Thanks, everybody, for joining the session. My name is Steve Barker. I cover Japan farmer stocks for Jefferies from Tokyo. And it's my privilege today to introduce Takeda, Japan's largest farmer company by sales. And Takeda is represented today by CEO-elect Julie Kim and CFO Milano Furuta. Julie Milano, thanks very much for joining us. So we do want to get into the nitty-gritty of your business. But Julie, since you're about to take over as CEO, perhaps you could share a few biographical details with us.
Sure. So thank you, everyone, for joining us today. Happy to be here and to talk about Takeda, since you're making me talk about myself first. So I've been in the life sciences space for just over 30 years, started in healthcare consulting, but then worked in a number of companies, primarily in the rare disease space, joined Takeda in 2019 through the acquisition of Shire, ran the plasma business, ran the U.S., managed part of our international business as part of the transition. and I've been acting CEO since January of this year. And on the 24th, we have our annual shareholder meeting where it'll become official.
Fantastic. Thank you. So let's jump right into the three big launches you have coming up. You've got Ova-Parexidon for narcolepsy type 1, Rusphotide for polycythemia vera, both launching this fiscal year. And then in the first half of next fiscal year, you have zasocytinib for psoriasis. So regarding oviparexidon and rusphotide, I believe there is some level of contribution included in your current year guidance. Can you quantify what launch timing you assume and what level of revenue is embedded in your guidance, please?
Yeah, sure. So first, let's talk about the timing for these two assets that should be first up for us. So when you look at both Ruspertide and Ova-Parextin, their PDUFA dates are in August. But for Ova-Parextin, we do expect DEA scheduling, which is normal in this class. And the DEA can take up to 90 days. We hope that they are faster, but they have up to 90 days. So you should take that into consideration in terms of timing for the OVET-Parextin launch. In terms of quantification for this first fiscal year, again, given those timings and it's their first year of launch, we've not disclosed the exact amounts for those two assets. But let me give you a little bit of characterization of what we expect in terms of the difference of the launches between OVET-Parextin, Rust-Fortide, and if I can include Zazo as well, Steve. So when you look at oviparexin, we do expect this medicine to fundamentally transform the standard of care for narcolepsy type 1 patients. And there's a lot of anticipation, both from the clinician standpoint, but also, more importantly, from the patient standpoint. And today, the variety of options that they have available to them really only treat symptoms and not the underlying disease. And so we do expect there to be a relatively fast uptake of oviparexidin. That will be the first source of growth. Beyond that, when you look at narcolepsy type 1, there's roughly 100,000 to 200,000 patients in the U.S. from a prevalence standpoint. But the diagnosis rate is roughly 50%. And so the second source of growth will be slower and steadier coming from improvement in diagnosis, where we expect ovoparexin will be the first choice of treatment. When it comes to rusfertide, rusfertide is one that I think you can expect more of a slow and steady uptake. This is an area where for polycythemia vera patients, they don't have a lot of good treatment options today. And Ruspertide will be the first medicine that can provide durable hematocritic control for PV patients. But the current standard of care is extremely cheap. It's phlebotomy and it's HU. So these are pennies on the dollar. And so we're not expecting to replace phlebotomy, but rusfertide will be a predictable, durable treatment for these patients. So it's a matter of a lot of education and awareness to what rusfertide brings, and that's why we think more of a steady growth versus a rapid uptake that we'll see in oviparexidin. And when it comes to Zazo, this is a very competitive space, as many of you are aware. There are other treatment options that are available, but there are three things that we like about our Zazo profile. The first is that it has a rapid onset of action, and so that is something that is positive for both patients and for the HCPs. The second is that there's no food restriction, and this is one where, you know, in a real world setting. We'll have to wait and see the impact of ICO's product and food restriction and what that means. And then the third thing is the durability of the efficacy for ZASO. This is something that we shared in April at the Academy Dermatology meeting. And this is, again, a benefit for patients. So if you forget a dose, you don't have to worry.
The efficacy will maintain. very clear thank you so getting back to the current year you are looking for a small single digit reduction in decline in revenue this year because you've still got the the negative impact from the Vyvanse LOE though getting a lot smaller and then the Trintelix LOE as well but you are you've also guided for a return to revenue growth very quickly from next year onwards so you've talked about a horizon one and a horizon two could you talk to that please sure so what we wanted to be clear with the investor community and the analyst community is to delineate the
difference between what we need to go through over these next two to three years what we're calling horizon one versus the accelerated growth we expect to see in horizon two so in horizon one there are four things that we are focused on. First and foremost is strong execution of these three launches that we were just talking about. This is setting the stage for future growth for us. The second thing is that we have to make sure that the pipeline continues to deliver. Behind these three assets that we'll be launching in the next 12 or so months are five additional late-stage assets that will come in Horizon 2. The third thing is we have to maintain the resiliency of our core inline brands. The two biggest ones being Antivio and GammaGuard Liquid, which is our immunoglobulin in the PDT portfolio. And then the fourth thing is we have to execute on our organization transformation. So some of this is driven by the new executive team that I put in place that took effect April 1, the start of our fiscal year. And some of it is our ongoing organization transformation to ready ourselves to be able to better take advantage of AI and other platform technologies. So those are the four things that we have to accomplish in Horizon 1. And we expect that to be a two- to three-year timeframe before we move on to Horizon 2, where we'll see the full impact of those first three launches. We'll start seeing the wave of second launches from those five assets that I mentioned. We should have completed the bulk of our organization transformation, which will give us a much more efficient operating base. And then, of course, the R&D pipeline we expect to continue to deliver. So from a business standpoint, that's what we're focusing on from Horizon 1 and Horizon 2. And maybe, Milano, you can share a little bit in terms of what we're trying to achieve from a financial metrics standpoint in those two horizons.
No, thank you, Julie, and thanks, and Steve. So in Horizon 1, as Julie mentioned, there's like a big driver is, of course, in the new launches of these three assets. In the meantime, we will soon see the IPA impact and what's going to look like in the 2028 for the NTBO. So that's a kind of the moving factor, right? How we can drive the uptake of the launches and how the NTBO's IPA impact would be. That's a kind of plus minus effect. But then after 26, we will see that bit deep in revenue and corporate profit, but we expect it back to growth. That's kind of the horizon one. And then one of the initiatives in the big, big initiatives we are working on in the transformation is the expanding the global capability center. So that's much, much beyond the traditional shared service center type of things. We're expanding the scope into the commercial analytics and R&D work and manufacturing so that in the next two to three years, we're going to have a very solid kind of corporate infrastructure. When I say corporate infrastructure, it's not the typical GNA. It's much beyond. But that's going to give us a good operating leverage in the long run. So in the horizon too, as all the five more assets coming in, then incremental revenue will have better trickle-down effect to the bottom line. That's how we see the corporate profit expansion in the long run.
Right. You mentioned the transformation plan, which I understand is going to deliver savings of around 100 billion yen this year and growing to 200 billion yen per year by a couple of years. So that's going to, yeah, as you say, that combined with increasing revenues, you should have very great operational leverage.
At the same time, in Horizon 1, there is an investment for the launches. So it's, again, we are very excited to have these three new launches. And we don't want to compromise the investment for the growth. this will be the driver in coming in two to three years, but in the long run even more. And then again, we have five more assets in phase three. That also requires investment. So basically we are kind of offsetting those incremental investment by the short-term savings of the transformation program. But this transformation program again will help us have the better operating leverage in the long run.
And this is why we've recommitted to achieving the low to mid 30% core operating profit margin in that horizon two. We're also maintaining our focus on deleveraging, so we do want to get down to two. Today we're at about 2.6, so we'll continue moving down to two. And another area that, those are in horizon two. In horizon one, we also want to make sure that our return on equity hits 5% and above. So that's a place where we've gotten some feedback from you all that that's a metric that we are now paying more attention to.
Right. But that's ROE on the basis of IFRS EPS, right? Yeah. I mean, if you look at core, it's a lot higher already.
Yeah. So you mentioned leverage, 2.6 times net debt to EBITDA right now, heading for two.
Milano once you get to two what sort of what sort of flexibility would that give you for a capital allocation and what would be a priority would it be more shareholder returns more business development so it will give us more flexibility but it's like it's more it's not perhaps the step change that difference in terms of the investment opportunities we always continue to look at those and the additional opportunities in attractive opportunities and it has to be very super attractive we are very selective and targeted on on our targeted therapeutic areas but we always look at and then as as our balance sheet and you know the the leverage improves them yes we will have more more flexibility but in the meantime also we are quite busy now in a you know positive positive way in in in the good sense we are very busy to develop those in the three plus five assets so there's also like r d operation like a pnl capacity so we are not necessarily looking at like a big stuff to bottom but we always look at additional the attractive opportunities yeah Right.
So what I'm hearing is you don't have an appetite for doing large scale transformational type deals like the Shire deal, for example, that brought you to cater. I guess you don't need that. I mean, you have global scale that you need already.
Exactly. And so while we're very excited about our existing pipeline and our ability to grow, you know, in that second horizon, we do want to have top tier, top line growth. And so while we believe that we've got great shots on goal with our late-stage pipeline, it's always nice to be able to supplement that. So as Milano said, we would be looking for assets that fit into our existing therapeutic area focus to provide some additional growth potential.
Right. Understood. You mentioned the major revenue drivers right now, which include Antivio, of course, and then also your plasma-derived products. Regarding Antivio, I understand Alvotech has applied for approval for an Antivio buy similar in Europe, which I suppose you will oppose, because it does run through patents, which you have out to 2032. um so it's interesting that they've filed in europe as opposed to the u.s do you have any like insight into why they would do that yes so so fundamentally the the process for bringing biosimilars into the market in europe is different than than in the u.s so in europe as you mentioned there's two markets where challenges have been legal challenges have been filed in the uk and
in the Netherlands. And you're absolutely right. We are going to vigorously defend our position in those two markets. In the U.S., the process is slightly different. So until the FDA accepts a filing, legal action cannot be started. But again, we feel very strongly about our patent position. And in the U.S., we would also defend. So U.S., we have not changed our assumptions in regard to biosimilar entry. In Europe, we'll have to see how these two court cases pan out.
Okay. But putting all that aside, Antivio, I mean, the growth rate has slowed, but do you think it can maintain the... I think you've guided for mid-single-digit growth this year. Can it retain that out to the end of patents?
So Antivio, I would say there are a couple of things that I would like to point out. First, from a U.S. market perspective, it is a very, very competitive market at this point with lots of different mechanisms of action that are active. But Antibio is still the only gut selective. And after being almost 14 years on the market, it's still the market share leader, particularly in UC for bio-naive. So we do believe that that That is a position that we've been able to defend and we will continue to defend. We have seen, as you all have witnessed, the market share loss in second and third and in CD. But we're holding strong in UC, which is why we have that guidance. Outside of the U.S., we are still growing quite strongly. So that's a combination that creates that growth for Antibio.
Understood. And regarding your PDT business, one of your competitors has created some concerns in the market. They've cut their guidance. But you've given us guidance for high single-digit revenue growth for PDT in general for…
Mid, mid-single-digit growth. And you're confident? Do you have any concerns about that target?
Yeah, so concerns, we wouldn't have provided that guidance if we did, but I think we need to separate the immune globulin growth from albumin. So immune globulin is still the primary driver for overall plasma, and this is an area where our underlying demand is still strong for our IG products. Yes, there is some competitive behavior on the pricing side that is creating a bit of challenge on the revenue line. But our underlying demand is strong, and we're able to defend our key accounts in the U.S. So we'll ride out the pricing variability with the strong underlying demand. Albion is a very different story because the biggest market for Albion is China. And as you all are aware, in China, the government has put in place cost utilization measures that have impacted demand and even caused demand to shrink this past year. We were able to weather the bulk of the year without seeing that impact, but we saw it in our last quarter, whereas some of our peers saw it much earlier. So this is until China fully recovers, and we do expect that down the road demand will start to grow again, that's going to be a tougher one for the whole industry. I think our position is slightly different in that we weren't as over-indexed on China as some others, and our ability to spread our demand across different geographies is helping us to temper the impact of the China demand shock.
Understood. We should talk about your pipeline. Very interested in your orexin strategy. We've talked about overparexidon coming to the market or getting approval in August, but then you have at least two follow-up compounds, TAC-360, which you have in phase two trials for NT2 and for IH, and then you also have an earlier stage candidate, TAC-495. Could you talk about the orexin strategy, please?
Sure, absolutely. So we're very, very excited about our overall portfolio here with the orexin assets. And as you mentioned, oviparexin is specifically for NT1 and NT1 only. This is a patient population where orexin is deficient. And with oviparexin, we are replacing the deficiency. For NT2 and IH, these are populations where the natural orexin is still present, and this is why differential dosing is needed in these populations. And so TAC360 is a different molecule than oviparexin, and we're very excited to see what our data looks like in the Phase II studies that we'll read out later this year in both NT2 and IH. For 495, again, a different molecule than 360 and oviparexin. We believe that different molecules with different characteristics are needed to address populations beyond NT1, NT2, and IH. We have not disclosed for competitive reasons exactly what our development plan is for 495, but we're very excited about the, let's call it the profile that 495 has and its potential in indications beyond narcolepsy NIH.
Very exciting. And oncology, you have a couple of assets you've licensed in from Invent. You've got TAC 928, alpha-biased IL-2 PD-1 bispecific And then you have TAC921, a clouding 18.2 ADC. Could you talk about those, please?
Really excited about our partnership with Inevent on these two assets. So for TAC928, this is a co-development 6040, 60Us40 Inevent. But this has the potential to be a first-in-class, next-generation immuno-oncology asset. And the key part of this is the alpha bias IL-2. So many of you know that IL-2s have been available for quite some time, but those have been beta and gamma targeted, not alpha. And so we don't see the same, I'll call it baggage, that you see with the other IL-2s because of this alpha bias. And the data that we've seen thus far, although it's all from Chinese patients, have been very, very strong and encouraging. So this is something that we currently have a number of trials ongoing, but we have a whole further development plan tied to TAC 928 that will have it be one of our key assets in our next cohort of blockbuster medicines for Takeda. Now, when you look at TAC 921, as you said, this is a clodin 18.2 targeting asset in very challenging populations of gastric and pancreatic cancer, and again, encouraging data in those two populations, and so very excited. Not as big potential from a revenue standpoint as 928, but from a patient impact standpoint, equally as strong.
Okay, thank you. So, Julie, you mentioned a new management structure that you brought in ahead of actually becoming CEO. So that's wonderful that you had that opportunity. Could you talk about that structure, please?
So as I'm sure you would all expect, any incoming CEO would put in place their new executive team. And because I'm an internal candidate, I don't have to wait until I'm officially in role. And if you think about it, those launches that I mentioned to you earlier with Ovaparexin and Rusfertide, if I would have waited to the end of this month to be officially enrolled and then take the usual two to three months to assess before putting in a new leadership team, we would have been disrupting the organization at the exact point in time where we needed to be launching these new medicines. So as an internal successor and, you know, with the support of Christophe, the current CEO, I put in place my executive team ahead of being officially enrolled. So they're all in place now. We've made a number of changes to create better operating efficiency to some of the things that you heard Milano mention earlier. earlier, centralizing our corporate functions so that we can simplify and standardize to then fully be able to take advantage of AI and other technologies. We've also flattened the organization, bringing decision-making closer to the customers. And we've brought in some talent, and I've moved some talent around on the executive So Milano's still CFO. He's not taking on a new role. But as you all know, I used to run the U.S. and so brought in Rhonda Pacheco to run the U.S.
I mean, what an amazing CV. She launched the GLP ones for Lily, right? So she knows how to run a blockbuster launch.
Exactly. Exactly. And so we have a number of new talents that we've brought to the executive team. And so I think this is a good mix of fresh outside perspective, different experiences and capabilities, along with the experience that our existing team members have. So really, really happy about my new leadership team.
Terrific. So you will be taking over as CEO before the end of this month. What are your top two to three priorities?
Well, as I'm sure you can imagine, launches, launches, and launches. But beyond the focus on these launches, very much aligned to what I shared with you in terms of our first horizon, that our pipeline needs to continue delivering. So we have laser focus on execution of those late-stage clinical trials. We also need to make sure that particularly Antivio and GammaGuard, which are two of our large core inline brands, show resiliency and strong performance. And then we have to execute on our transformation because all of that is going to underpin our ability to continue delivering improvements from a financial perspective on the bottom line.
Great. We do have a couple of minutes if anybody has a question. No? Well, maybe I'll ask about the board because you're making some changes there as well. You're bringing some new members. What do you expect these folks to bring to the board?
Sure. So because of the term limits that we have for our board, when the current CEO, Christoph, joined. Shortly after he joined, he brought on a whole new cohort of board members. So we actually have six longstanding board members stepping off in June. And so we didn't want to repeat the problem. So we're not replacing all six at the same time. This year, we're bringing on three new board members. So first, Dr. Paul Stoffels, who most of you may know that he used to run R&D at J&J. So given the stage that we are at with our pipeline and the need for our pipeline to continue delivering, having someone with his background and experience is extremely helpful for us. So again, very excited to have him on board. Mr. Bruce Boussard is another board member that will be joining us. He may be less familiar to this audience. His last CEO position was at Humana. So he ran Humana for about 14 years, I think it is. And again, that landscape, understanding of the payer landscape and the U.S. market in general, as you all know, is very, very important to the success of pharmaceutical products. So having his experience on the board is also something that will be very valuable. And then the final individual is Mr. Koichi Kimura one of our board members that's stepping off is the head of our audit and supervisory committee so mr. Kimura has that same sort of accounting background to maintain the robustness of our financial focus fantastic Julie Milano thank you very much for your time today.
