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Edited Transcript of 4508.T earnings conference call or presentation 30-Oct-19 8:45am GMT

Q2 2020 Mitsubishi Tanabe Pharma Corp Earnings Call

Osaka Nov 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Mitsubishi Tanabe Pharma Corp earnings conference call or presentation Wednesday, October 30, 2019 at 8:45:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Eizo Tabaru

Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer & Director

* Yoshiaki Takai

Mitsubishi Tanabe Pharma Corporation - VP & Head of Corporate Communications Department

* Yoshihiro Kobayashi

Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer, Division Manager of Ikuyaku & Director

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Conference Call Participants

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* Fumiyoshi Sakai

Crédit Suisse AG, Research Division - Research Analyst

* Hidemaru Yamaguchi

Citigroup Inc, Research Division - MD and Analyst

* Kazuaki Hashiguchi

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

* Seiji Wakao

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst

* Shinichiro Muraoka

Morgan Stanley, Research Division - Research Analyst

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Presentation

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Operator [1]

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Welcome to our conference call. Today, we're going to have a briefing on the business results of the second quarter of fiscal 2019 for Mitsubishi Tanabe Pharma Corporation. There will be a presentation on the overview of the business results for about 20 minutes, followed by questions-and-answers session. The total time for the conference call is expected to be about 45 minutes. Before we get started, please be reminded that the presentation that follows may contain future projections based on currently available information, all of which includes risks and uncertainties and that actual results may vary materially from these projections.

Now I'd like to invite Mr. Takai from Corporate Communications Department to moderate the session.

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Yoshiaki Takai, Mitsubishi Tanabe Pharma Corporation - VP & Head of Corporate Communications Department [2]

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Let us now start the briefing on our business results of the second quarter of fiscal 2019. Attending this conference call from our company are: Eizo Tabaru, Member of the Board and Managing Executive Officer, CFO; Yoshihiko (sic) [Yoshihiro] Kobayashi, Member of the Board and Managing Executive Officer and Head of Ikuyaku Integrated Value Development Division; and Yasutoshi Kawakami, Executive Officer, Head of Sales and Marketing Division; and I am Takai, Vice President, Head of Corporate Communications Department. First, Mr. Tabaru will give a presentation on the business results, after which we would entertain questions. Now Mr. Tabaru, over to you.

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Eizo Tabaru, Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer & Director [3]

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Thank you very much for joining us for the conference call to report on the business results of the second quarter of fiscal 2019 of Mitsubishi Tanabe Pharma Corporation. I'm Eizo Tabaru, Member of the Board and Managing Executive Officer and CFO. I will be discussing business results focused for fiscal 2019 development pipeline and shareholders' return. Let me first explain about the business results of the second quarter of fiscal 2019. Please take a look at Slide 2.

Revenues continue to be driven by domestic mainstay products in the second quarter. On the other hand, as arbitration proceedings with Novartis are underway, in accordance with IFRS 15, part of the royalty income of Gilenya has not been recognized as revenue. We ended up with revenues of JPY 118.1 billion (sic) [JPY 188.1 billion], down JPY 21.6 billion or 10.3% from a year before.

The profits at all line items of the P&L saw a decline year-on-year, mainly due to this impact from royalty income of Gilenya. Gross profit declined to JPY 99.6 billion; core operating profit, JPY 11.6 billion; and net profit attributable to the owners of the parent, JPY 8.3 billion.

As we made announcement on our revisions to the forecast on October 25, because accrual of some SG&A and R&D expenses have been postponed to the second half, core operating profit and all the other profits below that in P&L significantly overachieved the forecast announced on May 10.

Let me now explain about factors behind the increase and decrease of revenues using the graph. Among domestic ethical drugs, contribution by STELARA, for which we changed the sales arrangement with Janssen Pharma as well as growth of mainstay products such as Rupafin, SIMPONI and CANAGLU pushed up sales by JPY 7.5 billion year-on-year.

Overseas ethical drugs fell by JPY 2.5 billion year-on-year. RADICAVA declined by JPY 2.2 billion, as it was prescribed to most of the patients who have been waiting for the drug to be launched, but the revenue of RADICAVA is still at the level of our forecast for this fiscal year.

The number of patients who RADICAVA was prescribed to reached a total of about 4,200 as of the end of September. Royalty revenue, et cetera, dropped by JPY 27 billion from the year before due to decreased income from Gilenya, as I said earlier. As a result, revenues fell by JPY 21.6 billion to JPY 188.1 billion.

Next, let me discuss cost of sales, SG&A expenses and core operating profit. Cost of sales increased by JPY 2.3 billion. Cost of sales ratio went up by 6.0 percentage points to 47.1% due to changes in the product mix and a significant drop in the royalty revenue.

SG&A expenses decreased slightly year-on-year, while R&D expenses was almost flat, but was behind the original forecast. Consequently, the core operating profit dropped by JPY 22.8 billion to JPY 11.6 billion. How it compares to the original forecast is as shown on this slide.

As for the items below core operating profit, the operating profit was JPY 12.5 billion, down JPY 21.9 billion. Financial income and expense are as shown in this slide. Financial expenses were incurred mostly due to foreign exchange. These have resulted in a decline of JPY 16.6 billion in the net profit attributable to owners of the parent company to JPY 8.3 billion.

Let me now move on to the forecast for fiscal 2019. Please take a look at Page 7. Royalty revenue is expected to remain affected by the arbitration proceedings with Novartis in the second half, while the expenses postponed from the first half are expected to be incurred for the full year. Therefore, the full year forecast has been left unchanged from the forecast, as shown on this slide.

Now I would like to discuss the development pipeline. Please take a look at Page 9, which shows the status of major development pipeline. Items that have made progress since the earnings report for the first quarter of fiscal 2019 are highlighted in blue. They will be explained later with separate slides.

Let me discuss the progress made for global late-stage projects on Page 10. ALS treatment drug, RADICAVA, has been filed for approval in different countries and regions in parallel. Following Japan, Korea, U.S., Canada and Switzerland; China, in July, became the latest country where approval was granted. The oral formulation of RADICAVA MT-1186 was given a fast track designation by FDA in October. A long-term safety study is planned to start in December. ND0612, a drug for Parkinson's disease in its long-term safety study, has reached the target sample size of 100 in terms of the number of patients on this drug for 12 months.

Moreover, a Phase III study called BouNDless was started in August in which the drug is being compared to its oral formulation.

MT-2271, a seasonal influenza VLP vaccine, was filed for approval in September in Canada. In the U.S., data on the elderly and adults are under internal analysis and consultations with FDA are being scheduled prior to the application for approval.

Now I would like to introduce measures for intensification of central nervous system area. We are aiming to become a global company with CNS at its core. Globally, we will start with RADICAVA and launch new drugs for serious diseases, mainly in neurodegenerative diseases, including ND061 (sic) [ND0612] targeting Parkinson's disease and MT-3921 targeting traumatic spinal cord injury.

And in Japan, multi sclerosis drug IMUSERA and depression drug LEXAPRO, and we will be followed by domestic introduction of global products in addition to MT-0551 and MT-5199, continuously introducing new drugs for the treatment of central nervous system diseases, following the existing products and aim at strengthening the area.

Next, I would like to explain the progress of each product. Please turn to Page 12. First, RADICAVA. Biomarker study for ALS patients in the United States has started. Approximately 300 patients with ALS in about 40 sites in the United States will have biomarker testing and clinical assessments performed at baseline before RADICAVA treatment and at the end of the treatment. With this study, we will identify specific biomarkers as the indicators of disease progression to offer more appropriate treatment options for ALS patients.

Next, MT-1186, oral RADICAVA. We have reached agreement for development plan towards filing for oral RADICAVA with FDA in July and with PMDA in August. Long-term safety study is scheduled to start before the end of the year and bioequivalent study comparing oral formulation against IV in healthy subjects have been completed and PK profile equivalent to IV has been confirmed and Fast Track Designation was received from FDA in October with prompt NDA submission to FDA using 24-week data will be made and with a target launch in fiscal year 2021 in the U.S.

Next, an update on ND0612. As announced through a press release in August, Phase III study has started in the U.S. and Europe. The study purpose of the BouNDless is aimed to establish efficacy, safety and tolerability data, evidence of continuous subcutaneous ND0612 infusion in comparison with oral levodopa and carbidopa in patients with PD experiencing motor fluctuations. It is an active-control, double-blind study, with evaluation at week 12 of its superiority. We are planning for submission for fiscal year 2021 and launch for fiscal year 2022.

Next is MT-8554. The target indication is vasomotor symptoms with Phase II study completed in the U.S., confirming efficacy based on its mechanism. And we are in preparation for Phase III study. In parallel with the Phase III study, alliance activity is ongoing as high safety profile, owing to a novel nonhormonal mechanism of action is expected for vasomotor symptoms associated with menopause.

Next is MT-3921. It is a humanized anti-RGMa antibody from collaborative research with Osaka University. It promotes [neurite] elongation by blocking actions of RGMa. RGMa is also involved in inflammatory reaction and MT-3921 has anti-inflammatory effects. With these actions, it is expected to promote nerve regeneration after spinal cord injury. Phase I study in healthy adults is ongoing in Japan, and Phase I study in SCI patients is expected to start by the end of the year in the U.S., with the Phase I study plan submitted to FDA.

Next is MT-0551, inebilizumab. We concluded license agreement with Viela Bio Incorporated on October 8, and we acquired exclusive development and commercialization rights in Japan and Asia for NMOSD with global Phase III study already completed. This is a humanized anti-CD19 monoclonal antibody. It has an action to deplete plasmablast that produce autoantibody and CD19 expressing B cells. It is a monotherapy product to be administered at day 1, day 15 and subsequently, every 6 months. Clinically significant inhibitory effect is shown for EDSS, Expanded Disability Status Scale. There are no approved drug for NMOSD here in Japan with high unmet needs with approximately 5,000 patients domestically. We are preparing for filing in Japan in fiscal year 2020, followed by a launch in fiscal year 2021.

Next is MT-5199, Valbenazine. We are conducting Phase II and III starting in Japan with subject enrollment completed.

So this is the overview. The mode of action is the inhibition of vesicular monoamine transporter 2, VMAT2, inducted from Neurocrine Biosciences in 2015. Marketing approval for tardive dyskinesia and launch as INGREZZA in the U.S. has been achieved. It was nominated for Prix Galien USA Award. This is a procedure award given to innovative pharmaceutical development. There are no drugs in Japan indicated for tardive dyskinesia, and we will pursue development to offer novel treatment to patients. And here, in fiscal year 2021 and launch fiscal year 2022 in Japan is planned.

Slide 19 shows development and launch plan of our major products. Lastly, allow me to explain shareholders' return. As for dividends, the company will pay the interim dividend for 2019, JPY 28, as planned. We plan to maintain current level of dividends. Annual dividend of JPY 56 during the period of medium-term management plan, reflecting the revision announced in November of last year. That concludes my presentation. Thank you.

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Questions and Answers

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Operator [1]

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The first question is from Mr. Hashiguchi of Daiwa Securities.

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

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Hashiguchi from Daiwa Securities. I have several questions on the pipeline. The first question is about RADICAVA in China. Could you tell us your marketing strategies? Are you going to seek to obtain insurance reimbursement? Or do you plan to market the product at a free market price? Could you also comment on your view on the sales potential there?

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Unidentified Company Representative, [3]

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Kobayashi will answer that question.

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Yoshihiro Kobayashi, Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer, Division Manager of Ikuyaku & Director [4]

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Since this is an orphan drug and we were given approval from the Chinese authority in an expedited manner in order to ensure the drug will be delivered to patients as soon as possible, we would like to start selling the product initially at a free market price. As we consult with authority, if it is determined that the reimbursement will be possible, we hope to get it reimbursed.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [5]

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What levels of prices do you have in mind at the time of launch? And when do you expect to launch the product?

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Unidentified Company Representative, [6]

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That depends on our negotiations to the Chinese authority. And therefore, we cannot say exactly when at this time. Hopefully, as soon as possible. We are hoping to launch it during the next fiscal year, but there is also an inspection on the product quality, and we are now working to determine the timing of launch.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [7]

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I also want to ask about MT-2271 on the influenza vaccine. Could you comment on whether the situation in the U.S. has not changed from what you have been describing conventionally? Previously, you have been saying that based on the result of the Phase III study on elderly patients, you're expecting to file for approval in the fourth quarter. Has the result of the study on the other patients being just as you had expected? And am I correct to assume that your schedule up to the submission has not changed?

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Unidentified Company Representative, [8]

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Kobayashi will answer that question.

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Yoshihiro Kobayashi, Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer, Division Manager of Ikuyaku & Director [9]

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As we described on Slide 10, things have not changed. We expect that after interpreting the result of the study on elderly patients or the Phase III study, we will consult with FDA.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [10]

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And can we assume that the result of the analysis, so far, was satisfactory to you?

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Unidentified Company Representative, [11]

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We believe that the result was positive enough for us to take to FDA for consultation.

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Kazuaki Hashiguchi, Daiwa Securities Co. Ltd., Research Division - Research Analyst [12]

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My last question is about MT-3995. I recall you explained previously that you're expecting to obtain the result of the POC study for the indication of NASH in the second quarter. Can you update me on the current status of this?

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Unidentified Company Representative, [13]

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I think we were asked about this last time as well. We did obtain the result of the study for NASH, which was performed here in Japan. In accordance with the mode of action, we believe that we're able to determine efficacy to some extent. But as you probably know, if we are to seek approval on the indication of NASH, we would have to conduct an extremely large-scale study. And therefore, while looking for a partner to work with us, we're trying to come up with an exit strategy going forward.

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Operator [14]

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The next question is from Mr. Yamaguchi from Citi.

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

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I am Yamaguchi from Citi. My first question is on MT-8554. Can we see the result of the POC study disclosed somewhere?

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Unidentified Company Representative, [16]

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We are now preparing for publishing the result at an Academic Congress. And so we expect to report to you very soon.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [17]

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I see. This product, if you plan to market overseas, will probably require a certain level of distribution network. You indicated in the slide that you are engaged in partnering activities. Does that mean your basic policy is to license it out? This is somewhat different from drugs in CNS area. Or are you pursuing both approaches in parallel? I'm asking about overseas market.

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Unidentified Company Representative, [18]

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Basically, we would like to look for a partner.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [19]

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I see. My second question is about the arbitration proceedings for Gilenya. I understand that proceedings are ongoing, but in your eyes, has there been some new developments or any progress for the last 3 months?

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Unidentified Company Representative, [20]

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They are now underway. It is not the case that there have been any major trouble or hindrance. They are underway.

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Hidemaru Yamaguchi, Citigroup Inc, Research Division - MD and Analyst [21]

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Since there are no other presence from other companies, I would assume it will be a bit difficult to estimate the time to be taken. When you say underway, it usually implies that both parties are making preparations and having meetings in order to reach an agreement in arbitration. So are you saying those activities are taking place steadily?

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Unidentified Company Representative, [22]

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Well, yes. Steadily, yes. For arbitration cases, each of the parties involved is obligated to keep confidentiality. And therefore, the status of the other companies are not visible to us at all, and we are not in a position to disclose anything about us.

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

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I see. Then there's no telling when we'll come to an end.

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Unidentified Company Representative, [24]

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That is correct. We can't comment on schedule either.

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

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As Mr. Tabaru said earlier, despite everything you have gone through, you have overachieved the full year forecast in the second quarter. There are also some budgeted expenses that have yet to be used. But do you assume operating losses in the third and fourth quarters? Or the profitability is so low that are you going to review it as needed?

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Unidentified Company Representative, [26]

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Some of the expenses have been moved down to the second half, and they are supposed to be incurred, as budgeted, on a full year basis. With regard to how we are going to spend actually, we expect to have more visibility toward the end of the year when we report earnings for the third quarter. And so we are going to revise our forecast, if necessary.

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Operator [27]

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The next question is from Mr. Muraoka of Morgan Stanley.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [28]

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Muraoka from Morgan Stanley. With regard to the dividend, you said the current level will be maintained till the end of the current medium-term management plan in 2020. I would love to take your words at face value, but that would mean you will need JPY 30 billion annually. I'm fully aware that you have cash on hand of JPY 15 billion sitting on the balance sheet. Is there any discussion inside your company as to whether maintaining this policy is appropriate?

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Unidentified Company Representative, [29]

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Yes. We asked Board of Directors to deliberate on this before we announced the policy externally. We said our dividend per share will remain JPY 56. Though we are going through arbitration procedures, we kept insisting that we are entitled to the royalty income, given that we are at the level assumed in the medium-term management plan, and therefore, we will maintain JPY 56 per share. Our understanding is that there have been no changes since we decided on this policy. And therefore, we will carry on with this plan.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [30]

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Does that mean it is unlikely that your philosophy will be changed in the next fiscal year?

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Unidentified Company Representative, [31]

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It will be difficult for us to make commitments for the future. But in November last year, we announced that we will stick with this policy till the end of the current medium-term management plan, which remains unchanged on our part.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [32]

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I see. My next question is about MT-7117, a drug for EPP. I would assume the result of this Phase II study is out by now. Any updates you can share with us?

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Unidentified Company Representative, [33]

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We are on track, and so we'll be able to update you soon.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [34]

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But you have not received the result yet, have you?

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Unidentified Company Representative, [35]

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No, but we are expecting to receive soon.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [36]

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My last question is what sort of information we can expect to get at the upcoming IR meeting on November 25?

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Yoshiaki Takai, Mitsubishi Tanabe Pharma Corporation - VP & Head of Corporate Communications Department [37]

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Takai speaking. Based on our understanding of where we are vis-à-vis the medium-term management plan, 1 year prior to the end of the period, we intend to make preparations to update you on our revenue forecast as well as future strategies of NeuroDerm, if possible.

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Operator [38]

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Next is Mr. Sakai from Crédit Suisse.

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Fumiyoshi Sakai, Crédit Suisse AG, Research Division - Research Analyst [39]

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Can you hear me?

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Unidentified Company Representative, [40]

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Yes, we can hear you.

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Fumiyoshi Sakai, Crédit Suisse AG, Research Division - Research Analyst [41]

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Yes, I have one question. I'm sorry I was not able to listen in to the first half of the presentation, so I'm sorry if my question is redundant. My question is on the tax rate of your company. You may not like me asking about the period already ended, but for the fiscal year ended March 2019, I believe so impacts of deductible expenses and those structural reform expenses. But for this fiscal year, the second quarter just ended and the tax rate has not gone down, received our royalties from Gilenya, I believe, is taxable. Is this making the tax rate seem high on the surface? How are you treating this accounting-wise? In other words, how is it processed post arbitration? If it is settled in the way you have explained, what will happen?

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Unidentified Company Representative, [42]

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As for the tax rate, the total profit is small at around the level of JPY 10 billion. And with R&D expenses for NeuroDerm and Medicago being quite high, it results in no tax effects. This being the reason, the effective tax rate seems very high on the surface, but this is not in relevance to the situation concerning Gilenya.

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Fumiyoshi Sakai, Crédit Suisse AG, Research Division - Research Analyst [43]

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I understand. However, the royalty received from Novartis is taxable. Is that the correct understanding?

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Unidentified Company Representative, [44]

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Yes. When the arbitration is settled, tax accounting will occur.

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Fumiyoshi Sakai, Crédit Suisse AG, Research Division - Research Analyst [45]

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That is when it is processed as a [bet]. Is that correct?

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Unidentified Company Representative, [46]

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Well, taxation-wise, there are complexities. So we will refrain from disclosing the details.

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Operator [47]

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Next is Mr. Wakao from MUMSS.

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Seiji Wakao, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [48]

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My name's Wakao, Mitsubishi UFJ Morgan Stanley Securities. I have 2 questions. I would like to confirm the positioning of the biomarker study targeting ALS patients. Would you be utilizing the results of the biomarker study for R&D or future products? Is there potential for it to show analytical results bringing upside impact on sales of the current RADICAVA or the oral RADICAVA? Please explain how you position this study.

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Yoshihiro Kobayashi, Mitsubishi Tanabe Pharma Corporation - Managing Executive Officer, Division Manager of Ikuyaku & Director [49]

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This is Kobayashi. As you know, in the U.S., we obtained approval just with Japanese data for ALS. So we are short on data, and drugs available for ALS is limited at the moment. So the various pathology is not fully known.

In that sense, we will be utilizing the outcome of this study to find out the possible biomarkers, what kind of actions they may have, which will allow early diagnosis of ALS patients or confirm efficacy, et cetera. So this study will deepen the understanding of this disease as well as of Radicut.

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Seiji Wakao, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [50]

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And interim analysis will be conducted during 2020? Will the results be disclosed?

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Unidentified Company Representative, [51]

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It will be disclosed at an appropriate timing. The overview of the biomarker study has already been announced at a medical conference in Orlando in April 2019. If we obtain data worthy of reporting, it will be done in a timely manner.

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Seiji Wakao, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [52]

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The other question is about in-license product, MT-0551. Compared to competitors' product for this disease, like 2 guys, satralizumab or Soliris. What is a potential that MT-0551 have? What is its characteristics?

It seems to have high recurrent suppression rate and convenience as it is only required to dose every 6 months, making it superior. Do these 2 characteristics show that it is superior against competitors' products?

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Unidentified Company Representative, [53]

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Yes. As indicated, 3 compounds are now being developed for NMO.

I don't have good enough understanding of the data of other drugs. So how we can differentiate our products against the competitors will be made clear as we accumulate more data after launch. But having said that, all 3 compounds target CD19 [complements] and IL-6 receptors. So efficacy will be confirmed to adverse differentiation. But as for patients, they will be offered not only one, but 3 drugs, making it possible to choose an optimal therapy, which is a very good thing. But as you mentioned, the dosing interval is longest for inebilizumab, which is very convenient. Short-term results show good efficacy, and it was confirmed that we can submit with short-term data. So we will continue to confirm long-term efficacy and safety and differentiate our product from others at the same time.

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Seiji Wakao, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Research Division - Senior Analyst [54]

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I understand. Continuing with inebilizumab, you mentioned that the 5,000 patients here in Japan. Are they all target of this drug? And as it targets B cells, urinary tract infection and other infections are listed as possible adverse events. Will this be a burden on the drug? Is there any AEs that cause special concerns?

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Unidentified Company Representative, [55]

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A paper in Lancet mentioned there is, but the number of UTI is limited, and the result is not so different from the placebo arm. But this is just a short-term result, so we would like to follow up on a long-term basis. There are no high-risk points currently. As for the target population, patients have, for example, different complications and different pathophysiologies. So in the early stages, based on the data, we will choose patients in a robust manner. So the number of patients may be small to begin with, but we believe it will continue to increase as efficacy and safety of this drug are established.

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Operator [56]

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Next is Mr. Muraoka from Morgan Stanley.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [57]

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I'd like to ask one additional question on inebilizumab. I believe it is for aquaporin-4 positive only, where satralizumab is for both negatives and positives. Is this a correct understanding?

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Unidentified Company Representative, [58]

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Well, the trial itself is run for both positives and negatives, without separation. In other words, the results are available for both positives and negatives as well, while the ratio of 0 negative patients was very low. So if we extract only cellular negatives and compare them against placebo and active arm, clear efficacy was not achieved. And this was indicated in the paper in the Lancet as well, but the target is both positives and negatives.

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Shinichiro Muraoka, Morgan Stanley, Research Division - Research Analyst [59]

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So the final label may be decided by the authority. Is that correct?

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Unidentified Company Representative, [60]

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Yes, I think that is a correct understanding.

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Operator [61]

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With that, we'd like to close this Q&A session. Mr. Takai, would you like to conclude this briefing?

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Yoshiaki Takai, Mitsubishi Tanabe Pharma Corporation - VP & Head of Corporate Communications Department [62]

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Yes. I'd like to thank you for your participation in this conference call.

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Operator [63]

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With that, we'd like to conclude this conference call. Thank you very much for your participation.

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