Q1 2026 Takeda Pharmaceutical Co Ltd Earngs Call

July 30, 2026

Speaker #1: Authentic representation. Now, we want to start the presentation. We have present: CEO Judy Kim, Chief Financial Officer Milano Fruta, and President, R&D, and the plump.

Chris O'Reilly: Appendix of presentation. We would like to start the presentation. We have President and CEO, Julie Kim; Chief Financial Officer, Milano Furuta; and President R&D, Andy Plump. They will do the presentation, which will be followed by the Q&A session. We will get started.

Speaker #1: They will do the presentation, which will be followed by the Q&A session. We will get started, which will position us for accelerated growth in the years ahead, expand impact for patients, and set the stage for sustained value creation.

Julie Kim: Which will position us for accelerated growth in the years ahead to expand impact for patients and set the stage for sustained value creation. Today, I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year 2026 priorities. In Q1, core revenues declined slightly at 0.5% at constant exchange rate, or CER, in line with our expectations, as momentum across our core in-line brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio. Core operating profit declined 0.5% year-over-year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program. Core EPS was JPY 154, a decrease of 11.8% at CER, mainly due to a favorable tax position in the prior year.

Speaker #1: Today, I will outline this quarter's progress against our priorities. Financially, we delivered a solid quarter and made steady progress against our fiscal year '26 priorities.

Speaker #1: In the first quarter, core revenue declined slightly, at 0.5% at constant exchange rate, or CER, in line with our expectations, as momentum across our core inline brands and existing new launch brands largely offset anticipated headwinds in our mature portfolio.

Speaker #1: Core operating profit declined 0.5% year over year at CER, reflecting the continued investment behind our upcoming launches and exciting late-stage pipeline, which we are partially offsetting by savings generated through our transformation program.

Speaker #1: And core EPS was 154 yen, a decrease of 11.8% at CER, mainly due to a favorable tax position in the prior year. Milano will walk you through the financial dynamics in more detail shortly, but the key takeaway is that we are well on track towards our full-year guidance.

Julie Kim: Milano will walk you through the financial dynamics in more detail shortly, the key takeaway is that we are well on track towards our full-year guidance. This quarter, we had strong execution across all Horizon One priorities. We are ensuring the resilience of our existing portfolio with our core in-line brands growing by 2.3% at CER. We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our international business unit, which is bringing leadership and teams closer to patients and customers and supports more simplicity, speed, and efficiency. We will do all of this without sacrificing quality to help us move at pace to bring life-transforming medicines to patients. Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline.

Speaker #1: This quarter, we had strong execution across all Horizon One priorities. We are ensuring the resilience of our existing portfolio, with our core inline brands growing by 2.3% at CER.

Speaker #1: We also continue to execute against our transformation program. As an example, we have largely completed the implementation of our International Business Unit, which is bringing leadership and teams closer to patients and customers, and supports more simplicity, speed, and efficiency.

Speaker #1: We'll do all of this without sacrificing quality, to help us move at pace to bring life-transforming medicines to patients. Takeda's consistent and effective execution of our enterprise transformation is enabling us to fund our launches and advance our pipeline.

Speaker #1: It also represents a fundamental change in how we work today and how we will grow as a company in the future. We also made excellent progress across the pipeline this quarter.

Julie Kim: It also represents a fundamental change in how we work today and how we will grow as a company in the future. We also made excellent progress across the pipeline this quarter. We are pleased to have received our first approval for oveporexton in narcolepsy type 1 under the brand name ORZEYFUL in China. Approvals in the US and Japan are key milestones expected in Q2. I will speak more about the important milestones and progress towards launch for ORZEYFUL, rusfertide, and zavegepant on the next slide. In oncology, we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer, and we initiated a phase III study of elritercept in first-line anemia-associated MDS. Taken together, our three priorities for FY 2026 remain firmly on track.

Speaker #1: We are pleased to have received our first approval for Ovepirexin in narcolepsy type 1 under the brand name Orzafol in China, and approvals in the US and Japan are key milestones expected in Q2.

Speaker #1: I will speak more about the important milestones and progress towards launch for Orzafol and Zazacitinib on the next slide. In oncology, we presented TAK-928 data at ASCO in first- and second-line non-small cell lung cancer.

Speaker #1: And we initiated a Phase 3 study of Elritasept in first-line, anemia-associated MDS. Taken together, our three priorities for FY26 remain firmly on track.

Speaker #1: Continue advancing preparations for the successful launch of Orzafol and Zazacitinib, progress the next wave of our pipeline, and continue execution of our transformation program to unlock new capabilities and efficiencies.

Julie Kim: Continue advancing preparation for the successful launch of ORZEYFUL, rusfertide, and zavegepant, progress the next wave of our pipeline, and continued execution of our transformation program to unlock new capabilities and efficiencies. We continue to build the foundation for our future growth by preparing to bring new medicines to patients. With the first ORZEYFUL approval obtained in China, we eagerly look forward to bringing our first-in-class orexin agonist for narcolepsy type 1 to patients in the US and Japan as well, with launches expected in H2 2026. ORZEYFUL has delivered transformative efficacy across a broad range of NT1 symptoms. At the SLEEP 2026 meeting, we presented additional ORZEYFUL phase III data, reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition, and nighttime sleep in patients with narcolepsy type 1.

Speaker #1: We continue to build the foundation for our future growth by preparing to bring new medicines to patients. With the first Orzafol approval obtained in China, we eagerly look forward to bringing our first-in-class orexin agonist for narcolepsy type 1 to patients in the US and Japan as well, with launches expected in the second half of 2026.

Speaker #1: Orzafol has delivered transformative efficacy across a broad range of NT1 symptoms. At the SLEEP 2026 meeting, we presented additional Orzafol Phase 3 data reinforcing the potential of this medicine to establish a new standard of care by improving measures of daily function, cognition, and nighttime sleep in patients with narcolepsy type 1.

Speaker #1: Our potential first-in-class hepcidin mimetic for polycythemia vera has demonstrated rapid, stable, and durable hematocrit control while reducing patients' reliance on phlebotomy. It has obtained US FDA priority review, and we expect a US launch in the second half of 2026.

Julie Kim: Rusfertide, our potential first-in-class hepcidin mimetic for polycythemia vera, has demonstrated rapid, stable, and durable hematocrit control while reducing patients' reliance on phlebotomy. Rusfertide has obtained US FDA priority review, and we expect a US launch also in H2 2026. Following Protagonist's opt-out from US co-commercialization, we are excited to have sole responsibility for commercializing Rusfertide globally, and we are committed to maximizing its growth potential and impact on patients. Turning to the third of these transformative medicines, zasocitinib, is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions. We are on track towards launching in the US in H1 2027. Our confidence in its profile is stronger than ever.

Speaker #1: Following Protagonist's opt-out from US co-commercialization, we are excited to move forward with commercializing globally, and we are committed to maximizing its growth potential and impact on patients.

Speaker #1: Turning to the third of these transformative medicines, Zazacitinib is our potential best-in-class oral treatment for psoriasis, delivering rapid and durable skin clearance in a convenient once-daily pill with no fasting restrictions.

Speaker #1: We are on track to launch in the US in the first half of 2027. Our confidence in its profile is stronger than ever, and our recent head-to-head Phase 3 psoriasis study versus Dukocitinib, Zazacitinib, demonstrated statistical superiority for all primary and key secondary endpoints—with more than 35% of patients achieving PASI 100, or complete skin clearance, at week 16.

Julie Kim: In our recent head-to-head phase III psoriasis study versus deucravacitinib, zasocitinib demonstrated statistical superiority for all primary and key secondary endpoints, with more than 35% of patients achieving PASI 100 or complete skin clearance at week 16. We also shared new data this month from the pivotal phase III psoriasis studies, demonstrating that zasocitinib achieved consistent high rates of skin clearance across the body, including hard to treat and high-impact sites. Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data. We are continuing to lay the groundwork for successful launches. For ORZEYFUL, we have had medical science liaisons in the field for more than a year. We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience.

Speaker #1: We also shared new data this month from the pivotal Phase 3 psoriasis studies, demonstrating that Zazacitinib achieved consistently high rates of skin clearance across the body, including hard-to-treat and high-impact sites.

Speaker #1: Andy will talk more about this in a few minutes. Importantly, we are not just generating compelling data; we are continuing to lay the groundwork for successful launches.

Speaker #1: For Orzafol, we have had medical science liaisons in the field for more than a year. We've engaged payers and KOLs, and we've set up specialty pharmacy and patient support programs to facilitate an exceptional patient experience.

Speaker #1: We are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch.

Speaker #1: For Zazacitinib, payer discussions and broader prelaunch preparations are already underway, supporting our ambition not only to gain market share, but also to expand the oral treatment segment.

Julie Kim: For Rusfertide, we are building HCP awareness of the importance of sustained hematocrit control and leveraging our established hematology commercial infrastructure to ensure we're ready for a successful launch. For zasocitinib, payer discussions and broader pre-launch preparations are already underway, supporting our ambition not only to gain market share, but also to expand the oral treatment segment. Our efforts are planful. We believe they will enable us to ensure these transformative medicines will reach patients as quickly as possible, delivering on our commitments in Horizon One and positioning Takeda for accelerated long-term growth. These milestones reinforce the depth of our late-stage pipeline and reflect the sustained discipline commitment we have to faster AI-enabled discovery and development, strong market access, and best-in-class scientific, medical, manufacturing, technology, and commercial capabilities. Today, we are in Horizon One and fundamentally transforming Takeda from within.

Speaker #1: Our efforts are planful. We believe they will enable us to ensure these transformative medicines reach patients as quickly as possible, delivering on our commitments in Horizon One and positioning Takeda for accelerated, long-term growth.

Speaker #1: These milestones reinforce the depth of our late-stage pipeline and reflect the sustained discipline and commitment we have to faster AI-enabled discovery and development, strong market access, and best-in-class scientific, medical, manufacturing, technology, and commercial capabilities.

Speaker #1: Today, we are in Horizon One and fundamentally transforming Takeda from within. This includes optimizing our operations, strengthening our competitiveness, and successfully launching new medicines that will become our future growth drivers.

Speaker #1: As I just shared, this phase is progressing well through our launch preparations, pipeline progress, core inline brand resilience, and execution of our transformation. To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country—starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities.

Julie Kim: This includes optimizing our operations, strengthening our competitiveness, and successfully launching new medicines that will become our future growth drivers. As I just shared, this phase is progressing well through our launch preparation, pipeline progress, core in-line brand resilience, and execution of our transformation. To provide an additional example, we recently announced a landmark collaboration with the Indonesian government to build plasma operations in the country, starting with establishing plasma donation centers and assessing the feasibility of potential future manufacturing capabilities. Partnerships like this support the growth of our PDT business and the competitive resilience of our core in-line brands while reinforcing our commitment to a sustainable global plasma ecosystem. Throughout this period, we are committed to a clear set of performance measures: returning to top-line growth, protecting our core operating profit margins while making substantial growth investments, and improving our return on equity to above 5%.

Speaker #1: Partnerships like this support the growth of our PDT business and the competitive resilience of our core inline brands, while reinforcing our commitment to a sustainable global plasma ecosystem.

Speaker #1: Throughout this period, we are committed to a clear set of performance measures: returning to top-line growth, protecting our core operating profit margins while making substantial growth investments, and improving our return on equity to above 5%.

Speaker #1: The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon One. Every milestone we accomplish reinforces our path of progress towards Horizon Two, growth acceleration.

Julie Kim: The entire Takeda team is working diligently to execute on our priorities and establish a strong foundation in Horizon One. Every milestone we accomplish reinforces our path of progress towards Horizon Two growth acceleration. Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first-quarter financial results in more detail.

Speaker #1: Our employees' relentless dedication and discipline will continue to set the stage for sustained value creation for patients and shareholders. With that, I will hand the call over to Milano to walk through our first quarter financial results in more detail.

Speaker #2: Thank you, Julie. And hello, everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026. Overall, our Q1 results are on track toward full-year guidance.

Milano Furuta: Thank you, Julie, and hello, everyone. Let me walk through our financial highlights for Q1 of fiscal year 2026. Overall, our Q1 results are on track towards full-year guidance. Revenue was JPY 1.22 trillion, an increase of 10.2% on actual FX basis, or a decline of 0.5% at constant exchange rates or CR. Operating profit was JPY 358.9 billion, up 11.5% at actual FX or -0.5% at CR. Reported operating profit was JPY 201.4 billion. Core EPS was JPY 150.4, with an 11.8% decline at CR as expected, mainly reflecting tax favorability in the prior year. Reported EPS was JPY 72. Operating cash flow was lower than prior year, reflecting changes in the working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects a payment of $200 million to Protagonist following their decision in April to opt out of a co-promotion agreement for rusfertide.

Speaker #2: Revenue was ¥1.22 trillion, an increase of 10.2% on an actual effects basis, or a decline of 0.5% at constant exchange rates, or CR. Corporate profit was ¥358.9 billion, up 11.5% at actual effects, or minus 0.5% at CR.

Speaker #2: While billion yen. Core EPS was 154 yen, with an 11.8% decline at CER as expected, mainly reflecting tax favorability in the prior year. Reported EPS was 72 yen.

Speaker #2: Operating cash flow was lower than the prior year, reflecting changes in working capital related to our trade receivables factoring program. Adjusted free cash flow also reflects payments of $200 million to Protagonist, following the decision in April to opt out of a co-promotion agreement for Rooseveltide.

Speaker #2: As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for Rooseveltide globally. Overall, we are on track to deliver ¥650 billion to ¥750 billion in free cash flow for the full year.

Milano Furuta: As Julie highlighted, this means that Takeda now holds exclusive development and commercialization rights for rusfertide globally. Overall, we are on track to deliver JPY 650 to 750 billion free cash flow for the full year. Slide 10 shows the revenue bridge versus prior year. At CR, core revenue declined 0.5% as growth from core in-line brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of Vyvanse in the US. Core in-line brands represented 58% of total revenue and grew 2.3% at CR, which is on track with our expectations for Q1. Our largest product, ENTYVIO, remains resilient with 4% growth at CR, while immunoglobulins and Albumin were both impacted by phasing in the US, which was within expectation.

Speaker #2: Slide 10 shows the revenue bridge versus the prior year. At CR, core revenue declined 0.5%, as growth from core inline brands and new launches largely offset the decline from LOE and mature products, which includes the continued generic erosion of Vyvanse in the U.S.

Speaker #2: Core inline brands represented 58% of total revenue and grew 2.3% at CER, which is on track with our expectations for Q1. Our largest products and TVO remain resilient with 4% growth at CER, while ENTYVIO and albumin were both impacted by casing in the US, which was within expectations.

Speaker #2: Our new launches category is still small today, only 4% of total revenue, but it is growing strongly at 22.6% at constant rates, supported by Rusakla, Livitensity, Azima, and Qdenga.

Speaker #2: We're excited at the prospect of introducing new products to this category, with potential launches of Orzaiful and Rooseveltide later this year. Finally, FX was a big positive to our top line, adding ¥18.2 billion to deliver 10.2% growth at actual exchange rates.

Milano Furuta: Our new launches category is still small today, only 4% of total revenue, but it is growing strongly at 22.6% at CR, supported by FRUZAQLA, LIVTENCITY, ADZYNMA, and QDENGA. We are excited at the prospect of introducing new products to this category with the potential launches of ORZEYFUL and rusfertide later this year. FX was a big positive to our top line, adding JPY 118.2 billion to deliver 10.2% growth at actual exchange rates. Slide 11 shows a bridge for core operating profit. Consistent with our priorities in Horizon One, we have positioned fiscal year 2026 as a year of growth investments funded by savings from our transformation program. The transformation program is firmly on track as Julie commented earlier. Many of the initiatives were implemented at the end of the quarter, meaning the savings amounts captured in Q1 results is still relatively limited.

Speaker #2: Slide 11 shows a bridge for core operating profit. Consistent with our priorities in Horizon One, we have positioned fiscal year 2026 as a year of growth investments funded by savings from our transformation program.

Speaker #2: The transformation program is firmly on track, as Julie commented earlier. However, many of the initiatives were implemented at the end of the quarter, meaning the savings amount captured in Q1 results is still relatively limited.

Speaker #2: All high-priority growth investments are on track, including launch readiness for Orzaiful, Rooseveltide, and Facetinive, as well as progress of late-stage development programs such as PAC-928 and PAC-921.

Speaker #2: We continue to demonstrate cost discipline alongside targeted investments. Finally, you can see in the charts that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods, as well as a one-time divestiture-related milestone.

Milano Furuta: All the high-priority growth investments are on track, including launch readiness for ORZEYFUL, rusfertide, and zasocitinib, as well as progress of late-stage development programs such as TAK-928 and TAK-921. We continue to demonstrate cost discipline alongside targeted investments. You can see in the chart that gross profit was positive in Q1, primarily driven by favorable FX variance in cost of goods as well as a one-time divestiture-related milestone. Reported operating profit on slide 12. As you can see in this chart, the two main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of Vyvanse amortization in January 2026, and higher restructuring expenses related to the transformation program. FX also provided a tailwind, resulting in 9.1% growth versus prior year at actual exchange rates. Slide 13 shows our full-year fiscal 2026 outlook, which is unchanged from May.

Speaker #2: Next, reported operating profit on slide 12. As you can see in this chart, the two main factors impacting year-on-year performance were lower amortization of intangible assets, mainly due to the completion of Vyvanse amortization in January 2026, and higher restructuring expenses related to the transformation program.

Speaker #2: FX also provided a tailwind, resulting in 9.1% growth versus the prior year at actual exchange rates. Slide 13 shows our full-year fiscal 2026 outlook, which is unchanged from May.

Speaker #2: And our Q1 performance was fully on track toward our targets for this year. I will close my section of the presentation by re-emphasizing our commitment to strict financial discipline through our two growth horizons.

Speaker #2: In particular, during this Horizon One, our focus is on returning to revenue growth, protecting operating profits, improving reported profits and ROE, and maintaining strong adjusted free cash flow.

Milano Furuta: Our Q1 performance was fully on track towards our targets for this year. I will close my section of the presentation by re-emphasizing our commitment to strict financial discipline through our two growth horizons. In particular, during this Horizon One, our focus is on returning to revenue growth, protecting operating profit, improving reported profits and ROE, and maintaining strong adjusted free cash flow. I look forward to sharing our ongoing progress towards these goals. Thank you, and I now pass to Andy for updates on the pipeline.

Speaker #2: I look forward to sharing our ongoing progress toward these goals. Thank you, and I'll now pass to Andy for updates on the pipeline.

Speaker #1: Thank you, Milano. And hello to everyone on today's call. I want to frame this quarter simply: Takeda R&D is ready to convert pipeline progress into commercial performance that supports our two-horizon growth strategy.

Speaker #1: Over the coming months, we are poised to launch three transformative medicines: Orzaiful, Rooseveltide, and Zasocitinib, each with the potential to redefine the standard of care in its field and, together, set Takeda on a new growth trajectory.

Andrew S. Plump: Thank you, Milano. Hello to everyone on today's call. I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our two-horizon growth strategy. Over the coming months, we are poised to launch three transformative medicines, ORZEYFUL, rusfertide, and zasocitinib, each with the potential to redefine the standard of care in its field, and together, setting Takeda on a new growth trajectory. Let me begin with ORZEYFUL, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy Type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. At the 2025 World Sleep Congress, we presented groundbreaking results from two Phase III studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements.

Andy Plump: Thank you, Milano. Hello to everyone on today's call. I want to frame this quarter simply. Takeda R&D is ready to convert pipeline progress into commercial performance that supports our two-horizon growth strategy. Over the coming months, we are poised to launch three transformative medicines, ORZEYFUL, rusfertide, and zasocitinib, each with the potential to redefine the standard of care in its field, and together, setting Takeda on a new growth trajectory. Let me begin with ORZEYFUL, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy Type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms. At the 2025 World Sleep Congress, we presented groundbreaking results from two Phase III studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements.

Speaker #1: Let me begin with orexin, which I believe is one of the most exciting stories in neuroscience today. Narcolepsy type 1 is a lifelong disorder caused by the loss of orexin signaling, leading to disabling daytime and nighttime symptoms.

Speaker #1: At the 2025 World Sleep Congress, we presented groundbreaking results from two Phase 3 studies that met all 14 primary and secondary endpoints, demonstrating statistically significant and clinically meaningful improvements.

Speaker #1: Orzaiful delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy, as well as nighttime symptoms, cognitive symptoms, functional improvements, and quality of life.

Speaker #1: Orzaiful doesn't just manage symptoms; it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function.

Andrew S. Plump: ORZEYFUL delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy, as well as nighttime symptoms, cognitive symptoms, functional improvements, and quality of life. ORZEYFUL doesn't just manage symptoms, it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function. We are on track to bring the first and only orexin agonist to patients living with NT1. As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the US and Japan this quarter. At SLEEP 2026, we presented additional phase III data that I would describe as remarkable, with improvements spanning daily function, cognition, and nighttime sleep. Let me share a few of the highlights.

Andy Plump: ORZEYFUL delivered transformative efficacy across the broad disease spectrum, including daytime symptoms like excessive daytime sleepiness and cataplexy, as well as nighttime symptoms, cognitive symptoms, functional improvements, and quality of life. ORZEYFUL doesn't just manage symptoms, it addresses the underlying orexin deficiency in NT1, offering patients a single, well-tolerated oral therapy that could restore how a majority of NT1 patients feel and function. We are on track to bring the first and only orexin agonist to patients living with NT1. As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the US and Japan this quarter. At SLEEP 2026, we presented additional phase III data that I would describe as remarkable, with improvements spanning daily function, cognition, and nighttime sleep. Let me share a few of the highlights.

Speaker #1: We are on track to bring the first and only orexin agonist to patients living with NT1. As Julie mentioned, we have received our first approval in China, and we eagerly await decisions in the US and Japan this quarter.

Speaker #1: At SLEEP 2026, we presented additional phase three data that I would describe as remarkable, with improvements spanning daily function, cognition, and nighttime sleep. Let me share a few of the highlights.

Speaker #1: Using the Functional Impacts of Narcolepsy instrument, or FINS for short, we saw significant improvement across all functional domains, with p-values below 0.0001. This includes benefits to cognitive functioning, social activities, everyday activities, and daily responsibilities.

Speaker #1: These important benefits led to significant gains in work productivity, activity impairment, and quality of life. On cognition, we saw improvement versus placebo in attention, memory, and executive function, each with a very significant p-value.

Andrew S. Plump: Using the Functional Impacts of Narcolepsy Instrument, or FINI for short, we saw significant improvement across all functional domains with P values below 0.0001, including benefits to cognitive functioning, social activities, everyday activities, and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment, and quality of life. On cognition, we saw improvement versus placebo in attention, memory, and executive function, each with a very significant P value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep. REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations, and sleep disruptions. At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes.

Andy Plump: Using the Functional Impacts of Narcolepsy Instrument, or FINI for short, we saw significant improvement across all functional domains with P values below 0.0001, including benefits to cognitive functioning, social activities, everyday activities, and daily responsibilities. These important benefits led to significant gains in work productivity, activity impairment, and quality of life. On cognition, we saw improvement versus placebo in attention, memory, and executive function, each with a very significant P value. On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep. REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations, and sleep disruptions. At baseline, our NT1 patients had a mean REM latency of about 50 minutes against a healthy control value of roughly 130 minutes.

Speaker #1: On nighttime sleep, I want to dwell for a moment on the striking REM latency finding. REM latency is the time it takes to enter the first REM sleep stage after falling asleep.

Speaker #1: REM sleep disturbances can manifest as sleep paralysis, sleep-related hallucinations, and sleep disruptions. At baseline, our NT1 patients had a mean REM latency of about 50 minutes.

Speaker #1: Against a healthy control value of roughly 130 minutes, Orexaful shifted mean REM latency into the normative range across all treatment groups in both the First Light, or 3001, study and the Radiant Light, or 3002, study.

Speaker #1: This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the Radiant Light study; both trials produced similar results.

Speaker #1: As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM sleep duration using the NSS-CT, or Narcolepsy Severity Scale for Clinical Trials—a validated instrument used in narcolepsy.

Andrew S. Plump: ORZEYFUL shifted mean REM latency into the normative range across all treatment groups in both the FirstLight, or 3001 study, and the RadiantLight, or 3002 study. This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the RadiantLight study. Both trials produced similar results. As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM link sleep using the NSS-CT, or Narcolepsy Severity Scale for Clinical Trials, a validated instrument used in narcolepsy. ORZEYFUL significantly reduced hallucinations and sleep paralysis in all treatment groups, and it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving, often normalizing, a patient's day and night. Now, let me turn to zasocitinib, our next-generation, highly selective and potent oral TYK2 inhibitor.

Andy Plump: ORZEYFUL shifted mean REM latency into the normative range across all treatment groups in both the FirstLight, or 3001 study, and the RadiantLight, or 3002 study. This objective shift in sleep is unprecedented. To keep it simple, we are showing data from the RadiantLight study. Both trials produced similar results. As you can see, the objective REM shift is corroborated by the subjective assessments. We measured the subjective effects on REM link sleep using the NSS-CT, or Narcolepsy Severity Scale for Clinical Trials, a validated instrument used in narcolepsy. ORZEYFUL significantly reduced hallucinations and sleep paralysis in all treatment groups, and it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving, often normalizing, a patient's day and night. Now, let me turn to zasocitinib, our next-generation, highly selective and potent oral TYK2 inhibitor.

Speaker #1: Orzaiful significantly reduced hallucinations and sleep paralysis in all treatment groups, and it did so with no clinically meaningful disruption to sleep architecture. In practical terms, we are significantly improving, often normalizing, a patient's day and night.

Speaker #1: Now let me turn to Zasocitinib, our next-generation, highly selective, and potent oral TIP2 inhibitor. Here too, the data speak for themselves. In our phase 3 head-to-head psoriasis study, Zasocitinib significantly outperformed Dukravacitinib.

Speaker #1: At week 16, more than 35% of Zasocitinib-treated patients achieved complete skin clearance as measured by PASI 100. We have two key takeaway messages from these top-line results.

Speaker #1: One, this was a well-run trial, with Dukravacitinib having data consistent with past Phase 3 trials. Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill.

Andrew S. Plump: Here, too, the data speak for themselves. In our phase III head-to-head psoriasis study, zasocitinib significantly outperformed deucravacitinib. At week 16, more than 35% of zasocitinib-treated patients achieved complete skin clearance as measured by PASI 100. We have two key takeaway messages from these top-line results. One, this was a well-run trial with deucravacitinib having data consistent with past phase III trials. Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill. Zasocitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. Full details will be shared at a medical meeting this fall. What gives us additional confidence is the performance in the hard-to-treat, high-impact areas like psoriasis of the scalp palms, and soles, as demonstrated here by the high rates of skin clearance in the phase III LATITUDE programs, as well as statistically significant benefits to nails.

Andy Plump: Here, too, the data speak for themselves. In our phase III head-to-head psoriasis study, zasocitinib significantly outperformed deucravacitinib. At week 16, more than 35% of zasocitinib-treated patients achieved complete skin clearance as measured by PASI 100. We have two key takeaway messages from these top-line results. One, this was a well-run trial with deucravacitinib having data consistent with past phase III trials. Two, this is the best 16-week efficacy in psoriasis that we have seen from a pill. Zasocitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. Full details will be shared at a medical meeting this fall. What gives us additional confidence is the performance in the hard-to-treat, high-impact areas like psoriasis of the scalp palms, and soles, as demonstrated here by the high rates of skin clearance in the phase III LATITUDE programs, as well as statistically significant benefits to nails.

Speaker #1: Zasocitinib is poised to be a leading oral option with a fantastic efficacy and safety profile. The details will be shared at a medical meeting this fall.

Speaker #1: What gives us additional confidence is the performance in hard-to-treat, high-impact areas like psoriasis of the scalp, palms, and soles, as demonstrated here by the high rates of skin clearance in the Phase 3 LATITUDE programs.

Speaker #1: As well as statistically significant benefits to nails. These are the places where psoriasis can have the greatest day-to-day impact for patients who are among the hardest to treat.

Speaker #1: The new psoriasis data continues to add to our library of outstanding Phase 3 results. I'd like to take a moment to remind you that Zasocitinib is far more than just a psoriasis story.

Speaker #1: As you can see here at the top, Zasocitinib has studies underway across a broad range of immune-mediated diseases like psoriatic arthritis, Crohn's disease, ulcerative colitis, vitiligo, and hidradenitis suppurativa.

Andrew S. Plump: These are the places where psoriasis can have greatest day-to-day impact for patients who are among the hardest to treat. The new psoriasis data continues to add to our library of outstanding phase III results. I'd like to take a moment to remind you that zasocitinib is far more than just a psoriasis story. As you can see here at the top, zasocitinib has studies underway across a broad range of immune-mediated diseases like psoriatic arthritis, Crohn's disease, ulcerative colitis, vitiligo, and hidradenitis suppurativa. Zasocitinib is a molecule we believe could redefine what is possible with a convenient once-daily oral therapy. We anticipate a phase II data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026. Our Orexin franchise continues to advance. ORZEYFUL has initiated the important 3003 phase III study, which will support filing in Europe.

Andy Plump: These are the places where psoriasis can have greatest day-to-day impact for patients who are among the hardest to treat. The new psoriasis data continues to add to our library of outstanding phase III results. I'd like to take a moment to remind you that zasocitinib is far more than just a psoriasis story. As you can see here at the top, zasocitinib has studies underway across a broad range of immune-mediated diseases like psoriatic arthritis, Crohn's disease, ulcerative colitis, vitiligo, and hidradenitis suppurativa. Zasocitinib is a molecule we believe could redefine what is possible with a convenient once-daily oral therapy. We anticipate a phase II data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026. Our Orexin franchise continues to advance. ORZEYFUL has initiated the important 3003 phase III study, which will support filing in Europe.

Speaker #1: Zasocitinib is a molecule we believe could redefine what is possible with the convenience of once-daily oral therapy. We anticipate a Phase 2 data readout for Crohn's disease and ulcerative colitis at the end of our fiscal year 2026.

Speaker #1: Our orexin franchise continues to advance. Orzaiful has initiated the important 3003 Phase 3 study, which will support filing in Europe. This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to Orzaiful.

Speaker #1: In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher dose option. Beyond orexinful, we are advancing TAK-360 in narcolepsy type 2 and idiopathic hypersomnia, and anticipate Phase 2 data later this calendar year.

Speaker #1: The third of our imminent launches is RUSPERTIDE, a first-in-class hepcidin mimetic for polycythemia vera. RUSPERTIDE delivers rapid, stable, and durable hematocrit control, addressing a major unmet medical need in PV.

Andrew S. Plump: This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to ORZEYFUL. In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher dose option. Beyond ORZEYFUL, we are advancing TAK-360 in narcolepsy type 2 and idiopathic hypersomnia and anticipate phase II data later this calendar year. The third of our imminent launches is rusfertide, a first-in-class hepcidin mimetic for polycythemia vera. Rusfertide delivers rapid, stable, and durable hematocrit control, addressing a major unmet medical need in PV. It is filed in the US with an EU filing targeted later this fiscal year. We have an August PDUFA date and anticipate launch immediately thereafter. I want to be clear that our story does not end with these three assets. They are the starting acts of the most robust late-stage pipeline in Takeda's history.

Andy Plump: This potentially label-enabling trial will, for the first time, generate clinical data on direct switches from polypharmacy to ORZEYFUL. In addition, for the small number of patients who may benefit from dose escalation, the trial will include a higher dose option. Beyond ORZEYFUL, we are advancing TAK-360 in narcolepsy type 2 and idiopathic hypersomnia and anticipate phase II data later this calendar year. The third of our imminent launches is rusfertide, a first-in-class hepcidin mimetic for polycythemia vera. Rusfertide delivers rapid, stable, and durable hematocrit control, addressing a major unmet medical need in PV. It is filed in the US with an EU filing targeted later this fiscal year. We have an August PDUFA date and anticipate launch immediately thereafter. I want to be clear that our story does not end with these three assets. They are the starting acts of the most robust late-stage pipeline in Takeda's history.

Speaker #1: It is filed in the US, with the EU filing targeted later this fiscal year. We have an August PDUFA date and anticipate launch immediately thereafter.

Speaker #1: Now, I want to be clear that our story does not end with these three assets. They are the starting acts of the most robust late-stage pipeline in Takeda's history.

Speaker #1: And as we continue through Horizon 1, we will advance the next wave of pipeline progress with key readouts and milestones. As Julie shared earlier, in oncology, elritercept has started two Phase 3 trials in first- and second-line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis.

Speaker #1: We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein. First, in patients with second-line plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need, we showed a 42% overall survival rate at two years.

Andrew S. Plump: As we continue through Horizon One, we will advance the next wave of pipeline progress with key readouts and milestones. As Julie shared earlier, in oncology, elritercept has started two phase III trials in first and second line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis. We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein. First, in patients with second-line plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need, we showed a 42% overall survival rate at 2 years. We are planning for a pivotal phase III in this refractory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy, with favorable safety data.

Andy Plump: As we continue through Horizon One, we will advance the next wave of pipeline progress with key readouts and milestones. As Julie shared earlier, in oncology, elritercept has started two phase III trials in first and second line myelodysplastic syndrome and will soon start a pivotal trial in myelofibrosis. We presented important updates at ASCO in June for TAK-928, our PD-1/IL-2 alpha-biased bispecific fusion protein. First, in patients with second-line plus IO-resistant non-squamous non-small cell lung cancer, an area of great unmet need, we showed a 42% overall survival rate at 2 years. We are planning for a pivotal phase III in this refractory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy, with favorable safety data.

Speaker #1: We are planning for a pivotal Phase 3 for factory population later this fiscal year. In first-line non-small cell lung cancer patients with less than 50% PD-L1 expression, we were excited to see outstanding early data for TAK-928 in combination with chemotherapy.

Speaker #1: With favorable safety data, we are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as ARCO Tavatican, is an oncology program that has received less attention but remains highly promising.

Speaker #1: Strong progression-free survival data was announced from our partners at Innovent in June from a regional Phase 3 trial in third-line gastric cancer. We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial.

Speaker #1: In PDT, TAK-881, our 20% next-generation facilitated subcutaneous IG is advancing towards a US filing in primary immunodeficiency and filings in multiple indications in Europe.

Andrew S. Plump: We are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as arcotatug tavatecan, is an oncology program that has received less attention but remains highly promising. Strong progression-free survival data was announced from our partners at Innovent in June from a regional phase III trial in third-line gastric cancer. We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial. In PDT, TAK-881, our 20% next-generation facilitated sub-Q Ig is advancing towards a US filing in primary immunodeficiency and filings in multiple indications in Europe and Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science, where we have the depth to lead and commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential.

Andy Plump: We are looking forward to additional data cuts in the coming months as the trial matures. TAK-921, also known as arcotatug tavatecan, is an oncology program that has received less attention but remains highly promising. Strong progression-free survival data was announced from our partners at Innovent in June from a regional phase III trial in third-line gastric cancer. We plan on filing in Japan in fiscal year 2027 using mature overall survival data from this trial. In PDT, TAK-881, our 20% next-generation facilitated sub-Q Ig is advancing towards a US filing in primary immunodeficiency and filings in multiple indications in Europe and Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science, where we have the depth to lead and commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential.

Speaker #1: And Japan. Let me close where I began. What you're seeing from Takeda R&D is the result of our sustained focus on pursuing science, but we have the depth to lead.

Speaker #1: And commitment to disciplined choices that allow us to advance programs with the most meaningful patient potential. Orserdu, rusfertide, and zasocitinib are the leading edge of that strategy.

Speaker #1: Behind them is a pipeline with the depth to sustain this momentum well into the future. If we take a step back, we anticipate U.S. launch of Orzedaful in the second half of 2026.

Speaker #1: RUSPERTIDE will launch in the second half of 2026, and Zasocitinib will launch in the first half of 2027. Three potential new standards of care launching in close succession.

Speaker #1: Two of which carry breakthrough and fast track designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory. I have never been more confident in the science, in the team behind it, and in our ability to improve patients' lives and build a healthier world for generations.

Andrew S. Plump: ORZEYFUL, rusfertide, and zasocitinib are the leading edge of that strategy, and behind them is a pipeline with the depth to sustain this momentum well into the future. If we take a step back, we anticipate US launch of ORZEYFUL in H2 2026, rusfertide launch in H2 2026, and zasocitinib launch in H1 2027. Three potential new standards of care launching in close succession, two of which carry breakthrough and fast track designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory. I have never been more confident in the science, in the team behind it, and in our ability to improve patients' lives and build a healthier world for generations. I look forward to sharing our continued progress with you. Thank you. With that, I'll turn it back to Julie to wrap up the presentation.

Andy Plump: ORZEYFUL, rusfertide, and zasocitinib are the leading edge of that strategy, and behind them is a pipeline with the depth to sustain this momentum well into the future. If we take a step back, we anticipate US launch of ORZEYFUL in H2 2026, rusfertide launch in H2 2026, and zasocitinib launch in H1 2027. Three potential new standards of care launching in close succession, two of which carry breakthrough and fast track designations. This is the launch cadence that underpins our confidence in Takeda's growth trajectory. I have never been more confident in the science, in the team behind it, and in our ability to improve patients' lives and build a healthier world for generations. I look forward to sharing our continued progress with you. Thank you. With that, I'll turn it back to Julie to wrap up the presentation.

Speaker #1: I look forward to sharing our continued progress with you. Thank you. And with that, I'll turn it back to Julie to wrap up the presentation.

Speaker #1: Julie.

Speaker #2: Thank you, Andy. As you have heard, the momentum across our R&D organization is translating directly into tangible milestones, with the goal of bridging us from transformation to growth acceleration.

Speaker #2: We are also dedicated to operational discipline, and our enterprise transformation is already starting to unlock capital to reinvest in our pipeline and launches. In summary, we are delivering on our priorities in Horizon One, working towards a clear set of operational and financial goals.

Speaker #2: These milestones will enable us to secure a strong foundation that will advance us to Horizon DO—an era that will be defined by accelerated revenue growth, structural margin expansion, and sustained value creation.

Andrew S. Plump: Julie?

Andy Plump: Julie?

Julie Kim: Thank you, Andy. As you have heard, the momentum across our R&D organization is translating directly into tangible milestones with the goal of bridging us from transformation to growth acceleration. We are also dedicated to operational discipline, and our enterprise transformation is already starting to unlock capital to reinvest in our pipeline and launches. In summary, we are delivering on our priorities in Horizon One towards a clear set of operational and financial goals. These milestones will enable us to secure a strong foundation that will advance us to Horizon Two, an era that will be defined by accelerated revenue growth, structural margin expansion, and sustained value creation. We know our shareholders are eager to discuss more details of this path forward, and I am pleased to announce that we will host a capital markets day in Tokyo on 11 December 2026.

Speaker #2: We know our shareholders are eager to discuss more details of this path forward, and I am pleased to announce that we will host a Capital Markets Day in Tokyo on December 11, 2026.

Speaker #2: At that event, the executive team and I will provide a deep dive into our pipeline progress and mid- to long-term financial ambitions, in line with our two-horizon strategic roadmap that will guide our growth through the end of the decade and beyond.

Speaker #2: We have the right strategy, a highly competitive portfolio, and a united, deeply committed global team. I am proud of the progress we made this quarter, and I am incredibly energized by the trajectory we are on.

Speaker #2: With that, I'll now turn the call over to Chris for Q&A.

Speaker #3: それでは皆様からのご質問をお受けしたいと思います。

Speaker #2: Let's now take questions from the participants. If you want to ask a question, please use the Zoom feature to raise your hand. Please limit the number of questions per person to a maximum of two, and state all of your questions at once.

Julie Kim: At that event, the executive team and I will provide a deep dive into our pipeline progress and mid to long-term financial ambitions in line with our two-Horizon strategic roadmap that will guide our growth through the end of the decade and beyond. We have the right strategy, a highly competitive portfolio, and a united, deeply committed global team. I am proud of the progress we made this quarter, and I am incredibly energized by the trajectory we are on. With that, I'll now turn the call over to Chris for Q&A.

Speaker #2: In the beginning, the first question is from Yamaguchi-san at Citi Group. Please unmute and ask your question.

Speaker #3: Yes, we can hear you.

Speaker #4: Thank you very much for taking my question. This is Yamaguchi from Citi. I have two questions. The first question is about overall earnings. Mira-san mentioned that the gross margin in Q1 seems to be relatively high compared to the full-year guidance.

Speaker #4: And you talk about some mixed product mix, but also you talk about some diversity-related things. So how much is this diversity thing contributing, and is it just one-off? Also, can you give me comments on the gross margin prospects for Q1 and the full year?

Chris O'Reilly: Now I'd like to take questions from the participants. If you want to ask a question, please use the Zoom feature, raise your hand, and please limit the number of questions per person maximum to two, and please state all the questions in the beginning. The first question is Yamaguchi-san from Citigroup. Please unmute and please ask a question.

Speaker #4: The second question is that you may not have the answer yet, but Orzaiful has now been launch-approved in China and also will be approved in the US and Japan.

Speaker #4: Can you give me the overall strategy for how you're going to position this track compared to the current therapy? Are you going to add on, or are you going to replace? Are you going to take the new patients, or are you going to take share from the existing patients? And what about the pricing strategy?

Chris O'Reilly: Yes, we can hear you.

[Analyst] (Citigroup): Thank you very much. Thank you. My question, this is Hidemaru from Citi. I have two questions. The first question is the overall earnings, Milano San mentioned gross margin on the Q1 seemed to be relatively high compared to full-year guidance. You talk about some product mix, but also you talk about some divestiture-related things. How much is contributing this divestiture thing, and is this as one-off or not? Can you give me comment on those gross margin prospect, Q1 and full year? The second question is that, you may not have answer yet, Ozempic has been approved in China and also will be approved in the US and Japan. Can you give me the overall strategy, how you're going to position this drug compared to the current therapy? Are you going to add on or are you going to replace?

Hidemaru Yamaguchi: Thank you very much. Thank you. My question, this is Hidemaru from Citi. I have two questions. The first question is the overall earnings, Milano San mentioned gross margin on the Q1 seemed to be relatively high compared to full-year guidance. You talk about some product mix, but also you talk about some divestiture-related things. How much is contributing this divestiture thing, and is this as one-off or not? Can you give me comment on those gross margin prospect, Q1 and full year? The second question is that, you may not have answer yet, Ozempic has been approved in China and also will be approved in the US and Japan. Can you give me the overall strategy, how you're going to position this drug compared to the current therapy? Are you going to add on or are you going to replace?

Speaker #4: So, if you have any kind of general strategy on a global basis for Orzaiful, please let me know. Thank you. Those are my two questions.

Speaker #3: Thank you, Yamaguchi-san. So, the first question is on the breakdown of gross margin performance. Milano can take that. And then the second.

Speaker #5: Yamaguchi-san, ありがとうございます.

Speaker #2: Thank you very much, Yamaguchi-san, for your questions. I think, according to Zasaiful's points that Yamaguchi-san mentioned, I’d like to give you a response. As you mentioned, the gross margin in this quarter compared to the same quarter last year improved by about 1.4 points—visibly, there was an improvement observed.

[Analyst] (Citigroup): Are you going to take the new patient? Are you going to take the share from the existing patients? How about the pricing strategy? If you have any kind of general strategy on a global basis on Ozempic, please let me know. Thank you. Those are two questions.

Hidemaru Yamaguchi: Are you going to take the new patient? Are you going to take the share from the existing patients? How about the pricing strategy? If you have any kind of general strategy on a global basis on Ozempic, please let me know. Thank you. Those are two questions.

Speaker #2: And actually, the impact from the product mix was more or less neutral. And you also mentioned one-time factors; that contribution was relatively small.

Chris O'Reilly: Thank you, Hidemaru San. The first question on breakdown of gross margin performance. Milano can take that. The second-

Chris O'Reilly: Thank you very much, Hidemaru-san, for your questions. According to the several points Hidemaru-san mentioned, I'd like to give you a response. As you mentioned, the gross margin in this quarter compared to the same quarter last year by about 1.4 point, visibly, there was an improvement observed. Actually, the impact from the product mix was more or less neutral. You also mentioned one-time factor. That contribution was relatively small. It is a divestiture-related technology transfer, which was completed, and as a result, we had a one-time milestone gain or income that impacted us the reduction of the cost of sales. However, it is a small portion of Q1, and it is much smaller in the full year. Therefore, on a full-year basis, it is almost negligible. Actually, in the Q1, for the gross margin enhancement, PDT contributed most greatly.

Milano Furuta: Thank you very much, Hidemaru-san, for your questions. According to the several points Hidemaru-san mentioned, I'd like to give you a response. As you mentioned, the gross margin in this quarter compared to the same quarter last year by about 1.4 point, visibly, there was an improvement observed. Actually, the impact from the product mix was more or less neutral. You also mentioned one-time factor. That contribution was relatively small. It is a divestiture-related technology transfer, which was completed, and as a result, we had a one-time milestone gain or income that impacted us the reduction of the cost of sales. However, it is a small portion of Q1, and it is much smaller in the full year. Therefore, on a full-year basis, it is almost negligible. Actually, in the Q1, for the gross margin enhancement, PDT contributed most greatly.

Speaker #2: It is diversity-related technology transfer which was completed, and as a result, we had a one-time milestone gain or income. That impacted us with the reduction of cost of sales.

Speaker #2: And, however, it is a small portion of Q1, and it is much smaller in the full year. Therefore, on a full-year basis, it is almost negligible.

Speaker #2: And actually, in Q1 for the gross margin enhancement, PDT contributed most greatly. There was a transactional effect in this quarter; it worked in a positive direction.

Speaker #2: And it is because of past years' FX effects levels the euro against the US dollar was appreciated. As a result, PDT cost of goods improved. And regarding your question about the full year outlook, we have just finished Q1, and in May we mentioned the 65%. Based upon the FX movement going forward, we will be giving you updates as necessary, but at the moment, we are maintaining the 65%.

Chris O'Reilly: There was transactional effects. In this quarter, it worked in a positive direction. It is because of past years FX levels. The Euro against the US dollar was appreciated. As a result, PDT cost of goods improved. Regarding your question about the full year outlook. We have just finished the Q1. In May, we mentioned the 65%, and based upon the FX movement moving forward, we'll be giving you an update as it's necessary. At the moment, we are maintaining the 65%. Thank you.

Milano Furuta: There was transactional effects. In this quarter, it worked in a positive direction. It is because of past years FX levels. The Euro against the US dollar was appreciated. As a result, PDT cost of goods improved. Regarding your question about the full year outlook. We have just finished the Q1. In May, we mentioned the 65%, and based upon the FX movement moving forward, we'll be giving you an update as it's necessary. At the moment, we are maintaining the 65%. Thank you.

Speaker #2: Thank you. Thank you, Yamaguchi-san, for the question about Orzaiful positioning. So, let me share a few thoughts with everyone on this. First, just a quick reminder why we're so excited about Orzaiful.

Speaker #2: It is the first-in-class and potentially best-in-class RX and agonist designed to treat the underlying RX and deficiency that causes NT1.

Speaker #2: And as you saw from the information that we shared previously, and Andy shared on the call today, the efficacy across a broad disease spectrum is really impressive.

Speaker #2: And so we do anticipate that Orzaiful will redefine the standard of care in NT1. In terms of how we expect Orzaiful to be used, we studied it as a monotherapy.

Julie Kim: Thank you, Hidemaru-san, for the question about ORZEYFUL positioning. Let me share a few thoughts with everyone on this. First, just a quick reminder why we're so excited about ORZEYFUL. It is a first-in-class and potentially best-in-class orexin agonist designed to treat the underlying orexin deficiency that causes NT1. As you saw from the information that we shared previously, and Andy shared on the call today, the efficacy across broad disease spectrum is really impressive. We do anticipate that ORZEYFUL will redefine the standard of care in NT1. In terms of how we expect ORZEYFUL to be used, we studied it as a monotherapy. That is our anticipation, that ORZEYFUL is an effective monotherapy treatment. In terms of where the patients will come from, I would say there's two sources.

Speaker #2: So, that is our anticipation—that Orzaiful is an effective monotherapy treatment. In terms of where the patients will come from, I would say there are two sources.

Speaker #2: First and foremost, we will be addressing the patient need for individuals who are already diagnosed with NT1 and already on therapy. That will be the initial source of growth for Orzaiful.

Speaker #2: The second source of growth will come from improved diagnosis. This will take a bit longer. In order to drive better diagnosis, but that would be the second source of growth.

Speaker #2: And I think your third question was on pricing for Orzaiful. So, obviously, we don't share pricing at this point ahead of launch, but in general, our approach to pricing is to ensure appropriate value recognition for the transformative nature of the medicine, but at the same time support fast access, as this is a significant breakthrough in treatment options for individuals with NT1.

Julie Kim: First and foremost, we will be addressing the patient need for individuals who are already diagnosed with NT1 and already on therapy. That will be the initial source of growth for ORZEYFUL. The second source of growth will come from improved diagnosis. This will take a bit longer time in order to drive better diagnosis, but that would be the second source of growth. I think your third question was on pricing for ORZEYFUL. Obviously we don't share pricing at this point ahead of launch, but in general, our approach to pricing is to ensure appropriate value recognition for the transformative nature of the medicine, but at the same time, support fast access as this is a significant breakthrough in treatment option for individuals with NT1. Thank you.

Speaker #2: Thank you.

Speaker #4: Thank you.

Speaker #3: それでは次のご質問はモルガンさん。

Speaker #2: Next question from Morgan Stanley, Muraoka-san. Please ask your question. Yes, this is Muraoka from Morgan Stanley. Thank you for this opportunity.

Speaker #5: えっと360のまず1つ目質問なんですけれども。

Speaker #2: First question is about 360.

Speaker #5: えーデータの。

Speaker #2: 360 data。

Speaker #5: キャピタルマーケット。

Speaker #2: Presentation. Will that happen before the Capital Markets Day, or will it happen at the same time as the Capital Markets Day? So, 360 NT1 phase two has actually started.

Speaker #2: Can you please talk about the background? Do you want to have flexibility in terms of pricing strategy, or do you feel that once-daily is going to be necessary?

Chris O'Reilly: Thank you.

Hidemaru Yamaguchi: Thank you.

Chris O'Reilly: The next question from Morgan Stanley, Muraoka-san. Please ask your question.

Speaker #2: What is the background or the reasoning? That's my first question. And the second question is, regarding Zasau UCCD, how will information be shared? I heard information will be shared at the end of the year.

[Analyst] (Morgan Stanley): Morgan Stanley.

[Analyst] (Morgan Stanley): Yes. This is Muraoka, Morgan Stanley. Thank you for this opportunity. First question is about 360 data presentation. Will that happen before the Capital Market Day or will it happen at the same time as the Capital Market Day? 360 NT1 phase II has actually started. Can you please talk about the background? Do you want to have flexibility in terms of pricing strategy, or do you feel that one study is going to be necessary? What is the background or the reasoning? That's my first question. The second question is, zasocitinib, UC, CD, how the information will be shared. I heard information will be shared at the end of the year. Is this announcement going to be for both UC and CD together, and is it going to be in the form of press release?

Shinichiro Muraoka: Yes. This is Muraoka, Morgan Stanley. Thank you for this opportunity. First question is about 360 data presentation. Will that happen before the Capital Market Day or will it happen at the same time as the Capital Market Day? 360 NT1 phase II has actually started. Can you please talk about the background? Do you want to have flexibility in terms of pricing strategy, or do you feel that one study is going to be necessary? What is the background or the reasoning? That's my first question. The second question is, zasocitinib, UC, CD, how the information will be shared. I heard information will be shared at the end of the year. Is this announcement going to be for both UC and CD together, and is it going to be in the form of press release?

Speaker #2: And is this going to be for both UCNCD together, and is it going to be in the form of a press release, and can we expect this information maybe during—?

Speaker #2: The news announcement was in the third quarter. How do you intend to share this information? That's the second question.

Speaker #3: Muraoka-san, for the questions. So, first, on TAK-360 data disclosure timing: would that be ahead of the Capital Markets Day in December? And then, what is the positioning or the background behind studying TAK-360 in narcolepsy type 1?

Speaker #3: And then the second question on timing of zanzacitinib UC and CD data and also how that data would be presented. Will you announce the results of both studies simultaneously?

Speaker #3: So, for both of these questions, I'd like to call on Andy to comment, please.

Speaker #2: Great. Thanks, Chris. And thank you very much, Muraoka-san. This is Andy Plumb. So, firstly, with respect to TAK-360—so, as a reminder to everybody, TAK-360 is in the midst of three ongoing Phase 2 studies: one in idiopathic hypersomnia, one in type 2 narcolepsy, and a recently started one in type 1 narcolepsy.

[Analyst] (Morgan Stanley): Can we expect this information maybe during the earnings announcement for Q3? How do you intend to share this information? That is the second question.

Shinichiro Muraoka: Can we expect this information maybe during the earnings announcement for Q3? How do you intend to share this information? That is the second question.

Chris O'Reilly: Thanks for the questions. The first on TAK-360 data disclosure timing, would that be ahead of the Capital Markets Day in December? What is the positioning or the background behind studying TAK-360 in narcolepsy Type 1? The second question, on timing of zasocitinib UC and CD data, and also how that data would be presented. Will you announce the results for both studies simultaneously? Both of these questions, I would like to call on Andy to comment on those, please.

Speaker #2: In terms of timing for the former two, IH and NT2, the study design is such that it is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen.

Speaker #2: We're testing both once a day and twice a day doses. So in such a design, we don't have a clear end date. We will see data from that trial this year the exact timing whether it's available for the capital markets day in December remains to be determined.

Andrew S. Plump: Great. Thanks, Chris, and thank you very much, Muraoka-san. This is Andy Plump. Firstly, with respect to TAK-360. I will just remind everybody that TAK-360 is in the midst of three ongoing phase II studies. One in idiopathic hypersomnia, one in Type 2 narcolepsy, and recently started one in Type 1 narcolepsy. In terms of timing for the former two, IH and NT2, the study design is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen. We are testing both once a day and twice a day doses. In such a design, we do not have a clear end date. We will see data from that trial this year. The exact timing, whether it is available for the Capital Markets Day in December, remains to be determined.

Andy Plump: Great. Thanks, Chris, and thank you very much, Muraoka-san. This is Andy Plump. Firstly, with respect to TAK-360. I will just remind everybody that TAK-360 is in the midst of three ongoing phase II studies. One in idiopathic hypersomnia, one in Type 2 narcolepsy, and recently started one in Type 1 narcolepsy. In terms of timing for the former two, IH and NT2, the study design is built around an adaptive design that allows us to rapidly pivot and explore both dose and dose regimen. We are testing both once a day and twice a day doses. In such a design, we do not have a clear end date. We will see data from that trial this year. The exact timing, whether it is available for the Capital Markets Day in December, remains to be determined.

Speaker #2: In terms of the rationale for starting TAK-360 in type 1 narcolepsy, first I'll say that we are extremely confident, and you've seen the data for Orzaiful.

Speaker #2: We believe that Orzaiful is not just a first in class but a best in class agent for type one narcolepsy. With with that said, we are at the we're at the very front end of understanding what RX and Agonist can do across a broad range of diseases.

Speaker #2: And so our interest is to continue to learn more and to continue to explore. With respect to Zazacitinib and IBD, both the UC and Crohn's disease trials are going well.

Speaker #2: We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that's still something that we're sorting through.

Speaker #2: Thank you.

Andrew S. Plump: In terms of the rationale for starting TAK-360 in Type 1 narcolepsy, first I will say that we are extremely confident, and you have seen the data for ORZEYFUL. We believe that ORZEYFUL is not just a first-in-class, but a best-in-class agent for Type 1 narcolepsy. With that said, we are at the very front end of understanding what orexin agonists can do across a broad range of diseases. Our interest is to continue to learn more and to continue to explore. With respect to zasocitinib and IBD, both the UC and Crohn's disease trials are going well. We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that is still something that we are sorting through. Thank you.

Andy Plump: In terms of the rationale for starting TAK-360 in Type 1 narcolepsy, first I will say that we are extremely confident, and you have seen the data for ORZEYFUL. We believe that ORZEYFUL is not just a first-in-class, but a best-in-class agent for Type 1 narcolepsy. With that said, we are at the very front end of understanding what orexin agonists can do across a broad range of diseases. Our interest is to continue to learn more and to continue to explore. With respect to zasocitinib and IBD, both the UC and Crohn's disease trials are going well. We expect to have data by the end of this fiscal year. In terms of how and where we present those data, that is still something that we are sorting through. Thank you.

Speaker #3: ありがとうございます。ありがとうございました。それでは次は野村証券の松原様。

Speaker #2: Thank you. Next is Matsubara-san from Nomura Securities, please. This is Nomura. Matsubara from Nomura Securities. Thank you. I have two questions. The first is about Entyvio.

Speaker #2: The first quarter saw a CR 3.8% increase. This was observed, and I believe SC contributed a lot. Compared to last year, I think the customer base has been expanding. But what is the immediate situation right now, and what is the outlook?

Speaker #2: And next is the Ruxvelotide. Budufa is approaching in August, and regarding the pricing strategy, as you have discussions with the physicians, how do you think?

Speaker #2: Your pricing strategy and how. What is your view of the patient burden in terms of pricing?

Chris O'Reilly: Thank you. Next is Matsubara-san from Nomura Securities, please. This is Nomura, Matsubara-san from Nomura Securities. Thank you. I have two questions. First is about ENTYVIO. In Q1, CR 3.8% increase was observed, and I believe FC contributed a lot. Compared to the last year, I think the customer base have been expanding. What is the immediate situation right now, and what is the outlook? Next is the rusfertide. PDUFA is approaching in August. Regarding your pricing strategy, as you have discussions with the physicians, how do you think about your pricing strategy and how about your view of the patient burden in terms of pricing?

Chris O'Reilly: Thank you. Next is Matsubara-san from Nomura Securities, please.

Speaker #3: In the first quarter, so any comments on the prescription trends, how the performance is going for Entyvio? And then the second question on ruxolitinib, in particular, how you are positioning versus phlebotomy in terms of pricing strategy?

Chris O'Reilly: This is Nomura, Matsubara-san from Nomura Securities. Thank you. I have two questions. First is about ENTYVIO. In Q1, CR 3.8% increase was observed, and I believe FC contributed a lot. Compared to the last year, I think the customer base have been expanding. What is the immediate situation right now, and what is the outlook? Next is the rusfertide. PDUFA is approaching in August. Regarding your pricing strategy, as you have discussions with the physicians, how do you think about your pricing strategy and how about your view of the patient burden in terms of pricing?

Speaker #3: I think both of those questions, Julie, I'd like to ask you to comment on those, please.

Speaker #2: Thanks for the questions, Matsubara-san. Let me tackle Entyvio first. So, when we look at Entyvio, as you know, it's been on the market overall.

Chris O'Reilly: In Q1. Any comments on sort of prescription trends, how the performance is going for ENTYVIO? The second question on rusfertide, in particular, how you go positioning versus phlebotomy in terms of pricing strategies. I think both of those questions, Julie, I'd like to ask you to comment on those, please.

Speaker #2: The decline is due to pricing mix and lower days on hand. When we look at the growth of PEN, we continue to see very strong growth of Entyvio PEN in the U.S.

Julie Kim: Thanks for the questions, Hiroyuki-san. Let me tackle ENTYVIO first. When we look at ENTYVIO, as you know, it's been on the market Overall decline. The decline is due to pricing mix and lower days on hand. When we look at the growth of PEN, we continue to see very strong growth of ENTYVIO PEN in the US. We're pleased with that continued progression. For our markets outside of the US, here we continue to see strong growth with 6.7% growth in Europe, 10% in Japan, and the rest of our intercontinental markets at just about 36% growth. Again, very strong performance for ENTYVIO, driven by ENTYVIO subQ or the PEN across all of our markets. For the full year, we do expect to be able to hit our guidance. Your second question in terms of rusfertide pricing.

Speaker #2: And so we're pleased with that continued progression. For our markets outside of the US, we continue to see strong growth, with 6.7% growth in Europe, 10% in Japan, and the rest of our intercontinental markets at just about 36% growth.

Speaker #2: So again, very strong performance for Entyvio, driven by Entyvio's subQ, or the pen, across all of our markets. So for the full year, we do expect to be able to hit our guidance.

Speaker #2: Your second question in terms of Ruxvelotide pricing—so again, we won't share details of pricing at this point. I'll just reiterate that our approach to pricing is to make sure that we can receive appropriate value recognition for Ruxvelotide, but also allow rapid access for patients.

Speaker #2: So we will balance that as we look to finalize pricing. Thank you.

Speaker #3: ありがとうございます。 Thank you, Matsubara-san. For the next question, I'd like to call on Mike Nedelkovich from TD Cowen. Please go ahead and ask your question.

Speaker #4: Hi. Thank you so much for the questions. I have two. My first is actually on Mezegitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IGAN of $1 to $3 billion US dollars.

Speaker #4: Have there been any developments in either mezegitamab's development or in the competitive landscape that make you more confident in one or the other end of that range?

Julie Kim: Again, we won't share details of pricing at this point, and I'll just reiterate that our approach to pricing is to make sure that we can receive appropriate value recognition for rusfertide, also allowing rapid access for patients. We will balance that as we look to finalize pricing. Thank you.

Speaker #4: And are there any indications being explored that could be added to this target in the near future? So that's my first question. And then my second question is on the risk of Entyvio biosimilars in the US, what's the roadmap from here to your estimated 2032 timeline?

Speaker #4: What is the next step that we should be monitoring, and is there any Entyvio Pen IP that could extend exclusivity further than 2032?

Chris O'Reilly: Thank you, Hiroyuki-san. The next question, I'd like to call on Michael Nedelcovych from TD Cowen. Please go ahead and ask your question.

Speaker #4: Thank you.

Speaker #3: Great. Thank you, Mike. So, the first question on how we're progressing with Mezagitamab and thoughts on recent developments in these markets—I think Andy can take that question. And then the second is on biosimilars for Entyvio, and sort of the route from here to 2032 in terms of biosimilar entry, and whether the PEN gives us any extended IP.

Michael Nedelcovych: Hi. Thank you so much for the questions. I have two. My first is actually on mezagitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IGAN of $1 to 3 billion US. Are there any developments in either mezagitamab's development or in the competitive landscape that make you more confident in one or the other end of that range? Are there any indications being explored that could be added to this target in the near future? That's my first question. My second question is on the risk of ENTYVIO biosimilars in the US. What's the roadmap from here to your estimated 2032 timeline? What is the next step that we should be monitoring? Is there any ENTYVIO PEN IP that could extend exclusivity further than 2032? Thank you.

Mike Nedelcovych: Hi. Thank you so much for the questions. I have two. My first is actually on mezagitamab. Back in December 2024, you laid out a peak sales ambition in ITP and IGAN of $1 to 3 billion US. Are there any developments in either mezagitamab's development or in the competitive landscape that make you more confident in one or the other end of that range? Are there any indications being explored that could be added to this target in the near future? That's my first question. My second question is on the risk of ENTYVIO biosimilars in the US. What's the roadmap from here to your estimated 2032 timeline? What is the next step that we should be monitoring? Is there any ENTYVIO PEN IP that could extend exclusivity further than 2032? Thank you.

Speaker #3: Julie can answer that question, please.

Speaker #2: Mike, thank you. Thank you very much. This is Andy. So, as you know, we have two ongoing Phase 3 studies. Mezagitamab—one is in third line.

Speaker #2: ITP, and the other is in IgAN. We just recently started phase two program in antibody-mediated rejection. So we have three indications that are going rapidly with mezegitamab.

Speaker #2: We we do continue to look at additional indications. So stay tuned. I think the to to your question, the biggest development for us recently has been the recognition from our long-term extension data from our phase 1B2 proof of concept study that with short-term dosing, we're seeing a very durable effect.

Chris O'Reilly: Great. Thank you, Mike. The first question on how we're progressing with mezagitamab and thoughts on recent developments in these markets, I think Andy can take that question. The second on biosimilars for ENTYVIO and sort of route from here to 2032, in terms of biosimilar entry and whether the PEN gives us any extended IP. Julie can answer that question, please.

Speaker #2: And we presented data, and I think I've shared it in previous earnings calls, that with up to six months of therapy, we see sustained activity on clinical endpoints up to two years.

Andrew S. Plump: Mike, thank you very much. This is Andy. As you know, we have two ongoing phase III studies for mezagitamab. One is in third line ITP, and the other is in IGAN. We just recently started a phase II program in antibody-mediated rejection. We have three indications that are going rapidly with mezagitamab. We do continue to look at additional indications, stay tuned. I think to your question, the biggest development for us recently has been the recognition from our long-term extension data from our phase I-B/II Proof of Concept study that short-term dosing, we're seeing a very durable effect. We presented data, and I think I've shared it in previous earning calls, that with up to six months of therapy, we see sustained activity on clinical endpoints up to two years. This is really exciting.

Andy Plump: Mike, thank you very much. This is Andy. As you know, we have two ongoing phase III studies for mezagitamab. One is in third line ITP, and the other is in IGAN. We just recently started a phase II program in antibody-mediated rejection. We have three indications that are going rapidly with mezagitamab. We do continue to look at additional indications, stay tuned. I think to your question, the biggest development for us recently has been the recognition from our long-term extension data from our phase I-B/II Proof of Concept study that short-term dosing, we're seeing a very durable effect. We presented data, and I think I've shared it in previous earning calls, that with up to six months of therapy, we see sustained activity on clinical endpoints up to two years. This is really exciting.

Speaker #2: So this is really exciting. The confidence we have that this is a a real effect and can be and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is is real.

Speaker #2: So we actually made an adaptation to the Phase 3 design. Initially, the administration schedule was going to be six months on, six months off.

Speaker #2: We've now decided to administer Mezegitamab for six months and then track patients thereafter to the primary endpoint at one year and at two years.

Speaker #2: So, we believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Speaker #1: Thanks, Mike, for your questions. And let me just add a quick comment, because I think you also inquired about peak sales estimates for Meza.

Speaker #1: So we're not changing any peak sales at this point, but when we get to the Capital Markets Day in December, we will provide peak sales based on current assumptions and the current landscape.

Andrew S. Plump: The confidence we have that this is a real effect and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is real. We actually made an adaptation to the phase III design. Initially, the administration schedule was going to be six months off, six months off. We have now decided to administer mezagitamab for six months and then track patients thereafter to the primary endpoint at one year and at two years. We believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Andy Plump: The confidence we have that this is a real effect and relates back to the underlying pharmacology of the drug and the biology of this disease, we think is real. We actually made an adaptation to the phase III design. Initially, the administration schedule was going to be six months off, six months off. We have now decided to administer mezagitamab for six months and then track patients thereafter to the primary endpoint at one year and at two years. We believe we have a product that not only is going to be differentiated in terms of its safety and efficacy, but also in terms of its administration schedule.

Speaker #1: So, hold until then. Thank you for that information. In terms of your second question regarding Entyvio and timing in relation to biosimilar entry, our timeframes here have not changed.

Speaker #1: So when you look at the US because I think your question was specific to the to the US, we we expect it to still be roughly three to five years in litigation.

Speaker #1: We will defend our IP positions. We feel very good about our IP position, and so this is something that we will continue to provide updates on.

Julie Kim: Thanks, Mike, for your questions. Let me just add a quick comment because I think you did also inquire about peak sales estimates for meza. We are not changing any peak sales at this point, but when we get to the capital markets day in December, we will provide peak sales based on current assumptions and current landscape. Hold until then for that information. In terms of your second question regarding ENTYVIO and timing in relation to biosimilar entry. Our time frames here have not changed. When you look at the US, because I think your question was specific to the US, we expect it to still be roughly three to five years in litigation. We will defend our IP positions.

Speaker #1: But there is no change in the overall timeline.

Speaker #4: Thank you so much.

Speaker #3: Thank you, Mike. And so, for the next question, I'd like to call on Miki Sogi from Bernstein. Miki, please go ahead and ask your question.

Speaker #5: Thank you. I have two questions. The first one is to Andy about IBI363. So, you know, the only page 23 I see that you have achieved the proof of concept for of this product for tech guideline known known small cell lung cancer and first line known known small cell lung cancer.

Speaker #5: So, are these the data that we have not seen? And then, we should also be expecting to see the data at ESMO this year.

Speaker #5: That's the first question. Second question is about, you know, the the new product launches of of a Perexon and Rastertide and to be honest with you, I'm a little bit surprised that you didn't really mention any commercial launch preparation during this the presentation despite the fact that, you know, launch or, you know, approval is imminent.

Julie Kim: We feel very good about our IP position, this is something that we will continue to provide updates on, but no change in overall timeline.

Michael Nedelcovych: Thank you so much.

Mike Nedelcovych: Thank you so much.

Chris O'Reilly: Thank you, Mike. For the next question, I'd like to call on Miki Sogi from Bernstein. Miki, please go ahead and ask your question.

Speaker #5: And I'd like to see what are the, you know, the key the operational KPI that, you know, you are currently thinking of for these product launches and and, you know, hopefully we will get, you know, the update on that later on.

Miki Sogi: Thank you. I have two questions. The first one is to Andy about IBI363. On page 23, I see that you have achieved the Proof of Concept of this product for second-line non-squamous non-small cell lung cancer and first-line non-small cell lung cancer. Are these the data that we have not seen? We should be expecting to see the data at ESMO this year? That's the first question. Second question is about the new product launches of oveporexton and rusfertide. To be honest with you, I'm a little bit surprised that you didn't really mention any commercial launch preparation during the presentation, despite the fact that launch or approval is imminent. I'd like to see what are the key operational KPI that you are currently thinking of for these product launches and hopefully we will get the update on that later on.

Speaker #3: Thank you, Miki. So, the first question is on TAK-928 POC achievements, as we've marked on this slide. Andy, can you provide some color on that?

Speaker #3: And then the second question, on Zayful Rastertide launch preparation: what the operational KPIs will be, etc. Julie, could you comment on that one please?

Speaker #2: Great. Thank you, Miki. So, just to remind everybody, IBI363, or what we now call TAK-928, is our PD-1/IL-2 alpha-biased bispecific protein that we've partnered with Innovent on.

Speaker #2: We're pursuing multiple indications in parallel. We've already started a phase three global program in IL refractory second line squamous non-small cell lung cancer and to your question, Miki, we now have very encouraging phase one, two data out of our partners work at Innovant in both first line non-small cell lung cancer and also second line adeno or non-squamous non-small cell lung cancer.

Speaker #2: So, those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information. So firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data.

Chris O'Reilly: Thank you, Miki. The first question on TAK-928 POC achievements as we marked on this slide. Andy can provide some color on that. The second question, ORZEYFUL rusfertide launch preparation, what the operational KPIs will be, et cetera. Julie can comment on that one, please.

Speaker #2: So, 42% overall survival data at two years. And of course, it's difficult to compare study to study, but this is a population that, at two years, has an overall survival rate of approximately 20%.

Andrew S. Plump: Great. Thank you, Miki. Just to remind everybody, IBI363, or what we now call TAK-928, is our PD-1 IL2 alpha-biased bispecific protein that we've partnered with Innovent on. We're pursuing multiple indications in parallel. We've already started a phase III global program in IO refractory second-line squamous non-small cell lung cancer. To your question, Miki, we now have very encouraging phase I and II data out of our partners' work at Innovent in both first-line non-small cell lung cancer and also second-line adeno or non-squamous non-small cell lung cancer. Those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information. Firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data. 42% overall survival data at 2 years.

Andy Plump: Great. Thank you, Miki. Just to remind everybody, IBI363, or what we now call TAK-928, is our PD-1 IL2 alpha-biased bispecific protein that we've partnered with Innovent on. We're pursuing multiple indications in parallel. We've already started a phase III global program in IO refractory second-line squamous non-small cell lung cancer. To your question, Miki, we now have very encouraging phase I and II data out of our partners' work at Innovent in both first-line non-small cell lung cancer and also second-line adeno or non-squamous non-small cell lung cancer. Those data were actually presented by Innovent at ASCO, and I can just provide some high-level summary information. Firstly, in the refractory setting for patients with non-squamous or adeno non-small cell, we've seen really striking overall survival data. 42% overall survival data at 2 years.

Speaker #2: So we're very excited to get that phase three study going. And then of course, the the the the largest population is going to be in in front line we had data that was presented we have maturing data that was presented at ASCO by our partners at Innovant that suggests response rates of upwards of 80%.

Speaker #2: So we'll continue to track maturing data, but we're preparing to start that phase 3 study later in this fiscal year.

Speaker #5: Oh, Andy, I have a follow-up question on the first line. I believe that, you know, the the data that was presented at ASCO was, you know, those those escalation or those selection phase and you are running or Innovant is running, you know, the dose expansion phase.

Speaker #5: Which is actually a hit the head-to-head against Q3 plus chemotherapy, I believe. And I just wanted to see that if that, you know, those expansion phase that with comparator data will be presented at ESMO.

Andrew S. Plump: Of course, it's difficult to compare study to study, but this is a population that at 2 years has an overall survival rate of approximately 20%. We're very excited to get that phase III study going. Then, of course, the largest population is going to be in front line. We had data that was presented. We have maturing data that was presented at ASCO by our partners at Innovent that suggest response rates of upwards of 80%. We'll continue to track maturing data, but we're preparing to start that phase III study later in this fiscal year.

Andy Plump: Of course, it's difficult to compare study to study, but this is a population that at 2 years has an overall survival rate of approximately 20%. We're very excited to get that phase III study going. Then, of course, the largest population is going to be in front line. We had data that was presented. We have maturing data that was presented at ASCO by our partners at Innovent that suggest response rates of upwards of 80%. We'll continue to track maturing data, but we're preparing to start that phase III study later in this fiscal year.

Speaker #5: And so, your policy you're referring to doesn't really include that data.

Speaker #2: Yeah. So so thank you. Thank you very much. So of course, the the phase three study will be done, you know, depending on the mutation burden it will be done either against a PD1 pembrol with chemo or versus a PD1 alone.

Speaker #2: In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we will present them in rapid fashion.

Miki Sogi: Andy, I have a follow-up question on the first line. I believe that the data that was presented at ASCO was dose escalation or dose selection phase, and you are running, or Innovent is running the dose expansion phase, which is actually head to head against a KEYTRUDA plus chemotherapy, I believe. I just wanted to see that if that dose expansion phase with comparator data will be presented at ESMO. So, the talk you're referring to doesn't really include that data.

Speaker #1: Thank you for the question, Sogi-san. Maybe I didn't sound excited enough in my voice. I did talk about the launch preparation during the presentation, but let me share more detail so that you get a sense of what we've been doing.

Speaker #1: So first, I will tackle or Zayful. When you look at the—and I'm assuming you're asking specifically about the US—although both China and Japan are also fully prepared in China.

Speaker #1: We now have the approval, as you heard. One thing I do want to say about China is that the submission for NRDL approval—the window is only once per year.

Andrew S. Plump: Thank you very much. Of course, the phase III study will be done, depending on the mutation burden, it will be done either against a PD-1 pembrolizumab with chemo or versus a PD-1 alone. In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we will present them in rapid fashion.

Andy Plump: Thank you very much. Of course, the phase III study will be done, depending on the mutation burden, it will be done either against a PD-1 pembrolizumab with chemo or versus a PD-1 alone. In terms of the maturing data, Miki, we don't have specific plans to share today as to when those data will be available, but we assure you that as those data mature, we will present them in rapid fashion.

Speaker #1: And so the approval came after that window, so we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January of '28.

Speaker #1: So, between now and then, we will focus on the private market, and then the full launch will be after we receive—hopefully we receive—NRDL listing.

Julie Kim: Thank you for the question, Sogi-san. Maybe I wasn't excited enough in my voice. I did talk about the launch preparation during the presentation, but let me share in more detail so that you get a sense of what we've been doing. First I will tackle ORZEYFUL. When you look at the I'm assuming you're asking specifically about the US, although both China and Japan are also fully prepared. In China, we now have the approval, as you heard. One thing I do want to say about China is that the submission for NRDL approval, the window is only once per year. The approval came after that window, so we won't be able to submit for NRDL until next year, meaning NRDL listing wouldn't be available until January 2028.

Speaker #1: So in the US, as I mentioned during the presentation, we've had our MSLs in the field now for over a year, focused on awareness and education around orexin and the mechanism of action.

Speaker #1: We've had our sales in the field mapping accounts, getting introduced to the sleep centers in particular. We've been running disease state education campaigns, and we've been having payer meetings.

Speaker #1: Our specialty pharmacy network and patient support programs are ready to go. So, at this point, we are waiting for the FDA approval and then the subsequent DEA scheduling, and we'll be ready to go.

Speaker #1: For Rastertide, some very similar activities—again, in the fields doing education and awareness. As I mentioned in previous calls, there is a sense of inertia in terms of the current level of treatment for polycythemia vera patients.

Julie Kim: Between now and then, we will focus on private markets, and then the full launch will be after we receive, hopefully we receive NRDL listing. In the US, as I mentioned during the presentation, we've had our MSLs in the field now for over a year, focused on awareness and education around Orexin and the mechanism of action. We've had our sales in the field, mapping accounts, getting introduced to the sleep centers in particular. We've been running disease state education campaigns. We've been having payer meetings. Our specialty pharmacy network and patient support programs are ready to go. At this point, we are waiting for the FDA approval and then the subsequent DEA scheduling, and we'll be ready to go. For rusfertide, some very similar activities, again, in the field doing education and awareness.

Speaker #1: They're viewed as a quote-unquote "good cancer" patients. And so, it's a lot of education we need to do to help shine a light on the burden.

Speaker #1: PD patients have. We were also doing end-to-end patient experience programs that are, again, ready to go and of engagements. So all of that is in play.

Speaker #1: In terms of the things that we, you know, metrics that we'll be looking at, it'll be things like patient numbers, payer coverage, and source of patients.

Speaker #1: So, hopefully, that addresses your question.

Speaker #5: Sure. But Julie, I have one additional question. What is your target for payer coverage after 12 months of launch? Specifically, commercial coverage.

Speaker #1: Yeah. So we are trying to secure commercial coverage as quickly as possible. So at this point, I'm not going to share a target with you, but we want to make sure we have broad coverage.

Julie Kim: As I mentioned in previous calls, there is a sense of inertia in terms of the current level of treatment for polycythemia vera patients. They're viewed as a quote, unquote "good cancer patients," and it's a lot of education we need to do to help shine a light on the burden that PV patients have. We're also doing end-to-end patient experience programs that are, again, ready to go, and of course, the payer engagements. All of that is in play. In terms of the metrics that we'll be looking at, it'll be things like patient numbers, payer coverage, and source of patients. Hopefully that addresses your question.

Speaker #5: Thank you.

Speaker #3: Thank you, Miki. I think we'll take one final question and end with Stephen Barker from Jefferies. Please go ahead and ask your question.

Speaker #4: Thanks, Steve Barker. I'm going to go over Ozayful. Could you clarify whether the approved label includes both the 1 milligram and 2 milligram tablet strengths?

Speaker #4: That is, do the physicians in China have the flexibility to prescribe the dose, or is the label focused on the 2-milligram BID regimen that was tested in RADIANT Light?

Speaker #4: And a follow-up question: Is the same strength profile reflected in the U.S. and Japan applications, please? Thank you.

Miki Sogi: Sure. Julie, I have one additional question. What is your target of payer coverage after 12 months of launch? Commercial coverage.

Speaker #3: Thank you, Steve. So, Andy, would you like to answer those questions, please?

Speaker #2: Sure. So Steve, the label hasn't been released yet in China, and of course, we're still in the process of discussing the label in the US and Japan.

Julie Kim: Yeah. We are trying to secure commercial coverage as quickly as possible. At this point, I'm not going to share a target with you, but we want to make sure we have broad coverage.

Speaker #2: So we can't comment specifically on what's on the label, but we can say that the expectation in China and the US—at least, we've not gotten to this point of discussions with Japan—is that physicians will have access to multiple doses for patients.

Speaker #4: Okay, great. And if I can just follow up with a question about Tax 360. There are two aspects of what you presented today that caught my attention.

Miki Sogi: Thank you.

Chris O'Reilly: Thank you, Miki. I think we'll take one final question. We'll end with Stephen Barker from Jefferies. Steve, please go ahead and ask your question.

Speaker #4: So you're testing at an NT1, which suggests that it has the potential to expand the market opportunity beyond or Zayful. I was wondering if you could explain that.

Stephen Barker: Thanks. Steve Barker. A little of ORZEYFUL. Could you clarify whether the approved label includes both the 1 milligram and 2 milligram tablet strengths? That is, do the physicians in China have the flexibility to prescribe either dose, or is the label focused on the 2 milligram BID regimen that was tested in RadiantLight? Follow-up question, is the same strength profile reflected in the US and Japan applications, please? Thank you.

Speaker #4: And then also, the fact that you're evaluating both once-daily and twice-daily dosing—if you could explain that development choice as well, please.

Speaker #2: Just so just quickly in the interest of time, Steve, so again, we are we're fully confident in or Zayful and in the profile that we've seen for or Zayful.

Speaker #2: We think it's going to be a best-in-class agent for type 1 narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases.

Chris O'Reilly: Thank you, Steve. Andy, would you like to answer those questions, please?

Speaker #2: Understanding dose, exposure, and clinical response. And so for 360, given that it's relatively early in development, our goal is to be as thoughtful as possible within disease testing—as well as with a broader range of doses and dose regimens, and also across diseases—to understand what the potential of that molecule is. Once we have data, then we'll make decisions as to what doses we bring forward and what indications.

Andrew S. Plump: Sure. Steve, the label hasn't been released yet in China, and of course, we're still in the process of discussing the label in the US and Japan. We can't comment specifically what's on the label, but we can say that the expectation in China and the US at least, we've not gotten to this point of discussions with Japan, is that physicians will have access to multiple doses for patients.

Andy Plump: Sure. Steve, the label hasn't been released yet in China, and of course, we're still in the process of discussing the label in the US and Japan. We can't comment specifically what's on the label, but we can say that the expectation in China and the US at least, we've not gotten to this point of discussions with Japan, is that physicians will have access to multiple doses for patients.

Speaker #4: Fantastic. Thank you very much.

Stephen Barker: Okay, great. If I can just follow up with a question about TAK-360. There's two aspects of what you presented today that caught my attention. You are testing it in type 1 narcolepsy, which suggests that it has the potential to expand the market opportunity beyond ORZEYFUL. I was wondering if you could explain that. Then also the fact that you're evaluating both once daily and twice daily dosing, if you could explain that development choice as well, please.

Speaker #3: Thank you, Steve, for your questions. That brings our Q&A session to a close. I would now like to hand over to Julie for some closing remarks.

Speaker #1: So, thank you everyone for joining us today and for your very thoughtful questions. I hope you are equally excited about our expected launches as we are.

Speaker #1: And I hope that many of you will join us later this year for our Capital Markets Day on December 11th here in Tokyo. I look forward to sharing our longer-term ambition with you and spending a bit more time on our strategic roadmap that will guide our growth through the end of the decade and beyond.

Andrew S. Plump: Just quickly in the interest of time, Steve. Again, we're fully confident in oreximab and the profile that we've seen for oreximab. We think it's going to be a best-in-class agent for type 1 narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases, understanding dose exposure and clinical response. 360, given that it's relatively early in development, our goal is to be as thoughtful as possible within a disease, testing as broad a range of doses and dose regimens as well as across diseases to understand what the potential of that molecule is. Once we have all that data, we'll make decisions as to what doses we bring forward and what indications.

Andy Plump: Just quickly in the interest of time, Steve. Again, we're fully confident in oreximab and the profile that we've seen for oreximab. We think it's going to be a best-in-class agent for type 1 narcolepsy. We also recognize that we're really at the front end of understanding what orexin biology can do across a range of diseases, understanding dose exposure and clinical response. 360, given that it's relatively early in development, our goal is to be as thoughtful as possible within a disease, testing as broad a range of doses and dose regimens as well as across diseases to understand what the potential of that molecule is. Once we have all that data, we'll make decisions as to what doses we bring forward and what indications.

Stephen Barker: Fantastic. Thank you very much.

Chris O'Reilly: Thank you, Steve, for your questions. That brings our Q&A session to a close, I'd like to now hand over to Julie for some closing remarks.

Julie Kim: Thank you everyone for joining us today and for your very thoughtful questions. I hope you are equally excited about our expected launches as we are, I hope that many of you will join us later this year for our Capital Markets Day on 11 December here in Tokyo. I look forward to sharing our longer-term ambition with you and spending a bit more time on our strategic roadmap that will guide our growth through the end of the decade and beyond. Thank you again for your time, have a wonderful rest of your day or evening.

Q1 2026 Takeda Pharmaceutical Co Ltd Earngs Call

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