Astellas Pharma Inc

TSE:4503

Earnings Call Transcript 2022-Q1

[Naoki Okamura, executive]

Hello, everyone. I'm CSO and CFO at Astellas Pharma Inc. I'm Naoki Okamura. Thank you very much for joining our conference call on our financial results for the first quarter of fiscal year 2021.

As usual, I will give you an overview of financial results and explain our initiatives for sustainable growth. It maybe unusual to say what is not in the script at the beginning. But first of all, we'd like to apologize for the first quarter results, which are not as good as we expected.

So looking at the [indiscernible] of the stock market, it reflects the feelings of the investors. So we apologize to the shareholders as well. We are announcing our CSP plan, but we are not complacent. Maybe we were not so careful about what we are doing right now. And so we try to deliver the fiscal year 2021 results. So we'd like to do our best.

Let me move on. Page 2 is a cautionary statement regarding forward-looking information read by [indiscernible]. So I'd like to skip.

Page 3. Today, as I said, I will give you an overview of our financial results for the first quarter and also over the revised forecast for the full year. And also, I will explain our initiatives for the sustainable growth.

First, the first quarter results, Page 4. Revenue reached JPY 326.1 billion, up 6.2% year-on-year. Core operating profit was JPY 62.8 billion, down 0.9% from the previous year. The bottom half of this page shows full basis results due to the booking of JPY 27.1 billion as other expense, operating profit decreased to JPY 36.1 billion by 40.7% year-on-year, and profit was JPY 30.7 billion, down by 39.1% year-on-year. The details will be explained on the following pages.

Page 5. Revenue increased year-on-year. Operating profit slightly decreased, but was at the same level, almost with the previous fiscal year. So our first quarter results were in line with the assumptions of our full year forecast we announced in April.

Sales of XTANDI and strategic products increased as expected. SG&A and cost are slightly ahead of our full year forecast and the expenses are on track. As for full basis results, we decided to terminate the development of DNA vaccine ASP0892 and anti CD40 monoclonal antibody bleselumab in the first quarter, so we booked impairment loss on intangible assets as other expense, which was not included in our full year forecast initially. Therefore, operating profit and profit were behind our full year forecast.

Page 6, shows the details of revenue as for XTANDI, the volume increase has continued since fiscal year 2020. Sales of our strategic products, such as XOSPATA, PADCEV, Evrenzo increased as expected. For these products combined, sales increased by a total of JPY 25.3 billion year-on-year. Sales of Lexiscan negatively impacted by COVID-19 in the first quarter of FY 2020 returned, increasing by JPY 9.6 billion from the previous year. On the other hand, sales decreased due to the transfer of mature products such as Celecox, Lipitor, Eligard by JPY 17.5 billion year-on-year for these products in total.

We had temporary positive factors due to ForEx impact and the reversal of COVID-19 impact in the first quarter of the previous fiscal year, but our first quarter revenue increased due to the growth of XTANDI and our strategic products in line with our initial assumptions. I'm going to explain the situation of individual products on the next page.

Page 7. XTANDI global sales increased steadily as expected and reached JPY 132.9 billion, up by JPY 21 billion year-on-year, driven by the growth mainly in U.S. and EU. In Europe, additional indication of M1 CSPC was approved in April this year. In June, XTANDI was recommended by NICE in U.K. as a treatment for this indication. In March this year, reimbursement started in China, hospital adoption is increasing and demand grew higher than expected.

XOSPATA sales increased to JPY 8.3 billion, up by JPY 2.7 billion year-on-year. In addition to U.S. and EU, there has been also sales contribution from China, where it was launched in April this year. New prescriptions have been increasing steadily, we have made a good start with steady progress since we launch in China. As for PADCEV, core promotional revenue in the United States was JPY 4.2 billion, up by JPY 1.2 billion year-on-year, an additional indication was also approved this month, we're expecting further growth in the second quarter and beyond. Its progress against the forecast may look a little low, but additional indication in the United States will be contributing to sales and the launching in Japan and EU expected in the second half of this year -- this fiscal year, so it's progressing in line with our forecast.

Evrenzo sales in Japan was JPY 0.6 billion. In addition to the additional indication approved in November last year, a 2-week prescribing administration restriction has been listed. So adoption has been increasing, and sales have been rising steadily. It's maintaining its positioning as market-leading FPHI. Again, its progress against the forecast may look a little low, but we're expecting a launch in EU as well. So it's in line with the forecast as of now.

As for mirabegron, global sales reached JPY 44 billion, up JPY 3.6 billion year-on-year. In China, like XTANDI, reimbursement started in March this year, an increase in new prescriptions is contributing to sales.

Page 8 shows year-on-year comparison and progress against our forecast for cost items, growth ratio decreased by 0.4 percentage point year-on-year due to changes in product mix, products with low COGs, such as XTANDI in the United States grew, while sales of domestic in-licensing products with relatively higher COGs decreased. SG&A cost in total rose by 13.5% compared to the previous year. SG&A expenses, excluding extended use co-promotion fees increased by JPY 13.4 billion or 15% year-on-year, mainly due to the yen's depreciation against the euro, ForEx had an impact of JPY 4.4 billion increase. Another factor for the increase was a decrease in sales promotion and travel expenses due to COVID-19 impact in the first quarter of the previous fiscal year, which increased SG&A costs by about JPY 6 billion year-on-year.

We made about JPY 3 billion upfront investment in IT digital-related areas to support our CSP2021 initiatives. A move we started from the current fiscal year. SG&A spending is a little ahead of our full year forecast, but we believe it's within a controllable range for the full year by managing the cost stringently going forward, and we must do so. And the expenditure increased by JPY 1.8 billion -- 1.8% year-on-year. Investment increase in zolbetuximab on Primary Focus, while development costs decreased for fezolinetant with the completion of Phase III study, patient enrollment. We have been able to allocate our management resources to areas where we should use them almost in line with the plan.

Page 9 is an overview of our fiscal year 2021 revised full year forecast. As I have explained so far, our core basis first quarter results have been in line with our full year forecast in principle. So no changes have been made to a call basis FY 2021 full year forecast we announced in April. On the other hand, on a full basis, in addition to the booking of impairment loss on intangible assets, along with the termination of development projects in the first quarter, severance expenses are to be booked in FY 2021 third quarter due to early retirement incentive program in Japan, we announced in June.

It's going to be booked at the end of this calendar year. We reflected these expenses and made a downward revision of our full basis forecast. Operating profit is revised downward to JPY 227 billion or JPY 38 billion compared to the initial forecast. Profit forecast is revised to JPY 183 billion, down by JPY 26 billion.

From here on, I'm going to explain initiatives for sustainable growth. Page 11 highlights the progress of XTANDI and our strategic product story for business side . The upper part of Page 11 shows key events expected in FY 2021, which we showed in our results announcement meeting in April. On the right-hand side, you can find the timing of milestone achievement after the previous results announcement, it's in red. As for enzalutamide, indication of M1 hormone-sensitive prostate cancer was approved in EU in April. Regarding enfortumab vedotin, two sBLAs were approved in U.S. in July. As for roxadustat, CHMP's positive opinion was received in June. So we are expecting that approval will be given soon. With regards to fezolinetant, 52-week data became available in July from one of the Phase III studies, SKYLIGHT 2.

As other important update since our financial results announcement in April, we have updates for enfortumab vedotin and fezolinetant, which I will explain on the following pages. As for AT132, lower dose administration was resumed in the registrational ASPIRO study, in addition to the 3 patients originally enrolled for the lower dose, we are planning to amend a protocol and include 3 additional patients for the lower dose.

Now Slide 12. This is enfortumab vedotin overall urothelial cancer development program, it is shown by stage by stage. 2 sBLA approvals were between in the United States in July for mUC shown in the red frame in the right half. One is about the rightmost column, mUC with the platinum and PD-1/L1 inhibitor pretreated. Accelerated approval was obtained based upon Phase II EV-201 Cohort 1 in December 2019. At this time, regular approval was obtained based on a Phase III confirmatory study EV-301 data. The other is the second column from the right. mUC with PD-1/L1 inhibitors pretreated based on the data of Phase II study, EV-201 Cohort 2, SBLA was approved for cis-ineligible pretreated mUC.

Clinical development of enfortumab vedotin begins with a late-stage mUC, an expense to the MIBC shown in the central frame and from now on, the left most square, the further early stage of NMIBC will be started. NMIBC will be described in the next slide further. The traditional standard of care for NMIBC is transurethral resection of the bladder tumor, or TURBT, meaning an endoscope is inserted through the urethra, into the bladder, and the cancer in the bladder is removed with an electronic scalpel attached to the tip of the endoscope, followed by intravesical BCG, the vaccine to prevent tuberculosis. This reduces disease recurrency in about 70% of patients. However, about 30% of patients remaining are unresponsive to BCG, and the recurrence and progression remain common, so treatment options for BCG and responsive patients are limited. enfortumab vedotin targets high-risk BCG unresponsive NMIBC patients and its clinical studies are started. In mUC and MIBC enfortumab vedotin is administered intravenously. But in NMIBC, it is intravesical infusion therapy in line with the conventional therapy. So the first clinical trial is scheduled to be started in July to September period of this year as Phase I study.

Next is Slide 14, it's about fezolinetant. In July, we obtained a 52-week data of Phase III pivotal SKYLIGHT 2 study. The 52-week data evaluated over a 12-week placebo-controlled, double-blind period followed by a 42-week active extension treatment period supported the long-term use of the fezolinetant in terms of both, efficacy and safety.

At the North American Menopause Society, NAMS to be held in September, SKYLIGHT 2 study data focusing 12-week data will be presented. We plan to hold a conference call to introduce the data after the presentation at NAMS. So please look forward to it.

As [I] mentioned so far, overall safety will be assessed within this fiscal year with a 52-week data of 3 Phase III studies, including another pivotal SKYLIGHT 1 study and long-term safety SKYLIGHT 4 study. We are targeting U.S. NDA and EU-MAA submissions next fiscal year as early as possible.

In Japan, preparations are underway to start Phase IIb dose-finding study in Japanese patients in October to December period within this fiscal year. Sorry about this.

Now let me talk about Slide 15, progress in focus area approach. The CSP2021 is shown here once again, we will continue to report on the progress using this slide if there is an update on a quarterly basis. That goal is to have robust pipeline to newly build post-PoC portfolio. In the next page, I would like to show you the status of some projects in each primary focus.

Now Slide 16. So by each primary focus, the current status of projects in the clinical stage is mainly shown. In addition, the progress from the purpose of fiscal announcement, if any, is underlined. Genetic regulation. In gene replacement in addition to AT132, AT845 is in progress in Phase I trials for Pompe disease. Immuno-oncology, Phase I trials are underway for checkpoint aAVC and oncolytic virus projects and new small molecule, ASP1570 has been added to the pipeline as it has started a Phase I study.

Blindness and regeneration. In the ophthalmic cell therapy of ASP7317, the enrollment of new subjects in the Phase Ib study was suspended due to the influence of COVID-19. All the preparations were started for resumption, production was delayed and the study is still suspended. Currently, we are working to solve manufacturing delay problem. So please wait for a moment. Thank you.

Mitochondria biology. 2 projects of gene regulation and mitochondrial biogenesis are in Phase II, SB0367 achieved the fastest subject, first treatment in a Phase II/III study in primary mitochondrial myopathies patient last month. Also, as announced in today's press release, we have signed a license agreement with Minovia Therapeutics for cell therapy, mitochondrial transfer. This collaboration will be explained further on the next slide.

Now Slide 17. Today, we announced a strategic collaboration for mitochondrial cell therapy or mytochondria transfer program with a Minovia Therapeutics leading company in this field. Mitochondria transfer is the mechanism to transfer healthy mitochondria from donor cells on diseased cells. Minovia is mitochondrial transfer technology, MAT platform is shown in the lower left figure. First, isolate and concentrate normal mitochondria from healthy donors. The cells as slated from a patient are augmented with a healthy mitochondria. This makes the mitochondrial enriched cells by reinfusing those cells back into the patient's body, healthy mitochondria are delivered or transferred to diseased tissue or cells.

Minovia's technology uses the patient's own cells to deliver mitochondria. But as highlighted in yellow in the lower left figure, by combining with Astellas' Universal Donors Cells, so we can expect mitochondrial cell therapy with allogenic transplant becomes possible. So far, we have advanced the primary focus of mitochondrial biology through small molecule, drug discovery and advancing ASP1128 and ASP0367. To clinical study phase, we have added a cell medicine as a new modality, and we will continue to work on the creation of innovative programs to realize our cell therapy to treat mitochondria dysfunction associated disease.

Slide 18 is the progress of pneumococcal vaccine ASP3772. This is a 24-valent vaccine for prevention of pneumococcal disease, utilizing Affinivax Multiple Antigen Presentation System Technology or MAPS. As reported in press release on July 13, a Phase II study in the elderly showed good tolerability and its immune response is comparable to -- or better than both Prevnar13 and Pneumococcal 23 (sic) [ Pneumovax23]. Based on the results of this Phase II study, we obtained a Breakthrough Therapy Designation from the FDA for the indications of adults over 50 years old. A Phase III study for adults is planned in the future. At the same time, we are considering strategic options for value maximization and optimal development.

Slide 19. It's about Rx+ program. The key events that are expected to be achieved during this fiscal year were announced in April, and the progress made in the first quarter is shown in the red on the right. The Holter ECG analysis service, My Holter II using AI started on July 15. It will be implemented into the service provided by Emhart, a collaborative development partner, and we will receive a part of the sales. This is the very first full-scale commercialized program as Rx+. As for the fluorescent contrast agent, ASP5354, in addition to the ongoing Phase II study in the United States, the Phase I study has started in Japan.

Slide 20. That's a full strategic target sustainability. Every year, Astellas publishes in detail the sustainable efforts and the results of the environment, health and safety or EHS from previous year on the EHS website and EHS report. So far, we have reported specific measures such as premium and change of cars for sales reps to hybrid vehicles. At this time, I will introduce the specific data to show our global level improvement in the 2020 environmental performance data updated in June.

As a measure against the climate change, we are actively working to reduce greenhouse gas emissions. The greenhouse gas, GHG reduction target, which is defined as a mid- to long-term environmental behavior plan has been certified as scientifically valid by the science-based targets initiative and international organization related to the environment.

Astellas has 2 GHG reduction targets to climate change. One is to reduce GHG Scope 1 + 2 emitted directly from our own business activities by 30% by 2030. And the other is GHG Scope 3 emitted from indirect business such as supply chain is reduced by 20% per unit of revenue by FY 2030. In FY '20, in addition to the progress of efforts to reduce GHG emissions with the -- for example, using power derived from renewable energy sources, external factors such as COVID-19 countermeasures, brought us the reduction rate of 39% in Scope 1 + 2 against FY 2015 and 21% in Scope 3. We'll continue to position climate change countermeasures as one of the important management issues and work on it.

Slide 21 is a summary for today. In line with the initiatives announced in CSP2021, the progress in the first quarter is summarized here. Revenue and pipeline value, sales of extending our strategic brands has showed a steady expansion as expected.

In addition, XTANDI, PADCEV, fezolinetant and Pasolini such have achieved important events for line extensions and NDA. Regarding new products from the focus on approach, development has progressed in genetic regulation and mitochondrial biology. As has been mentioned, we have also started a collaboration that can lead to the new innovations.

Core OP, we are continuously reviewing the allocation of management resources to improve Core OP. And in the first quarter, we took the measures to improve effectiveness and efficiency, such as online information provision, collection services and product transfer. For future growth in the Rx+ business, we've launched the first service that leads to the revenue. Regarding sustainability, we will continue to work on a climate change countermeasures while disclosing environmental performance data.

As the first quarter of CSP2021, we have confirmed the expected progress for the growth trend. Although profits declined in the first quarter, we'll continue to promote the targets that [ fold in ] CSP so that we can achieve our sales and profits increases for the full year of FY -- full year. That's all from me. Thank you very much. Next, we'd like to entertain questions from the audience.

[Operator]

Now I'd like to begin the Q&A session. [Operator Instructions] Mr. Yamaguchi from Citigroup Securities.

[Hidemaru Yamaguchi, analyst]

Can you hear me?

[Unknown Executive]

Yes, we can hear you clearly.

[Hidemaru Yamaguchi, analyst]

Regarding your statement at the beginning, you explained the factors behind. It's not something you wanted to see. As for the cost, it was higher than you expected in the end. Was that to your main point? In the second quarter and beyond, do you have any mechanism to tackle these issues? Could you explain?

[Unknown Executive]

Thank you for your question. If you analyze the numbers in detail, you will reach the same conclusion. That's why I decided to say this myself. Excluding ForEx impact, not necessarily we cannot be optimistic. In the first quarter last year, we were under the impact of COVID-19. Based on that assumption, the profit increase this time is not something we can be boast of, to say it out loud, honestly speaking. And costs are increasing, that's unavoidable. Because we are doing something new. But for me, in order to do something new, we can do away with something older. So that we should maintain the flat level of SG&A costs. That's the basic story of CSP. Within the organization, it was not prevailing sufficiently. So that's a lesson learned behind my statement.

[Hidemaru Yamaguchi, analyst]

Second question is about 7317, alternative medicine. You've talked with FDA and to start a new study, that's what you mentioned in the past, but this time you talked about the delay of the production. This means, well, in the past, I believe that you change the way to produce sales, but there is a delay of the production internally? Well, that's my understanding, at least. And how long will it take to deal with it because this is a leading project. So I have a bit concern. How long do you think it will take to solve this problem?

[Unknown Executive]

Thank you for the question. How long necessarily, will it take to solve this program. Of course, I also want to know that time line as well. By the way, this is the internal issue, internal production issue. It's not a matter of CMO or other parties. But we are dealing with the cells, which is alive. So it's different from the chemical producer products. Therefore, the behavior is quite complicated.

We need to make it industrially stable products. So we produce one thing and next issue appears and that is repeated one after another. So assets were just like as we mentioned, this is our leading project. So as early as possible, we would like to come to the appropriate PoC for the NDA. So when resumption becomes possible, we see the plan for restart, we would like to report it to you. So today, we cannot make any commitment about when it will be started. Thank you very much.

[Hidemaru Yamaguchi, analyst]

Before with FDA, you were discussing regarding the timing of the next study, and now you're discussing the internal. So if that's resolved, you can resume, right?

[Unknown Executive]

Those are the steps, yes.

[Hidemaru Yamaguchi, analyst]

Lastly, just briefly, 3772, very good data, big potential market, limited a number of players. For you, it may not be a main area for your company necessarily, but there was a mention of a strategic option. To fall on when, you may not know, going to Phase III or take strategic options, such a decision is going to be made soon. Should I understand that way?

[Unknown Executive]

Thank you for your question. To answer your question, our strategic options to be discussed, should not cause a delay to the development of 3772. So we are discussing the strategic option at such a timing. That's all for me. Thank you very much.

[Operator]

Daiwa Securities, Mr. Hashiguchi.

[Kazuaki Hashiguchi, analyst]

Hashiguchi speaking. There are 2 questions from me. First question is about 3772. So now the readout of the study is available. And based upon what kind of competitive edge you can gain. Would you please explain that? Recently, there is a new development of vaccine ongoing. And this vaccine, that is 3772. Suppose it is launched. I think in the case, the competition might be different around that time. So towards the future, how do you expect the competitive environment would be? And against that, what kind of competitive edge are you thinking about?

[Unknown Executive]

Minetake Kitagawa is going to answer that question.

[Mike Kitagawa, executive]

Thank you for the question. Just like Hashiguchi mentioned. Recently, Pfizer, Prevnar 20, was newly approved. So the future landscape is likely to be different. But at least what we can say right now is that the comparator of the study this time is enfortumab in the new Novavax 23 recently used and the competitive edge against that are shown with the current data. We commit, we presented the data, and that is quite robust. 24 serotypes that were used for most of them currently available products are evaluated as a comparison. And the IgG and also the usefulness terms, our product is superior. So now and to the future, elderly and also the infants, those are the populations that we would like to pursue the possibility further.

Of course, Prevnar 24 and other products are under the development currently. Of course, we would like to keep our eyes on them to identify our strengths and also the possibility. But as has been mentioned, we cannot delay the development further. Therefore, we always would like to have a sense about the appropriate speed and think about the differentiation of ourselves from others and consider about the strategic options and our development strategies.

[Kazuaki Hashiguchi, analyst]

One more question, Page 13, [indiscernible]. NMIBC and intravesical therapy, how should we look at its market potential? How many patients there are? And the dosing frequency, how many times is it going to be a single dose? Or how many in doses are you assuming?

[Unknown Executive]

[indiscernible], thank you very much for your question. As of now, we're not disclosing such information yet. It's going to be different from before in terms of the administration route. I don't know whether we can call this PK, but what should be a parameter to deliver the drug to a necessary area. And how much delivery would result in how much efficacy, blood concentration and PK relationship. That's something we're going to study from now on. So please wait for some more time.

[Kazuaki Hashiguchi, analyst]

Singe dose or multiple dose, it's not decided yet. You're going to consider from now?

[Unknown Executive]

Yes, that's correct.

[Kazuaki Hashiguchi, analyst]

Is it a single dose?

[Unknown Executive]

Kitagawa would like to respond.

[Mike Kitagawa, executive]

For the new study part, in the second quarter, we are going to start. We're going to disclose the information when we can. As for the dosing, it's not going to be a single dose. That's something we can tell now, but the existing BCG treatment available. Now we'd like to refer to them to consider how to administer our agent. Phase I study, we'll look at that. And so please wait for more disclosure of information from that. Thank you. That's all for me.

[Operator]

JPMorgan Securities, Mr. Wakao.

[Seiji Wakao, analyst]

JPMorgan, Wakao is my name. The Page 15, that is about the focus area approach, and I have a question about this. The aAVC is my question. So the timing of PoC is within this fiscal year?

So 7517 result, AML MDS study Phase I study results are going to be available within this fiscal year. And this 7517. Well, with the combination with the pembrolizumab, you are studying the solid tumor, I think, according to the current plan, but in combination with pembrolizumab. Basically, the philosophy is aAVC induced the natural immunity. So with using a checkpoint inhibitor, that is the additive effect can be expected. Is this understanding right?

[Unknown Executive]

Kitagawa is going to answer that question.

[Mike Kitagawa, executive]

Thank you for the question. Your understanding is quite right. The Phase I study is currently ongoing. And there, certain level of PoC judgment or decision making, might be possible and because the data is likely to be available within this fiscal year. So that understanding is right.

[Seiji Wakao, analyst]

Pembrolizumab of CPI combination, including nonclinical results, we expect the additive efficacy. So including that we are going to consent further in the clinical setting. When PoC is obtained, this 7517, WT1, with the PoC again, other antigen is incorporated for further clinical trials. Once a PoC is achieved, you are going to go for the development programs one after another, but what's your plan?

[Unknown Executive]

Conceptually, what you mentioned is quite right. So antigen embedded, if that is going to be changed, it could be used for various purposes, WT1, and the new case one, they made a success. Because of that, we can go next project, one after another. Well, of course, scientific decision-making is necessary. But as long as the factors are satisfied, I would like to go on to the next.

[Seiji Wakao, analyst]

Last question is about the fezolinetant 12-week that is going to be presented in the Society Congress. And in the past, you mentioned the safety is thoroughly observed before the presentation. But this time, with the 12-week that you started to make the announcement at the Congress. What's the reason?

[Unknown Executive]

Kitagawa is going to answer.

[Mike Kitagawa, executive]

Thank you very much. So we are going to make the presentation in NAMS. That's because of 12-week, full analysis, the result is possible, including a safety data. And that data is now available. And additional explanation to that is that, as has been mentioned, the 52-week long-term administration data is further important. SKYLIGHT 1, 2 and long-term SKYLIGHT 4, such data or readouts are going to be available in the next year. So with that, a comprehensive safety efficacy data, including a long term, will be available. So that is the direction that we've been saying from the beginning. There is no change about that. But as of now, we are going to disclose 12-week data because we want to share the current available information as early as possible.

[Operator]

Crédit Suisse, Mr. Sakai, please.

[Fumiyoshi Sakai, analyst]

Sakai speaking. Regarding the pipeline, I have 2 questions. AT132, looking at what's written here, 3 more patients will be enrolled for a lower dose. There's no change in the 3 ongoing patients. Any change in the subject age? The timing of the study completion may change by how much?

[Unknown Executive]

Thank you for your question. The same patient population from before, the initial 3 patients switched from the higher dose to a lower dose. We were assuming to follow with a higher dose, we were considering the allocation between higher and lower dose subject in the lower dose may not be enough to provide enough information. So we are going to add 3 more patients in the lower dose. So it's going to be a total of 6 patients. Then the ongoing 3 patients and the next 3 additional patients will be compared. No, it's not going to be a comparison. We have a lower dose group, and we will just add 3 more patients.

[Fumiyoshi Sakai, analyst]

There's no plan to make a comparison among different arms. So what about the timing?

[Unknown Executive]

Compared to the time line before the addition of the 3 patients, we have to accept those slight extensions, but fortunately, identifying the patients with this disease is not so difficult. We have COVID-19 patients who cannot move around so much. There are such issues, but it's not going to be a big obstacle. It's not going to take 5 years or 10 years just because of this.

[Fumiyoshi Sakai, analyst]

Understood. Another question is about maybe today, that's mitochondrial collaboration with Minovia. This is basically the platform. So mitochondria activity is enhanced with this platform. Is this understanding right? Meaning was this new indications are to be added?

It's not something like that. You have a universal donor cells with using this platform, it can be applied for various areas, 1128, 0367, for example, those are low molecules, small molecule projects, those are completely different path from this platform.

[Unknown Executive]

I don't -- I'm not quite sure if I have a good understanding about your question, but Minovia technology, the best part of that is, as you know, mitochondria is not something that you can easily handle with or deal with. But from the living cells, the normal mitochondria can be extracted or isolated. That's the beauty of this technology. And that is infused into the patient cell, and that is brought into the body of the patients. So that's currently what they possible to be done. So in the case, the patients, their own cells are used and the cells survival has to be maintained and there, healthy mitochondria is reinfused for the augmentation.

That requires very complicated procedures, and it will be quite expensive, and the procedure is quite limited. But there, if our universal cell is added and are used. And there, mitochondria that is extracted from the Minovia technology can be infused in that case or augmented in that case, it can be the off-the-shelf product. So far for mitochondria, small molecules are used to provide their signals to regenerate the activity. So remaining mitochondria is used to compensate the remaining functions of the mitochondria. But with this technology, disease cells and the tumor can regain the normal mitochondria.

In other words, cell regeneration might be possible. So that's our expectation. I understand about that. But the technology itself is already verified and scientifically and also the technologically, this is already established, right? I think that's a matter of internal verification, meaning that taken up the mitochondria, the healthy mitochondria and that is infused into the different cells so that it can brought back into the body of the patient. With that, the healthy mitochondria is infused into the cell. That is confirmed in the experiment. If it is validated or not, of course, ultimately, we have to do the human study but till then we need a little bit more time.

[Operator]

Morgan Stanley, Mr. Muraoka.

[Shinichiro Muraoka, analyst]

I'm Muraoka from Morgan Stanley. First quarter results were explained. The cost was the main message. XTANDI in the United States, plus 7%, it looks very weak. What's the background? And in the second quarter and beyond, I'm sure you have an outlook for recovery. Where do you think you can catch up?

[Unknown Executive]

Matsui, do you like to respond?

[Yukio Matsui, executive]

Matsui speaking. Thank you for your questions. As you said, 7% may look a little weaker. In terms of the demand, it's growing on a double-digit basis. This may sound like an excuse, but this year, in the first quarter, the last inventory level is a usual level, but still, it's closer to the lower limit.

In the first quarter of the previous fiscal year, it was within the normal range, but it was on the upper side. Both within the normal range, but still, if you compare JPY 1 billion or JPY 2 billion or more, there is a difference that much. That's also part of the factors behind. Overall, we're still under the COVID-19 pandemic. It's not just for us, but cancer patient diagnosis, as a whole, is not increasing as expected. That seems to be a challenge for us. But as you know, in the [ indiscernible] and Argus data, particularly [ MOHCSBH ], particularly positioning -- we are establishing the positioning here. That's the preferred option.

According to our market research, we implement, we have been able to confirm it. So in the latter half of the year, we'd like to increase our market share, increasing the number of patients to increase early usage, then we can increase XTANDI. If I may add, we have a partner in the United States. That's Pfizer, during the COVID period for about a year, risk activities were limited to remote activities. There were restrictions on face-to-face activities. That restriction has been lifted since May this year, as I heard. Because of these circumstances, omni-channel, remote promotion and something effective is being established, but in a face-to-face session, impactful promotional activities can be expected from the second half of the year from Pfizer.

So we'd like to provide information activities in the [ MOCHAPC ] activities as well, so that we can catch up. So we don't have to worry about XTANDI. Correct.

[Shinichiro Muraoka, analyst]

3772 pneumococcal vaccine. So already multiple candidates that you have. And you had the progress to a certain extent about this. Is this understanding right?

[Unknown Executive]

We'd rather refrain from making a comment about that.

[Shinichiro Muraoka, analyst]

Understood. Last question, fezolinetant background information is what I'd like to know. U.S. market, I'm quite sure that the market itself is quite big in the United States. And some investors ask me this question. HRT, that is well-known, and that has the hormonal activity and the rejuvenation of the skin is expected as well.

So far as a hormone therapy, the treatment is thoughtful. But when it comes to the fezo type of the product that some patients do not want to get the treatment. Do you have any such kind of analysis or information?

[Yukio Matsui, executive]

Matsui speaking. Let me answer to that. I don't know. My answer is precise answer to your question, but let me explain my current interpretation. First of all, the background of your question would be probably about the target patients that we are aiming at. We are aiming at the patients currently using a hormone therapy, I think that's your assumption. But actually, our target might be a bit different, not only the patients using the hormonal therapy currently. But for example, around the [indiscernible] hormonal therapy is communicated with regards to the certain risks throughout the world, and especially in the United States, the prescription is drastically reduced. Probably, it was reduced by [1,600 or 1,715 ], the peak, meaning that potentially we have the patient there. They want to get the treatment, but they do not have the options. So there is a very high unmet needs there. And then we want to bring the new option. Although it's not hormonal therapy, the efficacy is equivalent or better.

Just like the other analyst explained that safety is confirmed. If so, then in the case, not only those patients on the hormonal therapy. Currently, we have further such a bigger market available. So there, we would like to bring this innovation so that this product can be used for the wide-scale population. That's our analysis. I'm not sure if this is really the answer for your question, but my comment.

[Shinichiro Muraoka, analyst]

That was quite clear. Thank you very much.

[Unknown Executive]

Thank you very much. We are bridging the end of this meeting. We have many results announcements by various companies. So right after our announcement, there's going to be another announcement by another company, so we'd like to close here. Some of you are still waiting for your question, sorry, but we'd like to close this meeting here. Thank you very much for your participation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]