Ono Pharmaceutical Co., Ltd.
Q1 2024 Earnings Call Transcript
Published:
- Unidentified Company Representative:
- Thank you very much for your participating on FY 2023 Financial Results Meeting. And if everyone has come. We'd like to start this meeting. And today we have the meeting in a hybrid manner. So we have the participants here in the venue and also online. And let me introduce you today's participant. Representative, Director, Chairman of the Board and CEO, Sagara; and Representative, Director, Corporate Officer, Executive Director, Clinical Development Takino; and Takahaki, the Corporate Executive Officer, Sales and Marketing; and Okamoto, Corporate Officer, Executive Director of Clinical Development, and Itoh from the Corporate Strategy Management and Tanigawa. And I'm [indiscernible] from the IR Corporate Communication Imola. And let me introduce you today's agenda. The first award would have the financial announcement for FY '23 and forecast of 2024 by Mr. Sagara. And also the status of the cross shareholdings will be explained by Mr. Sagara and Okamoto - Mr. Okamoto will explain you development of pipeline product basis, and Mr. Takahagi will explain to you the trend of upheaval. And as you know, the materials we use for today's meeting, is already available on our homepage. So please refer to it. And without ado, I'd like to invite Mr. Sagara to the podium to explain you the financial announcement for FY 2023.
- Gyo Sagara:
- Good morning, everyone. I got a cold, and I'm sorry for this voice. It's just a cold, so please bear with me for speaking in this voice. So let me start. And this is another busy slide. The venue was ¥502.7 billion, so the first time we exceeded ¥500 billion. And both the profit and product sales and royalties in others increased. And operating profit cost of sales increased by ¥17.1 billion to ¥127.1 billion. From the previous year and R&D expenses increased by ¥16.8 billion, 70.7%, ¥212.2 billion and SG&A expense except for R&D expense increased by ¥10.8 billion to ¥100.3 billion. And profit before tax increased by ¥20.2 billion to ¥163.7 billion. And - profit of the year attributable to owners of the company increased by ¥15.3 billion to ¥128 million. So, cost of sales, R&D expenses and SG&A expenses. I would like to make some additional comments on these. The cost of sales increased, because of the increased product of sales and accounting of ¥11.1 billion of impairment loss with Joyclu and Parsabiv, the cost of sales increased by ¥17.1 billion. And if it grew this impairment loss cost of sales, increased by ¥6 billion and R&D expense. We will continue to make active investment into R&D activities. So, related to the compounds under development there was the impairment of the intangible asset, which was recorded in this fiscal year. In the previous fiscal year, so R&D expense increased by ¥16.8 billion to ¥112.2 billion. And that was greater by the budget, greater the budget by ¥3 billion, ¥2 billion. But that is, because of the impairment loss and the proportion of research and development was four to six in the previous fiscal year. Another SG&A expense included the co-promotion expense of Forxiga and IT initialization related information structure expense increased and resulting in an increase of ¥10.8 billion. That is larger budget by ¥2.3 billion. But that is mainly, because of the larger than expected sales of Forxiga. Next page, please. And this is a breakdown of the sales revenue. So when we divide the sales revenue into goods and products and reality others goods and products increased by ¥21.1 billion and royalty and others increased by ¥33.6 billion to 185 ¥.7 billion and breakdown of royalty and others royalty from the MS for Opdivo increased by ¥8.3 billion to ¥99.97 billion. And royalty from Merck increased by ¥7.9 billion to ¥53 billion. And in addition to these AstraZeneca, we reached the settlement so we could have ¥70 billion in upfront payment from the settlement of the patent related lawsuit with AstraZeneca. And as for the sales of the major products, you can find the results here in FY '23. Let me explain to you the structure of the sales. So the previous year's sales was ¥447.2 billion. So we had the goods and products increased by ¥21.9 billion and royalty and others increased by ¥16.6 billion and ¥17 billion upfront payment of settlement is AstraZeneca. The total ¥55.5 billion is the increase was achieved allowing us to make Glactiv sales. And this is the financial focus into FY '24. On April 29, we made announcement Deciphera acquisition and that impact is being started now. So it is not included in this full year forecast. So please keep this point in mind. And expected revenue. This here ¥52.7 billion of decrease to ¥450 billion is expected. An expectation and specific products will be explained later. But the impact of the division of drug, price of people and decrease of royalty rates and the royalty, due to royalty rates decrease with Merck and others are expected. And also the absence of payment from AstraZeneca has a great impact and cost of sales is expected to decrease by ¥14.1 billion from this year to ¥113 billion, due to recording of ¥11.1 billion of impairment, loss of marketing rights this year an hourly expense is expected to decrease, despite we make the except investment into research and development. So it is, although it is expected, but the decrease is very small, so it is flat and SG&A expense excluding R&D expense is also to be flat from this fiscal year, operating profit is expected to decrease ¥37.9 billion to ¥122 billion. And profit before tax is expected to decrease ¥40.7 billion to ¥123 billion. Next, please. And this is the revenue breakdown and sales focused by product and Opdivo will experience the 15% of the drug price cut. And Forxiga is expected to continue to have achieved - continue to grow and Orencia and Ongentys are expected to continue to grow. And royalty and others royalty from BMS is expected to increase. But the one from Merck, because of the decline in royalty rate, we expect the big decline in royalty received from Merck. And we don't have this upfront payment by AstraZeneca for the settlement of the case. So about ¥40 billion decline is expected as expected royalty income is ¥145 billion. So this is from the year ending in March 2024 to year ending in March 2025. The decline of ¥50.7 billion, when you look into that, there's a ¥29 billion impact from the device of the drug price, and decrease of the royalty rates at the ¥37 billion impact. And that is from the 1.62% of the global sales it will decrease to 0.62%. So there's a decline in the royalty rates we received from the Merck and this upfront payment, there is none of them. And we are going to increase the good and sales products by ¥16 billion. And royalty received from BMS and others, is expected to increase by ¥14 billion. So in total we are going to achieve the revenue of ¥450 billion in total. And this is about dividend payment. We have been increasing the dividend payment so far at this fiscal year. We would like to keep it at Opdivo share. Let me go back. And as for the return for the investors, as we included the sentence, which we haven't had in the past in our financial report, that is that as for dividends, we have the policy. We will have the progressive policy of maintaining or increasing the annual dividend each year with a target payout ratio of 40%, taking into account the performance of each fiscal year and various indices. So this was a sentences, we didn't have in the previous report. And as for the cross shareholdings, as we have been saying against the ¥141.8 billion at the end of September 2021, our policy is to decrease it by 30% in three and a half years. And the top part is the value at the end of March 2021 and already 32.4% reduction was achieved. However, the share prices have been rising so when we see it on a balanced sheet with current share prices, reduction achieved was 28.4%. So we have to proceed more with the reduction of the cost share holdings by March 2025. We are going to achieve this target as planned, and we expect we will over achieve the target dip. And at present 12.7% is the ratio of the cross shareholdings in our asset. And this figure will be lowered to less than 10% and we are planning to achieve that figure. That's all from me. Thank you very much. Now I'd like to invite Mr. Okamoto from development division to talk about the development of the pipeline.
- Tatsuya Okamoto:
- This is Okamoto speaking. I would like to talk about the material of the development pipeline progress status, which is available on our homepage. Mainly about the changes made after January 30 past this year, and at the start of the New Year, some revisions were made about the description of the material on the progress of development pipeline. So, let me explain that change one-by-one. So with this slide, the title of the slide has changed to the status of regulatory filing for approval in Japan. And so far as for the Opdivo, when it was approved for the monotherapy, it was shown with the letter of M. And when it was approved for the combination therapy, it was shown with letter of C. But we did not have them after the revision. And rather than showing the first and second half of the year situation separately, we are going to show the full year status. On the other hand, color code is given with red for the files being under filed, and blue is for approved, and green is for the Met PE with successful validation file. And in our case, after successful PE, we take almost six months to file for approval. But the timing of filing for approval and schedule from now shown here for the shortest schedule, would everything proceed as planned. So this is subject to change, due to changes in the situation and planning of the filing for FY '24. There are two changes from the previous report. Last one is with this one. That is the filing of approval in Japan for neoadjuvant, adjuvant for non-small lung cancer based on the Phase 3 international trial of CheckMate 77T. Until last year, additionally, filing was scheduled to be in FY '23 that was how we did reported, but in the prior consultation with the regulatory authority we found a difference in interpretation, and this difference of interpretation has not been resolved yet. So as soon as this issue is resolved we would like to proceed with the filing without delay. So at present it is planned to be filed in FY '24, but this is also subject to change depending on how the negotiation with the regulatory authority will proceed. Another is the filing of combination therapy of ipilimumab for the first line treatment of urothelial cancer or cisplatin ineligible patient based on a Phase 3 international trial CheckMate-901, because we found there is a delay in timing of obtaining the result of the trial schedule was changed from FY '24 to filing in FY '25 and other than this, there is no changes from the previous schedule filing of approval in FY '24. And Phase 3 international trial CheckMate-8HW for first time treatment of colorectal cancer with MSI-H and Phase 3 international trial CheckMate-9DW for first line treatment of hepatocellular carcinoma at combination with Opdivo or Yervoy, and as I mentioned earlier, we've already achieved the primary endpoint. So our preparation is being done, to proceed with the filing as planned. And looking into FY '25 about Opdivo filing in Japan for adjuvant hepatocellular carcinoma and first line treatment of urothelial cancer for cisplatin ineligible patient as scheduled. And as others, we have the ONO-2017 cenobamate for the partial seizures which was licensed from South Korea biopharmaceutical is also to be filed in Japan. And FY '25 it is out of Japan in the United States, a filing of brentuximab based on the Phase 2 trial for the relapsed and refractory PCNSL is scheduled. And lastly, this is the last about this topic. So this is the update of the items already filed in FY '23, about epithelial skin malignancies approval was gained on February 9 this year. And this approval came with a 10-year reexamination period as orphan drug and this is the filing schedule in Japan. Next, let me explain you the changes of development status of Opdivo, and let me report this is how the description of the table was changed. As for the update after the May 2023 earnings call, are shown in red and as for updates after January 31 this year they are highlighted in yellow. And this page shows, some changes from the previous report. So, as I mentioned earlier, in Japan we have some difference of interpretation with regulatory authority resulting in a delay in application or filing that is the adjuvant, neoadjuvant and adjuvant treatment of the non-small cell lung cancer. But in U.S. and Europe, BMS made a filing so there is no update made. And next page on May 6, U.S. time, BMS announced at filing for combination therapy with ipilimumab for the first line treatment of colorectal cancer with MSI High was accepted by European Regulatory Authority, so this table was updated accordingly. And this table was also updated, because BMS obtained approval in the U.S. based on the result of the Phase 3 clinical trial CheckMate-901 for the first line treatment of urothelial cancer and here at the very bottom about the nivolumab subcutaneous injection. Also on May 6 U.S. time, BMS announced it completed the filing for approval with FDA and this filing is for all the efficacy nivolumab intravenous infusion approved as monotherapy or combination therapy with cabozantinib. And as for the combination therapy with ipilimumab efficacy and effect approved for the administration and dosage for monotherapy of nivolumab as maintenance therapy as subject of the filing and this filing is only for the adults. And as I mentioned earlier, in Japan approval was gained for the epithelial skin malignancies, so the table was updated accordingly. And this page is, the development pipeline other than Opdivo up until last fiscal year combination therapy of Opdivo and immune oncology latest pipeline in Japan in oncology other than Opdivo and the status of pipeline in Japan in other fields or non-oncology field and the status of pipeline and overseas were reported separately, because it's very complicated, but from now progress of global development of in-house products is expected. So status of in and out of Japan is summarized into one table with two fields of oncology and non-oncology. And also clinicaltrials.com or jRCT. These are publicized data and trial ids and they measure data obtaining timing. This information will be provided at the same time. And non-oncology field here, you can find the anti-CCR8 antibody ONO-7427 and this is jointly developed with BMS. And international Phase 1/2 study by BMS. We are participating it from Japan so it is added here. And this one ONO-7913 so the name of magrolimab was written in English, but it was now registered with Japan so it is now expressed in Japanese. And PARP7 inhibitor ONO-7119 licensed in from U.S. license. We carried out the Phase 1 study in Japan, but due to the strategic reason we stopped the development. So it was eliminated and ONO-7122, the TGF-β inhibitors and ONO-7226, the anti-ILT4 antibody. We were participating in the international Phase 1 study led by BMS, but the BMS decided to stop the development. So, we also decided to stop the development and eliminated them from this table. In this page, shows the development status of non-oncology field. And recently in the United States, the Phase 2 trial of ONO-2910 with healthy adults started. So it is stated here. And the result of - as you can see here we as for the ONO-2910 in Japan we have the trial for the second phase the POC trial or Phase 2 trial for the patients of diabetic polyneuropathy. And we expecting to have the results from this file. And as for the ONO-2808 for the multiple system atrophy, we are carrying out the Phase 2 study participating from Japan and this trial is being done in U.S. and Japan. So the change was made and this is about the progress of pipeline, mainly about the changes from the previous report. That's all from me. Thank you very much.
- Unidentified Company Representative:
- Thank you very much. So I'd like to invite the last speaker that is Mr. Takahaki, the Sales and Marketing to talk about the trend of Opdivo.
- Satoshi Takahaki:
- So this is Takahaki. So let me explain you the trend of Opdivo. And in 2024 there was a reduction of the like price and also the competitors entering into the gastric cancer field. But we expect to increase on the volume basis. So it works to mutually cover, especially with the gastric and lung cancers. And with the gastric lung cancer, there are some active veils such as the long-term follow-up data. So, we will establish the strong obstacles against the competitors to enter into the gastric cancer field. And we will surely make the recovery with the number of prescriptions and the evaluation of lung cancer. And there's a possibility for us to expand the market, by adding the indications. And also we can expect further growth with existing indications. So we'll go into the growth phases after 2025. And this is the sales of the Opdivo and ¥150 billion was a budget for the 2023. But we could achieve it, especially with the urethral cancer and non-small cell lung cancer. We couldn't achieve the growth as a planned. And with urethral cancer the guidelines recommended the Opdivo regimen, but so we could achieve a certain growth. But there's a kind of difference in the interpretation of - all patients with a higher risk of relapses - by the doctors and the lack of or started got in the - slower decrease of the new prescription than expected. And as for the non-small cell lung cancer, there was a widely concerned about the safety due - for the combination therapy with Yervoy that show the number of usage for the first line treatment and decreased from 2022. And I think that's the reason behind the decrease and recovery was slower than expected here. But in FY '24, as I mentioned earlier, we focus the gastric and lung cancer to achieve a recovery. Especially with the gastric cancer field in FY '24 in December we have been actively promoting it. We have to have the dialogue with doctors and what is expected with the gastric cancer patient, is the long-term survival and also the improvement of the conditions such as obstruction by the shrinkage of tumor as for the improvement of the QOL. And with gastric cancer Opdivo has the great efficacy, such as expectation of the long-term survival and full year follow-up data and effective shrinkage of tumor. So, I think it's possible for us to contain the entry by the competitor's product at less than 10% and as for the non-small cell lung cancer, the cause of - the concern for the safety was the cytokine release syndrome. Through the special doctors, we will promote the cancer measures from doctor-to-doctor way. Also the efficacy of the Opdivo long-term follow-up data was provided and understood. So, we bottomed out with the decrease of the number of the new prescription. And in FY '24 new follow-up data is coming at ASCO. So these are the tailwind for us, but I think we can achieve the reevaluation, and can achieve the recovery of the number of prescription. As for the esophageal cancer and urothelial cancer, we'll continue to grow them and in FY '24, compared to '23 we are going to achieve 1.1% growth of the volume basis achieving ¥125 billion of sales. And this is the trend of the new account number of patients newly prescribed with Opdivo by cancer type. And in January to March period FY '24, we had 1,550 for the gastric cancer, 460 for the esophageal cancer, 280 for the lung cancer. So in total 2,840 cases were newly prescribed in months. And this the trend - total sales of the ICPIs and Opdivo share. And as for the Opdivo share, in January two-month period it was 29%. And next is the first line treatment of the gastric cancer. So the number of the patient eligible for the Opdivo treatment for the first line was HER2 negative was 22,000 per year, and we could see the share improved close to 81%. And as I mentioned at the beginning, doctors want to see the longer survival, and also the improvement of the conditions provided by the shrinkage of the tumor. And this is the CheckMate-649 - four year of data from the time of the approval. Two year, three year and four year full of data lined here and with the overall survival as of four year follow-up, we still see the global difference of Opdivo. So, we could find as after four-year - one out of eight patients can achieve the survival. And what I have to mention is that this hazard ratio, which was 0.8 at the time of the approval, but even after four years the hazard ratio is still 0.79. It is well maintained. So we can see the well-established tail plateau for longer survival. So Opdivo is highly appreciated by the doctors and this result in the clear differentiation of Opdivo from the competitor's product. And this is the guideline for the treatment of the gastric cancer. And with the progression of the disease, the improvement of the condition was also stated and this is one of the targets of the treatment. And let me look back the data from the CheckMate-649. So against the other group, 12% so they are having of Opdivo 3% additional efficacy could be achieved. So this result in the development of the conditions including obstacle and this differentiate Opdivo from the other year's product and this can appeal to the doctors, which was confirmed through the experiment. And QOL is very important for the doctors in their treatment of the patient. So in treating the patient of the cancers, QOL should not be deteriorated. That is a point doctors first laid importance on. And the data on QOL for CheckMate-649, we used two items to compare the Opdivo plus chemo and chemo groups. And in every item, when other item, the Opdivo plus chemotherapy group achieved the higher results or better QOL and Opdivo and chemotherapy, will face the severe confession from now that Opdivo has the late data to pursue the efficacy or usefulness of it. So, we will continue to contain the entry by the competitor's products in the new prescription less than 10% and will continue to win in the market. Next is about the gastrointestinal cancer and this is a result of the first line treatment of esophageal cancer and now, we have about 45% of the share. And as you know, we were the late comer into the market. But from the time of the entry into the market, we took the market share from the other players, and have been maintaining the number one position, which proved the well established presence of us in the field of gastrointestinal cancer. And with the adjuvant of the gastrointestinal cancer, we are now promoting it and we have about 50% of the share. And here is the accumulation of data from the actual clinical usage. And we have to introduce this to many more doctors to doctor to Dr. Wei. So, we'll continue to promote it and in this field, the adjuvant monotherapy, or there are other patients without the adjuvant monotherapy or adjuvant therapy. So, we like have to speed our activities to provide - treatment to the patient. And this is the lung cell cancer, which is our focus for this fiscal year and our share is 17% for the first line treatment. And so, I think the decrease of the new prescription has bottomed out now. So what we have to do, is to achieve the growth from now. And our strength is the CheckMate-227 and I will show you the data from the [indiscernible] write-up. And especially with the patient with the negative expression of PD-L1, we now see the parallel plateau and we have the four year follow-up I'm sorry, a six year follow-up result and survival ratio is 16%, though the high efficacy was approved. And with CheckMate-9LA regimen, the four year follow-up result was announced. And as of four year a 23% survival ratio was observed, especially in field of the lung cancer with PD-1 inhibitor, even with a patient without expression of PD-L1, it is difficult to achieve the longer survival. That's the tendency we found, but with Opdivo and Yervoy regimen, by combining Yervoy which is the CTLA-4 inhibitor, we expect that longer survival can be obtained. So for these two regimens, we are continuing the follow-up and also for fiscal year we expect announcement of the follow-up data, and this is the area we have the very high unmet needs. So by pursuing this e-field we would like to achieve the recovery and number of the new prescription. But as for the irAE, the safety is very important, so we have to work on the prevention of the irAE at the same time. So, we'll continue to promote that. We acknowledge this is a product we can make a contribution to the longer survival of a lung cancer patient. And lastly, about urethral cancer, the adjuvant of the bladder cancer, we have 45% of the share for the new patient prescription, but in this field we achieving the gradual increase, but still see some problems. But when we try to face up to these problems, first I have to mention is the difference of the interpretation of the high risk patients among the doctors, but through the doctor-to-doctor information dissemination activities. I think we are working on this issue. But from the time of the approval, is the issue of the lack of the OS data. And in April this year at EAU, the follow-up data of CheckMate-274 was announced and DFS and OS results were included. And the main figure of the DFS was 22.9 months and there's no significant difference. But also for the OS, 69.5 months was shown. So invasive urethral cancer with poor prognosis and high risk of recurrence after radical resection of TURBT could show a very good result. So it is highly acknowledged by doctors and we'd like to make the continuous effort to promote it. And lastly about the renal cell cancer and now the share is 45%. So at one point, we were beat by - our competitor's product, but we continued our activities to disseminate information and Opdivo regimen, recovered the number one position. And we expect this year competition posed by the competitor's product. But we will continue to establish the high obstacles against the competitors and maintain this number one position. And this is the last page, I'd like to explain to you. So in 2024, there were many minus factors, but as I'm talking about there are so many plus factors. So, we'd like to resolve these negative functions, and prepare for more recovery. Especially the higher competition is expected in the field, of the gastrointestinal field. So, we will maintain our position as a number one, with the new number of the new patient. And also, we'll have the number one position through the ML evaluation by the external investigation. So both in quantity and quality, we maintain our number one position and establish a very strong obstacle against the entry from the competitors. And with the lung cancer field, with many eligible patients, we will achieve recovery of the number of new prescriptions, like we did with the renal cell cancer. And also into the new indications such as the hepatocellular cancer, lung cancer, colorectal cancer, urethral cancer. If we can have the approval of the new regimen we can expect the further expansion of the revenue. So, this fiscal year we're at the bottom, and after 2025 we will go into the growth field - growth phase. So, we will make a best effort to continue to meet the unmet needs of the cancer patient. That's all for me. Thank you very much for your attention.
- A - Unidentified Company Representative:
- Thank you very much. So this concludes the presentation from another side. So from now, we'd like to take the question from the audience. So as I'd like to entertain the questions from the floor. Mr. Sakai please.
- Fumiyoshi Sakai:
- This is Sakai from UBS speaking. I have a question to Mr. Takahaki listening to you and found that Opdivo will be in the recovery phase from now. And the other day it was reported that Mr. Sagara said that Opdivo might have kicked out. So that is a great contrast with what was explained to us now, so what do you think of this? And Opdivo – for Opdivo lung cancer is - rather than trying to achieve the further growth recovery I think you have to defend that. And I think the negotiation - is still has a lingering effect so this is the question from about Opdivo?
- Satoshi Takahaki:
- So the sales Opdivo will pick out, is not the intention of my statement. I think that's not reporting that way. So I mentioned that royalty received would peak out that's what I said. As for the sales in Japan, because we can expect the addition of the new indications so I talked that we can expect the further increase of the sales. So, I think - just so the fresh news that's the impression I had. So this is the articles Opdivo sales picked up last year. No, I have to correct your understanding, but that's not the intention of the market. So the reality and others we will lose the back from payment from AstraZeneca and more than ¥30 billion 1.62% of the global sales will decrease to 0.62% so far we will proceed [ph]. So there's a decline in the royalty ratio we receive. So we still have royalty from BMS, which is expected to increase a little bit. Thank you very much as for the lung cancer, they can still have an impact, but after that result was achieved, our data time of our clinical trial and after the marketing we have accumulated much data. And we have continued to explain this data, to the doctors and as for the five candidates syndrome with the corporation of the expert doctors we hold various players throughout the nation, to the possibility to explain in detail. So I think the decrease of the number of new patients and new prescription has bottomed out. And as for the safety, the concern over the safety of [indiscernible] is now being resolved. So I think we are in a phase to achieve the recovery. And from now, we will continue to come up with the follow-up data, which is strong for us. And especially for the patients with negative expression. The competitor's products do not come up with good results, so that is the point that doctors have a high expectation on Opdivo. So by combining a date, I think we can achieve a very strong recovery. But as you mentioned, the lung cancer field is one with a big number of patients, to achieve recovery is one of the pillars for our business during this fiscal year.
- Fumiyoshi Sakai:
- An one more question from me, and as for return for the investors, the 40% payout ratio is announced and as for dividend payment, you are going to have the progress policy to maintain or implement it. And why did you decide to have the 40% ratio for EPS basis? You can increase the payout ratio to 40% and increase the bill payment. But I wonder whether you will have such kind of situation. So, we are skeptical about the realization of the policy management. So maintaining yen per share payment is the minimum condition in just the way we have to understand when complete to the information on Page 10?
- Gyo Sagara:
- Yes. For time being, we will maintain ¥80 per share payment as the minimum level. And when I say for time being, how long is it? It's just not for time being until the next special announcement is made. If you look into the future, so if there's any patent occurs, you expect the decrease in payment. So with the recurrent expression, please understand that kind of situation will not happen.
- Fumiyoshi Sakai:
- Thank you very much.
- Unidentified Company Representative:
- Mr. Hashiguchi, please.
- Kazuaki Hashiguchi:
- This is Hashiguchi from Daiwa. [indiscernible] target for the just laid out and if it's not the operating profit as shown and your cash is within this range. But with this acquisition of Deciphera what happens? Do you expect the situation will be out of the framework you gave it to us, if we conclude this acquisition of Deciphera? So please give us your mid to long term forecast?
- Gyo Sagara:
- Yes. So Deciphera acquisition - should be included in this year's business performance when time comes. And then there is a possibility that Op ratio will be less than 25%. But how? We will revise the figure and the figures for the FY '26, it should be decided after we include the impact of the acquisition of Deciphera into our performance. At that time, we'll just make the experience about it. So at this moment, all we can say is that we don't see any change, if we do not include the impact of the Deciphera acquisition. So on organic basis, you don't see any change in forecast of achieving the 25%. And when can you expect that update? So TOB was not complete yet. So after TOB is complete, we will start the process to include acquisition of Deciphera and without delay, we'd like to come up with an update.
- Kazuaki Hashiguchi:
- Thank you very much.
- Unidentified Company Representative:
- Mr. Yamaguchi, please.
- Hidemaru Yamaguchi:
- This is Yamaguchi from Citi. And let me continue the question as for Deciphera in Q2, the closing is expected. So basically, can we understand that it is included in the PL from the second half of this fiscal year or is it not decided?
- Gyo Sagara:
- As we planned in Q2, we would like to calculate and include it in the second half. Include the impact of the Deciphera in the second half and you still have some impairment.
- Hidemaru Yamaguchi:
- And if you have any specific product, which will have the major impact, please let us know?
- Gyo Sagara:
- I think you have some licensed in products. So if I mention someone with a major one, placebo which was licensed in has a big marketing right. And as for the license, the balance - there is no product with major impact.
- Hidemaru Yamaguchi:
- How about 47?
- Gyo Sagara:
- 47? Yes, we have it that the outstanding balance, we still haven't achieved a milestone. So there was a possibility, it will increase from now, but not matching scale.
- Hidemaru Yamaguchi:
- I understand. Thank you very much. And thank you very much for explanation on the trend Opdivo. So for this fiscal year, the block price was revived. So when we measure it, about 15% drug price division took place, especially with the urethral cancer. And after next fiscal year, you mentioned you are going to achieve the growth. But I want to understand what image you have about this growth. So is it the single-digit, over single-digit or upper single-digit? So what image do you have about this image you want achieve higher the better? That's it from me?
- Gyo Sagara:
- And for the next fiscal year, I'd like to have another opportunity to explain to you. But as I mentioned earlier, in the field of the lung cancer, how much growth or how much recovery we can achieve in the field of the lung cancer, will decide the path we can take to the next fiscal year. And it's having cancer and urethral cancer, we still see there's a possibility of achieving the further growth. So these are three types of cancers with area we can accept the growth, and against the competitors, how high we can establish. The obstacle for the entry is another point. So in the situation, like to come up with an update. As for the gastric cancer Keytruda and Opdivo [ph] are coming into the market yet the drug price is not decided in a specific field. I think you will see we will fight against the competitors, but it's too early to say. But if you have any comment on the competitors, please let us know. So the maximum 10%, is the impact we expect or we expect that impact will be smaller, but we can make the impact smaller.
- Hidemaru Yamaguchi:
- And application for the approval subcutaneous injection was completed in United States. And do you see the timing application in Japan for the subcutaneous injection?
- Gyo Sagara:
- As for the timing of the filing, please lets us refrain from making a comment on the specific timing. But as I mentioned now, the Opdivo itself, there's no difference between the in and out of Japan. So even if it is in the form of the subcutaneous injection between the Japanese and Korea [ph], there's no big difference. So, we'll see the situation to make application in Japan at the right timing.
- Hidemaru Yamaguchi:
- And when do you expect the Phase 1 to complete?
- Gyo Sagara:
- The Phase 1 is for the coordination of the [indiscernible]. So it is difficult for us to tell you when the Phase 1 will complete. But I think it will not take much time.
- Unidentified Company Representative:
- So Mr. Akahane, please.
- Takashi Akahane:
- Thank you very much. This is Akahane from Tokai, Tokyo. I have three questions. So on Page 24 and 25, a 15% drug price is a very hard situation for Opdivo. So when I see the last situation, the esophageal cancer I know small-cell lung cancer was mentioned - is the 15% drug price cut. Do you expect a drop in the sales? And when we see this 15% can be offset by the increase of the value?
- Satoshi Takahaki:
- Thank you very much for your question. Please wait for a moment. First of all, as for the esophageal cancer on a volume basis looks increased, but it is difficult to offset the drug price cut. And as for urethral cancer, of course we expect the growth in volume, but in value basis, I think we cannot offset it completely. Did I answer your question?
- Takashi Akahane:
- And my second question is about Page 8. So 8% - 15% block price cut of the impact and that is ¥29 billion of the impact. So my question is sales of Opdivo. How much profit do you expect from the sales of Opdivo. Do you have any quantitative or qualitative information in that? So, profit expected to decrease by ¥37.5 billion. But profit of Opdivo itself is expecting decrease. And what is image of this decrease of profit Opdivo according to the decrease of sales?
- Satoshi Takahaki:
- As for the profit of Opdivo, the cost of production royalty, against the sales should be considered. The actual a cost ratio is not disclosed. But when you see the total cost ratio, the one of Opdivo in the good variety, the cost ratio of the Opdivo is not so different from the overall cost ratio.
- Takashi Akahane:
- Thank you very much. And this is the very vagal - big question in your forecast you expect the decrease of the revenue by 10.5%. And when we see the division of the stock prices, the sum of it generated medicine, company achieved the 30% increase in the sales and they achieved the stock high price of the shares. While you expect experience to the drug price cut accompanying the other competitor's products. So when you produce the guidance for the next fiscal year, I think not only the investors that the regulatory bodies are looking into your forecast and you came up with the expectation of the decrease of the sales and the values and we didn't expect the year. Or there are some other companies, which come up with a very drastic guidance, by highlighting the unprofitable products. So, we appeal to the regulatory bodies by coming up with this guidance that you expect this amount of decrease in sales and profit, because of the drug price cut?
- Satoshi Takahaki:
- Well, actually, we have that kind of feeling about a separate issue, which we will put into the, which will not put into the guidance figures. So guidance figures are based on just the facts.
- Takashi Akahane:
- Thank you very much.
- Unidentified Company Representative:
- Are there any other questions from the floor? There are some questions raised from the online participants, but there comes a time. We close this meeting. And thank you very much for you participating in this meeting, despite the various schedules, but it is this schedule. And we conclude this meeting now. And thank you very much for your participation.