Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2023-Q1

[Unidentified Company Representative]

[Foreign Language]

[Interpreted]

Now it's time to start the financial results briefing session for the first quarter of FY 2022 of Eisai Company Limited. Thank you very much for your participation despite of busy schedule. For this meeting here today in the beginning we are considered to have this as the venue and online base hybrid presentation meeting. But due to the COVID-19 pandemic situation recently we decided to have the live streaming and telephone line online type of the meeting. I believe some of you are here through the telephone line. In that case, please come to our website so that you can find our presentation material.

So today's presentation financial part is going to be given by our CFO, Chief IR Officer, Tatsuyuki Yasuno; Neurology Part Global Area Officer, Ivan Cheung. For Oncology Part, Chief Scientific Officer, Takashi Owa. Those are the presenters for today. And when it comes to the presentation by Ivan Cheung is going to be given in English. So with regards to Japanese, you can listen to the simultaneous translation. Thank you very much. Now let’s -- getting into the presentation.

First of all, about the financial part. Yasuno is going to give you the presentation. Mr. Yasuno, please?

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Thank you for the introduction. My name is Yasuno, I am CFO. First, I'd like to explain the Q1 consolidated statement of income for fiscal year 2022. During the quarter under review, due to the progress the growth of organic business progress as expected was seen both in revenue and profit. For revenue, Global Brands grew 146% of the previous year, and it was the significant growth by JPY29.4 billion year-on-year, due to significant impact of upfront payments related to MORAb-202 of JPY49.6 billion received in the previous year.

And then the revenue was 93% of the previous year at JPY184.3 billion. Cost of sales ratio was up 6 percentage points to 25.7%. However, it was controlled within the fiscal year 2020 or before level. And R&D expenses accounted for 20.9% of the sales at 92% of the previous year at JPY38.5 billion in R&D expenses. However, considering the reimbursement from the partner, R&D expenses were up 7% and 56%. And we are making proactive investment in growth.

SG&A expenses are JPY92.3 billion, 123% of the previous year and increased by JPY17.5 billion from year-on-year. Lenvima's growth expansion driven these expenses as well. And the shared profit of our partner was 11.9%, and these were the factors for increase. The weak yen had a positive impact of JPY11.9 billion on overall SG&A. And excluding this impact and the increase in the shared profit paid to Merck, the expenses are managed below the previous year's level.

Other income expenses were JPY1.4 billion for this year. As a result, OP was JPY7.4 billion, 13% over the previous year. As explained earlier, there was one-time factor in the previous year such as the upfront payment related to MORAb-202 JPY49.6 billion. And the Zonegran divesture of right of the Zonegran as well. So OP decreased. But as we originally explained -- expected that there will be a growth from the second quarter onward, the progress has been in line with the expectation.

Profit for the period was JPY28 billion, 66% of the previous year. Profit for the period attributable to owners of the parent was JPY26.9 billion, 64% of the previous year. And against the forecast of the full year, JPY57 billion, the progress is 47% and quite high progress. This was due to the company's recognition of losses on sales of investments in subsidiaries for tax purposes following a repayment of paying capital from a U.S. sub to the company in order to collect the capital from the U.S. sub as part of the company's capital policy to optimize the global allocation of cash in the company. Ratio of equity attributable owner of the parent was up 2.8 percentage points to 63.2%. Net DER is minus at 0.28 times and net cash position is JPY221.4 billion, and we have still continued to have ample net cash position, debt freezed by us with optimal capital structure.

Now next slide, revenue migration is explained. On the left-hand side, the JPY198.9 billion was recorded as revenue for the first quarter year-on-year. But this quarter, revenue was JPY184.3 billion, down JPY14.6 billion. And now breaking it down into pharmaceutical business and other business. In Pharmaceutical business, revenue increased by JPY34.1 billion year-on-year, up 23% from a year earlier, achieved a double-digit growth.

This is mainly due to all the growth of the -- all the four global brands of Halaven, Fycompa, Dayvigo, in particular, Lenvima, which were all above plan, and grew JPY29.4 billion and because of the strong growth in these brands as well. Other businesses, we saw the decrease in revenue year-on-year, a decrease of JPY48.8 billion. But as I said earlier, this was due to the upfront payment for MORAb-202 of JPY49.6 billion in the previous year. Overall revenue decreased, however, pharmaceutical business grew strongly with double-digit growth rate.

Next, breakdown of operating profit migration is explained here. On the left-hand side, JPY55.3 billion was recorded as operating profit for the first quarter of last fiscal year. And in this term, OP was decreased by JPY7.4 billion. As you see on the right, the breakdown is provided. Gross profit increased, as you see in the blue portion because of the increase in the revenue in pharmaceutical business, the gross profit increased by JPY26.7 billion from a year earlier. On the other hand, because of the one-time -- receipt of the one-time upfront payment in the previous year, the overall OP decreased by JPY22.8 billion year-on-year.

And R&D expenses due to increased efficiency through utilization of the partnership model such as reversal of R&D expenses of JPY3.2 billion regulatory milestone payment for approval and reimbursement of renal cell carcinoma in EU indicate although, we made the proactive investment resources into economic, but as you can see in the bottom, the actual R&D expenses, including expenses borne by partner, show that we have been continuing to make product investments in AD and oncology.

And the SG&A expenses increased by JPY17.5 billion because of the impact of forest and also increasing the shared profit for Lenvima paid to Merck. And due to the factors in the revenue in the previous year, OP for the first quarter decreased year-on-year, but profit in pharmaceutical business was JPY90.6 billion, up 33% year-on-year, due to the expansion of global brands, in organic business, we have been able to secure high profitability.

And OP level in this first quarter, may seem to be low, but we are proactively investing resources in R&D such as lecanemab and Lenvima and please consider that this is partly due to the difference of timing to receive milestone payments as return of shared profit with partners for the future growth of Lenvima and other strategic options. And we hope that you will assess our profitability, not from the short-term perspective but for full year or several years.

Next, I would like to talk about Lenvima, which is driving our revenue. Lenvima has established a very strong positioning as backbone therapy for six indications in five cancer types, and in all regions, it achieved a double-digit growth. And during the first quarter, revenue was of JPY66.3 billion as a global total. It was up 50% year-on-year against the full year forecast with the progress rate of the full year forecast of 30%.

On the right-hand side, the largest market for Americas omni-channel marketing has been adopted to a wide-ranging indications, and we have taken back the share in HCC in particular. And the Lenvima and the KEYTRUDA has established a top share in the market of endometrial cancer FPST position in patients following prior systemic therapy, and it is expanding share. In RCC as well, the prescriptions are steadily growing. And by the end of fiscal year 2022, we are going to obtain top share.

And the second largest market for us, China, even after generic entry, hepatocellular carcinoma market, we are maintaining the top share and Lenvima is the only TKI recommended in expert guidance on HCC local therapy and it has shown growth significantly over the previous year. In EMEA, Japan, Asia, it has shown strong growth and we are making very progress towards achievement of the target for this fiscal year in Lenvima.

Next, I would like to ask Ivan Cheung to report to you the progress on AD area.

[Ivan Cheung]

This is Ivan Cheung, responsible for Alzheimer's disease and brain health. Today, I want to give an update on the tremendous progress we have made with the lecanemab program. On Slide 5, as you can see from the top box, we successfully secured priority review from the FDA with PDUFA action date on January 6, under the accelerated approval pathway, which we believe is a critical regulatory strategy to speed up our ultimate goal link for lecanemab to become the first AD DMT to achieve full approval as the FDA will have essentially reviewed all the necessary components outside of Clarity AD results. We reiterate our target to file for full approval in the U.S. Japan and the EU within this fiscal year.

In the middle box, you can see that we are on schedule for Clarity AD top line readout by end of September in two months and we are very happy with where Clarity AD stands right now. As you see in the first bullet point, the statistical power of the study is now at 93%, very high because of not only the very large sample size in this trial, but also lower than expected discontinuation rate and well controlled variability. In addition to the 1,795 subjects for primary analysis, we've also enrolled a cohort of 111 subjects in China, which is a unique feature of the study not seen in other AD DMT Phase III trials.

In the second bullet point, which is a very encouraging aspect of this trial. We have almost 70% of the enrolled subjects being ApoE4 carriers. As many of you may remember, in Study 201, we saw very clear trends that these individuals are better responders to lecanemab treatment. One more update on the third bullet point, here, the independent data and safety monitoring board so far not raised any new safety concern, including ARIA-E. We expect the incidence of ARIA-E in Clarity AD to stay low similar to Study 201 at around 10%. In conclusion, we remain very confident in lecanemab becoming the first AD DMT to achieve full approval in the world.

Next slide, on Slide 6, please. Foundational to our launch preparation for lecanemab is building trust with the public about lecanemab's clinical data and value. We are fully committed to publications in peer-reviewed journals, and we have proven track record in doing so. In the middle box, in pink, as you can see, the first bullet point, the primary manuscript of Study 201 was already published in Alzheimer's research and therapy, which concluded that prespecified analysis demonstrating reduction in brain amyloid accompanied by a consistent reduction of clinical decline across several clinical and biomarker endpoints.

Secondly, the long-term health outcomes and potential economic value of lecanemab, using modern simulation model based on Study 201 were both published in Neurology and Therapy, which I'll explain later on in my presentation. We are now in the process of preparing submissions of additional data and analysis from Study 201, such as ARIA-E analysis on modeling for maintenance dosing regimen to peer-reviewed journals. More importantly, we are fully committed to timely publication of the primary management for Clarity AD results in a peer-reviewed journal.

Meanwhile, we have initiated discussion with the coverage and analysis group at the CMS responsible for the NCD with regard to how the rich data to be generated from Clarity AD can fulfill CMS criteria for high level of evidence to enable timely reconsideration for broader access for the lecanemab upon full approval. In summary, we will ensure full transparency of the body of knowledge around lecanemab so that we can achieve our mission to help people live with Alzheimer's disease and their families.

Next slide, Slide 7, please. We believe blood biomarker diagnosis is the most important element to simplify the patient journey and therefore, enlarge AD DMT market, which is most beneficial, obviously, to a potentially market-leading therapy like lecanemab. On the left-hand side of the slide, we estimate that the market size for AD DMT-eligible, early AD patients who are potentially available to treatments such as lecanemab, across eight major markets will reach about 2.5 million individuals by 2030, which is obviously enormous market potential, driven not only by the U.S., but also on the key markets such as China, which we have an advantage through our unique China strategy and Clarity AD that I mentioned just earlier.

The key to accelerating the AD DMT market expansion, as you can see on the right-hand side, this wide adoption of blood test as a replacement for patent CSF to confirm amyloid positivity diagnosis as you see in the bottom part of the right-hand side instead of just a screening tool to rule out amyloid-negative individuals as you see in the upper part of the right-hand side. With rapid advancements in improving both sensitivity and specificity of blood biomarker diagnosis such as multi-assay approach combining A-beta 40/40 ratio and p-Tau, we believe the AD DMT market will accelerate and expand quickly within five years from now.

Next slide, on Slide 8, please. Pricing, of course, is a critically strategic item for lecanemab going forward. We will follow value-based pricing principle for lecanemab and we will transparently publish all our methodology and regimen. As you can see on this slide, in April this year, we successfully published the long-term outcome model based on Study 201 in a peer-reviewed journal results from this subject-level model, given that AD is heterogeneous disease called AD ACE model demonstrated delay of progression from early AD to moderate AD by 3.13 years on average by lecanemab versus standard of care, which you can see on the left-hand side in the upper box. Also, this model predicted lower life-time probability of needing institutional care at 25% with lecanemab versus 31% for standard of care, as you can see in the lower left box on the slide.

In May, this year, we have another paper successfully published in a peer-reviewed journal that takes these long-term health outcomes that I just explained to you and calculates the medical and societal value of a lecanemab. The value-based price range of lecanemab, in the base case is predicted to be up to approximately $38,000 annually to the society, as you can see on the slide. In conclusion, we are confident that the lecanemab will improve long-term health outlooks and reduce care costs, resulting in a very meaningful value-based price range to the society, but to reach out final pricing position by lecanemab. In addition to the value of lecanemab, we will have to take into account health system sustainability as well as patient affordability as two other key important factors.

Next slide, on Slide 9, please. This is my last slide. Our leadership -- Eisai's leadership in Alzheimer's disease skills beyond lecanemab, and covers the entire continuum of ATM plus. Our Phase III program for lecanemab, is not only in early AD, as you can see on the left-hand side of the slide, but also in preclinical AD with the AHEAD 3-45 trial in conjunction with ACTC and also combination regimen with our anti-MTBR tau antibody, E2814 in collaboration with the DIAD TU NexGen trial. We also have E2511 and E2025 in Phase I targeting the synaptic microenvironment in the brain, one small molecule, one antibody. Overall we have conviction days that will continue to lead in Alzheimer's disease and Merck with the most comprehensive pipeline spanning across ATMs.

Let me also draw your attention at the bottom of the slide to E2086, our in-house novel Orexin agonist under preparation for IND-submission now based on Eisai's expertise in the Orexin pathway. For E2086, we will initially target narcolepsy, which is a chronic neuro-degenerative disease caused by deficiency of Orexin. E2086 is a unique chemical structure that offers differentiated efficacy and safety profile based on preclinical data. We look forward to initiating Phase I within this fiscal year.

Thank you very much for your attention. Now let me turn it over to Dr. Owa.

[Takashi Owa]

[Foreign Language]

[Interpreted]

Next slide please. Yes. Thank you. This is Owa speaking. I'd like to give you the update on the oncology pipeline. First, as for Lenvima, I would like to give you the progress in LEAP Studies. On the left-hand side of the slide, you can see the summary of top line results of LEAP-002 study for hepatocellular carcinoma first-line on which we made a news release on August 3. This study is designed to evaluate the effect of adding KEYTRUDA in combination with Lenvima, which is an approved drug for first-line treatment for HCC.

Statistically significant difference per, prespecified statistical plan was not confirmed for dual primary endpoint of OS and PFS between Lenvima plus KEYTRUDA combination and Lenvima monotherapy. However, it is considered nothing but to suggest how excellent Lenvima monotherapy is, as used as a comparator in this study. There were trends towards improvement in OS and PFS for patients who received Lenvima plus KEYTRUDA versus Lenvima monotherapy and the median OS of the Lenvima monotherapy arm.

In this study was longer than those observed in previously reported clinical trials evaluating Lenvima monotherapy in HCC first line. Furthermore, the combination therapy of Tecentriq and approved anti-PD-1 antibody for the same treatment line plus avastin and anti-VEGF antibody was reported to achieve the median OS of 19.2 months in the OS update published in December.

Even when taking into account that this is not a head-to-head comparison of studies with identical patient background, Lenvima monotherapy in this study is considered to have shown OS data comparable to that of Tecentriq plus Avastin combination. Details will be reported in academic conference in the near future. We aim to utilize this very -- variable data from LEAP-002 study to enhance contribution to patients with HCC by solidifying Lenvima's position as the first drug of choice in HCC first line as the current recent status in the U.S. market.

Next, please look at the right-hand side of the slide. Now other ongoing LEAP studies are designed to evaluate the add-on effect of Lenvima being added to KEYTRUDA monotherapy or combination therapy, including KEYTRUDA. This is contrast to the design of LEAP-002 study. Here, I would like to explain our analysis of the current status of LEAP-006 and LEAP-008 for first-line and second-line treatment of NSCLC, with particularly large number of patients who may benefit from medical treatment.

First, LEAP-006 study is designed to test a significant difference in two primary endpoints of OS and PFS by adding Lenvima on to KEYTRUDA plus combination chemotherapy. In this study, Lenvima's dosing combination is 8 milligram, which is lower than the approved dose of 20 milligram in combination with KEYTRUDA for RCC and endometrial carcinoma.

Independent Data Monitoring Committee has not raised any particular safety concern so far at its meetings and manageable safety profile was shown in dose evaluation part of this study. As for efficacy, favorable ORR of 69% was observed in the dose evaluation part. And this 69% is well above the approximately 50% level reported in literature for the comparator arm of KEYTRUDA plus combination chemotherapy.

Next LEAP-008 study. This study is designed to test a significant difference in dual primary endpoints of OS and PFS in comparison of Lenvima plus KEYTRUDA versus docetaxel monotherapy. Lenvima's dose in combination is 20 milligram and IDMC has not raised any particular safety concern at its meetings to date. As for efficacy, in NSCLC second-line cohort of basket type Phase Ib/II study carried out before this study, promising data with ORR is 33% and median DOR, duration of response of 10.9 months were obtained. This ORR is well above the ORR of about 10% with DOR of four months to five months, which have been reported in literature for the comparator docetaxel.

This LEAP-008 and 006, in this patient population of NSCLC first-line and second-line population, treatment outcome, there hasn't been any new drugs. So it may transform the treatment outcome, particularly survival benefits. And therefore, it will be reasonable to some extent, to surmise OS and PFS based on ORR and DOR values, and Lenvima is different from other VEGFR pathway inhibitors, and it inhibits FGFR and NSCLC is known to have relatively high dependence on FGFR pathway.

And we consider that may be involved in enhancing antitumor effects activity of Lenvima. And given this, our expectation to obtain desirable data from these studies has remained intact, and we intend to make necessary preparations with confidence. And global annual sales target of JPY500 billion also remains unchanged for now.

Next slide, please. Next, MORAb-202, farletuzumab ecteribulin development statuses to be updated. This is from the presentation made at the ASCO in June. We would like to give you the summary of the efficacy and the safety data of this ADC drug for patients with high-grade serous platinum resistant ovarian cancer in Study 101. And in the waterfall part on the left shows the Cohort 1 with 0.9 milligram per kilogram and Cohort 2 with 1.2 milligram per kilogram, you see tumor shrinkage effect of MORAb-202 is visualized here.

And you can see the highlights of efficacy on the right-hand side. ORR in Cohort 1 was 31.6%, in Cohort 2, 50.0%. So for -- compared to the publicly known information for this particular population, remarkable values were observed. And particularly, there was not a substantive difference in ORR between above and below the 50% cutoff of the folate receptor alpha expression level. We believe that -- we consider that this is due to the clinically validated bystander effect of MORAb-202.

And the safety profile for this ADC drug was manageable in general. The most common TEAE was interstitial lung disease, ILD. The observed ILD in Cohort 2, there was only one grade 3 case in Cohort 2. But excluding that, all of the other cases were Grade 1 or Grade 2, which did not require oxygen inhalation or discontinuation. ILD incidence was 37.5% in Cohort 1 and 66.7% in Cohort 2, relatively high values were shown. But because of the timing of this study, which coincided with the time when COVID-19 infection spread, therefore, we believe that this was due to certain level of screening effect.

Please next -- turn to the next slide. In this slide, we have considered various measures to reduce the risk of ILD, and this is the result. In this presentation at ASCO, body weight-based dosing were compared to a body surface area based dosing and looked at the impact on the efficacy and safety. Based on the actual clinical data, 1,000 virtual data points were used for conducting modeling analysis.

Please look at the table on the left. Here, for a person of 60 kilograms in body weight and the standard body surface area is estimated to be about 1.6 square meters based on this criteria and that there were groups of 0.9 milligram per kilogram administration MORAb-202 Q3W and the body surface area based dosing of 33 milligram per square meters every three weeks. Comparing these two groups and four quartiles by body weight and overall group were compared in ORR and ILD incidents.

First for ORR, BSA dosing, as you see in blue box in the heaviest group as well, ORR above or at 30% was maintained. And regarding ILD incidents, please look at red box portion and risk was reduced by about 35% in BSA dosing group compared to body-weight dosing group. Based upon this result, we revised amended protocol for the study, and we prepared ILD risk management manual. And with the agreement of FDA, we changed the dosing to BSA-based dosing and together with partner, BMS, we are accelerating clinical development.

Please look at the right-hand side, folate receptor alpha positive cancer with linear dependence includes the ovarian cancer, endometrial cancer, NSCLC and breast cancer. And total number of patients is expected to exceed 1 million in 2025. And the Study 201, targeting ovarian cancer and endometrial cancer, we will complete the BSA-based dose confirmation in 2022 to move on to the Phase II part. And for a new Phase II study for ovarian cancer, NSCLC, we are going to start by the end of the year, and we are making preparation with the clinical team of BMS. And in fiscal year 2025, we'd like to submit for either of the three types of cancer.

Next slide. I'd like to talk about the medium molecule E7386 first-in-class molecule. And you can see the chemical structure formula in top-left corner. And now currently, this is being developed as the oral peptide mimetic medium molecule drug to inhibit the protein printing interaction between CBP and beta catenin at the downstream of a wind signal pathway. And this -- if CBP beta-catenin interaction is inhibited, and then what will happen.

Please look at the two sets of pre-clinical data on the right-hand side. Based on the results from the left in model of human HCC cell line SNU-398. There was significant reduction of non-responsive tumor micro vessels involved in the resistance to Lenvima in combination of E7386 plus Lenvima. That means the green bar shows the density of Lenvima resistant micro vessels in tumor and in the combination of E7386 and Lenvima, you can see significant reduction in the density, as you see in the red bar.

On the right-hand side, in the model of Mouse (ph) breast cancer cell line Int-1 E7386 released the suppression of T-cell infiltration involved in the KEYTRUDA resistance, then the number of CD8-positive T-cells increased in tumor. The effect was found in this E7386 monotherapy and combination therapy with anti-PD-1 antibody. Based on this preclinical data, the study is ongoing for both combination of the E7386 and Lenvima and 7386 and KEYTRUDA. And in the Study 102 in the -- PR was observed in the multiple cases in patients with HCC, whose disease progressed after prior therapy with Lenvima monotherapy.

For the Study 201, Study 201 in combination of E7386 and the KEYTRUDA, dose confirmation part was completed as well. E7386 action on CBP and beta-catenin, which play a very important role in the wind signal and deeply involved in the resistance to IO therapy. As you see in this slide, the TMB, tumor mutation burden and PD-L2 biomarkers are analyzed based upon the public TCGA data sets for 29 types of cancer with a total number of patients of 9,218 people to conduct biomarker analysis.

And you can see pale gray and dark gray represent PD-L1 low and TMB low IO resistant cancer. Out of which about half, 46% had shown high wind signal activity across cancer types in dark gray population. That is where I'm talking about E7386 in combination with KEYTRUDA has shown the great potential to high potential to overcome IO resistant cancers with high unmet medical needs. And in study of 201 Phase II part was initiated in order to target melanoma second line and IO resistant ones and HCC second-line and CRC third line, microsatellite stable ones. And we are trying to achieve the clinical study for the triplet E7386 and Lenvima and KEYTRUDA, which is currently under consideration.

This is the last slide from me. Regarding oncology pipeline, we are promoting materialization of optimal modality by unique chemistry capability with a breakthrough drug discovery hypothesis to the refractory cancers based upon deep human biology learning. On top of what explained based on in-house payload strategy, we are working for the new ADC platform. For the pre-clinical phase, your asset is what you can see toward the bottom.

Currently, what is quite collecting attention as a new blockbuster is the ADC using protein integrator as payload. This is what we are working for. With this, you can target undruggable target. And also another one that is also paying more importance on is messenger RNA targeting splicing modulator used as payload that neoantigen inducer. That is also what we are working for the joint collaboration. So post Lenvima, that is also well prepared for us.

With this, I would like to close my part. Now, Yasuno is going to speak from here.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Thank you, here, Yasuno, myself is going to report on the consolidated financial forecast for full year in FY '22. And also, this is mid to long-term, but I'd like to talk about capital and the dividend policies toward FY 2030 and our SDG initiatives. First of all, there was no revisions to the consolidated earnings forecast disclosed on June 8. We will implement efficient operations with a priority given to advancing lecanemab.

Next, please. Next, I would like to talk about our capital and dividend policy toward FY 2030. Today, Ivan explained lecanemab, the subsequent AD pipeline, Lenvima, MORAb-202 and E7386 as well as subsequent oncology pipelines. As you all understand, the potentials of these pipelines are enormous, and we have strong confidence in these projects. We are aiming for a rapid increase in revenue in FY 2030 led by the success of these new products.

As indicated in the blue box, we will aim to realize HCC with a stand-alone model through strengthen financial robustness and increasing flexibility for investments. We currently have a very strong balance sheet but our investments will be focused on our in-house pipeline and business development, including digital area. Our simulation shows the expecting equity capital to accumulate to over JPY1 trillion and equity ratio to research -- to reach to 70% level, with net DER minus 0.3% to positive 0.3 level. We are aiming to maximize the shareholder value through unprecedented rapid growth.

Regarding dividends, based on the strong balance sheet, we will manage equity ratio and net DER through dividend increase in continuous and timely manner. Dividend policy is to return 8% of the cost of equity by cash. However, the DOA level may increase to maximize shareholder value. We aim to raise DOE to a 15% level and ROE to 25% level in FY 2030 through rapid growth, mainly driven by in-house pipeline in addition to increasing dividends supported by the strong balance sheet.

Next, please. In addition to the above efforts to enhance corporate value from a financial perspective, we are also working to enhance our corporate value through the achievement of the SDGs based on our philosophy based on management. In 2012, Eisai was the only Japanese company to participate in the long-term declaration and international public-private partnership for the control of neglected tropical diseases. Ten years later in June of this year, we signed Kigali declaration, the successor to the London Declaration.

Since 2013, we have been manufacturing diethylcarbamazine medicine for lymphatic filariasis at our plant in Vizag, India and have supplied 2.05 billion tablets to 29 countries through WHO. Through this program, disease have been eliminated in the 70 countries and the number of the people infected has been reduced by 74% but 860 million people are still at risk of infection. Eisai will continue to provide DEC tablets at price zero until elimination of the disease is achieved with an aim to realize a social good with efficiency by relieving anxiety over health and reducing health disparities.

In closing, let me summarize. Under the HHC concept, we aim for rapid growth through the expansion of in-house developed products as an innovation company originated from Japan, aiming for lecanemab's success while achieving solid growth in Lenvima and bolstering post-Lenvima products. We will maintain an optimal capital structure to support business expansion while aiming for investors' return through achieving the highest ever ROE and DOE. We aim to effectively realize social good.

I would like to ask for your continued support. That's all. Thank you very much.

[Unidentified Company Representative]

With this, we'd like to open the floor for Q&A. [Operator Instructions] Now the first person to ask a question is from Nomura Securities, Mr. Kohtani. Mr. Kohtani, do you hear me?

[Motoya Kohtani, Nomura Securities]

This is Kohtani of Nomura Securities. Do you hear me?

[Unidentified Company Representative]

Yes. Please ask your questions.

[Motoya Kohtani, Nomura Securities]

There are two questions about oncology. First, for Lenvima. LEAP-002 study was failed -- was a failure. Sorry, JPY500 billion in the annual target of the sales should be withdrawn. But with positive note, I think that Lenvima is for HCC, and it was very efficacious as the comparator. And 006 Study looked at in the LEAP program and being the comparator was KEYTRUDA plus the [indiscernible] and the combination therapy. So this is the global therapy. And I think that this global standard therapy, so it will be very hard.

So LEAP-007 with NSCLC alone, do you think that there is a likelihood to achieve a significant difference? And KEYTRUDA plus Lenvima in LEAP-006 without Farletuzumab (ph), and there was no significant difference. So how are you able to say that you are confident? LEAP-005, this is for second line. Therefore, we can have expectation. If LEAP-005 alone can be successful. And then what will be your projection of the peak sales of Lenvima? That is my first question.

[Unidentified Company Representative]

Regarding this question, Dr. Owa is going to respond.

[Takashi Owa]

Thank you very much for your question, Mr. Kohtani. First, LEAP-002 study. HCC is the target indication. The detail will be presented at the academic society. Very strong data will become available. Over 700 cases in a global Phase III study. And Lenvima monotherapy power, how powerful the Lenvima monotherapy can be. That has been the new finding in this study. Oral administration, monotherapy, and in this area, and the antibody-antibody combination therapy is being tried. But for the easiness of use for patients and also healthy economic benefits. Considering all these factors, Lenvima monotherapy, HCC first-line, first-line treatment value has been actually enhanced based on the data that has become available this recently. And this is not our hope, we have made such analysis.

Next, for lung cancer, as you pointed out, Mr. Kohtani, I would like to correct the number of the study. LEAP-007, this for the first-line lung cancer. You said that you failed -- we failed in this study. But as you know, PD-L1 positive patients were the target population and the squamous cell carcinoma -- non-squamous cell carcinoma, both were included. And for Lenvima, it was most of the design advantageous population for Lenvima. PD-L1 positive patients were targeted. So this is contrast to LEAP-002. KEYTRUDA was strong in this population. And there was difficult for Lenvima to make sure the significant difference. And the squamous cell carcinoma was included. [indiscernible] is not approved.

And there is the hemoptysis or bleeding risk, and there was -- had to be made adjustments. 007 and 006 cannot be compared head-to-head. 006 in LEAP program was based on the disadvantageous condition, excluding the squamous cell carcinoma. Only non-squamous cell carcinoma and all comers were test tried. And in this population, lung cancer, FGFR dependency is high. And particularly for Lenvima ORR safety run in part and 70% of ORR was observed. The usually 50% or so are limited and KEYTRUDA combination, only 50% level was reported, and it was outstandingly higher level. So we are -- we do not have any doubt in activity. And in add-on study, we expect that there will be a certain level of results.

And regarding LEAP-008, as you said, it has a very large potential. As you know, many first-line treatment with KEYTRUDA even in earlier like adjuvant and maintenance therapies are indicated. And the second line maybe become a first-line. That means that what is available in second line may be moved up. And even when we say second-line, the potential is great, 006, 008, of course, we believe that there will be positive results coming from these studies, but concentrating the value in the original market, I think that there is a potential to see further values generated. So that is our stance.

[Motoya Kohtani, Nomura Securities]

Thank you very much. My second question, I was concerned on protein degrader payload ACDC for pancreatic cancer, undruggable target on Page 15. [indiscernible] is reminded and protein degrader is also utilized by others. And the Glasgow University has been the partner for you. So in protein degrader, I think you have -- well, you have been very versed in protein degrader areas. So could you please elaborate on what you know?

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Thank you. Protein degrader, not only in Japan, but also in terms of the world, there has been a lot of accumulation of technology and know-how since many years ago and collaborating with Dokkyo University and Dundee University in Scotland in research and utilizing expertise of each academic centers have been introduced. And [indiscernible] question, I'm not able to answer on that part. But such cancer big 4, undruggable targets are being aggressively targeted, the protein degrader. It has the potential to do that. And now we will file for the application of the patent and I'll be able to introduce some more information to you, but I would like to refrain from -- referring to it further. Thank you very much.

[Unidentified Company Representative]

Next question, Citigroup Securities, Mr. Yamaguchi, please. Mr. Yamaguchi, can you hear me?

[Hidemaru Yamaguchi, Citigroup]

Can you hear me?

[Unidentified Company Representative]

Yes. I can hear you. Now, please start.

[Hidemaru Yamaguchi, Citigroup]

The first question is about the progress of the performance. Thank you very much for such a clear explanation. And the remainings is the KEYTRUDA related milestones and strategic options. So I think you are going to come up with this something, with that regard, that if you know, well, we are in -- you're in Q1 currently, but for Q2, Q3, Q4 milestone distributions. Could you explain that? If you have a certain idea about that, it would be useful for the forecast of the quarterly approach for us?

[Unidentified Company Representative]

Yasuno is going to answer for that.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Yasuno speaking. Mr. Yamaguchi, thank you very much for your explanation. The quarterly profit progress level and that plan of forecast is your question, I believe. In full year forecast, the high probability strategic options are included. However, the timing of that happening is something I'd rather refrain myself from talking about. But to the end of the fiscal year in a standard manner it's likely to increase. Please understand it that way. Thank you very much. Thank you. Which means rather than Q2, Q3 and afterwards rather than first half, it will be more in the second half that you will approach for that. You can understand in that way. Thank you very much.

[Hidemaru Yamaguchi, Citigroup]

Thank you. Second question, that is about Page 15. You have several ADC new projects explained and I would like to know your approach for your ADC. The payload is going to be changed one by one. But linker -- putting aside antibody's, but linker's dose is designed individually and some are degradative some not including those, you have a bit different approach for ADC. And also especially modulator you work for BMS and that is already available as information or already on the market or for the information or you have already started the joint research, always going to answer for that.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Yamaguchi, thank you very much for your question. First of all, ADC, our approach for ADC as a whole, first of all, targeted antigen selection, the selection against the antigens or the cancer rather is going to be enhanced as much as possible so that the specificity is going to be enhanced as side effects, adverse events are reduced. And linkers already, we have a very strong capability for chemistry. Next-generation ADC has the original. Its original linker and payload. Also we have seen many of such with the cytotoxicity, but it's not the simple cytotoxicity, but they are our uniqueness.

In other words, other companies cannot develop such kind of payload is what we would like to utilize still splicing mostly BMS collaboration. We are still in the preclinical, but we have an agreement for the collaboration, we have distributed roles to work for this. We will work for this together with the BMS so that it can get into the clinical phase. That is the current status. Thank you very much.

[Hidemaru Yamaguchi, Citigroup]

So the ILD for those this year or next year, would you explain about that?

[Unidentified Company Representative]

Of course, [indiscernible] data, but we are aiming at the next year as a target. But at this moment, this is just what we hope. We would like to make it as earlier as possible.

[Hidemaru Yamaguchi, Citigroup]

That’s all. Thank you much.

[Unidentified Company Representative]

Next from JPMorgan Securities, Mr. Wakao. Mr. Wakao, please ask you questions.

[Seiji Wakao, JPMorgan]

This is Wakao of JPMorgan. My first questions is on Lenvima. On Page 4, you introduced the first quarter progress in Lenvima, which was quite good. And from second quarter onward, do you think that this trend will continue? I think that the progress rate is quite high. Are there -- have there been any extraordinary factors for increasing the progress in the first quarter?

[Unidentified Company Representative]

Mr. Yasuno is going to respond.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

This is Yasuno speaking. Thank you very much for your question, Mr. Wakao. As I introduced today, Lenvima's results during the first quarter was quite steady and very strong growth was observed in all regions. As you asked in your question regarding China, let me -- even after the entry of generic, we have maintained a very high share in the market there. But when it comes to the second half, there will be an intensive purchasing program by the government.

In that category of program there has been the impact of this emission from this government program, therefore, towards the second half, we believe that the weaker results will be shown. In the United States and Europe and Japan indications have been expanded. In these regions, we believe that we are continuing to grow our share in the markets. So we believe that there is a high probability of achieving the annual target for this fiscal year. Thank you.

[Seiji Wakao, JPMorgan]

Thank you very much. My second question is about lecanemab. In September, primary endpoint readout is expected. The timing for us to know the result. Can we expect that, that will be available by the end of September or in early or October? And the information has continued to be updated and a drop up rate seems to be slightly increasing. If that is contained below 20%, do you think that we don't have to think it as a problem over the time in progress in the study. Do you think that there will be no likelihood of seeing increasing dropout rate?

[Unidentified Company Representative]

Thank you very much for your question. Ivan Cheung is going to respond.

[Ivan Cheung]

Thank you very much for your question. This is Ivan Cheung. To your first question, as I explained earlier, the top line results for Clarity AD will be around the end of September. So please be rest assured that we will announce -- make an appropriate announcement in an any manner in that regard. To your second question about a dropout rate, right now is approximately 15%, 15%. As you know very well, in the AD DMT Phase III trials usually around 20% to 25%. So we have been doing very, very well. As you know, we are now in early August. The top line readout will be end of September. So we actually just have not that many patients left to complete the last month of treatment. So this 15% will probably -- well, this 15% will most likely not probably, most likely stay around this number. So we have no concern whatsoever. Thank you.

[Unidentified Company Representative]

Are you satisfied with the answer, Mr. Wakao?

[Seiji Wakao, JPMorgan]

Yes. Thank you very much.

[Unidentified Company Representative]

Next question. Credit Suisse Securities, Mr. Sakai, please?

[Fumiyoshi Sakai, Credit Suisse Securities]

Sakai is speaking here. First of all, LEAP-002 study, you can get some aligning from the failure. I understand that logic. But at the same time, on the other hand, this fiscal year, I think it is incorporating to the milestone already. So what do you think about that point?

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

With that question, Chief Learning Officer, [indiscernible], is going to answer.

[Unidentified Company Representative]

Thank you for the question. So full year forecast has the strategic options with a high probability and each individual details of those. Rather we would like to refrain ourselves from disclosing such details. That's all. Is that okay, Mr. Sakai?

[Fumiyoshi Sakai, Credit Suisse Securities]

Then in that case, I have two more questions. One question is to Mr. Owa. This is splicing motion later. With ADC this time, is [indiscernible] That's what you licensed out, splicing modulator, I think that was it is. So with this regards, I believe you are working for the collaborative development with the BMS. So this splicing modulator is kindly collecting attention. So what's your strategy? What's the relationship of that one with this new ADC you are talking about.

[Unidentified Company Representative]

Owa is going to answer for this, Sakai-san.

[Takashi Owa]

Mr. Sakai, thank you your question. The splicing modulator, hypothesis of the Jack discovery covers wide range. There are three main pillars and each has potential, I believe. First of all, licensing out to [indiscernible] is about the hematologic cancer. And we don't have franchise half for that. So with [indiscernible], we've established a [indiscernible], new company, and we did the hematology, the reduction of the blood transfusion is what we are working for. This is quite unique and this is the clinically recognized endpoint. And this is where we would like to work for. And with the risk regards, we thought the partner is quite blueprint (ph), so we decided to the license out.

For this ADC, we're actually sparing targeting messenger RNA and neopeptide or neoantigens are generated. And immune code is then converted into immuno code. So this hypothesis is completely different. And who would be the appropriate partner? Well, needless the [indiscernible] immune checkpoint inhibitor BMS. So with BMS, we are working for the joint strategy. So each has the strategic perspective. And there is no contract-wise overlapping. We have a clear differentiation there. That's all.

[Unidentified Company Representative]

Mr. Sakai, is that fine with you?

[Fumiyoshi Sakai, Credit Suisse Securities]

Yes, one more question. Lecanemab, I think you have already finished the rolling submission and December is likely to be the full package submission. And I believe your response is that you are going to wait for that. And for rolling submission, when it is completed, it will be communicated as a news and that there will be no further FDA action initiated. Is that understanding right?

[Unidentified Company Representative]

With this regards, Ivan Cheung is going to answer.

[Ivan Cheung]

Thank you for your question. The rolling BLA submission under the accelerated approval pathway was already completed back in May. And the FDA accepted our rolling BLA completed filing and gave us the priority review with the PDUFA action date on January 6. So this is the accelerated approval application and our plan is upon receiving the accelerated approval, we will then immediately submit the sBLA, supplemental BLA that will contain the additional information of Clarity AD results to gain full approval from the FDA. We continue to believe Eisai is well ahead of other companies in securing the first-in-class, first full approval from the FDA off an AD DMT in this case with lecanemab. Thank you.

[Unidentified Company Representative]

Mr. Sakai, are you satisfied with this answer.

[Fumiyoshi Sakai, Credit Suisse Securities]

Okay. Thank you very much.

[Unidentified Company Representative]

Well, we have received another question from Jefferies Japan, Stephen Barker. Stephen Barker, please start asking your question.

[Stephen Barker, Jefferies]

Steve Barker of Jefferies Securities. Thank you. So license revenue, I have a question. In the annual forecast for the revenue, how much has been incorporated in your forecast? Could you please tell me?

[Unidentified Company Representative]

Regarding the question, Mr. [indiscernible] is going to answer.

[Unidentified Company Representative]

Thank you for your question. For this fiscal year, license revenue, your question was about license revenue. In the full year forecast in other income, JPY73.5 billion and JPY13.5 billion in other revenue. So with a high probability cases are included in our forecast. But regarding more -- further specifics, we'd like to refrain from mentioning them.

[Stephen Barker, Jefferies]

And considering the materials of Merck, a $300 million of sales milestone for Lenvima is to be paid to you. Is this the same understanding within Eisai as well?

[Unidentified Company Representative]

Regarding this question, Mr. [indiscernible] he is going to respond.

[Unidentified Company Representative]

Thank you for your question. Right, JPY300 million according to disclosure of Merck as a milestone payment, we have not taken into account the details of that number. I mean, we are not disclosing the specifics on the numbers.

[Stephen Barker, Jefferies]

Understood. According to the same set of materials, going forward, what should be paid $300 million milestone above that?

[Unidentified Company Representative]

There is no plan to pay other than this. That is mentioned in the material by Merck because according to the perspectives of Merck, $300 million as milestone will be the limit that they are going to pay. So there is no need for paying further than that.

[Stephen Barker, Jefferies]

So they do not plan to pay further. Then that means during this fiscal year, this may be the last payment by the end of this fiscal year. How do you think?

[Unidentified Company Representative]

Mr. [indiscernible] is going to respond to your question.

[Unidentified Company Representative]

Thank you for your question. We don't think that is the case. At the time of signing the contract $6 billion, which was announced at the time of signing the contract, we still have the residual portion. So in line with the growth of Lenvima, we believe that there are still opportunities for receiving the benefits. JPY500 billion in revenue, if that is achieved, then you expect that there will be milestones to be paid. So it really depends on how much growth you can make in the revenue.

[Stephen Barker, Jefferies]

All right.

[Unidentified Company Representative]

There is one more person to ask a question here. We are already after the time that we're supposed to close. So here is the last, Tokai Tokyo Research Center, Mr. Akahane, please. Can you hear me?

[Takashi Akahane, Tokai Tokyo Research Center]

I switched the phone. So sorry about this inconvenience/ The simple question that I have. In the first quarter, settlement, it is not that good, but as has been explained JPY49.6 billion is deducted, it is quite on track. And ForEx 6.28 billion negative, and that is excluded, then you can see that the [indiscernible] of the revenue from pharmaceutical business. Is this understanding right?

[Unidentified Company Representative]

Yasuno is going to answer.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

Yasuno speaking. Mr. Akahane, thank you very much for the question. Yes, your understanding is right.

[Takashi Akahane, Tokai Tokyo Research Center]

Thank you very much. And also regarding forecast, in the supplement material, you have the IRR forecast rate and term and the forecast. And here is the yen positive, but ForEx rate well, actually, that is a profit larger in U.S. dollar. So here is a negative. So what's the impact of that for the full year plan? And you have the 10 million of the inventory. Does that have the impact on to the inventory for you.

[Unidentified Company Representative]

[indiscernible] is going to answer for that question. Sorry, Yasuno is going to answer for that question. Thank you. For the question, Yasuno is going to answer for it.

[Tatsuyuki Yasuno, SVP, CFO & Chief IR Officer]

The full year forecast currently as has been pointed out, the ForEx rate, the volatility for that is quite high. So it's very difficult to see clearly into the future, but the impact onto the revenue or onto the profit comprehensively. Considered, we believe we can achieve the current forecast. And again, ForEx impact, as you pointed out, they might have the impact into different areas, but considering all those factors as well, we are aiming for achieving the forecast.

[Unidentified Company Representative]

Mr. Akahane, is that fine with you?

[Takashi Akahane, Tokai Tokyo Research Center]

Yes. Thank you very much.

[Unidentified Company Representative]

Okay. With this, we would like to close the financial results announcement. If you have additional questions, please contact with the IR. Here, we would like to close today's meeting. Thank you very much for your participation despite of your busy schedule.