Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2020-Q2

[Unknown Executive]

Thank you very much for taking your time to attend the financial results presentation for the second quarter fiscal 2019 by Eisai Co., Ltd.

Before I invite the speaker in today's presentation, I would like to ask you to check whether you have the necessary materials. Please find the deck of presentation materials that will be used today and earnings flash report. If the document is missing, please raise your hand.

Then I would like to introduce the officers in attendance, Mr. Haruo Naito, Representative Corporate Officer and CEO. Without further ado, please start the presentation.

[Haruo Naito, executive]

Now I'd like to explain the consolidated financial results for the first half of fiscal year 2019. The numbers shown here, all of them have exceeded our business plan. That's what I would like to report to you today. And revenue was JPY 299.3 billion. A little bit smaller number than that for the last fiscal year, but during the last fiscal year, LENVIMA HCC indication was approved. Therefore, milestone was received from Merck. Inclusive of that, as well as other onetime events, revenues were recorded, including those onetime events and the payments. But during the first half of this year, we didn't have such events. And Elmed Eisai is to be recognized in the first half of last year, but this has been already excluded this year and 4 global brands of Eisai have shown steady growth. Therefore, 96% of the previous year's revenue was achieved. That was the summary about the revenue for the first half.

Cost of sales ratio has declined by 1.9 percentage points. This is due to the expansion of our in-house products, which improved the product mix. And this is the evidence showing that as well. And gross profit have stayed almost flat, and R&D expenses were JPY 68 billion, which accounted for 22.7% of revenue. As I have been telling you every time we disclose numbers, for us, there were expenses borne by our partners and including those partner share is R&D expenses. The real resources invested in R&D activities exceeded JPY 100 billion, accounting for about 35% of revenue for the first half under review. Probably in the global pharma industry, we believe that we are one of the companies most committed to creating next-generation antibodies.

When it comes to SG&A expenses, which have shown increase, but this increase, we share the profit paid to Merck. So increase in the share of the profit is included here. And as a result, operating profit was JPY 32 billion, and profit for the period was JPY 27.4 billion. ROE was 8.7%, representing positive equity spread exceeding capital cost of 8%.

At the Board of Directors meeting held today, JPY 80 was resolved as the dividend for the first half and the full year, JPY 160 will be paid as full year dividend. That is our estimate for this fiscal year.

Next, breakdown of revenue migration is shown here. Due to the expansion of global brands, including Japan business, almost JPY 30 billion was added. And China and Asia businesses grew, and as I said onetime events brought about milestone payments for -- associated with HCC indication approval, JPY 22.2 billion. Elmed Eisai transfer of its share was JPY 12.2 billion and others included. There were other onetime events-related payments recorded last year, but they were not -- none such this year.

And next, turning to the breakdown of operating profit migration, almost a similar trend that has been shown and JPY 14.9 billion was a decrease because of the increased share, the profit paid to Merck. And there were the gain of -- on transfer of shares of Elmed Eisai of over JPY 4 billion, which was recognized last year and therefore, inclusive of all these factors, we had JPY 32 billion as operating profit for the period.

One of the major topics to be covered today is the advancement progress we have seen in aducanumab. Therefore, we'd like to once again put our focus on dementia. First, about the demographics of dementia. Now it is said that about 50 million people with dementia worldwide are recorded and in 2050, this number is expected to increase to 150 million people. And the [ cagwa or CAGR ], which is average gross ratio, is estimated at about 4% in the meantime. And this close to 4%, how should we interpret this compared to hyperlipidemia or hypertension? So-called lifestyle-related diseases are expected to show the average growth rate at about in the level of 1%. Therefore, compared to this, how fast the growth in the number of people with dementia will be, I think you can imagine that.

And for those people with dementia, now I'd like to explain how these people are distributed over the world. In the neighboring country, China, which is showing the rapidly aging trend, therefore, in Asia, particularly, there are many people with dementia. On the other hand, if you look at numbers in Japan, it is said that 6.31 million people are with dementia in Japan and including -- adding people with MCI, mild cognitive impairment, it is estimated that about 10 million people are living with dementia in Japan.

And associated costs. First, I'd like to give you the breakdown of the costs associated with dementia. About 80%, according to various sources of data, are due to the care costs. While family members are taking care of the people with dementia and the inclusive social care and the family care costs account for about 20%, and medical costs account for about 20%. That is the most conspicuous characteristics of the costs related to dementia. How much value are we talking about? In 2015, globally, JPY 90 trillion were incurred, but this is expected to increase to approximately JPY 220 trillion in 2030 -- in this year, 2030, as well as the disease or cardiovascular diseases. If we compare this to CV disease, which is said to cost us about JPY 100 trillion, therefore dementia will cost us almost double the cost for CV disease.

On the right-hand side, suppose that there is a new treatment intervention, which will delay the onset of dementia by 5 years, and what will happen to the estimated costs? In 2025, suppose that such a new treatment will be introduced, and in 2050, the number of patients will be reduced to about 50%. Then the reduction of the cost in a single year in the U.S. alone will be approximately JPY 40 trillion. And similar data is also available in Japan. In 2025, about JPY 2 trillion is expected to be reduced in costs related to dementia in fiscal year 2025.

As I have said about aducanumab, there were 2 Phase III studies, EMERGE/ENGAGE, which were conducted. And despite studies were announced as discontinued following the futility analysis, a new analysis of a larger data set from EMERGE and ENGAGE represented success in Phase III studies for the first time in patients with early AD and a new analysis of larger data sets showed EMERGE met the pre-specified primary endpoint, and Biogen believes that data from a subset of ENGAGE supports findings from EMERGE. Safety and tolerability profile was consistent with prior studies without any new findings. And in early 2020 next year, based on discussions with the FDA, Biogen plans to file a BLA. And we will continue dialogue with regulatory authorities in Europe and Japan.

The results of EMERGE are now to be reviewed here. The brain amyloid was reduced in dose-dependent manner -- dose-correlated manner, significant reduction was demonstrated, almost reaching the A beta, amyloid beta negative level. The level of brain amyloid has been reduced to reach the negative level. And the 3 endpoints, primarily endpoint for cognitive function, which was CDR-SB in the dose-correlated manner have shown improvement. In high dose arm, there was a 23% reduction of decline, and the p-value was 0.01.

ADCS-ADL-MCI, which is to measure -- evaluate the activities of daily living, which are assisted by the caregivers based upon this score, which have shown the 40% reduction of decline in symptoms. Therefore, this is a very robust statistical result. For instance, a [ professional finance ] or independently going out or traveling or daily chores attempt, for example, washing and dressing up and so forth, those activities are assessed. Therefore, for patients and their families, this score is closely related to the QOL, quality of living, life or well-being of the patients and their families, and it is expected to improve the QOL very much.

Next study, which is another study called ENGAGE. As you are already aware, the patients who have received the 10 or more -- uninterrupted 10-milligram per kilogram dosing intervals. And you can see this graph representing that result. In this study as well, as you saw in EMERGE, there was a similar trend of reduction in amyloid beta and also the reduction of the cognitive function decline. Therefore, ENGAGE was consistent with EMERGE in subset of patients with sufficient exposure to high-dose aducanumab. Therefore, this study also supports the data from EMERGE. That's what we believe.

And another point of recognition is about amyloid beta cascaded downstream biomarkers that are tau and also neurodegeneration. The biomarkers in the downstream on the amyloid beta cascade are gaining more importance now. Phosphorylated-tau and the total tau, those were measured in CSF. In ENGAGE study, there was an improved -- sorry, in EMERGE study, there was the improvement in dose-dependent manner. In ENGAGE the subset data supported the data from EMERGE. Even in the downstream biomarkers, the results have shown consistent results.

According to the interim analysis or futility analysis, which turned out to be a favor. But why this has been turned over to reach the favorable assessment is because of this time line events. As related to this particular trial, I'd like to share with you these facts again so that you can have clearer understanding.

First, ENGAGE that started in August 2015, and another study EMERGE was initiated in September 2015. There was the gap of a period of about 1 month. ENGAGE was started first and then 1 month later, EMERGE was initiated. And we saw the progress in the studies, and there were 2 significant amendments to protocol. The first protocol amendment was in July 2016. Therefore, it's about 1 year after they started ENGAGE. For patients with ARIA, there was a recommendation to suspend dosing. But that dosing -- the recommendation was lifted and resumption of -- at the originally assigned dose was allowed for such patients. And that was the first amendment. In about 8 months later, in March 2017, the highest dose for ApoE4 carriers used to be -- has been at 6 milligrams per kilogram, but it is allowed to be titrated up to 10 milligrams per kilogram. That was the second protocol amendment.

And in December 2018, there was a data cutoff date for futility analysis at week 78, and about half of the patients reached the completion of the week 78. And then it was predetermined that at such timing, futility analysis shall be conducted. Reaching that timing, this futility analysis was conducted. And the larger dataset analysis was conducted. Data cutoff date was March 2019. And the patients which were included in the futility analysis, the period for patient involved for futility analysis was June 2017 and the period for patient enrollment for the new analysis was in July 2018.

Also in fact, for the futility interim analysis based on the prespecified conditions, as I said earlier, the half of the overall patients reached or completed week 78. Therefore, the patients who completed this week 78 visit were included in the futility analysis. Therefore, 1,748 patients were analyzed for the futility analysis. All of them were -- had the opportunity to complete week 78 visit. In the new analysis with larger data sets, those patients who had the opportunity to complete week 78 visit and in addition to that, all the patients, other patients, who have started to receive the treatment were included in that analysis. That was predetermined, therefore, such larger data set analysis was conducted. The number of patients included there was 3,285. Of course, there was increase in the number of patients who had completed week 78, and also adding ITT patients as well, therefore, a new analysis was conducted utilizing a very large number of patients.

If I may recap once again what I have said in the new analysis of larger data set, data from 3,285 subjects were used with more patients having greater exposure to high-dose aducanumab. Differences in exposure to high-dose aducanumab largely explained the different results between the futility analysis and the new analysis of this larger dataset, as well as the different results between the 2 studies. Because ENGAGE was started earlier than the EMERGE study. Because ENGAGE study was started later, therefore, the accumulation of the patients was -- sorry, correction, the study which was started earlier could have earlier accumulation of patients. Therefore could you please correct me? And the less exposure to high dose, the study which was started later had a greater opportunity to have exposure to higher doses because of the accumulation of the patient was delayed as well.

So as a result, proportion of high-dose exposure in ENGAGE was less compared to EMERGE, where high-dose opportunity were increased by the protocol amendment. The study which was started earlier, the opportunity of high-dose exposure was less, therefore the study which was started later had higher opportunity to have high-dose exposure. We think that this impacted the result difference.

Turning to Study 201, which is BAN2401. The study was completed, and I would like to recap that study. Amyloid PET was removed in large amount, according to our analysis. The removal was such that brain amyloid reached almost amyloid negative level. And what this means is that in ordinary trials, patients who are amyloid PET positive when they enter the trials and the patients who reach amyloid negative level will no longer be able to participate in ordinary trials. They will not be diagnosed as having amyloid disease. So the removal was to such a degree. And as for clinical evaluation in this study, ADCOMS was used, and 30% slowing in cognitive decline was observed. As for neurodegenerative CSF indicators, all of these indicators showed suppression of neurodegeneration.

Study 201 had already been completed. And disease-modifying effect was observed in large clinical trial for the first time. BAN2401 Clarity AD Phase III study is ongoing. This is a single Phase III study. Globally, about 110 sites have been opened. And in China, about 20 sites will soon be opened, and preparations are well underway. In the first quarter of fiscal 2022, we expect final readout of primary endpoint. Stage prior to NCI, its preclinical phase is looked at in A3 and A45 studies. These are amyloid negative, and there's no cognitive decline, but these are patients at high risk, for example, ApoE4-positive and A45 study in amyloid-positive patients without clinical symptoms. Such patients will be targeted in this trial.

So in this preclinical phase, with ACTC collaboration is underway, and we are also having consultation with FDA, and preparations are being made to start trial as early as next year. Biogen, Eisai are working as partners. And there are 2 candidates in our camp. And therefore, with these 2 candidate compounds, we would like to establish dementia franchise using the strength of each candidate compound or antibody. And we will have to collect some more data. In the case of BAN2401, the data has yet to be collected from Phase III study or scaled Phase III study, but at least the origin of these 2 components are different, and that is what I would like to discuss once again today.

The origin of aducanumab is shown here. It is a human monoclonal antibody derived from a de-identified library of B cells collected from healthy elderly subjects with no signs of cognitive impairment, or cognitively impaired elderly subjects with unusually slow cognitive decline. On the other hand, BAN2401 is a humanized monoclonal antibody comprised of A-beta protofibrils as an antigen, with Arctic mutation based on the research of cases on Swedish familial AD with Arctic mutation, which concluded that abnormal accumulation of A-beta protofibrils may be a cause of AD onset. A-beta protofibril is the antigen from which humanized monoclonal antibody BAN2401 was obtained. So the origins of these 2 compounds are different.

Turning to elenbecestat. I must report about Elenbecestat. Despite the high expectations from you, this ended in failure and I must apologize. DSMB, Data Safety Monitoring Board, conducted a review of the safety as well as clinical endpoint-related data. 2,130 subjects were included in the data set. So it is a large data set. Data up to 24 months included 1,700 and -- 1,700 subjects were treated for 6 months and 900 subjects were treated for 12 months. And between placebo and elenbecestat arm, there was no difference in terms of patient background as they were equivalent.

[ We saw ] mental symptoms and skin symptoms, these adverse events increase were less observed in elenbecestat, although frequency was low. And these 3 adverse drug events are cross-effects of BACE inhibitor. They were judged to be cross-effects of BACE inhibitor. Using clinical endpoint, assessment was conducted. CDR-SB [ is used ] and the handout does not include this graph. If necessary, I believe this graph can be made available. This was added at the last minute. CDR-SB at 80% of lower confidence limit exceeds the mean value of placebo. If it's above, it is worsening. If it goes upward, it's worsening and for each month, I think this is month 24. And 18 and 12 and 6, and so the assessment was made at these time points and CDR-SB, 80% of lower confidence limit was worse than placebo at only one point. And at other time points, the CDR-SB mean values were distributed near mean value of placebo. So there was not a deterioration in the case of the BACE inhibitors, other than Elenbecestat in early timing, a worsening was observed. So from that perspective, Elenbecestat is different, behaving in different fashion from other BACE inhibitors.

Inclusive of these findings and then conditional power method was applied to see whether the clinical trial can be continued and whether the endpoints will be met. According to such analysis, the conclusion was that there is an unfavorable risk-benefit ratio and discontinuation of the study was recommended. And the study was immediately stopped, and currently follow-up is underway, and the data analysis -- analyzed data will be presented at clinical conference in the future.

Eisai and Biogen, I believe, are experiencing AB drug the most in the pharmaceutical industry. How related work is going to be carried out on a full-fledged basis going forward, so far, most of the work in terms of drug development was based on A-beta theory, the drug discovery so far have mostly been based on A-beta theory. So once again, I would like to recap the A-beta theory.

First, APP is released by enzyme called BACE. And then A-beta monomer is [ cleared ], and this becomes a dimer. And then aggregates will be formed, forming A-beta aggregates and in beyond, there will be insoluble amyloid plaque that will be deposited in brain parenchyma and blood vessels. This is the process of aggregation, and there is also a process of dissociation. It is known that there are 2 wave processes. If one is removed, [ things ] move in 1 direction, and so these things may be reduced.

In the downstream, including tau, these aggregates will affect negatively neurons, and there will be neurodegeneration. And from damaged [ AOX ], neurogranin, P-tau and total tau and the substances will be released in CSF and neurogranin as well. And those are downstream biomarkers in the downstream of A-beta. So this is the A-beta theory and the theory today. This is quite different from the A-beta theory we have 10 years ago. It is much updated.

First, regarding A-beta aggregates, this decline of cognitive function [ and ] benefits on activities of daily living by reducing A-beta aggregates were demonstrated in BAN2401 study and aducanumab study. And number two, other than APP, this inhibitor may be associated with several other substrates. And they have various effects. Therefore, going forward, high selectivity to APP will be required. APP-specific BACE inhibitors will be required. And we had already started drug discovery efforts to find such a drug. And the most appropriate indication for such BACE inhibitor is prevention of accumulation of A-beta aggregates or maintenance therapy after A-beta aggregates are removed by antibodies. We believe that these are the correct, right target population. And thirdly, A-beta aggregates are the evildoers and antibodies with selectivity have been shown to remove A-beta aggregates compared to the anti-A-beta monomer antibodies or BACE inhibitors.

With BACE inhibitor, A-beta monomers will be decreased. And because of that, there will be shift to dissociation and A-beta aggregates may be removed. At one point in time, that hypothesis was entertained. But by removing anti-A-beta monomer to cause dissociation is at a very slow pace. And therefore, the speed of lowering brain A-beta monomer level, breaking the bands and dissociating A-beta aggregates of BACE inhibitors are slow. This is also what is being understood.

In downstream, neurons are directly attacked and there are biomarkers in the downstream, and it is very important to examine such biomarkers. A-beta and clinical symptoms were examined so far, but n part and t part, tau and neurodegeneration-related biomarkers should also be examined to understand the pharmacological effect. Amongst the beta aggregates according to the recent data, it seems that protofibril may be most neurotoxic. And therefore, from exclusion, BAN2401 was designed to be highly selective to protofibrils and thus, this speaks to high expectations for BAN2401. So this is the updated A-beta theory, this is the last slide on A-beta-related topics.

There are 4Rs for potential successful drug development. Right hypothesis. In comparison to A-beta hypothesis of 10 years ago, there has been a change so we cannot base ourselves on A-beta hypothesis 10 years ago. Based on modern science, we have to use new A-beta hypothesis in our drug development and discovery. Next, right population. BACE inhibitor, the right population have the early AD patients. Rather target population for A3 study or target population for A45 study or maintenance and therapy after removal of A-beta aggregates. So that may have been the right population. And as for right dosage, aducanumab has shown this, 10 mg per kg per monthly at high dose. And that high exposure was the key to the success of the trial. And right endpoint. A-beta in clinical symptoms alone do not allow us to understand. You also have to include downstream biomarker in endpoints to prove pharmacological efficacy. So this is the conclusion that we reached at this point in time.

This shows the pipeline for neurology. We have 2 approvals beyond Phase II and Fycompa partial-onset seizure was approved in China based on priority review. We expect to launch before the end of the year. So with Meiji Seika Pharma in Japan, Equfina, Parkinson's disease drug is to be launched in November, and this targets the wearing-off phenomenon and [ as ] such proven to show a reduction by about 1 hour of wearing-off. And Fycompa monotherapy for partial-onset seizure in Japan is under review. And lemborexant, dual orexin receptor antagonist is under review in the United States and Japan for insomnia. And for aducanumab, preparation is underway for submission, and BAN2401 Phase III study is underway.

Now turning to oncology, and first, I would like to discuss LENVIMA. Full year forecast is revised upward to JPY 119 billion. And inclusive of this, we are pursuing USD 1 billion revenue or in excess of USD 1 billion to reach blockbuster status. And in the first half, it was JPY 50.5 billion, double the previous year, the same period. In America, there was also growth in HCC increase. Endometrial carcinoma approval was also obtained as additional indication.

In China, the launch was in November, but it's far exceeding Japan already. It is fast exceeding Japan already. And in China, the largest number of patients with HCC are reported. And this year, it is expected to be listed in China's National Reimbursement Drug List. As a result, price will decline but patients who can access LENVIMA is expected to grow in number by four or fivefold. In Japan, we expect growth for HCC, and EMEA is also showing strong growth.

Turning to endometrial carcinoma, FDA approved this EC drug, and this was the first approval in 50 years for EC. There is huge unmet medical need. And every year, about 12,000 patients die due to EC. And there are about 14,000 patients who are indicated second line. EC patients without MSI-H or dMMR+ are expected to be about 14,000 (sic) [ 10,000. ] And first-line treatment is a combination therapy of 2 agents, including platinum agent. This was approved under new FDA-initiated program, Orbis, whereby in 3 countries [ of were these ] U.S., Australia, Canada will review the same data and come to the decision. And in that sense, this was also epoch-making.

This is the waterfall flow chart. There were 8 complete response patients as shown here. Amongst 8 cases with complete response there were refractory serous adenocarcinoma patients and clear cell adenocarcinoma patients, and therefore, this was a robust, deep result. And it was a durable effect continuing for 16.4 months.

And the LENVIMA monotherapy for HCC, and this is mostly data from Japan, there are diffuse tumor and large tumor. Especially BCLC-B stage patients, LENVIMA may be given first to shrink tumors or to rectify the situation where there was a reduce of tumors. And then selective TACE or other radical treatment may be used to completely cure the patients from HCC. And this was mainly developed by Professor Kudo of Kinki University (sic) [ Kindai University ] in Japan. And ORR was 40.6% in REFLECT trial, but if right patients are selected, ORR is as high as 80.9% according to the data from Japan. So there has been a remarkable improvement of progress in treatment.

Through this treatment -- or rather, APPLE expert consensus, comprising experts from Japan, China, South Korea, Taiwan, Hong Kong, Singapore developed consensus guidelines for BCLC-B-stage patients who are not indicated for TACE -- who are TACE-refractory, first treatment option should be LENVIMA, and that was the recommendation. We would like to see this recommendation expanded globally.

And KEYTRUDA combination has also received a breakthrough designation. Five were complete response cases. About 70% of the patients were BCLC-C, Barcelona Classification C, more advanced patients. And so there is a -- this is one of the differences between monotherapy population. And in this space, the competitive landscape will become fiercely competitive, and we expect new combinations to emerge.

But to the extent that we know, we have looked at this comparative data, LENVIMA-KEYTRUDA combination data, and numerically, we believe that our combination is superior. And as for disease control, this combination therapy is showing high percentage.

Turning to RCC. Data is shown on this page. In target patient here, prior treatment of PD-1/PDL-1 antibody treatment and had a disease progression. So in comparison to the first-line setting of patients, these patients are more refractory. And disease control ratio is 100% despite patients being even more refractory. And this is also given breakthrough designation.

To summarize, the LENVIMA-KEYTRUDA combination study is making good progress. And there are 3 breakthrough therapy designations. In FGFR1, FGFR2, FGFR3 inhibitor, this is a small molecule -- in-house-developed small molecule for biliary tract cancer and others. And this has received SAKIGAKE designation in Japan.

What are shown in purple, these are 3 topics. These are factsheets based on -- factsheet drug of oncology field in Eisai based on Halaven or eribulin mesylate. And these 3 are related to Halaven, first, in liposomal formulation, and in combination with nivolumab, trial is conducted right now. Furthermore, we have MORAb-202. This is an ADC where [ preload ] is eribulin, and we are beginning to see good results. Furthermore, eribulin -- a parent. Something similar to a parent mother of eribulin, a larger [ modi counting total moti ] is now being developed. So eribulin derived, I think account for important parts in our pipeline.

But for full year forecast, a revenue of JPY 680 billion, 6% increase year-on-year. And JPY 103 billion other business revenue, including onetime events. Large part accounted for by milestone payment from Merck. Then the full year forecast was also upward revised. As you can see from that, the probability of receiving this milestone payment is high as we see situations right now. And we will continue to spend a large amount in R&D.

And operating profit forecast is JPY 110 billion. This is also upward revision. And so since fiscal 2010, when Aricept was [ update ], for the first time since then, operating profit is expected to exceed JPY 100 billion. And profit for the period is also forecasted to be a record high. And we would like to take on the challenge of achieving these milestones.

Return on equity is at 13.2%, pushing up equity spread substantially. And JPY 160 full year dividend is expected.

[Unknown Executive]

Thank you very much for your participation. We would now like to move to Q&A session. First, in this room, we would like to entertain questions before accepting questions from participants over telephone lines. [Operator Instructions]

[Motoya Kohtani, analyst]

My name is Kohtani. I'm from Nomura Securities. My first question is, of course, about aducanumab. We are not expert in statistical analysis. So according to the materials published by Biogen, the futility interim analysis was conducted and completed. And in EMERGE did not meet the primary endpoint. Opportunity to complete population, 179 patients' data were added. Therefore, as a result of that, primary endpoint was met. And about 70% of the patient -- enrolled patients was ApoE4 carrier, and half of them were included in the futility analysis. And about 40 people have been added to the high-dose arm in order to meet the primary endpoint.

Is this the correct understanding? If so, then on Page 8, ENGAGE and EMERGE, 10-milligram per kilogram difference between the 2 arms are very small. With this small gap or difference, the fact that one study could meet these primary end point, and the other could not meet the primary endpoint. And as in the BAN2401, you see was very important, 6-milligram and 10-milligram. Does it make such a big difference? It's only 1.3x. Or AUC had a greater difference because of the difference in the doses? That is my first question.

[Haruo Naito, executive]

Thank you very much for your question. Neurology business group, and Mr. Tsuno, who is in charge of Clinical Affairs in the business unit will respond.

[Masanori Tsuno, executive]

Thank you for your question. Regarding your question about AUC . AUC as a PK, it is linear. So based on the dose change from 6-milligram to 10-milligram exposure does not increase dramatically. So dynamics in the dose-dependent manner is enhancing the steeper line. And based on the earning call with Biogen early mentioned that there is a steep dynamics curve increase was shown probably.

And regarding the interim analysis and the new analysis, and according -- in the interim analysis, according to the materials published by Biogen, the conditional power was applied. So compared to the classical statistical analysis at that -- this time, the analysis was different and at the -- for week 12 and week 78, completed patients who [ weren't ] used for the futility analysis. The new analysis were larger, the data set, and the number of completers increased. And at the same time, those patients who have not completed yet, all of that patient -- those patients were included. In the typical, the classical analysis, MMRE and MMRM, utilizing such methodology for filling the missing data.

So as Biogen presented in the call -- and the last patient out was in July in 2018. That means that in -- at the time point in March 2019, although as regards the patient he or she must have a 9-month administration period. Therefore, a lot of noncompleted data were added, and MMRM as a methodology was used to extrapolate the data and reaching the final result -- the new result.

And there was a reversal of the results of the interim analysis to reach the newer analysis. And you may think in that way, but according to the Biogen's material, it was not the reversed or changed results. It was because of the different methodology used in analysis. As Biogen mentioned, in interim analysis EMERGE had already shown the efficaciousness trend, for example, in persimmon, and it is getting red. And the bluish one is not turned suddenly into red at the final analysis.

At the interim analysis point, the EMERGE persimmon was a little bit reddish -- pinkish, and then it was enhanced towards the end. And because of the exposure to high dose, it's like a fertilizer or a spice or a condiment was added. And that effect was very strong. At the time of interim analysis, the bluish or pinkish persimmons were mixed according to the materials of Biogen. And in the pooled analysis, overall picture tended to look like a bluish persimmon. So it's not at all the reversal of the data. Data has shown consistent results.

[Motoya Kohtani, analyst]

On Page 8, EMERGE and ENGAGE 10-milligram per kilogram. And of course, I think effective administrations were done for these patients, and maybe there was only 1 gap of 38 people or so. And it determines a failure or success? Do you think it is all due to the difference in the analysis methodology?

[Masanori Tsuno, executive]

Yes. In placebo arm, placebo used all the patients' data. If the sample size is small, and there will be variability, so there is no bias. Therefore, placebo arm had a robust -- or larger sample set and the end tended to be small for those patients with full dosing. And there will be a larger impact on the clinical effect. Well, according -- CTAD -- at CTAD, Biogen will make presentation regarding the detailed analysis. Please ask them at that time.

[Motoya Kohtani, analyst]

The second question is, at the CTAD you said that the detail will -- data be presented. And according to what you already have, I think one key point can be derived. [ Oligo ] is targeted. Aducanumab -- and also BAN2401 is also successful, and P2/P3 have been successful. But for other projects, could not meet the endpoints. And then oligomeric 3 or, I think, just the treatment targeting the oligomers alone. And needless to say, in the PTL 43, or ABLs and albumin nuclein as the target for Alzheimer's disease. And I think that many companies will start to target these. And amyloid beta lessons may be translatable to other projects as well, or I believe that you needed to further accelerate this development going forward.

[Unknown Executive]

Thank you for your comment and questions. For your questions, Mr. Kimura, who is in charge of Science Affairs of the Neurology Business Group will respond.

[Teiji Kimura, executive]

Thank you for your question. My name is Kimura. I'm from Neurology Business Group. Thank you very much for your question because I believe that question is very important.

What we have learned in amyloid beta, is, as I said, which amyloid species we are going to capture or inhibit as the targets, it's not enough. What would be the most toxic ones? And that has to be captured without failure. And the key is a tau. Tau is a fully peptide constituted amyloid and much larger than that for the tau.

[Motoya Kohtani, analyst]

And what is the [ disseminate ] or the key targets? And the company who really target that real target will be [ the success of and nuclesine and the PPT ] and so forth. And what will be the target among oligomers? And I know that there are ambiguities. What are included?

[Teiji Kimura, executive]

Not only the full [ engosil ] ones, but those have to be understood in order to further develop the drugs. That is what we have learned.

[Motoya Kohtani, analyst]

Lastly, regarding the diagnosis, could you please tell me, with the introduction of new treatment, the CSS test, and the test alone will not disseminate a new treatment. And I think at the CTAD, I think together with Sysmex, I think that you are going to present the data on the project you are working with Sysmex as well. And if you are going to present that data, Spearman's Law should not be used. Pearson's r or ROC curve AUC should be opted for in order to compare that data with Shimadzu's. So I hope that you will utilize those methodologies. Could you please comment on that?

[Haruo Naito, executive]

Thank you very much. Mr. Kimura is going to respond.

[Teiji Kimura, executive]

Thank you for your question about diagnosis. Yes, our project with Sysmex will be presented at CTAD. And [ ROC the curve ] will be used before explaining the data results to be presented at the CTAD. Thank you very much.

[Unknown Executive]

In the third row, please?

[Fumiyoshi Sakai, analyst]

I'm Sakai from Crédit Suisse. This news impacted the stock price substantially and this may be a premature question, but about submission package, I understand that Biogen will be leading the effort. The reason for asking you this question is that, depending on the way the data is put together may affect the potential of the drug and usability of the drug. Based on this, how are you going to collaborate with Biogen?

[Haruo Naito, executive]

All information is shared. We have joint committees, multiple joint committees. And there is a joint development committee, where clinical trials and submission are discussed. And at a higher level there is a joint steering committee. So we will have robust discussion at these committees. And of course, data sets is primarily handled by Biogen. And so there will be leadership coming from Biogen. But as for submission package, we will also be strongly involved.

[Fumiyoshi Sakai, analyst]

High dose basically will be the most important part in the submission package, I think, and is that the correct understanding? I'm asking about how the data will be extracted.

[Haruo Naito, executive]

EMERGE, it will be the core part, and ENGAGE high dose part supports EMERGE study. That is the interpretation. And then there is the PRIME study. I think PRIME is also going to be playing an important role in the submission.

[Unknown Executive]

Any other questions? The attendant in the back row, please.

[Yo Mizuno, analyst]

I'm Mizuno from Tokio Marine Asset Management. About oncology, LENVIMA HCC monotherapy, I have a question. Page 9 is patient response and REFLECT trial response. Is it okay to make the comparison between the 2? And for Page 9 [ is the ] patients, the recommendation, does this require approval? And based on this, in the real world of -- according to the recommendation, will LENVIMA will be used?

[Unknown Executive]

Thank you for your question. Dr. Owa, who's responsible for Science and Oncology business will respond.

[Takashi Owa, executive]

Thank you for your questions. I would like to respond. In this slide, ORR of 40.6% in REFLECT trial is shown, and in recent study, it has gone up to 80.9%. In REFLECT trial the way patients was enrolled was based on a standard where the patient was not eligible for TACE, BCLC-B and advanced-stage BCLC-C patients. So the population is different. And according to recent real-world data in BCLC-B and LBI grade 1 in Page 9 is -- so the patient population is changing, and therefore, we cannot make a direct comparison.

Patients who are actually receiving this treatment are changing in terms of the patient background, but this also means that high response rate can be shown, depending on the way LENVIMA monotherapy is used. And I think we were able to narrow down on where LENVIMA monotherapy should be used, and now based on this, whether we have to conduct trial for approval.

For one thing, based on real-world data, physicians, based on their discussions may use the Lenvima monotherapy and would work. Pembrolizumab's lenvatinib add-on is done in addition to [ case ] and need. The 012 study, so in real-world data, there's a use of this drug based on physician discretion, and we are also conducting this trial if approval is necessary. So we are taking this dual drug approach.

[Yo Mizuno, analyst]

For clarification, I have additional question. REFLECT trial, will first-line patients who are approved to be given this drug in the first line in TACE [ negative ] indications. So the patient number will increase by several fold?

[Takashi Owa, executive]

Yes, that is correct.

[Unknown Analyst]

My name is [ Matezuki ]. I'm from [ Montrade Mix ]. In your presentation in the dementia franchise to be established, now you have raised 2 compounds as specific examples. And according to your presentation, this franchise is going to be expanded. Do you have any image of how you are going to expand this franchise?

[Haruo Naito, executive]

Aducanumab is a product developed by Biogen and BAN2401 is Eisai's product. Well, that is the old concept, old way we're thinking. And Biogen Eisai has to respect these candidates, which are both very important for both of us. And we jointly have to pursue the ways to maximize the value. And this is the franchise concept background. And then in reality, how these are incorporated. As I said earlier, still, we do not have the data yet sufficiently, BAN2401 based on the results from CLARITY study. That data should be closely examined before we can capture what we are going to see in expansion. But as you know, this AD is a very in-depth franchise in terms of the disease state, starting from preclinical to severe AD, very broad stages.

And as for the demographics background of our patients with ApoE4 plus/minus or co-morbidities may include underlying diseases or patients without such co-morbidities. It's a very diverse population. Therefore, only with one single drug it would meet the various needs of the patients. So we needed to establish a franchise, including the various drugs before meeting such news. That's why we have come up with this concept of building franchise.

[Unknown Analyst]

I have another question. May I? For aducanumab dose setting, I have a question. Because of the adverse drug reaction, I think that data -- you started with the low dose, but titrating up to high dose. What will be the potential impact on the AE profile -- and because of the change in the dose? And then the hypothesis which was set up at the beginning of the protocol design may have been impacted. Do you have any view on the potential impact on the protocol?

[Unknown Executive]

Mr. Tsuno is going to respond.

[Masanori Tsuno, executive]

The data has been accumulated from a large number of patients, and ARIA is the most important AE of attention. And that has been consistent with the past study. And ARIA historically, was identified since 10 years ago or so, [ SBA ] and academia people joined in discussing what it is and what impacts will be brought about by this, and there was a wide-ranging discussion.

Like us, when we started the clinical study, there was a limitation to the dosage. And many companies have tried various antibodies, and the data has been accumulated a lot. And now ARIA may occur at certain incidents, particularly ApoE4. And that is the aggregation -- aggregate of the amyloid that can be removed. And then temporarily, edema may occur, [ clot integration ] may occur. And were there any serious adverse events, such concern about impacts -- events in a deepening understanding about the impact, so therefore, the concern has been reduced. Therefore, in the clinical dose, dose could be increased and titrated up to higher doses. And once there were any AEs, and then dosing was suspended. And after suspension, it was allowed to reduce the dosing at the original dose. So with the more accumulation of data going forward, of course, MRI will be used for monitoring several times. But whether or not there will be a significant restriction of the use of this drug, we do not think -- we do not anticipate that.

[Unknown Executive]

We have gone overboard with time. So we would like to conclude the session by accepting questions from those who have [ from the raising hands ].

[Tatsuyuki Arai, analyst]

Thank you for the presentation. I'm Arai from Merrill Lynch. I have one question concerning aducanumab. In order to obtain approval in the United States, what is important? Even if additional data is analyzed, one study was successful, the other was not successful, that fact cannot be changed. And with only 1 Phase III study, is FDA going to give approval or will BAN2401 with a 1 Phase III study review may be carried out. So is the hurdle relaxed by FDA? Or is FDA asking for additional good data? So what will be important in obtaining approval?

[Haruo Naito, executive]

Regarding approval requirements from FDA, we are not in a position to discuss. But looking at approvals given by FDA in CNS area, it seems that totality is emphasized by FDA. In this case, EMERGE, ENGAGE totality and these are prime reasons for ] added. In totality, there may be consistent findings, and I would imagine that FDA is trying to review in totality. That is the impression I have.

As for CLARITY AD, this 1 Phase III study will be conducted with the understanding of the agency. But there is also a large study, a Phase II study, 201 Study of BAN2401. So I think it is seen in totality.

[Unknown Attendee]

My name is Hashimoto. I am from Nikkei BP. Honestly speaking, the news about aducanumab with the forecast of getting approval, and we were surprised to hear that news. And Mr. Naito, what was your view and what was your impression when you saw this news for the first time?

[Haruo Naito, executive]

If you guarantee that this will not be written in an article, and I can say whatever you want, but this continuation news surprised me a lot in the first place. And this time, again, I was surprised a lot. And there were 2 surprises, and I might have a heart attack. I felt that as if I was dying twice. So this is unforgettable thing for our history.

[Unknown Attendee]

And another question, maybe difficult to answer. And one, now there is the visibility in 1 project now. And going forward, what about your view on the successor to you? I think that you have been thinking about various things. And as far as you can tell me now, please give us your view.

[Haruo Naito, executive]

Thank you very much for very kind questions. And for this matter, regarding my thought about successors, and this is included as a part of the role to be played by CEO. Therefore, I have to continuously think about who can be my successor. And actually, Board is the one who you needed to consult with. Board of Directors, Chair of the Board of the Directors, particularly outside directors, with whom I have been discussing a lot. And twice a year. Currently, we are presenting a succession plan. And this is the core for our discussion at all times. And we have considered various scenarios, we're raising specific names of candidates, and we continue to think about that.

[Unknown Executive]

And last question, please.

[Unknown Attendee]

[ In Hidaka ], editor and committee member of [ Iyako Kezai Journal ]. I also have a question regarding aducanumab. FDA -- how does FDA see this, of once discontinued a project to be resuscitated and the prospect of FDA approving such a drug. Have you had such experience before?

[Haruo Naito, executive]

We were quite surprised ourselves and we did our research. And I think there's some precedent. Over -- as I was saying that there was one example in oncology in the past, but I don't think there's any similar case in neurology. Discontinuation was recommended not by FDA but by DSMB. So discontinuation was not by FDA's involvement.

[Unknown Attendee]

As for elenbecestat, discontinuation was announced. And Mr. Naito, maybe you may have near heart attack once again if this is resuscitated. And what is the probability of this project being resuscitated?

[Haruo Naito, executive]

We would very much like to surprise our CEO. But in case of aducanumab, the background factors are quite clear, such as a protocol change. But for mission AD, unfortunately, factors that can cause such a change do not exist. Of course, we will analyze the data in detailed fashion, and the analysis results will be announced eventually. But I do not believe that our position will be changed -- for the moment.

[Unknown Executive]

Thank you very much for all of our questions, and we apologize for going overboard with our time.

This concludes the earnings announcement session by Eisai. Thank you very much.