Eisai Co Ltd

TSE:4523

Earnings Call Transcript 2023-Q3

[Operator]

It is now time. We would like to begin financial results presentation session by Eisai for the third quarter fiscal 2022. This is held in hybrid format, including attendance in this room as well as online attendance. Those of you who are attending in this room, please make sure that you have distributed the materials, including the deck of slides in the past reports. Those of you who are watching online, please continue to watch your screen.

Let me introduce the officers in attendance, standby President, Senior Vice President and Chief Financial Officer, Chief IR Officer, Mr. Tatsuyuki Yasuno; Senior Vice President, Global Alzheimer's Disease Officer, President, Americas Region, Ivan Cheung. Ivan Cheung will be presenting in English.

And in this room, we are securing enough distance, so masks will not be worn by the speakers. Presentation will begin. Microphone to you, Mr. Yasuno.

[Tatsuyuki Yasuno, executive]

Now first, myself, Tatsuyuki Yasuno, CFO, will present consolidated financial results for the third quarter of fiscal year 2022. The main points of the financial results this time are as follows: Due to the impacts of many onetime revenues recorded in the previous year, revenue and profit decreased. However, the pharmaceutical business, which is our organic business grew steadily and both revenue and profits increased. In addition, we are continuously making solid investments for future growth.

First slide here is the P&L. At the top line, revenue decreased to JPY 546.2 billion or 97% of the previous year's level. This includes the impact of foreign exchange rates of JPY 53.6 billion. Below that, revenue from pharmaceutical business increased 15% year-on-year due to the growth of our global brands and revenue decreased to JPY 546.2 billion or 97% of the previous year's level. This includes the impact of foreign exchange rates of JPY 53.6 billion.

And although there is a JPY 51.8 billion impact from foreign exchange rates, even including -- excluding this impact of ForEx, revenue grew steadily to 104% of the previous year's level. R&D expenses totaled JPY 121.4 billion, which was 98% of the previous year's level, with a total decrease of JPY 1.9 billion despite a JPY 20.6 billion increase due to weaker yen.

Excluding the impact of ForEx, R&D expenses would have been 82% of the previous year's level. SG&A expenses were JPY 273.8 billion, which was 107% of the previous year's level, but this includes a JPY 37.5 billion increase due to the impact of foreign exchange rates. Excluding this impact of ForEx, SG&A expenses would have been at 92% of the previous year level. Although expenses regarding shared profits of Lenvima paid to partner increased in line with its sales expansion. Agenda A expenses, excluding this year, profit expenses decreased significantly, indicating that the company is firmly managing its expenses.

Other income and expenses amounted JPY 1.3 billion for the 9 months of the current fiscal year. As a result, operating profit was JPY 13.8 billion, which was 19% of the previous year's level. The foreign exchange impact was minus JPY 10.8 billion.

For the Fycompa, the agreement for the divestiture of rights of Fycompa in the U.S. was signed in December of last year, the closing of which was completed in January. And the impact will be recorded in the fourth quarter of this fiscal year. The divestiture of Eisai distribution, the agreement which was also signed in December last year, is expected to be accounted for at the time of the share transfer slated for March 31st of this year.

Although the progress in operating profit, which was JPY 13.8 billion during the 9 months, this seems to be delayed as compared to the full year forecast. But as I said earlier, there were 2 strategic options for which agreement have been already signed. And for other strategic options as well, which are steadily progressing. Therefore, in addition, our core business -- pharmaceutical business, which is showing a steady growth. Therefore, we are even more confident that our full year forecast will be achieved.

Next, please. Here, I will be explaining the factors behind the increase and decrease in revenue, utilizing this waterfall chart. Top left. Last year's revenue was JPY 565.3 billion in the first 9 months of last fiscal year. And this year, JPY 546.2 billion was recorded for this fiscal year, a decrease of JPY 19.1 billion and JPY 68.1 billion year-on-year increase was recorded with double-digit 15% in pharmaceutical business.

And so both revenue and profit increased. So this was mainly due to the growth of global brands for Lenvima, which grew by JPY 50.2 billion year-on-year, mainly in the U.S., Dayvigo grew mainly in Japan by JPY 10.6 billion. Halaven and Fycompa also showed a solid growth both in revenue and profit. And therefore, there was a JPY 69.8 billion increase from the previous year for the 4 global brand products combined.

On the other hand, in other business, there was the onetime upfront payment for MORAb-202 with JPY 49.6 billion recorded in the last fiscal year. And also Lenvima sales milestone payments received in the amount of JPY 34.5 billion. Therefore, the increase of these impacts, the revenue decreased by JPY 87.2 billion. Although there were decreases in revenue because of the onetime payments. However, as I have said earlier, we have seen the solid growth in -- particularly in the pharmaceutical business.

I would now like to touch on Lenvima, which is driving the strong growth of pharmaceutical business. As you see on the left graph towards the right side of the left graph. In the first 3 quarters, revenue was globally JPY 191.3 billion, growing up 36% year-on-year. Excluding foreign exchange impact, the growth was 14%, which was a double-digit growth.

Lenvima is established in position as backbone therapy with 6 indications in 5 cancer types. In particular, combination with KEYTRUDA in aRCC and endometrial cancer, is driving growth. As shown at the right bottom with these data, we will continue to add further expansion as a standard therapy.

Next, I would like to touch upon the breakdown of the operating profit migration using similar waterfall chart. Left chart shows that April to December fiscal '21 operating profit was JPY 74.3 billion, and in this fiscal year, there was a decline of JPY 13.8 billion. As shown on the right side, the earlier mentioned pharmaceutical business revenue rose. And as a result, pharmaceutical business segment profit increased JPY 54.1 billion year-on-year or 27% year-on-year, which is a high level of double-digit growth.

Furthermore, regarding the profitability, there was a substantial improvement. All 5 regions achieved increase in operating profit. Below that in other business, as I mentioned, in relation to revenue because of a onetime income in the previous year in the segment operating profit, it was negative JPY 88.7 billion. As for R&D expenses, this year in AD area, including LEQEMBI, there was a prioritized investments of resources.

Also in other focus areas. On the other hand, Lenvima and related expenses decreased. Partnership model was used to improve efficiency and overall efficiency was improved. And on the whole, in comparison to the same period previous year, R&D expense decreased by JPY 1.9 billion, pushing up the profit. However, R&D expense, including partners reimbursement, was 32.1%. Growth investment continues at a high level, and we are making -- continuously making active investment in the future growth. As for other SG&A expenses, Lenvima shared profit is increased included here an increase of share profit Lenvima resulted in decline of other SG&A expenses of JPY 16.5 billion.

Other profit and loss decreased by JPY 11.3 billion year-on-year because in the previous year, Zonegran rights were divested. As you can see, there were many onetime factors in the previous year, where onetime income was recorded in the previous year. The third quarter operating profit declined. However, pharmaceutical business segment operating profit further improved. This is the full year forecast for fiscal 2022 on a consolidated basis. There is no change or revision to the full year forecast. With respect to dividend, based on our strong balance sheet, as forecasted, annual dividend payout forecast is JPY 160, and we see no problem in maintaining our forecast.

As I mentioned earlier, pharmaceutical business profitability organic business is improving. And towards the end of the fiscal year, we will continue to work on improving profitability further. With regards to R&D investment, we will also make efforts to improve efficiency further.

In addition, there are already signed 2 strategic projects, which will be booked on the accounts in the fourth quarter. And there are strategic options that we are working on currently, which are showing steady progress, and we will make sure to realize these. And with this, we believe that we will be able to achieve full year forecast. That concludes my part of the presentation. Next, Ivan Cheung will report on Alzheimer's disease area. Mr. Cheung, please?

[Ivan Cheung, executive]

Thank you. As many of you already know, we at Eisai are honored for the LEQEMBI innovation to be recognized by Prime Minister Kishida during his opening speech 2 weeks ago. Today, I want to provide an update about the positive dynamics and momentum behind LEQEMBI since the accelerated approval granted by the U.S. FDA on January 6.

First and foremost, on this slide, we are more than grateful to the hard work by the FDA and the Eisai team to deliver a transparent and informative label, which has drawn significant interest from physicians, medical institutions and payers, to engage with the Eisai teams to discuss how to select patients, how to administer the therapy and how to do monitoring such as how to identify ARIA and what to do when ARIA occurs.

We have received many, many requests for engagements from physicians, medical institutions and payers. For example, 1 neurologist recently told the Eisai team that he needs his clinical practice and Eisai to be both successful for LEQEMBI because if we are both successful, it will start a paradigm shift that will change patients' lives. Overall, what I can say is the feedback from the market are positive, with high enthusiasm from physicians, medical institutions and payers to seek out more information about LEQEMBI.

Next slide, please. We are also very encouraged that on January 6, both the FDA and the CMS put out public statements about LEQEMBI's accelerated approval, underscoring the importance of this day to the Alzheimer's disease community and to the American public. That's for to take a look at the FDA's public statements on January 6. Dr. Billy Dunn, Director of the Neuroscience division at the FDA set, as you can see on this slide, Alzheimer's disease immeasurably incapacitates the lives of those who suffer from it and establishing effects on their loved ones.

This treatment option is the latest therapy to target and affect the underlying disease process of Alzheimer's. Instead of only treating the symptoms of the disease, we at Eisai share his sentiment. Next slide, please. Now let's take a look at the CMS public statements on January 6. The CMS often does not make these public statements, but they do on January Chiquita Brooks-LaSure, CMS administrator set. At CMS, we will continue to expeditiously review the data on these products as they become available and are committed to timely access to treatments, including drugs that improve clinically meaningful outcomes. If lecanemab subsequently received traditional FDA approval, CMS would provide broader coverage using the framework we announced last year under coverage with evidence development on the same day.

The last phrase is very important. On the same day with Eisai commend her statement that broader coverage for Medicare beneficiaries would be provided on the same day when LEQEMBI receives full traditional approval from the FDA. Next slide, please. One consistent feedback from our stakeholders upon the FDA accelerated approval is the Eisai team's efficiency to move with urgency for the sake of patients and their families. On January 6, on the same day that we received, the accelerated approval for LEQEMBI from the FDA. We submitted the supplemental BLA to the FDA in based on Clarity AD data for full traditional approval. The same-day action reminded our stakeholders of another recent same-day action from Eisai, which was back in November 2022 when we publish our Clarity AD results in the New England Journal of Medicine.

On the same day, we presented the detailed data from Clarity AD for the first time at the CTAD Medical Congress. Shortly after January 6, which was a Friday. On Monday, January 9, we submitted the marketing authorization application to the EMA in Europe for LEQEMBI. Then quickly on the following Monday, on January 16, we submitted the new drug application to the PMDA in Japan. In just 10 days, we received the priority reviewed destination for LEQEMBI from the MHLW in Japan.

Meanwhile, we continue to be making solid progress with health authorities in other countries. For example, we have already started submitting data to the China CDE in December last year under the price category 1 destination that allows for the most expedited review. Overall, fiscal year 2023 will be a critical year for Eisai and for LEQEMBI with many approval and launch milestones.

In the United States, if the FDA grants priority review to our supplemental BLA application, we could receive a full traditional approval and broader coverage from the CMS in the summer of this year, just several months away. In Japan, under priority review, we could receive approval by the middle of fiscal year 2023, again, several months away only. For both Europe and China, we could receive approvals before the end of fiscal year 2023. Where they are committed to bring LEQEMBI to appropriate patients and their families even 1 day earlier around the world.

Next slide, please. Another consistent feedback from our stakeholders upon the FDA accelerated approval is Eisai's transparency with regard to the rationale and the detailed mathematics behind the U.S. pricing based on societal value of LEQEMBI. The industry first with this level of transparency and the commitment to give back to society.

We estimated the societal value of LEQEMBI the United States to be $37,600 per year per patient, and we priced LEQEMBI at $26,500 per year for a patient of average weight. And this number will further go down significantly during the maintenance dosing regimen of less frequent dosing. Over 10 years, the gradual adoption of LEQEMBI at this pricing approach could give back about 60% after potential positive social impact of several tens of billion dollars to the U.S. society, including patients, families, caregivers, health care providers and payers.

On the other hand, the remaining 40% to be accrued by employees, shareholders will be reinvested into further research and development to create new AD therapies and new ecosystems for inclusive AD communities. Since January 6, when this U.S. pricing announcement went out. Eisai has been held in high regard by many stakeholders with this pricing approach. While initial conversations with payers in the United States in a typical pharmaceutical launch, start with discussing and oftentimes defending the price.

Our transparent pricing announcement allowed our initial engagement with payers in the United States about LEQEMBI to go straight to the important clinical discussions. Moreover, payers in the U.S., appreciate our published ADAC model, which produce results similar to the ISO model despite different methodologies. Beyond the U.S., we will apply similar pricing approach based on the ADAC model with Clarity AD data tailored to unique conditions in each country.

Next slide, please. Now let me give an update on how we are accelerating our efforts with various payers in the United States. So far, we've received many, many requests from payers to conduct clinical data presentations with high level of engagement. Payers appreciate our transparency and data exchange frequent discussions about LEQEMBI safety profile, efficacy profile and clinical meaningfulness.

With regard to the CMS on the left-hand side of the slide, which covers about 85% of eligible early AD patients in the United States. The Eisai team has had numerous productive interactions with the CMS since the CMS issued the NCD policy last year. We met many times to discuss the Phase II data, 3 Clarity AD for the LEQEMBI. Our goal with the CMS is simple.

Our goal is to motivate CMS established broad and simple Medicare access to LEQEMBI. As I mentioned earlier, we are glad to hear on January 6 that the CMS could provide broader access on the same day after LEQEMBI receiving full traditional approval from the FDA. Let me add 2 points here about the CMS. One is that we recently did meet with the CMS post accelerated approval, and we went through how LEQEMBI's clinical data from the Phase III Clarity AD, as well as these 2 and also the open-label long-term extension data fully answered the 3 key questions required in the NCD policy.

And therefore, we believe qualifying LEQEMBI for a high level of evidence so that broad and simple Medicare access for LEQEMBI can be made available by the CMS within the existing NCD framework. Second point is that we are pleased to know that the CMS and the FDA are communicating and working closely together with regard to evaluating like LEQEMBI's clinical data, which we believe is a very positive development in our view, towards broader Medicare access on the same day of LEQEMBI's receiving full traditional FDA approval. To Veteran Affairs, VA in the middle of the slide, VA is the largest integrated health system in the United States, serving 9 million veterans and their families VA mix their own independent formulary decision and the Eisai team has had already several productive engagements with the VA, including explaining like LEQEMBI's clinical data and initiating contract term discussions.

We are hopeful that the VA will provide access to LEQEMBI soon, potentially even before LEQEMBI received in full traditional approval from the FDA. With regard to the commercial payers on the right-hand side, on that cover individuals under the age of 65, the Eisai team has already completed clinical data presentations to all major commercial payers.

There are many discussions about our clinical trials inclusion/exclusion criteria and monitoring approaches, which signaled to us positively that these payers are working on their utilization management and prior authorization approaches to consider placing like LEQEMBI on their formularies. Our overall objective is that shortly after LEQEMBI after receiving full traditional approval from the FDA, vast majority of the eligible early AD patients in the United States will have unimpeded access. That's our goal.

Next slide, please. Going back to the CMS topic. Let me use a couple of more slides to provide further insight. On December 19 last year, the Alzheimer's Association, which is the largest patient efficacy group in the United States sent their final and formal request for reconsideration of the NCD for monoclonal antibodies directed against amyloid for the treatment of Alzheimer's disease to the CMS, as you can see on the left-hand side.

On the right-hand side, attached with this request by the Alzheimer's Association is a letter undersigned by 220 AD researchers and clinicians titled, treating Alzheimer's. A new era begins with lecanemab. As you can see on the right-hand side on the slide.

Let me read the last paragraph of this letter, as you can see at the bottom of the slide. The many undersigned AD conditions and other experts though this terrible disease is all too well from witnessing it up close. We wrote the foundational advance represented by the advance of lecanemab therapy. Now we must build on the success of science to translate these gains into even better outcomes for patients and families. Autonomy and justice dictate that our patients have equator access and the opportunity to make informed choices regarding reasonable treatments that can impact their lives and wellbeing. No barrier can be allowed to stand between our patients and the treatment that is a reasonable risk benefit ratio and significantly reduces the cost of to pathology.

Next slide, please. Just last, Thursday, the American of Neurology, AAN, which represents over 38,000 neurologists, put out their public letter to the CMS, request an expedited review of the NCD as it pertains to lecanemab because there is consensus among the AAN members and leadership who have reviewed the Phase III data that the Clarity AD trial was well designed, findings are clinically and significantly and statistical is significant -- clinically, statistically significant.

Let me read the second and last paragraph in this letter, as you can see on the slide. To summarize, the AAN believes that the Phase III data from the Clarity AD trial, indicating a direct clinical benefit, expedited reconsideration of the existing coverage policy as it applies to the lecanemab. As it would have been impossible for CMS to consider this highly relevant data at a time that the NCD was published. We believe to promote patient access to therapy that it would be appropriate for this reconsideration to occur through the revised decision can be released with an effective date concurrent with the potential traditional approval of lecanemab.

Furthermore, the AAN beliefs that a similar approach could be applied the future products, which meet the standard set by the Phase III data published in New England Journal of Medicine. Once again, the key concept here AAN road, same day for CMS coverage when lecanemab receives traditional approval from the FDA. Of course, Eisai has nothing to do with the AAN letter or the Alzheimer's Association letter on the previous slide. But you can see how stakeholders in the United States are coming together behind LEQEMBI with regard to early access for Medicare beneficiaries, which are, as I mentioned earlier, about 85% of the early AD patients in the United States.

Next slide, please. Besides the Alzheimer's Association and the AAN, let me also share the comments from FDA Commissioner, Dr. Robert Califf during his interview on CNBC on January 10, when he was asked about the NCD situation for LEQEMBI. You said the company, meaning Eisai just submitted their data for full approval, not the accelerated approval. That's going to be coming up. So I don't expect the CMS policy to be a totally fixed policy. We have a lot of communication. We meaning the FDA and the CMS and I think they will reach a good spot. They mean in CMS. He went on to say, I liken it to a where we need to make the baton handoff a lot smoother. It's not a new problem, but this has really brought it to public attention. I don't think it's a bad thing.

We agree with Dr. Califf that the coverage decision for LEQEMBI is an important for the American public and is good for this to be brought to public attention. And we are very encouraged that the FDA and the CMS are working together closely on this matter. Next slide, please. Now let me provide an operational update of the LEQEMBI launch since the accelerated approval. On January 6, immediately after the accelerated approval, our patient assistance program or PAP, was launched through the Eisai patient support staff with patient navigators uninsured or underinsured individuals, including Medicare beneficiaries who meet certain financial and other program criteria could be eligible to receive LEQEMBI at no cost under the PAP.

I'm glad to report that prescriptions have already been written for approved PAP patients. Commercial product availability of LEQEMBI was achieved ahead of schedule with the first batch of vials arriving at the warehouse on January 17. On January 18, first sales were recorded when the vials were shipped to various specialty distributors based on their first orders, knowledge on January 23, the first prescription was written. And on February 3, the first infusion on the first patient occurred.

At this moment, prescriptions and infusions have been for individuals under the PAP or paying cash. While our primary goal during the accelerated approval launch phase, is to ensure market readiness while LEQEMBI upon full traditional proven upon broad and simple access. In the meantime, we will make every effort to support health care providers and patients for those who are able to access LEQEMBI.

On January 25, we are very proud that our proactive ARIA education program called understanding ARIA went live in addition to self-directed educational modules, peer-to-peer interactive training and case reviews will be available in partnership with medical imaging experts and academic societies. Overall, what I can say is that the initial LEQEMBI launched post accelerated approval has been smooth and very much on track.

Next slide, please. Eisai's commitment to supporting the patient journey of Alzheimer's disease does not stop with the accelerated approval of the LEQEMBI or the positive Clarity AD results. The graph on this slide depicts the progression of Alzheimer's disease based on biomarkers as well as cognitive decline. In the middle of this graph, for MCI due to AD and mild AD dementia. The subcutaneous auto injection formulation lecanemab, is under development. With a sub-study in the Clarity AD open-label expansion, and we expect to file for approval before the end of fiscal year 2023.

In addition, we are also progressing the maintenance dosing regimen of less frequent dosing for lecanemab with a study in Study 201 open-label extension, and we all expect to file for approval before the end of fiscal year 2023. As for earlier to the left-hand side on this slide into the asymptomatic preclinical Alzheimer's disease stage, AHEAD 3-45 Phase III study for the lecanemab continues to enroll with the A45 cohort enrolling individuals who are amyloid positive and the A3 cohort enrolling individuals who have intermediate amyloid.

Now let's go to the right-hand side into the later part of the Alzheimer's disease progression into the mild-to-moderate AD dementia. You see that our anti-MTBR Tau antibody, E2814, which targets extracellular propagation of tau seeds in the AD brain is in a Phase Ib/II study in diet subjects, dominantly inherited Alzheimer's disease subjects. We believe E2814 specifically targets of disease progression in Alzheimer's disease in terms of both early tau pathology and late tau pathology. And we very much look forward to the readout of the biomarker results later on this year.

Last but not least, back to the middle part of this graph is a DIAN-TU Tau NexGen Phase II/III study, which studies lecanemab and E2814 in combination. This is the first combination of this sort, and we believe this combination approach holds tremendous potential going forward and is crucial to Eisai aspiration to moving closer to 1 day, stopping the progression of this disease altogether instead of slowing down this disease.

Next slide, please. This is my last slide, the FDA accelerated approval of LEQEMBI versus in the world, opened a new page, a new page for Eisai, the AD community and society at large. The fundamental strategic mission of a modern pharmaceutical business, our innovation and access for which we will put forth our maximum efforts from everyone in Eisai to ensure their realization.

Thank you so very much for joining us today.

[Operator]

[Operator Instructions] First, we'd like to receive questions from the audience in this venue. And then we would like to receive questions from those who are participating online. [Operator Instructions] Gentlemen, in the third row, please. .

[Unknown Analyst]

This is the first time I am seeing you, Mr. Ivan Cheung, in a face-to-face manner. I was glad to hear your presentation directly. First, in Nikkei newspaper this morning, there was a report about LEQEMBI. An analyst made a comment on the sales projection between JPY 400 billion to JPY 500 billion as the sales for LEQEMBI forecast. And I thought that this is rather small. But according to the presentation that you have made today, perhaps the reimbursement or insurance coverage will become quite broad. So I would like to ask you what size or scale of sales are you projecting annually?

Let's say, in 2030, in 7 years from today, how much sales are you projecting with LEQEMBI?

[Ivan Cheung, executive]

Thank you very much for very important question. Let's go country by country. So for the United States, as you may remember, on January 6, when we released our U.S. pricing approach. We estimated that in 3 years, potentially about 100,000 patients could be eligible for a treatment like LEQEMBI. And going forward, beyond 3 years, 5 years, 10 years, the market will continue to expand upon important market expansion catalysts such as wider adoption of blood test. That's the United States. And of course, you can see a similar picture in other key markets in Japan in China, in Europe. We believe this is a gradual adoption upon a number of important developments such as, as I mentioned earlier, wide adoption of a blood test. And you heard in my presentation earlier, the subcutaneous auto injection formulation.

So I think, first and foremost, we have to look at the total potential LEQEMBI not only in the United States, in Japan also but also around the world. I think that's 1 key point. Another key point is beyond the early AD stage, we are working very, very intensely for LEQEMBI also into the asymptomatic preclinical AD stage as well as the combination with E2814. So I may not be able to provide an exact figure today. But as you can tell, there are a lot of potential areas we ought to look at in terms of within each key market across many markets around the globe and also across the disease continuum, expanding beyond early AD. Thank you.

[Unknown Analyst]

Could you be more specific -- could you give me figures like JPY 20 billion worth or something?

[Ivan Cheung, executive]

I think many of us in Eisai, including myself would believe that the number you quoted earlier may be too small. Now I think at Eisai, we prefer to take actions than talking too much. That's why I tend not to say too much because I think actions are more important. But I agree with you, and many of us agree with you that given the significant potential of how LEQEMBI can help so many patients and families we believe that number needs to be further improved upon. Thank you.

[Unknown Analyst]

May ask 1 more question, please. And I just like to know the situation in China. I think that the system is very different from that of Western countries. And your slide said that I submitted all data Phase III to the Chinese authority and you are waiting for the day of approval? So could you be explaining the background of a Chinese approval system and how soon do you expect you get the day of the approval in China?

[Ivan Cheung, executive]

Thank you. I will ask ...

[Operator]

Regarding this question, Nakahama-san is going to respond.

[Akiko Nakahama, executive]

Thank you very much. For your question regarding the submission we made in China, first, the submission of data has been initiated. Based upon the global data and from Clarity AD study, where Chinese patients were enrolled. So data from Chinese subjects are going to be submitted going forward.

Regarding the timings before we can get approval is by the end of next fiscal year, we are aiming at getting approval. And this is about the regulatory matters. Therefore, we'd like to try our best in order to get approval as soon as possible.

[Operator]

Next question, please, if you have a question, please raise your hand. Is there anyone in this room who has a question? Then turning to participants online. [Operator Instructions] Mr. Yamaguchi from Citigroup Securities.

[Hidemaru Yamaguchi, analyst]

Can you hear me?

[Operator]

Yes, we can.

[Hidemaru Yamaguchi, analyst]

First question is about a priority review in Japan, the timing. I was listening to Mr. Ivan Cheung. Did you say the middle of the year? Currently, it is February. So around June, you expect approval? Is that what you indicated? That is my first question. And regarding the United States, around the summer, I believe, is what you've mentioned, but this is immediately after submission. So I don't think you know the PDUFA date. But basically, what's the timeline you anticipate? Is it 6 months after submission. If you know the PDUFA data, please indicate that as well.

[Operator]

Regarding expected approval timing in Japan, Ms. Nakahama will respond.

[Akiko Nakahama, executive]

I'm Nakahama responsible for this product. Thank you for your question. In Japan, priority review designation products on average go through 9 months of review with the prior review system, some of the submission materials already provided to PMDA for their review since last year. And we would like to assist our expeditious review so that even by 1 day earlier, lecanemab will be accessible to patients, and we will make our best efforts. Earlier, Mr. Ivan Cheung said middle of the year. Next, about the U.S. approval timing, Mr. Ivan Cheung will respond.

[Ivan Cheung, executive]

Follow-up to Nakahama-san's response to you. Earlier, I said in the middle of fiscal year is 2023 -- this fiscal year 2023 year. So that's why, as you heard from Nakahama-san, a 9-month review process, we hope to be a bit earlier. So we'll see how that pans out. And the Eisai team is working day and night on this matter. With regard to the United States, we do not have the PDUFA action date yet on the supplemental BLA. As you know very well, for supplemental BLA. As I mentioned earlier, if we get a priority review. Again, we don't know yet. This is a 6-month process. That's why I said in the summer of this year, only a few months away potentially.

[Hidemaru Yamaguchi, analyst]

If I may, I have 1 more question. So and CMS comment used the word would, so -- on the same data as PDUFA coverage may be expanded on the same day. Is that the correct understanding?

[Ivan Cheung, executive]

That is what the CMS said on January 6 in their public statement and we commend the CMS proactive statement, and the Eisai team is continuing to work and discuss productively with the CMS on multiple -- with regard to the 3 questions in the NCD policy. So we are on track, and we look forward to that positive outcome on that same day.

[Operator]

Earlier, regarding the question from Mr. Simoa, regarding ADDMT, the potential population of the eligible patients. We are estimating 2.3 million in 10 years from today, that was announced in the press conference, which was held the other day. This is the supplemental follow-up comment for your question.

Next, I would like to receive questions from Nomura Securities, Mr. Kohtani.

[Motoya Kohtani, analyst]

Yes. First question regarding amyloid beta diagnostics. Can you please elaborate on how this is diagnosed? With auto helm, the method was different. And I think CSF, the diagnosis has been already approved for 2 companies. But I don't think that the is approved. And I think that there are agreement for covering the expenses to be paid by Biogen and Eisai for [indiscernible]. But seen that there is one. So could you please elaborate on what is your expectation for the PET diagnosis? And in the CDR-SB is not penetrating into clinics in the United States. And I think the education is necessary. I think that the brain battery, I believe that you have the diagnostics battery, CDR -- CDR-SB and also Alzheimer's disease symptomatic diagnosis, CBB penetration as well. Could you please make a comment on these?

[Operator]

And for this question, I'd like to ask Mr. Cheung to respond.

[Ivan Cheung, executive]

On your first question, if you look at the LEQEMBI accelerated approval label, it requires amyloid confirmation prior to initiation of treatment, it does not specify which modality meaning it could be a PET. It could be CSF. And very soon, we believe, our blood test.

With regard to your question, on payment methods. Of course, in the United States, PET has an NCD also from CMS. Certain level of PET coverage is to be provided by the CMS, but not to the extent that, of course, our stakeholders would like to see. And this is also another CD -- this is also another NCD under consideration by the CMS right now to expand further reimbursement and Eisai very much supports all the stakeholders at urging the CMS to expand the reimbursement coverage for PET with regard to CSF method in the United States, the process of receiving an IVD approval from the FDA and then subsequently, CMS reimbursement, that process is ongoing.

And again, we, of course, are very much support of such a development in the United States. In Japan, as you know, with regard to PET, 1 very important matter is the expansion of the indication into the MCI due to AD stage, which is also, we believe, a very important discussion that the MHLW is taking into consideration right now, and we are very hopeful positive outcome when LEQEMBI receives approval in Japan. So overall, we've -- is important, very, very important. And we are doing that Eisai is to work with all the stakeholders involved the diagnostic companies, academic societies, the payers in different countries to ensure that the diagnostic ecosystem, including reimbursement will be very much in a good shape as LEQEMBI receives approvals worldwide. That's the first part of the question.

Second part of your question with regard to CDR sum of boxes, you're correct. This is an instrument used in clinical trials in the real world, there will be additional efforts on the Eisai's part to work with providers in different countries or more simplified clinical approaches. Those efforts are ongoing. And we take your point very well. Just to note, in real-world practice, in addition to CDR sum of boxes, which we do have to figure out how to provide more simplified approaches. Please remember that in the back in the clinical trial, there are also other scales being used.

Yes. And how those may also translate into real-world clinical practices. You mentioned -- you mentioned, which is more -- which is a connective assessment tool are not used in the clinical trial for endpoint evaluation, we are using. We do believe a CBB or Cox holds a very important role in the ecosystem in terms of screening and screening for our patients in order to allow more individuals to go through amyloid testing. Thank you.

[Motoya Kohtani, analyst]

Second question is the last E2814. Could you please, when can we get update on the clinical trial Phase I study? I think the 8 DIAD patients were targeted I think the study is ongoing. And I think this is the open label. Therefore, whenever you like you were able to get the data? And is engaged to stop the propagation of tau in the brain. So if there is such data available, when can we get that data? AIC Academic Conference by the end of this year or next year, can we get that data?

[Ivan Cheung, executive]

Thank you, Kohtani. we will select a Medical Congress this year to present the biomarker results tentatively at the AAIC. That's the plan right now.

[Operator]

Next, from JPMorgan, Mr. Wakao please.

[Seiji Wakao, analyst]

Yes. This is Wakao from JPMorgan. The first question is about the timing of approval in the United States. Could you elaborate on this? PDUFA date will be announced within 60 days of submission beginning -- in the beginning of March. Around that time, can we expect some announcement from Eisai? And do you expect something like advisory committee?

[Operator]

The question will be addressed by Ivan Cheung.

[Ivan Cheung, executive]

You're correct. The FDA has 60 days to accept the file and issue the PDUFA action date. And of course, once we have the PDUFA action date, we will probably inform the public. I just want to clarify 1 point since this is a supplemental BLA, a supplemental BLA. That means the 60 days of accepting, filing and I mentioned earlier, if this is a priority review is a 6-month process, that's 6 months and the 60 days can occur simultaneously because this is a supplemental BLA, which is different from the initial BLA.

And with regard to your -- it's our second part -- I apologize Advisory Committee. We are still waiting for the PDUFA action date. So I think it's premature to comment on advisory committee. One thing I will say is with or without an advisory committee, I think the Clarity AD data is so robust that whichever approach the FDA choose us to do our confidence in receiving full traditional approval for a LEQEMBI does not change.

[Seiji Wakao, analyst]

Understood. The second question, 3 questions from CMS, clinically meaningful side effect issue and long-term efficacy this, in a very abbreviated way. Regarding these 3 questions from CMS, you've said that you expect to address with the existing data. Data is already shared with CMS. And so CMS is likely to give okay on these 3 questions. And do you have an agreeing of that?

I would like to ask you to specifically address these questions.

[Ivan Cheung, executive]

On the 3 key questions in the NCD, as I mentioned earlier, we have already started to supply the answers, meaning the rationale, the evidence, the data and the analysis specific to each question, and I want to clarify that it's not just the Phase III Clarity AD data, but also the Phase II data. Remember, the Phase II data has open-label long-term extension with data up to 5 years. One of the 3 questions from the CMS is how benefits and harms change over time.

We obviously, from Clarity AD has the 18-month data where you can see the CDR sum of boxes showing statistically significant benefit from 6 months onwards across each time point. And across each time point from 6 months to 18 months, the benefit expands over time. That's very important. Benefits expanding over time from 6 months to 18 months. And then as I mentioned earlier, we have the Phase II plus open-label extension 5 years of data.

So I'm not going to go through all the answers to every single question from the NCD document, but we are confident in the provision of our answers to the CMS. Of course, ultimately, this is a CMS decision. But from all the productive interactions we have had with the CMS so far and also the FDA is communicating with the CMS on understanding all these data. We are hopeful that and we believe the CMS and the FDA ultimately want to do the right thing for the American public, and we have utmost respect for both agencies. Thank you.

[Seiji Wakao, analyst]

Globally, 2.5 million by 2030 is the estimate like to make correction to the early announced estimated $2.3 million in 10 years. It's rather 2.5 million by 2030. Briefly your next question after full approval, and there's coverage from Medicare from summer onwards, you will be able to book revenue book sales. Is that the correct understanding? And I do not understand fully how you are going to sell sales reps I think Eisai will be leading. How are you preparing the sales capabilities?

[Ivan Cheung, executive]

Thank you for the question. Yes, once we have the Medicare coverage than 85% of the market in the United States will be able to prescribe this therapy right now for those 85% that those are Medicare beneficiaries even if the physicians want to write a prescription since the government is not paying for it. That market is basically not active, and that's why the CMS coverage will be critically important to open up the market.

And yes, Eisai book sales globally for LEQEMBI and now with regard to the deployment approaches in the field, if you're asking about the again, country by country, it's going to be a different situation, and we have to, of course, tailor our go-to-market model on the unique characteristics in each market.

In the United States, I believe that's probably what your question is, yes, Eisai will lead the launch. Right now, we are in the accelerated approval launching phase with limited access. So the primary goal right now during this our launch base as this accelerated approval launch base, as I mentioned earlier, is really to get the market-ready in terms of the diagnostic pathway the infusion capacity, the education on how to monitor for this therapy, get all the hospitals and clinics ready so that when full approval and CMS access are available, then these sites will be able to support patients and their families to be on LEQEMBI. I hope I answer your question.

[Operator]

Next Credit Suisse, Mr. Sakai.

[Fumiyoshi Sakai, analyst]

Yes. This is Sakai of Credit Suisse. Can you hear me?

[Operator]

Yes, please ask your question.

[Fumiyoshi Sakai, analyst]

I have only 1 question. According to the presentation, I don't want it to put the cold water or the presentation, where FDA and CMS have put forward very positive opinion because they are core stakeholders. And I think that this is -- this should be taken for granted. But on the other hand, there is such a high expectation towards this drug. I understand that as well. Those people who wanted to have access to this therapy. Most important stakeholder, patients, how -- are they going to be motivated?

Early-stage AD patients, how much subjective symptoms they have? So such patients need to be encouraged to get access to this therapy. I think there should be some measures to be taken. On that regard, what kind of a partnership collaboration cooperation is being done with Biogen now?

[Operator]

Mr. Ivan Cheung is going to respond.

[Ivan Cheung, executive]

Thanks for the question. But you're correct that especially the MCI due to AD stage, the disease awareness and the ecosystem development to encourage individuals and their families to be screened for a potential cognitive problems so that they can go to physicians and hospitals for a further follow-up, including confirming the presence of amyloid positivity or not. You are right. And that is going to be a very important part of our strategy to drive adoptions of LEQEMBI going forward.

This is going to be a gradual process, country-by-country, we will have to take different approaches. But you can see that at Eisai, we've already been working on the ecosystem approach since a few years ago with a number of partnerships earlier, the [ Cascade ] partnership was mentioned.

We are also doing a lot of work with different blood test companies right now. There are, of course, a lot of works in different countries with patient efficacy groups because they are the ones with first-hand interactions with a lot of patients and families in local areas. Last but not least, of course, a lot of efforts underway with physicians and medical institutions in different countries around the world.

So there's no one simple answer. This is a multifaceted, multidimensional approach country-by-country, area-by-area, street-by-street and that's what we're going to be doing. Thank you.

[Operator]

Unfortunately, we are almost running out of time, but I see 4 people in the queue for questions. So if I may ask each one to limit the number of questions to one. And quickly, please. Okasan from NHK, please.

[Unknown Analyst]

Can you hear me? My apologies. I had 2 questions, but I will ask 1 question. I believe prevention will be a greater focus after the approval of LEQEMBI, ahead of 5, I do not know correctly to pronounce this study. When did this study start? And when is the readout expected? I understand this is a Phase III study. And in relation to this, in terms of insurance coverage, since preclinical AD, it will be targeting asymptomatic patients. And so clinical significance will be appreciated by CMS is a able to preclude CMS in terms of clinical significance.

[Operator]

Ivan Cheung will address the questions.

[Ivan Cheung, executive]

In this started approximately 2 years ago, we will have readout in a couple of years. This is still under enrollment. We're in the middle of enrollment right now. We're very encouraged by this study. This study enrolled 1,000 people in the A45 cohort and 400 people in the A3 cohort. With regard to your second part of the question about coverage by the CMS, I think in a couple of years' time, the NCD may or may not look like it is today.

So I'm very hopeful that in a couple of years that the clinical -- the strong clinical relevance of LEQEMBI will be well established at that point, among all stakeholders, including the CMS in the United States so that coverage and reimbursement won't be an issue when we have a positive outcome from ahead 345. Thank you.

[Operator]

Barker from Jefferies Securities.

[Stephen Barker, analyst]

Yes, I can. One question from me for Ivan. I was looking for on Slide 8, the expert from the statement from CMS. So I was looking at the entire statement, and it says that they will generally issue a proposed NCD within 6 months from the initiation of the NCD analysis, has the formal NCD analysis begun?

[Operator]

Mr. Ivan Cheung is going to respond.

[Ivan Cheung, executive]

I understand your question. To reconsider the entire NCD, it will take months. You're right. What you're hearing from the CMS right now, for example, on this slide is what they may do within the existing NCD framework. And we believe within the existing NCD framework, the LEQEMBI data set from Phase III, Phase II open label long-term expansion data fully answered those 3 key questions for the CMS to provide broad and simple access within the current NCD construct. That's a point I want to convey. And I think that's what the CMS is trying to convey from their statement.

[Operator]

[indiscernible] from Sanford Bernstein.

[Unknown Analyst]

This is Soji speaking. So we understand currently, the treatment within LEQEMBI requires the treatment as well as on-treatment monitoring of ARIA using MRI. I'd like to understand what the insurance coverage of monitoring the test and also the impact for the -- your estimate of the impact of the such coverage for the uptake of the drug.

[Ivan Cheung, executive]

Yes. With regard to MRI monitoring, at least in the United States, we don't believe that reimbursement situation is an obstacle at this moment. Unlike the diagnostic procedures, which are more work will need to be done on the reimbursement front for those procedures. Thank you.

[Operator]

So we are going to receive the last question from Nikkan Yakugyo.

[Unknown Analyst]

Can you hear? Yes. This is Sakai of Nikkan Yakugyo speaking. I have a question for Mr. Ivan Cheung. On the team, LEQEMBI was launched in the United States. And what about the uptake and ramp-up of the sales going so far? Could you please give us your take on the sales ramp up?

[Ivan Cheung, executive]

We are actually quite encouraged by the initial orders from various specialty distributors for LEQEMBI vials. As I mentioned, we're also encouraged that already prescriptions have been written, infusions have occurred. Again, of course, without Medicare access, these prescriptions and these patients right now, they are either PAP patients or a cash-paying patients. But again, they occurred very quickly within the first month of the accelerated approval. Again, this is not appeal you take. This is an infusion with the diagnostic procedure than infusion even with those steps involved, we have these accomplishments within the first month and actually within the first 2, 3 weeks. So I think everything is very much on track as we expected and 1 may even say a bit ahead of our expectation.

[Operator]

We apologize, we have gone overboard with the schedule with our time. And with that, we would like to close today's earnings announcement session. Thank you very much for participating despite your very busy schedule.