Astellas Pharma Inc

TSE:4503

Earnings Call Analysis

Revised FY 2023 Focus Post-Iveric Bio Buy

The company's progress reached 56.5% against the full-year forecast, driven by unexpected development costs for the zolbetuximab study due to early enrollments. The acquisition of Iveric Bio led to an added R&D expenditure of JPY 4 billion. Excluding Iveric Bio's impact, revised FY 2023 revenue is estimated at JPY 1,597 billion with core operating profit projected as JPY 302 billion; including the acquisition, revenue and operating profit are projected at JPY 1,608 billion and JPY 199 billion, respectively. Positive foreign exchange influences and oncology product sales have been significant, despite a decline in LEXISCAN sales due to generics. Furthermore, significant advancements have been made in XTANDI and strategic products, with important regulatory submissions and trial progress indicating continuous growth.

Upward Revenue Forecast and Oncology Product Performance

The company has revised its full year global sales forecast upwards, which is a result of strong performance in the U.S. and the anticipated sales from the newly approved oncology indication. Particularly, their oncology product XOSPATA demonstrated a robust 12% year-over-year growth in global sales, reaching JPY 26.3 billion. This growth exceeded expectations with new patient starts and demand surging in all regions. Consequently, a collective upward forecast adjustment of about JPY 18 billion has been made across three oncology products which are viewed as key growth drivers for the future.

VEOZAH's Performance and Prospects

For VEOZAH, market access activities are progressing well, reaching approximately 20% of lives with commercial insurance coverage. Despite a lower-than-expected demand leading to a downward revision of sales, this setback is countered by the belief that it won't affect the mid- to long-term potential of the product. Notably, in-service activities have reached 70,000 healthcare providers (HCPs), bolstering VEOZAH's market profile. The recently kicked-off TV commercial is expected to fuel sales from December onwards. The year-end forecast will be revisited after assessing the third quarter performance heavily influenced by Direct to Consumer (DTC) marketing activities and progression in insurance coverage.

IZERVAY's Launch and Financial Outlook

IZERVAY, having launched in September, reported sales of JPY 1.2 billion in a month's time, aligning with projections and reflecting encouraging expectations. The product has been made available in roughly 500 Retina specialist accounts. With an anticipation of Medicare Part B coverage, a full year sales forecast stands at JPY 11 billion. The forecast anticipates a breakeven in FY 2025 and a profit contribution from FY 2026, with expected peak sales ranging between JPY 200 billion and JPY 400 billion.

Expense Dynamics and Investment Focus

The company reports that cost of sales ratios matched expectations, but a notable 16.5% year-over-year increase in Selling, General & Administrative (SG&A) expenses was recorded, attributed mainly to VEOZAH's sales promotion. This was partly offset by a decrease in promotion costs for mature products. R&D expenditure saw a slight increase, mainly due to expedited clinical study progress. Overall, the increases align with the company's strategy to actively invest into future growth.

Revised Financial Forecast for FY 2023

The revised financial projections for FY 2023 show an expected revenue of JPY 1,597 billion, with core operating profit at JPY 302 billion, excluding the impact of the Iveric Bio acquisition. Including the effects of this acquisition, the forecasted figures are slightly higher revenue of JPY 1,608 billion but reduced core operating profit at JPY 199 billion, factoring in increased SG&A expenses and R&D costs along with amortization of intangible assets. In both scenarios, the forecasts take into account expected foreign exchange impacts and the sales growth of the oncology portfolio.

Earnings Call Transcript 2024-Q2

[Hiromitsu "Hiro" Ikeda, executive]

Thank you very much for joining Astellas Pharma Inc.'s FY 2023 Second Quarter Financial Results Announcement Meeting out of your very busy schedule. I'm delighted to serve as emcee today. I'm Ikeda, Chief Communications, IR Officer. You can join this meeting through Zoom webinar or live streaming. Live streaming is available in Japanese language only.

[Operator Instructions] During -- including Q&A session, simultaneous interpretation is available in Japanese and English. We cannot guarantee the accuracy of the translation. If you're joining on Zoom webinar from the menu on Zoom screen, you can select the language of your preference. If you select the original language, you can listen to the original sound without going through the translation.

And today, we are going to make a presentation based on the meeting materials posted on our website. This material or presentation by representatives for the company and their answer and statement in the Q&A session includes forward-looking statements based on assumptions and beliefs in light of the information currently available to management and subject to significant risks and uncertainties.

Actual financial results may differ materially depending on a number of factors. They contain information on pharmaceuticals, including compounds under development, but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations. The participants are as follows: Representative Director, President and CEO, Naoki Okamura; Chief Scientific Officer, Yoshitsugu Shitaka; Chief Medical Officer, Tadaaki Taniguchi; Chief Commercial Officer, Claus Zieler and Atsushi Kitamura, who has assumed the post of CFO effective today.

We have 5 participants from our company. Before going into financial results, Kitamura will give you a few words of greetings. Kitamura-san, please?

[Atsushi Kitamura, executive]

Thank you for the introduction. I'm Atsushi Kitamura. I've been appointed CFO of Astellas Pharma, Inc. effective today. Thank you very much for your support in advance.

Here is my brief background. I started my career at Proctor Gamble, P&G and then at the Skylark Holdings, where I experienced relisting on the stock market and direct interaction with investors as CFO. Most recently, I have been involved in corporate management as CFO of Pioneer.

By leveraging my global experience and expertise in finance area, I will find the ultimate resource allocation for us to achieve sustainable growth and maximize corporate value. The -- I would like to further accelerate Astellas' ongoing efforts to optimize its cost structure and for the financial discipline and cost ownership. And I will commit to achieve CDP2021 as a member of top management. And also I see it as one of my important roles to deepen dialogue with the investors and bring it back to the management of this company. I sincerely am looking forward to having open and constructive dialogue with all of you. Thank you very much.

[Hiromitsu "Hiro" Ikeda, executive]

Thank you. Now we would like to start the presentation. Okamura-san, please start.

[Naoki Okamura, executive]

Hello, everyone. I'm Naoki Okamura from Astellas Pharma Inc. Thank you very much for joining our FY 2023 second quarter financial results announcement meeting out of your very busy schedule today. This is a cautionary statement regarding forward-looking information. As this was explained by Ikeda earlier, I'm going to skip this page.

Page 3 is the agenda for today. Starting from the next page, I will explain these topics in this order. On Page 4, I will give you an overview of FY 2023 second quarter financial results. We are disclosing the consolidated financial results, reflecting the impact of the acquisition of Iveric Bio starting from the second quarter of FY 2023.

Revenue increased year-on-year, but decreased year-on-year due to the impact of LEXISCAN generic when excluding the ForEx impact. Oncology products, XTANDI, PADCEV and XOSPATA combined exceeded expectations. We revised our full year forecast upward accordingly.

On the other hand, VEOZAH underperformed versus our forecast. We will review our full year forecast in accordance with the third quarter progress. The initial uptake of IZERVAY launched in September was in line with our expectations. I will explain these products on Page 7 through 9 in detail.

Next on cost items. When excluding the effect of ForEx impact and the acquisition of Iveric Bio, SG&A expenses were on track and R&D expenses exceeded expectations. As a result, core operating profit decreased by 25% year-on-year, mainly due to the impact of LEXISCAN generic and the acquisition of Iveric Bio.

Taking these factors into account, we revised our full year operating profit forecast downward. I will explain our revised forecast on Page 11 in more detail. On Page 5, before explaining the quarterly financial results, I will explain accounting treatment of business combination with Iveric Bio. Based on the fair value assessment as of the date of business combination, we booked intangible assets of $6.3 billion and goodwill of $251 million.

Out of the intangible assets, we booked $5.2 billion for IZERVAY in the United States and amortization started in the second quarter of FY 2023. For IZERVAY outside of the United States, we booked $1.1 billion, which will be amortized after launches. What I have just explained is subject to change due to the provisional accounting treatment at this moment. If there is a change, we will update at future earnings.

On Page 6, I will explain FY 2023 second quarter financial results. Revenue increased to JPY 767.1 billion, up 0.6% year-on-year. The progress was 50.5% of our full year forecast. Core operating profit was JPY 109.8 billion, down by 24.5% year-on-year. The progress was 37.9% of our full year forecast.

In addition to the impact of Lexiscan generic, we booked SG&A costs, R&D expenditure and amortization cost for intangible assets related to the acquisition of Iveric Bio which we did not anticipate initially, so the progress of core operating profit was much lower than expected. You can see the ForEx impact on the right-hand side of the table, there was a positive impact on revenue by JPY 37.8 billion and core operating profit by JPY 11 billion.

The bottom half of this page shows full basis results. In the right bottom of the table, we included other expenses booked in the second quarter. In the second quarter, we booked JPY 36.7 billion as payment for Iveric Bio's unvested share-based payments with the acquisition of Iveric Bio. Also, we booked JPY 8.8 billion as fair value increase of contingent consideration for zolbetuximab due to ForEx rate fluctuations.

The contingent consideration for zolbetuximab is booked as liabilities in euro. From the end of FY 2022, the euro substantially fluctuated towards the lower yen, which resulted in fair value increase of contingent consideration. As a result, operating profit was JPY 51 billion, down by 57.4% year-on-year. Profit decreased to JPY 31.7 billion, down 67.2% year-on-year. On Page 7, I will explain the progress of XTANDI, PADCEV, and XOSPATA and the future outlook. First, about XTANDI. Global sales increased to JPY 360.9 billion, up by 9% year-on-year. Following the first quarter, ex U.S. performance offset the U.S. performance.

Global progress as a whole was in line with our initial assumptions, even excluding ForEx impact. In the United States, the ratio of PAP, patient assistance program to enable patients to access drugs for fee continues to be higher than expected, but volume, excluding PAP, grew by 3% year-on-year, so actual demand increased.

Other than the United States, established markets and international markets in particular, exceeded expectations. Prescription for M1 CSPC continued to grow, which contributed to the expansion of sales. Regarding the future outlook, expecting the high PAP ratio to continue in the United States, we made a downward revision of our U.S. dollar-based full year forecast.

On the other hand, we made an upward revision of our full year forecast for good performing established markets and international markets, which are expected to outweigh the downside of the United States. As a result, we are making an upward revision of our global full year forecast as a whole, even excluding ForEx impact.

Next, for PADCEV, global sales increased to JPY 32.7 billion, up by 57% year-on-year. The progress in the United States, in particular, is exceeding our initial forecast, which contributed greatly to the expansion of global sales. The penetration of the additional first-line cisplatin-ineligible metastatic urothelial cancer indication approved in April continue to exceed expectations. Further sales acceleration is expected for the future. Also EV-302 study results presented at ESMO recently were extremely favorable, exceeding our expectations.

Based on these results, we are preparing to file a submission earlier than initial plan and are expecting approval of additional first-line cisplatin eligible indication in the United States by the end of the current fiscal year. In established markets, reimbursement started in big markets, Germany and Italy, and we are expecting further sales growth from the third quarter.

Regarding the future outlook, we made a significant upward revision of full year global sales forecast, reflecting the strong U.S. performance and the sales contribution expected from the approval of the additional first-line cisplatin eligible indication by the end of this fiscal year. Regarding XOSPATA, global sales increased to JPY 26.3 billion, up 12% year-on-year.

In all regions, new patient starts were higher than expected and demand increased. Reflecting the strong global performance, we made an upward revision of full year forecast. So overall, the 3 oncology products are performing well. We made an upward revision of our forecast by about JPY 18 billion in total for the 3 products combined. Even excluding ForEx impact, starting with PADCEV, we have high expectations on them as growth drivers for the future as well.

On Page 8, I will explain the progress of VEOZAH and the future outlook. Including market access, activities for HCPs and patients are on track. On the other hand, Second quarter sales underperformed versus initial forecast due to overestimation of demand prior to the launch of DTC, such as TV commercial. From the beginning, we are expecting full-scale sales growth from the third quarter onward, but we're expecting more demand up to the second quarter as well.

There are 2 main factors for the lower volume. First, usage by out-of-pocket payment, not covered by insurance was lower than expected. Secondly, there was some impact of prior authorization required for prescription despite insurance coverage in some cases. The procedural burden to complete this prior authorization process has been perceived as more bothersome than we expected. To tackle this issue, we are working to increase awareness of the program to support the prior authorization process. It's difficult to recover the downside through the second quarter, and we're expecting a downside also in our full year forecast.

But as of now, we are not changing our full year forecast on a local currency basis because the progress in the third quarter with DTC launch is going to be extremely important. Based on the impact of DTC activities and the progress of insurance coverage, we will review our full year forecast at the time of the third quarter earnings. Next, let me explain the progress through the second quarter.

Regarding the status of the market access as a whole, commercial insurance coverage is on track, around 20% of lives right now. Payer discussions are progressing as expected. We're expecting coverage to increase over the course of FY 2023. In our activities for HCPs, we have reached 70,000 HCPs in person. We believe that the product profile of VEOZAH has penetrated as expected. Actually, based on the results of a market research with a few hundred HCPs, we have been able to confirm steady increase in the awareness of VEOZAH since launch.

With regards to activities for patients, we started TV commercial from the ninth of October in the United States as planned. Industry benchmark suggests that it takes about 2 months in general for the impact of TV commercial to appear on a full scale so we are hoping that this will lead to sales expansion from December. For the future outlook, the initial uptake was lower than our assumptions but the factors behind would not affect the mid- to long-term business of VEOZAH per se in our opinion.

Also from a recent market research, we confirmed HCP's high assessment of VEOZAH. We remain confident about our peak sales forecast. We will continue to maximize the value of VEOZAH going forward. On Page 9, I will explain the progress of IZERVAY and the future outlook. It was launched in September in the United States. Sales in about 1 month since launch was JPY 1.2 billion, the initial uptake was on track. Our full year forecast for this fiscal year is JPY 11 billion.

Through our activities for just one month, it already became available in about 500 Retina accounts as of September. We feel there are high expectations for IZERVAY. As for insurance coverage, we are anticipating mainly Medicare Part B. We already submitted application for permanent J-code to facilitate billing of Medicare Part B treatments by healthcare professional. We're expecting J-code in April next year. Next, I will explain our future outlook.

Before sales forecast, I will explain the amortization for intangible assets for IZERVAY . We are expecting about JPY 60 billion this fiscal year and JPY 80 billion to JPY 100 billion from FY 2024 onward. Regarding IZERVAY sales forecast, between sales and amortization of intangible assets, SG&A expenses and costs related to IZERVAY, we're expecting breakeven in FY 2025, with contribution to profit expected from FY 2026.

We are expecting peak sales of JPY 200 billion to JPY 400 billion. As the product is just launched recently, with a lot of uncertainties such as the impact of competitive products, we are disclosing with a range by taking into account a certain degree of opportunity and risk. The potential impact of competitive product is still under examination right now.

Based on the future uptake and the market environment, we will review the range of peak sales. We have high expectations for the expansion of IZERVAY sales in the future as an important product to help compensate for the decline in sales from XTANDI LOE. Next on Page 10, I will explain cost items. Cost of sales ratio was as expected. SG&A cost excluding U.S. XTANDI co-promotion fees, increased by 16.5% year-on-year.

When ForEx impact was excluded, SG&A expenses increased by 11.2% year-on-year. The progress was 52.5% versus our full year forecast. We position FY 2023 as a year to make active investments for future growth. Sales promotion expenses related to VEOZAH increased by about JPY 13 billion year-on-year. On the other hand, sales promotion costs related to mature products such as Mirabegron decreased by about JPY 4 billion year-on-year.

The impact of the acquisition of Iveric Bio on SG&A cost was about JPY 10 billion. This includes onetime expenses associated with the acquisition in addition to the actual business costs. Excluding the impact of ForEx and the acquisition of Iveric Bio, SG&A costs are in line with our initial expectations. R&D expenditure increased by 2% year-on-year and decreased by 1.2% when ForEx impact was excluded. The progress was 56.5% versus our full year forecast and was higher than expected. Due to the steady progress of Phase II study for zolbetuximab in pancreatic adenocarcinoma, and earlier subject enrollment than we assumed, development costs were higher than expected, which was the main factor behind the increase.

With the acquisition of Iveric Bio, we booked R&D expenditure of about JPY 4 billion. Page 11. I will explain the revised focus for FY 2023. I will divide the revised focus into 2 parts. One, based on the progress of the business to date, excluding the impact of the Iveric Bio acquisition and the other on the impact of the Iveric Bio acquisition itself. The first is the revised focus excluding the impact of the Iveric Bio acquisition, which is shown in the center of the table.

We have revised our ForEx assumptions in the certain exchange rate of JPY 140 per dollar and JPY 150 per euro from the third quarter onward. While factoring in a decrease in the sales of LEXISCAN due to the impact of generics with taking into account the positive impact of foreign exchange rates of approximately JPY 90 billion and a total increase of approximately JPY 18 billion for the 3 oncology products as a whole, the revenue is forecasted as JPY 1,597 billion.

The focus for G&A expenses is JPY 699 billion, mainly due to the impact of ForEx rate. R&D expenses are expected to be JPY 271 billion, taking into account the impact of foreign exchange and an increase in development expenses due to the positive progress of studies of zolbetuximab as explained earlier.

As a result, core operating profit, excluding the impact of Iveric Bio acquisition, is expected to be JPY 302 billion. About JPY 7 billion of the fair value increase of contingent consideration for zolbetuximab is included into other expenses. But the full year operating profit is forecasted as JPY 263 billion, thanks to the positive impact of ForEx rate.

Next, I will explain the revised focus, including the impact of the acquisition of Iveric Bio is shown on the right side of the table. Revenues are expected to be at JPY 1,608 billion, including JPY 11 billion of IZERVAY sales forecast.

SG&A expenses are expected to be JPY 737 billion, including about JPY 38 billion. This also includes the increase of SG&A expenses in the actual business as well as onetime costs associated with acquisitions. R&D expenses are expected to be JPY 290 billion, including about JPY 19 billion. In addition, amortization of intangible assets of about JPY 60 billion has been factored in. As a result, core operating profit is projected to be JPY 199 billion.

On a full basis, operating income is expected to be JPY 123 billion, including about JPY 37 billion in payment for unvested share-based payment associated with the acquisition of Iveric Bio. From here, I would like to explain the initiatives for sustainable growth. Page 13 shows the overview of key updates and initiatives for sustainable growth since the last financial announcement. There has been significant development progress in XTANDI and strategic products and Focus Area Approach projects. Details are provided in the following slides.

In the RX Plus program, a Phase III trial evaluating ASP5354, our florescent contranst agent for urothelial visualization during surgery has started and achieved the first subject first treatment.

On Page 14, here, I will discuss the key events we expect to see in FY '23 for XTANDI and strategic products. The progress made in the past 3 months is shown in red. About XTANDI, the submission was accepted for the additional indication of M0 CSPS, nonmetastatic castration-sensitive preset cancer with a high risk of chemical recurrence in the U.S. in August and in Europe in September.

The U.S. application was granted priority review status by the FDA, where the PDUFA target was set as the third quarter. The application for an additional indication of M1 CSPC, metastatic castration-sensitive prostate cancer based on the China RCstudy has been accepted in China ARCHES study has been accepted in China in September.

As for PADCEV, the EV-302 study showed positive top line results in September. Based on these results, we are now moving ahead of our initial plan to file a global application and aiming at a submission in the U.S. by December.

For VEOZAH, Astellas has received CHMP positive opinion in October. IZERVAY received approval from the U.S. FDA and it was accepted for filing in Europe in August. In September, we received a positive 24 months top line results from the GATHER2 study. Based on these results, we plan to submit an application for label of revision in the fourth quarter. The current label specifies there's a maximum dosing period of 12 months and a dosing frequency of once a month but we plan to discuss with the regulatory authorities to improve the convenience for patients and physicians.

We plan to hold a presentation meeting on the 24-month GATHER2 study on November 6, immediately following the presentation at the American Academy of Ophthalmology AAO to provide more details. Other updates are listed outside of this chart. Regarding XTANDI, the EMBARK study data was published in The New England Journal of Medicine.

For PADCEV, results from the EV-103 study Cohort L and the EV-302 study in muscle-invasive bladder cancer were presented at ESMO. EV-302 study data will be explained with the next slide. For zolbetuximab, follow-up data from SPOTLIGHT and GLOW studies were presented at ESMO.

Other activities underway to bring the product to market will be described in the later slide. IZERVAY 12-month data of the GATHER2 trial was published in The Lancet. On Page 15, I discuss the EV-302 trial data for PADCEV, which was presented at the ESMO in October. The EV-302 study compared to the efficacy and the safety of PADCEV in combination with KEYTRUDA to chemotherapy -- excuse me, the efficacy and safety of PADCEV in combination with KEYTRUDA to chemotherapy with platinum and gemcitabine in patients with treatment-naive locally advanced or metastatic urothelial cancer.

As shown in the chart, the combination of PADCEV and KEYTRUDA reduced the risk of cancer progression or death by 55% versus chemotherapy with a hazard ratio of 0.45 for PFS and the risk of death by 53% with a hazard ratio of 0.45 for overall survival. The median survival in both PFS and OS was approximately twice as long as that in chemotherapy. In the subgroup analysis, consistent improvement in OS was observed in various patient populations regardless of cisplatin eligibility and PD-L1 expression level.

When this data was presented at the ESMO the other day, there was a standing ovation in the audience. That's what I heard. This means the presentation was highly acclaimed by the experts and affected a lot of -- attracted a lot of attention. Aiming at the position as a new standard first-line treatment for metastatic urothelial cancer, we are planning to submit regulatory applications globally, starting with the U.S.

In addition, due to the extremely positive results that exceeded our expectations, we have started to consider the possibility of rising our peak sales forecast. At this time, we don't comment on the specific range of the increase, but we will provide further guidance after we have conducted a thorough review.

Next is the zolbetuximab update. We have submitted applications for zolbetuximab in Japan, the U.S., Europe and China and are working with the regulatory authorities in each region on the review process. If approved, zolbetuximab will become a first-in-class drug targeting Claudin 18.2. In parallel with it, we are proactively conducting activities to raise awareness of importance of Claudin 18.2% as a biomarker, and its recognition by setting up a booth at major academic conferences around the world and by launching our website to educate physicians and pathologists who treat gastric cancer.

Roche is developing the companion diagnostic needed for patient screening. In addition, Early Access Programs are planned in about 20 countries to ensure patient access zolbetuximab until its launch. We plan to hold a meeting to explain in detail our commercial strategy and the sales outlook after the approval in the U.S., the timing will depend on the timing of the approval, but we are currently anticipating it will be a December to January time frame.

On Page 17, I will explain progress in a focus area approach. Projects in clinical trials are clinical stages that have been updated in the past 3 months are shown in red. And the primary focus of genetic regulation, we have been working on resuming the administration of AT845 since the clinical hold of the FORTIS trial was lifted. And the first subject was dosed in September as planned. We'll continue to enroll and evaluate subjects to determine the POC.

In the area of immuno-oncology, we disclosed that the target molecules of ASP2074, a bispecific immune cell engager, Tetraspanin-8 and CD3. Tetraspanin ETETRA spanning is a known tumor-associated antigen that is overexpressed in various types of cancers. The mechanism of action is that ASP2074 specifically binds to cancer cells expressing Tetraspanin-8 and CD3-positive cells, bringing them closer together and activating the T-cells to cause cancer cell damage. ASP1012, a systemic oncolytic virus has entered the clinical stage and is expected to enter Phase I trials in the fourth quarter.

ASP1012 is a later program acquired through an exclusive license agreement with KaliVir in 2020, and this is oncolytic vaccine virus carrying the gene for future protein of Leptine and Interleukin-2. After intravenous administration, the virus is designed to reach tumor tissues throughout the body to simultaneously cause local damage to cancer cells and enhance the cancer immune response.

We expect that the drug will easily access cancers that are difficult to treat with local administration to tumor tissue and will be believable to many cancer therapies.

ASP3082, a targeted protein degrader, has been granted First Track designation by the FDA for the treatment of locally advanced or metastatic colorectal cancer and non-small cell lung cancer with KRAS G12D mutation respectively. Together with pancratic adenocarcinoma for which the designation was also granted in February of this year, we were able to obtain Fast Track designation for 3 cancer types known to have a high frequency of KRAS G12D mutations.

We look forward to accelerating the development of this innovative treatment for these cancers with high unmet needs. On Page 18, I would like to explain the current outlook toward achievement of CSP2021. Through the full-scale sales of VEOZAH, further acceleration of growth of PADCEV based on the EV302 study and the global launch of zolbetuximab, we will achieve significant growth in revenue and profits toward FY 2025. This initial plan hasn't been changed, and we will continue to aim to achieve our goals, including a core OP of 30%.

In addition to this, we expect IZERVAY sales to grow and reach breakeven with associated expenses, including amortization of intangibles in FY 2025. As a result, when the impact of IZERVAY included, we expect that it will be difficult to achieve a core OP of 30% in FY '25. On the other hand, we expect IZERVAY to continue to grow in FY '26 and beyond contributing to profit growth along with other strategic products. This will bring us on solid ground to achieve what we are aiming for in our CSP2021, namely sustainable growth after the loss of the XTANDI exclusivity period.

Page 19, this is the last slide. You see the schedule of upcoming event. The IZERVAY meeting for 24-month data will be held on November 6. The zolbetuximab meeting will be held after anticipated U.S. approval between December this year to January next year. The Annual Sustainability Meeting is scheduled to be held on February 21 this year. I hope you will join us. That is all I have to say. Thank you very much for your attention.

[Hiromitsu "Hiro" Ikeda, executive]

[Operator Instructions] Today, our Chief Commercial Officer, Claus, is joining us well. [Operator Instructions] We now would like to entertain questions, please. Mr. Yamaguchi from Citigroup Securities.

[Hidemaru Yamaguchi, analyst]

I'm Yamaguchi from Citigroup Securities. There are so many topics included in the presentation. Thank you for the presentation. Regarding the VEOZAH business update, I have a question first. This was the topic during the Q1 earnings. Even if there is a prescription, there is a hurdle to clear until the actual prescription that was explained today. After the insurance reimbursement, it takes some time and you're going to resolve this issue as was mentioned.

You have a variety of programs going on to resolve these issues. In the short term, these issues will be resolved. Insurance coverage will increase. And even after insurance coverage, there may be some issues because of the process. I'm sure there is some impact including time frame, how much you can resolve these issues.

[Naoki Okamura, executive]

First of all, I'd like to briefly explain and then Claus may add some comments if any, afterwards. First of all, as you said, what is going to happen to insurance reimbursement. That's one factor. And also, for DTC, those who respond to DTC and patients usually would have an annual health checkup to visit physicians. But because they looked at DTC, they have certain symptoms and they want physicians to check their symptoms.

Whether they would go to the physicians or not, so there are 2 -- these 2 factors. Insurance reimbursement once we began discussions with payers, insurance reimbursement is not decided immediately. We need negotiations for a few months before decision. As you know, U.S. payers varies, small ones and big ones, the number of people they cover is also very different.

And some payers adopt something new quite quickly and others need a lot of discussions before approval. For the time being, we mentioned 20% of lives being covered of the population in the United States, and we received a reimbursement from such payers. As for the remaining ones, you have larger accounts. One insurance has many people being covered. We are to discuss with those players.

Of course, we're expecting tough negotiations with them. We shouldn't be too easy to determine the price because it will continue over the life cycle as a whole. So the value of VEOZAH must be fully recognized to determine the insurance reimbursement. Probably by the end of FY 2023, the ratio of the U.S. population, it's going to be a little more than 50% of the coverage of lives according to our forecast right now.

On the other hand, after launch until now, prescription is not growing so much. There is another reason behind. At the Super Bowl, we had an advertisement, so awareness increased in society as a whole. We thought that happened. And including the results of the market research, with or without prescription, quite a large number of patients visit their HCPs. That's what we thought, but not so much as we expected.

And to write a prescription, it didn't happen or they brought a prescription to fill the pharmacies, but they know that it's not going to be filled with their insurance, they decided not to receive it the time being, that's the situation up until now since launch. We started DTC from October. So more than before, the target a patient population for VEOZAH exists. VMS, as you know, has subjective symptoms.

If patients have subjective symptoms, they have an annual health checkup, but rather because of the symptoms. And I heard about this product, doctors, please check my symptom by increasing such visits to HCPs, it's more easy -- easier to write a prescription, and they may have no other choice but to write a prescription. Because of the prescriptions, payers would be pressured to know that there are so many patients.

And the discussions about insurance reimbursement will accelerate. If we have those factors as we expected, we can draw a picture as we expected. And prior to that, whether it's going to be realized in accordance with expectations, in the third quarter, we'd want to identify the situation. And based on that, JPY 49 billion we communicated at the beginning of the year, how much we can achieve the figure will be reviewed so that we can announce to you. Claus, any additional comments from you?

[Claus Zieler, executive]

I think Okamura-san described the situation very accurately. Maybe I can only add that the payer negotiations and the direct-to-consumer demand, of course, are linked because the payers are also trying to estimate what demand they should be expecting. So the direct-to-consumer campaign that we have started on the ninth of October, as it increases demand, we expect that, that will then also enable us to progress with the payer negotiations. So the 2 go hand-in-hand.

[Hidemaru Yamaguchi, analyst]

Another simple question. The startup of IZERVAY is really good. And I understand in the way, but probably the competitor show the news of the inflammation in eyes. And I just wonder if it is the product specific or the class problems. So for IZERVAY I just wonder if the kind of side effects have happened or not happen or how the HCPs are talking about this? What's the current situation?

[Naoki Okamura, executive]

As a fact regarding the IZERVAY, the vasculitis is reported, although it's just one case. So in that sense, it's difficult for us to say that this drug is completely clean. But how we evaluate that rather than myself, Taniguchi is better to explain about this. So Taniguchi-san, would you please answer for this.

[Tadaaki Taniguchi, executive]

Let me answer for this. For intraocular vasculitis, it is now observed in competitors' or other companies' product and that is collecting addition. In GATHER1, GATHER2, two studies are conducted and the result is disclosed and there such event it didn't take place. At the same time, although this is reported from other company, post-marketing, just one case of the vasculitis was reported. But this patient used this drug outside of the indication -- off label indication. And method of the administration is that with using other companies' drug, contralateral side IZERVAY was administered. So the situation was quite complicated. So there is such one patient report and for this patient we re currently still checking the current situation.

[Hidemaru Yamaguchi, analyst]

So in other words, that is only one case that this vasculitis is observed.

[Tadaaki Taniguchi, executive]

Yes, that is only one case that we recognize.

[Operator]

Next question. Mr. Hashiguchi from Daiwa Securities.

[Kazuaki Hashiguchi, analyst]

Mr. Hashiguchi from Daiwa Securities. Now about IZERVAY. The start-up is in line with the expectations as you explained but the expectation itself, the expectation of when, at what point of time? And what is the exactly -- what exactly that expectation is?

Well, because the of this situation, I just would like to hear. And after you decide the acquisition, the competitor safety related issue took place. So after you made a decision and the situation afterwards might have been changed.

So regarding the impact of the competitors' product, the mechanism is closer. That's why some doctors might be cautious about adopting IZERVAY or there's the situation where that the treatment option is limited, that's why IZERVAY is utilized. So there are such a complicated situation. So I just wonder what factor works in what way? And how do you see about the new patient share.

[Naoki Okamura, executive]

Thank you for the question. First of all, intangible for -- I explained about the contents of the accounting treatment of business combination. And that is a valuation based upon the time that we decide this acquisition. Therefore, in line with the expectation or better than the expectation, that means that the valuation result that we've done on our own is always referred to.

And JPY 200 billion to JPY 400 billion of peak sales, that we expect, and there are several reasons of this wider range. That's because we need take into consideration about the competitor situation. Meaning that this is not a factor that is handled only on our own. Meaning that we need to look at the data disclosure from the competitor. And also, the causality identification is also needed to be considered as a factor. There are various parameters. And if it is getting a positive, we can reach to nearly JPY 400 billion. But if it is not really so, then it becomes smaller to the level like JPY 200 billion.

It's been only 3 months after the closure of the contract of this acquisition, and it's just one month after the launch of the product. So what would happen cannot be precisely predict at this moment. However, we decide the purchasing price, acquisition price based upon the due diligence. So the valuation we made at the time is also the foundation to think about what will happen to the future, and peak sales guidance, therefore, is going to be let you know in appropriate way at appropriate timing so that you can have a better understanding.

[Kazuaki Hashiguchi, analyst]

Understood it quite well. So the current market -- what about the current share amongst new patients? Current share of this product amongst new patients.

[Claus Zieler, executive]

So as Okamura-san said, we -- thank you for your question. As Okamura-san said, it's very, very early with one month data. It's -- we are in a data set that is too thin to really estimate accurately. We do have some anecdotal evidence from doctors when our sales people contact them and that anecdotal evidence seems to suggest that we get a mixture of reactions. We get -- some doctors saying, I'm aware of the adverse events of the competitor product, so I'll be more careful. But we have other doctors saying, I'm aware of the competitors' adverse events. So I will prefer either way. So anecdotally, we get a big mix of hesitancy and/or switch behavior, which is impossible to quantify at this point. So I would argue that we will need probably another 4 to 6 months' data before we have stable market share trends.

[Hiromitsu "Hiro" Ikeda, executive]

Next, Morgan Stanley MUFJ Securities, Mr. Muraoka, please.

[Shinichiro Muraoka, analyst]

Hello. Muraoka MUFG from Securities. Can you hear me?

[Naoki Okamura, executive]

Yes, we can hear you.

[Shinichiro Muraoka, analyst]

First of all, amortization cost, JPY 60 billion or JPY 80 billion or JPY 100 billion. What is the duration of amortization period? 10 year -- around 10 years or I think it can be a little bit shorter.

Until when you would amortize and the countermeasures against LOE. With this drug, generic could be launched quite soon given the morality. So did you take that into account in calculating the amortization period?

[Naoki Okamura, executive]

Regarding the amortization period, we are not disclosing information. However, this year, our amortization amount this year from August -- for 8 months, starting from August for this year -- this fiscal year.

When I explain the amortization cost of JPY 80 billion to JPY 100 billion, the 2 reasons. One is, this would include the amount outside of the United States, and because of the long period, based on yen, we cannot make a specific amount in Japanese yen. That's why there is a range. In 2023 fiscal year, the amortization cost for FY 2023 is for 8 months. And we have intangible assets outside of the United States, what is the assumption for the amortization period, you can back calculate the period. With your calculation, you can set the duration. That's our stance.

As for life cycle management, based on the intellectual products, intellectual properties of the product, we determine the amortization period. But the life cycle management, we may change formulations, or we may go for different indications, and we may be able to get the usage pattern, for example, so depending on the -- what is going to happen in the future, if there is anything we should disclose to you at the proper timing, we'd like to explain to you in an easy-to-understand fashion.

For the time being, there are a few puzzle pieces. There is still some space. But from the remaining puzzle pieces, you're going to fill the space. That's our stance, we are taking for the time being.

[Shinichiro Muraoka, analyst]

So this nucleic acid-based drug, considering about 10 years later, you are not thinking that it is not easy to make a generic for nucleic acid product.

[Naoki Okamura, executive]

I don't know if I'm the right person to answer this. But probably 10 years later, technologically I assume that it will not be that difficult -- extremely difficult to make it. When antibody becomes available, at that time it was said, antibody is difficult to be made and also there are multiple layers of the intellectual property. Therefore, generic is difficult to be developed. But currently, biosimilar is not that difficult to be made. So same situation might happen no matter what the morality is, that way we better assumes, that is our stance.

[Shinichiro Muraoka, analyst]

For IZERVAY, the initial anecdotal feeding is what you talked about. And you talked about the safety, but the 12-month restriction of the usage. And currently, just a once monthly product available. Regarding this point, although it's just one month after the launch, what is the doctor response about this? Is there any negative comment about this?

[Naoki Okamura, executive]

What you're asking is rather than the doctors conducting clinical trials, but the doctors who are actually using this product in the market. If you want to hear the reaction of them?

[Shinichiro Muraoka, analyst]

Yes, that's right.

[Naoki Okamura, executive]

Now Claus, would you please answer to that?

[Claus Zieler, executive]

Thank you for your question. We don't have robust market research data to answer that question. But as an indicator, we do get reorders from clinics who have ordered multiple times now. So that gives us a lot of confidence that the doctors who are using the product are satisfied with the effect.

[Shinichiro Muraoka, analyst]

Last question. This is going to be a brief question. Somewhere in the supplemental documents, you discontinue Phase III of Mirabegron in pediatric patients. Because of the issues in the clinical study. I think this was to extend our LOE for mirabegron for 6-months, but we shouldn't expect this further for the future, correct?

[Tadaaki Taniguchi, executive]

Mirabegron pediatric indication, clinical studies for that indication. We decided to terminate because of the enrollment, enrollment was not so favorable with the European authorities, we had consultations and decided to do this. We made that decision. And into the future, how this will affect the LOE and the 6-month extension, probably discussions with authorities will continue. So we don't have any information we can disclose. We cannot respond right now.

[Shinichiro Muraoka, analyst]

It's limited to Europe.

[Hiromitsu "Hiro" Ikeda, executive]

Yes.

Next, JPMorgan Securities, Wakao-san, please?

[Seiji Wakao, analyst]

JPMorgan, Wakao is my name. First question is about VEOZAH from me as well. This might be the repetition, but I'd like to make a confirmation for the coverage, it might take longer than you have expected.

In the material in the first quarter, in the second afterwards, you are expecting the coverage of the private insurance and the end of 2025 the coverage will be established to a greater extent. But based upon the current assumption, that coverage is going to be reduced further. I believe you mentioned about the 50% of the coverage, by the end of this fiscal year, what will be your target of the coverage? And also the impact of this time -- well, it's not a level enough to change the peak forecast. But FY '25, JPY 300 billion, for example, such a midterm target. Against that, do you think the situation will have an impact or this is just a couple of months delay because I cannot learn about the magnitude of this situation -- that magnitude/impact of this situation.

[Claus Zieler, executive]

I believe your first question was about the payer coverage and what we are expecting at the end of the fiscal year. Our projections that I believe we have communicated since the beginning was that we would achieve a majority of lives covered by the end of the fiscal year. And as I alluded to an earlier question, at this point, we are fully on track with the lives covered, and we don't see any indication that we should be off target from that more than 50% expectation of lives covered by the end of fiscal 2023. So that would be what I can share today on the expectations.

[Seiji Wakao, analyst]

And what about the impact against the sales? So far, this is just about a couple of months delay or FY '25, JPY 300 billion forecast is also difficult to be achieved?

[Naoki Okamura, executive]

Let me explain about this a bit. And if there is additional information, Claus would make a comment. In the response in the first question, I mentioned there are 2 stages, meaning that the DTC impact after the launch, there will be a certain period of time, and DTC effect is that it to be appealed and the patients go to the doctors and explain about the symptoms and prescription is written. So there is a Phase I and Phase II.

And what is currently ongoing now? And what you see is this Phase I. But for this Phase I, we were too aggressive for the forecast, we thought it could have been better than our current situation. So for this itself, our focus was not accurate enough, and within this a couple of months, there are some patients started to use this drug and that they continue to use it within this fiscal year. In other words, the refill would take place, but that is already done, so you cannot recover that.

But on the other hand, Phase II would come, meaning that the DTC efficacy becomes effective is tangible and the patient actually go to the hospital further for the prescription, and for the setup, we need to have very keen eyes, so that we can -- therefore, it is in line with our expectation or not. And if that situation is completely in line with our expectation, we believe we can achieve the targeted peak sales. So I would like you to wait till the end of the third quarter.

[Seiji Wakao, analyst]

Meaning that we have to wait few months. So Phase II forecast, that might be varied. Is this understanding right?

[Naoki Okamura, executive]

Yes, that's right. That's right.

[Seiji Wakao, analyst]

Now I understand clearly. Next, about IZERVAY, the slide on the impact on the business results this year, you explained the impact on SG&A and R&D expenditure. Next fiscal year, IZERVAY, Iveric Bio's SG&A cost and R&D expenditure, how much should we expect on a full year basis? There can be a decrease for SG&A costs, but there can be a possibility of an increase in SG&A cost and R&D expenditure may decrease. So what's your view on this?

[Naoki Okamura, executive]

It's rather difficult to understand, perhaps, but SG&A costs include as you can see here, onetime expenses associated with the acquisition. So in FY 2024 and beyond, business as usual, what is going to be the amount. It's very difficult to tell, perhaps based on these figures. On the other hand, IZERVAY is a new product. So it's not as much as the VEOZAH, but for the launch of a new product, we need spending. Right now, it's just for the United States, but in FY 2024 outside of the United States, we are going to launch it as well.

So what I want to say here is that from FY '23, some of the costs will disappear, but some of the cost included in FY '23, but the amount may increase for the future. It's not included in FY '23, and it's going to be added to FY '24, for example. So we have to take these factors into consideration to sync, this could be an approximate level for R&D expenditure, -- in the life cycle management for that purpose, new formulations might be developed or every other month dosing, may require the accumulation of more clinical data, we can assume such scenarios. Iveric bio's trend, based on the trends by now, there can be a slight decrease. But on the other hand, we will continue to make these efforts as well. So reducing coming down to zero or suddenly doubling are not expected.

[Seiji Wakao, analyst]

Lastly, IZERVAY vasculitis, could you elaborate on that?

The first vial is supplied in 1 case, so 0.1%. So this rate is similar to the competitor's product. And you explained us about the case of the vasculitis.

The administration is quite complicated. So if the administration is in line with the guided administration way, this kind of vasculitis will not take place. What do you think about it?

[Naoki Okamura, executive]

That's a clinical perspective. So Taniguchi-san is going to explain about it. But the 10,000 vial in 1 case, so 1 out of 10,000, I don't think that is the right way. So please abolish that way of the thinking. And what Taniguchi a little while ago is, first of all, why this is complicated.

Well, first of all, this patient is off label use. And one is -- where the competitor's product is used and the other is IZERVAY. So once something happens, it's very difficult to identify what's the cause. That's why I'm saying this is quite a complicated situation. So one case per 10,000 -- well, that is a completely different way of thinking. Please do understand it in that way.

Taniguchi-san, do you have any additional comment on this?

[Tadaaki Taniguchi, executive]

Well, onset rate, well, for post-marketing that it's very difficult to define the nature, so we are going to make an effort. But for the future as well, it might be difficult to give you the precise number. What is clear is the calculation of data in the clinical trial. I believe that, that is the precise event rate of AE that can be communicated and I believe that other companies do the same way.

[Seiji Wakao, analyst]

I asked this because compared to Apellis, what is going to be the incidence. On the other hand, your company's product may have a lower incidence. The difference may affect the upcoming penetration in the market. That's why I wanted to confirm.

[Naoki Okamura, executive]

Yes, you're right. That's why our current guidance has a big range. You may not think this is the right guidance. But for us, with our efforts -- we would like to clarify various factors. And the third party -- we may have to depend on information from third parties in some aspects. So there are certain uncertainties. That's why we have a wide range in our guidance right now. If there is any event, we become aware to narrow the range and if there is any supporting information. Based on that, we will change our guidance, and we'll communicate to you at appropriate timing.

[Hiromitsu "Hiro" Ikeda, executive]

Next, Goldman Sachs Securities, Ueda-san, please.

[Akinori Ueda, analyst]

Ueda speaking from Goldman Sachs. My first question is also about VEOZAH -- so what's the current evaluation by the user doctors? For this drug efficacy and safety, onset of efficacy convenience, looking at in a comprehensive manner, I think this is the drug very easy to use. But what is the actual voice from the using doctors, the prescribing doctors.

[Naoki Okamura, executive]

Claus is going to answer for that.

[Claus Zieler, executive]

Thank you for your question, Ueda-san. We conducted recently market research to confirm doctors' impression of VEOZAH, and quite honestly, we were very positively surprised how positive the reaction is of those doctors who are writing who are actively writing VEOZAH, prescribing VEOZAH. The confirmation of the unmet medical need, the confirmation of the scientific progress that VEOZAH offers, the confirmation that it helps patients. So the reaction is resoundingly positive from doctors who have used VEOZAH. That, of course, gives us a lot of confidence that VEOZAH is really going to fill the need that women have in this indication.

[Akinori Ueda, analyst]

By the way, regarding that positive reaction, what are the points about VEOZAH, what kind of VEOZAH profile is being highly evaluated in your view?

[Claus Zieler, executive]

It's above all the efficacy and, of course, also the fact that it's a non-hormonal treatment. So those would be the 2 aspects that stand out in our market research. So the mechanism of action and the effectiveness of the treatment.

[Akinori Ueda, analyst]

Secondly, regarding IZERVAY, I have a question. Towards FY 2025, sales are going to grow substantially according to the image you have shared with us. For the future, what's your view of the speed of market development is going to be grow in parallel? Or if there's going to be certain acceleration at some point in time, the label update with the 24-month data? Are you assuming a certain trigger events?

[Naoki Okamura, executive]

Thank you for your question. Of course, it's not going to be linear in our view because 24 months of data -- from the current data, reflecting that data to change and to update label, that is going to be a major trigger in our view.

One more thing is as follows: In the actual clinical settings, instead of the clinical studies with a controlled environment in the real world usage, doctors will have their impression, if this is the product, this could be used in these patients. If that is going to happen or not, it's going to be a major driving force. In that sense, it's just one month, ad the doctors who are using seem to be using a lot. But the true capability of IZERVAY must be fully understood in the clinical settings so that it can be used in patients that would facilitate the growth in an accelerated fashion.

[Hiromitsu "Hiro" Ikeda, executive]

UBS Securities Sakai-san.

[Fumiyoshi Sakai, analyst]

UBS, Sakai is my name. For VEOZAH and IZERVAY, there are a lot of detailed questions already asked, and I believe that the questions exhausted. But this might be a more bigger picture perspective. OAB-BPH and such new disease -- so such a disease, what you said is the new target. And for those new areas, you made a success. But VMS and dry AMD, roughly speaking, these are also the -- what we are working as the very new treatment area, and Okamura-san is repeatedly saying you're still in early phase. And I think that is right. So they're developing a new field, of course, you have already accumulated your experience so far getting into such a new field.

What do you see the current situation? This current hurdle you are facing is what you've expected from the beginning? Or you have to change it your way to look at it your attitude towards this drastically, do you have any qualitative information? Do you have any particular answer for this question, and if that is the case, then the way of issuing the guidance, it's going to be quite important JPY 200 billion, JPY 400 billion. I want to be closer as much as possible, there will be the request for that as well. I believe it doesn't have to be a quarter, but at certain timing, I would like you to work on that as well. That's a question.

The second question is quite similar to the first question, so let me continuously ask. Is IZERVAY get the 2 dose once in 2 months and how that data is handled or treated? I don't understand that quite well. Is the design itself is not really the one that shows the superiority in the meeting in December, you are going to explain about that further. But as of this moment, is it possible for you to make some specific comments.

[Naoki Okamura, executive]

So I have those 2 questions. Before answering your question, I would like to confirm your intention of the first question, Sakai-san. So we've tried Astellas something new, conventionally. And based upon that, we have VEOZAH and IZERVAY currently and the peak sales even for PADCEV peak sales, those are information provided based upon our past experience.

[Fumiyoshi Sakai, analyst]

Yes, that is right. You've tried new challenges, new disease or new treatment area challenged. So in the urology, ophthalmology you get into new field. And there, have you used your experience, know-how established so far to come up with their prediction. For example, DTC in a Super Bowl and the reaction is not as expected. But you see that in that way, itself is surprising because something unexpected always happened.

So I believe you are saying that it's coming because you are still in a very earlier phase. So I just wonder how to -- what's your perspective on the toward the future? That's my intention.

[Naoki Okamura, executive]

Claus also would like to answer something. So Claus will make a comment first.

[Claus Zieler, executive]

I just wanted to respond to your use of DTC in the Super Bowl campaign, that is not DTC, that is disease awareness. Disease awareness is without the name of the drug. DTC is with the name of the drug. So the coverage that we got before we got approval, had a very different character from the DTC campaign that we launched on the 9th of October. The DTC campaign on the 9th of October says VEOZAH and please consult your doctor.

Whereas before, we were informing the public on what is VMS, and we did not say there is a new drug in our Super Bowl commercial. That came later through the media in May when we got the approval from the FDA. Then the media spontaneously without us doing anything said, "Oh, there's a new treatment " And that fact led us to believe that because they were saying, "Oh, there's a new treatment" We thought women would start consulting with the doctor. But now we see that it really takes a targeted DTC campaign -- a TV commercial, the way we have started on 9th of October, which says the brand name, which explains the context and ask women who are interested to consult their physician. That's a much more targeted approach than before. So you have to divide these 2 phases from the disease state awareness phase before and the targeted DTC branded campaigning that we're doing now.

[Naoki Okamura, executive]

And coming back to me. Of course, among what we have done by now, capabilities we can use under the current circumstances. And we have the knowledge and skills. We are using all or we can use right now. On the other hand, what we are seeing right now regarding the growth of new products, Tamsulosin for BPH and OAB drug, Vesicare, Mirabegron, compared to them, some look different. If we depend too much on what we did before, we shouldn't make a mistake.

We are trying to be careful. So we are using whatever we can. But at the same time, we try not to depend too much on what we have done before, because it's too early. I don't want to say that too much. But in reality, it's just one month after the launch or 3 months after the launch. And what is going to happen in 10 years' time? That's the question, right?

So we cannot say I think it's irresponsible to say this is going to happen. Definitively, you have to accept this kind of a range. Otherwise, it becomes difficult for us to talk to you in my view. So on our end, we try to be transparent as much as possible, and we shouldn't say what comes to our mind instantly, we have to be consistent. If we say something, a year ago, normal update for the subsequent year, we try to be careful in this regard. So having something in our hands without disclosing based on intention, which is not right to manipulate the information, please don't think so. We are very serious minded. We are thinking that we are responding to your questions with sincerity. We are disclosing whatever can be disclosed to you. So thank you for understanding.

[Fumiyoshi Sakai, analyst]

I don't think you are hiding anything. Of course, as Okamura-san said, I totally agree with you. I have a good understanding of your company situation.

What about GATHER2, by the way?

[Naoki Okamura, executive]

Taniguchi is going to respond.

[Tadaaki Taniguchi, executive]

Regarding the GATHER2 data, as has been mentioned from before, this week, at the end of this week, there's going to be a presentation at AAO. So I'd like you to look at the data at the time. And then at an explanatory meeting, we're going to explain further details to you. So as of now, what we can say is that 24-months data. Regarding the design, 12-months monthly dosing for 12 months and reallocation to monthly dosing and dosing every -- once every 2 months. Then up to 24 months, we follow up on the subject, and we have the results regarding the efficacy, the primary endpoint. The -- we achieved the suppression of GA secondary to AMD. And with 2 months data, there is consistency with what we have seen with 12 months dosing. Regarding the other details, I'd like to refrain from further comments.

[Fumiyoshi Sakai, analyst]

So you have confirmed those 2 points.

[Tadaaki Taniguchi, executive]

As a data, of course, corrected such data.

[Hiromitsu "Hiro" Ikeda, executive]

Next, Mizuho Securities, Tsuzuki-san, please.

[都築 伸弥, analyst]

IZERVAY and PADCEV, I have one question each. Just like asked by Sakai-san. IZERVAY that is once in 2 months administration, that is the regimen in the clinical trial as well. In AAO the data out of that will be published. But of course, the background of the patient will be different, but Astellas comparison will be also possible in that data?

[Tadaaki Taniguchi, executive]

Let me answer. So the once in 2 months data, that is going to be shown together with once monthly data. But in comparison with SYFOVRE, that is not done within this study. So that kind of a head-to-head to comparison that is not going to be shown. .

[都築 伸弥, analyst]

I see. So that is going to be in direct comparison done by ourselves, and another is about PADCEV. PD-L1 CPS over 10 or less than 10 -- the result is -- efficacy is really good and the peak sales is going to be revised and that since the data itself is really good. And it's difficult to what extent you are going to revise. It's difficult to be answered. But the first line MUC, overall market size that you are expecting, how bigger that be? Is it possible for you to mention that size? Is that information available somewhere?

[Hiromitsu "Hiro" Ikeda, executive]

I believe that slide is on the screen currently.

[都築 伸弥, analyst]

Is it about the target patient or overall market or looking at this, it's a JPY 300 billion to JPY 400 billion and first-line MUC -- that's a little less than half of that in your assumption. To what extent it will be? Because originally, this is the first-line MUC, there are various drugs that are already available. And what's the assumption of the market size? And if you have that kind of data, would you please share that with us?

[Hiromitsu "Hiro" Ikeda, executive]

Then it's not this one.Here. Here is the market size. JPY 300 billion to JPY 400 billion is the total. Out of that, about half is the first-line MUC.

[都築 伸弥, analyst]

But the markets, including other competitors -- other companies product, this is your own market, right? Including other products, what would be the overall market size, including other checkpoint inhibitors.

[Hiromitsu "Hiro" Ikeda, executive]

We don't have any market size information disclosed. But the target patient number 76,000 that is overall market size, so you assume? And also as additional information sales-wise, Out of this, about 2/3 will be from the United States. And out of that half is cis-eligible and half is cis-eligible. A number of the patients and data-based calculation that might be a bit different but that is the guidance that we have provided already.

[都築 伸弥, analyst]

Understood. Thank you very much very much.

[Hiromitsu "Hiro" Ikeda, executive]

This is going to be the last question.

Sanford C. Bernstein, Sogi-san, please?

[Miki Sogi, analyst]

Regarding IZERVAY. I have a question. It's just after the launch and the information from the field and the market research you have conducted so far can be the basis for your answer to my question. How to use this drug in reality?

We interviewed a U.S. ophthalmologist to use this drug in one eye or in both eyes, if GA is going to occur in both eyes, if it's just one eye, there's almost no vision in one eye. And regarding the other eye, the symptoms begin for those patients, this is going to be used.

According to the approach mentioned by the physicians, what's your view on this regarding this approach? Depending on the doctors, is there going to be any difference? Or if one is almost blind, are you going to focus on such patients? Or no problem at all in one eye, but GA begins in the other eye. Is that the timing to start the treatment? I'd like to know more.

[Claus Zieler, executive]

I am informed our label covers both unilateral and bilateral use. So we are not focusing on any particular patient type.

[Miki Sogi, analyst]

In the actual clinical settings, no information yet from the physicians in the clinical settings yet?

[Claus Zieler, executive]

Pretty much too early. I'm sorry, that would be much too early to have that specific information. Of course, when we gather that information, we'll be happy to share that with you.

[Miki Sogi, analyst]

And for PADCEV, so you are going to do the submission by the end of December. The approval is planned around the end of March. I think that's what's stated within the presentation material, but I think it's very fast. Is this understanding right?

[Tadaaki Taniguchi, executive]

This PADCEV 302 study, as has been explained, data wise, we say that it's quite valuable, high value. So -- and also unmet medical needs in this field is extremely high. So for us, this is most prioritized products. So as early as possible, we would like to receive the approval in the United States. And also would like to expand the activity other areas so that we can get approval as well. FDA discussion is ongoing. And at this time, we are doing our best so that we can get the approval at the timing that is expected and described here.

[Hiromitsu "Hiro" Ikeda, executive]

Thank you very much. Some of you are still waiting to ask questions, but time is up. So we'd like to close this meeting today. Thank you very much for joining this meeting.