Q3 2023 Takeda Pharmaceutical Co Ltd Earnings Presentation
Endpoints of non inferiority at eight weeks.
Full data results will be submitted to a peer review journal and that being shared with regulatory agencies Andy.
Andy will share additional information on these two studies later in the presentation.
In January together with our partner Arrowhead, we announced positive phase two data for <unk> Sirona in Alpha one antitrypsin.
<unk> deficiency associated liver disease.
<unk> is responsible for taking this program into a phase III study, which we expect to begin very soon.
Moving to the mid stage pipeline take 861 hour or direction agonist for narcolepsy has met our pre specified criteria to advance the program into two phase II studies in narcolepsy type one and type two.
We have been proactively planning these studies and we'd be able to move very quickly both phase III trials are currently enrolling patients.
To supplement this positive development in our pipeline, we are making strategic investments in long term growth in line with our capital allocation policy in this summer, we announced a major agreement with Nimbus therapeutics to acquire a potential best in class two inhibitors to balloon attached to 79 after closing.
This acquisition is fully aligned with our strategy and adds another important late stage for IP to our pipeline.
This therapy is possible indication across a broad range of disease, including <unk>.
So you take arthritis inflammatory bowel disease and Lucas.
It represents clearly a very significant potential opportunity in these markets.
We could potentially find this program within the fiscal year 2005 to 2007 timeframe, which means it could be generating significant revenue by your time on TV ultimately face biosimilar reinforcing our growth profile into the next decade.
We were able to take advantage of this exceptionally rare opportunity because of our financial discipline and our success and deliver aging which is driving our strong free cash flow.
We will maintain that strong financial discipline as we continue to look for opportunities to enhance our pipeline with mid to late stage assets.
In January we announced an exclusive licensing agreement with <unk> for kitchen, <unk>, a highly selective egfr went to three oral tyrosine kinase inhibitor.
<unk> offers a potential new treatment option for patients with refractory metastatic colorectal cancer, regardless of biomarker status.
The agreement will give us exclusive rights to further develop and commercialize for kitchen at worldwide, Excluding China, Hong Kong and Macau.
We plan to complete regulatory submission in the U S Europe and Japan in 2023.
In closing this quarter reinforce our growth outlook, we continue to deliver on our financial commitment to progress our pipeline and to create long term value for our stakeholders.
Why do we fulfill our purpose of bringing better health for people and a brighter future for the world.
With that I will turn the call over to Andy to update you on our pipeline. Thank you.
Thank you Christophe and Hello to everyone on the call today with regard to the next slide please.
Our pipeline continues to advance with very strong momentum this quarter and fiscal year I'm excited to share several important pipeline updates that have been achieved just this quarter.
As Christoph mentioned Takeda as dengue vaccine <unk> was approved in the EU and received a positive <unk> opinion for endemic countries participating in the EU medicines for all program.
In addition, the U S filing as complete and to Dangle received priority review as.
As a result of these efforts Takeda is on track to provide broad access to this critical vaccine with many additional approvals and launches in the near future.
<unk> is a transformative vaccine that fills a substantial unmet need for individuals in and travelers to warm weather climates.
<unk> has the potential to prevent morbidity and mortality for dengue endemic endemic regions across the globe.
About half the world's population lives.
Important clinical updates include Tak 755.
Which at an interim analysis of the phase III study demonstrated robust efficacy and a strong safety profile compared to the standard of care and congenital thrombotic thrombocytopenic purpura or C. TTP.
We will file for approval of Tak 755 is the first recombinant Adam <unk> replacement therapy for CTG pay I will discuss these data in more detail later in this presentation.
With density is up next in the Phase III Aurora study with Tensity provided clear evidence of durable anti viral efficacy and hematopoietic stem cell transplant patients with first line CMV infections.
In addition, we confirmed its favorable safety profile versus the standard of care. We are excited to engage regulatory agencies about our filing strategy in the very near future.
Next Iclusig are third generation tyrosine kinase inhibitor designed to block PCR April <unk>.
<unk> met the primary endpoint in the phase III Falcon study, demonstrating higher rates of minimal residual disease or <unk> negative complete response, when compared head to head with Imatinib in frontline Philadelphia chromosome positive ALR.
<unk>.
<unk> negativity is associated with improvement in long term outcomes for patients as reported in the scientific literature.
We are discussing these potentially practice changing data with regulatory agencies and will be the featured abstract in February ASKO plenary series.
In early January Takeda with our partner Arrowhead announced positive results for <unk> from the blinded phase two Sequoia trial.
<unk> as a potential first in class RNA interference therapy designed to reduce the production of mutant Alpha one antitrypsin protein or Z as a potential treatment for the rare genetic liver disease associated with Alpha one antitrypsin deficiency.
<unk> demonstrated a dramatic decrease in circulating mutant Z.
As well as liver Z <unk> globules.
In addition, the percent improvement in portal inflammation and change in fibrosis were consistent with the prior open labeled phase II results.
We've opened the phase III study with the primary endpoint of decrease from baseline of at least one stage of histologic fibrosis measured at week 106.
We believe that patients who received <unk> for two years should demonstrate continued therapeutic benefit with improvements in liver fibrosis.
Also in January as Christophe mentioned, we announced the advancement of TAC 861 into two phase <unk> dose ranging studies for patients with narcolepsy type one and narcolepsy type two.
We remain very excited about our Orexin franchise.
We believe our oral Orexin agonist Tak 861 has the potential to transform treatment for patients suffering from narcolepsy I will describe the directional criteria used to make this decision shortly.
The last clinical update we would like to share.
Is a new phase II start for tax free for one antibody therapy target targeting alpha nucleon for multiple system atrophy or MSA MSA is a rare progressive and fatal neuro degenerative disorder. Our phase one study showed strong target engagement with and a significant reduction.
<unk> of CSF Alpha nucleon.
We believe there is a strong biologic rationale that preventing the accumulation of alpha nucleon could be a disease modifying approach for MSA patients for which there are currently no approved therapies and finally again as Christoph mentioned earlier, we recently signed two late stage pipeline enhancing deals.
That are pending antitrust reviews, we announced our intent to acquire a late stage potential best in class oral <unk> allosteric <unk> inhibitor from Nimbus Therapeutics data from our phase <unk> study of this molecule in patients with psoriasis are targeted for presentation in March just next months months.
With its unique allosteric mechanism of action. This asset is a potent and highly selective <unk> inhibitor with exceptional clinical activity, a strong tolerability profile and wide therapeutic margin margins. We believe it has best in class potential.
A wide range of immune mediated conditions conditions.
The second deal is a licensing agreement with Hutch Med that gives takeda worldwide rights outside of China to for Clinton Nib.
Highly selective oral VEGF receptor tyrosine kinase inhibitor that has already demonstrated a significant overall survival benefit and refractory metastatic colorectal cancer.
Our partner <unk> has started a rolling submission process with the U S FDA.
Regulatory submissions are expected to be completed in the U S EU and Japan in fiscal year 2023 next slide please.
Shown here are 10 late stage development programs, which continue to advance it.
Additional progress this quarter includes the intensity filing for relapsed refractory CMV in China, and the submission of <unk> in the U S, which received priority review.
As evidenced by the two late stage deal announcements Nimbus and Hutch Med, we continue to look for transformative programs within our therapeutic areas that can add to our late stage development program and contribute to our marketed portfolio. This decade next slide please.
We are energized by recent developments in our mid stage pipeline that continues to mature and advance as mentioned earlier. This quarter. We advanced package takes one into two phase <unk> dose ranging studies for patients with narcolepsy is type one and two.
This decision was made based on the careful review of preclinical toxicology data.
Data from the single and multiple ascending dose healthy volunteer cohorts data from studies of healthy volunteers subject to sleep deprivation deprivation, and finally efficacy and safety data for patients with narcolepsy type one.
The Prespecified phase <unk> efficacy criteria are equivalent to those those used to evaluate our other orexin agonist the.
The safety review included liver safety assessments for up to four weeks of treatment.
Our decision to progress was based upon the data for <unk>, one and our extensive datasets from prior Orexin agonist development.
In addition, we highlighted in green our recent submission to an upcoming conference promising early data for Pac 92, five in healthy volunteer is recovering from anesthesia, we hope to share. These data with you early in fiscal year 2023, and our year end call, we plan to share progress across the mid stage programs.
Shown here. These programs are the first of many new molecular entities that could emerge from our rich and transformative early to mid stage pipeline, adding to our growing late stage portfolio next slide please.
Shown here are select expansion opportunities, we have for our major brands subcutaneous Entyvio was filed in Japan for Crohn's disease earlier than our initial plan.
We continue to expect an entyvio subcutaneous U S filing in early 2023.
The EU filing for the approval of <unk> to treat pediatric patients is complete as is the U S submission for Tac <unk> and IV <unk> therapy for patients with a sensitivity to immunoglobulin a next slide please.
As you can see illustrated here Q3 had many regulatory and phase III highlights that added to our pipeline momentum.
<unk> regulatory updates include dango approval in the EU and U K.
With Tensity achieve EU approval this quarter and <unk> was approved in China earlier than our initial target of fiscal year 2023.
Lastly, the high hub device, which is designed to improve the patient experience by reducing the number of steps required to complete an infusion of <unk> will now have a regulatory decision in the first half of fiscal year 2023. We have received some end of review requests from the FDA that we believe can be satisfied through additional.
Analytical testing now lets look at tax 75, and lift density data next slide please.
Tak 755 is our recombinant at MTS 13 replacement therapy designed to address the underlying cause of congenital TTP the.
The interim analysis of the first and only phase III pivotal trial in <unk> patients showed a 60% reduction in the incidence of thrombocytopenia events versus the standard of care, which is plasma derived from fresh frozen plasma or FSP.
755 also showed that a substantially lower proportion of subjects experienced adverse events.
These and many other clinically relevant benefits from this head to head trial will be presented at a medical meeting later this year.
As you can see on the right. We have added <unk> 13 activity plotted versus time at varying doses.
The 40 units per kilogram dose was the one used in the phase III trial. This pilot in Green.
The gray and shaded area between the 5% and 20 unit curves is representative of the activity. We would expect from the plasma standard of care, which typically provide about 10 units per kilogram of activity. These.
These positive results are perhaps not surprising given the higher level and longer duration of AD MTS 13 activity projected a recombinant therapy can provide consistent and higher AD MTS 13 replacement with less risk of allergic reactions and no concerns for volume overload.
That 755 is also being developed in immune TTP are much more prevalent form of this disease next slide please.
Okay.
The Aurora trial was the largest head to head comparison of <unk> intensity versus the standard of care Val ganciclovir in patients undergoing hematopoietic stem cell transplant, who develop CMV infections. Despite just missing achievement of non inferiority at the primary endpoint, we believe the dura.
<unk> efficacy and favorable safety profile as clinically meaningful and potentially label enhancing.
I would like to highlight the sustained numerically higher rate of long term CMV clearance at weeks 12, 16 and 20.
Showing evidence of durable anti viral viral efficacy as well as the compelling favorable safety profile, which includes a significantly lower rate of treatment emergent neutropenia, we will be engaging regulatory agencies shortly about our path forward.
Thank you very much and I will now turn it over to kosta. Thank.
Thank you Andy and Hello, everyone. This is costa <unk> speaking today I'll walk you through the financial highlights of our fiscal 2022 third quarter results and I'm pleased to say that it has been another strong quarter of growth.
Core revenue for the nine month period was 3.07 trillion yen or approximately $23 3 billion U S dollars.
Despite the entry of Brocade generics in May 2022, we continued to deliver solid top line growth up four 5% versus prior year.
Constant exchange rate driven by our growth in wound products.
These products now represent 39% of total revenue and grew 20% at constant exchange rate.
Reported revenue growth was 13, 9% with business momentum in foreign exchange upside more than offsetting the impact of a 133 billion gain from the sale of the Japan diabetes business that was booked in Q1 of prior year.
Core operating profit grew nine 7% at constant exchange rate to $954 7 billion yen.
And our core operating profit margin was 31, 1% an increase of one five percentage points on a year over year.
Basis.
This year on year margin improvement is an indicator of our financial resilience and our ability to control costs. In fact at a constant exchange rate our SG&A spend continues to be lower than last year.
Reported operating profit declined 13, 1% year to date impacted by the sale of our diabetes portfolio last year, but this impact is diminishing as each quarter goes by and we still expect to end the full year with growth.
Free cash flow was very strong at $595 2 billion and net debt to adjusted EBITDA came down to two five times from two eight times at the start of the fiscal year, even after paying the full dividend.
With regards to the full year outlook, we remain on track to our management guidance for constant exchange rate growth, although we are actually tracking towards the higher end.
This guidance on some measures.
Our reported and cool forecast remains unchanged.
Slide 16 shows our first half results in more detail.
On the left hand side are our reported results.
As highlighted in previous quarters.
Some of Japan diabetes portfolio in Q1 of last year is impacting our reported operating profit growth.
But reported EPS is actually up 19, 6% benefiting from a favorable reported tax rate.
Focusing on the core numbers on the right.
Very pleased with the year to date growth, we are delivering on a constant exchange rate basis with revenue up four 5% core operating profit up nine 7% and core EPS growth of 17, 1% on top of that FX has been a significant tailwind for us this year.
Noting an actual core revenue growth of close to 20% and core EPS growth of 37%.
Let me go into more details on the Q3 year to date.
Revenue performance versus prior year on slide 17.
On the left is a waterfall chart.
For reported revenue, which grew at 13, 9% year on year with business momentum and FX favorability more than offsetting the impact of the 133 billion. One off we built in Q1 of last year from the sale of the Japan diabetes portfolio.
<unk> revenue on the right hand side excludes the impact of the diabetes portfolio. So in the prior year.
You can see how business momentum was driving for 5% growth at constant exchange rate with the additional FX Halloween raising total core revenue growth to 19, 8%.
On Slide 18, you can see that the key driver of top line growth is our portfolio of growth and launch products, which generated approximately one two trillion yen or 39% of total revenue quarter three year to date.
20% growth at constant exchange rates.
Incremental Italy. These products added 350 billion or $2 $7 billion of revenue compared to last year.
This is the portfolio driving total company growth this year, despite the brocade loss of exclusivity and we expect that to continued momentum of these products will allow us to offset bobbitt's generics in fiscal 2023.
With our five key business areas.
Our largest area by revenue grew at 11% year to date on a constant exchange rate basis.
This was spearheaded by Entyvio, which grew 17% driven by continued increase in buyer.
Patient share.
In rare diseases, which grew 5% we see continued demand in geographic expansion Flotek Zara, which delivered growth of 25%. We also see early indicators of success with the lift tends to be launch with 87% of transplant centers in the U S. Having now.
I had a therapy with at least one patient.
PDT immunology continues to be very strong with 18% growth, including 19% growth of immune globulin and 20% growth of albumin.
<unk> strong demand.
We have continued to expand our plasma donation centers.
Adding 21 centers in the fiscal year to date, bringing our global footprint now to 225 centers.
Next is oncology, which is declining year on year as expected given the brocade generics entered the U S market from May this year.
Excluding brocade the rest of the portfolio grew 7% driven by Lou bring excuse <unk> ADCETRIS ad inclusive.
Finally, neuroscience continues to perform very well with growth of 10% driven by Vyvanse and <unk>, while the other segment is declining due to some regional loss of exclusivity in Japan.
The other segment also includes our COVID-19 vaccines in Japan.
We are seeing lower market demand for <unk> than expected given the current situation of vaccination in Japan and prevalence of on the ground.
On Slide 19, we show the drivers of reported and core operating profit for the quarter.
Reported operating profit was 401.9 billion yen a decline of 13, 1% versus prior year.
Again, the decline is predominantly coming from the gain on the sale of the Japan diabetes portfolio, which contributed $131 4 billion yen to reported operating profit last year.
We also had some one off items impacting the other column here such as impairments of intangible assets, which includes net power and higher pre launch inventory in preparation for future launches.
On the right side of the slide you can see the core operating profit was $954 7 billion yen with our business momentum driving the one 7% growth at constant exchange rate.
Foreign exchange was an additional benefit resulting in actual core operating profit growth of 26%.
Moving to cash flow on slide 20.
This slide shows our year to date free cash flow of 595.2 billion yen comfortably covering the full year dividend and also the net interest payment.
We also continued to make progress in reducing our debt.
With a total amount of 281 6 billion paid year to date, including prepayments of higher interest debt maturing in November 2023.
We closed December with ample cash of 685 billion yen.
And total liquidity of one three trillion yen or roughly $9 5 billion U S dollars.
This gives us the comfort to pay for the attack to seven odd acquisition from Nimbus, primarily utilizing cash on hand pending deal completion, which we hope will occur within this fiscal year.
Slide 21, the net debt balance compared to the end of March.
Demonstrates the continuation of our steady deleveraging progress from two eight times down to two five times.
Although we continue to make progress with debt repayment the amount of debt on our balance sheet in Japanese yen terms increased over the period.
The depreciation of the yen.
This is the dollar and euro and this movement is captured we can be other bar in the chart.
However, as a reminder, the depreciation of yen also benefited EBITDA, which means the impact of FX on our leverage ratio is minimal.
Also we have structured the currency denomination about the mirror, our cash flow, which shows that over time, we will be able to pay down debt with minimal impact from FX movements.
On slide 22, you can see our debt maturity ladder as of December .
As demonstrated on the cash flow slide we have already paid off significant amount of debt this fiscal year, including a total of $1 $2 billion of higher interest USD denominated bonds.
750 million euros of floating rate bonds.
As a result, our debt is now 100% fixed rates and our weighted average remains around 2%.
We remain very comfortable with the debt maturity profile over the coming years.
Next moving to slide 23, and our outlook for full year 2022.
I'm pleased to say that we are on track to me to help buoy management guidance for growth at constant exchange rate with core revenue growing at low single digit.
And core operating profit and core EPS growing high single digits.
In fact, we are trending towards the high end of the range for some of these metrics.
For our reported and core forecast, we are keeping our numbers unchanged from the update we gave at Q2.
On a reported basis, we still anticipate revenue to be 3.93 trillion yen.
Operating profit of 530 billion and EPS of 190 <unk> yet.
On a core basis revenue is expected to be 393 trillion yen with cooperating profit expected to reach $1, one eight trillion yen and core EPS to reach 525 years.
With regard to free cash flow, we are keeping our forecast unchanged at 650 to 750 billion yen. Although please note that it does not include the impact of the <unk> acquisition from Nimbus, which may impact. This number if the deal closes within this fiscal year.
To close out the presentation on slide 24, I'd like to reemphasize the key elements of our strategy to deliver sustainable growth and value to our shareholders. We continue to see strong momentum from our commercial portfolio.
Which enabled us to deliver four 5% core revenue growth at constant exchange rates Q3 year to date.
This is driven predominantly by our growth of them.
Products growing at 20% on a constant exchange rate basis more than offsetting the impact of generic versions of brocade that launched in May 2022.
Our margins are strong at 31, 1%.
And we delivered year to date core operating profit growth of nine 7% at constant exchange rate well on track towards full year guidance of high single digit growth.
And our success is built on a solid financial foundation with robust cash flows that we will continue to allocate towards growth opportunities such as the recent new deals with nimbus, an hatchment, while continuing to focus on competitive shareholder returns.
We have abundant liquidity and a well structured debt profile of 100% fixed rates at an average cost of 2%.
Which positions us well in the current macro environment.
Finally, before we open up to Q&A I'd like to bring to your attention in upcoming Investor call. We are scheduled for mid March focusing on our launch plans and commercial strategy for <unk>.
We look forward to your participation in this event.
With that we can open up the line for questions. Thank you very much.
Okay.
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Oh, hi, Thanks, Jeremy Yes.
Yes, we hear you.
Thank you very much so there's some of it to Chris.
I think it's better to make two questions.
At the same time. The first question is about margin Christians co.
Coke and.
And the margin itself, just looking at the quarter by quarter on a sequential basis is trending down, especially on the Q1 for <unk>.
Q3 can you give us a reason why.
The other is.
Coming from the business mix.
Maybe bifurcate it may have an impact on that one but.
Is this in line with your expectation or it's a little bit slower than your expectations that the first quarter.
Cost of goods sold on the margin question. The second question regarding our appraisal program other therapeutics.
I understand the quarter doesn't quarter, it's not necessarily a important part of this quarter.
Pretty strong, especially <unk> and also our women.
Can you give me the price conditions or marketing conditions or margin conditions regarding activity, especially in the U S. Thank you.
Thank you Yamaguchi. Some so the first question on gross profit margins on a quarter to quarter basis, I'll ask Costa to answer that question and then regarding the PDT business.
So the market dynamics pricing dynamics I'd like to ask Christophe to answer that one.
Okay.
Thank you Yamaguchi San for your question, Let me just let me just refer to your question more on a year to date basis, we typically given the the the way the business operates this seasonality impact and quarter by quarter.
We prefer to look at the other day. So if you look at year to date.
The gross profit margin.
Year to date Q3 year to date versus Q3 year to date 21 in fact, our gross profit is improving on an actual basis by 0.5% and on a constant exchange basis, it's growing by <unk>, 1%.
And the main reason for this.
Gross profit improvement on a year to date basis is because of the strength of our growth and launch portfolio.
At the same time, if you look at our core operating profit margin improved year to date are one 5% for both actual and constant exchange rate.
Again, the main reason is driven by the growth in most product coupled by our laser focus efforts on managing costs in particular, SG&A, where you see our SG&A.
Its actually favorable.
It's one 6% favorable versus prior year year to date. So please consider that the year to date numbers in the year to date numbers are really looking favorable accrual. Thank you.
Thank you.
Thank you and encourages tonnage Christophe per hour PDT growth is really driven by volume and demand it's not it's not.
Price driven growth of our portfolio is growing well.
Our ski good to be true and <unk> are growing so well and they are.
Significant growth driver.
We have in the quarter based on where we are who we continue to increase our.
Donation center, we added five new donation center. So we are on track to expand our network as plan.
About 25 centers.
In fiscal year 2022.
We are in terms of the donor.
Carsten.
Donor compensation as we announced previously we have been able to reduce.
Slightly.
The do not competition and to maintain that level in the in this Q3, so really a growth driven by the business fundamentals. Thank you.
Thank you.
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Okay. Thank you very much. So I think these are both for Andy So the first question on Tak 705 five.
So understanding similar efficacy as a couple of <unk>, but without the need for plasma exchange is it correct. There's no bleeding events and then for the filing would it be on demand or is there also a prophylaxis indication, possibly and then the next question on Pac three for one.
Was in phase one for Parkinson's now moving into a phase II for MSA.
But we certainly can enroll the right patients given that a lot of the diagnosis is based on symptoms. So we were sure. We can we can currently enrolled these MSA patients.
Why is takeda be taking over leading this trial from Astrazeneca, So I'll hand over to Andy Please.
Terrific. Thank you very much could understand this is Andy so firstly on Tak 755 that the data that we have.
That we've accumulated in our phase III study is both in prophylactic and in acute settings.
T T P D, whether it's congenital or immune mediated is related to either a complete deficiency or a functional deficiency and add MTS 13 activity. So tak 785 is quite distinct from any existing therapy is a recombinant form of atom tiers 13, and so we are.
Essentially providing an enzyme replacement therapy, we're replacing either the genetic or the acquired deficiency in this enzyme and the activity that we've seen in the in the phase III study in <unk> is quite is quite remarkable GTP as it is a very complex disease, you have both clotting and bleed.
And so the end points are related to boats colliding organ damage that you see when you when you when you move blood flow to an Oregon and also bleeding and we saw benefits across all of it.
All.
And points in our phase III study and we will be presenting those shortly and you'll have a chance to see them with respect to tax III for one you're correct MSA as it is a clinical diagnosis and as many overlaps with Parkinson's disease. There are some distinguishing features.
The rapidity of progression is one and then there are some newer.
Neuropsychiatric.
Manifestations, and MSA, which are different but it is a diagnosis clinical diagnosis and so it's possible that some of the patients that you wouldn't we would include in our MSA study may not actually have MSA I don't think that thats necessarily important because our expectation is that not only we will tag 341 be effective in MSA, but we have a strong.
Hypothesis to think the tab 341 could be effective in Parkinson's disease, we're starting with MSA because it's a it's a more streamlined phase III phase II and phase III study, we think that we can see efficacy more rapidly and MSA, but we're also considering very seriously moving into parkins.
<unk> disease as well and then finally this program has a partnership with Astrazeneca. The terms of the partnership where that Astrazeneca would manage the phase one program and starting in phase II and phase III Takeda would take over that.
Our market authorization application. Thank.
Thank you.
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Thank you I think these with both before Andy as well. So the first question on the <unk> inhibitor. So we'll see phase II data in March and will that data allow us to see superiority versus <unk>.
The Bristol product and the passive 75 schools and then the second question on <unk> 861 does this mean that we've fully overcome the tech 99 for safety issues or does that possibly with the remainder in phase II and previously we talked about this about having a longer half life of longer duration and is that still the case with <unk>.
<unk> hundred 61 over.
With you Andy.
So the <unk> phase III psoriasis, and I'm, sorry, the TIK two phase III psoriasis data will.
<unk> as already disclosed that they intend to present that in March. The hope is that we'll be closing the deal this fiscal year and we will be presenting those data representing those data at a medical meeting that it is important to note. The study did not include <unk>. This was a study that was was increasing doses of <unk>.
What we will call tact 279 against placebo. So you have to make cross study comparisons.
And we looked at the data during our diligence we felt that the study data suggested a high likelihood of a best in class profile, the best way to understand the potential of this molecule to go back and look at some of the <unk>.
Phase III data and look at what you see in terms of clinical efficacy with increasing doses with Docker and then look at the dose that was chosen for phase III. So we believe that Duke or left efficacy on the table with their phase III dose, perhaps to to optimize the safety profile, but you'll you'll have an opportunity to see all of those data.
Next month with respect to tax <unk>, one <unk> one is a distinct molecule to task 90, 94, it's more potent it has a longer half life is a very different set of.
The biophysical properties.
And and it's it's dosed at a much lower level than tech 99 for to see equivalent efficacy.
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Thank you Murat <unk>. So the first question was looking at the quarter on quarter costs. So R&D SG&A appeared to be higher in the third quarter and is there any risk to the full year forecast of $1. One eight trillion yen core operating profit and then the second question on shareholder return.
<unk>, what should we think about our expectations of a dividend increase would it be something continual and can we have the thoughts on that so I think both of these will direct to costa.
Right. Thank you very much Mario <unk>. So let me just start again.
Really drawing your attention to the year to date numbers Q3 versus Q3 2021, sorry.
Again, you know quarter by quarter. This fluctuation seasonality on a year to date, we're comparing the right apples to apples baseline. So on the SG&A perspective numbers, you can see that our SG&A.
On a constant exchange rate is actually declining versus last year. So it's a favorable one 6%.
And again main driver for that is significant improvement.
Improvement in back office more of the G&A line with leveraging data digital technology.
Takeda business solutions and in transactional.
Effectiveness there.
The R&D line, it's up on a constant exchange basis of five 3% slightly above the growth of revenue, which is revenue is growing at four 5%, but a lot of that is driven by some timing of program completion overall to your question on the.
Core operating profit of 1.18 trillion yen I can say that we are tracking well towards that on a run rate you can see our run rate deliverable year to date, we're tracking well and in fact, we're highlighting that.
Management guidance is is at the high single digit and perhaps in the higher range of that high single digit number.
So very very pleased with Q3 results not only on the top line growth, but also on the Opex and cooperating profit overall regarding dividend increase share buyback. So yeah. We are.
Haven't changed we're not changing our.
Capital allocation policy it game with very much focus on investing for growth for growth and growth drivers were pleased with the trend of our net debt to adjusted EBITDAR coming down even from two eight to 2.5, even after the full year dividend has been made.
And we're tracking very well towards getting to our <unk>.
Net debt to adjusted EBITDA targets.
And by fiscal year 'twenty three so we're very much focused on that and shareholder returns have been very much focused on maintaining.
Disciplined than if we were to give an update on the on the capital allocation policy, we will consider.
For sure looking at something that wouldn't be a one timer it'll be something that will be consistent moving forward, but right now it's too early to communicate that thank you very much.
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