Eisai Co., Ltd.
Q1 2022 Earnings Call Transcript

Published: 6 Aug 2021

[Unidentified Company Representative:]

It is now time. We would like to begin financial results presentation from the first quarter of fiscal 2021 by Eisai Co. Ltd. The presentation will be livestreamed and will also be distributed to participants via telephone line. Those who are participating via telephone line, please go to our website and download the slides and click the slides to move forward. Those who are watching livestream please continue to watch the livestream. Financial part will be first presented by; Mr. Ryohei Yanagi, CFO; and the operation parts will be presented by Mr. Ivan Cheung, President Neurology Business Group; and Mr. Terushige Iike, President of Oncology Business Group. Ivan Cheung's part will be given in English. Those who wish to listen to the Japanese are able to listen to the Japanese interpretation. And Ivan Cheung's original English sound is also available. Now the presentation will begin. First financial part will be presented by Mr. Yanagi.

[Ryohei Yanagi:]

Thank you. Hello everyone. I'm Yanagi CFO. I will first present the financial part. Next slide please. This is Slide 2. This is first quarter fiscal 2021 consolidated statement of income. This page gives PL summary. Through partnership model and expansion of global brands we were able to achieve increase in both revenue and profit. Regarding partnership model, in view of post-Lenvima era as we announced in our press release the other day regarding MORAb-202 with Bristol Myers Squibb, we have entered into the strategic collaboration and lumpsum payments related to MORAb-202 of $450 million is reflected in the revenue in PL. R&D reimbursement of $200 million is recorded not on the PL, but on the balance sheet on the liability side. In the meantime, $650 million which is the total of the 2 were received in cash in July with a timing difference. In the cash flow statement, it is not reflected in the first quarter but in the second quarter. Please take note of that. Now first, I would like to review the top line revenue. It was JPY 198.9 billion. It was a 20% increase year-on-year. As shown on the right-side box, these are major factors for increase in revenue a decrease in Lyrica drug price revision in Japan were more than offset by increase in global brands which was plus JPY 13.8 billion. And from last year and this year there were increase and decrease in licensing revenue. Last year there was tazemetostat rights transfer. But this year, we have lump sum payment related to MORAb-202 of $450 million; in yen terms JPY 49.6 billion. These are reflected in PL. As for global brands, especially Lenvima enjoys low cost of sales ratio and because of the increase of global brands mix improved. And with the increase of licensing income cost of sales ratio is 19.7%. In comparison to global top tier this is a very good level. As a result, gross profit was JPY 159.6 billion which was an increase of 25% year-on-year. And as usual we would like to continue to not go into short-termism, but base on long-termism to make contribution for future patient benefit. And we'll be making active investments in SG&A and R&D in forward-looking fashion. First R&D expense is JPY 41.8 billion increase of 37% year-on-year substantial increase. Major factors for increase are Lenvima R&D and next-generation Alzheimer's disease pipeline investment. In addition, for your reference from partner there was a reimbursement. And in view of that actual R&D investment -- R&D spending was JPY 52.6 billion. It is a 26.4% of sales an increase. So globally we are actively making R&D investments. Regarding SG&A expenses JPY 74.7 billion. This was a 15% increase from year-on-year a double-digit increase. And the ratio was 37.6% at a high range. The major factors for increase included increase of shared profit of Lenvima paid to Merck which increased by JPY 3.3 billion. And the other day U.S. FDA granted approval to ADUHELM. And increase in cost related to ADUHELM amounted to JPY 3.4 billion. And therefore, majority of increase in SG&A expenses are these positive investment of resource and SG&A expenses. And this is also for your information, but Lenvima-related profit sharing excluded SG&A expense was JPY 54.9 billion. And ratio to sales was 27.6% lower than 30% in the global peer range. As for other income and expenses, in Europe, Zonegran rights were transferred and proceeds is recorded here. Operating profit was JPY 55.4 billion more than 70% increase year-on-year. Operating margin was 27.9%. Nearing global top-tier level bottom line smally was JPY 42.2 billion recording 70% increase. In the past three years this is only for reference, but for this term ROE was 23.7% which is also equivalent to global top-tier level. On the other hand, looking at balance sheet items, earlier as I mentioned at the outset MORAb-202-related cash receipt of $650 million was recorded in July with a timing difference. And therefore. annual cash might appear to be slightly lower but net DER remains negative 0.2 and net cash of more than JPY 140 billion is retained. We have ample net cash position virtually debt-free. And the ratio of equity is 64.5%. And this is -- this gives us a good leeway and sound financial position. And based on this strong sound balance sheet, we will be making a positive -- we are making positive investment, while achieving increase in both revenue and profit in this first quarter. Now please turn to Page 3. This gives breakdown of revenue migration. In the pharmaceutical business, core business, centering around Lenvima and global brand growth, we were able to achieve or exceed plan. And based on partnership model, we have rises in revenue. And because of that we were able to record a large increase in revenue. On the left-side box, this is a summary of revenue. Last year, in the first quarter, revenue was ¥165.6 billion. And this quarter, 2021 revenue was ¥198.9 billion, increase of ¥33.3 billion. And increasing factors are shown on the right box. Global brands are given in red box. And in blue column below that, impact of drug price revision in Japan and decrease in Lyrica are also mentioned as decreasing factors. But offsetting these, more or less pharmaceutical business result was almost flat, especially the four global brands achieved plus ¥13.8 billion, increase in revenue from ¥50.6 billion to ¥64.4 billion. And Lenvima achieved an increase of ¥9.5 billion from ¥34.7 billion to ¥44.2 billion. In pharmaceutical business, in addition to this strong performance in pharmaceutical business, we also have others including licensing revenue. MORAb-202 lump sum payment and tazemetostat rights transfer, these increase and decrease in licensing revenue resulted in others ¥34.5 billion. And therefore, revenue increased ¥33.3 billion in this quarter. Next, please turn to Page 4. This graph shows a breakdown of operating profit. We expanded partnership model and strategic options for exercise. And to increase corporate value and to make patient contribution, we are proactively making advanced investment in determined fashion. On the left-side box, PL summary is given. First quarter fiscal 2020 revenue was ¥32.1 billion. In the end, this quarter in 2021 from April to June, it was ¥55.4 billion in revenue increase of ¥23.3 billion a substantial increase. On the right side in the box, the increases and decreases are given. Red is about revenue as I have explained before. Blue are expense items. These are advanced investments R&D expense. And Lenvima R&D cost increased ¥7.5 billion from the previous term. Project is progressing smoothly. And for your information until last year from Merck, we have reimbursement of R&D expenses from Merck. So actual R&D spending was not actually incurred by Eisai, but there is no longer reimbursement. So, actual R&D spending by Eisai is directly reflected here. And that has resulted in increase in R&D cost of Lenvima. And AD-related pipeline also is receiving continuous investment proactively. As for SG&A expenses, Lenvima-related shared profit paid to Merck increased by ¥3.3 billion. As for shared profit of Lenvima paid to Merck, for last year, it was ¥16.5 billion last year. And this year it was ¥19.8 billion in the first quarter. So there was a huge increase in profit, and with the approval of FDA, ADUHELM-related cost increased ¥3.4 billion. These are proactive positive expenses in SG&A. As for others, according to IFRS agenda decision in line with that decision, licensing and product transfer rights is not recorded in revenue, but in others sales of fixed assets. So transfer of rights for Zonegran is included in that line item. With that, revenue from first quarter was ¥55.4 billion, increase of ¥23.3 billion year-on-year. Left below box, also gives for your reference R&D expense comparison from last year and this year and partnership model benefit is reflected here. Partner reimbursement, there is ¥10.8 billion this year. And therefore actual R&D spending is ¥52.6 billion, a large investment for future patient benefit contribution. We have achieved increase in both revenue and profit and R&D expenses and SG&A expenses are also increased. And these are all possible due to partnership model. This is the consolidated results for the first quarter fiscal 2021. As for full year estimates, I would like to come back, to present that at the end of the presentation once again. So I would like to conclude the financial part of the presentation. Thank you. Next from Neurology business, we have Mr. Ivan Cheung.

[Ivan Cheung:]

This is Ivan Cheung from Neurology Business Group. Let me first provide an update on the important progress of ADUHELM. As you can see on the slide, Slide 5, ADUHELM's accelerated approval by the US FDA on June 7 was a historic and humble moment in our fight against Alzheimer's disease, as ADUHELM became the first new treatment option in almost 20 years. Unlike first-generation, anti-amyloid antibodies that do not clear amyloid from the brain, ADUHELM belongs to a next generation, as several FDA leaders recently wrote in The New England Journal of Medicine of monoclonal antibodies directed at aggregated amyloid, which also include lecanemab, that have achieved larger reductions of amyloid plaque with emerging evidence, supporting a consistent relationship between degree of plaque reduction and effect on clinical endpoints. As you can see in the upper box, regarding the FDA's subsequent update of the US label both Eisai and Biogen very much welcomed this update as the updated language aligns with our consistent expectation that ADUHELM will be prescribed for patients in the early stages of Alzheimer's disease. This update has been well-received by prescribers, payers and policymakers. Through our experiences with Aricept, we fully appreciate that being a pioneer building a new market for Alzheimer's disease is both an enormous undertaking and a noble cause in which we must face challenges head on. As you can see in the lower box, we are pleased to see strong indication of very high initial patient interest in ADUHELM. Of the approximately 900 sites, which we expected to be ready shortly after the approval to administer ADUHELM, we are encouraged that over 35% have completed our P&T pharmacy and therapeutics review with a positive outcome or indicated that they will not require a P&T review. We've also seen some site leverage external infusion centers if they face internal resistance or awaiting outcome of their internal process. With regard to reimbursement, we are pleased to say that we have seen the first examples of Medicare Advantage plans, approving pre-authorizations. And we're seeing progress with those early reimbursement requests getting submitted to regional MACs, Medicare Administrative Contractors for processing. We welcome the swift opening of an NCD, National Coverage Determination analysis by CMS to provide additional clarity on coverage for Medicare beneficiaries in a consistent manner across the country. We expect that Medicare Advantage plans and regional MACs will provide coverage for ADUHELM, while the NCD analysis is underway. Along with Biogen we are committed to pursue all options to maximize patient access to ADUHELM. As you know Alzheimer's is a neurodegenerative disease where time is of essence to patients and their families. Next slide, slide 6 please. Last week at the AAIC, we are encouraged that Biogen continued to present new data analyses from the clinical trials of aducanumab as you can see in the upper box. For example, in the second bullet point, correlation assessment across ADUHELM clinical trials supported a relationship between aducanumab-induced biomarker changes and slowing of clinical decline. Also from last week as you can see in the lower box, we are pleased to see an expert panel of six Alzheimer's disease specialists published the first recommendations for the appropriate use of aducanumab in the real world in The Journal of Prevention of Alzheimer's Disease. We believe this is an important first step to move the dialogue among physicians towards how to appropriately use this treatment and how to communicate with patients and their care partners. We agree with the expert panel that building the infrastructure for the appropriate use of aducanumab will require time, resources and planning. Along with Biogen, we are committed to partner with stakeholders to develop such infrastructure not only in the US but also globally. Next slide on slide 7. Outside of the US, as you can see in the upper box, we continue to engage with regulators regarding the ongoing review of aducanumab in Europe, Japan and other markets, while also continuing to submit new regulatory filings around the world. Here in Japan, Eisai and Biogen are continuing to have active dialogue with the PMDA, and we look forward to the next steps in the PMDA review process. As you can see in the middle box, along with Biogen we are moving with a sense of urgency to finalize the design of the post-marketing confirmatory Phase IV controlled study. In addition, we enrolled our last patient in the EMBARK long-term extension study last month bringing the total enrollment to roughly 1,700 patients. Moreover, we plan to initiate ICARE AD-US to collect real-world long-term effectiveness and safety data on aducanumab. Lastly as shown in the lower box, we initiated a new Phase I study to evaluate about availability of a subcutaneous formulation of aducanumab. Next slide. On slide 8, let me now turn to lecanemab or BAN2401, which was recently granted Breakthrough Therapy Designation by the US FDA. I will first review the important characteristics of lecanemab in amyloid plaque clearance based on PET imaging from our Phase II trial Study 201. In the graph on the slide, on the left-hand side, during the core phase of Study 201, lecanemab 10-milligram per kg biweekly represented by the red line converted over 80% of subjects from amyloid positive to amyloid negative after 18 months of treatment, the highest conversion rate reported so far among anti-amyloid monoclonal antibodies. In the middle part of the graph, you can see that amyloid plaque reduction was maintained during the off-treatment gap period that averaged about two years between the core phase and the OLE open-label expansion phase. Then the right part of the graph during the OLE phase, among placebo subjects from the core phase now newly treated with lecanemab, 10-milligram per kg biweekly as represented by the blue line once again 80% were converted from amyloid positive to amyloid negative and this time only after 12 months of treatment. You can also see that amyloid plaque clearance occurred as early as three months of treatment in the OLE phase aided by no-dose titration unlike other anti-amyloid monoclonal antibodies. Overall, we're excited about lecanemab's efficacy profile of fast, deep and sustained amyloid plaque clearance. In addition, the box on the right-hand side of the slide, you can see that rate of ARIA-E occurrence was 9.9% for subjects treated with lecanemab, 10-milligram per kg biweekly in the core phase and 8.9% in the OLE phase for subjects newly treated with lecanemab 10-milligram per kg biweekly. We are equally excited about lecanemab's safety profile of low rate of ARIA occurrence. In addition, with a large Phase 2 study and a completely enrolled Phase 3 study, lecanemab at this moment has a safety database that already fulfills the ICH guidelines from a regulatory perspective. Next slide on slide 9. Now let me review the new plasma biomarker data from lecanemab Study 201 presented last week at the AAIC, which evaluate longitudinal plasma A-beta 42 to 40 ratio and the relationship to longitudinal amyloid PET and clinical endpoints. As you can see in the graph plasma A-beta 42 to 40 ratio, tracked very well with PET SUVr changes, which I showed in the previous slide across the core phase on the left the off-treatment gap period in the middle and the OLE phase on the right. This continuing treatment allows plasma A-beta 42 to 40 ratio to start reducing again as you can see in the middle part of this graph, which we believe is an early indicator of brain amyloid plaque reaccumulation. Retreatment with lecanemab in the OLE phase, as you can see on the right-hand side of the graph, drives plasma A-beta 42 to 40 ratio to increase again, which is likely associated with lecanemab clearing newly generated protofibrils even after amyloid plaque removal. This first-of-its-kind data suggests that we are fast moving into a new era of being able to use plasma biomarkers to track disease progression and monitor drug effects in individual patients. Next slide on slide 10. Let me also review the new data of clinical endpoints from the OLE phase of lecanemab Study 201, which were also presented last week at the AAIC. In graph 1, on the left, subjects with early Alzheimer's disease at OLE baseline, who received lecanemab 10-milligram per kg biweekly in the core phase, continued to perform better than those who received placebo during off-treatment gap period, suggesting a potential disease-modifying effect of lecanemab. Most importantly, in graph 2 on the right, we trace the same subjects from core phase to off-treatment gap period to OLE phase, totaling about five years on average. The red line represents subjects who received lecanemab 10-milligram per kg biweekly, both during the core phase and the OLE phase. And the blue line represents subjects who received placebo during the core phase and then were re-treated for the first time with lecanemab 10-milligram per kg biweekly during the OLE phase. As you can see on the right side of the graph in the OLE phase, both the red line and the blue line showed shallower slope relative to the yellow natural disease progression line such as similar population from ADNI, which may support the concept of maintaining disease modification effect with long-term treatment when a patient is still in the early stage of Alzheimer's disease. In addition the red line, throughout this graph, stayed below the blue line the entire time even after the blue line start to receive lecanemab in the OLE phase, which may support the notion that early start of therapy is more beneficial than late start of therapy in a neurodegenerative disease like Alzheimer's. Lastly, these clinical effects taken together associated with treatment interruption and long-term dosing may generate insights into formulating the most optimal lecanemab regimen in the real world, possibly tailored by the individual's plasma trajectory as explained in my previous slide. Next slide on slide 11. Let me now summarize the current status and upcoming milestones for lecanemab. Firstly, under the Breakthrough Therapy Designation from the FDA, we have initiated communication with the FDA to seek the most optimal and expedited regulatory pathway forward for lecanemab. We will explore all options with the FDA. We will listen to their advice, including the accelerated approval pathway. As I mentioned earlier, we are excited about lecanemab's robust data on amyloid plaque clearance impact on clinical endpoints and large safety database. Secondly, on this slide as you can see our Phase 3 Clarity AD study completed enrollment of 1,795 early Alzheimer's patients in March this year, which is the largest Phase 3 study ever for this population. Thirdly, as reported last week at the AAIC, initial experiences with our Phase 3 AHEAD 3-45 study suggest it is feasible to identify participants across the continuum of preclinical Alzheimer's disease. We have so far activated almost 80 clinical trial sites across the globe and randomized over 100 subjects. Lastly, subcutaneous formulation development, including device is now underway with the goal of enhancing patient convenience. And we plan to initiate a Phase I study to evaluate the pharmacokinetics and bioavailability of this formulation within this year. Next slide, slide 12. Let me now turn to E2814, which we believe is the most advanced monoclonal antibody candidate, targeting MTBR-tau in the clinical stage. In the upper left part of the slide, you can see the targeted mechanism of E2814 in Alzheimer's disease. On the right-hand side, as described in the green box and the blue box Phase I MAD study in healthy volunteers has been progressing smoothly. And the Phase Ib/II study in DIAD dominantly inherited Alzheimer's disease patients was recently initiated. In addition, as shown in the pink box as reported last week at the AAIC E2814 was selected as the first anti-tau investigational agent to enter DIAN-TU's Tau NexGen global trial that will include up to three anti-tau drug arms. The Tau NexGen trial will enroll subjects into two cohorts

[Unidentified Company Representative:]

Now with regard to oncology business, Mr. Iike is going to present.

[Terushige Iike:]

Now, I'd like to present our oncology business. Please turn to slide 14. Lenvima sales the ¥44.2 billion up by 27% year-on-year. Americas. Endometrial cancer in February, we were able to present at Medical Congress the Phase III results. Since then the prescription volume in the United States has been growing. Please look at the right-hand side box of Americas, which indicates the RCC. The first-line indication of RCC is currently under regulatory review, and this has already been listed in Category one in NCCN guideline. Next China. March of this year this is now listed in National Reimbursement Drug List. Since then access is dramatically expanding. Compared to the previous year, we achieved a 2.5-fold of the sales growth. Japan. In the hepatocellular cancer field, there was the advent of the competitor that we received the impact of that. And we established the oncology business headquarter and increased oncology MRs. We have been strengthening the commercial organization in all the regions to prepare ourselves for the new indications to come and the new approvals to come. Please refer to slide 15 endometrial cancer. The full approval in the United States came six weeks earlier than full PDUFA date. And please look at the left-hand side graph of the slide. As a result of the Phase 3 OS PFS and ORR in all of these endpoints, we have been able to demonstrate the superiority compared to chemotherapy the control arm. And on the right-hand side, you see the quality of life. The Lenvima-KEYTRUDA combination arm demonstrated comparable or better-than-control result. So as for the second-line treatment of endometrial cancer there has not been any standard of care over several decades. Chemotherapy has been used for these patients. But this time with our Phase 3 data, we have been able to demonstrate OS benefit. And it is believed amongst the specialists that this is a very important evidence bringing about the transformation of easy treatment. And we are strongly expecting that this is going to be the new standard of therapy in this field. Slide 16, I would like to talk about Lenvima's QOL data. The Phase 3 additional analysis data were recently published. So I would like to share them with you. On the left-hand side Lenvima, monotherapy and so QOL data for this HCC first line compared to sorafenib control the comparable better results. On the right-hand side, this in combination with KEYTRUDA for the first line, the renal cell cancer. This is the data presented at ASCO of this year. Compared to sunitinib, the comparable even better profile was demonstrated. So the monotherapy the combination therapy HCC or RCC irrespective of treatment setting Lenvima regimen can demonstrate comparable or even better QOL benefit to the patients compared to the standard of care. And when you think about the very high level of the response rate, we think that this has all the qualification to become the new standard of care. Please refer to slide 17. On the left-hand side you see the five therapy indications of Lenvima has already been approved

[Unidentified Company Representative:]

Lastly, Mr. Yanagi is going to explain the financial outlook for this year.

[Ryohei Yanagi:]

Once again, myself Yanagi, the CFO is going to present the financial forecast for fiscal 2021. Please refer to the slide 22. And here you see the consolidated financial forecast for fiscal 2021. So as was presented, we are making this upward revision. In the neurology and oncology field, we want to achieve the innovation. And by overlooking this post-Lenvima stage, we would like to further pursue the greater the corporate values. Please look at these lines. So, first of all, we are looking to this revenue forecast at JPY 701 billion. On the right-hand side for your reference the disclosure, we made in May is indicated. And so this is an upward revision by JPY 20 billion from JPY 681 billion. We talked about the MORAb-202 and we have received $450 million upfront payment for this deal that is recognized in the top line. So this strategic – the partnership has been factored into these numbers from the beginning of the term at a certain probability of success. And also at this point in time what we called as realistic management options, various BDs and license kind of deals depending upon the process of negotiations and the probability of success we have been making some latest updating of these numbers. And as a result of this, all in all, we are making this upside revision of JPY 20 billion. And with Lenvima sales forecast and also the milestone payment from Merck related to Lenvima, these are the points that have not been changed. So within – in terms of the expenses, we have not made any significant changes to the original forecast. The result, we are estimating the operating profit to be JPY 76 billion, another upward revision. So when you look at the May disclosure number, it was stated JPY 58 billion. So it is an upside of JPY 18 billion or a little over 30% of upward revision. So as you can see looking into the post-Lenvima, we are pursuing the partnership and also the global products are growing very smoothly. And so we are making this upward revision of through the term the financial performance and again, so the JPY 70.1 billion of sales and gross profit. And so this R&D, so JPY 159 billion and SG&A, so JPY 321 billion. And then operating profit is JPY 76 billion, up by 30%. And also versus previous term the 50% of a significant increase in the profit is expected. And so as for the net income the bottom line of JPY 58.5 billion is expected as a significant upside. So ROE through the year is 8.2%. And we are ensuring the positive equity spread to achieve the value creations. When you look at EPS, so in May, we stated – mentioned JPY 158 and now it is up by JPY 50 and that's JPY 208. And the payout ratio is 77%. And as for this payout ratio over two years it becomes 23%. And also as for the balance sheet through the year, we are ensuring a greater than 6% of the equity ratio and we can ensure this greater than JPY 100 billion of the net cash. And so by ensuring the financial integrity, we believe that we can continue with the very active investment for the patient contributions and to also achieve the stable dividend payment. So these are the upward revisions that we are making for the financial forecast. So lastly, I would like to give the closing remarks on the Page 23. So including MORAb-202 partnership and we would like to further deepen the partnership model and also with the success of global brand including Lenvima, we are making the very significant upward revision of our forecast. And as you heard in today's presentation, centering around AD field, in neurology field and also Lenvima and also the oncology field, post-Lenvima are also very much progressing successfully. And through the appropriate capital allocation based on the strong balance sheet and financial soundness and following the agency purpose, instead of falling into the short-termism with the long-termism view, we want to continue with the aggressive investment and further patient contribution and further achieve the sustainable growth of long-term corporate value. And so I hope that you will continue to extend the support from the long-term perspective. With this I'd like to conclude the presentation. Thank you very much.

[Operator:]

[A - Unidentified Company Representative:]

We will now – we are going to Q&A session. We will be taking questions from participants who are participating over phone lines. [Operator Instructions] First question Mr. Kohtani from Nomura Securities. Can you hear me?

[Motoya Kohtani:]

Thank you. Thank you for taking my questions. This is Kohtani. Can you hear me? I have a question each for Alzheimer's and oncology. First about Alzheimer's, when we look at press report in the West in whatever A-beta antibody if amyloid plaque is reduced it seems it's approved. So it seems hurdle has been lowered. But when we look at the package not only reducing A-beta plus but A-beta accumulation reduction and the progression suppression were shown with ADUHELM. I think these were important. The plaque reduction itself may not lead to improvement in symptoms. So these proofs will be necessary. And as for ADUHELM like EMERGE study the latecomer will have to show primary endpoints and secondary endpoints and show statistical significance in all of these endpoints. So it will not be easy. Given these two unlike Western analysts are thinking is our hurdle for approval lower? Do you think that A-beta antibody approval hurdle has been lowered? Well donanemab has only one Phase II study result. So for approval I think it is still not sufficient. What is your view?

[Unidentified Company Representative:]

Thank you for your question. The question will be addressed by Mr. Ivan Cheung.

[Ivan Cheung:]

Ms. Kohtani, thank you very much to your question. As -- you're right as I mentioned earlier if you look at the article in The New England Journal of Medicine recently written by several leaders in the FDA they specifically talked about antibodies that are showing correlation between significant amyloid plaque reduction and impact on clinical endpoint. So this is quite important for the FDA I believe to distinguish between antibodies that could potentially impact the clinical progression of the disease in a meaningful manner versus that do not. So as I mentioned earlier, we are in active communication with the FDA about the pathway forward for lecanemab. And meanwhile, we of course are very committed to driving adoption and improving access for ADUHELM. Thank you very much, for your question.

[Motoya Kohtani:]

I have a follow-up question on Alzheimer's. BAN2401 the preventive study the only preventive study is ongoing in the world. I think Alzheimer's should be prevented rather than being treated. And looking at right below chart in Page 10, early elimination of A-beta may be preferred. So this is a question, for Kimura-san. BAN24 on Clarity AD study is -- it is effective. Can you say that the logic of prevention rather than treatment, will apply? And what is the time line for this?

[Unidentified Company Representative:]

Thank you very much for that question. Thank you for your question. Your question will be addressed by Mr. Kimura who is responsible for Science and Neurology Business Group.

[Teiji Kimura:]

Thank you, Mr. Kohtani, for your question. I'm Kimura from Neurology Business Group. As Mr. Kohtani rightly mentioned, as soon as possible to treat will be more effective in clearer fashion. That would be a logical way of thinking and many experts are supporting that hypothesis. On our part as Ivan Cheung presented today, we are trying to look at that population of patients to identify the population of patients and to treat them to show a clearer efficacy in a clinical trial to prove -- we believe we have to prove in this way. So hypothesis, is very promising. And through clinical trials, we would like to prove the hypothesis. Now as for the time line, by when, in comparison to Clarity AD study the usual study in comparison to usual study this is going to take longer. We have some indication of the time line but to discuss specifically by when, is somewhat premature. Please give us some time. Thank you

[Motoya Kohtani:]

I have a question on oncology. MORAb-202 congratulations. In 2019 at ASCO, you had a wonderful data so this is not a surprising result. But I believe you will be giving update on the trial result anyway. So I have a question regarding mechanism bystander effect not only that but as shown on Page 18 below microenvironment of cancer can be changed. And so in Phase I -- Phase II study in subsequent Phase II study were this confirmed? And MORAb-109 is also a mesothelin antibody with eribulin linker. This is an ADC. This was not mentioned in today's presentation but similar effect was -- was similar effect observed?

[Unidentified Company Representative:]

Thank you for that question. Regarding the question, person responsible for Science and Oncology Dr. Owa will respond.

[Takashi Owa:]

Thank you, Mr. Kohtani, for your question. I am Owa. I would like to answer your question. As you rightly mentioned, having eribulin-derived bystander effect is not a simple bystander effect. But in a cancer microenvironment there is a possibly modulation. And data suggesting this regarding the data that suggests, this in the slide that we used in the presentation folate alpha receptor expression level is low in some cancers but in those cancer types and at 1.2 milligram per kilogram at that dose or at 0.86 milligram per kilogram half dose MORAb-202 in ovarian cancer and triple-negative breast cancer in only one patient each but deep reduction in tumor and PR were observed. At 0.94 milligram per kilogram in ovarian cancer CR was observed after a long treatment. In other ADCs, these are not observed usually. So this is a deep PR or CR that were observed. This is not a mere bystander effect but we believe additive effect of affecting a micro-tumor environment was observed. And we are currently study -- we have an ongoing study to look at this and we'd like to present the results in the future. You've raised a question regarding MORAb-109. Thank you very much for asking about MORAb-109. Target antigen is mesothelin. And eribulin ADC drug antibody ratio -- antibody in the drug ratio per ADC is two with eribulin. Even though the number is low, strong antitumor effect was observed in preclinical study. And simply put with a low number direct effect may not be sufficient but we are able to have a comparable result. So tumor microenvironment effect is expected and therefore eribulin payload platform has room for further expansion in our view. Thank you for your questions.

[Unidentified Company Representative:]

Next question Mr. Yamaguchi from Citigroup Securities.

[Hidemaru Yamaguchi:]

Thank you. This is Yamaguchi speaking. Thank you very much. Since we have lost the time very much, so I would like to ask you one question. So the factors for the upward revisions and also milestone payment from BMS, there seems to have been some differences in the number. You have already explained this, but what you have received -- what do you have factored in initially? And also other deals have also been modified. Is it correct? That is to say that when all the other deals have proceeded as expected, do you think that the number could even be bigger?

[Unidentified Company Representative:]

So with regard to that question Mr. Masaka who is in charge of the business plan is going to respond.

[Teruyuki Masaka:]

Thank you very much. My name is Masaka in charge of the planning. As was already explained by Mr. Yanagi, our CFO and as a lump-sum payment we have received $450 million from BMS and this is recognized in the top line revenue. But again, the probability of success at a certain rate has been assumed and incorporated the number into the disclosed number at the time of May. And now this has been finalized this time. And also there are other strategic options factored into this May disclosure numbers. And also other deals and the current status have been factored in to really achieve this level. And also for the maximization of Lenvima and the R&D investment is expected to peak in a few years. And also, the ADUHELM, the investment is also expected to peak going forward. And therefore R&D investment is hovering at a very high level. And thus SG&A to step up on the sales of Lenvima and also in order to invest for the patient contribution to the maximum level and the SG&A rate is 46%. And R&D and SG&A, the cost altogether would amount to 70% which may be higher than the global standard. But we believe that this is advanced investment for the future in order to further maximize the value of the company. So rather than the short-term perspective, we'd like to continue with our business endeavors from the long-term perspective. Thank you very much.

[Unidentified Company Representative:]

Next, Mr. Hashiguchi from Daiwa Securities. Mr. Hashiguchi from Daiwa Securities, can you hear me?

[Kazuaki Hashiguchi:]

Yes. This is Hashiguchi from Daiwa Securities. CaLenvima LEAP007 study HCC first line in combination with KEYTRUDA after interim analysis, I think you are about to have interim analysis. What is the current status?

[Unidentified Company Representative:]

Thank you for your question. Dr. Owa will respond.

[Takashi Owa:]

Mr. Hashiguchi, thank you for your question. LEAP002 -- correction LEAP002 study, the study itself is ongoing very well. As you know primary endpoint is PFS and OS. And right now carefully, we are looking at the progress for events. We are currently carefully monitoring how things develop. And therefore, when endpoint will be reached events will be reached, we cannot say prematurely. But it is not that in study itself, we have any problem or troubles. When we have data, we will be presenting. So that is the extent of answer that I'm able to provide today. Interim analysis are planned several times. And after enrollment -- one year after enrollment completion in April this year, I think first interim analysis was conducted. And so DMC decided to allow study to continue. Interim analysis is taking place quite early on. So our assumption is that more mature data points should be used to look at both endpoints PFS and OS. That was the original plan and therefore there is no inconsistency here. Thank you.

[Unidentified Company Representative:]

So one last question from Credit Suisse, Mr. Sakai.

[Fumiyoshi Sakai:]

Thank you. I'm Sakai. I have one question. So about the Harbin delivery, so this name really sounds familiar to us. Last year at ESMO, liposome drug and the data was presented which showed very good results. So this time so by combining this with MORAb and I think that you should be able to really increase significantly the tumor cells concentration level. And so with regards to Harbin in this way including some drug deliveries, we are expecting the further expansion of the approved indications going forward. Is this something that we can expect?

[Unidentified Company Representative:]

Thank you very much. Owa, would like to respond to this question.

[Takashi Owa:]

Certainly, the mechanism of variable and cytotoxic, but it has the effect on the tumor microenvironment and so it can be loaded on antibody and through the liposome. And certainly, we can expect a further extension of this cancer indication. And also immunomodulation is another mechanism. As you know that for Harbin, we are also breaking on the combination with the immune checkpoint inhibitors and therefore it has the opportunities to develop in all of these possibilities. Thank you very much.

[Unidentified Company Representative:]

Thank you for all those questions. Unfortunately, we have run out of time. We'd like to conclude today's presentation. This is the end of Q1 fiscal 2021 financial results presentation by Eisai Co. Ltd. Thank you once again for taking time out of your busy schedule to participate and we ask for your continuous support. Thank you.