Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2020-Q1

[Unknown Executive]

Thank you very much for taking your time to attend the earnings announcement session by Eisai. First, COO, Mr. Okada, would like to say a few words.

[Yasushi Okada, executive]

Yesterday, we announced a news release as a Phase I clinical study conducted in Japan on healthy adults in Japan. After the administration of the clinical drug, one patient died. We express our condolences to the patient and to the family. And this caused concern amongst [ all ] and we extend our apology. As for the causal relationship between the study drug and subject death, relationship is unknown, and Eisai is actively cooperating with MHLW in its investigation.

Eisai considers this seriously that a volunteer subject died. We will continue to emphasize safety and will be guided by high ethical standards. We ask for your understanding.

It is time we would like to begin the first quarter 2019 financial results presentation session. Before we begin the presentation session, I would like to ask you to check whether you have the necessary materials. Please find a deck of slides that will be used during the presentation, press report, reference materials and news release on dividend increase. If any of the document is missing, please raise your hand.

Do you have all the materials?

I would now like to introduce the Directors in attendance: CFO and Chief IR Officer, Mr. Ryohei Yanagi; Neurology Business Group's President, Ivan Cheung; Oncology Business Group President, Terushige Iike.

Today, the first part of the presentation, financial part, will be given by Mr. Yanagi, and the latter part, operational part, will be driven by Mr. Cheung and Mr. Iike. Part of the presentation will be made in English. If you wish to listen to the Japanese translation, please use the double-up device and turn the switch on entering to Channel 1 to listen to the Japanese translation.

So without further ado, I would like to invite the presenters to invite -- to make presentation.

[Ryohei Yanagi, executive]

Now I would like to report on the financial section. First, Q1 FY 2019 consolidated statement of income. Revenue was JPY 154 billion. Last year, there were impacts of business development projects such as transfer of Lipacreon and Prialt last year. And from this year onward, the generic business has been off the consolidation. There were such impacts. But these impacts were overcome by the growth by JPY 15.8 billion in revenue for global brands. Particularly, LENVIMA increased its revenue by JPY 20.9 billion. Because of the increase in revenue by growth drivers brought about JPY 0.7 billion increase in revenue, reaching JPY 154 billion, same as -- flat from last year. And product mix has been improved significantly, and cost of sales ratio has improved to less than 30%, and the gross profit has increased by 6% year-on-year.

Within this increase of gross profit, that within -- 101% of total expenses were controlled with this financial discipline. Therefore, operating profit significantly increased. Please look at the breakdown of the expenses.

First, R&D expenses were JPY 29.4 billion, which seem to have declined from a year earlier, but this -- most of the difference was because of the structural reform expenses incurred last year for Andover. And furthermore, there were JPY 18 billion reimbursement from partners added and then a JPY 47.4 billion was invested. Therefore, this means that the R&D expenses were proactively spent with 5% increase. And now it accounts for over 30% of revenue. Now we are one of the top-tier global pharma companies which are most proactively spending in R&D.

SG&A expenses grew 19% year-on-year to JPY 60 billion with double-digit growth rate. And most of the increase was due to the payment of the profit sharing paid to Merck. Therefore, it is a very proactive expenditure.

And other income and expenses include the JPY 4.4 billion as gain on transfer of shares of Elmed Eisai, and operating profit was JPY 25.8 billion, OP margin exceeding milestone 15% and OP increased by 25% from a year earlier. Bottom line profit for the period attributable to owners of the parent was JPY 21.7 billion. In the U.S., there was the U.S. tax breaks on R&D expenditures. Therefore, consolidated tax rate declined. Therefore, bottom line saw further increase, almost 80% increase from year earlier. As a result, this is nearly [indiscernible] for the past 3 months, but ROE was 14%, very close to the median of the global top-tier players, and equity spread was secured at 6% from the residual income model, and value creation was secured.

Cash. Due to the extraordinary factor during the first quarter, that is to say, the proactive -- positive increase in the accounts receivable in Japan and China leading to the positive increase in working capital, lemborexant acquired and dividend and tax payments after financial closing. Therefore, net cash seems to have declined slightly. However, net cash was almost JPY 150 billion, which is almost debt-free management. And net DER was 0.24 and equity ratio was 59.2%. They're almost fitting for the optimal capital structure with a strong balance sheet and financial soundness has been secured.

On this waterfall chart, you see the breakdown of revenue migration. Last year, JPY 153.3 billion was recorded as revenue. Global brands, Japan, China, Asia business grew significant security. And absorbing the impacts of the share transfer of Elmed Eisai and broad business development and projects last year, we saw JPY 0.7 billion increase in revenue reaching JPY 154 billion revenue. For your information, last year and this year, milestone payments were not included in the quarter from March.

Here, on this page, you see a breakdown of OP migration. Last year, JPY 20.6 billion was recorded. And part of this growth in revenue, Global brands, Japan, China, Asia grew in business to secure increasing operating profit. And R&D expenditures, as -- there were expenses incurred at the end of last year. Therefore, the R&D expenditures contributed to the profit increase. And although positive expenditure was made, but this was the increase of the share, the profit paid by [ BELVIQ ]. And then the JPY 11.9 billion. And observing the impacts of BD projects and increase of JPY 5.2 billion EOP to reach JPY 25.8 billion.

On the right-hand side, you'll see the breakdown of R&D expenses. Because of the onetime expenditures for structural reform at the end of the last year, it seems to have decreased for next-generation AD treatment and then the maximization, which is a core project for Eisai. These major projects are progressing steadily. Therefore, the share of the R&D costs from partners have increased from JPY 11 billion to JPY 18 billion significantly. Therefore, actual has been increased by 5% year-on-year. On a full year basis, the prioritized projects are expected to proceed smoothly, therefore R&D expenditures will increase by double-digit growth rate, and we are going to continue to make proactive investments in R&D.

On this chart, we are going to explain Eisai's capital policies. As the proactive financial strategy, from this fiscal year onward, Eisai's financial capital strength -- policy is entering into the new phase. First, the proactive investment in R&D as well as the capital expenditures will be made in order to aim for growth in the future. It used to be JPY 20 billion or JPY 30 billion within the depreciation and amortization costs and then intangible and tangible assets were acquired. However, going forward, we are going to increase the expenditure in order to invest JPY 58 billion this year, mainly in the acquisition of lemborexant rights. And corporate venture capital, venture investments will be made. And at the Tsukuba and the Kawashima plants, we are going to make capital expenditure and proactive investments in IT.

And in addition to R&D and venture investment and so forth, we are going to make capital expenditures for the future growth. And by absorbing such impact, we are going to make shareholder return. In terms of return, for the first time after 10 years, we are going to increase dividend. So this shows the milestone changing into the new phase of our policy. Since FY 2009, we have maintained JPY 150 full year dividend until last year. But this year, we are going to increase the interim dividend from JPY 70 to JPY 80 in order to pay JPY 160 as a full year dividend. Regarding this decision, we have revisited our policy. Given the strong results recorded in the first quarter, particularly LENVIMA doubled to exceed significantly the budget, there has been such a significant expansion. And the second factor was due to the credit. After the review by rating agencies, we have given a positive assessment on review. Therefore, we are confident that we will secure the sound financial structure and this increased by JPY 10 dividend at JPY 2.9 billion, probably managed by finance, like share cross-holding will be dissolved. And then with corporate governance and from the perspective of the capital efficiency, we are going to increase the dividend. And we have been able to secure such funding. We are confident in paying the increased dividend.

And lastly, Ivan Cheung and Iike will explain neurology and oncology with new emerging scientific knowledge. We are more -- even more confident in the maximization of LENVIMA and AD new-generation drug therapy development. And the dividend signaling effect is anticipated. With these 3 factors, we have decided to increase dividend for the first time in 10 years. With this proactive investment and doubling CapEx and -- together with the increase of the dividend, which are all supported by financial soundness, with strong balance sheet, the equity ratio is 59% or over, therefore, urging the seeding of the optimal capital structure. Net cash is almost JPY 150 billion and minus 0.24 is the net DER, and we will be able to have the accumulated cash.

And as a real option to be utilized for value creation, we are going to have this new optimal financial strategy. And for your information, the dividend payout ratio, after increase of dividend, DOE 7.1% and payout ratio will be 64%. Compared to the median of global top-tier players, DOE is 8.3%, according to my calculation, and total payout ratio is 105%. Therefore, we have -- still have the leeway, and we have maintained JPY 150 dividend full year. The average DOE was 8.5% and payout ratio was 87%, and we still have leeway.

So for the future investments and also the trend in the cash flow continuously and efficiently or in a more flexible manner, we will consider the investments and the shareholder return. We still maintained a very strong financial leeway or financial integrity.

As has been mentioned, based on the strong balance sheet, we have maintained both productive investment and shareholder return in order to maximize the corporate values.

Next, this is the last slide for the financial section. Here is the full year forecast for this fiscal year. Revenue will reach -- is expected to reach JPY 680 billion, given the very strong Q1 results and even larger milestone payments to be received from Merck, which are expected to be concentrated in the latter half. Therefore, a 6% increase is expected, and we are confident to achieve this JPY 680 billion. And it has to grow 7%, but actual spending is expected to grow by a double-digit growth. And operating profit will be JPY 103 billion and 20% increase and exceeding JPY 100 billion OP target for 2020, as a midpoint in year 2025, and OP margin will exceed 15%, and 20% increase is expected in OP to reach JPY 103 billion.

ROE will be 11.2% based on the residual income model. Equity spread will be 3.2% leading to the shareholder value creation. As I said, full year dividend will be JPY 160. DOE will be 7.1%. DOE based on the optimal dividend policy based on the positive -- optimal capital structure. As a KPI, we are putting focus on this, and 6 -- 7 to 8 percentage range will be our target.

As a backdrop, global [ consensus approach ], shareholder capital cost is 7% or 8%. Therefore, opportunity cost for shareholders will be covered and returned in terms of the cash. That is the theory we are based upon. Through expansion of the LENVIMA and contribution from partnership model, we aim to achieve increasing both revenue and profit, and we would like to maximize and enhance shareholder value, including the shareholder returns. This concludes my section.

[Ivan Cheung, executive]

Today, I want to share with all of you about our enthusiasm about the important progress we are making in our Alzheimer's disease and dementia pipeline. First and foremost, let me talk about our increasing conviction in our elenbecestat and BAN2401.

The general understanding of the decades-old amyloid hypothesis now appears to be oversimplified, if I may say. We're now on the cusp of, finally, figuring out how to modify Alzheimer's disease by more precisely target the A-beta production mechanism and also more precisely, target the A-beta clearance mechanism.

And let me tell you how. Over here in A-beta production mechanism, but what about elenbecestat. Emerging science has taught us now that BACE enzyme selectivity is not the only thing. Actually, it's more important that we understand the selectivity to be more than 50 substrates involved in BACE, especially those substrates implicated in synaptic function and formation such as seizure 6, NGR1 (sic) [ NRG1 ] and others.

Recently, we reported the in vivo data that suggested that elenbecestat potentially has a more optimal substrate selectivity profile, which I will touch upon later in my presentation. In addition, in the Phase III program of elenbecestat, the dose selected 50 milligram inhibits CSF A-beta about 50%, which is now widely recognized as potentially the sweet spot dose on how to use a BACE inhibitor in these patients.

Last, but not least, the recent DSMB for the Phase III program, we viewed more than 900 subjects with regard to cognitive assessment and concluded that our Phase III program shall continue without modification.

Now let me talk about the A-beta clearance mechanism with regard to BAN2401. A number of reports recently, both preclinical and clinical data, are telling us that protofibrils here are the central toxic species in Alzheimer's disease pathogensis, disrupting synaptic function and to roughly causing neurotoxicity. In our last Phase II program with 856 subjects, we saw consistent result of BAN2401 in 3 different clinical outcome measures and biomarkers across the ATN hallmarks of Alzheimer's disease. This consistency gives us confidence in the robustness of the proof-of-concept result of this Phase II study.

Now in Phase III, because of the relatively more modest level of incidents, again, likely because of the unique mechanism of BAN2401 targeting the protofibrils, not the plaque, that allows us to choose the highest dose, 10 milligram per kg biweekly from the Phase II study without any titration in the Phase III program. So now we have a BACE inhibitor in our investors deck with potentially a more optimal substrate selectivity profile. And we have an anti-A-beta antibody that preferentially binds the protofibrils, which are central toxic species in Alzheimer's pathogenesis. We believe these 2 assets hold tremendous promise in bringing to millions of Alzheimer's disease patients, the world's first disease-modifying therapies [ to solve ] increasing condition.

Next slide, please. So let me update all of you about the Phase III program, progress of our elenbecestat and BAN2401. With regard to elenbecestat, the Phase III program, MISSION AD, progress going very well. As we reported previously, we have combined MISSION AD1 and MISSION AD2 into one single database for primary analysis. We believe this is a very important step to increase the probability of success in the pattern, a meaningful benefit in this population and to help accelerate the time line towards NDA submission. Our primary endpoint meet-out we're expecting in fiscal year 2021 in the first quarter.

With regard to BAN2401, given the consistent results we saw in the Phase II program, which we believe now will serve as a supportive study. We are now pursuing a single Phase III strategy with Clarity AD. In this Phase III study, we are planning to enroll 1,566 subjects, one-to-one randomization, meaning almost 800 subjects. Almost 800 subjects will be enrolled into the highest dose from the Phase III program, 10 milligrams per kilogram biweekly. And this almost 800 subject sample size is almost 5x the sample size of that same dose in the Phase II program, which, as I mentioned earlier, demonstrated consistently robust results across different measurements. As such, we believe this sample size is more than enough with more than enough power to achieve success.

Patient randomization has already begun in Japan and in the U.S. and very soon, Europe, Asia, China will come online. Specifically, for Clarity AD, we are only using high-quality sites, very strict criteria, meaning we are only using sites that have conducted such kind of studies in the past, and they have a large pool of such patients to [ study ]. Our primary endpoint readout we're expecting in fiscal year 2022 first quarter.

Next slide, please. I mentioned earlier, we've recently reported in vivo data relating to elenbecestat. And this slide shows the data that we presented at this month's AAIC. Here, the concept, the objective of this in vivo study is to show the impact of elenbecestat and other BACE inhibitors on synapse formation and function. And to measure, to evaluate such synapse formation and function, we are looking at 2 indicators: one is spine density and the other one is mitochondrial function. So firstly, with regard to elenbecestat in this in vivo study, this 3 milligram per kg dose group inhibits CSF A-beta in this in vivo model by about more than 50%, which is equivalent to the dose we have in the MISSION AD Phase III program, the 50 milligram. So I want to keep that -- I want you to keep that in mind about this dose.

Now if you look at these data at -- for elenbecestat, for this 3 milligram per kg group, even at higher dose, at 10-milligram per kg group, we just do that just to show the margin, you can see that both spine density and mitochondrial function, you see no statistically significant change in both measures. So no impact on these 2 measures, hence, unlikely to have any adverse impact on synapse function and formation.

On the other hand, we run the same experiments for 2 other BACE inhibitors in -- from other companies and, again, at the doses that were used in their clinical trials equivalent to the doses in their clinical trials. And here, you see both compounds, in terms of spine density, you see statistically significant reductions in spine density. And one of the 2 compounds at high dose also showed statistically significant reduction in mitochondrial function.

In summary, with these data, we believe elenbecestat at the clinical trial equivalent dose unlikely to cause negative impact on synaptic function and formation. That's really important for BACE inhibitor.

Number two, given this data, it's likely that elenbecestat potentially has a more optimal substrate selectivity profile with regard to synaptic function and formation. In addition, as I mentioned earlier, the DSMB of our Phase III program, MISSION AD, recently met in March, they reviewed more than 900 subjects of -- and these over 900 subjects had exposure to drugs of at least 6 months. And DSMB concluded to continue the trial without any [indiscernible]. Now I talked about this in 900 subjects and 6 months exposure is important because this sample size is so similar to the time point -- to the sample sizes at time points when other BACE inhibitors declared failure because of cognitive worsening. So at the same time point, the same sample size, we are not seeing that, based on DSMB recommendations, and that's very important. So with both the in vivo mechanistic data and also the clinical information from DSMB, we have confidence that elenbecestat, indeed, is a uniquely differentiated BACE inhibitor compared to the others.

Next, please. Here in Eisai, we have a strategy to pursue dementia wider scope, so that we can benefit many more patients. With that in mind, we are now in active collaboration with ACTC, a world-renowned consortium in Alzheimer's disease clinical trials, to conduct 2 Alzheimer's disease prevention studies, called A3 and A45. The A3 study will study subjects who are so-called amyloid accumulators. These are individuals who are still just under the threshold to be called amyloid positive, but they are accumulating and soon will likely become amyloid positive. That's the A3 population. And this study will use elenbecestat to evaluate how elenbecestat can prevent the accumulation of amyloid.

The next study is A45 study. The study population are already amyloid-positive patients who are still cognitively normal before -- even before the MCI stage. And here, in this study, we'll use a sequential regimen, very unique, first time in this field, to see a sequential regimen from the same company, starting with BAN2401 to clear the brain followed by elenbecestat to maintain the brain environment. And this sequential regimen, we aim to evaluate how the sequential regimen can prevent the migration of these cognitively normal subjects to cognitive impairment.

Right now, our protocol design is under discussion with ACTC. And specifically, one big item we're working on is the biomarker endpoints to potentially allow for earlier approval and registration of these agents in these populations. And when I talk about -- when I say biomarker endpoint, I don't mean just amyloid test, but also, we're looking at Tau path and other neurodegeneration-associated biomarkers, neurofilament light chain, neurogranin and, therefore, it is a very important part of both Eisai and ACTC. We expect both studies to start in fiscal year 2020 in the first quarter. Very exciting.

Next, please. So along with the theme of dementia wider scope, let me talk about another pillar, which is our novel anti-tau antibody. Tau pathology spreads in the brain from cell to cell through tau seed propagation. Tau seed propagation is the most important element to understand tau pathology. Specifically, in Alzheimer's brain, in Alzheimer's brain, in most cases, tau -- this tau protein is cleaved right here in the cell -- cleaved right here. And then this fragment flows out of the cell in this extracellular space and becomes the tau seeds. In other words, in Alzheimer's brains, most of these tau seeds are in this plot on this slide, which is the microtubule binding region, MTBR.

So let me try again. In Alzheimer's brains, most of the tau seeds are MTBR tau, and this is very important to understand because E2814 is specifically designed to bind to only MTBR. And as you can see on this slide, if you look at the other anti-tau antibodies, the clinical trials right now, some of them bind to the end terminal. We have another one that does bind to MTBR but also binds to the end terminal. And you have another one that binds just right outside of MTBR. E2814 is the only -- is the first and the only at this moment in the concept, in appropriate settings, in the clinical stage that binds to MTBR, which has specifically indicated what we believe in Alzheimer's disease brain in terms of tau application.

At this month's AAIC, we presented data that shows that in Alzheimer's disease patients, our MTBR tau is significantly increased. We also showed data that in CSF in Alzheimer's disease patients, majority of the MTBR tau can be bound by E2814 in a dose-dependent manner. This data gives us evidence that E2814 is a uniquely differentiated asset in tau pathology in Alzheimer's disease. We expect to start the Phase I study in this fiscal year.

Next, please. We're not stopping at just A-beta and tau. This month, July 9th, we held the opening ceremony at our new G2D2 facility in Cambridge, Massachusetts. G2D2 stands for Genetics Guided Dementia Discovery. This was the opening ceremony picture here. You see CEO Hauro Naito. We have a patient, an early onset dementia patient. We have Senator Fattman from Massachusetts and other distinguished guests. At the new G2D2 facility, we focus on drug discovery and research going beyond A-beta and tau, specifically, in the area of immunodementia, by combining the unique strengths of Eisai discovery and research, meaning human genetics, data science and precision chemistry.

In addition, as you know, Cambridge is probably the world's most premier tau technology cluster, so we're taking advantage of this location to accelerate our open innovation in that area. And we're doing something first time, very unique in Eisai. Within the G2D2 facility, we have the Eisai Incubator for NeuroDiscovery space that provides -- so not just the space but also services to Cambridge-based startup companies involved in cutting-edge neuroscience research. And these startup companies will have premier access to animal facility in-house in G2D2 and also Eisai scientists, who have had numerous success in creating and developing new medicines.

Going forward, we expect the G2D2 facility to create new dementia medicines targeting the brain immune system, and most importantly, kick off a new era of precision medicine targeting dementia in Eisai.

Next, please. But our efforts in the dementia Wider Scope Strategy does not stop at medications. We have an active collaboration with Sysmex to develop a simple blood-based AD diagnostic test. This data was presented at this month's AAIC, in which we utilized Sysmex HISCL system to measure plasma and CSF A-beta levels in cognitively healthy elderly subjects, MCI subjects and AD subjects.

In terms of a blood-based diagnostic test, the indicator, the chief diagnostic indicator is A-beta 42 to A-beta 40 ratio. This plasma A-beta 42 to A-beta 40 ratio is the chief test we have to validate for future use in the real-world setting. And here at the AAIC, we showed data correlating the blood-to-plasma A-beta 42 to A-beta 40 ratio to the CSF A-beta 42 to A-beta 40 ratio. And here you see strong correlation with p value under 0.001.

With this data correlating the blood indicator to the CSF indicator, it gives us confidence that this HISCL-based system measuring the blood ratio can translate into measuring the A-beta pathology in the human brain. Right now, we are working very closely with Sysmex. We try to bring this diagnostic test to market by the time our next-generation Alzheimer's disease modifiers hit the market. And we believe it's a very important project because as you know very well, the HISCL system has advantages over other technologies being developed right now, specifically, the high throughput as well as a wide commercial installed base of HISCL system. And this, of course, was a very hot topic at the AAIC this month.

Next, please. This is my last slide. And here you can see, arguably, the industry-leading Alzheimer's disease and dementia pipeline. I will just touch upon a couple of items I didn't explain earlier in my presentation. With regard to lemborexant, it's under regulatory review in both Japan and in the U.S. for the insomnia indication, which contains a large portion of data in elderly subjects and also the world's first head-to-head superiority data versus a Z-drug.

And lemborexant also, recently at the AAIC, we presented encouraging Phase II proof-of-concept data in indication associated -- in mild-to-moderate Alzheimer's disease patients. Also, our PDE9 inhibitor, E2027, Phase II/Phase III program targeting DLB patients, patient enrollment will be completed by the end of this fiscal year.

Last but not least, in the preclinical stage, we have 2 assets targeting the synapse microenvironment involved in neurodegeneration.

So in summary, we are now more confident than ever in achieving the 2 goals we have always had in mind: one, again, is to bring to millions of Alzheimer's disease patients the world's first disease-modifying therapies; and number two, is to realize our dementia Wider Scope Strategy so that one day we can prevent and cure Alzheimer's disease and dementia. Thank you very much.

[Unknown Executive]

[Interpreted] We're switching back to Japanese. And do we have enough time? First, regarding LENVIMA. As Yanagi said at the outset, sales in the first quarter was JPY 24.8 billion, more than double the previous year's level. In the U.S., HCC grew rapidly, and there was also an effect from collaboration with Merck. This not only increased our share of voice. The Merck's call center, through the physicians and nurses, phone calls are replaced. This new approach has begun.

And in Japan, the 2 indications, they are able to maintain dominant share. In HCC, LENVIMA treatment is started sooner, and so conversion of therapy is attempted more widely.

In Europe, in the biggest market in Europe, in Germany, HCC reimbursement began. So it has grown more than at double pace.

In China, for the first time on a quarterly basis, sales outnumbered Japan. Every month, more than 1,000 new patients are prescribed with LENVIMA. As for annual forecast of revenue of JPY 160 billion, to achieve that forecast, we were able to have a very good start again in the first quarter.

As for combination therapy between LENVIMA and KEYTRUDA, once again, I would like to summarize. For endometrial cancer, for the patients that [indiscernible] from the study, interim data

has shown. This is the so-called waterfall plot. The vertical axis is start of the cancer. And the bar, it represents each individual patient. As you can see here, most of the patients had a tumor shrinkage. There were patients up here who had a complete response, and then tumor shrinkage was observed irrespective of patient background.

The right-side chart shows a time of horizontal axis in weeks. This is a very busy chart, I apologize. And each individual patient, the duration of treatment is shown in this swimmer's plot. This is week 100, so this is beyond 2 years, and the treatment is still continuing.

Yellow bar shows extension part or expansion part that was started later, so naturally, the bars are shorter. However, they continue -- we hope that they will continue to become longer. And it's very difficult to see, but the black dots, it's the time when CR was observed for the first time. In the first 1 or 2 months, response is observed, and then that response is prolonged in many patients. That is what is suggested here. The first-line therapy is platinum-based therapy, and the patients who are resistant to platinum therapy, there is no standard of care. And paclitaxel and doxorubicin are used. But response rate is about 15%. PFS is 4 months according to a report.

So from that, we can see that how outstanding this data is, so we would like to establish this as the first second-line standard of care therapy. This is a first-line use in HCC. This month from FDA, Breakthrough Therapy Designation was given. And this is the third Breakthrough Designation in combination therapy.

This waterfall is showing the results. It's not unusual in solid cancer, but especially in HCC, but this is not unusually seen by [ rena l [indiscernible]. And there are tumor shrinkage observed, and there were some complete responses. And similarly to the earlier chart, horizontal axis is time and vertical axis is the size of the tumor. This is called Spider's plot. As you can see in this chart, in the first 1 or 2 months, tumor size has substantially decreased, and therefore, in sustained period, response is continued in many patients. The regrowth of tumor is seen -- not seen in almost all of the patients. In RCC and in other tumor types, we are observing strong response, and the treatment period is sustained over a long time. That possibility is suggested from these sets of data.

With the combination therapy, no new side effects were observed. And in combination therapy, there was no amplification of side effect. So we believe that we are able to accumulate very promising results from studies. And for submission, these are 12 studies -- out of 12, 10 are already ongoing, and the remaining 2, head and neck cancer studies, will begin before the end of this fiscal year.

We would like to accelerate the submission for or increase -- additional -- to obtain additional indication for these tumor types. On April 12, approval was given for breast cancer in Halaven in China. So in [indiscernible] we were able to obtain that approval in China. In the past, we did not have data from Chinese patients. So in China, we conducted local Phase III study. Results were positive, and that led to the approval. And we expect to start sales before the end of the year, and preparations are underway. On the right side, Phase I development pipeline is shown, and those were published at ASCO. Our first in-human Phase I, this is titration part and internal data is represented in both of the charts.

ADC MORAb-202 including complete response. So this starts from low dose, but we have observed a good response and side effects. So this is Halaven ADC. And bone marrow toxicity that was observed in Halaven was not observed. The toxicity was quite manageable.

And at the bottom is 6545, hormone-positive breast cancer. For that indication, this new small molecule drug is developed. Estrogen receptor mutation, consciously discussed in hormone therapy, but it is compound including mutant estrogen receptor. And we have seen response in multiple patients. And the PD biomarker is also observed in parallel, looking at the proliferation of cancer cells. So clinically, proof-of-concept was achieved. That is what we judged, and these 2 will move to the next phase for expansion part.

This is FGF receptor-related things. There are 2 things. Both are in Phase I stage. 6527, this is FGFR4 inhibitor. HCC, about 30% of HCC patients have over-expression of ligand FGF19, and cancer progresses in these patients. And targeting these patients, this drug is being developed. Phase I confirmed several partial response and target engagement. PD biomarker have shown movement, and FGFR4 receptor inhibition is clearly observed. And the proof-of-concept was achieved, and that is our determination. And in patients with over-expressed FGF19, the expansion part will be conducted.

And the 7090 from Tsukuba Research Lab, this is FGFR1, 2 and 3 inhibitor. This past April from MHLW, we have received SAKIGAKE Designation. And this is to be indicated for unresectable biliary tract cancer with FGFR2 gene fusion. We have seen partial response, and the pharmacodynamic biomarkers are at above a certain dose. Efficacy was observed in the data. And 120 milligrams -- 140 milligram was decided as the dose to be used going forward. This is not close to dose-limiting toxicity. There is an ample margin. But biologically, this is our effective dose that was selected. And we have had multiple consultations with the authority about development pathway for going forward and obtained agreement. And accordingly, we will continue with our development.

This is the list of the pipeline. Some of the ones that I did not mention is the STING agonist immunostimulator. IND was submitted, and soon, clinical trial will begin.

And E7386. This is catenin signal inhibitor. In monotherapy, there is Phase I, in addition, in combination with LENVIMA for HCC patients. Phase I was started.

And this is Halaven liposomal formulation. The other day, we have reached agreement with Ono Pharmaceutical. And so in combination with Opdivo or nivolumab, Phase I will begin. We'd like to establish a standard of care sooner, and the development of new compounds in the pipeline, and we will continue to make efforts in this area. Thank you very much.

[Unknown Executive]

[Interpreted] And last, let me -- I would like to make a comment. For the first time in 10 years, we announced an increase in dividend. We expect a signaling effect. And the signaling effect includes message of confidence from the management. That is the confidence about next-generation drug and maximization of profit from LENVIMA, elenbecestat and BAN2401.

By obtaining new scientific insights, we were able to grow in confidence, regarding elenbecestat, and basically differences were observed really, and that was included in today's presentation.

Regarding BAN2401, protofibril toxicity, regarding that, new suggestion from data is obtained. And so protofibril is a focus because of its central role in toxicity. And from Cambridge University and from other universities, papers are published and new findings are accumulated. And that is also going to be supportive for BAN2401.

In LENVIMA and KEYTRUDA combination therapy, to maximize the value out of the combination therapy, possibilities are expanding significantly. As our presentation mentioned there, for a long time, for strong -- in more pronounced fashion, our effectiveness is observed. And that means it can be used in more indications and that [indiscernible] of possibility is suggested.

With that, we'd like to conclude the presentation part, and thank you very much for your kind patience.

[Unknown Executive]

[Interpreted] We will now move to the Q&A session. But first, we would like to entertain questions from the floor in this room before taking questions from those who are participating via telephone lines. If you have questions, please use the microphone and please give us your affiliation and your name before your question. If you have a question, please raise your hand.

[Motoya Kohtani, analyst]

[Interpreted] My name is Kohtani from Nomura Securities. First, about LENVIMA. In the States, it says that revenue has doubled. And I don't have any complaints about that. I thought that you would achieve even more in America. What is the breakdown of the cancer types in the U.S.? What I am concerned about is in like -- in RCC, in combination with KEYTRUDA. I think that is taking share from you.

And in China, I think the number seems to be very excellent. And it's almost 4x. Or do you think you are going to see further acceleration?

And in KEYTRUDA, on Page 18, looking at these data, for 6 types of cancer and in 10 regimens, so you are conducting the pivotal studies. And you will -- if only after finishing this Phase III and you will -- only after the Phase III, you will be able to file for the approval, and it will take time for a submission. Could you please explain the time line for LENVIMA?

[Terushige Iike, executive]

[Interpreted] Thank you for your question. Regarding the breakdown of the indications or cancer types in the U.S., although we are not disclosing that data, but you are interested in the RCC compared to HCC and DTC, the thyroid cancer, the weight is smaller. So I would like to ask you to bear with this response. Of course, RCC, renal carcinoma, will be obtained as new indication through the combination.

In China, a potential -- more than quadruple, we believe that there is such a potential for making it even bigger than 4x.

And on Page 18, there are 10 or 12 Phase III studies for LENVIMA in combination therapy with KEYTRUDA. Your question about we'll be able to submit for approval unless we finish these programs? And [ with tau ] breakthrough recognition have been granted. Phase I/II Study results will be used for accelerated approval with the regulatory authorities.

And regarding Phase III programs under the vertical, we have designed interim analysis. Therefore, it does not mean that we will not be able to submit for approval unless we finish all these Phase III programs.

[Motoya Kohtani, analyst]

[Interpreted] Understood. Regarding Alzheimer's franchise, elenbecestat and BAN2401. You have explained that elenbecestat, as you have shown us that the impacts on the spine density is much smaller than other compounds. And in other compounds, they affected the cognitive function very rapidly. That was not observed in your elenbecestat, but in other -- all of the concerns, there are no data shown for stopping or slowing the progression of the cognitive deterioration. So how? Do you -- why do you have expectation for the BACE inhibitor?

Regarding BAN2401, protofibril and small cell, a professor -- a doctor has presented a data this time in aducanumab as well. It's also binding to protofibril, although it is binding more strongly to fibril. However, it was shown to bind to protofibril as well. Then even if very -- BAN2401 has very high selectivity, but can we expect so highly? Aducanumab also had that binding profile.

[Ivan Cheung, executive]

I will answer your first question, and I will ask Kimura-san to answer the second question. With regard to the first question, I would just like to remind you that in our small -- our relatively smaller Phase II study of about 70 subjects for elenbecestat, yes, of course, we were not able to show statistically significant improvement in terms of CDR sum of boxes just because of the sample size of different doses that we presented at both CTAD and AD/PD and also at this time, at the AAIC also about the trend of separating elenbecestat 50-milligram and a placebo, only trend, not statistically significant, from that Phase II study. I just want to give you that reminder. Kimura-san, the second question, please?

[Teiji Kimura, executive]

[Interpreted] Thank you very much. I'm in-charge of the neurology research. My name is Kimura. Regarding your first question, I'd like to supplement our explanation regarding the improvement of the cognitive function, which was not demonstrated in other BACE inhibitors. And according to the publication and the presentation at a congress meeting by other companies, from week 13 onward, unfortunately, the deterioration of function was shown because the spine was affected adversely, as Ivan Cheung explained. And the actual -- the effect of amyloid decline will maximize the adverse effects on the synapse function. So that's our view. So without such adverse effect on the synapse. And then amyloid beta decline effect should have been shown that the positive effect will be observed. And that's why we have high expectation to the results.

Regarding your second question, the binding profile to the protofibril, and you mentioned aducanumab also bound to the protofibril. That is true. But selectivity is very important. According to our concept, putting a [Tyrosine] binding to fibril ARIA, the edema risk arises. Therefore, you are not able to increase the dose. Or a risk adverse event and then you need to decrease the dose or you will require long-term titration. So it's very high-risk. And BAN2401, incidence was very low. Therefore, a simple dosage was allowed. That means that we were able to use the maximum dose in order to eliminate protofibril enough, and that is the biggest difference in our opinion. Thank you.

[Unknown Executive]

[Interpreted] We have gone overboard with our time. So perhaps we can take one last question. Would anyone like to ask a question? No further questions? Mr. Kohtani, would you like to ask additional questions?

[Motoya Kohtani, analyst]

[Interpreted] A3 study, A45 study, you have started these studies or they are going to be started going forward? These types of studies, I think it will be some time in the future, but is it possible to file a submission with these data?

And I think [indiscernible] different studies will be completed. Familial early onset Alzheimer's disease targeted drug development, a similar preventive study will be completed soon. And from these types of studies, can you file submissions? The most difficult question is, what is [ STING, SUDEP ] sporadic? And that can be your indication to cover Alzheimer's disease?

[Unknown Executive]

[Interpreted] Thank you very much for your question. And Kimura-san will address that question.

[Teiji Kimura, executive]

[Interpreted] Actually, about the indication for preclinical AD, we consider these registration studies, so we believe that we will be able to include the information on labeling. And we plan to have consultations with FDA. And next, about DIAN study, DIAN study, this is a small study targeting familial patients, and it's conducted by a different company. So as to what kind of consultations they may have -- the different company is holding with the FDA, we do not know. But there is a data from familial Alzheimer's disease. If there are results, then it may be feasible. But from familial to sporadic, whether it is possible to expand, we are not able to answer.

[Unknown Executive]

[Interpreted] The time has come. With this, we would like to conclude the financial results presentation session by Eisai. Thank you once again for coming today, and we ask for your continued support.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]