Eisai Co Ltd

TSE:4523

Earnings Call Analysis

Eisai Q1 FY2024 Revenue Updates Driven by 3 Key Drugs

Eisai's first quarter FY 2024 revenue reached JPY 189 billion, down 4% from last year, mainly due to a one-time income in the prior year. The pharmaceutical segment generated JPY 186.6 billion, up 3%, driven by strong performance of Lenvima, Dayvigo, and LEQEMBI. LEQEMBI's quarterly global revenue doubled from JPY 2.8 billion to JPY 6.3 billion. The company maintained its fiscal 2024 forecast, emphasizing sustained investment in LEQEMBI. Eisai focused on expanding LEQEMBI’s approval and market presence globally, despite regulatory challenges in Europe.

A Strong Start to the Fiscal Year

Eisai Company Limited reported a solid performance for the first quarter of fiscal 2024. Revenue reached JPY 189 billion, although this was slightly down to 96% of the previous year. The slight dip was primarily due to the impact of non-recurring income recorded in the prior year. However, the pharmaceutical business, the core of Eisai, saw a 3% increase in revenue reaching JPY 186.6 billion, driven by the strong performance of key drugs Lenvima, Dayvigo, and LEQEMBI.

Profitability and Investment in Key Products

Despite proactive investments in the growth of key drugs like LEQEMBI, Eisai's profitability remained strong. The cost of sales improved by 1.3 percentage points due to a better product mix, resulting in a gross profit of JPY 149.3 billion, which is 98% of the previous couple of years. The operating profit was JPY 13.4 billion, although down by 52% from the previous year due to the absence of one-time income, it was in line with strategic forecasts. The company also recorded a net profit of JPY 11.5 billion, representing 55% of the previous year's profit, again reflecting strategic spending and investments.

Growth of Key Drugs

Eisai's growth was majorly supported by the performance of its flagship products. Lenvima’s revenue grew by 18% year-on-year, Dayvigo increased by 29%, and LEQEMBI recorded an impressive growth of 2.2 times from the previous quarter. These products significantly offset the revenue loss from the termination of the Humira marketing partnership in Japan.

Global Expansion and Regulatory Progress of LEQEMBI

LEQEMBI, Eisai’s promising Alzheimer’s treatment, showed remarkable progress globally. It gained approvals in several countries, including South Korea, Hong Kong, and Israel, adding to previous approvals in the US, Japan, and China. However, the application faced a temporary setback in Europe where the CHMP adopted a negative opinion due to a perceived imbalance in benefit-risk analysis, but Eisai remains confident about overturning this decision upon reexamination, supported by robust Phase 3 Clarity AD study results.

Detailed Performance Insights

In the US, prescriptions for LEQEMBI have expanded significantly, with the number of medical institutions ordering the drug increasing by 40% and sales growing by 1.7 times compared to the previous quarter. In Japan, LEQEMBI’s revenue increased fivefold from the previous quarter, showing rapid adoption across 500 facilities. Similarly, China saw LEQEMBI being adopted by 148 hospitals across 57 cities since its June launch.

Outlook and Strategic Directions

For the fiscal year 2024, Eisai plans to maintain its strategic focus on key drivers like LEQEMBI, Lenvima, and Dayvigo. The company anticipates continued revenue growth and sustained profitability while ensuring careful cost control. Investments will be directed towards enhancing the corporate value through strategic innovations and market expansions.

Future Development and Evidence

Eisai’s commitment to LEQEMBI is evident from its long-term development strategies. Evidence presented at the AAIC 2024 highlighted LEQEMBI’s efficacy and safety over a 36-month period, showcasing its potential in early Alzheimer’s treatment. Eisai plans further updates and anticipates key events, including possible U.S. approval of IV maintenance treatment and the completion of patient enrollment for the AHEAD 3-45 study targeting preclinical AD.

Earnings Call Transcript 2025-Q1

[Operator]

[Interpreted] Thank you very much for taking your time to attend the financial results presentation meeting of Eisai Company Limited. It is now time. We would like to begin financial results presentation for the first quarter of fiscal 2024. This is held in a hybrid format with attendees in person in this hall and also attendees who are attending virtually, please find our financial report and presentation materials.

For those of you who are attending in person, those of you who are viewing online, please check these materials from Eisai's website. I would now like to introduce the presenters today: Representative Corporate Officer, COO, Keisuke Naito and CFO, Mitsuru Shomon. Mr. Shomon. CFO, please start.

[Mitsuru Shomon, executive]

[Interpreted] I will now explain our consolidated financial results for the first quarter of FY 2024. In the first quarter of FY '24, despite the continued proactive investment in the growth LEQEMBI, both revenue and profit increased in the pharmaceutical business, and both revenue and profit were in line with the business plan. And we could make a good start relative to the forecast for the fiscal year.

First, revenue was JPY 189 billion, down to 96% of the previous year due to the impact of the onetime income recorded in the previous year. Below, you will find that revenue from pharmaceutical business, which is our organic business was JPY 186.6 billion, up 3% from a year earlier due to the growth of what we call 3 Ls, Lenvima, Dayvigo, whose generic name is lemborexant and LEQEMBI. Cost of sales JPY 39.8 billion, accounting for 21% of revenue, down 1.3 percentage points from the previous year due to an improved product mix.

As a result, gross profit was JPY 149.3 billion at 98% of the previous year's level. R&D expenses were JPY 41.7 billion, up 1% over the previous year. SG&A expenses including share profit of Lenvima, JPY 38.4 billion, paid to Merck were JPY 99.5 billion at 116% of the previous year's level. Other income was JPY 5.4 billion. As a result, operating profit was JPY 13.4 billion at 52% of the previous year's level, and the profit for the period was JPY 11.5 billion, 55% of the previous year. But as I mentioned earlier, these were in line with the business plan, and we could make a good start for the fiscal year relative to the forecast.

Next slide. This shows the breakdown of revenue migration. As shown at the top left, revenue for the first quarter FY '23 was JPY 196.9 billion in the first quarter of FY '24, and the pharmaceutical business Lenvima was up JPY 12.8 billion or 18% from a year-on-year, Dayvigo increased JPY 2.7 billion or up 29% year-on-year. And in addition LEQEMBI grew JPY 6.2 billion year-on-year and by 2.2x from the last quarter.

These 3 Ls above the growth of the pharmaceutical drove the growth of the pharmaceutical business, offsetting decreasing factors such as terminating of Humira marketing partnership in Japan. In June last year, which is included in the bar above 4 products other than 3Ls, resulting in an increase of JPY 4.8 billion in revenue. On the other hand, as shown in the blue box at the bottom, due to the impact of onetime income of JPY 12.3 billion from the transfer of all future economic rights of elacestrant recording in the previous year. Revenue from other business decreased by JPY 12.7 billion, resulting in revenue by JPY 189 billion for the first quarter of '24 to 96% of the previous year's level.

This slide shows the breakdown of operating profit migration. As for operating profit, as shown in the second lowest blue box, a portion of the deposits Eisai previously received at entering into the global strategic collaboration for MORAb-202 JPY 4.8 billion was recorded. This was from BMS following the end of the collaboration, which was JPY 4.8 billion. This was booked last year. However, as stated in line below. Revenue from onetime payment last year had a major impact. As a result, it was down by JPY 12.6 billion to JPY 13.4 billion or a decline of 52% year-on-year. Despite the decline, thanks to the growth of 3Ls, we were able to proactively grow investment in LEQEMBI at the same time as increased segment profit of pharmaceutical business.

Fiscal '24 consolidated financial forecast, which remains unchanged since May disclosure, we will continue to focus on our efforts on 3Ls, including LEQEMBI and maintain financial discipline to control costs and expect growth of both revenue and profit without falling in to short term from mid- to long-term perspective, we will continue to proactively spend on LEQEMBI to sustain the enhancement of corporate value.

[Keisuke Naito, executive]

[Interpreted] Now let me talk about the progress of LEQEMBI. First, let me talk about the regulatory update and rapid expansion in launched countries. Next, here is the global regulatory update. I will report on the status. And the regulatory -- so I will report on the status of applications for maintenance treatment and subcutaneous relations which are important life cycle management issues and the status of submissions in countries and regions.

The regulatory processes of IV maintenance treatment and SC-AI maintenance treatment are all progressing steadily. In addition to the U.S., Japan and China, LEQEMBI has been also approved in South Korea, Hong Kong, and Israel and we will continue to expand in number of countries where it is approved.

We will request a reexamination of the CHMP opinion for approval in Europe. Within 15 days after receipt of CHMP opinion, the reexamination will be conducted with new laboratories and new members. I will explain in more details in the next slide. For the European submission for approval on July 26, the CHMP adopted a negative opinion on the Marketing Authorization Approval after considering the balance of benefits and risks.

Let me express the company's position on this. The protocol and statistical analytical method for the Phase 3 Clarity AD were determined in advance in consultation with global health authorities, including the EMA, the upper body of the CHMP and the endpoints were determined as such. In this study, lecanemab achieved all its primary endpoint and all key secondary endpoints all of which had been consulted on in advance, demonstrating statistical significant results. However, such an opinion was adopted, which I would like to reiterate.

For benefits, these efficacies have been sustained up to for a long-term of 36 months as presented at AAIC 2024, Alzheimer's Association International Conference recently held even further promoting Clarity AD results. Even further supporting Clarity AD results. On the risk side, data also confirmed that the incidence of ARIA, our main ADR was very low at 6 months of treatment. And in most cases were asymptomatic. The incidence of ARIA in actual clinical setting is consistent with clinical trials and is well managed in accordance with the guidelines set by regulatory authorities. So far, for both risks and benefits, we are confident in Clarity AD results.

Therefore, we will seek reexamination of this opinion. In order to provide this treatment to patients with progressive and fatal AD, as soon as possible, we will work closely with the CHMP to seek early approval in Europe.

Next slide, please. Here, I would like to present actual global results for LEQEMBI. The quarterly global revenue was JPY 6.3 billion Increased by 2.2-fold from JPY 2.8 billion in the previous quarter. This growth was due to that. The U.S. and Japan entered in prescription expansion phase while we started selling in China from the last week of June. It is progressing in line with the business plan toward achieving fiscal year 2024 revenue forecast.

Next slide, please. Here, let me show you the situation in the United States as prescriptions expand, the number of medical institutions ordering LEQEMBI increased by approximately 40% compared to the previous quarter. The average number of orders per medical institution also increased by approximately 30%, and the sales of vials to medical institutions increased by approximately 1.7x compared to the previous quarter.

Monthly revenue also continued to grow, reaching JPY 2.1 billion for the month of June, increasing the number of NAS, who provide information on the valuable LEQEMBI as a specialist in the neurological field, was increased in July, and the commercial structure in the U.S. now has approximately 450 positions, which include Biogen's personnel. We are aiming at further expansion.

We will leverage the latest data presented at AAIC, which we released recently and will be discussed in a moment to feature the potential benefits of patients through early initiation treatment and continued treatment of the plaque removal. The incident of ARIA in actual clinical setting seems to be within the range in the U.S. Package Insert. We will aim to increase the value through wealth of data and evidence, which only LEQEMBI has and established strong position as the first drug of first choice.

Next, please. In Japan number of patients receiving the treatment is rapidly increasing. Revenue increased to fivefold from the previous quarter. Sales in July also grew at an increasing pace. Of the 650 facilities that have completed pathway establishment, approximately 500 have initiated LEQEMBI administration. About 800 physicians have started prescribing LEQEMBI so far in fiscal year '24, all of which show that progress has been steady.

In addition, the number of physicians who have administered LEQEMBI to 10 or more patients has increased to 70, and as shown in the figure, the sales to medical institutions have been steadily increasing. The incidence of ARIA remained within the range indicated in packaging insert and the dropout rate also remained lower than expected. And Eisai is the home market in Japan, with the efforts made by the entire company and the passionate commitment of the medical professionals, LEQEMBI is expanding ahead of the business plan.

Next slide, please. Here, in China, after LEQEMBI was launched on June 27, it has already been adopted by 148 hospitals in 57 cities across the country. First quarter result was JPY 0.2 billion, and we started the contribution to patients mainly in private market.

One of the characteristics of this region is that in addition to PET and CSF, we are introducing a pathway model, utilizing new technologies such as BBBM, online platform, industry collaboration. On the online platform managed jointly by Eisai and Jingdong Health, a Chinese company, were approximately 300,000 general consumers and about 1,350 AD specialists are registered.

Through this platform, information regarding dementia, specialists and infusion centers is provided and also through reminders of MRI test for ARIA monitoring through all of which an ecosystem where it is easier to participate in and continued treatment is being established. The number of people with early AD in FY '24 is estimated to be 70 million. Contribution to patients has been rapidly increasing in China, which may become the second largest market after the U.S. In the medium to long-term. Launch has been started steadily.

Next, please. From here, I would like to discuss our efforts to develop LEQEMBI. We have spent more than 20 years to develop LEQEMBI and during 19months after its launch. From OLE study and various sub-studies, we have accumulated robust findings in this area, both in quality and quantity. Based on that experience, we believe that LEQEMBI's unique value has been demonstrated once again with even more data namely early start of treatment and continuation of treatment after plague removal maximize efficacy. Secondly, even in long-term treatment, the high level of safety is shown and thirdly suggested effect on tau cascade.

I would now like to turn to the latest updates from AAIC, the International Academic Conference held the other day to describe these unique points. First, these are the results from 36 months of long-term treatment with LEQEMBI obtained from Clarity AD OLE study. The top green line shows the change in CDR-SB in the group treated with lecanemab for 36 months. .

The bottom pink line is the change in CDR-SB in ADNI cohort set as the placebo arm. OLE study after the initial 18 months of core study does not have a placebo arm. Thus ADNI cohort data is used after 18 months. The 2 lines representing the difference in CDR-SB continue to separate from month 18 to month 36. This demonstrates the meaningfulness of continued treatment based on clinical symptoms.

In OLE studies, study, even in the late start group that started to receive lecanemab, only after the start of OLE, there is a clear difference between the placebo. However, in comparison to the difference in clinical symptoms between early start group and placebo, early start shows effects exceeding that seen in late start group. This data can also be considered to suggest the importance of early start of treatment.

Lecanemab is the only drug that includes early MCI population who have small accumulation of tau or low tau group and also subjects who do not have tau accumulation or no tau group in its studies. This slide shows data suggesting efficacy of long-term treatment in no and low tau groups. In no or low tau group patients, after 36 months of administration, 59% as shown here, right side or left side. 59% was confirmed to have maintained CDR-SB.

Moreover, on this side, in 51% of the subject, signs of improvement were confirmed. Looking at other indicators such as ADAS-Cog14 and ADCS-MCI-ADL, similar results showing maintenance or improvement in CDR-SB were obtained. As shown here, in no tau and low tau groups, after 36 months of continuous treatment, consistent maintenance and improvement of "effects" were confirmed. These are also important data showing efficacy of early start of treatment and continuation of treatment.

This data show the importance of treatment continuation indicated by the plasma biomarkers during the gap period. After the core study, there was a gap period before the OLE. During this period, there is no treatment and clinical symptom indicator, CDR-SB is down to deteriorate, similar to starting placebo group.

Left top graph shows that during the 2-year period without treatment, plasma biomarker Aß42/40 ratio suggested increasing trend of amyloid in the brain, but after the treatment was resumed during OLE, the trend was reversed and turned to decline.

Similarly, plasma AD biomarker such as p-Tau181 at right top, GFAB at left bottom and p-tau217 at right bottom also suggests reaccumulation trend during the gap period, confirming that the AD pathology started to progress once again. As shown here, AD pathology pathophysiology related plasma biomarkers are reaccumulating consistently when the treatment is stopped and AD-related pathological process starts to progress again.

On the other hand, after the gap period when lecanemab treatment is resumed, it has been confirmed that biomarker show declining trend, suggesting the importance of not stopping but continuing LEQEMBI treatment.

This is data obtained from Clarity AD OLE showing safety in long-term treatment. As for the incidence of adverse events in Clarity AD OLE, in exposure-adjusted ratio, it was equal to or lower than the core study and no clear increase in adverse events was observed with long-term administration. So no new safety findings were observed. This indicates that in long-term administration as well, safety of lecanemab is high.

I would like to once again touch upon the unique MOA of lecanemab centering around protofibrils. Lecanemab removes the plaques and at the same time, selectively acts on protofibrils considered to be most neurotoxic and protect the neural cell functions. This has been evaluated before and has been reported before. Furthermore, it is beginning to be understood that the protofibril can be the trigger of the tau cascade in the downstream.

And suppression of this leads to suppression of tau pathology. Tau cascade starts with tau phosphorylation, causing neurofibrillary targets. And lecanemab administration led to results suppressing the progression of tau pathology observed with tau pathology specific MTBR 243 increase is also delayed, which suggests the suppression of tau pathology and therefore, long-term clinical efficacy may be accelerated. And once again, what I would like to reiterate is that protofibril may have clinical effect on tau cascade. Lecanemab, unique MOA and deep insights on clinical works will be presented with more detailed data at the key event CTAD in autumn this year.

Lastly, I would like to show the key events scheduled this fiscal year. In the second quarter, data was presented at AAIC. As I have discussed thus far, we believe that we were able to show data that will maximize the value of LEQEMBI in the third quarter at CTAD, plaque and protofibril contributed to clinical effect and real-world data related to long-term treatment for over 5 years are expected to be presented.

In the fourth quarter, we expect approval of IV maintenance treatment in the U.S., and we would like to further appeal the long-term treatment benefits for the patients, in AHEAD 3-45 study targeting preclinical AD patients, enrollment of 1,400 patients is expected to be completed before the end of this fiscal year. Every quarter in this fiscal year through these key events, we will continue to create strong momentum to maximize the value of LEQEMBI. This is my final slide. As I have presented so far, LEQEMBI is unique and that it has dual action MOA and has advantage by starting treatment early and by treating over long term and the advantage of long-term safety.

These characteristics are demonstrated by very robust data. We will continue to demonstrate more evidence that will strengthen these characteristics. Based on this, we are very confident that LEQEMBI will continue to be the first-line therapy for early AD.

During the 20 years of development of LEQEMBI and 19 months after its launch, we have been collaborating with and building solid relationships, based on trust with the patients, their families, academia, health care providers in order to open a new door to AD treatment.

AD is progressive and in principle, irreversible disease. And as I discussed today, LEQEMBI treatment can be expected to be more effective with earlier treatment and long-term continuation of treatment according to data. With that in mind, our mission is to deliver LEQEMBI to the patients as soon as possible, and we will do our utmost towards that end, and I ask you for your continuous support. With that, I would like to conclude my presentation. Thank you.

[Operator]

[Interpreted] [Operator Instructions] The person in the first row, please?

[Seiji Wakao, analyst]

[Interpreted] My name is Seiji Wakao from JPMorgan. I would like to ask about the LEQEMBI progress during the first quarter. You mentioned that the growth has been made in a steady manner, but the most important thing is for you to achieve this fiscal year's target. So let me ask a few question. .

Regarding -- looking at the progress made during the first quarter, my impression is that in Japan and China, it is steadily growing, but in China starting from quarter 2, the sales started to be posted and which was quite surprising to me. And Americas, although it is still growing, but not as in line with our expectation, particularly the current status in the U.S.

Is it really progressing in line with the business plan of the company? If it is the case, at some point in the future, shifting from the linear growth or there needs to be further accelerated growth. So when do you expect such a change or inflection point is going to be made? So if you are seeing earlier timing, please let us know.

[Unknown Executive]

[Interpreted] For the fiscal year, global results progress will be explained by Mr. Naito-san, and regarding the current status in the U.S., Haruna-san is going to explain.

[Keisuke Naito, executive]

[Interpreted] Thank you for your question. As I said in the presentation, a global perspective, we believe that the LEQEMBI sales are steadily growing and progress has been good. And also the growth rate is also being accelerated. That is how we take -- and that is also represented in the reimbursement studies, and we believe that this upward trend will continue. And I would like to ask Haruna-san to supplement my response.

[Katsuya Haruna, executive]

[Interpreted] I am in charge of LEQEMBI in the United States. My name is Haruna. Regarding your question about the status of the business during the first quarter. In the United States as well, the progress has been steadily made in line with our plan and also the widths of the prescription and also depths of the prescription are to be expanded, which are very important for progress in LEQEMBI.

First, regarding the widths of the prescription. The prescribers and the number of medical institutions where LEQEMBI is prescribed is expanding and it has been steady growing over the plan. And particularly about 40% of the new prescription recorded during the first quarter. Therefore, the recent start of the prescription is expanding. And directly appealing to the patients and the families in order to encourage them to seek the medical consultation, DTC or you still can be is conducted in order to expand the number of patients who will seek medical consultation.

Therefore, we are starting to see the effects of digital marketing and also the number of medical institutions with over 50 prescriptions has increased by 3x from the previous quarter and about out of which 70% of the medical institutions have become the largest center for a large number of prescriptions. For these Mr. Naito explained earlier, as the specialist of the neurology area, NAS, who is providing information on the LEQEMBI, also for the neurologists at the medical institutions, we are increasing activities, and we are trying to establish more than 100 medical institutions as large prescribing institutions.

And regarding the achievement of the target for this fiscal year, we are planning to see the big waves for each quarter. And during the second quarter, as we have explained this today, the AAIC 36-month showing the long-term continued treatment as well as the early start of the initiation have shown the benefit for the LEQEMBI data was presented at the AAIC and also particularly from the long-term perspective, we needed to consider the treatment for the patient. We have got that feedback from the AAIC.

And during the third quarter, the new biomarker dual-acting MoA, how it is important will be presented during the third quarter. For the fourth quarter, the biweekly administration will be reduced in terms of frequency to monthly administration, which will increase the convenience of the patients. And there will be the indication -- new indication for the IV will be approved during the fourth quarter. Therefore, it will enhance the convenience of the patients.

And we are establishing the pathway and also we are closely working with health care providers and CMS and infusion center up here and advocacy groups, and there are many stakeholders with whom we are discussing, consulting, and we believe that we have been able to establish a very strong relationship with them. So based upon such latest data and experience and expansion of the indication, utilizing such great advantages, we are going to accelerate the expansion of the widths and the depths of the prescription going forward.

[Seiji Wakao, analyst]

[Interpreted] On a monthly basis, as you have been showing us now, on a monthly basis, this linear expansion of growth will be made into an exponentially accelerating growth trajectory. We have expectation for that. And the second question is about the status in your -- these 36 months are going to be submitted, including this 36-month administration data, this CHMP's negative opinion that has been given. Do you think that sufficient data do you hold in order to reverse this negative opinion of CHMP?

[Unknown Executive]

[Interpreted] With this question, I would like to call Dr. Lynn Kramer to respond.

[Lynn D. Kramer, executive]

Yes. Thank you very much. Let me discuss this CHMP recommendation. On July 26, the EMA announced that it has recommended the refusal of marketing authorization for LEQEMBI after considering the balance of benefits and risk as Keisuke Naito mentioned.

As I understand that the ground for this refusal, however, is primarily safety. However, we would like to emphasize the incidence of ARIA in actual clinical settings is not higher than in the clinical trials and is being well managed in accordance with the guidelines set by each regulatory agency where it is commercialized. The protocol for the Clarity AD Phase III study was determined in advance with health authorities, as was mentioned.

And the results in the trial were evaluated using the valuation criteria and analytic methods that were determined in advance. In this trial, LEQEMBI achieved its primary and all secondary endpoints demonstrated highly statistically significant results. Despite this, of course, we are disappointed that CHMP adopted a negative opinion.

The efficacy of LEQEMBI have been sustained up to 36 months and the long-term safety has also been established as shown in results at the AAIC in 2024. In order to provide this treatment to European patients as soon as possible for the treatment of this progressive and fatal disease, we will seek reexamination of this opinion and we'll work closely with the CHMP to seek early approval.

LEQEMBI has been approved in 6 countries and several others we hope shortly will approve and it has been proven that the benefits of LEQEMBI outweigh the risk in each of these countries. We firmly believe that as the best equipped and single treatment for this progressive and fatal disease, it will be made available to patients in the EU without delay.

AD communities such as patient organizations are spontaneously writing letters to EMA, many, many letters. These activities include AD experts, patients and key opinion leaders from various parts of Europe, many parts. The European Commission regulations allow an applicant to request a reexamination of a CHMP opinion.

Reexamination will be requested within 15 days after receipt of the official CHMP opinion in writing. The company will then submit the detailed grounds for requesting a reexamination within 60 days after receipt of this opinion. New rapporteur will be appointed for the reexamination and then EMA will have 60 days to review Eisai's reexamination documentation. We understand that the results of this reexamination will be issued within this calendar year. In order to provide this treatment to patients in the EU without leaving anyone behind for the treatment of the progressive and fatal AD we kind of remain confident in our robust data, and we will work closely with the CHMP to receive early approval. Thank you.

[Seiji Wakao, analyst]

[Interpreted] ApoE4 homozygotes, would you please give us any comments on that?

[Lynn D. Kramer, executive]

We're unable to comment specifically on the regulatory aspects around ApoE, homozygotes. However, we will work closely with the EMA with the goal of trying to provide access to LEQEMBI for as many patients as possible. That's a question that we would have to discuss further with EMA.

[Unknown Executive]

[Interpreted] Would there be any other questions? Yes. audience members seated in the third row, please.

[Kazuaki Hashiguchi, analyst]

[Interpreted] I'm Hashiguchi from Daiwa Securities. I have two questions. First is about LEQEMBI. Current status of LEQEMBI. According to your presentation about Japan, the dropout was lower than expected. That was mentioned during the presentation. You mentioned dropout only due to ARIA or dropout due to all reasons? And specifically, what was the expected level of dropout? And what is the current level of dropout? I believe that after the start of the actual treatment, it has not been -- much time has not elapsed yet. But that is the question.

And this was on Japan. But if you have similar information regarding the U.S., could you share that information?

[Unknown Executive]

[Interpreted] Yusa-san will respond. And then regarding the U.S. Haruna-san will respond.

[Unknown Executive]

[Interpreted] Mr. Hashiguchi, thank you for your question. I am responsible for LEQEMBI commercial, I'm Yusa. I will respond. First, regarding dropout and the specifics of the patients who dropped out. It is not limited to the reason of ARIA for dropout, all side effects and all circumstances are taken into view and dropout ratio was much lower than the percentage that we initially expected.

But as you have rightly mentioned, it has been only quite recent, that administration in actual clinical setting has started. But in the first 6 months, according to various drug data, there is a dropout ratio data for the initial 6 months and in comparison to these data, dropout ratio can be set to be lower. About the U.S. situation, Haruna-san will respond.

[Katsuya Haruna, executive]

[Interpreted] This is Haruna responsible for the United States. As Yusa-san reported about the situation in Japan, similarly in the United States, including ARIA for all side effects, adverse events, so far, the incidents is about less than half of the incidents in Clarity AD and similar to what is described on the package insert. And in AAIC, some real-world data were presented.

And if I may cite one example, Columbia University, 120 patients. And based on the experience of administering LEQEMBI to 120 patients report was presented. According to this presentation, ARIA incidents and the continuation of administration in these perspectives, benefits exceeding clinical studies were achieved. And therefore, we believe that progress has been smooth in terms of long-term treatment.

[Kazuaki Hashiguchi, analyst]

[Interpreted] Low incidence of adverse events. What is your analysis of the reasons as to why adverse events incidence is lower? Is it because of different patient background between clinical studies and real world? Or is it because of a difference in monitoring of AEs during the clinical trials and the real world?

[Unknown Executive]

[Interpreted] That question will be addressed by Owa-san.

[Takashi Owa, executive]

[Interpreted] Thank you. Mr. Hashiguchi for your question. This is Owa speaking. I am Chief Scientific Officer. Generally speaking, what the cause is cannot be concluded without a detailed analysis. And point raised by Hashiguchi-san may be a possibility, but which is more important, we will have to observe more over longer term of administration, after real-world data is accumulated more to specify cause, potential cause will be premature. But we recognize the point raised by Hashiguchi-san is an important point.

[Kazuaki Hashiguchi, analyst]

[Interpreted] Second question about development strategy of MORAb-202 going forward. Eisai announced that Eisai will continue to develop MORAb-202, but you will be developing on its own. Is there any change to development strategy? Will Eisai be exploring a new partner?

[Unknown Executive]

[Interpreted] Once again, Owa-san will address that question as well.

[Takashi Owa, executive]

[Interpreted] Hashiguchi-san, thank you very much for that question. This is Owa speaking. First, with BMS, we had a very close discussion and because of the differences and strategies of development portfolio, this partnership was ended. But we believe that there is a solid value in MORAb-202. And therefore, we will continue to develop. And in doing so, what becomes important is efficacy, in the past academic presentations and papers, I think you can see that there is efficacy.

The issue is in long-term treatment, can we maintain QOL of patients, and is there going to be -- how can we control ILD? That will be a key issue, clinicaltrial.com has certain information from which you are able to understand that. We have 4 different schedules or administrations regimens. Intermittent administration or steroid coadministration, these are being explored, and we have accumulation of data recently. And based on these data, we are holding Advisory Board to consider what schedule we should follow in further development and details are being worked out right now.

And in the near future through academic presentations, we hope to present how we plan to continue development under what administration regimen in gynecological cancer, I think will continue to be the focus for this cancer since folic acid will be highly present. And clinicians' opinions will also be taken into consideration to determine our development strategy. And I believe in the near term, we will be able to discuss that in more detail. Is there any possibility of partnering I forget to respond to that question. I apologize. We have not rejected a possibility of partnership, we would like to continue to look at the additional data, and I would also like to pursue those possibilities as well.

[Unknown Executive]

[Interpreted] So the person who has raised hand through online -- excuse me, rather the person in the second row.

[Kasumi Haruta, analyst]

[Interpreted] Haruta of UBS Securities. As regards to LEQEMBI, I have a question. Lilly's Kisunla is going to be launched both in the U.S. and in Japan and after approval, how kind of response have you heard from physicians? And also frequency of dosing and efficacy and safety. And after a certain period, the donanemab dosing will be stopped? And what has been the response from the medical world? And I believe that your accounts may have given you the positive response to you. But have you ever had any response you have heard?

[Unknown Executive]

[Interpreted] For your question, Naito-san is going to respond.

[Haruo Naito, executive]

Let me share with you some assumptions. We believe that the disease of amyloid AD or Alzheimer's disease is a progressive, which will continue progressing even after plaque is removed. That is how we interpret this. So after turning the plaque into negative, and then the dosing may be considered for stopping, the criteria and also the conditions of patients, not shown by data yet for Kisunla and after participation in the AAIC, and atmosphere and also how we felt at the venue that can be shared with you by Haruna-san. Could you please report on how you felt at the conference?

[Unknown Executive]

[Interpreted] The response you felt from physicians at AAIC in the United States that will be shared with you by Haruna-san.

[Katsuya Haruna, executive]

[Interpreted] Thank you. I am in charge of LEQEMBI in the United States. My name is Haruna. Regarding the response at AAIC, that 36 long-term data was presented at the Congress for which mainly physicians recognize the importance of a long-term continued treatment and also for Alzheimer's disease. Continued treatment is very important. That was the feedback from physicians and the difference between the drugs are now compared and considered.

And what is most important, in our opinion, is we have obtained a lot of knowledge. And since the accelerated approval, we have heard from many physicians and health care providers, and we collaborated with them to establish pathways. And when it comes to this pathway, other companies are not able to use our pathway. Therefore, they need to start establishing pathways on themselves from scratch. And as far as we have heard from physicians, LEQEMBI will continue to be the drug of first choice and the value of a long-term continued treatment and significance of continued treatment are differentiating us conspicuously from the other. Thank you for your question.

[Kasumi Haruta, analyst]

[Interpreted] I understood very well. My second question is the subcutaneous maintenance treatment in the United States. I think at the previous briefing session, by October or around October, the submission will be completed. And if earliest and then the approval may come around in June next year. So let me confirm whether that is the case now. And new indication for IV and a new patients are going to be increased and when the SC maintenance is allowed and then how much of such existing or IV patients are going to be shifted to the SC administration, how much -- how big then is it?

[Unknown Executive]

[Interpreted] Dr. Lynn Kramer is going to respond to your question.

[Lynn D. Kramer, executive]

Yes. Thank you. As you know, we have already submitted the IV maintenance, and we expect approval in this fiscal year. We also submitted the subcutaneous dosing regimen for initiation of therapy in a rolling submission previously. We expect to complete that just as we said before, by the end of October. And then we expect approval in June or sooner depending on whether we have priority review or not and that will be the FDA's decision when we submit our final documentation in October. Does that answer your question?

[Kasumi Haruta, analyst]

[Interpreted] Yes. When the SC maintenance treatment is approved and among the existing patients, what -- how big the need for that SC maintenance treatment do you see?

[Unknown Executive]

[Interpreted] So regarding the needs of shifting from the existing IV to SC maintenance dosing. Haruna-san who is in-charge of U.S.A. is going to respond to the question.

[Katsuya Haruna, executive]

[Interpreted] Thank you for the question. My name is Haruna. I am in charge of LEQEMBI in the United States. First, the need for SC, I would say that there has been a great expectation at the AAIC conference, there were lots of questions and a lot of expectations in the Q&A session at the Congress meeting, when is it going to be approved? And how you are completing the submission and so forth.

Many questions were asked and IV therapy and SC therapy will both become available in the future. And in accordance with the lifestyle of patients, patients will be able to get more flexibility. So for SC administration, they may be able to administer at home, and that will give a great benefit for patients. Thank you for your question.

[Unknown Executive]

[Interpreted] Next attendee who is participating online. Yamaguchi-san from Citi, please.

[Hidemaru Yamaguchi, analyst]

[Interpreted] This is Yamaguchi from Citi. Can you hear me? .

[Unknown Executive]

[Interpreted] Yes, we can.

[Hidemaru Yamaguchi, analyst]

[Interpreted] I have one question. This is to clarify what Dr. Lynn Kramer was explaining earlier, which is about LEQEMBI in Europe. Within 15 days, response will be submitted. And I may have missed this. Within 60 days, review will be carried out, 60 days, meaning that in 2 months' time, review will be carried out. So the timing is very clear. Am I mistaken? Could you clarify that once again?

[Unknown Executive]

[Interpreted] Lynn Kramer will respond.

[Lynn D. Kramer, executive]

It actually is a 4-month period. After we received the formal letter, we have to respond in 15 days that we would like reexamination, a formal response. We will then receive the list of questions that the CHMP and EMA have, we then have 45 days to respond to those questions. And then there is a 60-day period for EMA to identify new rapporteur and for preparation and review of those materials and then there will be a new oral explanation at that point. So it's 4 months from now approximately. Is that clear?

[Hidemaru Yamaguchi, analyst]

[Interpreted] New rapporteur, meaning new reviewer?

[Lynn D. Kramer, executive]

Yes, actually 2. So in a reexamination, EMA needs to appoint new reviewers. And there are 2, 1 from one country and 1 from another country.

[Unknown Executive]

[Interpreted] Muraoka-san from Morgan Stanley.

[Shinichiro Muraoka, analyst]

[Interpreted] I am Muraoka of Morgan Stanley. For SC maintenance, schedule is clear to me, but SC induction or I mean initial treatment, SC induction therapy. Could you please share with us current status, perhaps you are doing the dose optimization. As regards to dose, 360 for maintenance and so double the 720 milligram. Maybe not because of the optimization. So what is going to be the time line? And to which direction you are heading for? And where are the current status is? Could you please respond.

[Unknown Executive]

[Interpreted] Dr. Lynn Kramer is going to respond.

[Lynn D. Kramer, executive]

Yes. We have already started the submission of the initiation dose with FDA. We have received agreement on a rolling submission, and we have submitted the CMC manufacturing component and the safety component. We were asked to do a 3-month trial, and that has already been initiated and we'll complete in the second quarter, and then we will be writing the dossier, the clinical dossier and submitting it in October. And then the FDA will review that initiation dose dossier.

[Unknown Analyst]

Lynn, could you comment on the induction initiation treatment?

[Lynn D. Kramer, executive]

That's what I'm talking about, the induction treatment. What I just described is the induction treatment. Is that clear?

[Unknown Analyst]

Lynn, you just explained about the maintenance, SC maintenance.

[Lynn D. Kramer, executive]

No, no. I just described the induction treatment. People -- there's the IV maintenance that's already been submitted and the IV of the subcutaneous induction treatment is what I'm just describing.

Think of it this way, you have to have approval of an induction before you can have an approval of a maintenance. We are submitting a dossier that includes the induction and after receiving approval of the IV maintenance, then we can have the subcutaneous maintenance approved. Is that clear? So IV maintenance, first we had IV induction, then we have submitted IV maintenance, and we are submitting subcutaneous initiation of treatment and subcutaneous maintenance.

[Unknown Analyst]

Lynn, can you check in Slide 7, IV maintenance is now under evaluation and the SC auto injector maintenance therapy is now starting the rolling submission, right?

[Lynn D. Kramer, executive]

No. The initiation dose is the new -- the IV maintenance is a component of the induction dose. So those 2 things go together. You have to have an initiation dose and then you have the maintenance dose, just like the IV.

[Shinichiro Muraoka, analyst]

[Interpreted] This is Muraoka speaking. I was listening to the translation. So I was not able to follow at all. For this particular issue, could you please once again disclose the information? Or if you could add a supplementary explanation to the disclosure material, I am also confused, therefore, that will be helpful.

[Unknown Executive]

[Interpreted] Mr. Muraoka, you were asking about SSC initiation, induction therapy. So Dr. Owa is going to supplement.

[Takashi Owa, executive]

[Interpreted] Excuse us. Perhaps the intention of your question may have been misunderstood. Could you please, once again, ask your question because we don't want to have any misunderstanding.

[Shinichiro Muraoka, analyst]

[Interpreted] SSC induction, Rolling PLA for SC maintenance is understood, but for induction, for SSC, the initial induction treatment, the time line, the development starts and what is going to be the dose for. That is something that I was not understanding. Maybe my question was not relevant question.

[Lynn D. Kramer, executive]

I'm sorry, that question is exactly the question I answered. We are already submitting and have submitted the initial portions of the dossier for subcutaneous initiation of treatment, that's induction. So that is already being evaluated by the FDA. We reported that before. So the maintenance is also part of that but you have to have the induction dose approved before you can have a maintenance dose agreed on.

[Unknown Executive]

[Interpreted] Have you understood Muraoka-san. I mean, in the maintenance submission and when getting approval for the maintenance an induction dose needs to be discussed with regulators so we have to proceed with both -- that was the response from Dr. Lynn Kramer.

[Shinichiro Muraoka, analyst]

[Interpreted] Understood. So I see then at around June next year, SC maintenance, if you get approval for that, almost at the same timing SSC initial induction to maintenance therapy approval or agreement will be obtained. So can I understand in that way?

[Unknown Executive]

[Interpreted] Yes, that will be depending on the result of the regulatory consultation. But starting from IV induction and the SC maintenance, but it will depend on the discussion with aggregators and the maintenance SC and rolling submission is being made. And then SSC induction at the same time, data will be shown. And then if FDA is convinced and then at the same time, we may be able to get approval for both, but it will really depend on the negotiation with the regulators, if you could understand that, that will be appreciated.

Next, we would like to entertain questions from the members of the media. If you have questions, please raise your hand. Yes, the audience members seated on the third row.

[Susumu Shimoyama]

[Interpreted] I'm Susumu Shimoyama, nonfiction writer. EMA letter, looking at the letter from EMA, almost all cases of ARIA in the main studies were not serious and did not involve symptoms. Some patients have serious events, including large bleeds in the brain, which required hospitalization. That is what the letter said.

In New England Journal of Medicine, Clarity AD study, adverse event table was published and Table 3, looking at Table 3, large bleeds requiring hospitalization, which does this fall under? Is this ARIA-H microhemorrhage, there were 5%, 6%. There were 5% or 0.6%. And is this what EMA points out as large bleeds requiring hospitalization. That's my first question. And I have another question.

[Unknown Executive]

[Interpreted] Owa-san will respond.

[Takashi Owa, executive]

[Interpreted] Shimoyama-san, I may have missed the important part of your question, since I'm somewhat under the weather today.

[Susumu Shimoyama]

[Interpreted] So in a nutshell, according to this EMA letter, it says ARIA is not serious, but large bleeds, cerebral large bleeds requiring hospitalizations occurred. That sentence is also included in the EMA letter. And what is this in terms of AE in Clarity AD and according to paper published in New England Journal of Medicine, about Clarity AD, there is Table 3, and there's a list of AEs in ARIA-H microhemorrhage I think, is that it involves large bleeds. And there were 5 subjects. And I'm speculating that this cerebral macrohemorrhage is what EMA is pointing out as a large bleed requiring hospitalization.

[Takashi Owa, executive]

[Interpreted] Microhemorrhage, so there are microhemorrhage and siderosis. Siderosis is deposition of iron due to bleeding, and that is detected by MRI, and microhemorrhage and/or siderosis, in 5 subjects were detected to have these. According to New England Journal of Medicine, does this require serious toxicity, requiring hospitalization. Well, the number of patients who had this was very small at 5 patients, there was also 1 similar patient having similar AE in control group. These are symptomatic, but is this a serious bleeding requiring hospitalization? I do not think so.

[Susumu Shimoyama]

[Interpreted] Did you say microhemorrhage or macrohemorrhage?

[Takashi Owa, executive]

[Interpreted] Macro is small, micro adverse events, microhemorrhage, there were 126 patients who had microhemorrhage, this was 14%. And there were 5 subjects who had macrohemorrhage.

Since it says macro, I took it to mean that it was large bleed. Cerebral hemorrhage maybe my interpretation may have been wrong Ogawa-san will supplement.

[Tomo Ogawa, executive]

[Interpreted] I'm Ogawa responsible for clinical development in Japan and Asia. So macro hemorrhage, this is cerebral hemorrhage, microhemorrhage is small hemorrhage. And the response is, as Owa-san responded, these are cerebral hemorrhages. And there may be cases similar to a case requiring hospitalization, but these 5 microhemorrhages, are they all equal to the large bleeds requiring hospitalization, as pointed out by EMA, that is not clear.

[Susumu Shimoyama]

[Interpreted] Second question, I believe that Eisai will be responding -- requesting reexamination within 15 days. And in doing so, AAIC 36 months data will that be submitted to be reviewed by CHMP or is it -- is reexamination going to be solely based on Clarity AD.

[Unknown Executive]

[Interpreted] Lynn Kramer will respond.

[Lynn D. Kramer, executive]

Yes. Thank you. Let me clarify one thing you said before. The macrohemorrhage is the same thing as a intracerebral hemorrhage greater than 1 centimeter. Those 2 things are identical, and that's what appears in the label currently.

We will be submitting no new data in the reevaluation unless requested by the EMA. So CLARITY AD and our Phase II study are the majority of information, unless EMA asks for something additional. The reason for that is that would restart and require a new submission if we send additional information from long term, for example, However, they may request it, and then we would send it in. Is that clear?

[Susumu Shimoyama]

[Interpreted] I have a third question. When I read EMA letter, and about 3 months ago, reporters reported that amongst physicians, there is a pervasive nihilism which is the biggest problem. And this was a quote of basis spurring. Not data, but there is a rejection by physicians, they're not administering. And I believe some mass media in Japan also reported in a similar way.

It would appear to me that it would be difficult to change this no matter how much data is demonstrated, this does not change. And I' m wondering why it may be a difficult issue to address. But what are your views? How do you understand this situation amongst the physicians and within journalism? There is a nihilism. And how do you plan to address this? Since I think that this is a serious question.

[Unknown Executive]

[Interpreted] Lynn Kramer will respond. Apologies. Naito-san will respond.

[Haruo Naito, executive]

[Interpreted] Thank you very much. about nihilism regarding treatment, I do understand that there were some nihilism. However, at AAIC, there was a very intense discussion. There were intense discussions. And we launched LEQEMBI, which is a new product. And when we launch a new product, I think this is the type of world that we have to overcome, prescribing physicians and patients positively talked about the significance of this drug on many occasions. And looking at the market reaction, I'm sure that such nihilism will be disappearing.

[Unknown Executive]

[Interpreted] Any other questions? The person in the fourth row, please have the floor.

[Unknown Analyst]

[Interpreted] [indiscernible] I would like to confirm with you the current status in Japan. Well, the number of patients who are on this treatment cannot be shared with us because this is based on a guess, but during the Q3 for fiscal year 2023, when you had a financial briefing, 3,500 people by the fourth quarter and also the 7,000 will be the target for this fiscal year.

So are you in line with this target or exceeding this guidance, could you please share with the current status? The sales of vials have been shown this time, but what has been the volume of shipments so far, could you please share with us?

[Unknown Executive]

[Interpreted] Yusa-san is going to respond to your question.

[Unknown Executive]

[Interpreted] Thank you for your question. I am in charge of LEQEMBI commercial side in Japan. I think you were talking about a number of patients. But regarding the specific number of patients who are on treatment, we are not able to give you the number. But I can say that we are in line with the target or rather we are ahead of the target.

[Unknown Executive]

[Interpreted] Are there additional questions? We have run out of time. Unfortunately, we would like to conclude today's earnings results presentation session. If you have further questions, please contact Investor Relations. Thank you very much once again for taking your time today.

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