day, I will be joined by Dr. Antoine Yver, the Global Head of Oncology R&D. We plan to give you an extensive update on our progress and plans to deliver the oncology portfolio. We look forward to seeing you again on that important day. Thank you.
My name is Aya Yamaguchi from Citi. First question is about U.S. pain franchise. As you said, you're going to observe them carefully going forward and including those in-licensed products. As you said earlier, that will be a local franchise in the U.S., including the in-license products, do you have a plan to expand the business over there?
It is not going to be according to the word carefully. As I said today, CL-108 has been returned back, and mirogabalin phase II data was not positive. It was negative against our expectations. In the midterm business plan, we say that U.S. pain franchise will be JPY 100 billion in 2020. It is going to be difficult according to the current situation. U.S. opioid situation is surrounded by very tough situations, including the political and medical care constraints.
We'd like to make it. Going forward, including those three items, U.S. members today to start discussions to reconstruct our strategy. We have our internal discussions, and when the strategy is clear, we will let you know. The other question is about CS-3150. This is local development at the moment. What is the positioning of this product in your company? A competitor product is not commercially successful. That product is greater than the hypertensive franchise product, including angiotensin receptor blockers. Are you going to develop that to aim for a large product for the Japanese market? Please tell us the positioning of the product, minding today's development situation.
We are going to enter into the market with the indication for hypertension, and we do not expect big sales for that. After that, we will have the diabetic nephropathy. If that is approved, we have high expectations. For the time being, we will mainly push this forward for the Japanese market. We have no specific plans for the overseas market.
Thank you for the question. Daiwa Securities. My name is Hashiguchi. I have some questions regarding ADC franchise. Recently, the company announced two alliances, BMS and Glycotope. When we think about opportunities, it is likely that there are other potential opportunities. The timing is dependent on the potential partner to some extent. From your perspective, what are the second-highest priority ADC opportunities? What is the priority?
Our highest priority is to develop our in-house antibody drug conjugate portfolio. I've highlighted DS-8201 and U3-1402. Those are the highest priority. We also have several in-house antibodies that can be combined with the same linker and the same payload and will represent an in-house portfolio of ADCs. We also recognize that there are other antibodies owned, developed by other companies, Glycotope as an example, and we are carefully looking and discussing with companies, we can't discuss all of those conversations today, to look for the most attractive ones. There are also combinations with ADC that will be very attractive, and nivolumab is just the first of those that we've been able to announce.
As we develop further into the years, we have ideas within our lab to develop different linkers, different payloads, other ways for us to maintain a very strong leadership position in antibody drug conjugates. Our goal is to be the global leader.
My second question, that's about 8201 development plan. Slide up page 44. Is this really newly confirmed facts or just what you have already covered before? On the page lower down, compared to page 57, there is additional information on the page, and on the page it sounds like it has just started. How reflective is your information on the page of current status?
Our strategy to optimize 8201, our highest priority, has been evolving constantly as our scientists have been looking at ways to use it. As we indicated, the breast and the gastric cancer studies are the most important. They're the most advanced. Now you see on this slide, the first study combining it with a PD-1 inhibitor, so a combination therapy. We also believe that our drug, because of its superior attributes, will be effective in patients with lower HER2 expression, where other antibody drug conjugates have not been able to demonstrate benefit in low expression. We're testing that now. You see we're going to expand into areas beyond breast and gastric cancer. All of this is going on in parallel. Some things are ahead and some things are in planning. Some have just started.
When you heard our description just a short time ago, and now you hear it today, that's a great example of how fast we're moving to optimize this asset. We will give you more update at the R&D day so that you have a full picture of where we're going.
Lastly, about own share acquisition. Originally, the company indicated total return ratio of 100% or more. By now, it progress very, very rapidly given the target. The program was only moved up or concealing cash flow or cash position or forecast of cash flow. Can the program go beyond the stated targets? Please tell us what seems likely at present.
We have announced total return ratio of 100% or more. As you pointed out, we have been implementing the program with speed. However, at the end of five years, attaining defined target is the target so that we have moved very quickly. Therefore, while it's not final, it is potentially possible that we slow down toward the end of the five years period. Therefore, we would like to buy our own shares back when our share price dips lower than assumption.
There are just limited occasions when no insider information is around to buy back. We would like to move cautiously. Thank you for the question.
My name is Mochizuki from Monthly Mix. With regard to this result, you had increase of the revenue, but a decline of the profit. How do you take it? That's question one. The second question is that for the Japanese pharmaceutical businesses, including ASCA, Espha business growth is contributing to your results. What is your thinking about future ASCA businesses?
We had an increase of the sales turnover, as I said. Expenses are making progress according to the plans. Impairment losses are impacting our operating profit directly, and we said JPY 100 billion originally, but it is lower by as much as the impairment losses amount. However, we've had revenue as planned and expenses are going as planned as well. The variance is only by as much as the impairment losses. That is our understanding. Things are going according to the plans. As for the AG, Espha has taken in-licensed products from other companies. In terms of the contribution to the medical cares, out of the patients out there, quite a few still have the resistance to the use of the generics, and I want them to start using the AG product. Espha is making efforts for that for sales.
We've had a high level of the market shares because we had an early entrance into the market. For the time being, AG will be the main products of Espha. However, I would not expect the big AG product to continue going forward, therefore, we need to revisit our strategy sometime.
You're going to strengthen the pipeline, including the AGs from other companies going forward, is that right? If there are possibilities, of course, I would think so. Another question. In terms of the pain businesses, actually that is causing the impairment losses against your expectations. It is not going according to the plans. However, do you have businesses which would complement the problems here specifically?
We've made those midterm business plans and the results, and of course, there are things going well, there are things which are not. U.S. businesses of the pain franchise is not going well, but Japanese business is going very well. Also LIXIANA are growing more than our expectations. Luitpold in the U.S., including Injectafer, are showing very good growth, more than our expectations. Including all that, we like to try to cover the shortcomings of the pain franchise in the U.S. Of course, we have internal discussions today as to how we can do about pain businesses with those three products. Thank you for the question. UBS, my name is Seki. Thank you for the presentation. I have three questions. About the company lowered its OP guidance to JPY 75 billion. In the midterm business plan, there was a mention of JPY 100 billion.
Correct me if I'm wrong, in past guidance, there was a chart showing that OP would stay above JPY 100 billion. This time, the message is that due to impairment losses, OP happened to go below JPY 100 billion. Is it possible to keep seeing OP figures below JPY 100 billion?
As you pointed out, at times, we voiced our wish to maintain JPY 100 billion as much as possible. This time, the performance was better than expected, and there are no expense issues either. The downside of OP is due to impairment losses. When you look at the numbers, we couldn't quite attain JPY 100 billion, but we are on track. Going forward, we would like to stay in line with our mid-term business plan figures and make efforts to the end.
Having said that, though, we have to take risks in our R&D activities so that there are always uncertainties. On the other hand, there are ways to offset fluctuations well. We would like to be courageous when possible. I would like to ask a question to Mr. Gormley next. Let me ask the question in English.
I understand the definition of HER2 positivity in non-small cell lung cancer or colorectal cancer is not well established. I'm wondering how you are going to define the positivity for the HER2 in this patient population, and also how percent of patients will be addressable by 8201 in NSCLC or CRC. Thank you.
We recognized several years ago that as we were moving rapidly into these very complex questions in oncology, we were going to need to focus on biomarker development. We recruited a world expert in biomarkers who joined us from Novartis and has been very rapidly helping us establish those approaches. You're correct, there is some question about how much expression there is, we believe we can detect it. We believe we'll be able to demonstrate or separate patients based on that. We haven't disclosed all of that, it's work in progress. It will be the key to success. It is important to recognize that that biomarker strategy goes hand in hand with what we think will be the success in oncology throughout pharma. We plan to be a leader there as well.
Do you have rough number for how many patients would benefit from RS-8201, like half or for the NSCLC?
No, not at this time. We'll know once we get those clinical studies done.
Thank you.
Hopefully we can answer it with the data.
Lastly, third question. It is a kind of tough question regarding a mass media report at the end of August. The company immediately issued a press release and denied it. As your company's management principle in implementing the principle, do you think that Daiichi Sankyo needs to stay independent company? We need to think about maximum value or best for our shareholders and stakeholders. If it is a good proposition for our shareholders, it must be considered. Thank you.
Thank you for the question.
Ebisawa from Nikkan Yakugyo. I have a question to Dr. Manabe. You said that you want to make LIXIANA number one in Japan. When would you like to achieve it, to try to get share number one? In Germany, your progresses are 60%, whereas in Japan, 30%. That means you still have a potential going forward. At the moment, LIXIANA in the Japanese market made 39 billion JPY sales. If that is going to be 60% of the progress, that means we can expect a 70 or 80 billion JPY level. What is the potential going forward?
For the first question, we want to achieve the number one position as early as we can. As I said today, the growth amongst new patients are the greatest. Therefore, we have the strategy to do so, and that is functioning well now.
We have an internal target of when to achieve the number one. However, we do not disclose that. For instance, the time of the Tokyo Olympics Games, that will make a good target. When we have more specifics, we can explain. In terms of the switchover from warfarin, it is not just Daiichi Sankyo's issue. It is the common issue across all DOAC. We need to raise the awareness of the DOAC's superiority to warfarin. For that purpose, we are accumulating real world data in many ways. Once we get more data as such, it will say it is much better than warfarin, and it will let people use in many ways. I do not expect the Japanese situation to be like Germany very soon, but we like to gain 10% plus for some time soon.
In terms of the CAR-T therapy, CAR-T company acquired by Gilead gained approval, DS is going to make sales of that in Japan. What is the situation of the development? When can you launch it? We have obtained the approval by the U.S. already, we are going to start clinical trials for Japan next year. We do not share with you the ideas, including launches. We can say we are starting the clinical trials right next year. Starting from the phase I, yes, we need to, because we do have to get at Japanese data. Once that is launched, where are you going to manufacture? At the time of the clinical trials and the clinical research programs, it will be manufactured overseas.
If things go successfully and we can make sales in Japan, we can bring the manufacturing sites to Japan, but we have no specifics. Thank you very much.
My name is Muraoka from Morgan Stanley. About treasury share buybacks. At the completion of the program this time, the company ends up owning more than 10%+ on shares outstanding. What is your company's idea about share cancellation?
That stays controversial. Our CFO, Mr. Hirokawa, would answer to the question.
The scale of buybacks stay at the same level as last year's. There are caps in both total amount and number of shares to be acquired. The upper limit number of shares is 28 million, but usually, we find it unlikely to reach that share count. The pricing should be below JPY 1,800 or so that the estimated number of the shares to be acquired is about 20 million shares or so, the average of past years. The ratio held by the company is about 10% at the level with, I think, cancellation of shares is still unnecessary. In other words, should there be any cancellation that is after the next round of buybacks?
Oh, that's right.
Thank you. Another question is about 8201 pivotal study design. On page 63 and 64, I could be mistaken in my interpretation, but the primary endpoint is stated to be ORR. Is that aligned with the authorities by and large, making that ORR?
That's correct. The overall response rate is the primary endpoint, as we indicate on the slide. We are in constant discussion with the authorities to ensure that we have alignment. We can't really discuss the outcome of the discussions with the authorities, but we're confident that the development program that we have is exciting to the health authorities as well as to the investigators and the patients. The plan that you see is the one we're going to execute. We think we'll be very successful with that.
Thank you.
Thank you for the question.
Hasegawa from Yakult Keizai Sha. You mentioned with mirogabalin, it is going to be difficult for JPY 100 billion. You said that. Do you have an idea to revise your midterm business plans for that?
After we announced the midterm business plans, we found that there are things which are going according to the plans, and those which are not. In the different regions and products, we are seeing risks as well. Internally, we are consistently revisiting the risks or gaps that are identified. Specifically, the pain businesses in the U.S., we have a tough situation. We have an ongoing discussion. When we think that it is necessary to announce as a change of the midterm business plans, we would. At the moment, we are under discussion.
I have a question about generics businesses. You postponed a listing of the [result] on the other day. I want to know why.
Espha allocates a lot of resources for AG. Will that cause overcapacity situations? Is there a possibility like that? I do not think so. It is not the case in my understanding.
Thank you.
Tokio Marine Asset Management, my name is Mizuno. Regarding U.S. pain business. The company's pain business has become essentially opioid business in the U.S. In the presentation, various difficult elements surrounding opioid business were discussed. Let me check with you. There was something I didn't quite understand in the presentation. At the moment, without any final decision, you might review your business from now on, you just continue to the business on a cruising pace, or you are going to try to develop opioid business with a strong resolve to do the business.
The environment surrounding opioid business is becoming harder and harder, as you must be aware. This time we launched Morphabond and RoxyBond. They are abuse-deterrent formulations, so we can make a contribution to the society, we think.
At the moment, those non-abuse-deterrent formulations are easier to be abused, the government is looking into the direction. Even with the increase of their demand, the abuse-deterrent formulation can be manipulated, and over time, it might be abused. Therefore, at the moment, we think our initiatives are valuable, and we keep selling those two products. Looking at the situation, we might have to make different decisions.
In other words, rather than pursuing commercial success, you are fulfilling corporate social responsibilities. Is that the idea? If my memory serves me correctly, naloxone was developed by Sankyo. On the other hand, like the product, could you potentially develop a franchise that can resolve opioid issues? Opioid switching is taking place in Japan, and our products are recommended in Palliative Care Congress, and we are proud that we are making significant contribution to the society.
It's well-controlled in Japan, it's not abused. Because of that, we can make contribution. However, U.S. market is different. Of course, abuse-deterrent formulations are necessary, but even prescriptions are hard to control, and the situation is tough. If there is any additional comment from Mr. Gormley, I pass it to you.
Yes. As you know, the toughest environment with opioids is in the United States, and there's a significant concern by the FDA and many others that there's too much abuse going on with the existing formulations. I was at a meeting two months ago with the Commissioner of the FDA, Scott Gottlieb, he met with heads of R&D and CEOs of companies. His strong message was that they want to encourage companies to produce abuse-deterrent formulations, that they see that as one of the pivotal arms for getting the crisis under control. Dr. Gottlieb was very clear that companies that are willing to invest in abuse-deterrent approaches would be well-received. It isn't the full solution, as Manabe-san said, you can still potentially abuse, but it decreases it a lot. What is really under pressure are the non-abuse-deterrent immediate-release opioids.
That is not what we're focusing on in the U.S. specifically. Our strategy is to stay with abuse deterrent, where the FDA wants to work with us.
Thank you. If I may, I would like to add one thing. As stated, in the United States, there are a strong wind against opioid. Real patients' needs are there. At the same time, the government, as Mr. Gormley commented, there are expectations of our contributions we can make. We launched these two products in the marketplace and see what kind of contributions are possible. Considering difficult environment overall, we want to make cautious decisions. Thank you.
Sakai from Credit Suisse. I have two questions. One is about sales force in Japan. It has been a while since merger of your company, but you still maintain a certain number of the MRs since then. According to the report these days, I wonder if you could ensure to get the returns worth that number of MRs. Especially next year, integrated community care system is going to be introduced. That means role of the general MRs will be big, and it will be a good opportunity for you to raise the presence of the SMR. Next year was successful for Japan, and you can try to take the opportunity. I think you need it. Of course, I don't know if that model can sustain in the Japanese market. We do not have a pricing system going forward, and we have a tricky discussion too.
What do you think about it? At the moment, we have 2,200 medical reps at Daiichi Sankyo. As you know, we have so many product families to sell, therefore, MRs are required of a high quality. Number of the details per person is number one. We are proud of that. We have a very good assessment from outside as well. We have a good cycle at the moment. We enjoy a good evaluation of MRs from outside. We say that we continue to have 2,200 MRs in this midterm business period to manage the Japanese businesses. However, the promotion method will change, as you said, at the moment we are starting up the medical affairs department. Going forward, we would like to strike the balance between the two to make it successful.
For the community care initiatives, we are going to allocate the people who have the role of the area promotion. There are some unclear situation in some areas, but at the moment we are confident that we have a good capacity, we will observe the changes going forward. This may be a question or maybe a comment, you said that you are going to have the R&D on the 13th of December, and half of the R&D spendings are allocated for oncology programs. You have a policy to increase that. We are puzzled from outside because nowadays development model of the new pharmaceutical products are changing today. We had a similar discussion elsewhere today about it is going to be extremely important to ensure the payback of the R&D spending earlier, that is the case for Japanese and Western companies.
On R&D day, I would like to know how much efforts you're going to make for oncology, how much you will need, what is the return programs, not just launch day of DSAD01 in 2020. I wanted to give us the strategic positioning of that. Of course, if this is a project update, we have the information today.
Today on the slide that you see on the screen, I highlighted the overall shift in strategy that will lead to an increased focus in oncology. It will require that we decrease our investment in some of the other areas, it also focuses on decreasing operating expenses to improve our efficiency. We have, within R&D, been working very hard to develop a long-term strategy. Exactly the question that you're asking. It's our goal on R&D day on December 13th to outline how we plan to execute this shift in resources, how we will convert the strategy into an operational plan. Dr. Antoine Yver will cover part of that. I'll cover part of that. I think it'll go a long way to answering your question. I hope you'll be there on the 13th.
Yes, I'll be there. Okay. Yeah, looking forward to it. Thank you.
Daiwa SB Investments. My name is Cho. Regarding buybacks, according to earlier explanations, the company was partly motivated to buy own shares back because you considered the price is too low. Did you analyze why your share price is discounted?
Without eliminating the root cause, technical buybacks do not provide fundamental solution. If your analysis revealed potential discount factors, I am interested. Well, we wish we could provide such a quick analysis, but it's kind of tough to do. External assessment are rather divided as well. As for products, for example, if 8201 is highly appreciated, the evaluation tends to be high. If it has not been factored in yet, the valuation is very low. That is the source of difference. We just have to proceed on our current projects, and with transparency, we need to keep communicating the results. That's the best scenario.
We continue to do that. Thank you for all the questions. Is that okay? Thank you for your time. This conclude today's session. Thank you for your-