Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2020-Q3

[Unknown Executive]

Thank you very much for taking your time to attend the financial results presentation session by Eisai on the third quarter fiscal 2019.

Before we begin, there are some housekeeping announcements. Please make sure that you have the distributed materials in front of you. There should be a deck of slides that will be used in the presentation and flash report and related materials. If any of the document is missing, please raise your hand.

Then I would like to introduce the speakers today, Executive Vice President, CFO, Chief IR Officer, Mr. Ryohei Yanagi; Senior Vice President and President of Neurology Business Group, Mr. Ivan Cheung; and Senior Vice President and President of Oncology Business Group, Mr. Terushige Iike.

Today's presentation will be made by Mr. Yanagi to cover the first part, which is financial part, and the latter part, operation part, will be presented by Mr. Cheung and Mr. Iike.

[Ryohei Yanagi, executive]

Now I would like to report it to you. On the part, covering the financials. Here is the Q3 9 months cumulative consolidated statement of income.

Revenue, top line, was JPY 486.1 billion, up 4% year-on-year. All global brands grew 44% from a year earlier. Growth driver, LENVIMA could reach the revenue of JPY 80.5 billion, increased by JPY 37.2 billion, 1.9x as much as last year, so almost doubled. And rapid growth of LENVIMA for a transfer of generic business, brought about the improvement of product mix, and cost ratio has improved or lowered to 26.2%.

As a result, gross profit was JPY 358.9 billion, up 10%, up from a year earlier. The double-digit growth was achieved, within the increased ratio of the gross profit. Within this increased ratio, the total cost increase ratio was controlled and financial discipline worked well, and OP grew about 30%.

And let me share with you the breakdown of expenses. R&D expenses were JPY 103 billion, which seems on the flat from a year earlier. But including partners reimbursement, actual R&D -- total R&D expenses were JPY 151.8 billion, 14% increase from year earlier. And this -- these expenses account for over 31% of revenue.

Among the top-tier Global 25 companies, we can say that we have been one of the most proactively investing company in R&D in the world. And SG&A expenses were JPY 188.4 billion, 12% increase and -- from a year earlier and SG&A expenses have account for 38.8% of revenue. Difference from a year earlier, the JPY 20 billion increase was mostly due to the payment to -- but due to the profit sharing related to LENVIMA. Therefore, given the robust growth in LENVIMA, a positive spending was made. Such cost of profit sharing with Merck, excluding that impact, SG&A expenses were almost flat, and they accounting for 31% of revenue. And there is no much deviation from the median of global peer companies.

Operating profit was JPY 73.3 billion, up 30% from a year earlier. OP margin has exceeded a 15% mark.

During the third quarter, noteworthy things were the reversal of provisions on income taxes in the U.S., and there was increase in income taxes of the company following the repayment of trading capital from U.S. subs to the company to resolve the group's cash imbalance. Therefore, tax position improved significantly.

Bottom line profit for the period attributable to owners of the parent reached JPY 73.3 billion, 83% increase from a year earlier, a significant increase, and a 9 months cumulative reference value for ROE exceeded 15%, reaching global standard.

Looking at the balance sheet items. For this fiscal year, which we regard as a proactive investment year, and we are increasing the dividend by JPY 10 to JPY 160 per share for full year dividend. And the -- a little less than JPY 30 billion was expensed for capital investment in the past. But this fiscal year, we are doubling up to JPY 60 billion in CapEx, proactive investment is being made into ICT or ventures or a PP&E.

Therefore, net cash has slightly decreased, but net DER is minus 0.22. Therefore, net -- very significant net cash position is maintained, and the capital ratio is exceeding 61%. The debt-free status is maintained. Therefore, we do not have any concerns on the financial strength. Therefore, we are achieving those proactive investment and dividend payments.

Next, here is a breakdown of revenue migration. Last year, 9 months cumulative revenue was JPY 467.3 billion. And given the growth of 4 global brands, Japan, China, Asia business is through the revenue and LENVIMA associated milestone payments was JPY 225 million last year, but it has reduced to JPY 150 million this year. But we are expecting to reduce significant milestone payment in the fourth quarter. Transfer of shares of Elmed Eisai and due to other factors in the business development related factors, revenue increased by JPY 18.8 billion year-on-year to reach JPY 486.1 billion.

Next, please.

On this slide, you can see the breakdown of operating profit migration and this waterfall chart. And last year, OP was recorded at JPY 57.1 billion, in parallel to the movements in revenue due to growth 4 global brands, Japan, China, Asia, we could record the steady growth in OP. And as I said earlier, milestone payments related to LENVIMA were slightly decreased, but we expecting to receive significant milestones in the fourth quarter. Due to the proactive spending, the increase of the shared profit paid by Eisai to Merck related to LENVIMA was JPY 20 billion, and R&D expenses were almost flat. And inclusive of the impact by BD-related factors and -- OP increased by JPY 16.2 billion year-on-year to reach JPY 73.3 billion.

R&D expenses may have seemed to be almost flat from a year earlier, but inclusive of the reimbursement from partners in the amount of JPY 48.7 billion. Therefore, actual spending was JPY 151.8 billion. Therefore, a double-digit growth was observed in the R&D expenses.

Towards the future, we are making the proactive investment in R&D, while we are -- we have achieving the 30% significant increase in OP. And I think this is the benefit of the partnership model.

On this slide, we are providing you with a full year forecast for earnings. Revenue will be JPY 680 billion. Operating profit will be JPY 110 billion. These have remained unchanged from the last announcement. As I said earlier, due to the improvement in tax position, the lines from profit for the year below have been revised upward. And the profit targets set for 2020 have been already -- will be achieved year earlier.

And in FY 2006, the profit for the year is going to record -- put a record high profit, exceeding the record in 2006, and ROE will exceed 15%; and DOE, 7%; and ROE, 15%, which is set under EWAY 2025 for 2025 will be achieved.

As I said earlier, with strong balance sheet, DOE will be regarded as KPI, and the dividend per share will be maintained at this JPY 160. We do not have any concern about that. Through these, we are trying to maximize enterprise value. We have -- I have covered the financial section, and as the source of the profit and revenue, operations will be covered by responsible persons of oncology -- neurology and oncology after me.

[Ivan Cheung, executive]

Today, I would like to cover neurology product development status for the third quarter.

First of all, I would like to talk about aducanumab and BAN2401, and I'd like to give you the update on the development for aducanumab. Currently, Biogen is actively engaging with the FDA as well as regulators in Europe and Japan. And in order to complete regulatory filing in the U.S. as soon as possible, we are working with Biogen in preparation, and the protocol has been already filed with FDA for aducanumab. And we are coordinating and cooperating with Biogen.

On the other hand, for BAN2401 through collaboration with ACTC, AD prevention study is being planned. This study was named AHEAD 3-45. In this study, its real clearance of protofibril in participants -- in clinically normal participants, we are planning to study and evaluate the prevention of progression of brain pathophysiology.

Phase III cohort will include cognitively normal participants with intermediate levels of amyloid as determined by amyloid PET scan. And the A45 cohort will include participants with little to no cognitive impairment who have elevated levels of amyloid in the brain. These 2 cohorts will be enrolled in 1 single study, in this Phase III study. And we have already signed a contract with ACTC and targeting amyloid how neurodegeneration or biomarker panels by ATN will be used as endpoints, and we plan to initiate this Phase III study in this year, 2020. And Phase III study, Clarity AD, which is currently ongoing, targeting patients with early AD, which is ongoing steadily, in Japan, the U.S., EU and Asia. And by this year, we plan to complete patient enrollment, final readout of primary endpoint is targeted in the first quarter in fiscal year 2022.

In addition to these studies, Phase II open-label extension study will be conducted on the same patient population of the Phase II Study 201, given the positive results of the Study 201, open-label extension study has been already started for evaluating long-term safety and efficacy.

Next, here is the BAN2401 Study 201-OLE, the baseline data was published in CTAD in December last year. After the completion of the treatment with BAN2401, brain amyloid reduction at the end of core persists after BAN2401 discontinuation for amyloid PET SUVr. This chart shows the changes after the average of 2 years of treatment in Study 201.

Amyloid reduction was founded to be almost maintained for about to 2 years on the average after discontinuation of BAN2401, and a treatment difference for clinical outcomes at the end of core appears to be maintained following BAN2401 discontinuation.

Given this data, but just BAN2401's potential disease-modifying effects.

Next, about new insomnia treatment, DAYVIGO, is what I'd like to explain. DAYVIGO is in-house discovered and developed dual orexin receptor antagonist. Last year, in December, in the United States, it was approved for treatment of insomnia, and in Japan, in January, approval was obtained.

DAYVIGO exhibits both OX1R, OX2R orexin receptors, thereby, alleviate excessive awake condition. And especially, it is involved in -- it has stronger inhibition effect in orexin 2 receptor, which is involved in suppression of no REM sleep.

There are 2 Phase III studies, SUNRISE 2 and SUNRISE 1. And insomnia -- correction, sleep onset and sleep maintenance were demonstrated with statistical significance. And in SUNRISE 2, long-term efficacy and safety were observed.

Sleep well, wake well, be well, will be realized by DAYVIGO, and there is no rebound insomnia, and for chronic insomnia, long-term treatment is possible. For insomnia patients, we aim to contribute to such patients with sleep disorder by improving their symptoms.

In the United States, we plan to launch following scheduling by the U.S. DEA. And in Japan, we plan to launch in the first quarter of fiscal 2020. There are social issues caused by insomnia disorder. Approximately 30% of adults worldwide have symptoms of insomnia, and up to 10% are diagnosed as insomnia, approximately 10 million in U.S. and approximately 4.5 million in Japan are receiving treatment for insomnia.

Poor sleep is associated with a wide range of health consequences, including hypertension, accidental injury, diabetes, obesity, depression, heart attack, stroke and dementia.

Disease risks may be elevated by poor sleep. Due to difficulty falling asleep and staying asleep, patients may suffer from fatigue, difficulty concentrating and irritability, and productivity may decline as a result. DAYVIGO seeks to decrease negative impact on society caused by sleep disorder to fulfill patients' unmet needs.

Turning to Fycompa next. In this -- in the past quarter, we were able to make progress in value maximization for patients. In China, in December 2019, for adjunctive treatment of partial-onset seizure, we were able to launch Fycompa. Fycompa was designated for Priority Review. And after submission within 12 months, we were able to obtain approval. In Japan, in January this year, approval was given for additional indications -- the following 3 additional indications: monotherapy for partial-onset seizures, pediatric use in partial-onset seizures, new formulation of fine granules at the same time. In EU pediatric use in partial-onset seizures is under review and LGS Global 3 study is steadily ongoing.

As for IV formulation, in the United States and in Japan, we aim to submit in early fiscal 2020, and in EU within fiscal 2020. So with Fycompa, we are expanding launch countries and receiving approvals of new indications and new formulations. And this provides new treatment options to patients with epilepsy.

This is my last slide. In neurology area, this is the development pipeline. After October last year, we were able to launch 2 products and obtain 5 approvals and initiate 1 Phase I study. And our neurology portfolio is steadily growing.

As you can see, as a pharmaceutical company, we are addressing because of AD amyloid tau in neurodegeneration, all of ATN as the only company to do so. We are approaching ATN, and we have a pipeline of disease-modifying drug that approaches ATN. Regarding tau, we have E2814 new anti-tau antibody, and we were able to initiate Phase I study. In AD, there are differences with other tau related disease. There is highly toxic MTBR, which tend to be aggregated in the brain, and MTBR or microtubule-binding region fragments are increasing with this characteristic. And MTBR fragments are thought to be causing tau degeneration propagation by accumulating in brain.

And unlike other anti-tau antibody, E2814 can target MTBR fragments and may be able to exhibit a strong disease-modifying effect according to our understanding. The achievements in neurology area in the third quarter was presented in my presentation. Thank you.

[Terushige Iike, executive]

Next, I would like to report on our progress in oncology area. In the beginning, as my colleague, Mr. Yanagi mentioned, LENVIMA achieved JPY 80.5 billion sales cumulatively over 3 quarters. This is a growth of 86% over the previous year, same period, which is a strong growth.

Americas were boosted by HCC, and last September, approval was obtained for endometrial carcinoma, which is an indication for -- endometrial carcinoma, which exacerbated for systemic therapy and the LENVIMA was the first drug in the United States to receive indication for this. And it is expanding smoothly, and in China, in Japan as well, HCC-led our sales.

In HCC, tumor size may be large or tumor number maybe too many, and local therapy may not be suitable for such patients. First LENVIMA can be given to shrink tumors. And then curative local therapy, including TACE may be applied, and this is called conversion therapy. Already in Japan, about 60 patients are undergoing this conversion therapy.

As for EMEA, Germany is showing the fastest growth. And in Russia, LENVIMA was listed in the national guideline and is also growing at the pace similar to Italy and France. For this fiscal year, LENVIMA sales is expected to exceed $1 billion.

This month in the Journal of Clinical Oncology, Phase I/II study results of combination between LENVIMA and KEYTRUDA were published. There are 6 types of cancer that were targeted for the study. As shown in this waterfall block, there is tumor a shrinkage observed, and safety profile is showing that the safety is manageable. In case of RCC, tumor shrinkage or overall response is 70% and duration of response is 20 months, and therefore, good results are obtained. And patients who die from cancer are most of the patients die from lung cancer, and NSCLC accounts for majority of the lung cancer, ORRs 33%, DOR was 11 months.

We do not limit based on previous therapy in these studies. Most of the patients who participated in the study may have received the immuno checkpoint drug, including KEYTRUDA. Despite that, ORR and DOR as high as these were achieved. In multiple types of cancer, a combination of LENVIMA and KEYTRUDA, cancer was -- cancer backbone therapy, that is our belief, and we are carrying out studies for submission. Pivotal studies are underway. This is the development of combination therapy with KEYTRUDA, but in neck cancer first-line study included 12 studies have been initiated. One study that is remaining, which is second line for head and neck cancer, is under preparation. And 2 days ago, clinical trial disclosure was made so we were not able to include that in this slide. There is one more trial that is added, that is for HCC in combination with TACE. This TACE is transcatheter chemoarterial embolization (sic)

[ transarterial chemoembolization ] and in combination with LENVIMA, KEYTRUDA, TACE, the study will be carried out. And this was not included initially in our contract with Merck. But in HCC, there is an outstanding usefulness observed in combination therapy. And last year, after consultation with the Merck, the 2 parties decided to start this study. And 6 types of cancers are covered by LEAP-005 in basket study trial, triple-negative breast cancer, gastric cancer, included 6 types of cancer are included. The ASCO, the other day -- Japanese doctors announced the results of 69% of ORR for gastric cancer for combination therapy with KEYTRUDA, and LEAP-005, in which Japanese doctors announced investor-initiated trial results, and we will be getting results from LEAP-005 as well.

So about next steps, we would like to consult with our partner Merck.

Turning to China, which is our important region. For HCC indication, JPY 10.7 billion revenue was accumulated in Q3 fiscal 2019, exceeding revenue in Japan and EMEA. Through collaboration with MSD, we are expanding contribution to patients, mainly in city areas by increasing commercial resources and by increasing coverage, and in regions and to small and medium-sized hospitals, through utilization of e-marketing, we would like to expand patient access.

As for thyroid cancer -- differentiated thyroid cancer, global Phase III is already completed. And based on the results, submission was accepted by the authority. As for the thyroid cancer incident in China, approximately 190,000 new cases are diagnosed. And that number in Japan is 20,000. So in China, it is almost a tenfold. And there is a strong unmet medical need. And we are making utmost efforts in our response to the review process by the authority.

For Halaven, this is Eisai in-house developed compound. And in January the 12th, we had a launch event. After launch in December 2019, approximately 370,000 new cases of breast cancer are diagnosed in Japan. So this is about 5x that in Japan. And a Fareston hormonal therapy for breast cancer has been launched in China since 9 years ago. Using that base, we would like to build for Halaven to Chinese patients.

Next, E7090 fibroblast growth factor receptor inhibitor. FGFR 1, 2, 3 selective inhibitor is E7090. At Tsukuba Research Laboratories, using LENVIMA discovery know-how and compound library, E7090 was discovered and developed. Phase I expansion part result was published at ASCO-GI the other day. FGFR2 mutation biliary tract cancer or gastric patients -- gastric cancer patients are included in this expansion part. And those was 140-milligram in the earlier dose escalation part. Higher dose was considered, however, biomarkers suggest that sufficient efficacy is obtained at 140 milligram and that is why this dose was selected. Red bars are biliary tract cancer. Out of 6, the 5 had tumor shrinkage and 1 had stable disease, so strong efficacy was observed.

Blue is gastric cancer. Perhaps other than FGFR2, other factors may be contributing to proliferation of cancer. There seems to be cancer heterogeneity in gastric cancer, more so than in biliary tract cancer.

FGFR2 fusion, biliary tract cancer, on this, we received SAKIGAKE designation from MHLW last year. In consultation with the authority, we have decided to conduct a joint Phase II study, jointly between Japan and China, and this has already been started. In the 3 months, we were able to launch one product and one submission and initiation of one Phase III, one Phase II and one Phase I studies in oncology, E7766 STING agonist.

This is a Phase I study. Two Phase I studies will be run in parallel, and one is injection in the tumor and the other is injection in bladder for bladder cancer patients. And breast cancer in HCC pipelines are also making progress for early development products, and combination with KEYTRUDA in LEAP study series, we expect results of one after another from LEAP studies this year and next year for these types of cancer so that they can serve -- so that the therapy can serve as a backbone therapy, we would like to work together with Merck. That concludes the oncology presentation part.

Then I would like to summarize at the end. Today, the three speakers have presented. Eisai's operations and financials are currently very robust and making strong advances. EWAY 2025 vision is medical societal innovator. For example, as explained today, next-generation AD treatment is medical innovation. And that is based on ecosystem, which is quite inclusive, and this can turn into a massive social innovation, and we are making steady progress in implementing such a business model. And as a result, EWAY 2025, at the time of 2025, ROE of 15% level should be achieved in stable fashion and that probability of success is being enhanced. Furthermore, over extremely long term, beyond 2025 -- even beyond 2025, there should be contribution to enterprise value due to a rich pipeline filled with next-generation product candidates and progress is made.

At Eisai, long-term sustainable growth of enterprise value is pursued. And amongst stakeholders, we hope that we continue to receive your support.

With that, I would like to conclude. Thank you very much.

[Unknown Executive]

Next, we would like to open the floor for questions. First, we would like to entertain questions in this room before receiving questions from participants over the phone. If you have questions, please do use the microphone, and please give us your name and affiliation before your question. If you have questions, please raise your hand.

[Motoya Kohtani, analyst]

My name is Kohtani. I am from Nomura Securities. I have three questions about oncology. First, ASCO-GI, as you said that IIS EPOCH 1706 and 29 patients included. Therefore, 69% was the response rate and that the sample size were very small, but although -- but it was not a coincidence. And with the monotherapy KEYTRUDA, the response was 15%. And then with the chemotherapy -- and then only 45% -- with the chemotherapy, 40%. And with the chemotherapy 45% -- 5% was the response rate. Please let me know.

LENVIMA monotherapy in gastric cancer, what kind of data was published? Are there any such data and VEGF and PD-L1 antibodies? And do you think that there has been a powerful synergy with PD-L1 antibodies like the KEYTRUDA?

Probably, it will be difficult to file solely based on this study data. But I think you mentioned earlier, this is with Merck, LEAP or we did include it in the basket trial being conducted with Merck is adding such a study. And then how this addition will -- may have an impact on your clinical development?

[Unknown Executive]

Thank you for your question. Dr. Owa, who is in charge of science of oncology. Dr. Owa is going to respond to questions.

[Takashi Owa, executive]

Thank you very much, Mr. Kohtani. Regarding your first point, LENVIMA monotherapy data for gastric cancer. What kind of data do we have for LENVIMA monotherapy, for example, with 20 or 30 patients with gastric cancer, we do not have any data for monotherapy. But so far, Phase I study were conducted for LENVIMA and that there were gastric cancer patients involved. And for -- even for monotherapy, there were partial response. That data is available, but there is nothing taken from this data because the sample size was not large enough.

[Motoya Kohtani, analyst]

And so how should we interpret this data?

[Takashi Owa, executive]

As you know, Mr. Kohtani, very well, for this class of agents, at ASCO-GI held last year, Japanese -- the same Japanese physician group, nivolumab and regorafenib combination therapy data were published. At this year's at ASCO-GI, there was a publication about the follow-up data, and these data were promising. It's not a apple-to-apple comparison. But with our LENVIMA in combination with the KEYTRUDA and niviolumab and Opdivo combination compared. And as we pointed out, our data suggested a favorable -- more favorable data. The purity was as suggested. And VEGFR was inhibited in PD-L1 plus efficacy is enhanced very much and there is a significant carried enhancement of efficacy, only with LENVIMA. The good data was shown to FGFR, there will be even potent effects on the strengthening of the immunity. As has been mentioned by Mr. Iike, LEAP study -- LEAP-005 study progress has been shown very steadily. And the data from gastric cancer and IIS data will be combined, and these may suggest the EPOCH -- potential EPOCH making a treatment for gastric cancer treatment, if we agree on that between us and the Merck. And then this sample size may be expanded to 100 to 150, and the breakthrough therapy designation or earlier accelerated pathway for getting approval. These pathways will be discussed with Merck and in any way LEAP-005 data will be utilized before discussing and making any decision going forward. We have our expectations regarding the impacts on our operational budget. And of course, this will be discussed with Merck as well. Well, the accelerated approval is being targeted. I don't think that, that will create a major impact on budgeting. There will not be a lot of costs to be incurred in proceeding with this pathway. Thank you.

[Motoya Kohtani, analyst]

Let me clarify once again, LEAP-005. Do you think that the data will be coming up by the end of this year?

[Takashi Owa, executive]

Well, it really depends on the types of cancer, they are mixed picture.

And for 2020, gastric cancer, during the follow-up period. And how much follow-up monitoring will be done, and a partial response. There needs to be a certain time to be spent in order to include the patients in the PR. So we do not want to miss that so that we can have the solid response data. If we believe that we can accelerate further and then we we'll see the readout by the end of this year. But if you think that it's better to wait for more. And then we may wait more beyond this year.

[Motoya Kohtani, analyst]

And this is the second question, BAN2401, A3, A45. I think that the prevention study was discussed earlier to be started. But for this type of study, I think this study could be very expensive because you needed to do a lot of tests, and I think it will be too difficult to involve patients as well.

And the cost-wise, how much impact do you see on the R&D expenses during the next fiscal year. And I think you have announced that your time with the Sysmex in order to do the amyloid blood based testing. Do you apply this test to this study? And a, is amyloid and tau and Nfl, maybe I don't know what N stands for. But how are you going to measure these other endpoints inclusive of diagnostics?

[Ivan Cheung, executive]

I will answer the first half of your question. And then for the second half of your question, I would ask if [indiscernible] have additional comments to add. With regard to the AHEAD 3-45 study, it's very important that we have a collaborator in ACTC. And they already have up to 100 sites that are ready to enroll these subjects, with majority of them in the U.S., but also some sites in Japan and Australia. And because this ACTC consortium also has funding from the NIH, we believe, we will see some cost efficiency from that arrangement. With regard to the second half of your question, I would just say that you know -- you all know very well. It's not just amyloid PET anymore. We are talking about tau PET, CSF, plasma p-Tau, neurogranin, there are many items we want to include so that we can really make sure we can see the improvement that are associated -- the biomarker improvements that are correlated with the underlying clinical progression.

But [indiscernible] please answer that.

[Unknown Executive]

As Ivan Cheung already mentioned, the biomarker ATN, amyloid or tau and neurodegeneration, the biomarker panel and looking at the CSF and the PET and plasma and PET, of course, tau, Biogen in aducanumab has published excellent data, reducing the tau. And in CSF, p-Tau, of course, and the total tau and neurogranin and neurofilament light chain and other new emerging markers exploratory measured in panel. And as has been already mentioned, regarding blood. Of course, we are collaborating with Sysmex. We are discussing with Sysmex now, and blood samples at a fluid biomarkers, that is easy to take. Therefore, we are enrolling -- rolling out these testing as experience grade test.

[Motoya Kohtani, analyst]

This is my last question. Regarding lemborexant, I wanted to ask this question. Of course, on the label of DAYVIGO, which is already available, I haven't seen this efficacy in SUNRISE 1, 2 and compared to Belsomra LTS WSO these main endpoints. I think in terms of numbers, I think the lemborexant is better than belsomra. And regarding the safety profile, is there anything that are reflected in label and Belsomra in the sleepiness, somnolence and the cataplexy, like folding may be caused and the driving may be affected. That dizziness will be felt by patients. And I think that you have been testing on these items of tests? And have there been any reflection of the results on the label ISWRD, which is a critical endpoint? Could you please give us your update?

[Ivan Cheung, executive]

With regards to the safety aspect, as I mentioned earlier, we do not see a rebound insomnia from our Phase III study, which we believe is extremely important for an insomnia treatment for long-term insomnia patients.

Secondly, in addition to SUNRISE 1 and SUNRISE 2, we conducted two very important Phase I studies, Study 108 and Study 106. In Study 108, we looked at middle of the night; when you wake up, can you go back to sleep? And also how's your body's [ weight ] when you wake up at a -- in the middle of the night. And that is 108 Study is comparing lemborexant to not only placebo, but also most importantly, to Azedra and zolpidem. Just 108, and we have very good data from that study that some of the information are included in the language of the package insert. Study 106 is a driving study. And in our driving study, both the 5-milligram and a 10-milligram doses, we see fairly good data. There is no case of not crossing the line when you drive. And actually, in the label, it specifically talked about the 5 milligram, which is effective dose. The 5 milligram -- there's no concern for driving. The 10-milligram dose are high dose, there will be some caution in the label about the high dose, but the 5-milligram dose does not. So there are a number of safety advantages that we believe will differentiate this drug versus others. Thank you.

[Unknown Executive]

Next question, please.

[Kazuaki Hashiguchi, analyst]

Hashiguchi from Daiwa Securities. I have two questions. First, BAN2401 Clarity study. Aducanumab results indicate that the dose level is very important. So once again, the importance of dose level was indicated. In the Phase II study, adverse events was not pronounced, not notable. And if a dose was increased, I assume that adverse events may increase. And in Clarity study, only 1 dose level is considered. But in the future, what is the possibility of increasing dose levels. And after results from aducanumab are made available, is there a change in entry speed now that there are different views in the wider society about aducanumab?

[Ivan Cheung, executive]

First, your last question. And then the first question, I would like to ask [indiscernible] to give you the answer. The third last point, the speed of enrollment. Actually Clarity AD now is enrolling very, very well, given the enthusiasm for such a mechanism, especially one that can target the aggregates. And we're actually a bit ahead of schedule right now. So within this year, we will complete enrollment for our Clarity AD, which probably will be -- maybe the fastest ever in this population among all trials in the past. The first part of your question, [indiscernible], please.

[Unknown Executive]

In Phase II, 10-milligram biweekly is used and impact that much reduction was obtained in biomarkers. We are also seeing a very supportive data in terms of clinical efficacy. So current Clarity AD 10-milligram biweekly dose. We are confident of that dose level and it doesn't require titration. So from day 1, 10 milligrams dose -- potent dose can be given. And Clarity AD 10-milligram biweekly, we believe is sufficiently clinically effective. So going forward, we are not at all thinking about other those levels. Thank you for your question.

[Kazuaki Hashiguchi, analyst]

The second question is about LENVIMA first-line HCC in combination with Tecentriq. That result was announced and in -- in comparison to solanezumab superiority was shown. So how will LENVIMA be differentiated to compete against these? And in combination with KEYTRUDA first-line HCC Phase III study, what is the progress? When can we have results? When can we see results?

[Unknown Executive]

Thank you for your questions. Atezolizumab, as you correctly pointed out, I think it was last Monday, filing was completed by Roche according to its news release. Of course, last year, Phase III study results in detail were published in Central Asia. We are not in a position to comment directly on these results. LENVIMA, even in monotherapy has pronounced tumor-shrinking effect. Intermediate, advanced incurrence of stage. In intermediate stage, cancer can be downstaged with tumor shrinkage and survival can be extended. And if atezolizumab has always benefit -- even if atezolizumab has always benefited, we, I believe, can still claim the advantage of LENVIMA. Atezolizumab, I think, is targeted more towards advanced-stage HCC patients. That is my speculation.

And as for bevacizumab, 15-milligram over 3 weeks, that is the regimen. So [indiscernible] related safety, of course, we are not in a position to know the information. But in that respect, our LENVIMA value can be advocated. I think that there is room to drive the advantage of LENVIMA.

As for the timing, which was the second part of your question, we are seeing very good progress. And in the near future, we expect to obtain results. Specifically, in what quarter, we are not able to answer. Now as for Phase III study, not only Phase III study, there is 117 Study, Phase Ib study, and this study is also progressing quite well. Thank you for your question.

[Unknown Executive]

A question in the front. Well, please have the floor.

[Seiji Wakao, analyst]

My name is Wakao. I'm from Mitsubishi UFJ Morgan Stanley Securities. I have two questions about -- first one is about aducanumab. In the U.S., Biogen is consulting. And I think we can listen to what Biogen has to say. But in Japan -- Biogen in Japan, if I remember correctly, through interview, mentioned the filing by the end of this year. So could you please elaborate on the timing you plan to make a filing in Japan? And I think the marketing will be done by Eisai in Japan. But after launch of aducanumab, have you already started preparation for the launch of aducanumab in this market?

[Ivan Cheung, executive]

Good question. We just started interaction with the authority in Japan, when we have more information, we will update everyone and of course, together with Biogen in Japan. We are, of course, working on the potential launch and preparing for success. So those activities are going on very well. And you recently saw, since this month, the [indiscernible] group has been established, led by Keisuke Naito make sure that we are very much prepared for success in Japan.

[Unknown Executive]

Are you satisfied with the answer?

[Seiji Wakao, analyst]

Another question is milestone revenue scheduled for this fiscal year. I think according to Page 9 of the reference material -- and JPY 103 billion. And in the reference data, it's mentioned as JPY 40.8 billion. And how these will be allocated in each quarter, which was not explained, therefore, I do not know. But on this level, sales-based milestone and regulatory-based milestones related to LENVIMA are included. But based on the current trend, in the revenue growth in LENVIMA as well as the development of [ sales ] and inclusive of others -- and then JPY 103 billion. And out of which JPY 40.8 billion. How should I interpret this number?

[Ryohei Yanagi, executive]

Yanagi. As far as I can, I'd like to respond to your question. Regarding the receipt of milestone from Merck, as you pointed out, according to the financial briefing on Page 9, at your hand, I think in the other column. And then this revenue includes those milestones and others include JPY 79.1 billion last year. And the full year forecast is JPY 103 billion for this fiscal year. And it does not include -- not only the milestone received from Merck, but also the revenue from exports from us.

But based on the general trend, the total revenue can be analyzed and surmised. And regarding the trend in milestones, $225 million was received last year. And this year, $125 million -- $150 million was received this year, but we are expecting to receive large amount of milestone in the fourth quarter. But according to the press data that has been published in the continuous progress of this project, that is to say, auction milestone is to be received in the amount of $200 million in the fourth quarter. For others, the sales based milestones are expected to be received further. And those various amounts as well as the conditions as thresholds are not to be disclosed. But based upon those numbers, you can surmise, and guess.

[Seiji Wakao, analyst]

And during the third quarter, cumulative LENVIMA associated revenue, based upon the LENVIMA revenues, in the first -- fourth quarter, do you expect that the milestone will be received as planned? And based on the cumulative revenue of LENVIMA, up until third quarter, has been steady progressing, as you explained, I think that, that will be assured, I think.

[Ryohei Yanagi, executive]

JPY 80.5 billion up until third quarter, which has been steadily growing. So as expected, and $150 million has been already received as planned. And regarding the full year forecast, JPY 119 billion, so over JPY 100 billion revenue is aimed at. Based on the linear analysis, I think that we are still on track towards that target. So expected milestone, sales based milestone will be booked and recognized by the end of March. So-- we are seeing steady progress toward that. Thank you very much.

[Unknown Executive]

This will be the last question. One final question, please. One question.

[Unknown Analyst]

CTAD announced BAN2401 OLE study? And how to think about this? Treatment was only up to 18 months. And I think that is why the diagrams are shown. The lowering of aggregate negative 0.4. Is this the limit physically? Or if a treatment was extended to 24 months or 36 months, was there room to achieve even lower level? And to begin with, if a treatment is over 18 months. Do you have any evidence that it's not risky?

[Unknown Executive]

The question is, well, on the right side, CDR-SB the gap is maintained, but in some way, if in real world, if it's approved, that the green line may remain at low level and plateauing.

As for left-hand diagram, PET SUVr value. This is a change over baseline, change from the baseline. So it may be not easy to understand, but baseline in early AD in our study is about 1.4. And negative threshold in SUVr, if there is to be a cut -- cut a line, it's 1.1, 10-milligram biweekly. It has gone down by 0.4. So from 1.4 negative -- 1.4 minus 0.4, which is 1. So it is slightly lower than the threshold for negative finding. So 10-milligram biweekly patients, more or less, they have been able to see lowering to near threshold levels -- the near negative threshold in healthier subjects.

It may be 0.8 or 0.9, although there may be individual variability, and it's a threshold level, but there is much accumulation of amyloid. So -- and they can be included in A3 preclinical AD.

And if a treatment was continued. I believe that -- I think that lowering will continue. Aducanumab, open-label study over about 3 years was carried out. And so will decelerate, but lowering continues.

And this study -- in this study, treatment was 18 months. But if treatment was continued, I think lowering will continue. And as for the right-hand side data, this also suggests the need of continuous treatment and amyloid beta plaque may have been reduced. But what may be invisible in PET, there is a soluble aggregate and patients have lower ability to clear amyloid. So most toxic species, aggregate amyloid, soluble amyloid, aggregate in protofibril, may be neutralized with continuous treatment. So continuous treatment is important. With less side effects and selectivity over protofibril and soluble aggregate, I think, we'll have greater role to play in actual clinical practice.

[Unknown Executive]

Thank you very much for all of the questions. It is now time we would like to close the presentation session by Eisai. Thank you very much.