Eisai Co., Ltd.
Q4 2022 Earnings Call Transcript

Published: 15 May 2023

[Operator:]

Thank you very much for taking your time out of your busy schedule to attend the financial results presentation for fiscal year ended March 31, 2023 by Eisai. Today, this will be conducted in hybrid format in person as well as virtually. Those of you, who are here, please refer to the circulated materials including the deck of slides plus reports. Those of you, who are participating online, please look at the slides that will be shown on the screen. The presenter is Mr. Haruo Naito, Representative Corporate Officer and CEO.

[Haruo Naito:]

Could I have the slide deck for the fiscal year 2022. Here is the statement of income. As you see in the subtitle, we accelerated investment in the major area and in total, the R&D and SG&A expenses we made a total of approximately JPY60 billion investment. And here are the results. And if you look on the right hand side, there is ForEx impact. There has been a lot of significant impacts by ForEx fluctuations for many lines. Revenue was JPY744.4 billion, which was 98% of the previous year's level. Gross profit growth was 97% of the previous year. So R&D expenses and SG&A expenses were spent as such and the total expenses exceeded a little bit of the increase of gross profit. As a result of such investment, operating profit was about JPY40 billion. That was the result. Profit for the year increased from a year earlier. This was because of the impact of the payment of paid-in capital from a consolidated US sub. Therefore, tax expenses decreased as an effect of that. Next page. So regarding the changes in the revenue, here is the breakdown of the factors. The business during the last fiscal year in each region regarding the major brand products that you see in the top half. Lenvima increased by JPY57.3 billion. Dayvigo increased by JPY12.9 billion. These four global brands grew JPY77.4 billion. On the left hand side, you can see this pharmaceutical business grew 11% from a year earlier, with the amount of JPY67.2 billion. Pharmaceutical business can be said that it has achieved significant growth, but what was much lower than the last year. It was because of the decrease in one-time income related to the license income. If you look at the bottom half for the one-time income during the fiscal year 2021, there was upfront payment related to MORAb-202 and there were two sales milestone payments related to Lenvima. So compared to the two years ago, there was a JPY79 billion decrease in terms of the one-time income. Therefore, as a result, revenue decreased by JPY11.8 billion. Similar structure is applicable in operating profit. A JPY65.7 billion increase or a 25% increase was recorded in the operating profit for the pharmaceutical business. However, because of the impact minus JPY82.2 billion as the one-time payment decrease from a year earlier, therefore, the operating profit decreased. Because of this significant decrease in the one-time payment in other business segment, therefore, we resulted in JPY40 billion in operating profit. Next for Alzheimer's disease and LEQEMBI. I would like to report to you current status. On the 14th of May, there was the G7 Nagasaki Health Ministers' Communique and there was a statement specifically referring to dementia that was adopted at that meeting. And to the last part of this Communique, we will also work to enhance early detection, diagnosis and interventions including through the development of care pathways and capability and capacity building of health and primary care providers by strengthening primary healthcare. In the field of R&D, we encourage the development of potentially disease-modifying therapies for the various types of dementia, including Alzheimer's disease. In addition, we believe that development related to early diagnostics such as biomarker should also be noted. We encourage manufacturers to seek to bring effective, safe, and affordable new treatments for dementia to the global market as quickly as possible. Very positive message that's adopted at the G7 Health Ministers meeting. So we believe that this message is very encouraging for us. Then we are working toward value maximization of LEQEMBI. If you look at the top of this page, we are planning to submit two value -- very important value maximization programs, which will lead to the new usability of LEQEMBI by the end of this fiscal 2023. First one is subcutaneous administration. As you see on the right hand side, there is the picture of pen-type auto injector. This will be utilized for subcutaneous administration. We plan to submit for approval of this dosage form by the end of this fiscal year. Data for this will be taken from open label extension study or sub-study in the OLE of Clarity AD. This data will be utilized for submission for this. Another one is maintenance dosing regimen, currently bi-weekly infusion during the initiation period, initial dosing period, and after that once every four weeks it's going to be provided. So based upon this interval, maintenance dosing regimen shall be submitted, utilizing the data from the sub-study in Study 201 OLE study and we plan to file submission by the end of this fiscal year. Why do we believe these are very important submissions? For us, treatment of Alzheimer's disease shall not be discontinued after a certain period of time of treatment. That is to say, initial dosing bi-weekly administration will be done and after that Alzheimer's disease is supposed to continue to progress, for example, amyloid beta turns into the negative field. However, accumulation of amyloid beta will take place gradually and there are various changes in the biomarkers. Changes are going to start. So that has been confirmed in the open label extension study. Therefore, treatment for AD should be continued. That is what we believe. Therefore, we come up with these two value maximization programs, which we believe are very important. If you look at the bottom half, this is the schedule for getting full approvals. As we have already reported, in the United States, under priority review, PDUFA date is scheduled for July 6th. Before that, on June 9th, Advisory Committee will be held in Japan in the second quarter, EU and China in the fourth quarter we anticipate approval to be obtained. By the end of this fiscal year, globally, we anticipate obtaining full approvals. Now, through LEQEMBI we would like to establish simple patient journey. At the top you can see for patients as well as the consumers, there are various stages they are going through. By recognizing early signs and make the decision to seek treatment from that timing to the initiation of the treatment with LEQEMBI at the very first stage utilizing up Simple Cognigram and other testing or self-check or self-confirmation of the cognitive function will be done and visiting PCP, primary care physicians. Then something like MOCA, simple scale will be utilized for detection of cognitive impairment and in order to have the clinical definitive diagnosis and amyloid beta test more detailed specific scaling shall be utilized and PET and CSF shall be used for confirmation. And then BBBM, blood-based biomarkers, how feasible and are usable in the clinical setting BBBM is going to be, that is something we are focusing on. In the Health Minister's Communique, a statement was made to promote the diagnosis based upon the biomarkers. Therefore, in that sense, simple and low cost BBBM to be adopted more so that it will be incorporated into the clinical guidelines. We are having a high expectation to that. After the initiation of the treatment with LEQEMBI, there is no need for titration with LEQEMBI. Therefore, a first of dose is effective dose. So this we believe will bring about a very simple initiation of treatment and then transition into maintenance dosing and subcutaneous auto injector will be used, which will allow patients to be administered at the location where they are. We are designing this kind of a simple patient journey. As you see at the bottom, needless to say ARIA management is going to be very important. After obtaining the accelerated approval we started education program called Understanding ARIA to promote adoption throughout the United States and many HCPs have participated in this program. So, for ARIA as well as the diagnosis of it, I believe that the knowledge or awareness has been advanced. And what is going to be described in label, MRI confirmation is very important. There is no room for debate on this. So how are we ready towards a full approval in the United States? Cognitive function tests, amyloid beta tests, and in the United States, in the healthcare supply or provision in the United States, IDN is playing a very critical role, integrated delivery network, which is the network centering on the larger scale hospitals and in the United States. For this kind of an infusion formulation what is most important is infusion centers and also management of ARIA is shown here, regarding the cognitive function tests which I already explained. Then going to amyloid beta tests, PET/CSF, we are collaborating with diagnostic manufacturers and the reference laboratories very closely for reimbursement as well as the wide use by HCPs. We are aiming at these as soon as possible. For blood-based biomarkers, PrecivityAD by C2N Diagnostics is considered to be most advanced. Therefore, we are working more closely with C2N Diagnostics and the use of PrecivityAD, it started in pre-screening, but ultimately confirmation or the definitive diagnosis of amyloid beta needs to be based upon this PrecivityAD. So we tried to incorporate this into the guideline, but for that simple and low-cost BBBM method should be taken into account for achieving that goal. For IDN, with most of the top 40 IDNs, we completed clinical presentations and we achieved a positive P&D, pharmacy and therapeutics decisions at eight key IDNs. Infusion centers, we already provided over 600 infusion centers with educational sessions for LEQEMBI administration and the association of infusion centers, NICA or National Infusion Center Association, we are working with them to raise awareness of LEQEMBI for HCPs. When it comes to management of ARIA, educational program, understanding ARIA provides medical resources. Since AA, accelerated approval, in January, over 2,900 times of access have been already made and live webinar by neurologists has been or neuro radiologists have been conducted and at AAN, American Academy of Neurology, ARIA MRI Reader sessions have been conducted many times. So we have seen a great advancement and progress in awareness rating. Accelerated approval status has been already obtained and we are utilizing the advantage of that in order to prepare ourselves for full approval. On the other hand, if you look at the field forces, those people in the front line there in the market. I wonder whether we can call medical people as marketing people, but I would like to share with you our activities for preparation in the field. On the right hand side, you can see the list of stakeholders, starting from key opinion leaders down and for these stakeholders, corresponding to these, there are various groups within Eisai in a multi-layered approach to keep contact with wide-ranging stakeholders. When it comes to Eisai's Group medical, commercial, market access, these are the three major groups of people within Eisai. For medical, literature and as regards to clinical studies, they are the ones who share information about these for rolling out to markets and each region. MSL, Medical Science Liaison, these are the main people who are doing these services. And medical affairs and medical directors, this is also another group in medical team currently with key opinion leaders, neurologists and geriatrician, these are the stakeholders they are focusing on in rolling out medical activities starting from the second half of this fiscal year. They will start conducting PCP, primary care physicians, as well. So top four on the right hand side list are contacted and approached by medical groups. Now, turning to commercial, we have neurology account specialist, the MR or sales reps dedicated to neurology covering whole United Nations, HCPs and IDN. They are approaching these networks and also they are conducting educational sessions at infusion centers. Now regional thought leader liaison. In each region, the patient advocacy groups and professional societies are existent in each region. So there, it is very important to create networking with them in each region. So that is what regional thought leader liaisons are engaged in. Next, clinical educators, this group of people are educating site of care staff in the field, so infusion-related education or the diagnostics. And so far the site of care staff are being educated by these educators of Eisai and market access, of course this is expected to play very critical roles in the US. Health systems account executives are focusing on IDN. As I said earlier, about top 100 IDNs, they are focusing on getting approval at P&T for top 100 IDNs. And next one Market Access and HEOR group is focusing on the health economics of LEQEMBI. They are discussing with national-level or regional-level payers. And next, patient navigators, this group of people, if you look at the right hand side, the second from the bottom, all the people who would be treated with LEQEMBI. They will provide information regarding patient journey that I explained earlier and support them. And patient assistance program which was explained in January, for financial disadvantage patients eligible for PAP, the free-of-charge provision of medication is being conducted. Such PAP is supported by this group of people included in this group of patient navigators. And next access and reimbursement team, as you see at the bottom, once LEQEMBI is prescribed, the scope of indication as well as the reimbursement status will be communicated to payers with the medical institutions and infusion centers. They will explain the scope of the coverage for LEQEMBI. That is the work done by part of this team. So, in total, we have about 400 FTEs. It's the same set of data and same omni-channel approach shall be applied. So data will be input into the data lake and then AI will support the processing of data in order to get the appropriate guidance out of it. So the data-based approach will be utilized in order to further expand the efficient approach. These 400 FTEs, I believe that some people may say that this is too -- this is large and some others may say this is small number, but this kind of a breakthrough type of product launching, it's not relying on the very large scale share of voice. We do not think that we are currently in that era. So appropriate number of FTEs should be rolled out in order to deploy these approaches efficiently. And that is required by the society nowadays. So in that sense, I believe that we are preparing the field workforce in appropriate manner. Next, this is about CMS reimbursement coverage. Recently, Attorney Generals in nearly half of US states and territories sent a letter to HHS and CMS regarding Alzheimer's disease treatment. The important therapy for Alzheimer's disease will be extremely limited or nearly non-existent. And this status should not be considered fair. So as soon as possible, a fair and larger scale access to this therapy should be realized as soon as possible. That is the letter they sent. And at the Congress as well as AAEN, of course, patient groups and a similar opinion has been sent from various groups, including those and given that in the US Congress CMS administrator made these remarks that people who will be eligible will be based on the FDA label. A registry in no way limits people from getting access to the drug. When FDA fully approves drugs for Alzheimer's disease, CMS will cover it more broadly. She made these remarks. So in our interpretation, as you see, two bullets are provided at the bottom. It remains the goal of the agency to have coverage operational that people who will be eligible based on the FDA label on the same day of the traditional approval and registry requirement will not be an obstacle to coverage. These are quite positive statements I believe in our interpretation. So we have high expectation because of this. Now, in Japan, for amyloid testing imaging agents are used, and this shows the submission status. This is a partial change submission. This is additional indication for MCI for that submission is being filed or will be filed. And imaging agents, there are two types. Tracer production, tracers produced at hospitals and those that are delivered. For these two types, we see development. The number of manufacturers who have filed submission is increasing. At the time when lecanemab is approved, we believe that there will be a better environment for PET, amyloid PET. This is the vision for the year ahead. There are three. First, establish a global presence. As I mentioned earlier, Japan, US, EU, and China, we expect to obtain full approval by the end of the fiscal year. We would like to establish position as the first choice treatment for early AD by ensuring efficacy and safety. Two, simple patient journey. Patient journey should be as simple as possible. As I mentioned, as much as possible, it should be not burdensome and that there should be diagnosis and treatment of dementia and efficaciousness should be experienced. That is the simple patient journey that we aim to achieve. Three, global access. Medicare reimbursement included, as I just mentioned earlier, in each country, we would like to pursue reimbursement. In that respect, earlier I shared with you the communique announced by G7 Health Ministers. In each country to promote reimbursement, the communique I believe has very strong significance. And patient assisted program will be enhanced depending on the conditions in each country. These three are what we would like to have achieved in one year's time. Next, following LEQEMBI, the second Alzheimer's disease treatment, the second round, I would say, plus ultra-therapy. This is anti-MTBR Tau Antibody E2814. This adapts promising approach by Eisai in DHBL-based development. What I mean by promising approach is that in case of A beta hypothesis, A beta protofibril was hypothesized to be the main pathological A beta. In case of tau, we believe that MTBR tau is the pathological target and that has been confirmed. Starting from this, we have developed the drug development hypothesis. And in that sense, approach for A beta cascade and this tau pathology are similar -- is similar and DHBL is human-based biology driven learning process. That data indicated here is based on human biology. All of them are based on human biology, animal test data or preclinical data. These are not animal data or preclinical data, but human biology-based data. And 2814 data were obtained from the studies and the human biology learning-based development is exemplified by E2814. Please refer to the diagram at right top. This explains the hypothesis of drug development. This pathological tau species is considered to be MTBR tau. What is shown at the middle is a synaptic cleft and MTBR tau propagation species in the synaptic cleft are considered to be the main pathological species. And MTBR tau in the synaptic cleft can be captured and removed by the antibody to remove them -- to outside of the brain. This antibody therapy will halt progression of tau pathology, resulting in a reduction in cognitive function decline and that is our hypothesis for drug development and observation from AD brains MTBR tau extracted was analyzed and the core of AD tau aggregation was this MTBR tau. According to mass spectrometric analysis of insoluble tau tangle and MTBR tau exists in DIAD patients and MTBR tau is dropped by E2814. MTBR tau and E2814 are engaged. That was confirmed. Target engagement was confirmed. This is a very important observation in terms of this drug development hypothesis. DIAD are inherited Alzheimer's disease of family of patients and in this mutation, there is an estimated year of onset. The expected timing of symptom onset. And in this family of patients, the symptom onset is estimated pretty much accurately and increased tendency of MTBR tau in CSF starting 20 years prior to symptom onset in -- was confirmed in DIAN observation program. And what is noted at the bottom of the left hand side are shown on the two charts on the right hand side. 3.a EYO=0 estimated year of onset zero and around this time, within CSF MTBR tau rate of annual change -- changes, it was increased. However, around the time of EYO of 0, it tends to decrease. What this means is that MTBR tau decreases in CSF, but rather it is aggregated in the brain. That is what's suggested here. And if you turn to 3.b, at the same timing, according to tau PET observation, the same thing was also confirmed. Within CSF MTBR tau rate of increase was sold at the time of the onset and with tau PET, start of the aggregation in the brain was confirmed. And as shown in red letters, MTBR tau captured by E2814 is indicated to be closely linked to -- was indicated to be associated with tau pathology and E2814 potentially suppresses the progression of tau pathology as indicated in red in lower left. Turning to oncology, first Lenvima. As shown in bar charts on the left side, globally, last year, we were able to achieve a substantial growth in this fiscal year. Once again, we expect the growth. Blue part is the United States. The main market is the United States and what is happening in the United States is shown in the bar charts in the middle, lower -- two lower segments clearly are driving the growth in Americas. Blue part is RCC and pink part is endometrial cancer. And these two new cancer types are expected to continue to drive growth this year. At the top in red letter, targets are shown. At ASCO, various new data for these two cancer types will be reported. In case of RCC, a 30% of new patients and in EC, 45% of new patients. Those are the shares we would like to achieve. In other words, top share. As for Lenvima, as shown at middle part of right hand side, we are fully deploying omnichannel marketing. What this means is that through HCPs we are adopting various approaches. We are approaching them in many ways. Sales reps are approaching them and remote channels are also used to approach HCPs. Feedbacks and responses obtained, they will be all entered into data lake in an integrated fashion and integrated data from data lake will be analyzed by AI, suggesting -- and it will suggest or recommend the next action to be taken, including in-person contacts by sales reps or various other approaches using various other pathways. By implementing these, we are able to engage in very efficient sales activities and this will be applied to all types of cancer. RCC and EC and at the bottom, HCC is mentioned and these are -- they are thinking for this fiscal year for RCC intractable non-clear cell RCC. Even in that, favorable ORR and PFS were shown. In clear cell RCC and non-clear cell RCC in both types, there is clear action indicated, clear action shown. On the right side for regulatory purposes complete response rate is shown which is 16.1%, but at ASCO, we hope to be able to report results that is better than this. In the middle is EC. For the first time, this is used in off-chemotherapy treatment. Therefore, it is also outstanding in terms of safety. In the middle, in the yellow part OS, PFS and ORR are shown in comparison to chemotherapy. Risk of death decreased by 30%. Risk of progression or death decreased by 40% or PFS and ORR was approximately two times. In regulatory data, in Kaplan-Meier curve efficacy is shown from early on and in a sustained fashion. At the very bottom, HCC, in the past, mainly the focus was on Child-Pugh A, but Child-Pugh B or Sorafenib is mainly used, but we have favorable data for Child-Pugh B. And in this fiscal year, we would like to develop further this Child-Pugh B. We will be updating results from three important cancer types this fiscal year. LEAP-006, NSCLC first line, 008 is the second line and first line from EC, we will be obtaining results. And I would like to say that we are confident about the expected results. And the reason for that is that for lung cancer, VEGF antibody bevacizumab is used as add-on in the first-line setting. And OSS, favorable OS extension is observed. Lenvima is also has a potent anti-VEGF action and in preceding studies, ORR of 69% was observed, which was exceeding 48% reported from control arm in preliminary results. As for the second line, in a similar fashion, VEGFR antibody ramucirumab add-on is used to show OS extension significant OS extension. And similar effects are expected by adding on Lenvima. From previous trials, ORR in comparison to control drug docetaxel exceeded the results. As for the first line for EC, second line approval was obtained based on the results from 309 study, which was a very large-sized study with 827 patients and adjuvant chemotherapy following adjuvant chemotherapy in the first line, which are quite similar in profile to the second line patients included in the first line study in comparison to the control, decrease of risk of death of 36% was shown. Second line success and based on this data, we also are very confident about the success of 001 study. Next, this is a recent development. A new anti-HER2 ADC. We have Exton site. This is the second point from the top. This is the former Morphotek site. At Exton site, ADC research is carried out very actively and MORAb-202 is one such ADC and eribulin is used as a payload and linker chemistry will also have proprietary linker chemistry. Multiple EDCs were developed and one such ADC is a BB-1701. And as shown at the right, this is licensed out to Chinese company BlissBio and favorable results were obtained by study run by BlissBio. Results are expected to be published at ASCO. Based on this, we are -- we have concluded an agreement with a view towards joint development and for HER-2 expressing breast cancer, the second phase, a Phase II study will be conducted. And there will be -- there is a biomarker research as well. And biomarker change in case of non-responder to other agents or biomarker change in ILB, we would like to conduct a research of these as well. This slide shows strong balance sheet of Eisai. There are no concerns. We have no concerns. At the Board meeting today, for fiscal 2022, JPY160 dividend for full year was approved and in fiscal 2023, the forecasted JPY160 full year dividend was also confirmed at the Board. Sufficient shareholder return and growth investment, both can be achieved. This is the PL for this fiscal year. Revenue, within the increase of revenue, expense increase will be also contained to ensure that revenue and profit can be grown. And last year, tax expenses decreased but this fiscal year, we do not forecast such decrease in tax expenses. And that is why we forecast these amounts for profit for the year. Lecanemab-related JPY110 billion investment will be made in this fiscal year. More than JPY110 billion of Lecanemab-related investment is planned. There will be a shared burden -- burden-sharing with Biogen. About 60% of JPY110 billion investment is related to marketing SG&A, marketing-related SG&A and the remainder is to be invested in ongoing R&D programs. Such a large investment related to LEQEMBI and resource allocation related to LEQEMBI included, we plan to achieve this PL. And R&D expenses, SG&A expenses, we will be improving efficiency and at the same time, our biggest ambition is steady introduction into market of LEQEMBI is to be achieved and steady creation of value is to be achieved. And we are determined to make important resource investment this fiscal year. This is my final slide. Full approval of LEQEMBI is anticipated globally. And as I just mentioned for LEQEMBI we remain committed and we consider this current -- now to be the time for investment and we aim for dramatic growth in fiscal 2024 and beyond. What we mean by dramatic growth, towards 2032, top line, bottom line, we would like to achieve double-digit growth in both the top line and the bottom line. That is what we mean by dramatic growth. With that, I would like to conclude. Thank you.

[Operator:]

Now we would like to open the floor for Q&A session. [Operator Instructions] Then the person in the second row, please.

[Motoya Kohtani:]

Thank you. My name is Kohtani. I am from Nomura Securities. Donanemab Phase III study results. I know that it is difficult for you to make any statement. For tau accumulated pCRB and placebo, against the placebo, 30% reduction in the progress and you compared it to your LEQEMBI result of 27% and ARIA-E, 6.1% and for you 2.8%. Therefore, it seems better than donanemab. Considering the lifecycle of the drugs and then efficacy is focused and then safety and industry convenience. From this perspective, I think that the efficacy terms, donanemab seems to be better than LEQEMBI and ARIA-E may be fatal. Therefore, it is better to have stronger safety. Therefore, LEQEMBI must be superior. So, could you please give us your take on this?

[Haruo Naito:]

Regarding this, I would like to ask COO to respond to your question.

[Yasushi Okada:]

As you know, Kohtani-san, at AAIC, more detailed data will become available. So until we see those data, there are many things that are not known to us. So according to the current press release, this is my personal take from what I read from the press release. If it is okay, I would like to share with you. First of all, ClarityAD compared to this study, target population seems to be different. That is my impression. For Clarity AD, patients with MCI accounts for 62% in the population, but in donanemab trial, MCI patients account for much less than that. And for us, Clarity AD, tau PET was used -- was not used for screening the patients. For patient selection and inclusion, I believe there are differences between the two studies. And second point is the duration of treatment or rather discontinuation of the treatment. I think that there is a point as a difference. As I said in my presentation today, after ending the initial treatment, and then the patient may transition into the maintenance dosing period, even after completing the initial treatment, we needed to continue with maintenance dosing. That is what we have learned with confidence from OLE study. In that sense, development of subcutaneous dosing as well as the maintenance dosing regimen, where we put much focus. So maintenance dosing regimen, it's something indispensable in the treatment of AD. That is one aspect. How long the treatment duration for denosumab is going to be? It's not known to us, but at least for lecanemab, that is what we believe in. And the third point is, as you pointed out, safety profile, ARIA-E incidents for lecanemab is 12.6%, symptomatic ARIA-E is 2.8%, ARIA-H is 17.3%. I believe that there are differences from the other. That is my impression. Rather this is my take as my impression. So in a nutshell, for those patients with accumulated tau and then still compare it to Clarity AD for more progress or advanced patients are enrolled in their study, so in that phase maybe the patient seems to have responded to their treatment better. Is this what I should interpret? MMSE criteria looked at and I think that is what you can take from that as well. And the vision I said earlier that we like to establish a first choice drug. That is what we would like to establish. I believe starting from the early phase of MCI, treatment can be started and then it is expected to get larger response or efficacy of treatment. So in that sense, even in the MCI or early AD, I believe that this is the strong point that we recognize as a feature of this drug. Thank you very much.

[Operator:]

Next attendee seated in the front row, please.

[Fumiyoshi Sakai:]

I am Sakai from Credit Suisse. I also have a question related to tau in relation to donanemab study. I'm curious about that. As it was just mentioned, in high tau patients it doesn't seem that donanemab is effective. I believe that is the result. On the other hand, tau increase or decrease, how much is that linked to improvement in the symptoms? You are developing E2814 and I think that can be an important point going forward. Looking at the data, I'm sure you have looked at the data. Overall, I believe, Mr. Naito, I think you grew more confident about LEQEMBI. But regarding tau, if we look only at tau, how do you interpret the results?

[Haruo Naito:]

I would like to ask Ivan to add later, if necessary. But AD -- the initial trigger for AD, I believe, is A beta pathology. So first, A beta pathology should be targeted from early on. And then I believe that tau pathology, I think there is a potential to weaken tau pathology as a result. And if you consider tau pathology to be separate and independent from AD pathology, then that will be a different story. However, we believe that A beta pathology within AD pathology is a major pathology that occurs in the very beginning and to target that from quite early on in the treatment is important. And I believe that is always an important irrespective of tau. Ivan, if you would like to add, please.

[Ivan Cheung:]

I'm Ivan Cheung, Global Alzheimer's Disease Officer. Thank you very much for the question. Let me make two points. First point, when you mentioned the donanemab Phase III trial, I think everyone's focusing on intermediate tau and high tau. I think one point not being mentioned is this trial excluded low tau. That means probably more than 20% of amyloid-positive early AD subjects were excluded from that trial. That's why you heard from CEO earlier that the Clarity AD and LEQEMBI uniqueness in the efficacy profile is a broad efficacy, including the very early stage of early AD, which in a progressive disease, as you heard from CEO, critically important to treat early as a first choice therapy. I just want to remind everyone about the lack of low tau people in the donanemab Phase III trial. And the Clarity AD trial has low tau subjects. Second point on E2814. As you heard from CEO already, amyloid is the early part [Technical Difficulty] early tau pathology. So you can think about impacting amyloid, especially when you think about the protofibrils pocketing impacts the early tau pathology. E2814 here, as you saw, which we will present more data later on this year both at AAIC and CTAT, you see that E2814 has the ability to also impact late tau pathology, which will expand the utility of E2814 in conjunction of LEQEMBI across a broader continuum of the Alzheimer's disease and we'll show more biomarker data later on this year. So please stay tuned. Exciting time ahead. Thank you.

[Fumiyoshi Sakai:]

Thank you.

[Operator:]

Next question, the person in the third row, please have the floor.

[Unidentified Analyst:]

My name is [indiscernible] non-fiction novelist. I have a question. Compared to donanemab, lecanemab is ahead of donanemab eight months in my opinion. So the results from Phase III trial were obtained eight months earlier than those from donanemab. Perhaps approval can be obtained globally eight months earlier than donanemab. So this time lag of eight months as we mentioned earlier in order to establish the presence globally, how significant do you think it is going to be? I believe that you explained earlier that you are preparing various things, in today's presentation. So in the competition in pharmaceutical, industry in order to obtain best-in-class position, getting approval earlier than others, what is the significance in terms of strength of having earlier approval than others?

[Haruo Naito:]

It's not only about the earlier acquisition of the results from the Phase III study, but for lecanemab, we have the Accelerated Approval status. This is the drug medication that has been already approved. For example, approaching IDN to approach the committee deciding on the formulary and we can approach them to ask them to approve the adoption of this medication. We can do such activity in the field, not only medical, but also commercial group and reimbursement groups because we are talking about already approved drugs. Therefore, they can be very active and publicly, officially, they can do marketing activities. So this is a great advantage of having AA. Donanemab was it granted AA?

[Ivan Cheung:]

They didn't get Accelerated Approval, yeah.

[Haruo Naito:]

Right. So in that sense that this density of the activities can be very different by having this status. So for us this lead time is very significant.

[Unidentified Analyst:]

Thank you very much.

[Operator:]

Next I would like to entertain questions from online attendees. From Citigroup Securities, Mr. Yamaguchi. Can you hear me?

[Hidemaru Yamaguchi:]

Thank you. This is Yamaguchi from Citi. Can you hear me?

[Haruo Naito:]

Yes, we can. Please go ahead with your question.

[Hidemaru Yamaguchi:]

Thank you. I was not able to hear very well. So this is for clarification. The amount to be invested in LEQEMBI, did you say JPY400 billion?

[Haruo Naito:]

JPY110 billion.

[Hidemaru Yamaguchi:]

I see. About half of that amount will be borne by Eisai?

[Haruo Naito:]

Yes. According to the agreement, this is a 50-50.

[Hidemaru Yamaguchi:]

What is the sales amount that is expected?

[Haruo Naito:]

Ivan can address the question.

[Ivan Cheung:]

Thank you for the question for the question. I believe is sales for this fiscal year. So I think a great question. You heard from CEO earlier, we are very confident with the FDA traditional approval by July 6th as well as the approval in Japan in second quarter. Europe and China at the end of the fiscal year. So will not contribute meaningful in terms of the sales numbers. Of course, with respect to the United States, we are also confident about the CMS granting broad and simple access by July 6th. And so, in the United States, you'll see a rather rapid uptake of the prescriptions and new patients from July onwards. By the end of fiscal year 2023, we do expect about 10,000 patients to be on lecanemab by that time. Thank you. In the United States. Thank you.

[Hidemaru Yamaguchi:]

Thank you very much.

[Operator:]

From JPMorgan Securities, Mr. Wakao. Mr. Wakao, can you hear us?

[Seiji Wakao:]

Yes, this is Wakao of JPMorgan Securities speaking. I think that many things are going very well. I understood that very well. And in the near future and before the approval, there is Advisory Committee. As for Advisory Committee, I don't think that there are any problems or issues, but now we are approaching that date. So once again, could you please give us specific discussions and are there any updates on the preparation for that?

[Haruo Naito:]

For this, I would like to ask Ivan Cheung to respond.

[Ivan Cheung:]

Thank you for the question. Yes, June 9 is the FDA Advisory Committee is going to be conducted virtually. The FDA has done this virtually a few times now. So this format is very well established. So we are very pleased with the FDA's progress on this format. And right now, we are not aware of specific questions to be discussed at the June 9. At this moment, we are, of course, confident that the well-conducted, straightforward, and robust Clarity AD results will be shared publicly in this very important forum. We are also ready to address any question to be asked by the advisory committee members. Basically, everything is going very well. We are very prepared and we wish the advisory committee is tomorrow, but it's tonight. That's fine. So we look forward to that date. Thank you.

[Seiji Wakao:]

Thank you very much. Clearly understood.

[Operator:]

Next, Mr. Muraoka from Morgan Stanley, please.

[Shinichiro Muraoka:]

Can you hear me? Thank you. In conscious of time, I have one question about the balance sheet. Inventory increased by about JPY40 billion, quite substantial. Is this because of the steady progress for launch of LEQEMBI? Earlier you mentioned about 10,000 new patients. And does that mean that considering the unit price and the sales expected for this fiscal year, maybe JPY1 billion to JPY2 billion?

[Haruo Naito:]

CFO, Mr. Yasuno respond.

[Tatsuyuki Yasuno:]

This is Yasuno, CFO. Thank you for your question. And your understanding is quite correct. Thank you very much. As you rightly understood, this is Lenvima inventory in preparation for a full launch of LEQEMBI. We are fully prepared by having sufficient inventory of Chief IR Officer.

[Shinichiro Muraoka:]

Are you going to increase inventory further?

[Tatsuyuki Yasuno:]

Mr. Muraoka, could you repeat your question? It wasn't clear.

[Shinichiro Muraoka:]

So inventory, do you think that you will have to buildup inventory significantly from the level at the end of March?

[Tatsuyuki Yasuno:]

We believe that we have sufficient inventory. Please understand that they will not going to be -- there will not be any excessive increase in inventory.

[Operator:]

We can take some further questions, if you have any questions. It's the person in the second row from the back, please.

[Unidentified Analyst:]

My name is [Oka] (ph). I'm from NHK. At the previous, the last press conference, Mr. Naito, CEO Naito said at earliest approval in Japan may come around in September. And in the second quarter you said in the presentation slide, it is expected to come around in the second quarter. So do you think that there is a possibility to get approval earlier?

[Haruo Naito:]

Then I would like to ask Mr. Nakahama to respond and if necessary, I would like to supplement, please.

[Akiko Nakahama:]

Thank you very much for your question.

[Haruo Naito:]

Could you please speak louder?

[Akiko Nakahama:]

Thank you very much for your question. I am in charge of lecanemab review status in Japan. Before submission, we utilized the prior assessment consultation system. Therefore, everything is moving very steadily. And PET diagnosis, amyloid PET test agent or imaging agent, as CEO explained earlier, the review for these agents, Clarity AD data is provided to support that -- the review process. So the review of imaging agents are also going steadily. Is there any potential to seek -- have the approval earlier than expected? Although, we are not able to give you any specific view on that because we are in the process of being reviewed at the expert panel of the MHLW. I believe that there'll be a review by them and then we have been given the priority review status. Therefore, at latest, approval can be obtained by September, so towards which we would like to work harder in order to get approval as soon as possible. Prime Minister in his policy statement, he touched upon this area. Several weeks ago, in Japan, biopharmaceutical CEO round table was held with CEOs of over 30 companies all over the world and there has been a request made to the Government of Japan and the Prime Minister, Kishida attended the meeting and -- AD treatment as the first ever in the group and originated from Japan. This treatment for AD shall be reviewed and he expects that this will be rolled out and deployed all over the world. And in the G7 Health Ministers' meeting, this topic has been taken up and addressed.

[Unidentified Analyst:]

So innovation originated from Japan?

[Haruo Naito:]

Innovation starting from Japan for which review is being conducted very actively and I think this is further accelerated now. That is how I have felt.

[Unidentified Analyst:]

Understood. Thank you very much. But I should have said that at latest by September, I shouldn't have said at earliest September, but I have other questions, but I will wait.

[Operator:]

There are people who are waiting to ask question, who are participating online. From Sanford Bernstein, Sogi-san, please.

[Miki Sogi:]

Can you hear me? Thank you. I'm Sogi from Sanford Bernstein. I have a question regarding LEQEMBI. Recently results from donanemab were announced. Differences between LEQEMBI, there may be differences between LEQEMBI and one such difference as CEO Naito mentioned is the treatment duration. Treatment duration is limited for one or one and a half years or continuous treatment in the case of LEQEMBI. This can be a major difference. And at Eisai, do you believe that continuous treatment is necessary for Alzheimer's disease or rather the need for continuous treatment for Alzheimer's disease? When you communicate with the physicians and patients, what data do you think will be necessary to explain the need for continuous treatment or are you already preparing such data?

[Haruo Naito:]

I would like to ask Ivan Cheung to address that question.

[Ivan Cheung:]

Thank you very much for your question. Let me refresh your memory, if I may. In our Phase II trial, there is a gap period between the core randomized phase and the open label extension. On average about two years, for some patients longer than two years. You look at that gap period, you can see, first of all, the amlyoid accumulation in terms of the PET scan in the brain does reaccumulate slightly over time, about 3% or so over time. And then if you look at the other, what you may think of as, more leading indicators, such as CSF or the plasma biomarkers, they accumulate even, they reaccumulate even faster during those gap period, which tells you that this is indeed a chronic disease. As you know, Alzheimer's is a neurodegenerative disease. It's not just a condition that you tackle one time and it's gone. It's a progressive generative disease. So beyond the data for any degenerative disease, when you talk with key opinion leaders and physicians, there is a general understanding for chronic progressive degenerative disease. Some kind of ongoing treatment will be needed to prevent reaccumulation or prevent worsening of the disease. Of course, you may not need the same dose intensity and that's why you heard from CEO Naito earlier that we're developing the maintenance dosing regimen of less frequent dosing after the initial, for example, 18 months of a more intensive dosing. This is I believe a very well-accepted position among many physicians and experts. Thank you.

[Miki Sogi:]

Thank you.

[Operator:]

I believe there are further questions or those people who are waiting for the opportunity to ask questions. And then we would like to take second round of questions.

[Unidentified Analyst:]

My name is [Oka] (ph). I'm from NHK. This is my second time. If the approval is obtained in Japan, and the key point is going to be, what kind of a guideline for the optimal use of the drug? How the guideline is going to look like? It will determine the ramp up speed of the penetration of this drug. So I would like to ask for your take, Mr. Naito, what will be the desirable things to see?

[Haruo Naito:]

Prescribers -- for prescribers what kind of physicians should be prescribing this drug? So that is the point you are asking. Those physicians who have certain level of experience in treating Alzheimer's disease for certain period of time or physicians who have gone through training and education programs on condition as such, the prescribers may be determined and that is the most desirable situation I would like to see. This is my personal opinion, though. Looking at the community by G7 Health Ministers, they mentioned the importance of PCP and through the discovery of the -- through the training as well as the capability, capacity building and then the -- and we needed to enhance the early detection diagnosis intervention. So this is not only about specialists or neurologists for treatment of the dementia. The neurologists are not in sufficient supply for providing treatment. These are the -- we are thinking about PCPs or general practitioners. By having the certain level of experience and also going through the trainings and education guideline. I hope we will permit them as well to prescribe this drug. That will be the most desirable situation I would like to see.

[Unidentified Analyst:]

Thank you very much. Understood.

[Operator:]

Regrettably, the time has come to end today's presentation session. If you have further questions, please contact our IR team or PR team. Thank you once again for taking your time to attend this presentation session.