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Edited Transcript of 4503.T earnings conference call or presentation 31-Jan-20 5:30am GMT

Q3 2020 Astellas Pharma Inc Earnings Call

Tokyo Feb 8, 2020 (Thomson StreetEvents) -- Edited Transcript of Astellas Pharma Inc earnings conference call or presentation Friday, January 31, 2020 at 5:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Mike Kitagawa

Astellas Pharma Inc. - Senior VP of Development Project Management

* Naoki Okamura

Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director

* Yukio Matsui

Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive

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Conference Call Participants

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* Akinori Ueda

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Hidemaru Yamaguchi

Citigroup Inc, Research Division - MD and Analyst

* Kazuaki Hashiguchi

Daiwa Securities Co. Ltd., Research Division - Research Analyst

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Presentation

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [1]

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I'm the CSO and CFO, Naoki Okamura. Thank you very much for participating in the conference call by Astellas on the third quarter financial results for fiscal year 2019. Today, the time is limited. So initially, I'd like to spend about 20 minutes to give you an overview of the financial results and explain the initiatives for sustainable growth and capital allocation. And then we will entertain your questions later.

Page 2 is a cautionary statement regarding forward-looking information, which was already read, so please turn to Page 4. First of all, this is an overview of the third quarter financial results based on year-on-year comparisons. Revenue and core operating profit declined, but excluding ForEx impact, revenue and profit increased. So our business progressed favorably as expected, due to the LOE of Tarceva, VESIcare in the United States and Europe and Tarceva in the United States and termination of Symbicort and KM bioproducts in Japan, sales declined substantially.

But sales of main products, XTANDI and mirabegron, our new products, XOSPATA and EVENITY, increased steadily, offsetting the substantial decrease for the existing products and revenue increased, excluding ForEx impact and the expenditures increased and amortization of intangible assets decreased. As for full basis results, other expenses declined year-on-year, operating profit increased. On the other hand, as the tax rate in the previous year was low due to a one-off factor, third quarter profits decreased slightly.

Page 5. This is an overview of the consolidated financial results for the third quarter of FY 2019. Revenue was down 1.6% year-on-year to JPY 988.5 billion. Core operating profit was JPY 235.9 billion, down 3.3% year-on-year. But as you can see on the right, excluding ForEx impact, revenue increased by 1.4% year-on-year and core operating profit rose 1.6%.

The bottom half of the slide shows full basis results. Compared to the previous year, with the booking of new litigation costs, restructuring and domestic early retirement program costs, other expenses declined this fiscal year. So full basis, operating profit was JPY 237.7 million, up 13.5% year-on-year. Due to a one-off factor of patent income deduction in Belgium with IP-ready transaction for the fezolinetant, tax rate was low in the previous year. And now that the tax rate returned to usual, third quarter profit offset the operating profit increase to slightly decrease to (sic) [by] 0.8% year-on-year to JPY 190 billion.

Page 6 shows the year-on-year comparison of revenue and sales of new main products. XTANDI sales were JPY 297.9 billion, up 17.6%. Due to penetration in early-stage in the prostate cancer, sales are increasing steadily in all regions.

In the United States, in the third quarter, we obtained additional indication for metastatic CSPC. XOSPATA sales were JPY 9.8 billion, up JPY 9.1 billion from the previous year. In the third quarter, XOSPATA was also launched in Europe as well. Mirabegron sales were JPY 121 billion, up 10.1%. It's continuing to grow in all regions, making a double-digit growth. Sales of new products in Japan were JPY 45.3 billion, up JPY 26.7 billion year-on-year.

EVENITY, launched in March last year had sales of JPY 16.5 billion. As I said at the beginning, for other products due to the impact of LOE of VESIcare and Tarceva, and termination of Symbicort and KM bioproducts in Japan, sales of other products declined substantially, but these negative effects were offset by the growth of main and new product.

Page 7. This is a year-on-year comparison of cost items. The cost of sales ratio was 22.4%, slightly fell -- falling by 0.2% year-on-year. SG&A cost, we continue to optimize both resource allocation and effectively manage expenses, partially offsetting increase in XTANDI U.S. co-promotion fees and new product launch costs for XOSPATA and PADCEV. Due to a one-off factor, reversal of lost allowance in the second quarter to decrease costs, SG&A costs as a whole declined by 0.6% year-on-year.

On the expenditure, key late-stage projects are progressing as planned. So development costs are increasing year-on-year. In addition, we are increasing our investments into primary focus, such as regenerative medicine, cell therapy and immuno-oncology. So R&D expenditure increased 6.5% from the previous year. Due to the LOE of Tarceva in the United States, amortization for the United States was completed, resulting in substantial decrease year-on-year.

Page 8 shows the progress against the FY 2019 full year forecast. As I have explained, sales of main products such as XTANDI are progressing favorably against our full year forecast. So no changes have been made to the FY 2019 forecast revised in October 2019. We are expecting one-off costs, specifically non-core costs of about $100 million for the acquisition of Audentes, announced last year to be booked in the fourth quarter, which could be a downside factor for full basis profit. That's why I'm giving you this guidance today.

From here on, I'd like to talk about our initiatives for sustainable growth in line with the strategic objectives of our strategic plan.

First, Page 10 about Evrenzo launched in Japan in November last year -- on the 20th of November last year. Evrenzo is a first-in-class orally administered HIF-PH inhibitor. This is indicated for renal anemia in patients on dialysis. Unlike the conventional drugs such as ESA or ESA, Evrenzo inhibits the degradation of HIF, activates the erythropoiesis or red blood cell production and enhances the blood's capability to transport oxygen. So the new mechanism improves anemia. It's soon after the launch, but the number of adopted facilities increasing steadily, so the reactions from prescribers regarding efficacy have been favorable. This drug can promote the endogenous EPO production and enhance the iron use. So this will benefit, not just the patient not treated with ESA, but also it would help patients with low response to ESA due to low efficiency in iron use and/or chronic inflammation and also those who are using ESA with high dose.

Next, Page 11. PADCEV launched in the United States last month. This is enfortumab vedotin, as our new option in urothelial cancer with high unmet medical needs, based on favorable Phase II study, pivotal study results, this was approved 3 months earlier than PDUFA date. We expect that about 2,000 patients per year in the United States will be eligible for treatment with PADCEV in the labeled indication. Soon after the approval, the drug has been added to NCCN guideline in the United States, and we are ensuring patient access with sufficient insurance coverage. PADCEV is directed against Nectin-4, which is highly expressed in bladder cancer. So there is no need for biomarker testing. It's just one month after the launch, but already, many oncologists are showing a strong interest in PADCEV. In the United States, Seattle Genetics are booking the sales, and we are co-promoting with them, and we receive co-promotion fees.

Slide 12 and beyond, I'd like to explain the progress of the 6 key late-stage project. This shows the important milestones since second quarter results announced in October.

Now Page 13. The progress since the previous financial results announcement was underlined from this stage. First, at the left, that is enzalutamide. This is about the M1 CSPC, the United States approval received in December for additional indication as M1 CSPC. In China, approval was granted in November for the first indication of metastatic CRPC. The status of the enfortumab vedotin or EV in the upper right will be shown in the individual slides coming later.

Lower center, roxadustat, we are reviewing and analyzing the data required for European applications. And we will re-examine the timeline. But unfortunately, we changed the target application time from April to June this year.

Japan obtained good results in the remaining Phase III study for non-dialysis patients and applied for the additional indication [in the general areas], together with the results of another study that has already been completed.

The end, lower right, fezolinetant. Japan is considering no global development with the U.S., Europe or Asia. Possibility of local development is under the consideration including the details. In Asia, joint Phase III study, including China, is going to be studied soon.

Slide 14. With using a couple of slides, I would like to explain you the situation about the enfortumab vedotin or EV. Slide 14 shows the standard of care for patients with metastatic UC according to treatment history as compared to ongoing clinical trials of EV. Going to the right of the figure, the treatment history will increase and the right most platinum preparation and the PD-1/L1 inhibitor-treated patient class. That is those with the most [noted immuno option.] For them, approval was granted based on the expedited approval program in the United States in December last year with the EV-201 cohort 1 data. Since EV was added to the NCCN guideline as a recommended treatment option soon after approval, it is expected that EV will be used as a standard therapy for this patient group in the future. In order to further expand indications, a Phase III study of EV and pembrolizumab in combination as first-line treatment will be started for a patient group who has now been treated. I will explain in the next slide.

Slide 15 is explaining about the Phase III study of EV for metastatic UC first-line. Phase III Study EV-302 Study comparing EV plus pembrolizumab with chemotherapy with more than 1,000 patients and 3 arms. This is a collaborative study with the Seattle Genetics, Astellas and the Merck, which owns pembrolizumab for product name of Keytruda. The permanent efficacy and points of PFS and OS and the study is expected to begin earlier this year.

Slide 16. This shows EV development other than the UC. Development status of other cancers, the [neutrophils] carcinoma. Regarding this, let me explain as follows: it has been known that net inflow target of EV is expressed in various kinds of cancers. In consideration of expression of Nectin-4 as well as the unmet needs and the sensitivity to microtubule inhibition, the 6 cancers in this slide are selected for EV development. Phase II study with good subjects each, will begin this quarter for these cancers, select cancers that are sufficiently responsive in a Phase II study to proceed to the next Phase III. It is expected that the value of the EVs will be further expanded by considering these cancers.

Slide 17 and 18. Here, I would like to talk about the progress of focus area approach. Focus area approach is progressing. First, in this Page 17, that's about the gene therapy the acquisition of Audentes was completed on January 15. As shown in the last months in the meeting, there are 3 key points in the acquisition of Audentes: First of all, rare neuromuscular diseases, a pipeline, especially AT132, the lead of program of its kind has been confirmed with its efficacy in X-linked Myotubular Myopathy in the Phase I/II study. And also, there's a unique technology platform utilizing AAV and at point 3, GMP-compliant, large-scale production capacity for commercial production is available. In order to combine Audentes key capabilities with Astellas technologies and assets to establish a leading position in this area. Gene therapy is positioned as Astellas' fifth primary focus, and the resources are prioritized to be invested into this area.

Page 18, this is the progress of primary focus since the R&D meeting held last month, especially about the immuno-oncology. In order to enhance CAR-cell therapy technology and pipeline, Astellas has acquired Xyphos last month and have partnered with Adaptimmune this month. Using unique CAR-cell therapy technology platform of Xyphos, we will overcome the problems of conventional CAR-T cells and consider effective treatment for a wide variety of cancers. Xyphos lead program will enter into clinical study phase in 2021. In the future, we expect to create more promising CAR-cell therapies in combination with the donor cells made by Universal Cells.

Furthermore, Adaptimmune has the ability to identify and verify carcinogenic-specific TCRs and CARs as well as the ability to use allogenic T-cell platforms and will have a synergistic effect with the Universal Cells' technology in the future expected. We will continue to invest in the strength and priority in the area of immuno-oncology.

From Slide 19 for a couple of pages, I would like to talk about Rx+ program. So one of the 3 strategic goals of the management plan -- our strategic plan 2018, we succeeded in planning some business opportunities as a result of extensive researching for Rx+ business, creation opportunities. At the same time, some challenges identified as -- such as the scope of the business to be considered as too broad and technological and market changes are extremely quick. It is a concern that it will be difficult to achieve sustainable growth by creating business continuously is simply passing opportunities because they will be less focused.

This time, Rx story has been formulated as a strategic direction that indicates the areas of focus for Rx+ business creation. It is expected that the ideas will be generated through interconnections of ideas and activities will be promoted and accelerated in an organized manner. Also the possibility of creating some new -- something new that go beyond the condition of framework, even from the viewpoint of partnering and business models. With Rx+ story, we are expecting that it's going to the next level to establish a solid foundation for business acceleration.

So here, you can see the outline of Rx+ story. Through Rx business, we would like to realize our concept of philosophy that is a world where people can live mentally and physically healthy lives and be true to themselves through healthcare solutions based on scientific evidence. And through this Rx+, we have 3 values defined. And in order to realize, we set up the sphere for each business. Each sphere has a number of interrelated programs exist, aiming to achieve a medium to long-term goal. There are 6 spheres under consideration. And also, there are already disclosed programs, and they are described at the bottom. We will aim to continuously introduce new programs to each sphere. But at the same time, it is necessary to take into account the rapidly changing internal/external situations and flexibly replace the spheres in programs and review contents of those.

Within this red square, you can find the collaboration with Welldoc, and that is going to be shown within the next slide. So Astellas and Welldoc enter into strategic alliance for digital therapeutics to try for development and commercialization of digital health solutions. As you know, the -- to assist patients in self-management using digital technology and treatment by physicians, medical softwares are being used. They could use a different approach from pharmaceutical products to achieve the efficacy and solve difficult problems that could not be solved by pharmaceuticals. Therefore, they could be one of the new healthcare modalities.

BlueStar, a disease management support site for diabetics, a -- collaborate to expand access in the U.S. market -- it's been already launched. And we are going to develop and commercialize jointly with the Welldoc in Japan and some Asian regions, although we have planned to jointly develop digital therapeutics for multiple other diseases. Digital therapeutics is going to be a new territory for Astellas, needless to say. And we hope to make further progress by utilizing the knowledge gained through this joint development.

Slide 23, this is about the capital allocation. There is no change about our policy. Investment into the growth opportunity is the priority. Recently, we've done the M&A and established alliance, which has been already introduced. And we are going to pursue for such kind of investment opportunities for business. This year, expect the profit -- this time, we expect profit and loss but dividend will be JPY 40 increased by JPY 2. The -- from November 1, the share buyback started with the limit of 32 million shares and JPY 50 billion, but it's going to be ended January 31, today. We will continue to improve shareholder returns and capital efficiency.

That's all from me. Thank you very much for your attention.

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Unidentified Company Representative, [2]

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Thank you very much. That's all the explanation from our company. We now would like to entertain questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Mr. Hashiguchi from Daiwa Securities.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [2]

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I'm Hashiguchi speaking. My first question is about the results. The cost of sales ratio compared to year-on-year, there was a slight decrease, as you have explained. Compared to the first half, there's a slight increase up to the second quarter trend. What were the factors to worsen the cost of sales ratio, could you explain?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [3]

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Between October and December, there was a slight increase in influenza vaccine. The product mix changed, adjusted a bit compared to the first half. The cost of sales ratio increased compared to the first half. So there was such a seasonality other than that.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [4]

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No particular increase in costs, correct?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [5]

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Compared to the previous year, there was an elimination of unrealized gains, and there was the product mix change, and as it sold before and the sales coming to a halt -- an end. So it's almost plus/minus 0. There was the remaining ForEx impact due to the elimination of unrealized gain resulting in a decrease by 0.2 percentage points.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [6]

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Second question is about enfortumab vedotin, their development other than the [IOC.] This time, Phase II is going to be studied. And based upon that, I believe that you are going to go to the Phase III with selecting different cancers. But this Phase II study, if the result is extremely good, then accelerated approval, that could be possible to be aimed at. It's not really so in the design. Phase III is going to be definitely unnecessary whatever the case is. That is your design?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [7]

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Kitagawa is going to answer your question.

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [8]

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Basically, this time, Phase II is going to be started and the Phase II alone accelerated submission, that cannot be satisfied in terms of the condition concerning the data is going -- which is going to be available from Phase II. So of course, the situation is depending on the data. So when data becomes available, we are going to have the discussions with the authorities, then we are going to identify the most optimal pathway.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [9]

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Progress in the United States, could you give us an update, which you explained before?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [10]

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In the second quarter due to the generic out of stock, the situation are favorable for progress. We will continue to win. Matsui would like to respond?

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [11]

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If according to FDA website, there was an update this year until May, there will be supply issues. As public information, this is publicly announced. So our assumptions are also in line with this.

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Operator [12]

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Mr. Yamaguchi from Citi.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [13]

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Yamaguchi is my name from Citi. Can you hear me?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [14]

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Yes.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [15]

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First, domestic situation. Mirabegron, the prescription restriction is released. So 2 companies securing the market and [prior time it pass midterm or midterm time upon], it goes into the U.S. market as well. So what's your perspective about the competition against this mirabegron?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [16]

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Matsui is going to answer your question.

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [17]

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First of all, Japanese market. As you pointed out, the long-term prescription is now possible, so including the specialists, new option is required to be evaluated. So within our expectation level, the drugs are currently used, that is for sure. However, after the launch of this drug, needless to say, through other word, we are collecting a different -- a lot of different data.

And in urology, as you know, Astellas is very -- has a very strong connection with our urologists and also society, not only in Japan, but other countries as well. So we can provide the [identification] about the products to the specialists. By doing so, we are planning to increase our market share.

On top of that, with the 2 companies coming into this market, meaning that the market is going to be expanded. That is the situation, what is happening in Japan. And the situation in the United States, [Bentyl] with the alliance with them. Yes, I know that they are working for the marketing. In the calendar year, the end of last year, they've already submitted the dose AFO, the approval. Therefore, 2020, probably on the end of this year, the drug is going to be approved. That's what we expect. But at the same time, in the United States, again, we have data. And also, we have experience that can be fully leveraged and continuously for OAD, we would like to secure ourselves and also profit.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [18]

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Next on PADCEV additional indication. As you have explained, there's a good chemistry with pembrolizumab that one focus at ESMO. So first, you go for monotherapy and your collaboration with Merck, it's ongoing in parallel? Or is there any possibility that you may do this in the middle?

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [19]

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Sorry, I'd like to confirm your question. Slide 16, are you referring to that page?

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [20]

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Yes.

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [21]

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Kitagawa would you like to respond.

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [22]

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In other solid tumors development, right? Not about the first line?

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [23]

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Correct.

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [24]

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Other than urothelial cancers, you have programs and projects he explained today. These will be baseline service. In the future, there can be a variety of combinations, we'd like to consider. But first of all, [late] line with monotherapy. First, to study efficacy and safety in the future, including combinations, we'd like to study further. For the future.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [25]

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Understood. Sorry, I haven't read through the material yet, but the parts of sales result is available somewhere?

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [26]

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It's been showed since it is launched. So currently, we are not disclosing the sales number.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [27]

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I see. But just like you mentioned, it's quite attractive. And also the inquiry rather. The -- it is expected to be sold quite well.

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [28]

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Yes, that's right. The request is quite large.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [29]

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And XTANDI U.S. have had it stable in business the PROSPER and ARCHES, what about the impacts of them? And also price, what's the situation all the time, you update us, but what about something like that price and also impacts of indications. Could you share the information with us?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [30]

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Matsui is going to answer.

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [31]

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I'm Matsui. First of all, ARCHES, officially, as you know, last year, December, it was approved. So our promotional activities started immediately after the approval. So we are going to enhance our marketing sales activities further. That's what I was thinking. But the data when the data became available, NCCN guideline include this drug into the drug to be recommended.

Because of that, some doctors -- although it was off-line, some doctors selected to use this drug. However, us -- promotional activities have started in December and afterwards. PROSPER for M0, it's also quite smooth proceedings to the physician specialist data is introduced. So early-stage prescription is on the increase. The price pressure needless to say, Zytiga generic is now available. So we -- that situation is continuing and also [Bio] launched new products and a leader is available for this about one year. So continuously pressure's ongoing, but we have an abundant data and also differentiation from generics. Of course, that is not generic of our own products. So we can demonstrate the clinical differentiation. With that, we would like to minimize the price impact and continuously we'll be making efforts for that.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [32]

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One simple question. Macro policy -- macroeconomic policy in the United States, international price referencing is a hot topic these days. Unfortunately for XTANDI, there is a big price gap between Japan and the United States from some Congress members, there was a comment on this. I see are -- are there any possible impact on your product? Or is it too early to say for IDR?

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [33]

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Such discussions are going in Washington and in some states, and we are aware of that. But whether this is going to be turning into a legislation, and there may be some time until we have these factors. Our assumptions, we haven't worked on this yet. But there's a possibility this can be a risk for us. As a risk, we are aware of this, so we have to watch it closely, and we are watching. We will continue to monitor the situation going forward.

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Operator [34]

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Goldman Sachs, Mr. Ueda.

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Akinori Ueda, Goldman Sachs Group Inc., Research Division - Equity Analyst [35]

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Ueda from Goldman Sachs. So first question is about XTANDI in the United States on quarter-on-quarter basis, the growth rate is about 2%. But this is reflecting the actual growth. As it's been mentioned, there is a price pressure still. What about the situation of the impact onto the inventory? Could you share the information with us?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [36]

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Matsui is going to answer your question.

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [37]

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First of all, the inventory at the end of the year. There's no specific factors necessary to be explained. The situation is quite normal. And also buying patterns, real demand, if there was any extraordinary impact. You might remember this, at the time of Q2, I made a bit of the comment. In the United States, the major buyers or payers, veterans that is for the veterans, called VA and in certainly, it's launched in Q2 or Q3. And this fiscal year, in FY '19, the sales took place in Q2. And in Q2, purchase is a bit larger, including a certain portion over Q3. So within Q2, the growth rate is 2%. So overall, it looks low percentage. But as you know, if it is compared to the previous fiscal year, there is more than 20% growth. So overall, if you look at Q2, that's a bit decreased. However, that is not much of our concern.

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Akinori Ueda, Goldman Sachs Group Inc., Research Division - Equity Analyst [38]

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My second question on roxadustat. The timing of filing in Europe is slightly postponed. What are the factors behind? What's going to be the timing of submission for dialysis and non-dialysis patients, respectively?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [39]

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Kitagawa would like to respond.

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Mike Kitagawa, Astellas Pharma Inc. - Senior VP of Development Project Management [40]

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In Europe, one quarter delay. So final data necessary for European submission is being delayed. So we are reviewing all data. So including the analysis necessary for European submission, we are preparing such one reason or factor for the delay. For both dialysis and non-dialysis, we are going to file simultaneously in Europe for both.

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Akinori Ueda, Goldman Sachs Group Inc., Research Division - Equity Analyst [41]

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Last question is about Evrenzo. In -- on the patients on dialysis, especially including the evaluation of -- or considering the efficacy, you mentioned that the adoption is quite smooth. But what about the superiority in terms of the competition? Could you explain about that?

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [42]

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Matsui is going to answer your question.

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [43]

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Okamura commented in his presentation. First of all, this drug in the clinical data, ESA high dose require new patients. In other words, the patients with inflammatory disease and having the requirement of a higher dose for those patients, efficacy was confirmed and also is lower reacted or responded to patients also demonstrated the efficacy.

So among CKD, those with inflammatory disease, I think the prevalence is quite large. And if the inflammation level is higher, then more ESA high dose is necessary and also control be difficult, more difficult. Among such patients in the existing clinical trials, Evrenzo showed the efficacy and without the increasing dose control was confirmed. So those are the main patients, we would like to ask the physicians to use this drug. So that is our recommendation, so that they can feel the efficacy.

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Akinori Ueda, Goldman Sachs Group Inc., Research Division - Equity Analyst [44]

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What about the actual target subject, so the patients for this type of the drug?

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Yukio Matsui, Astellas Pharma Inc. - Chief Commercial Officer & Senior Corporate Executive [45]

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Well, first over the patients with inflammation, that accounts for more than 60%. That's what I said. But out of those many patients are controlled by ESA to a certain extent. There are many as such. But amongst them are still -- there are low responder or there are those who need to increase the ESA dose to enjoy the efficacy total, there is going to be around 30% of the people or the patients. It depends on the decision by their physician. But we are looking at the percentage in that way, but as the oral therapy and considering this mechanism for the patients with inflammation like let them use this drug rightly. However, again, is a high dose recurring patients and also low responders. They are probably the entrance of using this drug.

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Naoki Okamura, Astellas Pharma Inc. - Chief Strategy Officer, CFO, Corporate Executive VP & Representative Director [46]

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It's time. So we'd like to close today's conference call here. Thank you very much for your participation today.

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