Astellas Pharma Inc

TSE:4503

Earnings Call Transcript 2019-Q3

[Chikashi Takeda, executive]

Hello, ladies and gentlemen, I'm Takeda, thank you very much for participating in this conference call on our results for the Third Quarter of Fiscal Year 2019, despite your very busy schedule. It's going to be an hour meeting. But for the first 30 minutes or so, I do have to explain from my side and in the remaining time, we will have a Q&A session.

Page 2 is a cautionary statement as explained by Ogata. Page 3 is the agenda today. Today, I'll give you an overview of financial results for the third quarter of fiscal year 2018, and I also the third item is initiatives for sustainable growth. Page 4 shows our financial results on a quarterly basis. This is the summary. First, let me explain by focusing on main items. Net sales reached JPY 1,005,000,000,000 at 0.6% year-on-year. The third from the bottom in this table is core operating profit. It increased 10.7% to JPY 244 billion. Beneath that is the core profit for the period, which rose to JPY 217.9 billion, substantially increasing by 29.8% from the previous year. Profit for the term rose due to substantial tax rate reduction. Like the situation after the second quarter, there was a tax rate reduction in -- due to U.S. tax reform. And also there was certain income deduction inversion along with IP related transactions [ reading ] our group for fezolinetant.

So there was a substantial reduction in the corporate tax rate.

This tax rate reduction due to certain income deduction inversion was a one-off factor. I'd like to explain the details of each item on the following slide. Now you can see the progress on the right-hand side on Page 4. As you can see, we are making steady progress overall. There is a possibility of an upside depending on the future sales strength and the use of our expenses for the future.

Turning to Page 5. This shows our year-on-year sales analysis in a waterfall format. XTANDI is shown at the bottom, and it increased substantially. Mirabegron and OAB product were drivers. Year-on-year, there was a growth.

We have some new product in the first 2, 3 years. Compared to XTANDI and [ Mirabegron ], they're smaller in size, but they're also increasing their sales figures steadily. Still in Japan, there was early NHI drug price revision and there was some impact. And also there was a decline in sales of Micardis and other long listed products in Japan. And Tarceva in the United States was affected by the competitive situation. There was a decrease there. Even deducting these decreases, total sales increased overall.

Slide 6. Sales core operating profit. And this is also waterfall chart for the year-on-year analysis. As you can see, sales increased. In addition to that, product mix changed due to this cost ratio decline. As a result, gross profit increased more than sales. Next SG&A costs -- they increased slightly. Co-promotion fees for XTANDI increased in the United States. Excluding this factor, other SG&A costs virtually decreased. We are promoting the efficient use of both spending and the optimal resource allocation. R&D expenditure decreased. As I mentioned earlier, we are making progress in spending as planned in key areas in stage pipeline project. We are also increasing our investments in new areas and modalities based on focus area approach, such as regenerative medicine and sales therapy. Development costs decreased due to the wind down of research operations at Agensys last year.

And also development cost decreased due to discontinued products such as EB178, so there was some slight decrease there. ForEx was a positive factor at the profit level. Page 7 shows our financial results on a full [ year ] basis based on IFRS. We booked JPY 13.1 billion as other income for the first 9 months in total.

In the third quarter, due to the acquisition of Potenza, we booked a gain from remeasurement relating to business combinations. In the third quarter, as a result of reevaluation of shares we held from before other expenses were JPY 47.8 billion in total for the 9 months.

Focusing on the third quarter, we booked restructuring costs due to the implementation of the early retirement program in Japan. And in payments, we also paid tangible fixed assets along with the business transfer of Nishine plant. As a result, operating profit reached JPY 209.4 billion up 16.5% year-on-year.

Like the core basis figures, tax rate declined. And profit for the period increased 34.3% year-on-year to JPY 191.5 billion. Page 8 shows sales of our main product. XTANDI grew 15.2% year-on-year.

The progress is high vis-a-vis our revised full year forecast we announced in October. Next page. XTANDI, sales by region. In all regions, it made a steady growth. The year-on-year growth was 15.3%. In the Americas, Japan and EMEA quarterly sales reached a record high. Early stage prescriptions continued to expand.

In the United States, we see largest sales as you know in 2018. In July M0 CRPC indication was additionally approved. In the following month in August, NCCN guidelines were updated, and recommendation to use XTANDI in M0 CRPC was quickly added. New prescription has an increasing trend, as we confirmed the more earlier stage prescription, the more prescription by neurologists, overall, 25% and the ratio is up 1%. Focusing on new prescriptions about 1/3 is the prescription by neurologists. In addition to these figures, we also conducted our own survey. All the results were favorable.

In EMEA, in October 2018 M0 CRPC additional indication was approved. In Germany promotion was started and we were able to confirm new prescription increased.

In U.S. and Europe into the future, the numbers are going to increase for M0 CRPC gradually over time, but we have been able to conduct activities steadily right now. In Asia, it's smaller in size, but steadily sales are growing.

Among Asia the biggest market is China, XTANDI is not launched yet.

In March last year, we filed our submission. The product was designated for priority review in June. We were told that the target review period

is 12 months. So we are expecting our new launch soon, and we are making preparations accordingly. Other indications are also doing well, M1 HSPC. In other studies in M1 HSPC, primary endpoint was achieved. I'll explain the details in the pipeline section. We're obtaining the indications in earlier prostate cancer. We are aiming for a broader patient population and a larger administration -- longer administration period.

Now this shows the trend of quarterly OAB franchise sales. We are concentrating our sales and marketing resources on mirabegron.

We -- mirabegron sales ratio is 61% and 39% for VESIcare in OAB. And there is -- we are using our sales and marketing resources, also promotional activities related to combination therapy, mirabegron and VESIcare in the United States. In the United States and Japan, we are continuing to take action to increase awareness, because this is still a hurdle.

So we are implementing [ DTC ] activities and TV commercials.

Page 11. From here on, I'd like to talk about our pipeline. Please turn to Page 12. Since the previous earnings report, for the past 3 months we obtained full approvals. From the left, let me explain briefly gilteritinib was approved in November in the United States.

It's the first FLT3 inhibitor for relapsed or refractory AML. Secondly, ipragliflozin was approved for the indication of Type 1 diabetes, where romosozumab was approved in Japan as a treatment for osteoporosis, with a level of mechanism action completely different from that of existing drugs. As for degarelix an additional formulation was approved in addition to the existing full week formulation to enable a demonstration at 12-week interval. It is expected to reduce treatment burden for patients with prostate cancers. Out of these, I'd like to use the following 2 pages to explain new molecular entities gilteritinib and romosozumab in more detail.

This page -- Page 13 shows the details of gilteritinib. After the approval in September 2018 in Japan, it was approved in November in the United States. In December, it was launched under the product name XOSPATA in Japan and in the United States. Development made steady progress. Gilteritinib is the first FLT3 inhibitor approved for the indication of relapse or refractory AML. We got early approval. We [ achieved ] regulatory pathways in each country for early approval. We have been able to deliver this new treatment option quickly to patients with limited treatment options. Phase III ultimate study met its primary endpoint with a significant and a longer overall survival.

These results will be presented at future scientific meetings. Now Slide 14. This is romosozumab for the firstly approved in Japan and China in 2019 for osteoporosis in patients that have risk of a fracture.

A prior fracture is one of the major risk factors for further fractures in osteoporosis patients, therefore, they require early treatment [ effect ]. This drug has dual effects of increasing bone formation and decreasing bone resorption, and like existing drugs it reduces the risk of fracture by increasing bone density rapidly and maintaining and improving the microstructure of bone and strengthening it. In the large case a Phase III study was conducted and the [ romosozumab ] reduces the risk of fracture by administration of 12 months in which it was proven.

And this drug is to be administered once a month for 12 months, so we can expect to improve adherence to the treatment. Slide 15. For a couple of times already whenever we have opportunity, so we have introduced you about 6 POST-POC project. And in this slide and afterwards, I would like to talk about the current progress of 6 POST-POC projects. For all of these 6, advancement was achieved and it was achieved many of the milestones successfully. Enzalutamide and roxadustat and fezolinetant are going to be introduced to you later. Gilteritinib, as has been already mentioned, this has launched in the United States and Japan. And MAA in Europe is also planned in first quarter of 2019. And for enfortmab vedotin, top line results of Phase II study cohort 1 is planned in the first quarter of 2019. If the favor was not obtained within this year, we are planning to do the BLA resubmission in the United States. Zolbetuximab, the combination with [ N Cohort 6 ] is being evaluated in a SPOTLIGHT study. And also GLOW study, the global Phase III combination study with CAPOX, which is a chemotherapy mainly used in Asia, has achieved first patient in.

Page 16. This is more detailed information. First of all, this is about enzalutamide. This is for the M1 HSPC and ARCHES study, for this study the primary endpoint was met. In M1 HSPC patients, that data is limited especially for low tumor disease and also metastatic patients who had a prior -- or a definitive therapy. And there is such a wide range of the patients that are included within this study.

And in [ radio grastofil ] effect, the primary endpoint showed a significant improvement. And the preliminary safety analysis appears consistent with the safety profile of this drug in previous clinical trials. And the data to be presented at ASCO GU. And based upon the results of this study in Japan, United States and Europe within this time of this year, we are planning to do the submission. This is Fezolinetant. In the previous financial announcement, we've introduced to you that the Phase IIb results will be available. And the PK/PD included data that the analysis was completed. So let me introduce you that result.

For the efficacy all focal primary endpoints demonstrated a statistically significant improvement in most of cohorts. Efficacy in hot flash frequency and severity and treatment effective size of VID and QD were similar. And also improvement compared to placebo is also the same level. Safety: No deaths or treatment-related SAEs were reported.

Overall, TEAE rates were similar across cohorts, and mostly mild or moderate.

Asymptomatic liver enzyme elevations were observed in a smaller number of patients in higher dosing cohorts. In the Phase III study, the dose with no liver enzyme elevation is going to be selected. The details of this sector study result is going to be presented at ENDO 2019, which is planned to taking place in this March. Now -- and throughout the future based on this study data, we are going to do the regulatory consultations in different countries with regards to the Phase III dose selection and the study design.

Now Page 18, this is about Roxadustat.

We are aiming at the -- making this as a first-in-class of our treatment for anemia associated with a CKD. Last September, we have done the submission in Japan for dialysis patients. HIF-PH

inhibitor is what it is. And this is a new mode of action, and all [ the administration is ] possible. It has comparable or better efficacy to the current treatments such as ESA, and this can minimize the use of IV iron. And also because of Erythropoietin levels within or near the physiological range, potentially it's possible to avoid the concerns from the existing therapy. Efficacy in the patients who cannot be well controlled with the current treatment is -- current treatment is expected, for example, patients with inflammation. Page 19. This is the Roxadustat. In -- within countries for the submission and also the reimbursement for 6 studies Phase III study results are already gained. All studies met their primary endpoints, and roxadustat was well tolerated. Preliminary safety analysis showed the overall safety profile is consistent with the previous clinical studies. In the first half of this year for the safety analysis, so it is going to be available. Based upon all of these in the mid -- and in 2019, we are going to do the MAA submission in Europe.

Page 20. So we have this 6 POST-POC project. And for them, we have a plan of additional indications to be gained. In this slide, you can find the additional indication program of zolbetuximab. Currently, the [ pancreatic ] cancer and [ gastro-esophageal ] junction adenocarcinoma, 2 Phase III studies are ongoing. This drug zolbetuximab are targeting CLDN18.2. And a 50% to 70% of pancreatic cancer patients show significant expression of CLDN18.2 targeting pancreatic adenocarcinoma first line in Phase II study initiation is planned.

Page 29 (sic) [ Page 21 ]. Other projects development have been on the progress. In this slide, you can find the project which has been changed in the development stages. We've done the pneumococcal disease vaccine [indiscernible] from Affinivax, and that went into Phase I. And zolbetuximab went -- and also on top of that, mitobridge originated ASP1128/MA-0127 went into Phase II. Reldesemtiv for COPD discontinued for the development as indications are still ongoing. ASP4070 in the Phase II study. Primary endpoints were not satisfied, so the program was discontinued.

Slide 22. These are the expected key events within a year. And for each project, they are ongoing according to the plan toward the future as of including now for the 6 POST POC projects. And other items are waiting for the major milestones. So please, I expect to have further overall activities. Page 23, this is the last item. This is the initiative for sustainable growth. Page 24, last December Potenza, the company whom we did the joint research with was acquired. And currently 3 programs are within Phase I.

There is a new immuno-oncology program who are targeting 2 more types, which are irresponsive to existing immuno-oncology therapies. We expect this provides platform for immuno- oncology combination with the existing pipeline products. Page 25, this is about the pursuing operational excellence.

From the various perspectives, we have been conducting the various activities. And this slide is for the -- [indiscernible] allocations or reallocation, some have been already introduced to you in the past. And there are something new or some are decreasing in size, some we are going to -- [ could outside ]. And that those are described within here. And these are activities as of today in FY '18. But in this third quarter for the category of -- in you can find the

Potenza acquisition. And [ out ], you can find the manufacturing site Nishine plant transfer. These are quite important factors and [ I ] always bring attention to these activities, so we would like to continue our effort for the business growth. This is the last page, Page 26, this is the slide of capital allocation. The policies have been already introduced to you, and there is no change about that. So priorities and investment for strategic business growth, the dividend to be increased continuously because this is important. And if there is excessive capital, then we would like to do the capital buybacks.

So there is business strategic investment. As you can find on the left bottom. So far, we have acquired or established alliance with these 4 companies. On the right shareholder returns. In the beginning of the year, JPY 38 of dividend, which is due to an increase was introduced at the beginning of this year. In the May, JPY 100 billion of the acquisition of own share was announced. On top of that JPY 6 billion of share buyback is going to be conducted, which was decided, and which was already press released. Now for this share back -- share buyback is going to be started from tomorrow up to 20th of March. So we have been working continuously harder for the improvement of share return and the capital efficiency. I'll then -- so quickly for this presentation, but this ends my presentation, thank you very much. So that's all as a company presentation. Now we'd like to entertain your questions.[Operator Instructions]

Citigroup Securities, Mr. Yamaguchi, please. Hidemaru Yamaguchi from Citigroup, can you hear me?

[Hidemaru Yamaguchi, analyst]

Yes. My first question is about XTANDI in the United States. There was no follow up on the details in the United States. But according to the numbers [indiscernible] declined because of generics. Whereas XTANDI q-on-q 5% growth was achieved year-on-year, there was a big number for the fourth quarter last year, what's the situation in the United States based on the third quarter? And any price increase this year? Just briefly, could you give me an update?

[Unknown Executive]

Thank you very much. I'm [indiscernible]. I do like to briefly comment. As you pointed out quarter-to-quarter compared to the previous quarter 5% growth we've seen. In -- regarding the fourth quarter, as we said previously, in the United States as you know in the fourth quarter maybe [indiscernible] related to [ rebate ] would come. So in the fourth quarter, it's not grown as much as the third quarter. As for the price increase that was also part of your question. In January, 5.9% price increase was implemented.

[Hidemaru Yamaguchi, analyst]

What about your competitive landscape?

I forgot the name, but what about insurance?

[Unknown Executive]

Regarding the competitive environment, Zytiga, as you said. Zytiga generics were launched.

[Hidemaru Yamaguchi, analyst]

And any impact on us?

[Unknown Executive]

I think that's your question.

Now at this point, as far as we have seen there isn't a lot of impact on our side. As we responded to a question in the previous meeting. In the oncology area, [ branded products on generics ]. Regarding the different ingredients. Interactive generics is very limited. So as for the impact of generics it's not obvious. As we have seen a leader is a competitor's product, so I'm not going to comment much. But relatively speaking, neurologists' trust in us seems to be high. So we haven't seen a lot of impact yet.

And as for the insurance, I don't remember whether we touched on this earlier before. In the competitive environment, in the insurance program, we want access to this product. So [ step-edit ] must be resolved. We have to create an environment where it's easier to use our drug, so based on this new [ positive ] data we tried to promote the data. And also to major insurance companies, we'd like to negotiate. By doing so, I think there's an expansion. So there is an environment where it's much easier to use our product. As a result, in the actual demand, it's steadily growing, as CFO Takeda said. The use by biologists is increasing. When you look at a new prescription, there is a steady increase. So we are feeling that there is a good performance.

[Hidemaru Yamaguchi, analyst]

One more base question, a simple question. XOSPATA [indiscernible] OS was achieved. First line results were successful. I think this is the first such announcement, correct? XOSPATA?

[Unknown Executive]

In the near future for the results, we think these are considered good results for the official announcement, whether it's going to be [ presentation not an ] academic society in the near future. So we would like to refrain commenting on the details. But always might be a [ mentor or not ]. This is a first time that you're seeing that end point was met.

[Hidemaru Yamaguchi, analyst]

Lastly, romosozumab. At risk of fracture, that's understandable, if you look at the indication, how many patients are at risk of fracture, it's not clear, could you comment on this?

[Unknown Executive]

First of all, in this [indiscernible] , [ PTHE ] agent were launched earlier. You can estimate based on this situation that in Japan, right now, those who are suffering from osteoporosis according to a survey, are 12 million approximately, and about 20% of them are treated according to the data. So to what degree the market is going to expand? How much patients were treated with these agents?

After approval or after a launch, we would like to expand our business.

[Operator]

Next question is from UBI Securities, Mr. Seki.

[Atsushi Seki, analyst]

Seki is my name. The first question. Mr. Matsui. This is a question to Mr. Matsui. A follow up for the Mr. [indiscernible] question. First I might have said this and this impact of the [indiscernible] have extended from October [indiscernible] and gross net, to what extent of the impact do they have. That's the question.

[Yukio Matsui, executive]

[ Pfizer ]. I'm sorry that if -- I'm sorry that I'm not quite aware if [ Pfizer ] mentioned about the inventory. But at least what I can answer you is about inventory for Q3 status. There is a Christmas holiday or there is such as seasonal impact, so concerning that compared to the ordinary cases, there is about a couple of days more of the inventory kindly existing.

[Atsushi Seki, analyst]

What about gross net?

[Unknown Executive]

As of now gross net, there is no particular big change impact that I make a comment here.

[Atsushi Seki, analyst]

And the second. Congratulations for the success of the study of ARCHES and [indiscernible] results became available. And I would like to hear about the statistical design of ARCHES? For the OS, so is that the design that you can attest the statistical significance in the statistical plan?

[Unknown Executive]

[indiscernible] in charge of the development is going to answer your question.

[Unknown Executive]

[indiscernible], I am going to make a comment.

OS is evaluated as endpoint. So the design is viable to evaluate that. Thank you very much.

[Atsushi Seki, analyst]

And last question, the third question, that is [ Phase II/b ]. There is no description in the presentation material, is there the dose dependency confirmed?

[Unknown Executive]

[indiscernible] is going to answer your question.

[Unknown Executive]

Phase II/b dose dependency was confirmed, QD once daily or BID for both cases at same level of efficacy was identified and confirmed.

[Atsushi Seki, analyst]

And also increase of the [indiscernible] enzyme, is this matching the highs to low?

[Unknown Executive]

Well, as Takeda mentioned, with the high dose there are

a couple of such cases, total [indiscernible] is now increased. So his low meeting cases were not identified or confirmed.

[Operator]

[indiscernible] Securities, Mr. [indiscernible]. Mr. [indiscernible] please.

[Unknown Analyst]

[indiscernible] speaking. I also would like to ask about XTANDI in Europe. In the second quarter -- go back in EU each country request for rebate depending on the sales, I think this was explained by Mr. Matsui. Regarding this -- as far as I saw the figures, there was no such thing in the third quarter. Could you explain the situation?

[Yukio Matsui, executive]

Thank you, Matsui speaking. In the third quarter, there was go-back as well.

XTANDI growth, you may say is low. There was some impact because of this. The growth compared to other regions was a bit lower. In the third quarter as well there was some impact, particularly in Germany.

[Unknown Analyst]

No, in Italy, no change in that respect. Okay, understood. And also may I continue. Two more simple questions. In the United States, competitive environment vis-vis XTANDI was mentioned.

And new information will be available, [indiscernible]. I don't think it's going to have a big impact. According to some, but it's a new brand. So what about new prescriptions? It's a competitor's product. So you may not be able to comment much. But what do you think?

[Yukio Matsui, executive]

New competitor is entering this [ space ], we know that. But we have a track record and results. And we have our clinical data. We probably so far, so we are very confident in that sense. The only thing this is a major risk. We don't think so right now. I do like to refrain from making further comments as of now.

[Unknown Analyst]

Understood. Two more questions to confirm the fact. According to some report [indiscernible] contract is coming to an end. You're going to return this to AstraZeneca according to that article. So

marketing rate will be returned to them and your sales will be gone, that's the timing, if my understanding is correct?

[Yukio Matsui, executive]

Yes, this was already announced by us. You are right in July, we're going to return the rights. According to our plan.

[Unknown Analyst]

Okay, last one question. Brexit in fact, in Europe, particularly in U.K. or Ireland, you have high exposure there. In the fourth quarter, setting aside the ForEx issue, your inventory and manufacturing and production, any one-off factors? Do you have such a possibility? I'd like to know.

[Unknown Executive]

Regarding Brexit. Other companies and we are different, because in our company's case, we have factories. We don't have factories in U.K., so in principle in Europe due to supply issues any major risks, no. For us what is coming to U.K. may face some obstacles or issues, as other companies are announcing in newspaper articles recently, so additional [indiscernible] will be increased.

To deal with emergencies, we are taking such measures.

[Unknown Analyst]

And any special buy-in terms of sales who are decrease.

[Unknown Executive]

We are not expecting such things to happen. Based on the current preparations, we can deal with the situation in our view.

[Operator]

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

[Shinichiro Muraoka, analyst]

Good afternoon, Muraoka from Morgan Stanley. XTANDI, that's a question for me as well. I might have asked you the same question all the time, about M0 effect.

So it's more and more useful at all M0 q-on-q plus 5% including the impact of inventory, it seems to me that it's not big enough considering the current situation, but this is something you can be satisfied with?

[Unknown Executive]

Matsui is going to answer your question.

[Yukio Matsui, executive]

Well, actually on top of that, there is one other factor that we know. That is [ where ] veterans VA. Veterans' buying patterns. This has relatively quite a large volume in the second quarter. The third quarter, there is a relatively high volume of the purchase take place. So veterans' purchases in FY '18 that happened in the second quarter. And because of this. Well, actually in the third quarter, if it happened in the third quarter, third quarter number was likely to be bigger. But this time, in the second quarter that amount was included that's why the third quarter in quantity wise was -- it seems there was not such a big increase, that's why you pointed out in such a thing I believe. So buying pattern included and considering the demand -- pattern, it seems flat, but there is such a special factor took place. But prescription level, there is a steady increase. That's our understanding.

[Shinichiro Muraoka, analyst]

And fezolinetant is another question. Liver enzyme matter was asked a little while ago. And the Phase III, it might not be the max dose, but this means that once daily dose will be the -- what you -- is -- you're likely to select? And the liver enzyme increased that happened in the initial phase of administration or later phase, would you share with us some of such information?

[Unknown Executive]

Thank you for your question, Stig O. is going to answer your question.

[Stig Ogata, executive]

The final Phase III dose to be selected. Well, that's going to be considered further with the consultation with the authority. We have a kind of data. And if it [ confirms ] a liver enzyme increase is not taking place the dose that we should select. With the U.S. authority and also authority with other countries, so we are going to have consultations and we'll make the final decision. The timing of the liver enzyme increase. To answer the -- in end, we are going to present some of the data, therefore, as of this moment, I will do have to rather refrain from making any comment.

[Operator]

Daiwa Securities, Mr. Hashiguchi.

[Kazuaki Hashiguchi, analyst]

Hashiguchi speaking. I have a question about fezolinetant, only one question. Based on limited information, we speculate a lot, so this may be a silly question, but please bear with me. In the previous explanation meeting [ limited ] results available, but PK/PD and obviously, the results must also be included to make official announcement that's what you said before, as for what you explained today, PK/PD announced its results reflected fair, that was not very clear to me? Based on information today, you might have been able to do this 2 or 3 months ago, still PK/PD announced its results before the announcement. You might have assumed, [indiscernible] analysis, what were you able to find, could you explain?

[Unknown Executive]

[indiscernible], would you like to comment.

[Unknown Executive]

Exposure level and also the dose. Exposure level on the dose and efficacy and safety data. Results of PK/PD analysis, we will not be able to say anything accurate. This is a dose finding study, so these are the keys. Just to -- we just had the topline results becoming available. So including exposure level based on the more accurate analysis. With the dose without liver enzyme elevation, we are going to proceed for the future, that's how we are going to negotiate with you because of the authorities.

[Kazuaki Hashiguchi, analyst]

In the end, you'll know this already 3 months ago, but you didn't have PK/PD data, it might have been and just by chance, but based on the analysis results various data can be explained in a more logical fashion, you were able to confirm, correct?

[Unknown Executive]

Yes, that's how you can understand.

[Operator]

Next Merrill Lynch, Japan. Mr. [indiscernible].

[Unknown Analyst]

[indiscernible] from Merrill Lynch. Can you hear me? Again my question is about the XTANDI, sorry about this. Then my question is about the status in the United States, around the last November CMS in the United States announced about the review of the list of Medicare, and the draft actually was presented at the time, so XTANDI, the American exposure is, I believe, quite high, but from that list, what do you think about the risk of excluding XTANDI, especially as I take a generic is now available? And in this situation, what's the risk of the XTANDI excluded from the list? To what extent, do we have to be cautious about? I would like to hear you -- your view about this.

[Unknown Executive]

Matsui is going to answer your question.

[Yukio Matsui, executive]

Regarding this matter. Of course, in various levels, like including President Trump, the [indiscernible] and in the Congress and in various levels, the U.S. healthcare prices, especially Medicare out of pocket and pricing are discussed and the proposals are placed. In what way, how it's going to come to the conclusion is even now in the United States, including pharma. The discussions are ongoing. And a hearing even is taking place. Therefore, it's still difficult or too early for us to say, what's going to happen about this. However, the -- this drug is no longer to be used at all. Well, basically this is the cancer drug. So Zytiga even price wise, because as I take generic becomes available and easier to be used. But still, there is a clinical benefit, and now we have the data to support the efficacy, therefore, we'd not think about the risk that our drug is going to be completely shut out. But there is the policy by the government and that the negotiations will continue. So we would like to always pay attention to that. And we listen to the opinions from different stakeholders, and we would like to keep our eyes on it. But there was list like you pointed out that's what we now ask you.

[Operator]

Next, Citigroup, Mr. Yamaguchi.

[Hidemaru Yamaguchi, analyst]

I forgot to ask this question, may I? You announced your American business plan. There's going to be a recovery from [indiscernible] [ March 2021 ] period because of the bottom is going to be emerge to 2020. And based on the flow right now, early retirement program was not included back then. Cost reduction measures were not fully available, are you going to include such action? Or do you have a program already?

[Chikashi Takeda, executive]

Takeda speaking, let me answer your question. As for the list, we do have a list. We may add some items, we are adding some items to the list. If there is a big chunk, which we can share with you, we'd like to do so. The timing to achieve the numbers, we have announced that is going to be fiscal 2020. Towards that goal, we are making steady progress in our activities, that's how I would like to comment.

[Hidemaru Yamaguchi, analyst]

And also on the expenditure in the fourth quarter [ JPY 65 billion ] or so, would like to know whether you're going to use the money or not.

[Chikashi Takeda, executive]

We are making detailed analysis. Overall, we are going to spend the remaining amount according to current plan.

[Operator]

Thank you, very much. It's the time. So just we would like to finish this conference call. Thank you so much for your participation.