Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2024-Q1

[Operator]

Thank you very much for taking your time out of your busy schedule. It is now time. We would like to begin financial results presentation for the first quarter of fiscal 2023 of Eisai Co. Ltd. Today's session will be held in a hybrid format. If participating in person as well as virtually online, please find the materials circulated to you for those of you who are in this hall. And for those of you who are participating online, please continue to watch the screen. Let me introduce the Directors present from Eisai Company Limited; Mr. Mitsuru Shomon, Chief Financial Officer. Dr. [indiscernible], Chief Scientific Officer; Global AD Officer, Keisuke Naito. Now Mr. Shomon, please start your presentation.

[Mitsuru Shomon, executive]

My name is Shomon, I am CFO. I'd like to give you the financial results presentation for the first quarter fiscal year 2023. During the quarter under review, Lenvima and Dayvigo and R&D expenses and SG&A expenses were controlled and we achieved increase in revenue and operating profit, making a good start for fiscal year 2023. Revenue was JPY 196.9 billion, which was up 7% from a year earlier. And below that, you can see the breakdown of revenue. Organic business or in pharmaceutical business, revenue was JPY 181.7 billion. Lenvima and Dayvigo overcoming negative factors staying at 100% of the previous year. In other business revenue by executing strategic options and receipt of the onetime payment, JPY 50.2 billion was recorded as revenue, 521%. Cost of sales was JPY 43.9 billion, accounting for 22.3% of the sales. And through the improvement and increase in the one-time payments received, the ratio has been reduced by 3.4 percentage points from 25.7% in the previous year, and gross profit was JPY 153 billion, a double-digit growth of 12% was achieved.

Expenses. R&D expenses was JPY 41.1 billion, up 7% from a year earlier, accounting for 20.9% of the sales, the same level as last year. And R&D expenses, including partners reimbursement, was JPY 55.2 billion, which was 99% of the previous year. Next, SD&A expenses. There was a share profit of Lenvima paid to Merck JPY 32.3 billion, and the shared profit of LEQEMBI received from BioGen JPY 4 billion included a JPY 86.1 billion was recorded, which was 93% of the previous year, accounting for 43.7% of the sales and down by 6.4 percentage points from the previous year's 50.1%. As has been already reported, due to change in agreement with Biogen, the particles to incur addition-related expenses by the end of December 2022, leading to significant reduction of expenses.

For financial disciplines, expenses in total were at 98% controlled below the increase of gross profit at 112% of the level a year earlier. And operating profit was JPY 26 billion, which was 350% of the previous year. Profit for the period was JPY 20.9 billion because there was the repayment of paid-in capital from U.S. last year, leading to a decrease in corporate income tax. Therefore, year-on-year change was 75% ROE, although this was the reference value for the first quarter was 9.9%. And net DER showing financial health was minus 0.19%. We have remained debt-free and equity ratio was 64.7%, showing the strong financial structure.

Next slide. On this slide, we can show you the breakdown of revenue migration mainly in the United States, Lenvima and Dayvigo in Japan and in pharmaceutical business, revenue was increased. On the left-hand side, at the top, as you see, during the first quarter of fiscal year 2022 revenue was JPY 184.2 billion. for the first quarter 2023, in organic business or pharmaceutical business, LENVIMA grew JPY 4.4 billion from a year earlier, achieving 7% year-on-year growth. Dayvigo grew JPY 2.9 billion, which was 145% of the previous year's level, exceeding the impact of the transfer of rights of Fycompa in the United States and a drug price revision in Japan, revenue grew by JPY 0.4 billion. In addition, in one other business, due to the transfer of all future economic rights for LSS front, JPY 12.3 billion was recorded. Therefore, for the first quarter of FY 2023, revenue was increased by JPY 20.7 billion year-on-year, up 7% year-on-year to reach JPY 196.9 billion.

Next slide, please. On this slide, you can see the breakdown of operating profit migration. We made a proactive investment in LEQEMBI increase in operating profit was achieved increase in revenue as well as cost reduction and real allocation. In the top left, during the first quarter of fiscal year 2022, OP was JPY 7.4 billion. During the first quarter of this year, in Pharmaceutical business, OP increased due to the following factors: growth of Lenvima and Dayvigo decreasing U.S. related expenses and reversal of the accounting-related expenses received from Biogen, we made productive investment as we can by related expenses. However, the ratio with segment profit revenue increased to 51.3% from 50% in the previous year. And the segment profit was increased by JPY 2.5 billion.

Next, R&D expenses. [indiscernible] related expenses was decreased by JPY 2.3 billion, but increased recovery-related expenses and there was a regulatory milestone payment of JPY 3.2 billion for LENVIMA received from Merck in the previous year. And then the OP rate by JPY 2.6 billion. However, ratio of R&D expenses to revenue is 20.9% the same level as previous years.

Next group headquarters, management costs and other expenses. In here, ADUHELM related expenses or losses and shared profit in LENVIMA to Merck included here, but ADUHELM related expenses were decreased by JPY 4.6 billion, and SG&A expenses were reduced. And the shared profit of LENVIMA to Merck increased by JPY 2.6 billion as the proactive investment into this. And the profit increased by JPY 6.1 billion through appropriate cost control while making proactive investment. So far, these accounted for a JPY 6 billion increase in OP. In addition, in other business, as I have explained earlier, there was a transfer of all future economic rights for elacestrant of JPY 12.3 billion onetime in revenue income. And then as a result, total R&D and SG&A expenses invested in LEQEMBI at the level of JPY 20 billion. But still, the OP for the first quarter 2023 was JPY 26 billion, increased by JPY 18.6 billion, 350% year-on-year.

Next page. This is the last page. Here is the fiscal year 2023 consolidated financial forecast. The full year forecast has remained unchanged. We will accelerate the proactive investment in the LEQEMBI continuing on. This concludes the financial part.

I would like to ask Dr. Owa to explain oncology part next.

[Takashi Owa, executive]

So this is Owa speaking. I would like to explain oncology part. First, I'd like to share with you the current status of revenue for LENVIMA -- with 6 indications in 5 cancer types, LENVIMA has established a very firm backbone therapy position, and it is still continuing to be further growth. On the left-hand side, as you can see in these graphs, for fiscal year 2023 during the first quarter, global revenue for LENVIMA reached JPY 70.8 billion, which was 107% of the previous year's level. Very strong growth has been shown. And furthermore, this was the highest Q1 revenue ever. on a quarterly basis, and we are making steady started what achieving the fiscal year full year forecast of JPY 261 billion. And in the largest market, the U.S., Lenvima revenue grew 125% of the previous year and driving the global growth.

In the middle here is the revenue by indication the blue portion RCC and pink-colored endometrial cancer in these indications in terms of the number of new patients, it achieved the largest share. By region, in China, although there was a erosion by generics. But compared to the fiscal year 2020 to fourth quarter revenue of JPY 4.8 billion. Revenue in China increased by JPY 2.1 billion, JPY 6.9 billion increase. And also in RCC and EC indicates the number of countries where indications are approved, and reimbursed is increasing, making it a key factor for growth. And this year, we plan to obtain study OS results and potentially file submissions for LENVIMA plus KEYTRUDA combination therapy in 3 indications, which are very important of NSCLC first line, second line and EC first line in fiscal year 2023. These studies are ongoing, almost in line with our expected time line. Therefore, we have high expectation to getting these final results.

Next slide, please. I would like to share with you the summary of presentation made at this year's ASCO for RCC. The final analysis startup, a full year follow-up data of a Phase III study, Study 307 in advanced RCC. As regards to complete response rate, exceeding the 16.1% action submission, CRR of 18.3% was obtained. Survey was conducted on 440 patients with metastatic RCC on their treatment preferences. And it was found that the most important desire for patients was complete response. That is to say elimination of all evidence to lists.

We believe that this final analysis that of full year follow-up shall meet this desire of patients. Furthermore, Phase II study targeting non-Clear cell RCC, which has even higher unmet medical needs, favorable ORR, 49% and PFS of about 18 months, very favorable results were shown in this study, and we believe that we have been able to strengthen the clinical evidence for non-clear cell RCC.

Next slide. This is to explain Novel anti-HER2 antibody ADC BB-1701. Here is the update. BB-1701 is being jointly developed with Bliss Biopharmaceutical and delivering our in-house anti- cancer drug is used as payload and this is bound to an anti-HER2 antibody through linker. And this linker payload was developed at Eisai's U.S. research site Exton. This is a proprietary technology platform. And it is anticipated to have antitumor effects on breast and cancer and other cancers that express HER2 based upon the clinical study results that have been obtained so far. Here is the waterfall plot. On the left-hand side, here is the efficacy data that was presented at -- from a Phase I study, which was presented at ASCO this year. As you can see here, in HER2 expressing breast cancers with prior treatment, there was the efficacy of antitumor efficacy was demonstrated in terms of ORR at 70.5% and DCR at 100%.

As regards to safety, most commonly reported grade or severe adverse event was peripheral neuropathy. In recent years, it has been reported as a problem with other ADCs, interstitial pneumonia or ILD. This particular AE was not clinically reported in this particular study. At the time of our presentation, we plan to initiate a Phase II study for HER2-expressing breast cancer by the end of this fiscal year. And in line with this, last week, IMD was achieved in the United States. And based upon the results from Phase II study and also clinical biomarker data will be collected. And particularly the clinical biomarkers for non-responders or refractory to existing ADC, human bio-[indiscernible] data will be focused. And based upon the comprehensive assessment of this data, we may consider exercising option rates for commercialization and development.

Next slide, please. Lastly, for maximizing patient value of LENVIMA, we have intellectual property strategy. This slide summarizes our multifaceted initiatives. First is utilizing our chemistry capability, Highly pure lenvatinib patent. International filing date is August 26, 2015. Globally, expiry is 20 years from this date. August 26, 2035. It is valid in the United States, major European countries, Japan and several other countries. In this patent, the scope of the claim is lenvatinib mesylate that has a very low controlled level of impurity. Patent covers the competition as well as the manufacturing method. Secondly, we have a combination of partners with pembrolizumab utilizing our alliance with Merck. Filing data in Japan is March 3, 2016, expiry in Japan is 20 years from now on March 3, 2036. This patent of covered lenvatinib mesylate that is used in combination with pembrolizumab regarding the combination of the 2 drugs, already RCC and in Japan Euroline body cancer are approved as indications. And for future indications, the patent also covers the combination therapy.

But thirdly, as referential measure for rare disease drug in Japan, reexamination period is extended by as long as 10 years. In Japan, within the LENVIMA indication and uterine body cancer and thymic cancer are recognized as rare disease. And for the -- for this longer exclusivity than the basic patent expiry can be maintained for lenvatinib. Even after basic substance of patent expiry of lenvatinib, we are promoting these IP strategies to maximize the value of lenvatinib to maintain the effectiveness of the rights and to execute the rights. Final part will be presented by Mr. Naito.

[Keisuke Naito, executive]

Good afternoon, everyone. I am Keisuke Naito appointed as global EDA Officer. I will be promoting a dementia ecosystem development globally, including the can-based activities. Based on AAIC update, I would like to review once again the features and characteristics of the solution that can be and would also like to touch upon commercial situation in the United States. That can be received accelerated approval from FDA in the beginning of the year this year. And at AdCom on June 9 through the discussion of the experts, it was confirmed that CLARITY AD study results are clinically meaningful and that the benefit risk profile is positive. After such discussions can be -- was fully approved.

On July 6, LEQEMBI is currently the only ADDMT that has received full approval -- there were various presentations at AAIC. Other companies drug may eventually also receive full approval in the United States. As a result, patients will have more options, and I believe that these will be triggers to build wonderful ecosystem in the future. Given such situation, I believe that we now have an environment already where we can discuss more about the uniqueness of LEQEMBI. Today, once again, I would like to start by touching upon the characteristics of this product.

First, about the origin of LEQEMBI. LEQEMBI is a drug developed through drug discovery research approach based on A-beta theory focusing on the aggregation of A-beta, which is observed in Alzheimer's disease patients brain as the cause of AD. A-beta goes through formation stages of soluble monomers, Oligomers and protofibril and become aggregated as non-soluble A-beta plaque research by [indiscernible]. Over more than 30 years have shown that the protofibrils have strong neurotoxicity.

The in the pre-stage of plaque aggregation, there are protofibril that are highly toxic and selective finding of protofibril is the [ MLAO ] that can characteristic of LEQEMBI as ADDMT. Next, I would like to discuss the second part. In summary, in before -- for approval, this part of the CLARITY AD study was reviewed mainly reviewed for approval this time. In regards to the protocol, there's no halved screening, NCIA accounts for 62% and CDR-SB, which is why the used in actual clinical setting is that as the primary endpoint, diverse population is covered similar to real world with these ideas incorporated in the protocol to broad range of early AD patients similar to actual clinical practice, -- the study was conducted in a design that is scientifically transparent and highly probable and it was designed in such a way that far results are obtained.

As for clinical efficacy, all primary and secondary endpoints were achieved from month highly statistical significance has been confirmed. And throughout the broad range of endpoints and subgroups, consistent results for obtains -- regarding ARIA, which is a point of discussion in relation to safety of ADDMT, the incidence was within the expected range. FDA has issued clear guidance, and we believe that this is manageable. And as for important indicator of antibody medicine, immunogenicity, ADA positive rate was 10% -- neutralizing antibody positive rate was 4%. And it was also confirmed that such immunogenicity does not affect blood concentration in clinical efficacy. -- that was conference through PK/PD study analysis, and we believe that LEQEMBI can be administered over a long term.

In summary, the following is the uniqueness of LEQEMBI the first-ever ADDMT in the world or the uniqueness of LEQEMBI aside from it being the world's first AD-DMT. First, rather than A-beta plaque, the most neurotoxic protofibrils in the stage before A-beta are selectively removed and consistent clinical significance of [indiscernible] in broad diverse range of early AD patients. Secondly, in the U.S. package insert, a related genetic background monitoring method and method to respond to side effects, such as infusion-related reaction are described. That is to say safety treatment management is established by the FDA. And therefore, we believe that LEQEMBI is a very easy-to-use drug as the first-in-class drug. This is the second characteristic.

And the third characteristic is confirmation of significant clinical efficacy in low-Tau group. On this point, at AAIC the other day, Tau sub-study results were presented. And I would like to describe the detail on the next slide. The fourth unique point is the ongoing development to maximize the product value through development of subcutaneous formulation and maintenance dosing regimen. I will come back to SC formulation later. Based on these uniqueness, we believe that we can be is worthy of positioning as the first client choice.

First, about Tau-subgroup results. The top part shows the accumulation in the temporal lobe, this was presented at CTAD. Lecanemab, as well as the accumulation of tau pathology in temporal lobe that was confirmed in the data, and the lower part is an update on Tau Pathology, which was presented at AAIC the other day. This is the analysis result of Clarity AD sub study in group with mild accumulation of tau in brain, CDR-SB, ADAS-Cog14 and ADS NCI ADL in all of the indicators, lecanemab group showed a better clinical efficacy than placebo group. That is to say from these results, LEQEMBI in early AD group is effective across a broad range of endpoints. And in particular, in low-tau group, which indicates early stage of AD significant clinical efficacy is expected.

As for 549%, I believe this is eye-catching in a nutshell, inactive drug group. This shows the positive direction change in cognitive function. The expression used is slowing of deterioration, but it can be interpreted that the results were such that cognitive function was improved.

Next, about the SC development. Based on the results of the study presented at AAIC, I will explain together. As for those setting, based on the analysis using PKPD model, irrespective of the body weight, 730 milligram weekly SC fixed dose administration achieved a similar level of the average as IV administration of 10 milligram per kilogram biweekly and lower Cmax in comparison to IV efficacy is known to be affected by C average. And therefore, based on the results, we believe that SC will bring about amyloid reduction at the same level as IV.

And safety indicator ARIA incidents, it is known to depend on Cmax. As shown on the right side, in area incidence simulation results, SC incidents and IV incidence of ARIA-E are shown. Cmax of SC is lower than IV, and we expect that safety profile of SC will be better than IV. In summary, towards the submission within fiscal 2023, I would like to say that [indiscernible] development is smoothly progressing. Currently, within quality open-label extension, SC study results are being analyzed. -- update will be presented at CTAD 2023.

Finally, I would like to touch upon the market outlook in the United States going forward. After the accelerated approval in January in the United States, in the U.S., we have implemented limited commercial activities in LEQEMBI. Treatment of LEQEMBI will be shown in a journey as shown in the slide to the patients. First patient starting from #1, a patient will notice the symptoms, and we'll seek treatment as the family doctor, family doctor will refer the patients to specialist will give definitive diagnosis and administer LEQEMBI or refer the patients to clinic, which is possible to administer can be the administration ARIA, et cetera, will be managed through monitoring. This is the expected journey and more or less, the journeys are happening in actual commercial operations.

And as shown below, in east, we also recognize that there are challenges to increase the scope. In particular, LEQEMBI itself included in various pathway, the -- or medical technologies in each pathway are not necessarily covered by insurance coverage and that economic burden is affecting the journey overall. However, triggered by full approval of LEQEMBI, market environment is changing significantly in the positive direction from A to FAG, we have factors. And first A, this was the biggest challenge. Insurance coverage of fairs Technologies. We are seeing progress here. First, as for LEKMBI, on the same day as the full approval on July 6, CMS started a broad coverage-- and PET use was restricted in a major way, but CMS has announced a policy to review this in the direction of lifting the restrictions. Amyloid CSF testing and MRI are already covered by Medicare. APOE4 genetic testing is conducted in clinical practice as a part of assessment of patients. As for PET insurance reimbursement, with the PET insurance reimbursement, we believe that there will be greater options for diagnosis throughout the United States.

And the chasm regarding each step, we are seeing progress after full approval, the enhancement of disease awareness on MCI and mild AD -- regarding this, we have information site on education about the disease and the product information Leqembi.com. After full approval, access number increased to 179%. And regarding screening tests to deduct MCI and mild AD, we are implementing measures to make screening test widely available, including MoCA and other simplified cognitive function screening. And as for environmental development to provide LEQEMBI and as for a number of specialists in one-stop fashion, about 1,400 neurologists are able to prescribe and administer LEQEMBI. As for a better environment, currently 15 integrated delivery networks have seen pharmacy and therapeutics committee passed LEQEMBI. And more than 700 infusion centers have started training. And in terms of administration of LEQEMBI there has been much progress.

As for reducing the burden on patients, GE, as earlier mentioned, SC is developed according to the time line and [indiscernible] is increased understanding of ARIA by medical professionals, Eisai is providing education program called understanding ARIA. And the access number to this program has increased to 125% of before, and interest in this is increasing quite substantially. As I have discussed, after the full approval of LEQEMBI stakeholders such as CMS and IDN are taking actions, and this fact shows the expectations towards LEQEMBI of patients in the United States and medical professionals in the U.S. so that there will be most appropriate access to LEQEMBI. We would like to develop ecosystem. That will be the highest priority. And we believe that we are making good progress for its contribution to 10,000 patients.

This is the final slide. And this is the summary of the message that I wanted to convey today. On July 6, 2023, LEQEMBI received a full approval from the U.S. FDA as first ADDMT. This has the unique MOA, targeting highly toxic protofibril and established safety profile, and we believe that it will be a potential promising first-line therapy option in the future ADDMT ecosystem. Eisai will continue to work with stakeholders to establish an inclusive treatment pathway aiming that people with dementia can receive treatment with greater peace of mind. ADDMT is a new approach to AD by disseminating the value of this, we strive to establish the dementia ecosystem, which enables people with dementia to have more options, such as novel treatment agent and solutions beyond drugs. Thank you very much for your kind attention. And we look forward to your questions.

[Operator]

[Operator Instructions]

[Hidemaru Yamaguchi, analyst]

My name is Yamaguchi. I am from Citigroup. As for LEQEMBI, I have several questions. First, well, I haven't been able to look at the information. Towards the end of this fiscal year, you are targeting 10,000 patients to be treated and sales and actual number of patients. But if you have any updates on the numbers of these status, could you please give them?

[Operator]

For your question, Mr. Naito is going to respond.

[Keisuke Naito, executive]

Thank you for your question. Regarding specific numbers, we refrain from disclosing them. But as you see here, there are various indicators in addition to them and also the number of vials under the AA accelerator approval situation the number of vials has been quadrupled -- and regarding the number of patients treated has increased by about fivefold. And looking at this overall trend, we believe that we are making steady progress. And today, from the United States, we have Mr. Toyosaki as the global brand lead. We'd like to ask him to respond to your question in specifics.

[Hideki Toyosaki, executive]

I'm Global Brand Lead in United States. My name is Toyosaki as has been introduced by Naito, compared to the situation when we saw under the accelerated approval situation, the number of vials are shipped and those number of patients treated have been increased by several fold. And -- last month, this drug was granted a full approval and IDN so-called large-scale integrated delivery network and others, many physicians had a great number of hospitals or clinics who have become ready already now starting the actual prescription. And before the expansion of the coverage of the PET, CSF is mainly used for making the definitive diagnosis of the amyloid. And even with that, the number of restrictions has been quadrupled or increased by fivefold.

And from physicians regarding the [indiscernible] LEQEMBI, there has been a very strong interest shown by patients they are seeing I believe that this can be interpreted as the promising indicator for uptake going forward. And also readiness for prescription and treatment and the formulary approval is increasing and the -- among the IDN of our top priority IT list and this 15 IDN has already have already adopted this LEQEMBI as their formulary. And now LEQEMBI infusion and based upon the discussion of physicians, the number of physicians who are ready for treatment with LEQEMBI, we have quantified and found that this has reached 1,400. And also the expanded coverage of CMS. And given these changes in the system, we are seeing the increase of the number -- prescription and the patients on the treatment are increasing week by week. And even after the PET is covered by reimbursement, and then we believe that we can say confidently that the number of prescriptions will even further increase.

[Hidemaru Yamaguchi, analyst]

Regarding LENVIMA, there was the explanation about the extension of the patent. These 1, 2, 3 patterns, do you think that these patents or IP to block the entry by and I think that the #1 in distant cetera, this #1 is the strongest in slowing the launching by generic manufacturers?

[Operator]

Dr. Owa is going to respond to your question.

[Takashi Owa, executive]

Regarding the limit patent the creation and development of animated is based upon the culmination of the technological capability of Eisai. So this efficacy of power of this patent to make high-purity and embodies, we have a very strong confidence in this currently for this balance -- now we are in the middle of the litigation regarding this patent in the United States. So we like to refrain from making any comments regarding discount utilized as beating the generics manufacturers. But if you ask me whether we are confident in doing so because I am a chemist therefore, I would say we are confident. Utilizing these patents with the existing indications and new potential indications, so we'd like to utilize the optimization for maximizing the patent value of LENVIMA, even after the expiry of the existing original patents, we would like to continue to utilize these for strengthening the value.

[Seiji Wakao, analyst]

I'm Wakao from JPMorgan. I have a question regarding subcutaneous formulation. 2 questions. First, in simulation, you have said that it is moving on very well. What is the probability of this being successful in the sub study? What is your feeling of the possible probability of success? Next, I believe Neuro PET will be an indicator and amyloid PET will be an indicator. And through amyloid PET, if a decline is shown, will [indiscernible] approve?

[Takashi Owa, executive]

Neurology clinical -- in Japan and Asia, that is my responsibility. Thank you for your question. About the simulation. This simulation is in Phase II of Study 2 or one that we conducted based on the data simulation was carried out. And according to the simulation regarding efficacy, the average. And as for ARIA incidents, it is affected by Cmax. That has been found. Based on that simulation, prediction was made. And during the -- in Sub study, we are confirming the results of the simulation, but we expect to obtain similar data that is similar to the simulation results. As for FDA discussion consolidation, we are still discussing the details that towards filing of submission. We are in conversation with FDA.

[Seiji Wakao, analyst]

Second question, using this SC formulation, longer-term administration may be possible. And that I think is the strength of lecanemab. As for donanemab, once amyloid beta becomes negative, administration will be stopped. I think that will be the regimen for donanemab after amyloid beta is negative, administration may be stopped. That is the possibility. But with SC formulation per patient, how long can you extend the administration duration and how much increase can you achieve in the dosing times. So with the SC formulation, can I simply take it that patients will be longer on the LEQEMBI treatment? -- without amyloid beta accumulation, Alzheimer's disease may progress. Will marketing use in such data become necessary? Or will you require long-term data, for example, from Phase III?

[Operator]

That question will be addressed by Mr. Naito.

[Keisuke Naito, executive]

This may be a general answer to your question. But first, as far as comparison with donanemab is concerned, there is no head-to-head data right now. So it is difficult to discuss a simple comparison. However, as for the uniqueness of [indiscernible] as I mentioned during my presentation, in early AD, a broad and consistent results were obtained. And from FDA, safety profile has been established. And as you've mentioned, it is highly likely that this drug can be used for a longer-term administration. And as for SC formulation, currently, we are making efforts to increase administration options. And as for continuous administration, that is being considered, I would like to ask Mr. Toyosaki to provide additional comments.

[Hideki Toyosaki, executive]

Thank you. I would like to offer some additional comments. First, as for Alzheimer's type dementia -- this disease is a progressive chronic neuro degenerated disease. And after removing the plug, did is understood to continue progression and -- that is very important that we consider the optimal duration of the treatment. As for LEQEMBI, during 18 months of administration, neutralizing antibody, this may affect the efficacy of the drug by neutralizing antibody was 4% as presented during the earlier presentation, efficacy, safety regarding pharmacokinetics, such as immunogenicity without the factor from that, the neutralizing antibody is not a limiting factor for limb administration. That has been suggested. -- beyond 18 months, over longer-term safety and efficacy from quality AD open-label extension study, currently, further evaluation is being carried out. As for continuous treatment beyond 18 months, whether further benefit can be brought about. We believe that, that is a possibility and evaluation by medical professions of physicians and through conversations with physicians and patients, we hope -- we believe we will be able to consider other treatment options. And in that respect, subcutaneous administration will be very important. And in addition, we believe that there is another point regarding subcutaneous formulation, efficient share and other medical resources may be saved through the use of SC formulation. And I emphasize in that aspect as well, we are developing SC formulation.

[Fumiyoshi Sakai, analyst]

My name is Sakai. I'm from Credit Suisse. I have 2 questions about LEQEMBI prescriptions and also the sales and revenue, those numbers will become available a little time later. But one question. How many patients have started to receive diagnosis based mainly on CSF tests, but out of way how many are considered to be MCI or early AD and definitive diagnosis has been given to such patients, out of which how many patients are currently have trends further to migrate it to the start of the treatment by LEQEMBI. If you have such a flow of data, could you please provide them with me. And the second question is about the soon to be approved that can be in Japan. Naito-san became this global AD officer. I think that you were in charge of the Japanese domestic infrastructure establishment for AD. And I believe that there will be a stringent supply of the [indiscernible] resources inclusive of the physicians who will be responsible for diagnosis. Could you please give us the current status in the Japanese market infrastructure?

[Operator]

For your first question, Mr. Toyosaki is going to respond.

[Hideki Toyosaki, executive]

I would like to respond to your first question. For your question, I believe that is a very important point for us. As we have shown in our presentation slide, patient journey is considered in each process. through with how many patients will go through each process of the patient journey. Well, actually, we do not have the data on hand as of today. But on the other hand as important indicators for the uptake of this product, we believe that this data will become crucial, we are working on various ways to obtain such data going forward.

[Keisuke Naito, executive]

Yes, I have been in charge of the Japanese domestic ecosystem establishments. Thank you very much for your question about that. There are various significance to that. Firstly, in ecosystem, which allow us to have collaboration with other companies, we are increasing the number of alliances we make day by day. And the topic we discussed today about LEQEMBI, it's not only limited to LEQEMBI, but we have obtained the accumulated tale from Aricept. We have market research team within us. And Yusa-san, who is in charge of that, is going to respond to your question.

[Unknown Executive]

Thank you very much for your question. Mr. Sakai. I am in charge of the Integrity dementia strategy team. My name is [indiscernible] and in response to your question regarding how the infrastructure has been established in Japan, as Mr. Naito has mentioned, in Japan, HCC area coordinators are available. There are 41 people, and they are mainly engaged in the market research. And there are 2 major parts of the research. First one is in the dedicated clinical clinics or medical institutions, medical resources, MRI, PETS and CSF testing in which quantity and how much capacity will they have in the future for giving such services to patients. And with this drug, of course, physicians may ask other medical institutions, the CSF page or MRI. Therefore, it will be necessary to have the local -- the collaboration among medical institutions. And after the launch and how these resources will be expanded in each community based upon that market research, as of today, of course, we have to consider when the reimbursement will be approved for CSF and PET, we do not believe that there are any problems in terms of the capacity for the future.

[Fumiyoshi Sakai, analyst]

There is another question. Dr. Owa the 1701, -- could you please explain how significant this drug is going to be? I believe that you have just touched on breast cancer as the indication, which is a very competitive area. But Halaven I believe that this was the product where we had a very high expectation. So what is the significance of having this new drug?

[Takashi Owa, executive]

For us through Halaven, we have established a network with key opinion leaders in breast cancer area in global markets. And with the high expectation from such physicians, eribulin or Halaven -- it's still growing and expanding in breast cancer area, showing that it has a depth of excellence of this drug, and we have heard such feedback from physicians every day. And also as a mechanism, the menu modulation and the microenvironment improvement and [indiscernible] targeting only the microtuble and which is different from the BB1701 mechanism. And we dare to enter into HER2 area. And with existing trucks, cultivating the HER2 area and the prescriptions are expanding. But even with this growth, there are not much complete response. -- achieved. And due to the AE problems, there are many patients who are not able to use therapies for long-term time in the future, even with a competitive area of our market, best-in-class and eribulin Halaven data, which shows the uniqueness of Eisai, and they believe that we will be able to deliver meaningful and significant option of the therapies to health care professionals and patients. And we have such a belief and also we are supported by the expectations by the physicians. And we are asked frequently by physicians. So why don't you use the everybody or Halaven in this area of HER2.

[Kazuaki Hashiguchi, analyst]

I'm Hashiguchi from Daiwa Securities. I have 2 questions. First, in CLARITY study, why was the OE incidence low in comparison to other amyloid beta targeting therapy clinical trials. I believe [indiscernible] I think that this is due to different patient target patient background. -- properties specific to that can be based on the characteristics specific to Lamb, what do you think led to low incidence of ARIA?

[Operator]

That question will be addressed by Mr. Owa.

[Takashi Owa, executive]

Thank you for your question, Mr. Hashiguchi. This is Owa speaking. As for the profile of our lecanemab, as it was explained earlier, soluble protofibril that is with which the antibody has high affinity. As for ARIA incidences, there are various different theories. But on the vessel wall, Black is adhere to and removing the pack, maybe one of the causes of ARIA and soluble protofibril is targeted by lecanemab. In that respect, it may have weaker relatively weaker affinity to the plaque. And it may be less directly involved in that, and that may lead to lower incidence of ARIA.

[Kazuaki Hashiguchi, analyst]

The second question is about a highly pure lenvatinib patent and the significance thereof. As for genomics, different purity products are often approved as generics in general. And based the invention that is the of this patent. By utilizing that invention, how much clinical significance is there? For example, better stability or lower incidence of adverse events, what is the value that will be offered from this invention and from this patent.

[Takashi Owa, executive]

Dr. as has to go to your question. That is a very important question. And that is indeed the very point that is being disputed during the -- in the patent litigation. By all means, we want to win. And therefore, please understand that we cannot disclose information.

[Unknown Analyst]

On the 21st of August, there will be -- the expert committee panel will be held. And lecaneumab is expected to be approved in Japan. And that's what I have heard and that was reported by NHK and others. And I have one question about that. And the time line after that, so after the approval is granted until the reimbursement is granted, do you have any specific date for that? And the timing when the price will be determined will be at the same time as the reimbursement approval. And in the United States, after -- immediately after the accelerated approval, the marketing activities were started in the United States. But when it's going to be the launch date of Japan, is it going to be after the reimbursement is approved in Japan? Could you please explain that? Nakahama-san, perhaps, could you please respond?

[Akiko Nakahama, executive]

I am in charge of the Japanese Regulatory Affairs. My name is Nakahama from approval to reimbursement approval, usually within 60 days at maximum 90 days. But usually, it is within 60 days as a general rule. And after the reimbursement is approved and the timing to launch the product based upon the readiness for shipment, which may be different from a company to another, but we would like to proceed in this way as soon as possible. So after the reimbursement is approved and then launch will be started. So that means that at the same time as the reimbursement approval and then the insurance coverage will start. And then as soon as possible, you would like to launch the product. And you mentioned that within 60 days under the Japanese regulation. So after approval and then the reimbursement will be determined by 60 days. And so at maximum 90 days, but usually, within 60 days after approval, reimbursement will be determined.

[Unknown Analyst]

My second question is about on Page 12. On this slide, on the left-hand side, LEQEMBI is used in terms of CDRSP, slowing decline was 549%. I have a question about the data -- in the open-label extension, 122 in placebo and 135 in lecanemab arm. And this data world gained or in Clarity AD, is this the data that have been measured in the CLARITY AD that is my first question.

[Takashi Owa, executive]

Regarding this tau-related data, in core study or double-blind study of [indiscernible] were tested. And for these patients, data was obtained. Top line from 0 to week 78, [indiscernible] was reviewed.

And then from Mr. Naito, you used the word improvement in CDR-SB. So looking at this data, the blue or green line shows in CDR-SB, the numbers seem to improve. So is this the correct way of interpreting above 2.4 in the CDR-SB, the point of CDR-SB has been increased by 0.4 percent points how to interpret this graph, please? Yes, in the middle line, which shows 0, the below 0 shows the trend toward deceleration. So for placebo arm below 0, showing that there were a deterioration. But on the other hand, lecanemab arm made a positive turn. So that means that the group went into the trend towards improvement.

[Unknown Analyst]

If lecanemab arm at stayed at 0 line and then the slowing of decline was 100%. However, according to this data, it was above 0. That means that above 100% of slowing of decline rate, [indiscernible] whether this slowing of decline is appropriate or not. But 549% is shown. CDR-SB, what is the full score for CDR-SB so 0.4% shown here is how should I interpret this?

[Takashi Owa, executive]

Overall, out of the global population of 1,795 and 0.45% was the difference between the [indiscernible] arm and the placebo arm in the overall population. So is it the case from between 0 and up to 0.4%, and that's the comparison showing the improvement. But rather, in the [indiscernible] arm, CDR-SB has shown has been shown to be improving compared to placebo arm, the [indiscernible] it's not that the economy arm was better by 0.4%. But as stand-alone, lecanemab Rn has shown improvement in CDR-SB alone. According to this data, the difference between the 2 arms, as you see in this graph, 0.59 square was equal to 0.59%. So this is the difference between the 2 arms. That means the placebo arm was deteriorated by about 2.1%. On the other hand, lecanemab arms have shown the improvement by about 0.4%. Therefore, the difference between the 2 arm is 0.59. That is how this is shown.

And then in Alzheimer's disease, which is known to continue to decelerate, although the or sample size is limited, but even at the stage where the symptoms are very mild, but still showing the improvement. Based upon only on this data in these particular arms was the trend toward improvement. But as you said, sample size is limited. So depending only on this data, in the mild patients improvement trend was shown, we are not able to make a definite comments like that. We just can just say that there was an indication of that trend.

[Unknown Attendee]

I'm [ Kurose ] from Nikkei Newspaper. About contribution of LEQEMBI in revenue. First, this is a question for clarification. On Page 15, fiscal 2023 contribution to 100,000 patients in the U.S. Does it mean that administration that can be will be administered to 10,000 patients. Is that what it means here? The second question, when will you expect to be able to disclose information on revenue JPY 1 trillion level revenue simulation in 2030 was presented in information meeting before, but what is the expectations about the revenue.

[Keisuke Naito, executive]

First, regarding 10,000. This is treatment with LEQEMBI of 10,000 patients. So that is what it means as you correctly understood. As for the second question about the sales or revenue, I've mentioned our aspiration, this is a drug in a very new category. First, we have to develop a treatment pathway that is safe and secure. That is the first and foremost priority. And as I discussed during the presentation, the target of treating 10,000 patients, we are making good progress. That is to say also, we are making progress towards JPY 1 trillion in 2030 and midterm target, we are making good progress. That is the information that I would like to discuss at this point in time.

[Unknown Attendee]

My name is Mattia, I'm from Bloomberg News. I have 2 questions regarding the drug price in Japan. Once approval is granted and then that will be covered by reimbursement. And when you discuss the reimbursement in the United States, Eisai has published various studies in terms of the economic benefits. But for Japan, -- how you are going to develop the discussion about the drug pricing in Japan. Could you please explain how you are going to promote the discussion on the pricing in Japan .

[Unknown Executive]

I am in charge of drug pricing. My name is [ Akana ]. I'd like to respond regarding the drug pricing in Japan, which is different from U.S. And there are rules available for the drug pricing. And based upon that, MHLW will determine the pricing. But on the other hand, similarly in the United States, this Lecanemab is expected to bring about a large impact on the society, not only the medical care fee, but also the long-term care fees. And like in the United States, based upon the simulation model in Japan as well, we have published in papers, a peer reviewed journal and in [indiscernible] in June issue, this paper has been published in Japan. And the policymakers and stakeholders with them, we are making a very transparent discussion based upon such publication. Now the -- we are at the turning point in drug pricing system in Japan. Cost accumulation method has been made -- or similar drug comparison method has been used in Japan. But this kind of innovative drug pricing, it's not compatible with such a conventional method of drug pricing. So how to evaluate the innovative drugs is now being discussed. That is included in the basic policies and the fiscal and economic management of the government of Japan. So we'd like to consider how to proceed with such a discussion going forward based upon the developments.

Another question is for Mr. Naito. And as of August 1 of this year, the congratulations on being appointed as Global AD Officer. So what is your view and your aspiration as global AD officer going forward? Could you please give us your take?

[Keisuke Naito, executive]

Thank you for your question. I think I have mentioned by feeling in the last slide of the slide deck, LEQEMBI can be new AD approach or ADDMT disease-modifying therapy. With this, whether or not we are able to cultivate and develop market for this. And I believe that this will determine the path going forward. And in the area of ADDMT -- coexistence or inclusive society's definition is expected to further expand. That means that at earlier stages, a patient will find the cognitive function. And then by knowing that there will be wider options available. By knowing such signs earlier than ever. But there hasn't been easily available options for patients.

But going forward, LEQEMBI other ADDMT categories to be established, there will be a more significant significance of knowing symptoms and signs earlier -- but regarding this tracker can be as well as the category of ADDMT for all patients with dementia we are not targeting all the entire patients of dementia. And if you ask me whether we are not targeting those patients who are not covered by this category of AD DMT. And then inclusive also the solution beyond the drugs. That's why I use these terms to cover those patients as well.

So now we are not just sticking to the drug, but also ecosystem and markets which are not bound to the drugs should be developed going forward. As you asked in your question, in the United States, there was the event of getting full approval, which has triggered various actions of many different stakeholders. But on the contrary, there is a high barrier to reach that stage so far in the United States, -- we have had the teams working on those stages and now transitioning to commercial stage like in Japan and China or Europe markets, we will go through similar stages that we have done. So in the United States, therefore, globally, we needed to secure a good operation in Japan. I believe that there is a reasonable significance in doing so in Japan. Maybe my answer is not organized well, but that is what I can say now.

[Operator]

We would now like to take questions from participants for participating for [indiscernible]. [Operator Instructions] [indiscernible] Asset Management.

[Unknown Analyst]

I have a question regarding HER2 ADC. There were earlier responses, and this is for clarification. Ultimately, I believe that you would like to take on the challenge of making your drug first in line. But I think you are starting from a niche area where others are not targeting or are you going to target from the very beginning in a major way, first line?

[Takashi Owa, executive]

HER2 area is seeing a very fierce competition, which line to start with? Well, IND was submitted in the U.S. last week. And without a bias, we will be collecting data under the initiative of Eisai and HER2 antibody non-responders, refractive patients, there are various patients who will be entering into our studies. We will be taking a very good look at that data. And based on the data, if a data suggests that we can enter in earlier lines, that will be the direction. And if our data suggests that, that is difficult, we will pursue later lines or we will target where our BB 1701 is effective.

[Unknown Analyst]

So we would like to take a very sure certain approach -- just to make sure, in Merch Phase II, you are able to have a patient pool so that you can run this sub-analysis?

[Takashi Owa, executive]

Yes, that is correct.

[Unknown Analyst]

[indiscernible] Because I am allowed to ask one question. PET reimbursement of coverage by CMS for Medicare in the United States. CMS in NCS MCD, their policy is going to be -- I think that they made a proposal to do so. But before Abolishing [indiscernible] and PET reimbursement will not be become available by [indiscernible] care. And if that will happen and then how long do we have to wait? And in the end, PET for CSF, the usual clinical practice is going to be the ratio or mix between the CSF and [indiscernible]. If there was no problem, care reimbursement.

[Hideki Toyosaki, executive]

Thank you for your question. My name is Toyosaki. First, CMS on July '17 has announced the policy -- regarding the relation to the imbursement covering the mild, there has been a long [indiscernible]. And on the 6th of July, since the LEQEMBI was fully approved and then about 10 days after that, we announced the policy change. And I believe that we take this as a very positive move. And as SVP and ADUHELM earlier and also I explained this earlier, currently, the patients are being treated, mainly after getting the definitive diagnosis of amyloid positivity through CSF tests. But on the other hand, if there is if there is no more limitation of the coverage by the insurance. And then through [indiscernible], the ratio patient who would be given the definitive diagnosis of Amyloid -- will be almost equivalent or comparable to that of the CSF.

And now most of the things are being listed based upon CSF. And once the access to amyloid PET is improved. And also the time to get access to amyloid PET shortened and then there LEQEMBI, access to LEQEMBI will be further accelerated. As regards to process, we are not able to give you any definitive comment in usual capacities.

In July, the policy to abolish current [indiscernible] was announced, and there is a 30-day public comment period. And after that, there will be about 60 days to make a decision after getting public comments. So probably in fall this year, there will be a final decision to be announced. That is our expectation. Thank you for your question.

[Unknown Analyst]

Well, Lenvima and China, I had a question, but actually I want to ask you about the performance. In the first quarter, revenue increased 7% and operating profit increased by 3.5 fold. Page 3, according to the [indiscernible] LEQEMBI expenses and [indiscernible] were incurred. But in the previous term, [indiscernible] access was incurred, which was JPY 6.2 billion, 1/3 of the increase in profit is due to normal incurrence of other expense. There is a high lab effect. -- advisory committee was held in June, July, so expenses are still not being incurred. Is that the case? Or PET and genetic tests are necessary. So are you taking it slow to expand your sales and marketing efforts earlier ADUHELM was led by Biogen, but LEQEMBI is led by Eisai. Is that also affecting the level of expense? Or is it because it is in the first quarter that you are not seeing a very large expense, is there going to be larger expenses for LEQEMBI in the second and third quarters and awards?

[Mitsuru Shomon, executive]

This is Shomon speaking. As you rightly mentioned, going forward, we will be accelerating spending in LEQEMBI expenses related to LEQEMBI will become larger. That is our expectation. And that is why we have not changed our full year forecast.

[Unknown Analyst]

LEQEMBI and ADUHELM, I believe are targeted of the same physicians and same target patients, you have suspended ADUHELM in the infrastructure resources that you had before. Can you make an effective use of that?

Without LEQEMBI, you expect greater expenses in the second and the third quarter. Last time with ADUHELM, you have built infrastructure. And since the targeted physicians are the same, can you make use of the existing infrastructure so you do not have to incur much cost?

[Hideki Toyosaki, executive]

First, regarding LEQEMBI, Eisai is leading the commercialization efforts. That is how we are carrying out activities and sales is on in information is provided. Education is provided. These channels are also important. But in addition, we also have various different communication channels, including what we call omnichannel to provide education and communication to the physicians. I would also like to improve awareness of the disease.

I would like to add, of course, it is not that there is nothing that can be made use of from the past infrastructure. For example, IDN for aducanumab, for example, we have infrastructure that we can use for IDN for legal, we do not have such infrastructure. And so looking at various indicators, we will have to rebuild our infrastructure once again. That was my additional comment. Thank you.

[Operator]

Okay. This might be the last question. From Morgan Stanley, Mr. Muraoka.

[Shinichiro Muraoka, analyst]

This is Shinichiro Muraoka of Morgan Stanley speaking. Thank you very much for clarification and a little bit of request for clarification -- for Q&A, a number of vials and increased by 4x and the number of patients increased by a little over 5x compared to access approval. And in 3 or 4 weeks in by, how the 4x or 5x increase have been made achieved. So because the duration of that increase was not clear. Could you please clarify that?

[Hideki Toyosaki, executive]

For your point, on July 7, full approval was obtained up until the -- recently, the number of vials shift and also number of patients treated with the CMB and during the [Technical Difficulty] accelerated approval period and that these numbers have increased by 4 or 5x. So compared to the average during the 6 months under accelerated approval and also the days of the -- the average during the -- after the full approval when compared and apple-to-apple comparison, what I understood.

[Shinichiro Muraoka, analyst]

And another question is related to revenue for LEQEMBI. From the next presentation onwards, because full approval has been already granted, could you please specify the numbers ?

[Hideki Toyosaki, executive]

According to explanation pet diagnosis may become available from October onwards. So it may not be making a full contribution to the revenue this year, but we would like to ask you to specify the numbers for next briefing session onward.

[Operator]

With this, I would like to conclude financial briefing session today. Thank you very much for taking time of your busy schedule to participate.

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