Kyowa Kirin Co Ltd

TSE:4151

Earnings Call Transcript 2018-Q1

[Motohiko Kawaguchi, executive]

This is Kawaguchi. I'd like to start from Page 5 of today's results presentation slides. First is the summary of the consolidated results. The revenue declined JPY 6.6 billion, down 7% year-on-year. The core operating profit declined JPY 500 million, down 3% but the bottom line profit was JPY 22 billion, which was an increase of JPY 10 billion year-on-year.

Page 6 shows the breakdown of this JPY 10 billion profit increase in a waterfall chart. First, the gross profit declined JPY 2.5 billion, mainly due to the decrease in pharmaceuticals. As for the total of SG&A and R&D expenses, the rise in sales promotional costs in both pharmaceuticals and biochemical pushed down the profit a little.

On the other hand, there was an improvement of JPY 2.7 billion in the income and loss of equity method affiliates. The details will be explained later but the loss of JPY 1.3 billion, which we booked last year, turned into an income of JPY 1.4 billion this year.

Furthermore, there were big incomes in the others. One of them is the gain on sale and valuation of Kyowa Medex shares, which was JPY 11 billion. This is comprising the sales gain on 2/3 of the shares in January and the valuation gain on the remaining 1/3 of the shares.

Another is the gain or reversal of impairment losses, which was JPY 3.4 billion. This is relevant to the ongoing development cost of RTA 402. Based on the positive outcome of the Phase II test, we reevaluated the retrievable value and reverse the impairment loss in our accounting book.

Moving on to Page 7, I'd like to provide the summary of results by segment. As for Pharmaceuticals business, both the revenue and the core operating profit dropped year-on-year. Bio-Chemicals also booked with a decrease in both, down JPY 1 billion in revenue and down JPY 300 million in core operating profit.

On the right-hand side, we are showing the 2018 plan and the progression rate. Both Pharmaceuticals and Bio-Chemicals achieved 25% progress in revenues, which are in line with the plan. However, Pharmaceuticals core OP progression rate is a little higher because of the lump sum improvement in the equity method income during the first quarter.

On the other hand, Bio-Chemicals core OP progression rate is 15%, but we're expecting a bigger cost improvement in the second half of the year. So all-in-all, for both Pharmaceuticals and Bio-Chemicals, we have been achieving a good and steady progress against the full year plan.

In the next slide, I'd like to explain the details of Pharmaceuticals business. First, regarding the revenue. The biggest factor contributing to the drop was the JPY 3.3 billion decrease in domestic drug revenue. Some of the negative factors include the drop of REGPARA due to the impact from a competing product and the drop of long-listed products, such as ALLELOCK, CONIEL, ASACOL and DEPAKENE due to the penetration of generic drugs.

On the other hand, as for the positive factors, there was an increased revenue from Patanol due to the high pollen dispersal and also the continual steady growth of new product, such as G-Lasta. Furthermore, rituximab BS launched in January is also smoothly penetrating into the market.

Overseas drug revenue is achieving a steady growth contributed by Abstral in Europe, and GRAN and NESP in Asia, namely in China and Taiwan. In the meantime, technology licensing revenue decreased JPY 1.2 billion, despite some benralizumab-related milestone revenue, because debt of the previous year was higher. The others dropped a little over JPY 2 billion due to the deconsolidation of Kyowa Medex.

Page 9 shows a pharmaceuticals year-on-year analysis of core operating profit. The biggest factor contributing to the drop was the decrease in the revenue that I just mentioned, which led to a JPY 3 billion drop in the gross profit.

As for SG&A and R&D expenses. SG&A increased due to the expenses to boost the launch readiness of Crysvita overseas, but the R&D expenses decreased due to the decline of clinical tests in the late stage developments. In addition to that, there was a JPY 2.7 billion improvement in the income and loss on equity method affiliates.

There were 2 factors here: one was the upfront revenue upon the licensing out of FKB327 to Mylan in Europe, that we received this quarter; and the other was the decrease of R&D expenses for FKB327. Due to these 2 factors, the equity method income achieved a large improvement.

Moving on to Page 10. I'd like to explain the revenues of major pharmaceuticals items. As for NESP, the revenue decreased slightly due to the timing of shipment and the holding off of purchase before the drug price revision. Revenues of the rest of the products increased or decreased as shown on the slide.

As for the technology licensing revenue, we have broken it down to Japan versus ex Japan from this quarter. As you can see, the technology licensing revenue in Japan increased a little, but it decreased overseas, mainly due to the year-on-year drop in benralizumab-related revenues.

From Page 11 onward, I will explain Bio-Chemicals business. First, Bio-Chemicals revenue was down by JPY 1 billion. Overseas revenue was down slightly by JPY 0.1 billion, mainly due to increased competition in China for some products. These products are low-margin products so profitability impact is negligible.

Also, pharma and health food materials revenue was down by JPY 0.6 billion. And again, similarly, this is due to streamlining of some low-margin products. In mail order business, Arginine EX continue to be strong. Other revenues decreased due to the transfer of the plant growth regulator business last year.

On Page 12, I will explain Bio-Chemicals core operating profit year-on-year analysis. In terms of gross profit, as I mentioned earlier, although revenue was down, cost ratio has improved due to the stable operation of overseas factories mainly in Thailand, and that gross profit was at the same level with last year.

On the other hand, SG&A has increased by JPY 0.3 billion year-on-year due to slightly more advertisement expenditure in the first quarter this year versus last year for promotion of mail order business. As a result, this increase in promotion cost led to decrease in profit.

Next, Satoh will discuss key R&D development in the first quarter 2018.

[Mitsuo Satoh, executive]

Please turn to Page 14, which shows key events between January to March this year. First, RTA 402 was designated as target product under SAKIGAKE system, and now preparation is underway for the next trial phase. Benralizumab was approved for asthma in Europe on January 10 and in Japan on January 19.

Burosumab KRN23 was conditionally approved for pediatric in Europe on February 19. Evocalcet was approved for secondary hyperparathyroidism for maintenance dialysis patients in Japan on March 23. Sancuso was approved improved in Malaysia in January for sales expansion in Asia.

Page 15 shows key developments after April. Burosumab was approved for the treatment of pediatric and adult patients with XLH in U.S. on April 17.

Please turn to Page 16. For mogamulizumab, we were working on combination therapy trials with Pfizer as well as AstraZeneca for treatment of solid tumors. But we made decision to discontinue these 2 joint developments. With Pfizer, development was pursued for solid tumors with a combination between mogamulizumab and Pfizer's antibody for 4-1BB. And with AstraZeneca, with their antibody PDL 1 and CTLA-4. But based on the clinical trial results obtained, so far, we decided to call off these developments.

Next, Murata will talk about 2 business topics in the first quarter.

[Wataru Murata, executive]

Please turn to Page 18. First is about progress on product alliances with partners. In the first quarter, Dovobet and rituximab were launched. Through these active alliances, we are steadily enhancing our domestic product portfolio.

Dovobet first quarter revenue was JPY 1.2 billion and full year revenue forecast is JPY 6.2 billion, including sales of gel. Rituximab BS made a reasonably good start after launch.

Another topic is in the area of biosimilar business. Page 19 through Page 21 shows the outline, so I will discuss one by one. First is FKB327, adalimumab biosimilar to Humira. Our application was accepted in May 2017 in Europe. Also, we have concluded an exclusive sales agreement with Mylan for Europe. Currently, we are negotiating an exclusive sales agreement with Mylan for the other territories. We expect to get an approval in Europe in the second half of 2018.

Second biosimilar project is FKB238, biosimilar to Avastin. As you may know, Centus was established in 2015 as a joint venture between U.K. AstraZeneca and our equity method company, Fujifilm Kyowa Kirin Biologics. The product right is now held by this joint venture, which is currently conducting a Phase III international joint clinical trial.

Project is now moving ahead smoothly. Especially in the case of FKB327, approval timing is coming up close in Europe and also, now that we are in sales agreement with Mylan, an excellent partner. Overall, BS project status is much improved and we are very excited about future profit contribution. That is all for my presentation.

From here on, we would like to move on to the Q&A session.

[Daisuke Yamaguchi, analyst]

This is Yamaguchi of Citigroup Securities. My first question is regarding the licensing out of FKB327 to Mylan. May I confirm if the upfront payment from this deal is already reflected in your original 2018 plan?

[Wataru Murata, executive]

This is Murata. Yes, it is included in the budget.

[Daisuke Yamaguchi, analyst]

Then, is it in line with expectation?

[Wataru Murata, executive]

Yes, that is correct.

[Daisuke Yamaguchi, analyst]

My second question is regarding rituximab BS, which you mentioned to be penetrating well into the market since the launch. According to some external data, you seem to have sold quite a good volume in March. What is the reason behind this? Also, do you think this is going to be a positive upswing factor in your full year forecast?

[Wataru Murata, executive]

Yes. We are doing better than we had expected as we pointed out, Mr. Yamaguchi. However, whether we should revise the full year forecast is still too early to tell, so we cannot comment at this moment. Yet, we believe there were several reasons behind this good performance. First of all, in Japan, we were facing various challenges in penetrating biosimilar into the market, such as the drug price system and the rules on patient's burdens. Another barrier in the market penetration was the negative impression held by doctors on biosimilar. However, in order to address these challenges, we made steady efforts to explain thoroughly. And as a result, the penetration into the market turned out to be better-than-expected. We don't know how much growth can be achieved in the market from here on, but we are excited about this.

[Daisuke Yamaguchi, analyst]

Which of the 2 factors that you explained would have a greater impact on the biosimilar sales growth?

[Wataru Murata, executive]

That is difficult to tell, but we believe both of them are important.

[Daisuke Yamaguchi, analyst]

Anyway, you are saying that you anticipated a difficult start. But as your sales reps made steady efforts to penetrate it into the market, the launch turned out to be much better than expected, right?

[Wataru Murata, executive]

Yes, your understanding is correct.

[Atsushi Seki, analyst]

This is Seki of UBS Securities. Thank you for disclosing the breakdown of technology licensing revenue by Japan versus overseas. This sort of geographic breakdown is very helpful for my analysis, and I'd like to ask 2 simple questions. My first question is about rituximab. You have 3 indications for rituximab BS, and it is less than the number of indications held by the preceding drug. Could you tell us if you have a good market share in any of these 3 indications?

[Wataru Murata, executive]

This is Murata. I'm sorry, but I cannot comment on the details such as the market share for each indication.

[Atsushi Seki, analyst]

All of these 3 indications of rituximab BS, are they going to mainly used in the hospital market?

[Wataru Murata, executive]

Basically, that is correct.

[Atsushi Seki, analyst]

My second question is regarding IDO inhibitor. I believe, you have IDO-1 inhibitor, which is called KHK-2455. Recently, there has been some news regarding IDO-1 inhibitor. And if I remember correctly, Merck, Incyte, NewLink and Bristol discontinued the development. Based on such series of discontinuations, what are your current thoughts on the KHK-2455 asset?

[Mitsuo Satoh, executive]

This is Satoh. We're in Phase I of KHK-2455, which is an IDO inhibitor. According to the data that we obtained so far, such as kynurenine, which is a PDE blood marker that can be used as PD marker to compare the activity level of compounds or compound seem to have a significantly higher activity and holds an advantage over the peers' compounds. However, we also need to thoroughly analyze what's the reason behind the peers' decision to discontinue the IDO inhibitor development.

[Atsushi Seki, analyst]

Was it the concept of IDO inhibitor itself that was not working? Or was it simply the level of activity as an IDO inhibitor that was not enough?

[Mitsuo Satoh, executive]

We are currently studying these matters. So please understand.

[Kazuaki Hashiguchi, analyst]

This is Hashiguchi of Daiwa Securities. My first question is regarding Crysvita situation in Europe. Could you please update me on the timeline toward the launch? I'd also appreciate your comment on the initial pricing in Europe.

[Wataru Murata, executive]

This is Murata. In Europe, we have already launched in Germany. As for the other countries, we are going to launch eventually. Regarding the price, I can share with you the list price in Germany. It's EUR 3,388 per 10 milligrams viral.

[Kazuaki Hashiguchi, analyst]

When was it launched in Germany?

[Wataru Murata, executive]

In April.

[Kazuaki Hashiguchi, analyst]

You said April?

[Wataru Murata, executive]

That's right.

[Kazuaki Hashiguchi, analyst]

My second question is regarding the development of status of KW-6002. What is the current readiness that apply in U.S.? I'd also appreciate your comment on your current plans to commercialize in Europe?

[Mitsuo Satoh, executive]

This is Satoh. As for the details of the progress, we held a Type B meeting with FDA this February. We continue to believe that we cannot reapply. At the same time, we must prepare the data required by FDA, including various data analysis. We are determined to prepare and submit them. So we are making a steady progress preparing for the reapplication. As for Europe, we would first like to succeed in the reapplication in the U.S. and then properly discuss what to do in Europe next.

[Hiroshi Tanaka, analyst]

This is Tanaka of Mizuho Securities. I have 2 questions. Both of them were earlier in this Q&A session, so this is just a confirmation. You said the price of Crysvita in Germany was EUR 3,308?

[Wataru Murata, executive]

This is Murata. No, it's EUR 3,388.

[Hiroshi Tanaka, analyst]

Okay. When it was approved in U.S., Ultragenyx commented that the net price in the U.S. was $160,000 for pediatric and $200,000 for adults? However, according to WAC, but I'm not sure if this is correct, it seems to be $3,400 per 10 milligrams. Is this correct? And if it is, then the price in Europe seems to be little higher.

[Wataru Murata, executive]

We also feel that the price in Germany is high.

[Hiroshi Tanaka, analyst]

So the price in Germany is higher than that in the U.S.?

[Wataru Murata, executive]

We don't know if it is generally the case. But under this drug's current initiatives, the German price is higher.

[Hiroshi Tanaka, analyst]

My second question is regarding biosimilar. You said it was already included in the 2018 full year plan. I suppose you're expecting to make this business profitable by 2020, the final year of the midterm plan. And now having this alliance Mylan, do you think this plan is fully achievable?

[Wataru Murata, executive]

We mainly have 2 compounds under development in the similar -- biosimilar business. All-in-all, they are in line with the plan, and we believe the business will be profitable in 2020.

[Fumiyoshi Sakai, analyst]

This is Sakai of Credit Suisse. I'd like to ask about the P&L of equity method affiliates. During the presentation earlier, I believe you mentioned that there was an upside during the first quarter, but was it you due the milestone revenue from Mylan? Because there was this mask in revenue, does the equity method P&L looks positive during the first quarter? On the other hand, the full year guidance shows that it's going to be negative. What is your projection on the equity method P&L for the rest of the year? I know that it is not just FKB that is included in here, but I'd like to confirm what to expect to the extent that you can share. And another question that I have is regarding FKB. Mr. Murata said earlier that the profitability of FKB business is likely to improve from here on. I'm sorry to bother you with the same question over and over, but could you please elaborate a little more detail on FKB?

[Motohiko Kawaguchi, executive]

This is Kawaguchi. I'd like to explain the accounting process of FKB's upfront revenue from licensing out the commercial right. We have started to use IFRS accounting standard from last year. But when we made the initial plan, our assumption was to book the upfront revenue as a deferred account. However, as we discussed with the audit corporation, we learned that it should be booked in a lump sum during the first quarter. That's why the profit of the first quarter is JPY 1.4 billion, a little higher than our initial assumption, but it does not mean that the full year would also be profitable.

[Wataru Murata, executive]

This is Murata. Regarding your request to improvement the level of disclosure of FKB information, we are sorry, but we'd appreciate your understanding in accepting the current level of disclosure. As for the reasons, first of all, this is a joint venture with a partner company, so we have to consult with the partner if we were to disclose more information. Moreover, we have patent issue to consider as well. So we cannot disclose some of the information due to our strategic reason. We would appreciate your kind understanding.

[Fumiyoshi Sakai, analyst]

So you're saying you're not going to improve the level of disclosure?

[Wataru Murata, executive]

Yes, that is the current stance.

[Fumiyoshi Sakai, analyst]

I have one more question. You announced the discontinuation of the Phase I test of mogamulizumab in combination with Pfizer's compound and another Phase I test with AstraZeneca's compound. Now the only remaining combination test for mogamulizumab is the one with nivolumab, and I suppose you're continually pursuing this. But what was the major reason behind the discontinuation of the test with Pfizer and AstraZeneca? To the extent that you can share, I would appreciate your comment. I remember you're saying before that, because there are so many I/O developments underway in the whole market, there has been overall delay in the clinical test. I'm sure you also had cost issues and all, but you could comment the reasons as far as you could.

[Mitsuo Satoh, executive]

This is Satoh. In terms of the approach of treating solid tumors by activating immune system, we believed that there should be a potential in mogamulizumab, therefore, have been working with partner companies on combination therapy development with various drugs. First of all, one of the reasons why we struggle in those trials is, as you have said, the severe competition in this area which led to the delay in development scheduled than planned. Also, in the course of these trials, we have analyzed various data that was obtained up to this point, including response rate and compared drug efficacy between monotherapy versus combination therapy. But we were under the impression that the effect was not as high as we initially expected. As soon as we get the outcome of the ongoing combination trial with Bristol-Myers Squibb, we would like to make proper decision as to what we should do in the future.

[Fumiyoshi Sakai, analyst]

Does that mean that you were under the impression that combination therapy was not effective for solid tumors?

[Mitsuo Satoh, executive]

Yes, we believe so.

[Shinichiro Muraoka, analyst]

This is Muraoka from Morgan Stanley MUFG Securities. First question is about Crysvita. In this morning's Ultragenyx conference call, various comments were made about post-launch status in U.S. In Europe as well, although it's been only 1 month since the launch, are there any episodes which indicate better or worse situation than initial expectation? Also, what about the status in finding adult patients? Is there any updates that you can share with us? Also, SG&A has increased by JPY 1.4 billion, and is this increase for launch expense in Europe? And second question is about antibody OX40. I believe that you see trial result should be coming out soon, and could you make some comments on that?

[Wataru Murata, executive]

This is Murata. Crysvita was just launched in Germany in April. And it has been so recent that I cannot really make any comment about it. We feel that the initial start was good. But again, I cannot say anything yet, very sorry.

[Motohiko Kawaguchi, executive]

This is Kawaguchi. About your question on SG&A, we split Crysvita-related selling expenses in U.S. with Ultragenyx under the profit share scheme. That means that increased SG&A include half of Crysvita launch preparation expenses in U.S. and 100% in Europe.

[Mitsuo Satoh, executive]

This is Satoh. For antibody OX40, global Phase II trial is ongoing for UC and in Japan Phase I for atopic dermatitis to gather data for safety. UC patients data is almost ready. Also, for atrophy patients, in a safety validation test, we are currently checking PD marker changes and so on. So not so far in the future, we should be able to announce the results and direction of the next trial phase.

[Shinichiro Muraoka, analyst]

I have one more follow-up question of Crysvita sales status in Europe. Ultragenyx has talked a lot about the situation in America. Is it okay to understand that ramp-up in Germany is slower than America and that is why you cannot comment about it?

[Wataru Murata, executive]

This is Murata. No, it has just been launched in the second half of April and it's just that we really don't know yet. In the next quarterly briefing session, we should be able to talk more about it.

[Takashi Akahane, analyst]

This is Akahane from Tokai Tokyo Research. I would like to clarify some numbers. Other profit for the first quarter was JPY 14.5 billion, and is it okay to understand that of which JPY 11 billion is a sales gain of Kyowa Medex?

[Motohiko Kawaguchi, executive]

This is Kawaguchi. That is correct.

[Takashi Akahane, analyst]

You said that the 2/3 of that is a sales gain and the remaining 1/3 is evaluation gain? Then how much still remains unsold? When are you going to book sales gain for that?

[Motohiko Kawaguchi, executive]

To be more precise, the 2/3 of JPY 11 billion is a proceed of the shares that were already sold, and the remaining 1/3 still remains unsold. However, we have already done evaluation and come up with a value equivalent to the sales proceed. And that amount is already booked in the first quarter as evaluation gain. So you can consider 100% of gain is already captured in the first quarter.

[Takashi Akahane, analyst]

So that means that from second quarter and beyond, there will be no more Kyowa Medex-related other profits?

[Motohiko Kawaguchi, executive]

That is correct.

[Takashi Akahane, analyst]

Another question is a rather broad question. We heard that development activities in biosimilar business are making good progress and sales of partner companies biosimilar product is strong as well? On the other hand, with the NHI price revision in April, medical service fee in dialysis facilities was compressed substantially? The penetration of biosimilar products has increased in the market because of your sales activities. Do you see the similar situation happening in dialysis area as well? Should I think that biosimilar business is a double-edged sword and has a significant impact on your dialysis-related products or that it's not a concern?

[Wataru Murata, executive]

This is Murata. We cannot tell for sure until we see that trends in second quarter onward. But so far, for dialysis, it is true that rather significant changes were seen in medical service points, but we do not expect to see big impact on revenue.

[Takashi Akahane, analyst]

To ask you the other way around, performance of biosimilar business has improved a lot. And that means that the level of understanding has been enhanced due to education activities by pharma companies including yourself.

[Wataru Murata, executive]

As I mentioned earlier, biosimilar has a challenge of educating doctors and insurance reimbursement. And it is true that our efforts have to overcome such hurdle, but whether that is directly related with a dialysis or not is a separate discussion.

[Yasuhiro Nakazawa, analyst]

This is Nakazawa from SMBC Nikko Securities. I would like to clarify the question raised previously. Crysvita drug price in Germany is set higher than that in U.S. I recall that HEMLIBRA, Chugai Pharmaceuticals hemophilia product price in Germany was either on a par or higher compared with that over U.S.? Does that mean that because of drug price revision in Europe, this kind of orphan drugs prices tend to be set higher?

[Wataru Murata, executive]

This is Murata. I personally don't have such detailed understanding, I'm sorry.

[Yasuhiro Nakazawa, analyst]

Well, then, please let us know if you find the information. I have a second question. I would like to clarify, once again, about FKB's profitability. On a full year basis, will the investment loss on equity method be smaller than the initial plan? Or full year number will remain unchanged and it just that the amount was concentrated in first quarter?

[Motohiko Kawaguchi, executive]

This is Kawaguchi. As for the deferred technology licensing revenue, first, we booked the contractor liability then reversed the amount over the course of the contract obligation period. Well, generally speaking, development support is the obligational activity that must be performed. Therefore, revenue is deferred over the period until the end of development or until application submission. However, this time, licensing out occurred after the application submission and there was no critical obligational activity to be performed. Therefore, revenue was booked all at one time.

[Yasuhiro Nakazawa, analyst]

So it was just an upfront payment associated with the agreement with Mylan?

[Motohiko Kawaguchi, executive]

That is correct.

[Kazuaki Hashiguchi, analyst]

This is Hashiguchi from Daiwa Securities. I would like to clarify one thing on the same topic. You said that revenue booking from Mylan was deferred over the period of time until the application submission. Is this treatment done only for the revenue from Mylan? For example, in case of benralizumab, you explained before that revenue is deferred over the period until the approval? Revenue booking timing for this will also change?

[Motohiko Kawaguchi, executive]

This is Kawaguchi. I apologize for my insufficient explanation. Most common pattern is to basically defer revenue over the period of time until their approval. However, this time, the application has already been submitted and time before the approval is quite short, and no critical support is required before approval. That is why we decided to book revenue all at one time. Well, in general, though, your understanding is correct and revenue is deferred over the period until the approval.

[Kazuaki Hashiguchi, analyst]

I have one more simple question. RTA 402's gain on reversal of impairment losses, was it in the original plan?

[Motohiko Kawaguchi, executive]

No. It was not the part of the plan.

[Kazuaki Hashiguchi, analyst]

That means that this item could be a potential upside to the full year guidance?

[Motohiko Kawaguchi, executive]

If you only look at this item, yes, that is correct.

[Seiji Wakao, analyst]

This is Wakao from Mitsubishi UFJ Morgan Stanley Securities. I have 2 questions on Crysvita. First is about the price in Germany. In Europe, in some cases, drug prices are cut when the number of patients increases with additional indication. That means that for Crysvita, if additional indication for adults is approved, then the price will be reviewed and cut down?

[Wataru Murata, executive]

This is Murata. As for the price outlook for Crysvita, once adult indication is approved, I will -- for that, I would like to refrain from making comment on that.

[Seiji Wakao, analyst]

Another question is about KRN23 in Japan. The presentation shows the application submission in 2018 and approval target in 2019. Is this in line with the initial plan? In Japan, are you going to submit application both for pediatric as well as adults?

[Mitsuo Satoh, executive]

This is Satoh. In Japan, we would like to submit application by the end of the year. As for indications, we are considering various possibilities, including pediatric, adult, TIO and ENS in the discussion with PMDA.

[Seiji Wakao, analyst]

Does that mean that there is a possibility other than XLH?

[Mitsuo Satoh, executive]

That's right. The number of TIO and ENS patients is very small, but we are conducting trials including those patients. Based on those points, we are discussing with the authority as to what labels are appropriate.